OFFER TO AMEND
Published on November 19, 2008
Exhibit
(a)(1)
EMCORE
CORPORATION
OFFER
TO AMEND ELIGIBLE OPTIONS
NOVEMBER
19, 2008
THIS
OFFER EXPIRES AT 11:59 P.M., MOUNTAIN TIME, ON DECEMBER 17, 2008,
UNLESS
THIS OFFER IS EXTENDED
EMCORE
Corporation (“EMCORE,”
the “Company,”
“us”
or “we”) is
making the offer set forth in this Offer to Amend Eligible Options (this “Offer to
Amend” and, together with the related Letter of Transmittal and Stock
Option Amendment and Cash Payment Agreement (the “Amendment
Agreement”), as each may be amended or supplemented from time to time,
this “Offer”) to
certain individuals holding eligible outstanding stock options to purchase our
common stock previously granted to those individuals under the EMCORE
Corporation 2000 Incentive Stock Option Plan (as amended and
restated, the “Plan”) to
amend those options. Some of the options currently outstanding under the Plan
were unvested as of December 31, 2004. In order to determine for
purposes of this Offer which options that you hold were vested on December 31,
2004, and are therefore not Eligible Options (as defined below), it has been
assumed that any options which you exercised were the first options to vest
among the options that you hold. An outstanding option to purchase
shares of our common stock will be eligible for amendment pursuant to this Offer
if it meets all of the following conditions:
·
|
the
option was granted under the Plan;
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·
|
the
exercise price per share currently in effect for the option is less than
the closing sale price per share of our common stock on the date which has
been determined to be the correct date of grant of the option in
accordance with the terms of the Plan (in such circumstances,
there is a risk to the holder that, for tax purposes, the exercise price
per share may be considered to be less than the fair market value per
share on the date of grant);
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·
|
the
option is held by an individual who is, on the date of this Offer to Amend
and the Expiration Date (as defined below) of this Offer, a current
employee of EMCORE and subject to income taxation in the United States
with respect to that option (an “Eligible
Optionee”);
|
·
|
the
option was unvested as of December 31, 2004 (if only a portion of an
option was unvested as of December 31, 2004, the unvested portion of the
option may be eligible for amendment);
and
|
·
|
the
option is outstanding on the Expiration Date (as defined below) of this
Offer.
|
An option that satisfies all of the
foregoing conditions is designated an “Eligible
Option” for purposes of this Offer. If only a portion of an
option is an Eligible Option (the portion that was unvested as of December 31,
2004), then only that portion will be amended pursuant to this
Offer. The balance of such option will not be subject to this Offer
and will not be an Eligible Option. That portion (the portion that
was vested as of December 31, 2004) will retain its current exercise price and
we believe it will not be subject to adverse tax consequences under Section 409A
(as defined below).
EMCORE ’s
executive officers and directors will not participate in this Offer, although it
is expected that following this Offer two of our current executive officers, who
were not Section 16(b) officers at the time they were granted options that would
otherwise constitute Eligible Options, will be given an opportunity to amend the
exercise price of those options on terms no more favorable than those made
available to all other Eligible Optionees in this Offer.
Through
its voluntary inquiry into its historical practices with respect to the granting
of stock options, the Company determined that an incorrect grant date was used
in granting certain options. As a result, the Eligible
Options were granted at an exercise price below the fair market value of the
Company’s common stock on the most appropriate measurement date for the Eligible
Options. Because of this, there is a risk to the holder that, for tax
purposes, the exercise price per share may be considered to be less than the
fair market value per share of our
i
|
common
stock on the date of grant. Unless remedial action is taken to adjust
the exercise price of an Eligible Option before the earlier of (1) December
31, 2008 or (2) the date on which an Eligible Optionee exercises an Eligible
Option, that Eligible Option may be subject to these adverse tax consequences
under Section 409A (“Section
409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). Eligible
Optionees may be able to avoid such adverse tax consequences only if certain
changes are made to the Eligible Options. Accordingly, EMCORE is
making this Offer so that the Eligible Optionees holding one or more Eligible
Options will have the opportunity to amend those Eligible Options to the extent
necessary to avoid such adverse tax consequences. The adverse tax
consequences of Section 409A do not apply to options that vested on or prior to
December 31, 2004 or that were granted with an exercise price at or above the
fair market value per share of our common stock on the date of
grant. See page 5 for a discussion of the purpose of this
Offer.
If an
Eligible Option is properly tendered and accepted and not validly withdrawn
pursuant to this Offer, the amendment will increase the exercise price per share
currently in effect for the Eligible Option to the Fair Market Value (as defined
below) per share of our common stock on the date of grant of the Eligible
Option. The new exercise price per share will be designated the
“Adjusted
Exercise Price” and will become effective on the first business day
following the expiration of this Offer, which we expect to be December 17, 2008
(the “Amendment
Date”). The Eligible Option as so amended with the Adjusted
Exercise Price will be designated an “Amended
Option.” The “Fair Market
Value” per share of our common stock on any date means the closing price
per share of our common stock on that date on The NASDAQ Global
Market.
The
Eligible Optionees whose Eligible Options are amended to increase the exercise
price pursuant to this Offer will become entitled to receive from us a special
cash payment (the “Cash
Payment”) with respect to those Eligible Options. The amount
of the Cash Payment payable with respect to the Eligible Options that are
amended to increase the exercise price to the Adjusted Exercise Price will be
determined by multiplying (1) the amount by which the Adjusted Exercise
Price exceeds the exercise price per share currently in effect for that Eligible
Option by (2) the number of shares of our common stock purchasable under
that Eligible Option at the Adjusted Exercise Price. The Cash Payment
will be paid on the first regular payroll date after January 1,
2009. Under applicable Internal Revenue Service (“IRS”)
regulations, the Cash Payment may not be made in the same year as the Amendment
Date. The Cash Payment, when made, will be subject to all applicable
withholding taxes required to be withheld by EMCORE.
If you
are not an employee of EMCORE on the Expiration Date of this Offer, then you
will not be eligible to participate in this Offer, none of your tendered
Eligible Options will be amended and you will not be entitled to any Cash
Payment with respect to those Eligible Options pursuant to this Offer. The
tendered Eligible Options will be returned to you and will remain exercisable in
accordance with the terms in effect for them at the time of tender, including
the current exercise price per share. You will be solely responsible
for any taxes, penalties or interest you may incur under Section 409A (and
similar state tax laws).
This
Offer will expire at 11:59 p.m., Mountain Time, on December 17, 2008, unless
extended (the “Expiration
Date”).
If you
are an Eligible Optionee, then we will send you promptly following the
commencement of this Offer a personalized Letter of Transmittal that contains
the following information with respect to the Eligible Options you
hold:
·
|
the
current exercise price per share in effect for the Eligible
Options;
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·
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the
number of shares underlying the Eligible
Options;
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·
|
the
dates of grant of the Eligible Options;
and
|
·
|
the
Fair Market Value per share of our common stock on the date of grant of
the Eligible Options.
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All of
the options set forth in your personalized Letter of Transmittal will be
Eligible Options. To tender one or more of your Eligible Options for
amendment pursuant to this Offer, you must properly complete and sign your
Letter of Transmittal and timely deliver your Letter of Transmittal and any
other required documents in the manner set forth in this Offer to Amend and the
related Letter of Transmittal and its instructions.
ii
Subject
to satisfaction of the conditions of this Offer, we currently intend to accept
for amendment on the Expiration Date all Eligible Options tendered by Eligible
Optionees who properly accept this Offer and are employees of EMCORE on the
Expiration Date.
As of
October 31, 2008, options to purchase approximately 8,754,360 shares of our
common stock were issued and outstanding under the Plan, of which 164,088
constitute Eligible Options. Some of the options currently
outstanding under the Plan were unvested as of December 31, 2004. In
order to determine for purposes of this Offer which options that you hold were
vested on December 31, 2004, and are therefore not Eligible Options, it has been
assumed that any options which you exercised were the first options to vest
among the options that you hold.
We are
making this Offer upon the terms and subject to the conditions set forth in this
Offer to Amend, including the conditions described in Section 7
below. You are not required to accept this Offer. You may
accept this Offer with respect to some or all of your Eligible
Options. However, if you decide to tender a particular Eligible
Option, you must tender that entire Eligible Option for
amendment. This Offer is not conditioned upon the tender of a minimum
number of Eligible Options for amendment.
Although
our board of directors has approved this Offer, neither we nor our board of
directors will make any recommendation as to whether you should tender your
Eligible Options for amendment. You must make your own decision
whether to tender your Eligible Options for amendment, after taking into account
your own personal circumstances and preferences. You should be aware
that adverse tax consequences under Section 409A (and similar state tax laws)
may apply to your Eligible Options if they are not amended pursuant to this
Offer, and you will be solely responsible for any taxes, penalties or interest
you may incur under Section 409A (and similar state tax laws). For
that reason, we recommend that you consult with your personal tax, financial and
legal advisors to determine the tax and other consequences of accepting or
declining this Offer. See page 5 for a discussion of the potential
adverse tax consequences.
Shares of
our common stock trade on The NASDAQ Global Market under the symbol
“EMKR.” On November 18, 2008, the last reported sale price of our
common stock on The NASDAQ Global Market was $1.33 per share. The
Adjusted Exercise Price for the Eligible Options that are amended pursuant to
this Offer will represent the Fair Market Value per share of our common stock on
the date of grant of the Eligible Option. Neither the exercise price
currently in effect for the Eligible Options nor the Adjusted Exercise Price for
each such option amended pursuant to this Offer reflects our view of what the
trading price of our common stock may be at any point in the
future.
You
should direct questions about this Offer or requests for assistance or for
additional copies of this document, the related Tender Offer Statement on
Schedule TO or the Letter of Transmittal and Amendment Agreement to Keith Kosco,
Chief Legal Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com.
We
have not authorized anyone to give you any information or to make any
representation in connection with this Offer other than the information and
representations contained in this Offer to Amend, the related Tender Offer
Statement on Schedule TO or the Letter of Transmittal and Amendment
Agreement. If anyone makes any representation to you or gives you any
information that is different from the representations and information contained
in this Offer to Amend, the related Tender Offer Statement on Schedule TO or the
Letter of Transmittal and Amendment Agreement, you must not rely upon that
representation or information as having been authorized by us. We
have not authorized any person to make any recommendation on our behalf as to
whether you should tender your Eligible Options pursuant to this
Offer. If anyone makes any recommendation to you, you must not rely
upon that recommendation as having been authorized by us. You should
rely only on the representations and information contained in this Offer to
Amend, the related Tender Offer Statement on Schedule TO or the Letter of
Transmittal and Amendment Agreement to which we have referred you.
iii
This
Offer has not been approved or disapproved by the U.S. Securities and Exchange
Commission (the “SEC”) or any state securities commission nor has the SEC or any
state securities commission passed upon the accuracy or adequacy of the
information contained in this Offer. Any representation to the
contrary is a criminal offense. All references to tax consequences
are for guidance only. We recommend that you consult with your
personal tax, financial and legal advisors to determine the tax and other
consequences of accepting or declining this Offer.
IMPORTANT
INFORMATION
To tender
one or more of your Eligible Options for amendment pursuant to this Offer, you
must properly complete and sign your Letter of Transmittal and timely deliver
your Letter of Transmittal and any other required documents to us by facsimile,
hand delivery, regular mail, overnight courier or e-mail as
follows:
By
Facsimile:
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(626) 293-3646
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By
Hand Delivery, Regular Mail or Overnight Courier:
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EMCORE
Corporation
10420
Research Road SE
Albuquerque,
NM 87123
Attn:
Keith Kosco
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By
E-mail:
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Keith_Kosco@EMCORE.com
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Delivery
of the Letter of Transmittal and other required documents by any other means is
not permitted.
As soon
as administratively practicable following the Amendment Date, we will deliver to
you a final and complete Amendment Agreement in which the Adjusted Exercise
Price for each of your Amended Options and the amount of the related Cash
Payment will be set forth in Schedule I to the Amendment Agreement.
The key
dates to remember in connection with this Offer are as follows:
This
Offer will commence on November 19, 2008.
This
Offer will expire at 11:59 p.m., Mountain Time, on December 17, 2008 (unless we
extend this Offer).
The
Eligible Options will be amended on December 18, 2008 (unless we extend this
Offer).
The
Cash Payment will be paid on the first regular payroll date after January 1,
2009.
We are
not making this Offer to, nor will we accept any tender of Eligible Options from
or on behalf of, option holders in any jurisdiction in which this Offer or the
acceptance of any tender of Eligible Options would not be in compliance with the
laws of such jurisdiction. However, we may, at our discretion, take
any actions necessary for us to legally make this Offer to option holders in any
such jurisdiction.
iv
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Page
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Index
to Summary Term Sheet
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Q-1 |
Summary
Term Sheet
|
Q-2 |
Certain
Risks Related to Participating in This Offer
|
1 |
The
Offer
|
2 |
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1.
|
Eligible
Optionees; Eligible Options; Amendment of Eligible Options and
Cash Payment; Expiration Date; Additional
Considerations
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2
|
|
2.
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Purpose
of This Offer
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5
|
|
3.
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Status
of Eligible Options Not Amended
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6
|
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4.
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Procedures
for Tendering Eligible Options
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6
|
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5.
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Withdrawal
Rights
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8
|
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6.
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Acceptance
of Eligible Options for Amendment and Commitment to Make Cash
Payment
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9
|
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7.
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Conditions
of This Offer
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10
|
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8.
|
Price
Range of Common Stock Underlying the Options
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11
|
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9.
|
Source
and Amount of Consideration; Terms of Amended
Options
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12
|
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10.
|
Amended
Options Will Not Differ from Eligible Options
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14
|
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11.
|
Information
Concerning EMCORE Corporation
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14
|
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12.
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Interests
of Executive Officers and Directors; Transactions and Arrangements
Concerning the Options and Other Securities of the Company; Material
Agreements with Executive Officers and Directors
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18
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13.
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Status
of Options Amended by Us in This Offer; Accounting Consequences of This
Offer
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18
|
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14.
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Legal
Matters; Regulatory Approvals
|
19
|
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15.
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Material
U.S. Federal Income Tax Consequences
|
19
|
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16.
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Extension
of This Offer; Termination; Amendment
|
20
|
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17.
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Fees
and Expenses
|
21
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18.
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Additional
Information
|
21
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19.
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Forward-Looking
Statements; Miscellaneous
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22
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Schedule
I Information
Concerning the Executive Officers and Directors of EMCORE
Corporation
Schedule
II Beneficial
Ownership of EMCORE Securities by EMCORE Executive Officers and
Directors
Index to
Summary Term Sheet
Question
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Page
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What
is this Offer?
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Q-2
|
Why
is EMCORE making this Offer?
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Q-3
|
Who
is eligible to participate in this Offer?
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Q-3
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Which
options are eligible for amendment pursuant to this Offer?
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Q-3
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What
are the components of this Offer?
|
Q-4
|
What
happens if I am not an employee of EMCORE on the Expiration
Date?
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Q-4
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What
are the tax consequences of an option subject to Section
409A?
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Q-4
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What
are the tax consequences if I accept this Offer?
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Q-5
|
What
are the tax consequences if I do not accept this Offer?
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Q-5
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How
will my Cash Payment be taxed?
|
Q-5
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What
securities are subject to this Offer?
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Q-6
|
Am
I required to participate in this Offer?
|
Q-6
|
How
and when do I tender my Eligible Options?
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Q-6
|
Do
I have to tender all of my Eligible Options or may I tender one or more
selected Eligible Options?
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Q-7
|
Will
the terms and conditions of my Amended Options be the same as those
currently in effect for my Eligible Options?
|
Q-7
|
When
will my Eligible Options be amended?
|
Q-7
|
When
will I receive my Cash Payment?
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Q-7
|
May
I withdraw my tender of Eligible Options?
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Q-8
|
When
may I exercise my Amended Options?
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Q-8
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When
may I exercise the portion of my options that was vested as of December
31, 2004?
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Q-9
|
What
if I exercise my Eligible Options after I accept this Offer but before
they are amended?
|
Q-9
|
Will
my Amended Options be incentive stock options or nonstatutory
options?
|
Q-9
|
What
are the conditions of this Offer?
|
Q-9
|
When
does this Offer expire? Can this Offer be extended, and if so,
how will I be notified if it is extended?
|
Q-9
|
What
does EMCORE’s board of directors think of this Offer?
|
Q-9
|
What
are some of the key dates to remember?
|
Q-10
|
Who
can I talk to if I have questions about this Offer?
|
Q-10
|
Q-1
SUMMARY
TERM SHEET
The
following are answers to some of the questions that you may have about this
Offer. We urge you to read carefully the remainder of this Offer to
Amend and the Letter of Transmittal and Amendment Agreement. The
information in this summary term sheet and in the introductory pages preceding
this summary term sheet is not complete and may not contain all of the
information that is important to you. Additional important
information is contained in the remainder of this Offer to Amend and the Letter
of Transmittal and Amendment Agreement. We have included page
references to the relevant sections of this Offer to Amend where you can find a
more complete discussion of the topics addressed in this summary term
sheet.
What
is this Offer?
This
Offer is a voluntary opportunity for Eligible Optionees to elect to have
Eligible Options amended to increase their exercise price and receive the Cash
Payment with respect to those Eligible Options.
For
purposes of this Offer, you should be familiar with the following
terms.
“Adjusted Exercise
Price” is the new exercise price per share that will be in effect for any
tendered Eligible Option that is amended pursuant to this Offer and will be
equal to the Fair Market Value per share of our common stock on the date of
grant of the Eligible Option. The Adjusted Exercise Price will be
effective on the first business day following the expiration of this
Offer.
“Amended
Option” will mean an Eligible Option that has been amended pursuant to
this Offer to increase the exercise price per share of our common stock
purchasable under that Eligible Option to the Adjusted Exercise Price determined
for that Eligible Option.
“Amendment
Agreement” will mean the Stock Option Amendment and Cash Payment
Agreement that will document the Adjusted Exercise Price for each of your
Amended Options and evidence our obligation to pay the Cash Payment with respect
to those Amended Options.
“Amendment
Date” will mean the date on which the Eligible Options is amended to
increase the exercise price of that Eligible Option to the Adjusted Exercise
Price and is expected to be December 18, 2008 or, if this Offer is extended, the
first business day following the extended Expiration Date of this
Offer.
“Cash
Payment” is the special cash payment to which the Eligible Optionees will
become entitled if the current exercise price of one or more of his or her
Eligible Options is increased pursuant to this Offer. The amount of
the Cash Payment payable with respect to the Eligible Options that are amended
to increase the exercise price to the Adjusted Exercise Price will be determined
by multiplying (1) the amount by which the Adjusted Exercise Price exceeds
the exercise price per share currently in effect for an Eligible Option by
(2) the number of shares of our common stock purchasable under that
Eligible Option at the Adjusted Exercise Price.
“Eligible
Option” is an option that (1) was granted under the Plan, (2) has an
exercise price per share currently in effect that is less than the closing sale
price per share of our common stock on the date that has been determined to be
the correct of grant of the option in accordance with the terms of the Plan (in
such circumstances, there is a risk to the holder that, for tax purposes, the
exercise price per share may be considered to be less than the fair market value
per share on the date of grant), (3) is held by an Eligible Optionee, (4) was
unvested as of December 31, 2004 (if only a portion of an option was unvested as
of December 31, 2004, the unvested portion of the option may be an Eligible
Option), and (5) is outstanding on the Expiration Date of this
Offer.
“Eligible
Optionee” is an individual who is, on the date of this Offer to Amend and
the Expiration Date of this Offer, a current employee of EMCORE and subject to
income taxation in the United States with respect to his or her Eligible
Options. EMCORE ’s executive officers and directors will not
participate in this Offer, although it is expected that following this Offer two
of our current executive officers, who were not Section 16(b) officers at the
time they were granted options that would otherwise constitute Eligible Options,
will be given an opportunity to amend the exercise price of those options on
terms no more favorable than those made available to all other Eligible
Optionees in this Offer.
Q-2
“executive
officers” refers to our executive officers, listed on Schedule I to this
Offer to Amend.
“Expiration
Date” means 11:59 p.m., Mountain Time, on December 17, 2008, unless we
extend the period of time during which this Offer will remain open, in which
event the term “Expiration
Date” will refer to the latest time and date at which this Offer, as so
extended, expires.
“Fair Market
Value” per share of our common stock on any date means the closing price
per share of our common stock on that date on The NASDAQ Global
Market.
“Letter of
Transmittal” is the form that an Eligible Optionee must use to notify the
Company as to the particular Eligible Options he or she has elected to tender
for amendment pursuant to this Offer.
“Plan”
means the EMCORE Corporation 2000 Incentive Stock
Option Plan, as amended and restated.
Why
is EMCORE making this Offer?
Through
its voluntary inquiry into its historical practices with respect to the granting
of stock options, the Company determined that an incorrect grant date was used
in granting certain options. As a result the Eligible Options were
granted at an exercise price below the fair market value of the Company’s common
stock on the most appropriate measurement date for the Eligible
Options. Because of this, there is a risk to the holder that, for tax
purposes, the exercise price per share may be considered to be less than the
fair market value per share of our common stock on the date of
grant. Unless remedial action is taken to adjust the exercise price
of an Eligible Option before the earlier of (1) December 31, 2008 or (2) the
date on which an Eligible Optionee exercises an Eligible Option, that Eligible
Option may be subject to these adverse tax consequences under Section
409A. Eligible Optionees may be able to avoid such adverse tax
consequences only if certain changes are made to the Eligible
Options. Accordingly, EMCORE is making this Offer so that the
Eligible Optionees holding one or more Eligible Options will have the
opportunity to amend those Eligible Options to the extent necessary to avoid
such adverse tax consequences. The adverse tax consequences of
Section 409A do not apply to options that vested on or prior to December 31,
2004 or that were granted with an exercise price at or above the fair market
value per share of our common stock on the date of grant. See page 5
for a discussion of the purpose of this Offer.
Who
is eligible to participate in this Offer?
You are
an Eligible Optionee, and are, therefore, eligible to participate in this Offer
if you, on the date of this Offer to Amend and the Expiration Date of this
Offer, are a current employee of EMCORE and subject to income taxation in the
United States with respect to your Eligible Options. EMCORE ’s executive
officers and directors will not participate in this Offer, although it is
expected that following this Offer two of our current executive officers, who
were not Section 16(b) officers at the time they were granted options that would
otherwise constitute Eligible Options, will be given an opportunity to amend the
exercise price of those options on terms no more favorable than those made
available to all other Eligible Optionees in this Offer. See page 3
for a discussion of Eligible Optionees.
Which
options are eligible for amendment pursuant to this Offer?
An
outstanding option to purchase shares of our common stock will be eligible for
amendment pursuant to this Offer if it meets all of the following
conditions:
·
|
the
option was granted under the Plan;
|
·
|
the
exercise price per share currently in effect for the option is less than
the closing sale price per share of our common stock on the date that has
been determined to be the correct date of grant of the option in
accordance with the terms of the Plan (in such circumstances, there is a
risk to the holder that, for tax purposes, the exercise price per share
may be considered to be less than the fair market value per share on the
date of grant);
|
Q-3
·
|
the
option is held by an Eligible
Optionee;
|
·
|
the
option was unvested as of December 31, 2004 (if only a portion of an
option was unvested as of December 31, 2004, the unvested portion of the
option may be eligible for amendment);
and
|
·
|
the
option is outstanding on the Expiration Date of this
Offer.
|
An option
that satisfies all of the foregoing conditions is designated an Eligible Option
for purposes of this Offer. See page 2 for a discussion of Eligible
Options.
The date
of grant for the Eligible Options in the applicable option agreement or grant
notice and the exercise price per share currently in effect for that option are
set forth on page 3. Your personalized Letter of Transmittal that we
will send you promptly following the commencement of this Offer will set forth
with respect to the Eligible Options you hold the current exercise price per
share in effect for the Eligible Options, the number of shares
underlying the Eligible Options, the dates of grant of the Eligible Options and
the Fair Market Value per share of our common stock on the dates of grant of the
Eligible Options.
What
are the components of this Offer?
Amendment to Increase Exercise Price
to Adjusted Exercise Price. If an Eligible Option is properly
tendered and accepted and not validly withdrawn pursuant to this Offer, the
amendment will increase the exercise price per share currently in effect for the
Eligible Option to the Fair Market Value per share of our common stock on the
date of grant of the Eligible Option. See page 3 for a discussion of
the amendment to increase the exercise price to the Adjusted Exercise
Price.
Cash Payment. The
Eligible Optionees whose Eligible Options are amended to increase the exercise
price pursuant to this Offer will become entitled to receive from us the Cash
Payment with respect to those Eligible Options. The amount of the
Cash Payment payable with respect to the Eligible Options that are amended to
increase the exercise price to the Adjusted Exercise Price will be determined by
multiplying (1) the amount by which the Adjusted Exercise Price exceeds the
exercise price per share currently in effect for an Eligible Option by
(2) the number of shares of our common stock purchasable under that
Eligible Option at the Adjusted Exercise Price. The Cash Payment will be paid on
the first regular payroll date after January 1, 2009. Under
applicable IRS regulations, the Cash Payment may not be made in the same year as
the Amendment Date. The Cash Payment, when made, will be subject to
all applicable withholding taxes required to be withheld by
EMCORE. See page 3 for a discussion of the Cash Payment.
What
happens if I am not an employee of EMCORE on the Expiration Date?
If you
are not an employee of EMCORE on the Expiration Date of this Offer, then you
will not be eligible to participate in this Offer, none of your tendered
Eligible Options will be amended and you will not be entitled to any Cash
Payment with respect to those Eligible Options pursuant to this Offer
.. The tendered Eligible Options will be returned to you and will
remain exercisable in accordance with the terms in effect for them at the time
of tender, including the current exercise price per share. We
recommend that you discuss with your personal tax advisor the tax consequences
to you arising under Section 409A as a result of your ownership of Eligible
Options. You will be solely responsible for any taxes, penalties or
interest you may incur under Section 409A (and similar state tax
laws).
What
are the tax consequences of an option subject to Section 409A?
Section
409A was added to the Code by the American Jobs Creation Act of
2004. The Treasury Department and IRS have to date provided guidance
and issued final regulations with respect to certain items of compensation under
Section 409A. That guidance and those final regulations indicate that
a stock option granted with an exercise price per share below the fair market
value per share of the underlying shares on the date of grant will, to the
extent that option was not vested as of December 31, 2004, be subject to the
adverse tax consequences of Section 409A. Unless remedial action is
taken to adjust the exercise price of an Eligible Option before the earlier of
(1) December 31, 2008 or (2) the date on which an Eligible Optionee
exercises an Eligible Option, we believe, on
Q-4
the basis
of our general understanding and interpretation of the applicable guidance and
final regulations, that the option will trigger adverse U.S. federal tax
consequences under Section 409A as indicated below, although it is not entirely
clear at present how that option will actually be taxed under Section
409A.
In the
event of non-compliance, Section 409A likely would subject the optionees to
income recognition before the options are exercised and likely would subject the
optionees to an additional 20% federal tax (plus additional penalties in certain
states, such as California). Although the Section 409A guidance
is not clear on this point, such guidance indicates that in the tax year in
which a discount option vests (to the extent vesting occurs after
December 31, 2004), optionees will be required to recognize income equal to
the difference between the fair market value of the shares and the exercise
price (the “spread”) and will be subject to the 20% federal penalty tax (plus
potential additional state penalties) on the spread, plus interest
charges. In addition, the applicable guidance indicates that during
each subsequent tax year (until the discount option is exercised or expires),
optionees will be subject to additional annual income and penalty taxes, plus
interest charges, on any increase in value of the underlying
stock. Finally, certain states have laws similar to
Section 409A. Consequently, optionees may incur additional
taxes, penalties and interest charges under state law provisions. For
example, California has a provision similar to Section 409A and imposes a
20% tax with regard to discount stock options (in additional to the federal 20%
tax and any federal and state income taxes).
What
are the tax consequences if I accept this Offer?
If you
accept this Offer and tender your Eligible Options for amendment, you will not
recognize any taxable income for U.S. federal income tax purposes at the time of
your acceptance of this Offer and tender of your Eligible Options or at the time
your Eligible Options are amended to adjust the exercise price.
By
amending the exercise prices of your Eligible Options to the applicable Adjusted
Exercise Prices, you should avoid the adverse tax consequences under Section
409A that may apply to your Eligible Options. Accordingly, you will
not be subject to taxation under Section 409A on your vested Amended Options in
the 2008 calendar year. You should only be taxed with respect to your
Amended Options when you exercise those Amended Options or when you sell the
underlying shares. However, you will recognize taxable income when
you receive the Cash Payment paid with respect to your Amended
Options. See page 21 for a discussion of the tax consequences of
accepting this Offer.
If you
are subject to the tax laws of other jurisdictions in addition to the United
States, there may be additional consequences of your participation in this
Offer. We recommend that you consult with your own personal tax,
financial and legal advisors to determine the tax and other consequences of
accepting or declining this Offer.
What
are the tax consequences if I do not accept this Offer?
If you
choose not to accept this Offer to amend your Eligible Options and take no other
action to bring those options into compliance with Section 409A, then you may be
subject to the adverse tax consequences under Section 409A (and similar state
tax laws) in the manner discussed above. You will be solely
responsible for any taxes, penalties or interest you may incur under Section
409A (and similar state tax laws). See page 5 for a discussion of the
potential adverse tax consequences. In addition, if your Eligible
Options are not amended pursuant to this Offer, you will not become eligible to
receive the Cash Payment.
How
will my Cash Payment be taxed?
You will
be immediately taxed upon receipt of the Cash Payment. The Cash
Payment will constitute wages for tax withholding
purposes. Accordingly, EMCORE must withhold all applicable U.S.
federal, state and local income and employment withholding taxes as well as
applicable foreign taxes and payments required to be withheld with respect to
the Cash Payment. See page 21 for a discussion of the tax
consequences of receiving the Cash Payment. You will receive only the
portion of the Cash Payment remaining after those taxes have been
withheld. If your Eligible Options are not amended pursuant to this
Offer, you will not receive any Cash Payment with respect to those Eligible
Options. See page 3 for a discussion of the Cash
Payment.
Q-5
What
securities are subject to this Offer?
This
Offer covers only Eligible Options and does not affect stock options that are
not subject to adverse tax consequences under Section 409A. Your personalized
Letter of Transmittal that we will send you promptly following the commencement
of this Offer will set forth with respect to the Eligible Options you hold the
current exercise price in effect for the Eligible Option, the number of shares
underlying the Eligible Option, the date of grant of the Eligible Option and the
Fair Market Value per share of our common stock on the date of grant of the
Eligible Option. See page 2 for a discussion of Eligible
Options.
Am
I required to participate in this Offer?
No. Participation
in this Offer is voluntary. You may choose either to accept this
Offer and tender your Eligible Options for amendment pursuant to this Offer or
decline this Offer, retain the current exercise prices for those Eligible
Options and either seek another alternative to bring those Eligible Options into
compliance with Section 409A or pay any taxes, penalties or interest that you
may incur under Section 409A. See page 7 for a discussion of Eligible
Options not amended pursuant to this Offer. To tender one or more of your
Eligible Options for amendment pursuant to this Offer, you must properly
complete and sign your Letter of Transmittal and timely deliver your Letter of
Transmittal and any other required documents in the manner set forth in this
Offer to Amend and the related Letter of Transmittal and its
instructions. See page 7 for a discussion of procedures for tendering
Eligible Options.
How
and when do I tender my Eligible Options?
If you
are an Eligible Optionee, then we will send you promptly following the
commencement of this Offer a personalized Letter of Transmittal that contains
the following information with respect to the Eligible Options you
hold:
·
|
the
current exercise price per share in effect for the Eligible
Options;
|
·
|
the
number of shares underlying the Eligible
Options;
|
·
|
the
dates of grant of the Eligible Options;
and
|
·
|
the
Fair Market Value per share of our common stock on the dates of grant of
the Eligible Options.
|
All of
the options set forth in your personalized Letter of Transmittal will be
Eligible Options. To tender one or more of your Eligible Options for
amendment pursuant to this Offer, you must properly complete and sign your
Letter of Transmittal and timely deliver your Letter of Transmittal and any
other required documents to us by facsimile, hand delivery, regular mail,
overnight courier or e-mail as follows:
By
Facsimile:
|
(626) 293-3646
|
By
Hand Delivery, Regular Mail or Overnight Courier:
|
EMCORE
Corporation
10420
Research Road SE
Albuquerque,
NM 87123
Attn:
Keith Kosco
|
By
E-mail:
|
Keith_Kosco@EMCORE.com
|
Delivery
of the Letter of Transmittal and other required documents by any other means is
not permitted.
If you
have any questions regarding your Letter of Transmittal, please contact Keith
Kosco, Chief Legal Officer and Corporate Secretary, at (505) 332-5044
or Keith_Kosco@EMCORE.com.
Q-6
We must
receive your properly completed and signed Letter of Transmittal and other
required documents before 11:59 p.m., Mountain Time, on December 17,
2008. If we extend this Offer beyond that time, we must receive your
properly completed and signed Letter of Transmittal and other required documents
before the extended Expiration Date of this Offer. See page 7 for a
discussion of the procedures for tendering Eligible Options.
We
will not accept delivery of any Letter of Transmittal after the Expiration
Date. If we do not receive a properly completed and signed Letter of
Transmittal from you prior to the Expiration Date, we will not accept your
Eligible Options for amendment. Those Eligible Options will not be
amended pursuant to this Offer, and no Cash Payment will be paid with respect to
those Eligible Options.
We
reserve the right to reject any or all tenders of Eligible Options that we
determine do not comply with the terms and conditions of this Offer, are not in
proper form or are unlawful to accept. Otherwise, we intend to accept
any and all Eligible Options that are properly tendered and not validly
withdrawn before the Expiration Date. Subject to our rights to
extend, terminate or amend this Offer, we currently expect that we will accept
for amendment all properly tendered and not validly withdrawn Eligible Options
upon the expiration of this Offer, and we will amend those options on the
Amendment Date. See page 10 for a discussion of accepting Eligible
Options for amendment.
Do
I have to tender all of my Eligible Options or may I tender one or more selected
Eligible Options?
If you hold more than one Eligible
Option, then you may elect to tender one or more of those Eligible Options and
retain the remaining Eligible Options. If you decide to tender a
particular Eligible Option, you must tender that entire Eligible Option to
increase the exercise price to the Adjusted Exercise Price for all shares
subject to that Eligible Option. We will not accept partial tenders
of any Eligible Options. Please remember that not all of a particular
outstanding option grant may be an Eligible Option. Only the portion
that was unvested as of December 31, 2004 may constitute an Eligible Option. See
page 7 for a discussion of the procedures for tendering Eligible
Options.
Will
the terms and conditions of my Amended Options be the same as those currently in
effect for my Eligible Options?
Except
for the adjustment to the exercise price per share, the Eligible Options that
are amended pursuant to this Offer will continue to remain subject to the same
terms and conditions currently in effect for that Eligible
Option. Accordingly, each Amended Option will continue to remain
outstanding under the Plan, will vest in accordance with the same vesting
schedule measured from the same vesting commencement date and will have the same
exercise period, option term and other conditions currently in effect for that
Eligible Option. See pages 13 and 16 for a discussion of the terms
and conditions of Amended Options.
When
will my Eligible Options be amended?
The
exercise price for the Eligible Options properly tendered and accepted and not
validly withdrawn pursuant to this Offer will be amended to the applicable
Adjusted Exercise Price on the Amendment Date, which is expected to be December
18, 2008, or if this Offer is extended, the first business day following the
extended Expiration Date of this Offer.
As soon
as administratively practicable after the Amendment Date, we will deliver to you
a final and complete Amendment Agreement that will indicate the Adjusted
Exercise Price in effect for each of your Amended Options and our obligation to
pay you the Cash Payment calculated for each Amended Option. See page
3 for a discussion of the amendment of Eligible Options.
When
will I receive my Cash Payment?
The Cash
Payment will be paid (1) on the first regular payroll date after January 1,
2009. Under applicable IRS regulations, the Cash Payment may not be
made in the same year as the Amendment Date. The Cash Payment, when
made, will be subject to all applicable withholding taxes required to be
withheld by EMCORE.
Q-7
We may,
at our discretion, accelerate the payment to any recipient of all or any portion
of the Cash Payment, but in no case will such payment be made prior to January
1, 2009. We do not undertake, and will not be obligated, to treat all
recipients of Cash Payments in the same manner with respect to any discretionary
acceleration of the payment of any portion of any Cash Payment. See
page 3 for a discussion of the Cash Payment.
May
I withdraw my tender of Eligible Options?
You may
withdraw your tendered Eligible Options at any time before the Expiration Date
of this Offer. If we extend this Offer beyond that time, you may
withdraw your tendered Eligible Options at any time until the extended
Expiration Date of this Offer. To validly withdraw your tendered
Eligible Options, you must deliver to us by facsimile, hand delivery, regular
mail, overnight courier or e-mail a properly completed and signed withdrawal
form with the required information while you still have the right to withdraw
your tendered Eligible Options as follows:
By
Facsimile:
|
(626)
293-3646
|
By
Hand Delivery, Regular Mail or Overnight Courier:
|
EMCORE
Corporation
10420
Research Road SE
Albuquerque,
NM 87123
Attn:
Keith Kosco
|
By
E-mail:
|
Keith_Kosco@EMCORE.com
|
Delivery
of the withdrawal form and other required documents by any other means is not
permitted. To obtain a copy of a withdrawal form, please contact
Keith Kosco, Chief Legal Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com.
We must
receive your properly completed and signed withdrawal form and other required
documents before 11:59 p.m., Mountain Time, on December 17, 2008. If
we extend this Offer beyond that time, we must receive your properly completed
and signed withdrawal form and other required documents before the extended
Expiration Date of this Offer. You may not withdraw only a portion of
a tendered Eligible Option. If you choose to withdraw a tendered
Eligible Option, you must withdraw the entire Eligible Option. See
page 9 for a discussion of withdrawal rights.
You may
not rescind any withdrawal, and any tendered Eligible Option you withdraw will
no longer be deemed tendered for amendment pursuant to this
Offer. However, after you have withdrawn an Eligible Option, you may
retender that Eligible Option before the Expiration Date. If EMCORE
extends the Offer beyond the Expiration Date, you may retender your withdrawn
Eligible Option(s) at any time until the extended Expiration Date of this
Offer. You will not be deemed to have made a valid retender of your
withdrawn Eligible Option(s) unless you deliver, prior to the Expiration Date, a
new Letter of Transmittal in accordance with the tender procedures described in
Section 4 below. The new Letter of Transmittal must be signed and
dated after your original Letter of Transmittal and any withdrawal form you have
submitted. Upon the receipt of such a new, properly completed, signed
and dated Letter of Transmittal, any previously submitted Letter of Transmittal
or withdrawal form received by us prior to the Expiration Date will be
disregarded and will be considered replaced in full by the new Letter of
Transmittal. You will be bound by the last properly submitted Letter
of Transmittal or Withdrawal Form received by us prior to the Expiration
Date. See page 9 for a discussion of withdrawal rights.
When
may I exercise my Amended Options?
You may
exercise your Amended Options once vested at any time following the Amendment
Date and prior to the Amended Option’s termination. However, an
Amended Option may not be exercised for more than the vested number of shares
for which it is at the time exercisable. Any such exercise must
comply with the terms of your original stock option award agreement and
Amendment Agreement, our insider trading policies and any blackout
periods during which cashless exercises and sales of our shares are generally
prohibited. See page 13 for a discussion of the terms and conditions
of Amended Options.
Q-8
When
may I exercise the portion of my options that was vested as of December 31,
2004?
You may exercise the portion of each of
your options that was vested as of December 31, 2004 at any time before the
termination or expiration of that option. We believe the portion of
your options that was vested prior to December 31, 2004 will not be subject to
adverse tax consequences under Section 409A.
What
if I exercise my Eligible Options after I accept this Offer but before they are
amended?
If you
choose to exercise your Eligible Options after you accept this Offer but prior
to the Amendment Date, assuming such exercise complies with the existing terms
of your Eligible Options, our insider trading policies and any blackout periods
during which cashless exercises and sales of our shares are generally
prohibited, then any election you have made to accept this Offer as to the
exercised Eligible Options will be null and void. Consequently, you
may be subject to adverse tax consequences under Section 409A (and similar state
tax laws) with respect to any Eligible Options you exercise prior to the
Amendment Date. You will be solely responsible for any taxes,
penalties or interest you may incur under Section 409A (and similar state tax
laws). See page 5 for a discussion of adverse tax
consequences.
Will
my Amended Options be incentive stock options or nonstatutory
options?
Because
your Eligible Options were granted with exercise prices below the Fair Market
Value per share on the respective dates on which those Eligible Options were
granted, they are considered nonstatutory options under the U.S. federal income
tax laws, and they will remain nonstatutory options after the amendment to the
applicable Adjusted Exercise Prices. Therefore, when you subsequently
exercise your Amended Options, you will recognize immediate taxable income equal
to the excess of (1) the fair market value of the purchased shares at the time
of exercise over (2) the Adjusted Exercise Price paid for those shares, and
EMCORE must collect the applicable withholding taxes with respect to such
income. See page 20 for a discussion of material U.S. federal income
tax consequences.
If you
are subject to the tax laws of other jurisdictions in addition to the United
States, there may be additional or different consequences in that jurisdiction
of exercising your Amended Options.
What
are the conditions of this Offer?
This
Offer is subject to a number of conditions, including the conditions described
in Section 7 below. This Offer is not conditioned upon the tender of
a minimum number of Eligible Options for amendment. See page 10
for a discussion of the conditions of this Offer.
When
does this Offer expire? Can this Offer be extended, and if so, how
will I be notified if it is extended?
This
Offer will expire on December 17, 2008, at 11:59 p.m., Mountain Time, unless we
extend this Offer.
Although
we do not currently intend to do so, we may, in our discretion, extend this
Offer at any time. If this Offer is extended, we will send you an
e-mail or other communication informing you of the extension no later than 9:00
a.m., Mountain Time, on the business day immediately following the previously
scheduled expiration of this Offer. See page 4 for a discussion of
the expiration of this Offer and page 21 for a discussion of our rights to
extend, delay, terminate or amend this Offer.
What
does EMCORE’s board of directors think of this Offer?
Although
our board of directors has approved this Offer, neither we nor our board of
directors will make any recommendation as to whether you should tender your
Eligible Options for amendment. You must make your own decision
whether to tender your Eligible Options for amendment, after taking into account
your own personal circumstances and preferences. You should be aware
that adverse tax consequences under Section 409A (and similar state tax laws)
may apply to your Eligible Options if they are not amended pursuant to this
Offer, and you will be solely responsible for any taxes, penalties or interest
you may incur under Section 409A (and similar state tax laws). For
that reason, we recommend that you consult with your personal tax, financial and
legal advisors to determine the consequences of accepting or declining this
Offer. See page 5 for a discussion of these adverse tax
consequences.
Q-9
What
are some of the key dates to remember?
This
Offer will commence on November 19, 2008.
This
Offer will expire at 11:59 pm, Mountain Time, on December 17, 2008 (unless we
extend this Offer).
The
Eligible Options will be amended on December 18, 2008 (unless we extend this
Offer).
The Cash
Payment will be paid on the first regular payroll date after January 1,
2009.
Who
can I talk to if I have questions about this Offer?
For
additional information or assistance, you should contact Keith Kosco, Chief
Legal Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com.
Q-10
CERTAIN
RISKS RELATED TO PARTICIPATING IN THIS OFFER
Participating
in this Offer involves risks discussed in this Offer to Amend. In
addition, information concerning risk factors included in our Annual Report on
Form 10-K for the fiscal year ended September 30, 2007, as
amended, and our most recent Quarterly Reports on Form 10-Q for the
fiscal quarters ended December 31, 2007, March 31, 2008 and June 30, 2008 are
incorporated by reference herein and may be inspected at, and copies may be
obtained from, the places and in the manner described in Section 18
below. You should carefully consider these risks, and are encouraged
to consult your personal tax, financial and legal advisors before deciding to
participate in this Offer.
Tax-Related
Risks
Section 409A Tax
Consequences. As described above and in Section 2 below, based
on the current guidance and final regulations with respect to certain items of
compensation under Section 409A, your Eligible Options may be subject to adverse
tax consequences under Section 409A, unless they are brought into compliance
with Section 409A before December 31, 2008 or, if earlier, the date on which
those options are exercised. We believe that we have complied in good
faith with the current guidance and final regulations under Section 409A in
structuring this Offer in a manner that will provide you with the opportunity to
avoid adverse tax consequences with respect to you Eligible Options under
Section 409A. However, the Internal Revenue Service (“IRS”) may
provide additional relief and guidance with respect to certain Eligible Options
so that those options would not be subject to adverse tax consequences under
Section 409A. There can be no assurance as to the effect of any
future IRS guidance.
State and Local
Taxes. The discussion in Sections 2 and 15 below describes the
material U.S. federal income tax consequences if you participate or do not
participate in this Offer. State and local laws may provide different
tax treatment. In addition, certain states, including California,
have adopted provisions similar to Section 409A. If you are subject
to income taxation in those states, you may incur additional taxes, penalties or
interest under such provisions if you do not bring your Eligible Options into
compliance with Section 409A.
Tax-Related Risks for Multiple
Jurisdictions. If you are subject to the tax laws in more than
one jurisdiction, you should be aware that tax consequences of more than one
jurisdictions may apply to you as a result of your participation in this
Offer. We recommend that you discuss with your personal tax,
financial and legal advisors these consequences.
We
recommend that you consult with your personal tax, financial and legal advisors
to determine the tax and other consequences of participating in this
Offer.
Procedural
Risks
You are
responsible for making sure that your Letter of Transmittal or any withdrawal
form is received by us prior to the Expiration Date. We intend to
confirm the receipt of your Letter of Transmittal or any withdrawal form within
two business days after we receive your Letter of Transmittal. If you
have not received a confirmation within this time period, you should confirm
that we have received your submissions by contacting Keith Kosco, Chief Legal
Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com.
If we do
not have a record of receipt of your submissions, we may request that you show
us evidence of those submissions. We recommend that you keep a copy
of your submissions and proof of delivery, facsimile confirmation or other
transmittal confirmation in case we ask you for evidence of timely
submission. If you do not have evidence of timely submission, we will
not be obligated to change any determinations we may have made regarding your
participation in this Offer.
1
THE OFFER
1.
|
ELIGIBLE
OPTIONEES; ELIGIBLE OPTIONS; AMENDMENT OF ELIGIBLE OPTIONS AND CASH
PAYMENT EXPIRATION DATE; ADDITIONAL
CONSIDERATIONS.
|
EMCORE
Corporation (“EMCORE ,”
the “Company,”
“us”
or “we”) is
making the offer set forth in this Offer to Amend Eligible Options (this “Offer to
Amend” and, together with the related Letter of Transmittal and Stock
Option Amendment and Cash Payment Agreement (the “Amendment
Agreement”), as each may be amended or supplemented from time to time,
this “Offer”) to
certain individuals holding eligible outstanding stock options to purchase our
common stock previously granted to those individuals under the EMCORE
Corporation 2004 Stock Incentive Plan (as amended and restated, the “Plan”) to
amend those options. Some of the options currently outstanding under
the Plan were unvested as of December 31, 2004. In order to determine
for purposes of this Offer which options that you hold were vested on December
31, 2004, and are therefore not Eligible Options, it has been assumed that any
options which you exercised were the first options to vest among the options
that you hold.
Through
its voluntary inquiry into its historical practices with respect to the granting
of stock options, the Company determined that an incorrect grant date was used
in granting certain options. As a result the Eligible Options were
granted at an exercise price below the fair market value of the Company’s common
stock on the most appropriate measurement date for the Eligible
Options. Because of this, there is a risk to the holder that, for tax
purposes, the exercise price per share may be considered to be less than the
fair market value per share of our common stock on the date of
grant. Unless remedial action is taken to adjust the exercise price
of an Eligible Option before the earlier of (1) December 31, 2008 or (2) the
date on which an Eligible Optionee (as defined below) exercises an Eligible
Option, that Eligible Option may be subject to adverse tax consequences under
Section 409A (“Section
409A”) of the Internal Revenue Code of 1986, as amended (the “Code”). Eligible
Optionees may be able to avoid such adverse tax consequences only if certain
changes are made to the Eligible Options. Accordingly, EMCORE is
making this Offer so that the Eligible Optionees holding one or more Eligible
Options will have the opportunity to amend those Eligible Options to the extent
necessary to avoid such adverse tax consequences. The adverse tax
consequences of Section 409A do not apply to options that vested on or prior to
December 31, 2004 or that were granted with an exercise price at or above the
fair market value per share of our common stock on the date of
grant
Eligible
Options
An
outstanding option to purchase shares of our common stock will be eligible for
amendment pursuant to this Offer if it meets all of the following
conditions:
·
|
the
option was granted under the Plan;
|
·
|
the
exercise price per share currently in effect for the option is less than
the closing sale price per share of our common stock on the date that has
been determined to be the correct date of grant of the option, accordance
with the terms of the Plan (in such circumstances, there is a risk to the
holder that, for tax purposes, the exercise price per share may be
considered to be less than the fair market value per share on the date of
grant);
|
·
|
the
option is held by an individual who is, on the date of this Offer to Amend
and the Expiration Date (as defined below) of this Offer, a current
employee of EMCORE and subject to income taxation in the United States
with respect to that option (an “Eligible
Optionee”);
|
·
|
the
option was unvested as of December 31, 2004 (if only a portion of an
option was unvested as of December 31, 2004, the unvested portion of the
option may be eligible for amendment);
and
|
·
|
the
option is outstanding on the Expiration Date (as defined below) of this
Offer.
|
n option that satisfies all of the
foregoing conditions is designated an “Eligible
Option” for purposes of this Offer. If only a portion of an
option is an Eligible Option (the portion that was unvested as of December 31,
2004), then only that portion will be amended pursuant to this
Offer. The balance of such option will not be subject to this Offer
and will not be an Eligible Option. That portion (the portion that
was vested as of December 31, 2004) will
2
retain
its current exercise price and we believe it will not be subject to adverse tax
consequences under Section 409A (as defined below).
The
following chart provides information concerning the dates of grant for the
Eligible Options subject to this Offer and the exercise price per share
currently in effect for those Eligible Options. Your personalized
Letter of Transmittal that we will send you promptly following the commencement
of this Offer will set forth with respect to the Eligible Options you hold the
current exercise price per share in effect for the Eligible Options, the number
of shares underlying the Eligible Options, the date of grant of the Eligible
Options and the Fair Market Value (as defined below) per share of our common
stock on the date of grant of the Eligible Options. All of the
options set forth in your personalized Letter of Transmittal will be Eligible
Options.
Date
of Grant
|
Current
Exercise Price
Per
Share
|
Fair
Market Value on Date of Grant
|
Number
of Options Granted
|
Number
of
Eligible
Options Outstanding and Exercisable as of
October
31, 2008
|
April
26, 2002
|
$8.21
|
$8.86
|
971,800
|
3,725
|
May
18, 2004
|
$2.63
|
$2.89
|
984,500
|
160,363
|
Eligible
Optionees
Individuals
to whom Eligible Options have been granted by us will be Eligible Optionees for
purposes of this Offer if they are, on the date of this Offer to Amend and the
Expiration Date of this Offer, a current employee of EMCORE and subject to
income taxation in the United States with respect to those Eligible Options.
EMCORE ’s executive officers and directors will not participate in this Offer,
although it is expected that following this Offer two of our current executive
officers, who were not Section 16(b) officers at the time they were granted
options that would otherwise constitute Eligible Options, will be given an
opportunity to amend the exercise price of those options on terms no more
favorable than those made available to all other Eligible Optionees in this
Offer.
Amendment
of Eligible Options and Cash Payment
Subject
to the terms and conditions of this Offer, we will amend the Eligible Options
that are properly tendered by an Eligible Optionee in accordance with Section 4
below, and not validly withdrawn in accordance with Section 5 below, before the
Expiration Date. If an Eligible Option is properly tendered and
accepted and not validly withdrawn pursuant to this Offer, the amendment will
increase the exercise price per share currently in effect for the Eligible
Option to the Fair Market Value per share of our common stock on the date of
grant of the Eligible Option. The new exercise price per share will
be designated the “Adjusted Exercise
Price” and will become effective on the first business day following the
expiration of this Offer, which we expect to be December 18, 2008 (the “Amendment
Date”). The Eligible Option as so amended with the Adjusted
Exercise Price will be designated an “Amended
Option.” The “Fair Market
Value” per share of our common stock on any date means the closing
selling price per share of our common stock on that date on The NASDAQ Global
Market.
Except
for the adjustment to the exercise price per share, the Eligible Options that
are amended pursuant to this Offer will continue to remain subject to the same
terms and conditions currently in effect for that Eligible
Option. Accordingly, each Amended Option will continue to remain
outstanding under the Plan, will vest in accordance with the same vesting
schedule measured from the same vesting commencement date and will have the same
exercise period, option term and other conditions currently in effect for that
Eligible Option. The Eligible Optionees whose Eligible Options are
amended to increase the exercise price pursuant to this Offer will become
entitled to receive from us a special cash payment (the “Cash
Payment”) with respect to those Eligible Options. The amount
of the Cash Payment payable with respect to the Eligible Options that are
amended to increase the exercise price to the Adjusted Exercise Price will be
determined by multiplying (1) the amount by which the Adjusted Exercise
Price exceeds the exercise price per share currently in effect for that Eligible
Option by (2) the number of shares of our common stock purchasable under
that Eligible Option at the Adjusted Exercise Price. The Cash Payment will be
paid on the first regular payroll date after January 1, 2009. Under
applicable IRS regulations,
3
the Cash
Payment may not be made in the same year as the Amendment Date. The
Cash Payment, when made, will be subject to all applicable withholding taxes
required to be withheld by EMCORE.
Example. Assume
that you were granted an option to purchase 2,500 shares of our common stock
with a date of grant of May 18, 2004, and an exercise price per share
of $2.63. That option has not been exercised. Further
assume that the Fair Market Value per share of our common stock was $2.89 per
share on the date of grant for that option. That option constitutes
an Eligible Option for purposes of this Offer.
If you
accept this Offer to amend that Eligible Option, then that Eligible Option will
be amended to increase the exercise price to $2.89 per share for the 2,500
shares subject to that option. No other change will be made to that
option. In addition, you will receive a Cash Payment, prior to
applicable withholding taxes, in the amount of $650.00 determined by multiplying
(1) $0.26 (the amount by which the $2.89 Adjusted Exercise Price for that option
exceeds the $2.63 per share exercise price previously in effect for that option)
by (2) the 2,500 shares issuable upon exercise of the option at the $2.89 per
share Adjusted Exercise Price.
Your Cash
Payment will be paid on the first regular payroll date after January 1, 2009,
subject to all applicable withholding taxes.
Former
Employees
If you
are not an employee of EMCORE on the Expiration Date of this Offer then you will
not be eligible to participate in this Offer, none of your tendered
Eligible Options will be amended and you will not be entitled to any Cash
Payment with respect to those Eligible Options pursuant to this
Offer. The tendered Eligible Options will be returned to you and will
remain exercisable in accordance with the terms in effect for them at the time
of tender, including the current exercise price per share. We
recommend that you discuss with your personal tax advisor the tax consequences
to you arising under Section 409A as a result of your ownership of Eligible
Options. You will be solely responsible for any taxes, penalties or
interest you may incur under Section 409A (and similar state tax
laws).
Expiration
Date
The term
“Expiration
Date” means 11:59 p.m., Mountain Time, on December 17, 2008, unless we
decide to extend the period of time during which this Offer will remain open, in
which event the term “Expiration
Date” will refer to the latest time and date at which this Offer, as so
extended, expires. See Section 16 below for a discussion of our
rights to extend, delay, terminate or amend this Offer, and Section 7 below for
a discussion of the conditions to this Offer.
Additional
Considerations
In
deciding whether to accept this Offer to amend your Eligible Options pursuant to
this Offer, you should know that EMCORE continually evaluates and explores
strategic opportunities as they arise, including business combination
transactions, strategic partnerships, capital infusions and the purchase or sale
of assets. At any given time, we may be engaged in discussions or
negotiations with respect to various corporate transactions. We also
grant options in the ordinary course of business to our current and new
employees, including our executive officers and directors. Our
employees, including our executive officers and directors, from time to time
acquire or dispose of our securities. Subject to the foregoing, and
except as otherwise disclosed in this Offer or in our filings with the
Securities and Exchange Commission (“SEC”), we
presently have no plans or proposals that relate to or would result
in:
·
|
any
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving us or any of our
subsidiaries;
|
·
|
any
purchase, sale or transfer of a material amount of our assets or the
assets of any of our subsidiaries;
|
·
|
any
material change in our present dividend policy or our indebtedness or
capitalization;
|
4
·
|
any
change in our present board of directors or executive management team,
including any plans to change the number or term of our directors or to
fill any existing board vacancies or to change the material terms of any
executive officer’s employment;
|
·
|
any
other material change in our corporate structure or
business;
|
·
|
our
common stock not being authorized for quotation in an automated quotation
system operated by a national securities
association;
|
·
|
our
common stock becoming eligible for termination of registration pursuant to
Section 12(g)(4) of the Securities Exchange Act of 1934 (the “Exchange
Act”);
|
·
|
the
suspension of our obligation to file reports with the SEC pursuant to
Section 15(d) of the Exchange Act;
|
·
|
the
acquisition by any person of any of our securities or the disposition of
any of our securities, other than in the ordinary course or pursuant to
existing options or other rights;
or
|
·
|
any
change in our certificate of incorporation or bylaws, or any actions that
may impede the acquisition of control of us by any
person.
|
Provided,
however, that we are currently in discussions with prospective investors which
could result in the purchase of a significant portion fo the Company's stock
outside of the ordinary course of business; however, no terms have been agreed
upon and no legally binding documentation has been entered into with respect to
this prospective sale
2.
|
PURPOSE
OF THIS OFFER.
|
Through
its voluntary inquiry into its historical practices with respect to the granting
of stock options, the Company determined that an incorrect grant date was used
in granting certain options. As a result, the Eligible Options were
granted at an exercise price below the fair market value of the Company’s common
stock on the most appropriate measurement date for the Eligible
Options. Because of this, there is a risk to the holder that, for tax
purposes, the exercise price per share may be considered to be less than the
fair market value per share of our common stock on the date of
grant. Unless remedial action is taken to adjust the exercise price
of an Eligible Option before the earlier of (1) December 31, 2008 or (2) the
date on which an Eligible Optionee exercises an Eligible Option, that Eligible
Option may be subject to these adverse tax consequences under Section
409A. Eligible Optionees may be able to avoid such adverse tax
consequences only if certain changes are made to the Eligible
Options. Accordingly, EMCORE is making this Offer so that the
Eligible Optionees holding one or more Eligible Options will have the
opportunity to amend those Eligible Options to the extent necessary to avoid
such adverse tax consequences. The adverse tax consequences of
Section 409A do not apply to options that vested on or prior to December 31,
2004 or that were granted with an exercise price at or above the fair market
value per share of our common stock on the date of grant. Some of the options
currently outstanding under the Plan were unvested as of December 31,
2004. In order to determine for purposes of this Offer which options
that you hold were vested on December 31, 2004, and are therefore not Eligible
Options, it has been assumed that any options which you exercised were the first
options to vest among the options that you hold.
In the
event of non-compliance, Section 409A likely would subject the optionees to
income recognition before the options are exercised and likely would subject the
optionees to an additional 20% federal tax (plus additional penalties in certain
states, such as California). Although the Section 409A guidance
is not clear on this point, such guidance indicates that in the tax year in
which a discount option vests (to the extent vesting occurs after
December 31, 2004), optionees will be required to recognize income equal to
the difference between the fair market value of the shares and the exercise
price (the “spread”) and will be subject to the 20% federal penalty tax (plus
potential additional state penalties) on the spread, plus interest
charges. In addition, the applicable guidance indicates that during
each subsequent tax year (until the discount option is exercised or expires),
optionees will be subject to additional annual income and penalty taxes, plus
interest charges, on any increase in value of the underlying
stock. Finally, certain states have laws similar to
Section 409A. Consequently, optionees may incur additional
taxes, penalties and interest charges under state law provisions. For
example, California has a provision
5
similar
to Section 409A and imposes a 20% tax with regard to discount stock options
(in additional to the federal 20% tax and any federal and state income
taxes).
Pursuant
to the transitional relief that the Treasury Department provided under Section
409A, if you exercised the portion of your stock options that vested in the 2005
calendar year before the end of that year, you would have avoided any 20%
penalty tax (and likely California 20% penalty tax, if applicable) under Section
409A with respect to that portion. To avoid any adverse tax
consequences under Section 409A with respect to that portion of your options
that vested after December 31, 2004 (but were not exercised in 2005), you must
take remedial action to bring that portion of your options (the “409A
Portion”) into compliance with the requirements of Section
409A. EMCORE is now offering you the opportunity to bring the 409A
Portion of your Eligible Options into compliance with Section 409A as
follows:
The 409A
Portion of each of your Eligible Options would be amended to increase the
exercise price to the Adjusted Exercise Price determined for that
portion. Such an amendment to the exercise price would bring the 409A
Portion of each option into compliance with Section 409A, and you could exercise
that 409A-compliant portion as you choose, subject only to the existing exercise
provisions and option term in effect for each such option.
Accordingly,
pursuant to this Offer, you may tender each of your Eligible Options to EMCORE
for amendment. The exercise price per share for each Amended Option
will be increased to the Adjusted Exercise Price determined for that option, and
that Amended Option would not be subject to adverse tax.
If you
are subject to the tax laws in more than one jurisdiction, you should be aware
that tax consequences of more than one jurisdiction may apply to you as a result
of your participation in this Offer. We recommend that you discuss
with your personal tax advisor these tax consequences.
Neither we nor our board of directors
will make any recommendation as to whether you should tender your Eligible
Options for amendment, nor have we authorized any person to make any such
recommendation. You must make your own decision whether to tender
your Eligible Options, after taking into account your own personal circumstances
and preferences. You should be aware that adverse tax consequences
under Section 409A (and similar state tax laws) may apply to your Eligible
Options if they are not amended pursuant to this Offer, and you will be solely
responsible for any taxes, interest or penalties you may incur under Section
409A (and similar state tax laws). You are urged to evaluate
carefully all of the information in this Offer, and we recommend that you
consult with your personal tax, financial and legal advisors to determine the
tax and other consequences of accepting or declining this
Offer.
3.
|
STATUS
OF ELIGIBLE OPTIONS NOT AMENDED.
|
If you
choose not to accept this Offer to amend your Eligible Options, those options
will continue to remain outstanding in accordance with their existing terms,
including the below-market exercise price component that violates Section
409A. Accordingly, if you take no other action to bring those options
into compliance with Section 409A, then you may be subject to the adverse tax
consequences described in Section 2 above. You will be
solely responsible for any taxes, penalties or interest you may incur under
Section 409A (and similar state tax laws).
4.
|
PROCEDURES
FOR TENDERING ELIGIBLE OPTIONS.
|
Proper
Tender of Options
If you
are an Eligible Optionee, then we will send you promptly following the
commencement of this Offer a personalized Letter of Transmittal that contains
the following information with respect to the Eligible Options you
hold:
·
|
the
current exercise price per share in effect for the Eligible
Options;
|
·
|
the
number of shares underlying the Eligible
Options;
|
·
|
the
dates of grant of the Eligible Options;
and
|
6
·
|
the
Fair Market Value per share of our common stock on the dates of grant of
the Eligible Options.
|
All of
the options set forth in your personalized Letter of Transmittal will be
Eligible Options. To tender one or more of your Eligible Options for
amendment pursuant to this Offer, you must properly complete and sign your
Letter of Transmittal and timely deliver your Letter of Transmittal and any
other required documents to us by facsimile, hand delivery, regular mail,
overnight courier or e-mail as follows:
By
Facsimile:
|
(626) 293-3646
|
By
Hand Delivery, Regular Mail or Overnight Courier:
|
EMCORE
Corporation
10420
Research Road SE
Albuquerque,
NM 87123
Attn:
Keith Kosco
|
By
E-mail:
|
Keith_Kosco@EMCORE.com
|
Delivery
of the Letter of Transmittal and other required documents by any other means is
not permitted.
If you
have any questions regarding your personalized Letter of Transmittal, please
contact contacting Keith Kosco, Chief Legal Officer and Corporate Secretary, at
(505) 332-5044 or Keith_Kosco@EMCORE.com.
We must
receive your properly completed and signed Letter of Transmittal and other
required documents before 11:59 p.m., Mountain Time, on December 17,
2008. If we extend this Offer beyond that time, we must receive your
properly completed and signed Letter of Transmittal and other required documents
before the extended Expiration Date of this Offer.
We
will not accept delivery of any Letter of Transmittal after the Expiration
Date. If we do not receive a properly completed and signed Letter of
Transmittal from you prior to the Expiration Date, we will not accept your
Eligible Options for amendment. Those Eligible Options will not be
amended pursuant to this Offer and no Cash Payment will be paid with respect to
those Eligible Options.
The
method of delivery of all documents, including the Letter of Transmittal and any
other required documents, is at the election and risk of the tendering Eligible
Optionee. We recommend that you keep a copy of your Letter of
Transmittal. In all cases, you should allow sufficient time to ensure
timely delivery.
Except in
accordance with the next sentence, the Letter of Transmittal must be executed by
the Eligible Option holder. If the signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation or
any other person acting in a fiduciary or representative capacity, the signer’s
full title and proper evidence satisfactory to EMCORE of the authority of that
person to act in that capacity must be indicated on the Letter of
Transmittal.
You may
not tender only a portion of an Eligible Option, and we will not accept such a
partial tender. Accordingly, if you decide to tender a particular
Eligible Option, you must tender that entire Eligible Option to increase the
exercise price to the Adjusted Exercise Price for all shares subject to that
Eligible Option. Please remember that not all of a particular
outstanding option grant may be an Eligible Option. Only the portion
that was unvested as of December 31, 2004 may constitute an Eligible
Option. If you hold more than one Eligible Option, then you may elect
to tender one or more of those Eligible Options and retain the remaining
Eligible Options.
If
your Letter of Transmittal includes only a portion of an outstanding Eligible
Option, then we will not accept the tendered Eligible Option or portion for
amendment, but we do intend to accept for amendment each properly tendered and
not validly withdrawn Eligible Option set forth in the Letter of
Transmittal.
If you
choose to exercise your Eligible Options after you accept this Offer but prior
to the Amendment Date, assuming such exercise complies with the existing terms
of your Eligible Options, our insider trading policies and any blackout periods
during which cashless exercises and sales of our shares are generally
prohibited, then any election you have made to accept this Offer as to the
exercised Eligible Options will be null and void. Consequently, you
may be subject to adverse tax consequences under Section 409A (and similar state
tax laws) with
7
respect
to any Eligible Options you exercise prior to the Amendment Date. You
will be solely responsible for any taxes, penalties or interest you may incur
under Section 409A (and similar state tax laws).
Determination of Validity; Rejection
of Tenders; Waiver of Defects; No Obligation to Give Notice of
Defects.
We will
determine, in our sole discretion, all questions as to the form of documents and
the validity, form and eligibility (including time of receipt) of tenders of
Eligible Options pursuant to this Offer. We will also decide, in our
sole discretion, all questions as to (1) the Adjusted Exercise Price to be
in effect under each Amended Option, (2) the number of shares of our common
stock purchasable under the Amended Option at the Adjusted Exercise Price
and (3) the amount
of the Cash Payment payable with respect to each Amended Option. We
reserve the right to reject any or all tenders of Eligible Options that we
determine do not comply with the terms and conditions of this Offer, are not in
proper form or are unlawful to accept. Otherwise, we intend to accept
and amend all Eligible Options that are properly tendered and not validly
withdrawn before the Expiration Date. We also reserve the right to
waive any of the conditions of this Offer or any defect or irregularity in any
tender of Eligible Options with respect to any particular Eligible Option or any
particular Eligible Optionee. No tender of Eligible Options will be
deemed to have been properly made until all defects or irregularities have been
cured by the tendering Eligible Optionee or waived by us. Neither we
nor any other person is obligated to give notice of any defects or
irregularities in any Letter of Transmittal submitted to us, nor will anyone
incur any liability for failure to give any such notice.
Our
Acceptance Constitutes an Agreement
Your
tender of an Eligible Option for amendment pursuant to the procedures described
above constitutes your acceptance of the terms and conditions of this
Offer. Subject to our rights to extend, delay, terminate or amend
this Offer, we currently expect that we will, promptly upon the expiration of
this Offer, accept for amendment all properly and timely submitted acceptances
of this Offer to amend Eligible Options that have not been validly withdrawn,
and on the Amendment Date we will increase the exercise price per share of those
options to the Adjusted Exercise Price determined for each option.
Our
acceptance of your tender of an Eligible Option for amendment pursuant to the
Offer will constitute a binding agreement between us and you upon the terms and
subject to the conditions of this Offer. Accordingly, as soon as
administratively practicable after the Amendment Date, we will deliver to you a
final and complete Amendment Agreement that will indicate the Adjusted Exercise
Price in effect for each of your Amended Options and our obligation to pay you
the Cash Payment calculated for each Amended Option.
5.
|
WITHDRAWAL
RIGHTS.
|
You may
withdraw your tendered Eligible Options at any time before the Expiration Date
of this Offer. If we extend this Offer beyond that time, you may
withdraw your tendered Eligible Options at any time until the extended
Expiration Date of this Offer. In addition, unless we accept and
amend your Eligible Options before 12:00 midnight, Mountain Time, on January 16,
2009 (the 40th
business day after the commencement date of this Offer), you may withdraw your
tendered Eligible Options at any time prior to our acceptance of such Eligible
Options for amendment.
To
validly withdraw your tendered Eligible Options, you must deliver to us by
facsimile, hand delivery, regular mail, overnight courier or e-mail a properly
completed and signed withdrawal form with the required information while you
still have the right to withdraw your tendered Eligible Options as
follows:
By
Facsimile:
|
(626) 293-3646
|
By
Hand Delivery, Regular Mail or Overnight Courier:
|
EMCORE
Corporation
10420
Research Road SE
Albuquerque,
NM 87123
Attn:
Keith Kosco
|
By
E-mail:
|
Keith_Kosco@EMCORE.com
|
8
Delivery
of the withdrawal form and other required documents by any other means is not
permitted. To obtain a copy of a withdrawal form, please contact
Keith Kosco, Chief Legal Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com .
We must
receive your properly completed and signed withdrawal form and other required
documents before 11:59 p.m., Mountain Time, on December 17,
2008. If we extend this Offer beyond that time, we must receive your
properly completed and signed withdrawal form and other required documents
before the extended Expiration Date of this Offer.
You
may not withdraw only a portion of a tendered Eligible Option. If you
choose to withdraw a tendered Eligible Option, you must withdraw the entire
Eligible Option.
You may
not rescind any withdrawal, and any tendered Eligible Option you withdraw will
no longer be deemed tendered for amendment pursuant to this
Offer. However, after you have withdrawn an Eligible Option, you may
retender that Eligible Option before the Expiration Date. If EMCORE
extends the Offer beyond the Expiration Date, you may retender your withdrawn
Eligible Option(s) at any time until the extended Expiration Date of this
Offer. You will not be deemed to have made a valid retender of your
withdrawn Eligible Option(s) unless you deliver, prior to the Expiration Date, a
new Letter of Transmittal in accordance with the tender procedures described in
Section 4 above. The new Letter of Transmittal must be signed and
dated after your original Letter of Transmittal and any withdrawal form you have
submitted. Upon the receipt of such a new, properly completed, signed
and dated Letter of Transmittal, any previously submitted Letter of Transmittal
or withdrawal form received by us prior to the Expiration Date will be
disregarded and will be considered replaced in full by the new Letter of
Transmittal. You will be bound by the last properly submitted Letter
of Transmittal or withdrawal form received by us prior to the Expiration
Date.
Neither
we nor any other person is obligated to give notice of any defects or
irregularities in any withdrawal form submitted to us, nor will anyone incur any
liability for failure to give any such notice. We will determine, in
our discretion, all questions as to the form and validity, including time of
receipt, of withdrawal forms. Our determination as to these matters
will be final and binding on all parties.
6.
|
ACCEPTANCE
OF ELIGIBLE OPTIONS FOR AMENDMENT AND COMMITMENT TO MAKE CASH PAYMENT.
|
Subject to the terms and conditions of
this Offer, we will, upon the Expiration Date, accept for amendment all Eligible
Options that have been properly tendered and not validly withdrawn before the
Expiration Date. For each Amended Option, we will increase the
exercise price per share to the applicable Adjusted Exercise Price on the
Amendment Date, which we expect to be December 18, 2008. If we extend
the Expiration Date, then the accepted Eligible Option will be amended on the
first business day following the extended Expiration Date.
We will
provide written or electronic notice of our acceptance to the Eligible Optionees
whose tendered Eligible Options we have accepted for amendment. Such
notice may be by e-mail, press release or other means. In addition,
as soon as administratively practicable after the Amendment Date, we will
deliver a final and complete Amendment Agreement to the Eligible Optionees whose
Eligible Options have been amended pursuant to this Offer. The
Amendment Agreement will indicate the Adjusted Exercise Prices in effect for
your Amended Options. In addition, the Amendment Agreement will
indicate our obligation to pay such Eligible Optionee the applicable Cash
Payment on the first regular payroll date after January 1, 2009, and the amount
of the Cash Payment for each of his or her Amended Options.
If you
are not an employee of EMCORE on the Expiration Date of this Offer, then you
will not be eligible to participate in this Offer, none of your
tendered Eligible Options will be amended and you will not be entitled to any
Cash Payment with respect to those Eligible Options. The tendered
Eligible Options will be returned to you and will remain exercisable in
accordance with the terms in effect for them at the time of tender, including
the current exercise price per share. If you take no other action to
bring those options into compliance with Section 409A, then you may be subject
to adverse tax consequences as described below. We recommend that you
discuss with your personal tax advisor the tax consequences to you arising under
Section 409A as a result of your ownership of
9
Eligible
Options. You will be solely responsible for any taxes, penalties or
interest you may incur under Section 409A (and similar state tax
laws).
7.
|
CONDITIONS
OF THIS OFFER.
|
We will
not accept any tendered Eligible Options for amendment, and we may terminate or
amend this Offer or postpone our acceptance and amendment, in each case, subject
to Rule 13e-4(f)(5) under the Exchange Act, if at any time on or after November
19, 2008, and prior to the Expiration Date, any of the following events has
occurred or has been reasonably determined by us to have occurred and, in our
reasonable judgment in any such case and regardless of the circumstances giving
rise to these events (including any action or omission by us), the occurrence of
such event or events makes it inadvisable for us to proceed with this Offer or
with our acceptance of any acceptances of this Offer to amend Eligible
Options:
(1)
|
there
shall have been threatened or instituted or be pending any action or
proceeding by any government or governmental, regulatory or administrative
agency, authority or tribunal or by any other person, domestic or foreign,
before any court, authority, agency or tribunal that directly or
indirectly challenges the making of this Offer, the amendment of the
existing exercise price in effect for some or all of the Eligible Options
for which acceptances of this Offer have been submitted, the payment of
the Cash Payment or otherwise relates in any manner to this Offer or that,
in our reasonable judgment, could materially and adversely affect our
business, financial condition, operating results, operations or prospects,
or otherwise materially impair in any way the contemplated future conduct
of our business or the business of any of our subsidiaries or materially
impair the contemplated benefits of this Offer to
us;
|
(2)
|
there
shall have been any action threatened, pending or taken, or approval
withheld, or any statute, rule, regulation, judgment, order or injunction
threatened, proposed, sought, promulgated, enacted, entered, amended,
enforced or deemed to be applicable to this Offer or us or any of our
subsidiaries, by any court or any authority, agency or tribunal that, in
our reasonable judgment, would:
|
·
|
make
the amendment of the exercise price of Eligible Options that have been
tendered or payment of the Cash Payments illegal or otherwise restrict or
prohibit consummation of this Offer or otherwise relates in any manner to
this Offer;
|
·
|
delay
or restrict our ability, or render us unable, to accept for amendment some
or all of the Eligible Options;
|
·
|
materially
impair the benefits that we hope to convey as a result of this Offer,
which we believe would occur as a result of further changes to Section
409A, the regulations thereunder or other tax laws that would affect this
Offer or the Eligible Options; or
|
·
|
materially
and adversely affect our business, financial condition, operating results,
operations or prospects or otherwise materially impair in any way the
contemplated future conduct of our business or the business of any of our
subsidiaries;
|
(3)
|
there
shall have occurred:
|
·
|
any
general suspension of trading in, or limitation on prices for, securities
on any national securities exchange or in the over-the-counter
market;
|
·
|
any
general suspension of our ability to issue equity under the Plan or
pursuant to the registration statement on Form S-8 registering shares of
our common stock for issuance under the
Plan;
|
·
|
any
significant change in the market price of the shares of our common stock
or any change in the general political, market, economic or financial
conditions in the United States or abroad that could, in our reasonable
judgment, have a material adverse effect on our business, financial
condition, operating results, operations or prospects or on the trading in
our common stock, or that, in our reasonable judgment, makes it
inadvisable to proceed with this
Offer;
|
10
·
|
in
the case of any of the foregoing existing at the time of the commencement
of this Offer, a material acceleration or worsening thereof;
or
|
·
|
any
decline in either the Dow Jones Industrial Average, The NASDAQ Stock
Market or the Standard and Poor’s Index of 500 Companies by an amount in
excess of 10% measured during any time period after the close of business
on November 19, 2008;
|
(4)
|
there
shall have occurred any change in generally accepted accounting principles
or the application or interpretation thereof that could or would require
us for financial reporting purposes to record compensation expenses
against our operating results in connection with this Offer that would be
in excess of any compensation expenses that we would be required to record
under generally accepted accounting principles in effect at the time we
commence this Offer;
|
(5)
|
a
tender or exchange offer with respect to some or all of our outstanding
common stock, or a merger or acquisition proposal for us, shall have been
proposed, announced or made by another person or entity or shall have been
publicly disclosed, or we shall have learned
that:
|
·
|
any
person, entity or “group,” within the meaning of Section 13(d)(3) of the
Exchange Act, has acquired or proposed to acquire beneficial ownership of
more than 5% of the outstanding shares of our common stock, or any new
group has been formed that beneficially owns more than 5% of the
outstanding shares of our common stock, other than any such person, entity
or group that has filed a Schedule 13D or Schedule 13G with the SEC before
November 19, 2008; or
|
·
|
any
person, entity or group has filed a Notification and Report Form under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 or made a public
announcement reflecting an intent to acquire us or any of our subsidiaries
or any of the assets or securities of us or any of our
subsidiaries;
|
(6)
|
any
change or changes have occurred in our business, financial condition,
assets, operating results, operations, prospects or stock ownership or
that of our subsidiaries as a result of unforeseen, extraordinary events
beyond our control that, in our reasonable judgment, is or may be material
to us or our subsidiaries or otherwise makes it inadvisable for us to
proceed with this Offer; or
|
(7)
|
any
rules, regulations or actions by any governmental authority, The NASDAQ
Global Market, or other regulatory or administrative authority of any
national securities exchange have been enacted, enforced or deemed
applicable to us that makes it inadvisable for us to proceed with this
Offer.
|
The
conditions to this Offer are for our benefit. We may assert them in
our discretion regardless of the circumstances giving rise to them prior to the
Expiration Date. We may waive them, in whole or in part, at any time
and from time to time prior to the Expiration Date, in our discretion, whether
or not we waive any other condition to this Offer. The waiver of any
of these rights with respect to particular facts and circumstances will not be
deemed a waiver with respect to any other facts and
circumstances. Our failure at any time to exercise any of these
rights will not be deemed a waiver of such rights, but will be deemed a waiver
of our ability to assert the condition that was triggered with respect to the
particular circumstances under which we failed to exercise our
rights. Any waiver of a material condition of this Offer would
require that at least five business days remain in this Offer following the date
we announce the waiver. Any determination we make concerning the
events described in this Section 7 will be final and binding upon all
persons.
8.
|
PRICE
RANGE OF COMMON STOCK UNDERLYING THE
OPTIONS.
|
There is
no established trading market for the Eligible Options or any other options
granted under the Plan.Our common stock is quoted on The NASDAQ Global Market
under the symbol “EMKR.” The following table shows, for the periods
indicated, the high and low sales prices per share of our common stock on The
NASDAQ Global Market.
11
Price
range per share of the Company’s common stock
|
||||
First Quarter
|
Second Quarter
|
Third Quarter
|
Fourth Quarter
|
|
Fiscal
2007
|
$4.60
– $ 6.47
|
$3.84
– $ 5.89
|
$4.32
– $5.78
|
$5.45
– $9.91
|
Fiscal
2008
|
$7.22
– $15.90
|
$5.65
– $15.70
|
$5.80
– $9.30
|
$3.30
– $6.65
|
Fiscal
2009 (through November 18, 2008)
|
$1.28
– $ 5.50
|
On
November 18, 2008, the last closing sale price reported on The NASDAQ Global
Market for our common stock was $1.33 per share.
The price
of our common stock has been, and in the future may be, volatile and could
decline. The trading price of our common stock has fluctuated in the
past and is expected to continue to do so in the future, as a result of a number
of factors, many of which are outside our control. In addition, the
stock market has experienced extreme price and volume fluctuations that have
affected the market prices of many companies, and that have often been unrelated
or disproportionate to the operating performance of these
companies.
9.
|
SOURCE
AND AMOUNT OF CONSIDERATION; TERMS OF AMENDED
OPTIONS.
|
Consideration
If we
accept your tender of Eligible Options for amendment, those options will be
amended to increase the exercise price to the Adjusted Exercise Price determined
for each such Eligible Option. Except for such Adjusted Exercise
Price, all the terms and provisions in effect for the Eligible Option at the
time of tender will continue in effect after the Amendment
Date. Accordingly, each Amended Option will vest in accordance with
the same vesting schedule measured from the same vesting commencement date and
will have the same exercise period, option term and other conditions currently
in effect for that Eligible Option.
If you
accept this Offer, then with respect to each of your Eligible Options that are
amended to increase the exercise price per share to the Adjusted Exercise Price
determined for that option, you will be eligible to receive the Cash
Payment. The Cash Payment will be paid from our general funds on the
first regular payroll date after January 1, 2009.
If all
Eligible Optionees accept this Offer to amend all Eligible Options pursuant to
this Offer, then the resulting Amended Options will cover approximately 164,088
shares of our common stock, which represents approximately 2.5% of the total
number of shares of our common stock outstanding as of October 31, 2008, and the
Cash Payments payable pursuant to this Offer will be in the total maximum dollar
amount of approximately $44,000.
Terms
and Conditions of Amended Options
Except
for the adjustment to the exercise price per share, the Eligible Options that
are amended pursuant to this Offer will continue to remain subject to the same
terms and conditions currently in effect for that Eligible
Option. Accordingly, each Amended Option will continue to remain
outstanding under the Plan, will vest in accordance with the same vesting
schedule measured from the same vesting commencement date and will have the same
exercise period, option term and other conditions in effect for that Eligible
Option.
You may
exercise your Amended Options at any time following the Amendment Date and prior
to the Amended Option’s termination. However, an Amended Option may
not be exercised for more than the vested number of shares for which it is at
the time exercisable. Any such exercise must comply with the terms of
your original stock option award agreement and Amendment Agreement, our insider
trading policies and any blackout periods during which cashless exercises and
sales of our shares are generally prohibited.
The
amendment of tendered Eligible Options will not create any contractual or other
right of the accepting Eligible Optionees to receive any future grants of stock
options, restricted stock units or other stock-based
compensation. This Offer does not change the “at-will” nature of an
Eligible Optionee’s employment with us, and an
Eligible Optionee’s employment may be terminated by us or by the Eligible
Optionee at any time, for any reason, with or without cause.
12
EMCORE
Corporation 2000 Incentive Stock Option Plan
The following is a description of the
principal features of the Plan under which the Eligible Options are, and Amended
Options will be, outstanding. The description of the Plan is subject
to, and qualified in its entirety by reference to, all the provisions of the
Plan and the form of stock option award agreement in effect for the Eligible
Options. The Plan, as amended and restated, has been filed as an
Exhibit to the Company's Definitive Proxy Statement filed with the Securities
and Exchange Commission on March 4, 2008. The form of employee stock
option award agreement under the Plan and the form of the Amendment Agreement to
be used to evidence the adjustment to the exercise price of the Eligible Options
amended pursuant to this Offer have been filed as exhibits to the Tender Offer
Statement on Schedule TO related to this Offer. Please contact Keith Kosco,
Chief Legal Officer and Corporate Secretary, at (505) 332-5044 or
Keith_Kosco@EMCORE.com to receive a copy of the Plan, the form of stock option
award agreement or the form of the Amendment Agreement. We will
promptly furnish you copies of those documents at our expense.
Administration
A
Compensation Committee (the “Committee”) selected by our board of directors
administers the Plan in accordance with its terms. The Committee has at least
three members, all of whom are directors.
Shares
Reserved for Issuance
The Plan
authorizes the grant of options to purchase up to 9,350,000 shares of the
Company’s common stock. As of October 31, 2008, options to purchase
approximately 8,754,360 shares of the Company’s common stock were issued and
outstanding under the Plan.
Eligibility
Officers,
directors, employees and consultants in our service or in the service of our
affiliates are eligible to receive option grants under the Plan.
Option
Terms
Each
granted option has an option term and exercise price per share determined by the
Committee, but that price may not be less than 100% of the fair market value of
the option shares on the date of grant. The shares subject to each
option will generally vest in one or more installments over a specified period
of service measured from the date of grant. No option may have a term
in excess of 10 years. If an optionee’s service to EMCORE is
terminated, the optionee may have a limited period of time in which to exercise
his or her outstanding options to the extent those options are vested at the
time of termination as provided in the optionee’s award agreement.
Change
of Control
In the event of a change in control of
EMCORE all outstanding options will be accelerated and become immediately
exercisable in full.
At its discretion, in the event of a
change in control, the Committee may also make adjustments to the options
granted under the Plan. The Committee may substitute shares or other
securities of the surviving or successor entity or another corporation that is
party to the change in control transaction, with approximately the same value,
for shares of common stock covered by options outstanding under the
Plan. The Committee may also determine that you will receive cash for
any options that you have outstanding, with the amount of cash based on the
greater of the highest market value of the common stock subject to the award
during the 30 business days prior to the closing or expiration of the change in
control transaction or the highest value of the consideration that you would
receive in such transaction if you owned the shares of common stock underlying
your option, less the option exercise price of such shares. The
Committee may also provide that any options subject to any such acceleration,
adjustment or conversion cannot be exercised after such a change in control
transaction. If such a change in control transaction disqualifies an
employee’s incentive stock options from favorable “incentive stock option” tax
treatment under the Internal Revenue Code or results in the imposition of
certain additional taxes on such an employee, the Compensation Committee may, in
its discretion, make a cash payment that would leave such an employee in the
same after-tax position that he or she would have been in had such
disqualification not occurred, or to otherwise equalize such employee for such
taxes.
The Plan generally defines a change of
control of EMCORE as the occurrence of at least one of the following
events: (1) a reorganization, merger, or consolidation; (2) the sale
or disposition of all or substantially all of EMCORE’s assets or business; (3)
the complete liquidation or dissolution of EMCORE; (4) the purchase by any
person or group of 50% or more of the voting power of EMCORE’s voting securities
(excluding, for this purpose, EMCORE, its employee benefit plans and
certain related persons or entities, or a person that already owns 50% or more
of EMCORE’s voting securities); or (5) a change in the membership of a majority
of the incumbent directors constituting the board of directors as of February
16, 2000, provided that
any new directors approved by a majority of such incumbent directors, including
those directors similarly approved, shall not be treated as new directors for
this purpose. The occurrence of an event described in clause (1)
above will not constitute a change in control if: (A) former EMCORE
stockholders continue to own more than 50% of the voting power of the successor
entity’s voting securities, in substantially the same proportion as their
pre-existing ownership of EMCORE’s voting securities; (B) no person or group
owns 50% or more of the voting power of the successor entity (excluding, for
this purpose, EMCORE or certain related persons or entities or a person with a
pre-existing such 50% ownership of EMCORE) and (C) a majority of the board of
directors of the successor entity were members of EMCORE’s incumbent board of
directors immediately prior to the execution of the agreement providing for the
reorganization, merger, or consolidation. Please refer to the Plan
document for a full statement of the Plan’s definition of “change in
control.”
Shareholder
Rights and Option Transferability
No
optionee will have any shareholder rights with respect to the option shares
until such optionee has exercised the option and paid the exercise price for the
purchased shares. Options are not assignable or transferable other
than by will or the laws of descent and distribution following the optionee’s
death, and during the optionee’s lifetime, the option may only be exercised by
the optionee.
Changes
in Capitalization
In order to preserve the benefits or
potential benefits intended to be made available under the Plan or outstanding
options, or as otherwise necessary, the Committee will, in its discretion, make
appropriate adjustments to the number, class and kind of shares available under
the Plan and covered by options granted under the Plan, as well as the option
price of such outstanding options, and the Plan’s limit on the number of shares
that can be subject to options granted to a single recipient during a 12-month
period to reflect changes in EMCORE’s outstanding common stock (or other changes
in corporate capitalization) resulting from a stock dividend, stock split,
reverse split, recapitalization, reorganization, merger or consolidation
(whether or not EMCORE is the surviving corporation), spin-off, liquidation or
other substantial distribution of assets or issuance of our stock for less than
full consideration, or rights or convertible securities with respect to EMCORE
stock.
Amendment
and Termination
The board
of directors has the right to amend, alter, suspend, or terminate the
Plan. The Committee may also amend outstanding
options. However, neither the board of directors nor the Committee
may amend or terminate the Plan or any outstanding options in a manner that
would materially impair your previously accrued rights without your written
consent. In addition, the board of directors will be required to
obtain approval of our shareholders, if such approval is required by any
applicable law (including requirements relating to incentive stock options) or
rule, of any amendment of the Plan that would:
|
·
|
except
in the event of certain changes in EMCORE’s capital increase
the number of shares of common stock that may be delivered under the Plan,
or that may be subject to options granted to a single recipient in a
12-month period;
|
·
|
decrease
the minimum option exercise price required by the
Plan;
|
|
·
|
change
the class of persons eligible to receive options under the Plan;
or
|
13
|
·
|
extend
the duration of the Plan or the exercise period of any options granted
under the Plan.
|
Taxation
of Nonstatutory Stock Options
Under the
Code, an optionee will not recognize taxable income for U.S. federal income tax
purposes upon the grant of a non-statutory option under the Plan. In
general, an optionee will recognize ordinary income, in the year in which the
option is exercised, equal to the excess of the fair market value of the
purchased shares on the exercise date over the exercise price paid for the
shares, and the optionee will be required to satisfy the tax withholding
requirements applicable to such income.
We will
be entitled to an income tax deduction equal to the amount of ordinary income
recognized by the optionee with respect to the exercised non-statutory
option. The deduction will in general be allowed for our taxable year
in which such ordinary income is recognized by the optionee.
If you
are subject to the tax laws in more than one jurisdiction, you should be aware
that consequences of more than one jurisdiction may apply to you as a result of
your receipt, vesting or exercise of an EMCORE option grant. We
recommend that you discuss with your personal tax advisor these tax
consequences.
In
accordance with the Financial Accounting Standards Board’s Statement of
Financial Accounting Standards No. 123R (revised 2004), Share-Based Payment
(“FAS 123R”), the
Company uses the Black-Scholes option-pricing model and the straight-line
attribution approach to determine the fair-value of stock-based awards. The
Company elected to use the modified prospective transition method as permitted
by SFAS 123(R) and accordingly prior periods were not restated to reflect the
impact of SFAS 123(R). The modified prospective transition method requires that
stock-based compensation expense be recorded for all new and unvested stock
options and employee stock purchase plan shares that are ultimately expected to
vest as the requisite service is rendered beginning on October 1, 2005, the
first day of the Company’s fiscal year 2006. The option-pricing model
requires the input of highly subjective assumptions, including the option’s
expected life and the price volatility of the underlying stock. The Company’s
expected term represents the period that stock-based awards are expected to be
outstanding and is determined based on historical experience of similar awards,
giving consideration to the contractual terms of the stock-based awards, vesting
schedules and expectations of future employee behavior as influenced by changes
to the terms of its stock-based awards. The expected stock price volatility is
based on the Company’s historical stock prices.
See
Section 13 below for a discussion of the accounting consequences of this
Offer.
10.
|
AMENDED
OPTIONS WILL NOT DIFFER FROM ELIGIBLE
OPTIONS.
|
Except
for the adjustment to the exercise price per share, the Eligible Options that
are amended pursuant to this Offer will continue to remain subject to the same
terms and conditions currently in effect for that Eligible
Option. Accordingly, each Amended Option will vest in accordance with
the same vesting schedule measured from the same vesting commencement date and
will have the same exercise period, option term and other conditions currently
in effect for that Eligible Option.
11.
|
INFORMATION
CONCERNING EMCORE CORPORATION.
|
Company
Overview
EMCORE
Corporation is a leading provider of compound semiconductor-based components and
subsystems for the broadband, fiber optic, satellite and terrestrial solar power
markets. The Company was established in 1984 as a New
Jersey corporation and has two reporting segments: Fiber Optics and
Photovoltaics. EMCORE's Fiber Optics segment offers optical
components, subsystems and systems that enable the transmission of video, voice
and data over high-capacity fiber optic cables for high-speed data and
telecommunications, cable television (“CATV”) and fiber-to-the-premises (“FTTP”)
networks. EMCORE's Photovoltaics segment provides solar products for
satellite and terrestrial applications. For satellite applications, EMCORE
offers high-efficiency compound semiconductor-based gallium arsenide (“GaAs”)
solar cells, covered interconnect cells (“CICs”) and fully integrated solar
panels. For terrestrial applications, EMCORE offers concentrating
photovoltaic (“CPV”)
14
systems
for utility scale solar applications as well as offering its high-efficiency
GaAs solar cells and CPV components for use in solar power concentrator
systems. For specific information about our Company, our products or
the markets we serve, please visit our website at
http://www.emcore.com.
The
Company is subject to the information requirements of the Securities Exchange
Act of 1934. The Company files periodic reports, current reports, proxy
statements and other information with SEC. The SEC maintains a
website (http://www.sec.gov) that contains all of our information that has been
filed electronically. Our annual reports are available on our website, free of
charge, as soon as reasonably practicable after such material is electronically
filed with, or furnished to, the SEC. The information on EMCORE’s
website is not incorporated by reference into and is not made a part of this
Offer to Amend.
Selected
Financial Data
The
following selected consolidated financial data of the Company's three most
recent fiscal years ended September 30, 2007 and interim nine-month periods
ended June 30, 2008 and 2007 is qualified by reference to, and should be read in
conjunction with, Management’s Discussion and Analysis of Financial Condition
and Results of Operations under Item 7 and Financial Statements and
Supplementary Data under Item 8 of our Annual Report on Form 10-K for the fiscal
year ended September 30, 2007, as amended, and our Quarterly Report on Form 10-Q
for the period ended June 30, 2008. The information set forth below is not
necessarily indicative of results for future operations. Significant
transactions that affect the comparability of the Company’s operating results
and financial condition include:
Financial
Highlights:
Fiscal 2008:
·
|
In
June 2008, the Company sold one million shares of Series D Preferred Stock
of WorldWater and Solar Technologies Corporation (“WWAT”), together with
100,000 warrants to a major shareholder of both the Company and WWAT at a
price equal to $6.54 per share. The Company recognized a total
gain of $3.7 million on the sale of this
stock.
|
·
|
In
February and April 2008, the Company acquired the telecom, datacom, and
optical cable interconnects-related assets of Intel’s Optical Platform
Division for $120 million in cash and the Company’s common
stock.
|
·
|
In
February 2008, the Company completed the sale of $100 million of
restricted common stock and warrants. Investors purchased 8
million shares of our common stock, no par value, and warrants to purchase
an additional 1.4 million shares of our common
stock.
|
·
|
In
January and February 2008, the Company redeemed all of its outstanding
5.5% convertible subordinated notes due 2011 pursuant to which the holders
converted their notes into the Company's common
stock.
|
Fiscal
2007:
·
|
In
November 2006, the Company invested $13.5 million in WWAT in return for
convertible preferred stock and
warrants.
|
·
|
In
April 2007, the Company modified its convertible subordinated notes to
resolve an alleged default event. The interest rate was
increased from 5% to 5.5% and the conversion price was decreased from
$8.06 to $7.01. The Company also repurchased $11.4 million of
outstanding notes to reduce interest expense and share
dilution.
|
·
|
In
April 2007, the Company acquired privately-held Opticomm Corporation for
$4.1 million in cash.
|
15
·
|
Fiscal
2007 operating expenses included:
|
§
|
$10.6
million related to our review of historical stock option granting
practices;
|
§
|
$9.4
million related to our new terrestrial solar power
division;
|
§
|
$6.1
million related to non-recurring legal expenses;
and
|
§
|
$2.8
million related to severance charges associated with facility closures and
consolidation of operations.
|
Fiscal
2006:
·
|
In
November 2005, the Company exchanged $14.4 million of convertible
subordinated notes due in May 2007 for $16.6 million of newly issued
convertible senior subordinated notes due May 15, 2011. As a result of
this transaction, the Company recognized approximately $1.1 million in the
first quarter of fiscal 2007 related to the early extinguishment of
debt.
|
·
|
The
Company received manufacturing equipment valued at $2.0 million less tax
of $0.1 million as a final earn-out payment from Veeco in connection with
the sale of the TurboDisc division.
|
·
|
In
August 2006, the Company sold its Electronic Materials & Device (EMD) division to
IQE plc (IQE) for $16.0 million. The net gain associated with the sale of
the EMD business totaled approximately $7.6 million, net of tax of $0.5
million. The results of operations of the EMD division have
been reclassified to discontinued operations for all periods
presented.
|
·
|
In
August 2006, the Company sold its 49% membership interest in GELcore, LLC
for $100.0 million to General Electric Corporation, which prior to the
transaction owned the remaining 51% membership interest in
GELcore. The Company recorded a net gain of $88.0 million,
before tax, on the sale of GELcore, after netting the Company’s investment
in this joint venture of $10.8 million and transaction expenses of $1.2
million.
|
·
|
The
Company recorded approximately $2.2 million of impairment charges on
goodwill and intellectual property associated with the June 2004
acquisition of Corona Optical
Systems.
|
·
|
Fiscal
2006 operating expense included $1.3 million related to our review of
historical stock option granting practices and $1.3 million related to our
new terrestrial solar power
division.
|
·
|
Other
expense included a charge of $0.5 million associated with the write-down
of the Archcom investment.
|
·
|
The
Company recognized a provision for income taxes of $1.9 million from
continuing operations for the year ended September 30,
2006.
|
Fiscal
2005:
·
|
SG&A
expense included approximately $0.9 million in severance-related charges
and $2.3 million of charges associated with the consolidation of the
Company’s City of Industry, California location to Albuquerque, New
Mexico.
|
·
|
The
Company received a $12.5 million net earn-out payment from Veeco in
connection with the 2003 sale of the TurboDisc
division.
|
16
Selected Financial
Data
Statements
of Operations Data
(in thousands,
except per share data)
|
||||||||||||||||||||
For
the nine months ended
June
30
|
For
the fiscal years ended
September
30
|
|||||||||||||||||||
|
2008
|
2007
|
2007
|
2006
|
2005
|
|||||||||||||||
Product
revenue
|
|
$
|
164,695
|
$
|
108,907
|
$
|
148,334
|
$
|
132,304
|
$
|
106,656
|
|||||||||
Services
revenue
|
13,973
|
13,715
|
21,272
|
11,229
|
8,801
|
|||||||||||||||
Total
revenue
|
178,668
|
122,622
|
169,606
|
143,533
|
115,367
|
|||||||||||||||
Gross
profit
|
30,397
|
22,170
|
30,368
|
25,952
|
19,302
|
|||||||||||||||
Operating
loss
|
|
(33,767
|
)
|
(40,835
|
)
|
(57,456
|
)
|
(34,150
|
)
|
(20,371
|
)
|
|||||||||
(Loss)
income from continuing operations
|
|
(39,635
|
)
|
(41,260
|
)
|
(58,722
|
)
|
45,039
|
(24,685
|
)
|
||||||||||
Income
(loss) from discontinued operations
|
|
-
|
-
|
-
|
9,884
|
11,200
|
||||||||||||||
Net
(loss) income
|
$
|
(39,635
|
)
|
$
|
(41,260
|
)
|
$
|
(58,722
|
)
|
$
|
54,923
|
$
|
(13,485
|
)
|
||||||
|
||||||||||||||||||||
Per
share data:
|
||||||||||||||||||||
(Loss)
income from continuing operations:
|
||||||||||||||||||||
Per
basic share
|
|
$
|
(0.62
|
)
|
$
|
(0.81
|
)
|
$
|
(1.15
|
)
|
$
|
0.91
|
$
|
(0.52
|
)
|
|||||
Per
diluted share
|
$
|
(0.62
|
)
|
$
|
(0.81
|
)
|
$
|
(1.15
|
)
|
$
|
0.87
|
$
|
(0.52
|
)
|
||||||
|
||||||||||||||||||||
Balance
Sheet Data
(in
thousands)
|
|
|||||||||||||||||||
As
of June 30
|
As
of September 30
|
|||||||||||||||||||
2008
|
2007
|
2007
|
2006
|
2005
|
||||||||||||||||
Cash,
cash equivalents and available
for
sale securities
|
$
|
18,183
|
$
|
48,336
|
$
|
41,226
|
$
|
123,967
|
$
|
40,175
|
||||||||||
Working
capital
|
82,709
|
80,360
|
63,204
|
129,683
|
56,996
|
|||||||||||||||
Total
assets
|
352,735
|
243,618
|
234,736
|
287,547
|
206,287
|
|||||||||||||||
Long-term
liabilities
|
-
|
85,022
|
84,981
|
84,516
|
94,701
|
|||||||||||||||
Shareholders’
equity
|
290,720
|
114,503
|
98,157
|
149,399
|
75,563
|
17
12.
|
INTERESTS
OF EXECUTIVE OFFICERS AND DIRECTORS; TRANSACTIONS AND ARRANGEMENTS
CONCERNING THE OPTIONS AND OTHER SECURITIES OF THE COMPANY; MATERIAL
AGREEMENTS WITH EXECUTIVE OFFICERS AND
DIRECTORS.
|
Executive
Officers and Directors
A list of
our current executive officers and directors is attached as Schedule I to this
Offer to Amend. As of October 31, 2008, our executive officers and
directors as a group beneficially owned outstanding options under the Plan to
purchase a total of 2,639,256 shares of our common stock, which represent in the
aggregate approximately 30% of the aggregate number of shares of our common
stock subject to all options outstanding under the Plan as of that
date.
Schedule
II attached to this Offer to Amend sets forth a table indicating the beneficial
ownership of our common stock by our executive officers and directors as of
October 31, 2008.
During
the 60-day period ended October 31, 2008:
|
(1)
|
The
Company has granted options to purchase 46,000 shares of our common stock,
none of which were granted to executive officers or
directors;
|
|
(2)
|
Individuals
exercised options to acquire 38,920 shares of the Company’s common stock,
none of which were exercised by executive officers or
directors;
|
|
(3)
|
The
Company cancelled options to purchase 233,261 shares of the Company’s
common stock, none of which were held by executive officers or
directors;
|
|
(4)
|
No
executive officers purchased shares of the Company’s common stock on the
open market. ; and,
|
(5) No
executive officers or directors sold shares of the Company’s common
stock.
Except as
otherwise described above and other than stock option grants made in the
ordinary course to employees who are not executive officers, there have been no
transactions in any outstanding options to purchase the Company’s common stock
that were effected during the 60-day period ended October 31, 2008 by the
Company or, to our knowledge, by any current Executive Officer, director,
affiliate or subsidiary of the Company.
EMCORE ’s
executive officers and directors will not participate in this Offer, although it
is expected that following this Offer two of our current executive officers, who
were not Section 16(b) officers at the time they were granted options that would
otherwise constitute Eligible Options, will be given an opportunity to amend the
exercise price of those options on terms no more favorable than those made
available to all other Eligible Optionees in this Offer.
13.
|
STATUS
OF OPTIONS AMENDED BY US IN THIS OFFER; ACCOUNTING CONSEQUENCES OF THIS
OFFER.
|
The terms
and provisions of each Amended Option will not differ from the terms and
provisions in effect for that option at the time of acceptance, except that the
Amended Option will have an exercise price equal to the Adjusted Exercise Price
determined for that option. Accordingly, each Amended Option will
continue to remain outstanding under the Plan, until exercised or
cancelled, will vest in accordance with the same vesting schedule measured from
the same vesting commencement date and will have the same
exercise period, option term and other conditions currently in effect
for the Eligible Option.. All Eligible Options, whether or not
amended pursuant to this Offer, will continue to remain outstanding under the
Plan until exercised or cancelled.
Pursuant
to the accounting standards in effect under SFAS 123R, we will not recognize a
compensation expense for financial reporting purposes with respect to our
increasing the exercise prices of the Eligible Options to
18
the
applicable Adjusted Exercise Prices. We will recognize compensation
expense for financial reporting purposes over the period the Cash Payments
become payable pursuant to the terms of this Offer.
14.
|
LEGAL
MATTERS; REGULATORY APPROVALS.
|
We are
not aware of any license or regulatory permit that appears to be material to our
business that might be adversely affected by our increasing the exercise prices
of the Eligible Options to the applicable Adjusted Exercise Prices, paying the
Cash Payments or of any approval or other action by any government or
governmental, administrative or regulatory authority or agency, domestic or
foreign, that would be required for such amendment to those options or the
payment of the Cash Payments as contemplated in this Offer. Should
any such approval or other action be required, we presently contemplate that we
will seek such approval or take such other action. We are unable to
predict whether we may determine that we are required to delay the acceptance of
the Eligible Options tendered for amendment or the payment of the applicable
Cash Payments pending the outcome of any such matter. We cannot
assure you that any such approval or other action, if needed, would be obtained
or , if obtained, would be obtained without substantial conditions or that the
failure to obtain any such approval or other action might not result in adverse
consequences to our business. Our obligation to amend Eligible
Options is subject to certain conditions, including the conditions described in
Section 7 above.
15.
|
MATERIAL
U.S. FEDERAL INCOME TAX
CONSEQUENCES.
|
The
following is a general summary of the material U.S. federal income tax
consequences applicable to the amendment of the Eligible Options and the payment
of the Cash Payments. Foreign, state and local tax consequences are
not addressed.
Acceptance
of Offer
If you
accept this Offer and tender your Eligible Options for amendment, you will not
recognize any taxable income for U.S. federal income tax purposes at the time of
your acceptance of this Offer and tender of your Eligible Options.
By
amending the exercise prices of your Eligible Options to the applicable Adjusted
Exercise Prices, you should avoid the adverse tax consequences under Section
409A that may apply to your Eligible Options. Accordingly, you will
not be subject to taxation under Section 409A on your vested Amended Options in
the 2008 calendar year, and you will not be
subject to any 20% penalty tax or any interest penalty under Section
409A.
Amendment
of Option
The
amendment of your Eligible Option to increase the exercise price per share to
the Adjusted Exercise Price determined for that option is not a taxable event
for U.S. federal income tax purposes.
Exercise
of Amended Option
Your
Amended Option will be taxable as a nonstatutory stock option for U.S. federal
income tax purposes. Accordingly, upon each exercise of such Amended
Option, you will recognize immediate taxable income equal to the excess of (1)
the fair market value of the purchased shares at the time of exercise over (2)
the Adjusted Exercise Price paid for those shares, and EMCORE must collect the
applicable federal, state and local income and employment withholding taxes with
respect to such income.
19
Sale
of Acquired Shares
The subsequent sale of the shares
acquired upon the exercise of your Amended Option will give rise to a capital
gain to the extent the amount realized upon that sale exceeds the sum of the (1)
exercise price paid for the shares plus (2) the taxable income recognized in
connection with the exercise of your such option for those shares. A
capital loss will result to the extent the amount realized upon such sale is
less than such sum. The gain or loss will be long-term if the shares
are sold more than one (1) year after the date the Amended Option is exercised
for those shares.
Cash
Payment
You will
be immediately taxed upon receipt of the Cash Payment. The Cash
Payment will constitute wages for tax withholding
purposes. Accordingly, EMCORE must withhold all applicable U.S.
federal, state and local income and employment withholding taxes as well as
applicable foreign taxes and payments required to be withheld with respect to
the Cash Payment. You will receive only the portion of the Cash
Payment remaining after those taxes have been withheld.
Foreign
Taxation
If you
are subject to the tax laws of other jurisdictions in addition to the United
States, there may be additional tax consequences as a result of your receipt,
vesting or exercise of an EMCORE option grant or your participation in this
Offer. We recommend that you discuss with your personal tax,
financial and legal advisors these consequences.
We
recommend that you consult with your personal tax, financial and legal advisors
with respect to the foreign and U.S. federal, state and local tax and other
consequences of participating in this Offer.
16.
|
EXTENSION
OF THIS OFFER; TERMINATION;
AMENDMENT.
|
We
expressly reserve the right, in our discretion, at any time and from time to
time, and regardless of whether or not any event set forth in Section 7 above
has occurred or is deemed by us to have occurred, to extend the period of time
during which this Offer is open and thereby delay the acceptance and amendment
of any Eligible Options by giving notice of such extension to the submitting
Eligible Optionees and making a public announcement of such
extension.
We also
expressly reserve the right, in our judgment, at any time prior to the
Expiration Date, to terminate or amend this Offer and to postpone our acceptance
and amendment of any Eligible Options with respect to which this Offer has been
accepted upon the occurrence of any of the conditions specified in Section 7
above, by giving written or electronic notice of such termination or
postponement to the accepting Eligible Optionees and making a public
announcement thereof. Our reservation of the right to delay our
acceptance and amendment of the accepted Eligible Options is limited by Rule
13e-4(f)(5) promulgated under the Exchange Act, which requires that we must pay
the consideration offered or return the accepted Eligible Options promptly after
termination or withdrawal of this Offer.
Amendments
to this Offer may be made at any time and from time to time by public
announcement of the amendment. In the case of an extension, the
amendment will be issued no later than 9:00 a.m., Mountain Time, on the next
business day after the last previously scheduled or announced Expiration
Date. Any public announcement made pursuant to this Offer will be
disseminated promptly to Eligible Optionees in a manner reasonably designated to
inform option holders of such change.
If we
materially change the terms of this Offer or the information concerning this
Offer, or if we waive a material condition of this Offer, we will extend this
Offer to the extent required by Rules 13e-4(d)(2) and 13e-4(e)(3) under the
Exchange Act. Those rules require that the minimum period during
which an Offer must remain open following material changes in the terms of this
Offer or information concerning this Offer, other than a change in price or a
change in percentage of securities sought, will depend on the facts and
circumstances, including the relative materiality of such terms or
information. If we decide to take any of the following actions, we
will give notice of such action and keep this Offer open for at least ten
business days after the date of such notification:
20
·
|
we
increase or decrease the amount of consideration offered for the Eligible
Options; or
|
·
|
we
decrease the number of Eligible Options eligible to be accepted for
amendment in this Offer.
|
17.
|
FEES
AND EXPENSES.
|
We will
not pay any fees or commissions to any broker, dealer or other person for
soliciting tenders of Eligible Options for amendment pursuant to this
Offer.
18.
|
ADDITIONAL
INFORMATION.
|
We have
filed with the SEC a Tender Offer Statement on Schedule TO, of which this Offer
to Amend is a part, with respect to this Offer. This Offer to Amend
does not contain all of the information contained in the Schedule TO and the
exhibits to the Schedule TO. We recommend that you review the
Schedule TO, including its exhibits, and the following materials that we have
filed with the SEC before making a decision on whether to accept this Offer to
amend your Eligible Options:
The
following documents were filed with the SEC:
• Annual
report on Form 10-K for the fiscal year ended September 30, 2007, filed with the
SEC on December 31, 2007, as amended by our Form 10-K/A filed with the SEC on
January 28, 2008.
• Our
Definitive Proxy Statement pursuant to Section 14(a) of the Exchange Act, filed
with the SEC on March 4, 2008.
•
Quarterly report on Form 10-Q for the quarter ended December 31, 2007, filed
with the SEC on February 11, 2008.
•
Quarterly report on Form 10-Q for the quarter ended March 31, 2008, filed with
the SEC on May 12, 2008.
•
Quarterly report on Form 10-Q for the quarter ended June 30, 2008, filed with
the SEC on August 11, 2008.
• Current
Reports on Form 8-K dated January 11, 2008, February 4, 2008, February 11, 2008,
February 20, 2008, February 25, 2008, March 4, 2008, April 4, 2008, April 15,
2008, April 18, 2008, April 24, 2008, May 7, 2008, May 9, 2008, August 11, 2008,
August 13, 2008, August 19, 2008, October 3, 2008 and November 3,
2008.
•our
Registration Statement on Form S-8 (File No. 333-13217) filed with the SEC on
March 10, 2006,
•the
description of our common stock set forth in a registration statement on Form
8-A (File No. 000-22175) filed pursuant to Section 12(b) of the Securities
Exchange Act on February 26, 1997, including any amendment or report updating
such description).
The SEC
file number for our annual, quarterly and current reports referred to above is
00808326. These filings, our other annual, quarterly and current
reports, our proxy statements and our other SEC filings are available to the
public on the SEC’s website at http://www.sec.gov. These filings may
also be examined, and copies may be obtained, at the following SEC public
reference room:
100 F
Street, N.E.
Washington,
D.C. 20549
21
You may
obtain information on the operation of the public reference rooms by calling the
SEC at 1-800-SEC-0330.
We will
also provide without charge to each person to whom a copy of this Offer to Amend
is delivered, upon the written or oral request of any such person, a copy of any
or all of the documents to which we have referred you, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
into such documents). Requests should be directed to:
EMCORE
Corporation
10420
Research Road SE
Albuquerque,
New Mexico 87123
Attn:
Keith Kosco, Chief Legal Officer and Corporate Secretary
Phone: (505)
332-5044
E-mail: Keith_Kosco@EMCORE.com
As you
read the foregoing documents, you may find some inconsistencies in information
from one document to another. If you find inconsistencies between the
documents, or between a document and this document, you should rely on the
statements made in the most recent document.
The
information relating to EMCORE in this Offer to Amend should be read together
with the information contained in the documents to which we have referred
you.
19.
|
FORWARD-LOOKING
STATEMENTS; MISCELLANEOUS.
|
Some of
the statements made and information contained in this Offer to Amend and the SEC
reports referred to above, excluding historical information, are
“forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. However, the safe harbors of the
Private Securities Litigation Reform Act of 1995 do not apply to statements made
in connection with this Offer. These statements may be found
throughout this Offer to Amend and the SEC reports referred to
above. Forward-looking statements typically are identified by the use
of terms such as “may,” “will,” “should,” “expect,” “anticipate,” “believe,”
“estimate,” “intend” and similar words, although some forward-looking statements
are expressed differently and describe our expectations, plans, strategies and
goals and our beliefs concerning future business conditions, our results of
operations, financial position and our business outlook or state other
“forward-looking” information based on currently available
information. The factors listed above under the heading “Certain
Risks Related to Participating in this Offer” and in other sections of this
Offer to Amend and the SEC reports referred to above provide examples of risks,
uncertainties and events that could cause our actual results to differ
materially from the expectations expressed in our forward-looking
statements. These statements include, among other things, the
following:
·
|
projections
of revenues, cost of raw materials, income or loss, earnings or loss per
share, capital expenditures, growth prospects, dividends, the effect of
currency translations, capital structure and other financial
items;
|
·
|
statements
regarding our plans and objectives, including the introduction and market
acceptance of new products or estimates or predictions of
actions by customers, suppliers, competitors or regulating
authorities;
|
·
|
statements
of future economic performance; and
|
·
|
statements
of assumptions, such as world wide energy demand, underlying other
statements and statements about our
business.
|
Factors
that could cause actual results to differ materially from these forward-looking
statements include, but are not limited to the following general
factors:
·
|
our
ability to implement and fund our business strategy in the current
economic climate, particularly the current situation in the international
capital markets;
|
22
·
|
our
ability to design and build new products on a profitable
basis;
|
·
|
the
impact of changes in domestic and foreign government policies,
particularly those relating to the encouragement of alternative energy
resources;
|
·
|
our
ability to acquire and protect the intellectual property necessary for our
operations;
|
·
|
risks
involved in foreign operations such as disruption of markets, changes in
import and export laws, currency restrictions, currency exchange rate
fluctuations and possible terrorist attacks against U.S.
interests;
|
·
|
general
economic conditions;
|
·
|
the
ability to acquire goods and services and/or fulfill labor needs at
budgeted costs;
|
·
|
our
ability to successfully pass along increased material costs to our
customers;
|
·
|
the
loss of one or more of our major
customers;
|
·
|
our
ability to undertake future acquisitions, particularly given the
volatility of our stock price;
|
·
|
the
potential continuing impact of our historical stock option granting
practices, including our ability to obtain directors and officers
insurance;
|
·
|
increasing
governmental regulation, particularly relating to certain chemicals which
we utilize in our manufacturing processes;
and
|
·
|
our
ability to operate in the international environment, including the ability
to develop relationships with international partners in key market
areas.
|
Although
we believe that the expectations reflected in such forward-looking statements
are reasonable, we can give no assurance that such expectations will prove to
have been correct. The forward-looking statements made in this Offer
to Amend and the SEC reports referred to above relate only to events as of the
date on which the statements are made. We undertake no obligation to
update beyond that required by law any forward-looking statement to reflect
events or circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
We are
not aware of any jurisdiction where the making of this Offer is not in
compliance with applicable law. If we become aware of any
jurisdiction where the making of this Offer is not in compliance with any valid
applicable law, we intend to make a good faith effort to comply with such
law. If, after such good faith effort, we cannot comply with such law
or we determine that further efforts to comply are not advisable, this Offer
will not be made to, nor will acceptances of this Offer be accepted from or on
behalf of, the holders of Eligible Options residing in such
jurisdiction.
We
have not authorized anyone to give you any information or to make any
representations in connection with this Offer other than the information and
representations contained in this Offer to Amend, the related Tender Offer
Statement on Schedule TO or the Letter of Transmittal and Amendment
Agreement. If anyone makes any representation to you or gives you any
information that is different from the representations and information contained
in this Offer to Amend, the related Tender Offer Statement on Schedule TO or the
Letter of Transmittal and Amendment Agreement, you must not rely upon that
representation or information as having been authorized by us. We
have not authorized any person to make any recommendation on our behalf as to
whether you should tender your Eligible Options pursuant to this
Offer. If anyone makes any recommendation to you, you must not rely
upon that recommendation as having been authorized by us. You should
rely only on the representations and information contained in this Offer to
Amend, the related Tender Offer Statement on Schedule TO or the Letter of
Transmittal and Amendment Agreement to which we have referred you.
EMCORE
Corporation
|
November
19, 2008
|
23
SCHEDULE
I
INFORMATION
CONCERNING THE EXECUTIVE OFFICERS AND DIRECTORS OF EMCORE
CORPORATION
The
EMCORE executive officers and members of the EMCORE board of directors and their
respective positions and offices as of October 31, 2008 are set forth in the
following table:
NAME
|
POSITION
AND OFFICES HELD
|
Reuben
Richards
|
Executive
Chairman, Chairman of the Board
|
Thomas
Russell, Ph.D. (2)
(4)
|
Chairman
Emeritus
|
Robert
Bogomolny (1) (3)
(4)
|
Director
|
Charles
Scott
(1) (2) (3) (4)
|
Director,
Chairman of the Audit Committee
|
John
Gillen (1) (2)
(3)(4)
|
Director,
Chairman of the Compensation Committee
|
Hong
Hou, Ph. D.
|
Chief
Executive Officer, Director
|
John
Markovich
|
Chief
Financial Officer
|
John
Iannelli, Ph. D.
|
Chief
Technology Officer and Interim General Manager – ESP
|
Keith
Kosco
|
Chief
Legal Officer and Corporate
Secretary
|
(1)
Member of Audit Committee.
(2)
Member of Nominating Committee.
(3)
Member of Compensation Committee.
(4)
Determined by the board of directors to be an independent director.
The
address of each board member and executive officer is c/o EMCORE Corporation,
10420 Research Road SE, Albuquerque New Mexico 87123
SCHEDULE
II
BENEFICIAL
OWNERSHIP OF EMCORE SECURITIES BY EMCORE EXECUTIVE OFFICERS AND
DIRECTORS
The
following table shows the holdings of our common stock as of October 31, 2008 by
each executive officer and director of EMCORE :
Name
of Beneficial Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percent
|
Reuben
Richards
|
1,062,054
|
1%
|
Thomas
Russell, Ph.D.
|
5,273,791
|
7%
|
Robert
Bogomolny
|
86,972
|
*
|
Charles
Scott
|
42,409
|
*
|
John
Gillen
|
29,242
|
*
|
Hong
Hou, Ph. D.
|
200,371
|
*
|
John
Markovich
|
-
|
*
|
John
Iannelli, Ph. D.
|
96,881
|
*
|
Keith
Kosco
|
18,500
|
*
|
_____________________
* Does
not exceed 1% of the outstanding shares.