UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

 

Filed by the Registrant ☒       Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☒	Preliminary Proxy Statement

 

☐	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

☐	Definitive Proxy Statement

 

☐	Definitive Additional Materials

 

☐	Soliciting Material under §240.14a-12

EMCORE Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

 

☐	No fee required.

 

☐	Fee paid previously with preliminary materials.

 

☒	Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED JANUARY 14, 2025

EMCORE CORPORATION

450 Clark Drive

Budd Lake, New Jersey 07828

(626) 293-3400

 

 

Dear EMCORE Shareholders:

You are cordially invited to attend a special meeting of the shareholders of EMCORE Corporation, a New Jersey corporation (“EMCORE,” the “Company,” “we,” “us,” and “our”), to be held in a virtual-only format via live webcast (including any adjournments or postponements thereof, the “Special Meeting”) on [    ], 202[ ] at [ ] a.m., Eastern Time (unless the Special Meeting is adjourned or postponed). You will be able to virtually attend and vote at the Special Meeting by visiting www.proxydocs.com/EMKR. There will not be a physical meeting location. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” or “in person” shall mean virtually present at the Special Meeting.

As previously announced, on November 7, 2024, EMCORE entered into an Agreement and Plan of Merger with Velocity One Holdings, LP, a Delaware limited partnership (“Parent”), Aerosphere Power Inc., a New Jersey corporation that, at the effective time of the Merger (as defined below) will be an indirect wholly owned subsidiary of Parent (“Parent Group Member”), and Velocity Merger Sub, Inc., a New Jersey corporation that, at the effective time of the Merger will be an indirect wholly owned subsidiary of Parent (“Merger Sub”) (as it may be amended from time to time, the “Merger Agreement”). The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will be merged with and into EMCORE (the “Merger”), with EMCORE surviving the Merger and becoming an indirect wholly owned subsidiary of Parent.

Under the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of common stock, no par value, of EMCORE (“EMCORE common stock”) (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive $3.10 per share in cash (the “Merger Consideration”), without interest, subject to any withholding taxes.

Immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any of the Company’s 2010 Equity Incentive Plan, 2012 Equity Incentive Plan, Amended and Restated 2019 Equity Incentive Plan, 2022 New Employee Inducement Plan, Officer and Director Share Purchase Plan, Directors’ Compensation Policy, and Short-Term Incentive Plan, in each case, as amended (each a “Company Equity Plan”) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax

withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

There are currently no awards outstanding under the 2010 Equity Incentive Plan and the 2012 Equity Incentive Plan, nor are there expected to be any awards outstanding under these plans prior to or at the closing of the Merger.

Pursuant to an equity commitment letter dated November 7, 2024, and subject to the terms and conditions set forth therein, Charlesbank Equity Fund X, Limited Partnership (the “Guarantor”) has committed to invest or cause to be invested in the equity capital of Parent an aggregate amount of up to $37.0 million solely for the purpose of funding the Merger and other transactions contemplated by the Merger Agreement, including the Merger Consideration. In addition, the Guarantor has entered into a limited guarantee dated November 7, 2024 in favor of EMCORE, pursuant to which the Guarantor is guaranteeing certain of the termination fee obligations of Parent and Merger Sub in connection with the Merger Agreement.

At the Special Meeting, you will be asked to consider and vote on: (a) a proposal to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger (the “Merger Agreement Proposal”); (b) a proposal to approve, on an advisory (non-binding) basis, the “golden parachute” compensation that will or may be paid or become payable to EMCORE’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and (c) a proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Agreement Proposal at the time of the Special Meeting (the “Adjournment Proposal”). With respect to each proposal, the affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve each such proposal.

The Board of Directors of EMCORE (the “Board of Directors”), after considering the factors more fully described in the enclosed proxy statement, has unanimously: (a) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, are advisable and fair to, and in the best interests of EMCORE and EMCORE shareholders; (b) approved the execution, delivery, and performance of the Merger Agreement and the other transaction documents, and the transactions contemplated by the Merger Agreement; (c) recommended that EMCORE shareholders approve the Merger Agreement; and (d) directed that the adoption of the Merger Agreement and the transactions contemplated thereby, including the Merger, be submitted for consideration by EMCORE shareholders at the Special Meeting. The Board of Directors unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

The enclosed proxy statement provides detailed information about the Special Meeting, the Merger Agreement, and the Merger. A copy of the Merger Agreement is attached as Annex A to the proxy statement. The proxy statement also describes the actions and determinations of the Board of Directors in connection with its evaluation of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. You should carefully read and consider the entire enclosed proxy statement and its annexes, including the Merger Agreement, as they contain important information about, among other things, the Merger and how it affects you. You may also obtain more information about EMCORE from documents we file with the United States Securities and Exchange Commission (the “SEC”) from time to time.

Whether or not you plan to virtually attend the Special Meeting, please sign, date, and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in the section entitled “The Special Meeting — Voting by Proxy or While Virtually Attending the Special Meeting” beginning on page 37 of the

proxy statement). If you virtually attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted.

If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank or other nominee, then the broker, bank, or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” “Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, or other nominee how to vote their shares using the methods described above. Since the proposals are “non-routine matters,” your broker, bank, or other nominee does not have discretionary authority to vote your shares on the proposals. If your shares are held in street name, your broker, bank, or other nominee has enclosed a voting instruction form with the proxy statement. If you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal. We encourage you to authorize your broker, bank, or other nominee to vote your shares “FOR” all of the proposals by following the instructions provided on the enclosed voting instruction form to provide your instructions over the Internet, by telephone, or by signing, dating, and returning the voting instruction form in the postage-paid envelope provided. We encourage you to vote electronically. The failure of any shareholder of record to grant a proxy electronically over the Internet or by telephone, to submit a signed proxy card, or to vote at the Special Meeting will not have any effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, and will cause such shareholder’s shares to not be counted for purposes of determining whether a quorum is present for the transaction of business at the Special Meeting. Abstentions will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.

Your vote is very important, regardless of the number of shares that you own. We cannot complete the Merger unless the Merger Agreement Proposal is approved by the affirmative vote of a majority of the votes cast by the holders of EMCORE common stock entitled to vote thereon at the Special Meeting, where a quorum is present. If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

Alliance Advisors, LLC

200 Broadacres Drive

Bloomfield, NJ 07003

Phone Number: 833-501-4822

Email: EMKR@AllianceAdvisors.com

We are very excited about the opportunities offered by the Merger, and we thank you for your consideration and ongoing support.

 

Sincerely,

/s/ Matthew Vargas

Interim Chief Executive Officer

EMCORE Corporation

[    ], 202[ ]

Neither the SEC nor any state securities regulatory agency has approved or disapproved the transactions described in this document, including the Merger, passed upon the merits or fairness of the Merger, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The accompanying proxy statement is dated [    ], 202[ ], and, together with the enclosed form of proxy card, is first being mailed to EMCORE shareholders on or about [    ], 202[ ].

 

PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION, DATED JANUARY 14, 2025

EMCORE CORPORATION

450 Clark Drive

Budd Lake, New Jersey 07828

(626) 293-3400

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD VIRTUALLY ON [    ], 202[ ] AT [ ] A.M., EASTERN TIME

To the Shareholders of EMCORE Corporation:

You are hereby notified that EMCORE Corporation, a New Jersey corporation (“EMCORE,” the “Company,” “we,” “us,” and “our”), will hold a special meeting of its shareholders in a virtual-only format via live webcast (including any adjournments or postponements thereof, the “Special Meeting”) on [    ], 202[ ] at [ ] a.m., Eastern Time (unless the Special Meeting is adjourned or postponed). You will be able to virtually attend and vote at the Special Meeting by visiting www.proxydocs.com/EMKR. There will not be a physical meeting location. For purposes of attendance at the Special Meeting, all references in the enclosed proxy statement to “present” or “in person” shall mean virtually present at the Special Meeting. The Special Meeting is being held for the following purposes:

 

1.

To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of November 7, 2024, by and among EMCORE, Velocity One Holdings, LP, a Delaware limited partnership (“Parent”), Aerosphere Power Inc., a New Jersey corporation that, at the effective time of the Merger (as defined below) will be an indirect wholly owned subsidiary of Parent (“Parent Group Member”), and Velocity Merger Sub, Inc., a New Jersey corporation that, at the effective time of the Merger (as defined below) will be an indirect wholly owned subsidiary of Parent (“Merger Sub”) (as it may be amended from time to time, the “Merger Agreement”) and the transactions contemplated by the Merger Agreement, including the Merger (the “Merger Agreement Proposal”);

 

2.

To consider and vote upon a proposal to approve, on an advisory (non-binding) basis, the “golden parachute” compensation that will or may be paid or become payable to EMCORE’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement (the “Compensation Proposal”); and

 

3.

To consider and vote upon a proposal to adjourn the Special Meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to approve the Merger Agreement Proposal at the time of the Special Meeting (the “Adjournment Proposal”).

As previously announced, on November 7, 2024, EMCORE entered into the Merger Agreement with Parent, Parent Group Member, and Merger Sub. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company (the “Merger”), with the Company surviving the Merger and becoming an indirect wholly owned subsidiary of Parent.

Under the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of common stock, no par value, of EMCORE (“EMCORE common stock”) (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive $3.10 per share in cash (the “Merger Consideration”), without interest, subject to any withholding taxes.

Immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any of the Company’s 2010 Equity Incentive Plan, 2012 Equity

Incentive Plan, Amended and Restated 2019 Equity Incentive Plan, 2022 New Employee Inducement Plan, Officer and Director Share Purchase Plan, Directors’ Compensation Policy, and Short-Term Incentive Plan, in each case, as amended (each a “Company Equity Plan”) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

There are currently no awards outstanding under the 2010 Equity Incentive Plan and the 2012 Equity Incentive Plan, nor are there expected to be any awards outstanding under these plans prior to or at the closing of the Merger.

Pursuant to an equity commitment letter dated November 7, 2024, and subject to the terms and conditions set forth therein, Charlesbank Equity Fund X, Limited Partnership (the “Guarantor”) has committed to invest or cause to be invested in the equity capital of Parent an aggregate amount of up to $37.0 million solely for the purpose of funding the Merger and other transactions contemplated by the Merger Agreement, including the Merger Consideration. In addition, the Guarantor has entered into a limited guarantee dated November 7, 2024 in favor of EMCORE, pursuant to which the Guarantor is guaranteeing certain of the termination fee obligations of Parent and Merger Sub in connection with the Merger Agreement.

The Board of Directors of EMCORE (the “Board of Directors”) has fixed the close of business on [    ], 202[ ] as the record date for the Special Meeting (the “Record Date”). Only EMCORE shareholders of record as of the close of business on the Record Date are entitled to notice of the Special Meeting and to vote at the Special Meeting or any adjournment, postponement, or other delay thereof.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE: (1) “FOR” THE MERGER AGREEMENT PROPOSAL; (2) “FOR” THE COMPENSATION PROPOSAL; AND (3) “FOR” THE ADJOURNMENT PROPOSAL.

Whether or not you plan to virtually attend the Special Meeting, to ensure your representation at the Special Meeting, we urge you to sign, date, and return, as promptly as possible, the enclosed proxy card authorizing the individuals named on your proxy card to vote your shares by: (a) accessing the website listed on the proxy card (www.proxypush.com/EMKR); (b) calling the toll-free number listed on the proxy card (1-855-635-6594) or the number on your voting instruction form; or (c) submitting your completed and signed proxy card or voting instruction form by mail by using the provided self-addressed, stamped envelope. If you virtually attend the Special Meeting and vote thereat, your vote will revoke any proxy that you have previously submitted. If you hold your shares in “street name,” you should instruct your bank, broker, or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker, or other

nominee. Your bank, broker, or other nominee cannot vote on any of the proposals, including the Merger Agreement Proposal, without your instructions. If you sign, date, and mail your proxy card without indicating how you wish to vote, your proxy will be counted as a vote “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal, and “FOR” the Adjournment Proposal.

If your shares are registered directly in your name, you are considered the shareholder of record with respect to those shares. If your shares are held in a stock brokerage account or by a bank or other nominee, then the broker, bank, or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” “Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, or other nominee how to vote their shares using the methods described above. Since the proposals are “non-routine matters,” your broker, bank, or other nominee does not have discretionary authority to vote your shares on the proposals. If your shares are held in “street name,” your broker, bank, or other nominee has enclosed a voting instruction form with the proxy statement. If you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal. We encourage you to authorize your broker, bank, or other nominee to vote your shares “FOR” all of the proposals by following the instructions provided on the enclosed voting instruction form to provide your instructions over the Internet, by telephone, or by signing, dating, and returning the voting instruction form in the postage-paid envelope provided. We encourage you to vote electronically. The failure of any shareholder of record to grant a proxy electronically over the Internet or by telephone, to submit a signed proxy card, or to vote at the Special Meeting will not have any effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, and will cause such shareholder’s shares to not be counted for purposes of determining whether a quorum is present for the transaction of business at the Special Meeting. Abstentions will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.

EMCORE shareholders may revoke their proxy in the manner described in the accompanying proxy statement before it has been voted at the Special Meeting.

Our Notice of Special Meeting of Shareholders, Proxy Statement, and Proxy Card are available at www.proxydocs.com/EMKR.

 

By Order of the Board of Directors, EMCORE Corporation

		/s/ Ryan Hochgesang
		Ryan Hochgesang
		Corporate Secretary

[    ], 202[ ]

YOUR VOTE IS VERY IMPORTANT

Regardless of how you choose to participate or how many shares you own, it is important that your shares are represented at the Special Meeting. We cannot complete the Merger unless the Merger Agreement Proposal is approved by the affirmative vote of a majority of the votes cast by the holders of EMCORE common stock entitled to vote thereon at the Special Meeting, where a quorum is present. The approval of the Merger Agreement Proposal is the only approval of EMCORE shareholders required for closing of the transactions

contemplated by the Merger Agreement. EMCORE will transact no other business at the Special Meeting other than the proposals described above, except such business as may properly be brought before the Special Meeting or any adjournment or postponement thereof.

WHETHER OR NOT YOU PLAN TO VIRTUALLY ATTEND THE SPECIAL MEETING, WE ENCOURAGE YOU TO SUBMIT YOUR PROXY AS PROMPTLY AS POSSIBLE: (1) OVER THE INTERNET; (2) BY TELEPHONE; OR (3) BY SIGNING AND DATING THE ENCLOSED PROXY CARD AND RETURNING IT IN THE PREPAID ENVELOPE PROVIDED. You may revoke your proxy or change your vote before the Special Meeting in the manner described in the enclosed proxy statement.

The failure of any shareholder of record to grant a proxy electronically over the Internet or by telephone, to submit a signed proxy card, or to vote at the Special Meeting will not have any effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, and will cause such shareholder’s shares to not be counted for purposes of determining whether a quorum is present for the transaction of business at the Special Meeting. Abstentions will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. Broker non-votes will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal.

You should carefully read and consider the entire accompanying proxy statement and its annexes, including the Merger Agreement, along with all of the documents incorporated by reference into the accompanying proxy statement, as they contain important information about, among other things, the Merger and how it affects you. If you have any questions concerning the Merger Agreement, the Merger, the Special Meeting, or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help voting your shares of EMCORE common stock, please contact our proxy solicitor:

Alliance Advisors, LLC

200 Broadacres Drive

Bloomfield, NJ 07003

Phone Number: 833-501-4822

Email: EMKR@AllianceAdvisors.com

As required by the New Jersey Business Corporation Act, a complete list of EMCORE shareholders entitled to vote at the Special Meeting will be available during the Special Meeting.

To virtually attend the Special Meeting, you must be a registered EMCORE shareholder as of the Record Date, or, if your shares are held through a broker, bank, or other nominee, you must obtain a legal proxy from such holder and follow the instructions set forth in the accompanying proxy statement. In order for you to receive timely delivery of copies of the accompanying proxy statement and any documents incorporated by reference therein in advance of the Special Meeting of EMCORE shareholders to be held on [    ], 202[ ] and any adjournment or postponement thereof, you must make such request no later than [    ], 202[ ].

TABLE OF CONTENTS

 

		Page
SUMMARY			1
QUESTIONS AND ANSWERS			18
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS			32
THE SPECIAL MEETING			34
PROPOSAL 1: APPROVAL OF THE MERGER AGREEMENT			42
Overview			42
Information about the Parties Involved in the Merger			43
Certain Effects of the Merger			44
Effect on EMCORE If the Merger Is Not Completed			45
Merger Consideration			45
Background of the Merger			46
Recommendation of the Board of Directors and Reasons for the Merger			79
Opinion of Craig-Hallum			84
Certain Unaudited Prospective Financial Information			92
Interests of EMCORE’s Directors and Executive Officers in the Merger			94
Indemnification			99
Financing of the Merger			99
Limited Guarantee			100
Closing and Effective Time of the Merger			100
Accounting Treatment			100
Dissenters’ Rights			100
Material U.S. Federal Income Tax Consequences of the Merger			101
Regulatory Matters			103
Delisting and Deregistration			105
Required Vote			105
THE MERGER AGREEMENT			106
PROPOSAL 2: THE COMPENSATION PROPOSAL			130
PROPOSAL 3: THE ADJOURNMENT PROPOSAL			131
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			132
FUTURE SHAREHOLDER PROPOSALS			134
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE			135
MISCELLANEOUS			136

ANNEXES

 

Annex A		—		Agreement and Plan of Merger, dated as of November 7, 2024, by and among EMCORE Corporation, Velocity One Holdings, LP, Aerosphere Power Inc., and Velocity Merger Sub, Inc.
Annex B		—		Opinion of Craig-Hallum Capital Group LLC.

 

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QUESTIONS AND ANSWERS

The following are brief answers to certain questions that you, as an EMCORE shareholder, may have regarding the Merger and the matters being considered at the Special Meeting. You are urged to carefully read this proxy statement and the other documents referred to or incorporated by reference into this proxy statement in their entirety because this section may not provide all the information that is important to you regarding these matters. See “Summary” for a summary of important information regarding the Merger. Additional important information is contained in the annexes to, and the documents incorporated by reference into, this proxy statement. You may obtain the information incorporated by reference into this proxy statement, without charge, by following the instructions under “Where You Can Find More Information; Incorporation by Reference.”

 

Q:	What is the Merger?

 

A:

On November 7, 2024, EMCORE entered into the Merger Agreement with Parent, Parent Group Member, and Merger Sub with respect to the Merger. Subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company surviving the Merger and becoming an indirect wholly owned subsidiary of Parent. At the effective time of the Merger, each issued and outstanding share of EMCORE common stock (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive $3.10 per share in cash, without interest, subject to any withholding taxes. In addition, immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any Company Equity Plan will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

The Merger Agreement is attached as Annex A hereto.

 

Q:	Why am I receiving this proxy statement?

 

A:	Your vote is required in connection with the Merger. EMCORE is sending this proxy statement to its shareholders to help them decide how to vote their shares with respect to the Merger Agreement Proposal, the Compensation Proposal, and the Adjournment Proposal.

 

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Q:	What matters am I being asked to vote on?

 

A:	To implement the Merger, EMCORE shareholders are being asked to consider and vote upon:

 

•

the Merger Agreement Proposal to approve the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger;

 

•

the Compensation Proposal to approve, on an advisory (non-binding) basis, the “golden parachute” compensation that will or may be paid by EMCORE to its named executive officers in connection with the Merger; and

 

•

the Adjournment Proposal to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal.

The approval of the Merger Agreement Proposal is the only approval of EMCORE shareholders required for the Closing.

 

Q:	When and where will the Special Meeting take place?

 

A:	The Special Meeting will be held in a virtual-only format via live webcast on [   ], 202[  ] at [  ] a.m., Eastern Time (unless the Special Meeting is adjourned or postponed). You will be able to virtually attend and vote at the Special Meeting by visiting www.proxydocs.com/EMKR.

To virtually attend and vote at the Special Meeting, you must be a registered EMCORE shareholder as of the Record Date, or, if your shares are held through a broker, bank, or other nominee, you must obtain a legal proxy from such holder and follow the instructions set forth in this proxy statement.

In order to virtually attend the Special Meeting, you must register at www.proxydocs.com/EMKR by [ ] p.m., Eastern Time on [     ], 202[ ] using the control number included in the notice, proxy card, or in the voting instructions that accompanied your proxy materials. Upon completing your registration, you will receive further instructions by email, including unique links that will allow you to access the Special Meeting and vote online during the Special Meeting.

 

Q:	May I physically attend the Special Meeting?

 

A:	No. The Special Meeting is being held in a virtual-only format to offer a wider group of shareholders the opportunity to participate in the meeting, while reducing the costs to shareholders and the Company associated with an in-person meeting.

 

Q:	What if I have trouble accessing the Special Meeting virtually?

 

A:

The Special Meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins. Please allow sufficient time to check your internet connection, confirm your browser is up-to-date, and ensure that you can hear streaming audio prior to the start of the Special Meeting.

If you plan to virtually attend the Special Meeting, we encourage you to access the webcast before it begins. Online access to the webcast will be available approximately 15 minutes prior to the start of the Special Meeting. If you experience any technical difficulties during the check-in process or during the meeting, please call the toll-free phone number that will be available at www.proxydocs.com/EMKR for assistance. Technicians will be available to assist you.

 

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Q:	Can I submit questions in connection with the Special Meeting?

 

A:

Yes. EMCORE shareholders are encouraged to submit questions in advance of the Special Meeting by visiting www.proxydocs.com/EMKR before [  ] p.m., Eastern Time on [    ], 202[ ] and entering their unique control number, as well as during the Special Meeting at www.proxydocs.com/EMKR. During the Special Meeting, we will answer as many shareholder-submitted questions related to the business of the Special Meeting as time permits.

 

Q:	What constitutes a quorum at the Special Meeting?

 

A:

To conduct the Special Meeting, the presence, either in person (virtually) or by properly executed proxy, of the holders of a majority of the shares of EMCORE common stock entitled to vote at the Special Meeting shall be required for the transaction of business. This is referred to as a “quorum.” If an EMCORE shareholder submits a properly executed proxy card or vote by the Internet or telephone, then such EMCORE shareholder will be considered present at the Special Meeting for purposes of determining the presence of a quorum. Abstentions will be counted as present and entitled to vote for purposes of determining the presence of a quorum. Broker non-votes will generally not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. However, if you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal.

 

Q:	Who can vote at the Special Meeting?

 

A:

The Board of Directors has fixed the close of business on [     ], 202[  ] as the Record Date for the Special Meeting. Accordingly, only EMCORE shareholders of record on the Record Date are entitled to notice of and to vote at the Special Meeting or any adjournment or postponement of the Special Meeting. As of the close of business on the Record Date, there were approximately [    ] shares of EMCORE common stock issued and outstanding and entitled to vote at the Special Meeting.

 

Q:	What vote is required to approve each proposal?

 

A:	Merger Agreement Proposal — The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve the Merger Agreement Proposal.

Compensation Proposal — The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve, on an advisory (non-binding) basis, the Compensation Proposal.

Adjournment Proposal — The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve the Adjournment Proposal.

Approval of each proposal is not conditioned on the approval of any other proposal. If the Merger does not close, the compensation described in the Compensation Proposal may be paid to EMCORE’s named executive officers to the extent payable in accordance with the terms of their respective compensation agreements and contractual arrangements even if EMCORE shareholders do not approve the Compensation Proposal.

If a quorum is present at the Special Meeting, the failure of any EMCORE shareholder of record to: (a) submit a signed proxy card; (b) grant a proxy over the Internet or by telephone (in accordance with the

 

20

instructions detailed in “The Special Meeting—Voting by Proxy or While Virtually Attending the Special Meeting”); or (c) virtually attend the Special Meeting, will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. If a quorum is present at the Special Meeting, for EMCORE shareholders who virtually attend the Special Meeting or are represented by proxy and abstain from voting, such abstention will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal.

If you hold your shares in “street name” and a quorum is present at the Special Meeting, the failure to instruct your bank, broker, or other nominee how to vote your shares (resulting in “broker non-votes”), assuming a quorum is present, will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. Broker non-votes generally will not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. However, if you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal. If your shares are held in a stock brokerage account or by a bank or other nominee, then the broker, bank, or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” “Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, or other nominee how to vote their shares using the methods described above. Since the proposals are “non-routine matters,” your broker, bank, or other nominee does not have discretionary authority to vote your shares on the proposals. If your shares are held in street name, your broker, bank, or other nominee has enclosed a voting instruction form with the proxy statement. A broker non-vote occurs when brokers, banks, or other nominees who hold shares in “street name” for a beneficial owner of the shares, who have not received voting instructions from the beneficial owner of the shares, do not vote on a non-routine proposal because the bank, broker, or other nominee does not have discretionary authority to vote on such proposal, but the bank, broker, or other nominee does exercise its discretionary authority to vote the beneficial holder’s shares on at least one “routine” matter at Special Meeting. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. Failure to instruct your broker on how to vote your shares will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. If you properly sign your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

See “What if a holder does not vote or abstains from voting?” below for information regarding the treatment of abstentions and “broker non-votes,” as well as for the impact of not voting on a specific proposal.

 

Q:	Why are EMCORE shareholders being asked to consider and vote on a proposal to approve, on an advisory (non-binding) basis, the Compensation Proposal?

 

A:

The SEC has adopted rules that require EMCORE to seek an advisory (non-binding) vote on “golden parachute” compensation. “Golden Parachute” compensation refers to certain compensation that is tied to or based on the Merger and that will or may be paid by EMCORE to its named executive officers in connection with the Merger.

 

Q:	What will happen if the Compensation Proposal is not approved at the Special Meeting?

 

A:	Approval of the Compensation Proposal is not a condition to the Closing. Accordingly, EMCORE shareholders may vote against the Compensation Proposal and vote for the Merger Agreement Proposal.

 

21

The Compensation Proposal vote is an advisory (non-binding) vote. If the Merger does not close, the compensation described in the Compensation Proposal may be paid to EMCORE’s named executive officers to the extent payable in accordance with the terms of their respective compensation agreements and contractual arrangements even if EMCORE shareholders do not approve the Compensation Proposal.

 

Q:	How do holders of record vote?

 

A:

If your EMCORE shares are registered directly in your name with our transfer agent, Equiniti Trust Company LLC, you are considered the “shareholder of record” with respect to those shares. Shares held in your name as the shareholder of record may be voted electronically at the Special Meeting by visiting www.proxydocs.com/EMKR. If you have already voted in advance of the Special Meeting by Internet, telephone, or mail, there is no need to vote again at the Special Meeting unless you wish to revoke and change your vote. Even if you plan to virtually attend the Special Meeting, we recommend that you vote your shares in advance so that your vote will be counted if you later decide not to virtually attend the Special Meeting.

 

Q:	What is a proxy?

 

A:

A proxy is a legal designation from an EMCORE shareholder to another person to vote shares owned by such EMCORE shareholder on their behalf. If you are an EMCORE shareholder of record, you can vote by proxy over the Internet, by telephone, or by mail by following the instructions provided in the enclosed proxy card. If you hold shares beneficially in “street name,” you should follow the voting instructions provided by your bank, broker, or other nominee.

 

Q:	How do beneficial holders vote?

 

A:

If a beneficial shareholder holds EMCORE shares in “street name” through a broker, bank, or other nominee rather than directly in such shareholder’s own name, such shareholder is considered the “beneficial holder” of shares held in street name. The broker, bank, or other nominee who holds these shares will provide instructions on how to vote the shares beneficially owned by such shareholder. Because a beneficial holder is not a shareholder of record, such shareholder may not vote these shares at the Special Meeting unless such shareholder obtains a legal proxy giving such shareholder the right to vote those shares at the Special Meeting. If such shareholder wishes to virtually attend the Special Meeting and vote, such shareholder will need to consult with the broker, bank, or other nominee who holds these shares and obtain a legal proxy.

 

Q:	If a holder’s shares are held in “street name” through a broker, bank, or other nominee, will the broker, bank, or other nominee vote the shares for the holder?

 

A:

Under the rules applicable to brokers, banks, and other nominees holding shares in “street name,” they have the authority to vote on routine proposals when they have not received instructions from beneficial owners. However, brokers, banks, and other nominees are precluded from exercising their voting discretion with respect to the approval of non-routine matters. Since the Merger Agreement Proposal, the Compensation Proposal, and the Adjournment Proposal are non-routine matters, absent specific instructions from you, the brokers, banks, and other nominees are not empowered to vote those “street name” shares in connection with such proposals. You should follow the procedures provided by your bank, broker, or other nominee to vote your shares. Without instructions, your shares will not be voted on such proposals, and, assuming a quorum is present, will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal.

 

Q:	What happens if I sell or otherwise transfer my shares of EMCORE common stock after the Record Date but before the Special Meeting?

 

A:	The Record Date for the Special Meeting is earlier than the date of the Special Meeting and the date the Merger is expected to be completed. If you sell or transfer your shares of EMCORE common stock after the

 

22

Record Date but before the Special Meeting, unless special arrangements (such as provision of a proxy) are made between you and the person to whom you sell or otherwise transfer your shares and each of you notifies EMCORE in writing of such special arrangements, you will transfer the right to receive the Merger Consideration, if the Merger is completed, to the person to whom you sell or transfer your shares, but you will retain your right to vote those shares at the Special Meeting. Even if you sell or otherwise transfer your shares of EMCORE common stock after the Record Date, we encourage you to sign, date, and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the Internet or by telephone (in accordance with the instructions detailed in “The Special Meeting—Voting by Proxy or While Virtually Attending the Special Meeting”).

 

Q:	If a holder is not going to attend the Special Meeting, should that holder return his or her proxy card, or otherwise submit a proxy to vote his or her shares?

 

A:

Yes. Completing, signing, dating, and returning the proxy card by mail, or submitting a proxy by accessing the website listed on the proxy card, or calling the toll-free number listed on the proxy card, ensures that the holder’s shares will be represented and voted at the Special Meeting, even if the holder is unable to or does not virtually attend the meeting.

 

Q:	Who may attend the Special Meeting?

 

A:	Only shareholders of record as of the close of business on [     ], 202[  ], or their proxy holders, or the underlying beneficial owners, may virtually attend the Special Meeting.

 

Q:	Can holders change their vote?

 

A:	Yes. Holders of record of shares of EMCORE common stock who have properly completed and submitted their proxy card, or proxy by Internet or telephone, can change their vote or revoke their proxy in any of the following ways:

 

•

delivering a signed revocation letter to Ryan Hochgesang, EMCORE’s Corporate Secretary, at EMCORE’s address set forth in this proxy statement, which must be received prior to the Special Meeting, which states that you have revoked your proxy;

 

•

voting again by Internet or telephone (prior to [    ], 202[ ] at [ ] p.m., Eastern Time), since only the latest vote will be counted;

 

•

signing and returning, prior to the prior proxy’s exercise at the Special Meeting, another proxy card that is dated after the date of the first proxy card, and submitting it following the instructions on the enclosed proxy card; or

 

•

virtually attending and voting at the Special Meeting. Virtually attending the Special Meeting alone will not in and of itself revoke your previously submitted proxy.

If your shares are held in “street name” by a broker, bank, or other nominee, you may change your voting instructions by following the instructions of your broker, bank, or other nominee. You may also vote at the Special Meeting if you register in advance to attend the Special Meeting and obtain a valid legal proxy from your broker, bank, or other nominee as set forth in this proxy statement. Simply virtually attending the Special Meeting will not revoke a previous proxy.

 

Q:	What if a holder does not vote or abstains from voting?

 

A:

Holders of record on the Record Date for the Special Meeting may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to each proposal. If a quorum is present at the Special Meeting, the failure of any EMCORE shareholder of record to: (a) submit a signed proxy card; (b) grant a proxy over the Internet or by

 

23

telephone (in accordance with the instructions detailed in “The Special Meeting — Voting by Proxy or While Virtually Attending the Special Meeting”); or (c) virtually attend the Special Meeting will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. If a quorum is present at the Special Meeting, for EMCORE shareholders who virtually attend the Special Meeting or are represented by proxy and abstain from voting, such abstention will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal.

Each “broker non-vote” will, assuming a quorum is present, have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, because “broker non-votes” will not be counted as votes cast with respect any proposal for which the broker, bank, or other nominee has not received voting instructions from the beneficial owner. Broker non-votes will generally not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. However, if you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal. If your shares are held in a stock brokerage account or by a bank or other nominee, then the broker, bank, or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” “Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, or other nominee how to vote their shares using the methods described above. Since the proposals are “non-routine matters,” your broker, bank, or other nominee does not have discretionary authority to vote your shares on the proposals. If your shares are held in street name, your broker, bank, or other nominee has enclosed a voting instruction form with the proxy statement. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. If a proxy is returned without an indication as to how shares of EMCORE common stock represented are to be voted with regard to a particular proposal, the shares of EMCORE common stock represented by the proxy will be voted in accordance with the recommendation of the Board of Directors. Therefore, such shares will be voted “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal and, if necessary or appropriate, “FOR” the Adjournment Proposal.

 

Q:	Does the Board of Directors support the Merger?

 

A:

Yes. The Board of Directors has approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and recommends that EMCORE shareholders vote “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal and, if necessary or appropriate, “FOR” the Adjournment Proposal.

 

Q:	What should holders of shares of EMCORE common stock do now?

 

A:

After carefully reading and considering the information contained in this proxy statement, holders of shares of EMCORE common stock should submit a proxy by mail, via the website, or by telephone to vote their shares as soon as possible so that their shares will be represented and voted at the Special Meeting. Holders should follow the instructions set forth on the enclosed proxy card or proxy form, or on the voting instruction form provided by the record holder if their shares are held in the name of a broker, bank, or other nominee.

 

Q:	Should holders of shares of EMCORE common stock surrender their certificates or book-entry shares now?

 

A:	No. After the Merger is completed, a nationally recognized bank or trust company designated by EMCORE that is reasonably acceptable to Parent to act as the paying agent for purposes of effecting the payment of

 

24

the Merger Consideration in accordance with the terms of the Merger Agreement (the “Paying Agent”) will send each holder of record of an outstanding certificate a letter of transmittal and instructions that explain how to exchange shares of EMCORE common stock represented by such holder’s certificates for the Merger Consideration. Also, after the Merger is completed, the Paying Agent will send each holder of non-certificated shares represented by book entry the Merger Consideration for each such book-entry share upon receipt of an “agent’s message” by the Paying Agent (or such other evidence, if any, of transfer as the Paying Agent may reasonably request).

See “The Merger Agreement — Conversion of Securities in the Merger — Payment of Securities; Surrender of Certificates.”

 

Q:	What is the Merger described in this proxy statement?

 

A:

The Merger contemplates the acquisition of EMCORE by Parent in the Merger. At the effective time of the Merger, each issued and outstanding share of EMCORE common stock (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive $3.10 per share in cash, without interest, subject to any withholding taxes. In addition, immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any Company Equity Plan will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

Each of the foregoing shall be effected on the terms and subject to the conditions in the Merger Agreement, and the conversion of the EMCORE common stock into the right to receive the Merger Consideration, and the cancellation of outstanding restricted stock unit awards subject to time-based vesting restrictions and outstanding restricted stock unit awards subject to performance vesting conditions (which, to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived) in consideration for, and the cancellation and conversion of outstanding stock options (if any) into, the right to receive a lump sum cash payment pursuant to a formula based on the Merger Consideration, in each case shall be subject to adjustment for any stock split, reverse stock split, stock dividend, recapitalization, reclassification, combination, exchange of shares, or other similar event, to the extent appropriate to provide the same economic effect as contemplated by the Merger Agreement prior to such event, and without interest and subject to any required tax withholding.

See “Proposal 1: Approval of the Merger Agreement — Overview” and “The Merger Agreement — Conversion of Securities in the Merger.”

 

25

Q:	What are EMCORE’s reasons for the Merger?

 

A:

In reaching its decision to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, and recommend that EMCORE shareholders approve the Merger Agreement, the Board of Directors considered, among other things, the amount of Merger Consideration offered to EMCORE shareholders in the Proposed Transaction, the results of operations and prospects of EMCORE, the alternatives to the Proposed Transaction, the risks and uncertainties associated with the Proposed Transaction, and alternatives to the Proposed Transaction, including continuing on a stand-alone basis.

In the process of reaching its decision, the Board of Directors consulted with EMCORE’s financial and legal advisors and considered a variety of factors, including the following factors as generally supporting its decision, among other things:

 

•

the fact that the Merger Consideration represents a premium of (i) 41.6% over EMCORE’s closing stock price of $2.19 on November 6, 2024, the day prior to the meeting of the Board of Directors during which the Board of Directors approved the Proposed Transaction, (ii) 54.2% over EMCORE’s closing stock price one week prior to that date, (iii) 26.5% over EMCORE’s closing stock price one month prior to that date, (iv) 226.3% over EMCORE’s closing stock price three months prior to that date, (v) 156.8% over the 90-calendar day volume-weighted average ending on September 27, 2024, the last trading day before the Announced Mobix Proposal, and (vi) 26.5% over EMCORE’s closing stock price of $2.45 on October 1, 2024, the first full trading day after the Announced Mobix Proposal;

 

•

the risks and uncertainties of remaining as an independent public company, including risks related to execution of EMCORE’s strategic growth initiatives, increasing the scale of EMCORE’s business, the difficulty of accurately forecasting customer demand in connection therewith, and EMCORE’s ability to continue as a going concern;

 

•

the fact that the Merger was the result of the Board of Directors’ thorough review of EMCORE’s standalone growth prospects and opportunities to maximize shareholder value, including contact, with the assistance of Craig-Hallum, with 9 parties, including 6 potential strategic partners and 3 financial sponsors (including Parent Group Member and its financial sponsor, the Guarantor), and with the assistance of Financial Advisor A, with 132 parties, including 48 potential strategic partners and 84 financial sponsors, concerning their interest in a strategic transaction involving EMCORE. The Board of Directors considered the nature of the engagement by each of these potential acquirors, and that, of these potential acquirors, only Parent Group Member and the Guarantor made a proposal for an acquisition of EMCORE that was capable of being accepted;

 

•

strategic alternatives to the Merger, including continuing to execute on EMCORE’s long-term plan without effecting the Merger;

 

•

the fact that the Merger Consideration of $3.10 will be paid in cash, and provides near term value and liquidity to EMCORE shareholders, enabling them to realize value for their interest in EMCORE while eliminating business and execution risk inherent in EMCORE’s business;

 

•

the Board of Directors’ belief that the value offered to EMCORE shareholders pursuant to the Merger is more favorable to EMCORE shareholders than the potential value from other alternatives reasonably available to EMCORE, including remaining an independent public company;

 

•

the Board of Directors’ belief that although the Merger Consideration of $3.10 in the Merger is lower than the $3.80 per share proposed by Mobix, the Merger has greater closing certainty than the Potential Mobix Transaction, as the Guarantor and Parent entered into an equity commitment letter providing sufficient commitments for the Aggregate Merger Consideration, which includes third-party beneficiary rights in favor of EMCORE, and the Merger Agreement provides that EMCORE would be able to seek damages beyond the Parent Termination Fee of $2.0 million payable by Parent if a willful breach or fraud occurred, while Mobix did not provide sufficient evidence of its ability to finance the

 

26

Potential Mobix Transaction in the opinion of the Board of Directors and Mobix sought to cap damages to the reverse termination fee of $1.5 million payable by Mobix, even in the event of a knowing and intentional breach;

 

•

the fact that the Merger Consideration was the result of arm’s-length negotiations, and the fact that representatives of Parent informed representatives of EMCORE and its financial advisor that the Merger Consideration was the maximum price that Parent was willing to pay; and

 

•

increased volatility and uncertain outlook for EMCORE driven by:

 

•

EMCORE’s smaller size as compared to our competitors;

 

•

EMCORE’s limited liquidity;

 

•

the unpredictability of future revenue;

 

•

customer concentration; and

 

•

EMCORE’s dependence on a few products.

See “Proposal 1: Approval of the Merger Agreement — Recommendation of the Board of Directors and Reasons for the Merger.”

 

Q:	What will EMCORE shareholders receive if the Merger is completed?

 

A:

At the effective time of the Merger, each issued and outstanding share of EMCORE common stock (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive the Merger Consideration of $3.10 per share in cash, without interest, subject to any withholding taxes. In addition, immediately prior to the effective time of the Merger: (a) each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any Company Equity Plan will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions; (b) each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (X) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (Y) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and (c) each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

See “The Merger Agreement — Conversion of Securities in the Merger.” After the Closing, EMCORE shareholders will cease to own any shares of EMCORE common stock.

 

Q:	How does the Merger Consideration compare to the market price of EMCORE common stock prior to the announcement of the Merger Agreement?

 

A:	The Merger Consideration of $3.10 per share of EMCORE common stock represents a 41.6% premium over the closing price per share of EMCORE common stock on November 6, 2024, the day prior to the meeting

 

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of the Board of Directors during which the Board of Directors approved the Proposed Transaction and the last trading date before the execution of the Merger Agreement, as well as a 54.2% premium over the closing price per share of EMCORE common stock one week prior to November 6, 2024, a 26.5% premium over the closing price per share of EMCORE common stock one month prior to November 6, 2024, and a 226.3% premium over the closing price per share of EMCORE common stock three months prior to November 6, 2024. The Merger Consideration also represents a premium of 156.8% over the 90-calendar day volume-weighted average ending on September 27, 2024, the last trading day before Mobix Labs, Inc. (“Mobix”) issued a press release announcing that it had submitted a non-binding proposal to the Board of Directors to acquire all of EMCORE’s outstanding shares for $3.80 per share in cash (the “Announced Mobix Proposal”). In addition, the Merger Consideration represents a premium of 26.5% over the closing price per share of EMCORE common stock on October 1, 2024, first full trading day after the Announced Mobix Proposal. The closing price per share of EMCORE common stock on Nasdaq on January 13, 2025, the most recent practicable date prior to the date of this proxy statement, was $2.99. You are encouraged to obtain current market prices of EMCORE common stock in connection with voting your shares of EMCORE common stock.

 

Q:	Will EMCORE cease to be a public company after the Closing?

 

A:	Yes, the shares of EMCORE common stock will be delisted from Nasdaq and EMCORE will cease to be an SEC reporting company upon the Closing.

 

Q:	What are the material U.S. federal income tax consequences to EMCORE shareholders resulting from the Merger?

 

A:

The receipt of cash by a U.S. Holder in exchange for shares of EMCORE common stock pursuant to the Merger will be a taxable transaction for U.S. federal income tax purposes. In general, for U.S. federal income tax purposes, a U.S. Holder who receives cash in exchange for EMCORE common stock pursuant to the Merger will recognize a gain or loss in an amount equal to the difference, if any, between the amount of cash received in the Merger and the U.S. Holder’s adjusted tax basis in the shares of EMCORE common stock surrendered pursuant to the Merger. This proxy statement contains a general discussion of certain U.S. federal income tax consequences of the Merger. This discussion does not address any U.S. federal tax considerations other than those pertaining to income tax (such as estate, gift, or other non-income tax consequences) or any state, local, or non-U.S. income or non-income tax considerations. Consequently, you should consult your tax advisor to determine the particular tax consequences to you of the Merger.

See “Proposal 1: Approval of the Merger Agreement — Material U.S. Federal Income Tax Consequences of the Merger.”

 

Q:	Are there risks associated with the pendency of the Closing?

 

A:

Yes. The Closing is subject to the satisfaction of customary closing conditions, including receipt of approval by EMCORE shareholders of the Merger Agreement Proposal and the absence of any laws or orders that would make illegal, enjoin, or otherwise prohibit consummation of the Merger or the other transactions contemplated by the Merger Agreement.

Each of the parties to the Merger Agreement has agreed to use its respective reasonable best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper, or advisable to consummate and make effective, and to satisfy all conditions to, in the most expeditious manner practicable (and in any event no later than the End Date) the Merger and the other transactions contemplated by the Merger Agreement, including obtaining all necessary governmental authorizations, waivers, and actions or nonactions from governmental entities, making all necessary registrations, filings, and notifications (including filings with governmental entities), and taking all steps as may be necessary to obtain an approval or waiver from, or to avoid an action or proceeding by, any governmental entities.

 

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Although the Merger is not reportable under the HSR Act, and therefore no filings with respect to the Merger are expected to be required with the FTC or the DOJ, the Merger and the other transactions contemplated by the Merger Agreement are subject to the requirements of ISRA, and the regulations issued thereunder, with respect to the Budd Lake Facility. EMCORE has agreed to use commercially reasonable measures to achieve ISRA compliance prior to Closing if possible, or otherwise take commercially reasonable measures with respect to ISRA to permit the consummation of the Merger as set forth in the Merger Agreement.

See “The Merger Agreement — Conditions to the Merger,” “The Merger Agreement — Appropriate Action, Consents, and Filings,” and “Proposal 1: Approval of the Merger Agreement — Regulatory Matters.”

 

Q:	What happens if the Merger is not completed?

 

A:

If the Merger Agreement is not adopted by EMCORE shareholders or if the Merger is not completed for any other reason, EMCORE shareholders will not receive any payment for their respective shares of EMCORE common stock. Instead, EMCORE will remain an independent public company, EMCORE common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act, and EMCORE will continue to file periodic and other reports with the SEC. Under specific circumstances, in connection with a termination of the Merger Agreement, EMCORE may be required to pay Parent a termination fee in an aggregate amount of $1.5 million and Parent may be required to pay EMCORE a termination fee in an aggregate amount of $2.0 million.

See “Summary — Termination Fee Payable in Certain Circumstances” and “The Merger Agreement — Termination Fee Payable in Certain Circumstances.”

 

Q:	Will EMCORE or Parent have to pay anything to the other parties if the Merger Agreement is terminated?

 

A:	Under specified circumstances, in connection with a termination of the Merger Agreement,

 

•

EMCORE would be required to pay Parent a termination fee in an aggregate amount of $1.5 million; and

 

•

Parent would be required to pay EMCORE a termination fee in an aggregate amount of $2.0 million.

See “Summary — Termination Fee Payable in Certain Circumstances” and “The Merger Agreement — Termination Fee Payable in Certain Circumstances.”

 

Q:	Are EMCORE shareholders and beneficial owners entitled to dissenters’ or appraisal rights for their shares?

 

A:

No. Under Section 14A:11 of the NJBCA, a shareholder may not dissent from a merger with respect to shares (i) that are listed on a national securities exchange or held of record by not less than 1,000 holders on the record date fixed to determine the shareholders entitled to vote upon the plan of merger, or (ii) for which, pursuant to the plan of merger, such shareholder will receive (x) cash, (y) shares, obligations or other securities which, upon consummation of the merger, will either be listed on a national securities exchange or held of record by not less than 1,000 holders, or (z) cash and such securities.

Since the Merger Consideration will consist of cash, holders of EMCORE common stock will not be entitled to dissenters’ rights in the Merger with respect to their shares of EMCORE common stock under the NJBCA. Under the NJBCA, notwithstanding that EMCORE shareholders do not qualify as statutory dissenters, they may still have the right to claim fair compensation for their shares in the context of a cash-out merger, as a result of the fiduciary duty of the majority to treat the minority fairly.

For more information, see “Proposal 1: Approval of the Merger Agreement — Dissenters’ Rights.”

 

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Q:	What is the current relationship among EMCORE and Parent, Parent Group Member, and Merger Sub?

 

A:

Parent Group Member, will, at the effective time of the Merger, be an indirect wholly owned subsidiary of Parent, and Merger Sub will, at the effective time of the Merger, be an indirect wholly owned subsidiary of Parent. Parent was formed by Parent Group Member as a Delaware limited partnership in November 2024 as part of an overall restructuring of Parent Group Member and its subsidiaries, with such restructuring to be completed prior to the consummation of the Merger. Merger Sub was formed as a New Jersey corporation in November 2024 to effectuate the Merger. Other than as set forth above and in connection with the Merger, there is no relationship between or among Parent, Parent Group Member, or Merger Sub, on the one hand, and EMCORE on the other hand.

 

Q:	When will the Merger close?

 

A:

The Merger is currently expected to close during the quarter ending March 31, 2025, subject to the completion or waiver of certain specified closing conditions described in this proxy statement. EMCORE and Parent are working to complete the Merger as quickly as practicable after the closing conditions are satisfied or waived. Assuming that the Merger Agreement Proposal is approved by the requisite vote of EMCORE shareholders at the Special Meeting, other important conditions to the Closing exist. However, it is possible that factors outside the parties’ control could require the Merger to be completed at a later time or not be completed at all. As a result of the foregoing, there may be a significant or longer than expected time period between the shareholder vote at the Special Meeting and the Closing.

See “The Merger Agreement — Conditions to the Merger.”

 

Q:	Who will bear the cost of soliciting votes for the Special Meeting?

 

A:

EMCORE has engaged Alliance Advisors, LLC (“Alliance”) to assist in the solicitation of proxies for the Special Meeting. EMCORE estimates that it will pay Alliance approximately $25,000, plus additional fees to be determined at the conclusion of the solicitation and reimbursement of reasonable expenses. EMCORE has agreed to indemnify Alliance against various liabilities and expenses that relate to or arise out of its solicitation of proxies (subject to certain exceptions).

 

Q:	What should I do if I receive more than one set of voting materials?

 

A:

This means you own shares of EMCORE common stock that are registered under different names or are in more than one account. For example, you may own some shares directly as an EMCORE shareholder of record and other shares through a broker, or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must vote, sign, and return all of the proxy cards, or follow the instructions for any alternative voting procedure on each of the proxy cards that you receive in order to vote all of the shares you own. Each proxy card you receive comes with its own prepaid return envelope. If you submit your proxy by mail, make sure you return each proxy card in the return envelope that accompanies that proxy card.

 

Q:	How many copies of this proxy statement and related voting materials should I receive if I share an address with another EMCORE shareholder?

 

A:

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. EMCORE and some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address, unless contrary instructions have been received from the affected

 

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shareholders. Upon written or oral request, EMCORE will deliver free of charge a separate copy of each of the proxy related materials, as applicable, to a shareholder at a shared address to which a single copy was delivered. Once you have received notice from your broker or EMCORE that they or EMCORE will be sending householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or EMCORE if you hold registered shares. You can notify EMCORE by sending a request to EMCORE Corporation, 450 Clark Drive, Budd Lake, New Jersey 07828, Attention: General Counsel or by calling (626) 293-3400 and EMCORE will promptly deliver to you a separate copy of the proxy statement.

 

Q:	Where can I find the voting results of the Special Meeting?

 

A:

The preliminary voting results for the Special Meeting are expected to be announced at the Special Meeting. In addition, within four business days following certification of the final voting results, EMCORE will file the final voting results of the Special Meeting (or, if the final voting results have not yet been certified, the preliminary results) with the SEC on a Current Report on Form 8-K.

 

Q:	Who can answer my questions?

 

A:	If you have any questions concerning the Merger, the Special Meeting, or this proxy statement, would like additional copies of this proxy statement, or need to obtain proxy cards or help voting your shares of EMCORE common stock, please contact our proxy solicitor:

Alliance Advisors, LLC

200 Broadacres Drive

Bloomfield, NJ 07003

Phone Number: 833-501-4822

Email: EMKR@AllianceAdvisors.com

 

Q:	Where can I find more information about EMCORE, Parent, Parent Group Member, and Merger Sub, and the Merger?

 

A:	You can find out more information about EMCORE, Parent, Parent Group Member, and Merger Sub, and the Merger by reading this proxy statement and, with respect to EMCORE, from various sources described in “Where You Can Find More Information; Incorporation by Reference.”

See “Proposal 1: Approval of the Merger Agreement — Information about the Parties Involved in the Merger” for additional information about Parent, Parent Group Member, and Merger Sub. For additional information about the Merger, see “Proposal 1: Approval of the Merger Agreement — Overview.”

 

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

This proxy statement contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Exchange Act. These forward-looking statements include, but are not limited to, statements regarding the following: the anticipated benefits of the Merger, including future plans, objectives, expectations, and intentions; the anticipated timing of the Closing; the anticipated delisting and deregistration of EMCORE common stock; indebtedness to be incurred by Parent in connection with the Merger; EMCORE’s potential or projected future financial performance and expenditures; potential tax and accounting impacts of the Merger; and other expectations and estimates or statements which are not historical facts. Forward-looking statements can be identified by terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “foresee,” “intend,” “may,” “plan,” “project,” “should,” “will,” “would,” and the negative of these terms or other similar expressions. These forward-looking statements are based upon information currently available to EMCORE and are subject to a number of risks, uncertainties, and other factors that could cause actual results to vary materially from those expressed in, or implied by, these forward-looking statements. Important factors that could cause actual results to vary materially from the results referred to in the forward-looking statements in this proxy statement include, among other things:

 

•

the possibility that the conditions to the Closing will not be satisfied;

 

•

failure to obtain, delays in obtaining, or adverse conditions related to obtaining, necessary governmental authorizations, waivers, registrations, filings and notifications, shareholder approval, or regulatory clearances to be sought in connection with the Merger in the anticipated timeframe or at all;

 

•

effects of the announcement or pendency of the Merger on the trading price of EMCORE common stock and on EMCORE’s business and operating results;

 

•

the occurrence of any event, change, or other circumstances that could give rise to the termination of the Merger Agreement;

 

•

significant transaction costs, fees, expenses, and charges (including unknown liabilities and risks relating to any unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses, and future prospects) which could impact EMCORE’s business and operating results or expected or targeted future financial and operating performance and results;

 

•

operating costs, customer loss, and business disruption (including, without limitation, difficulties in maintaining employee, customer, or other business, contractual, or operational relationships following the announcement of the Merger and the diversion of EMCORE management’s attention from its ongoing business);

 

•

failure to consummate or delay in the Closing for any reason;

 

•

the ability to retain key executive officers and employees during the pendency of the Merger;

 

•

risks associated with regulation and litigation related to the Merger or otherwise impacting any of the parties;

 

•

changes in the competitive or regulatory landscape in the aerospace and defense industry;

 

•

dependence on significant licensing arrangements, customers, or other third parties;

 

•

risks relating to any resurgence of the COVID-19 pandemic or similar public health crises;

 

•

issues and costs arising from acquisitions and dispositions, and the timing and impact of accounting adjustments;

 

•

risks related to Parent’s ability to obtain the necessary financing to consummate the Merger;

 

•

prolonged declines in one or more markets;

 

32

•

economic changes in global markets, such as reduced demand for products, exchange rates, inflation, and interest rates, recession, government policies, including policy changes affecting the aerospace and defense industry, taxation, trade, tariffs, immigration, customs, border actions and the like, and other external factors that the parties to the Merger cannot control;

 

•

risks related to intellectual property, privacy matters, and cyber security (including losses and other consequences from failures, breaches, attacks, or disclosures involving information technology infrastructure and data);

 

•

other business effects (including the effects of industry, market, economic, political, or regulatory conditions); and

 

•

other risks and uncertainties including, but not limited to, those described in EMCORE’s Annual Report on Form 10-K filed with the SEC, and from time to time in other filed reports, including EMCORE’s Quarterly Reports on Form 10-Q.

For a more detailed description of the risk factors associated with EMCORE, refer to EMCORE’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024 filed with the SEC on January 14, 2025 and subsequent SEC filings by EMCORE. Shareholders, potential investors, and other readers are urged to consider these factors in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements included in this proxy statement are made only as of the date of this proxy statement, and EMCORE undertakes no obligation to update any forward-looking information contained in this proxy statement to reflect subsequent events or circumstances.

 

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THE SPECIAL MEETING

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors for use at the Special Meeting of EMCORE shareholders to be held virtually via live webcast on [    ], 202[  ]. When this proxy statement refers to the Special Meeting, it is also referring to any adjournments or postponements of the Special Meeting. EMCORE intends to begin mailing this proxy statement, the attached Notice of Special Meeting of Shareholders and the accompanying proxy card on or about [    ], 202[  ]. For purposes of attendance at the Special Meeting, all references in this proxy statement to “present” or “in person” shall mean virtually present at the Special Meeting.

Date, Time, and Place of the Special Meeting

The Special Meeting will be held virtually via live webcast on [    ], 202[ ] at [ ] a.m., Eastern Time (unless the Special Meeting is adjourned or postponed). You will be able to virtually attend and vote at the Special Meeting by visiting www.proxydocs.com/EMKR.

To virtually attend the Special Meeting, you must be a registered EMCORE shareholder as of the Record Date, or, if your shares are held through a broker, bank, or other nominee, you must obtain a legal proxy from such holder and follow the instructions set forth in this proxy statement.

Purpose of the Special Meeting

At the Special Meeting, EMCORE shareholders will be asked:

 

1.

Merger Agreement Proposal: to consider and vote upon a proposal to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger;

 

2.

Compensation Proposal: to consider and vote upon a proposal to approve, on an advisory (non-binding) basis, the “golden parachute” compensation that will or may be paid or become payable to EMCORE’s named executive officers that is based on or otherwise related to the Merger Agreement and the transactions contemplated by the Merger Agreement; and

 

3.

Adjournment Proposal: to consider and vote upon a proposal to approve the adjournment of the Special Meeting, if necessary or appropriate, to solicit additional proxies in the event there are insufficient votes at the time of the Special Meeting to approve the Merger Agreement Proposal.

THE APPROVAL OF THE MERGER AGREEMENT PROPOSAL IS THE ONLY APPROVAL OF EMCORE SHAREHOLDERS REQUIRED FOR THE CLOSING OF THE MERGER.

THE BOARD OF DIRECTORS HAS APPROVED THE MERGER AGREEMENT, THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT, INCLUDING THE MERGER, THE “GOLDEN PARACHUTE” COMPENSATION PAYMENTS AND, IF NECESSARY OR APPROPRIATE, THE ADJOURNMENT PROPOSAL, AND RECOMMENDS THAT EMCORE SHAREHOLDERS VOTE “FOR” EACH PROPOSAL LISTED ABOVE.

Participating in the Special Meeting

In order to virtually attend the Special Meeting, you must register at www.proxydocs.com/EMKR by [ ] p.m., Eastern Time on [    ], 202[ ] using the control number included in the notice, proxy card, or in the voting instructions that accompanied your proxy materials. Upon completing your registration, you will receive further instructions by email, including unique links that will allow you to access the Special Meeting and vote online during the Special Meeting.

The Special Meeting platform is fully supported across browsers (MS Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and

 

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plugins. Please allow sufficient time to check your internet connection, confirm your browser is up-to-date, and ensure that you can hear streaming audio prior to the start of the Special Meeting.

If you plan to virtually attend the Special Meeting, we encourage you to access the webcast before it begins. Online access to the webcast will be available approximately 15 minutes prior to the start of the Special Meeting. If you experience any technical difficulties during the check-in process or during the meeting, please call the toll-free phone number that will be available at www.proxydocs.com/EMKR for assistance. Technicians will be available to assist you.

EMCORE shareholders are encouraged to submit questions in advance of the Special Meeting by visiting www.proxydocs.com/EMKR before [ ] p.m., Eastern Time on [    ], 202[  ] and entering their unique control number, as well as during the Special Meeting at www.proxydocs.com/EMKR. During the Special Meeting, we will answer as many shareholder-submitted questions related to the business of the Special Meeting as time permits.

Additional information regarding related rules of conduct and other materials for the Special Meeting will be available during the Special Meeting at www.proxydocs.com/EMKR.

Record Date and Issued and Outstanding Shares

The Board of Directors has fixed the close of business on [     ], 202[  ] as the Record Date for the Special Meeting. Accordingly, only EMCORE shareholders of record as of the Record Date are entitled to receive notice of and to vote at the Special Meeting or at any adjournment or postponement of the Special Meeting. Each share of EMCORE common stock entitles the holder to one vote on each of the proposals to be considered at the Special Meeting.

As of the close of business on the Record Date, there were approximately [    ] shares of EMCORE common stock issued and outstanding and entitled to vote at the Special Meeting.

Holders of shares of EMCORE common stock on the Record Date may vote their shares of EMCORE common stock at the Special Meeting or by proxy as described below under “—Voting by Proxy or While Virtually Attending the Special Meeting.”

Quorum

The presence, either in person (virtually) or by properly executed proxy, of the holders of the majority of the shares of EMCORE common stock entitled to vote at the Special Meeting shall be required for the transaction of business. This is referred to as a “quorum.” If an EMCORE shareholder submits a properly executed proxy card or vote by the Internet or telephone, then such EMCORE shareholder will be considered present at the Special Meeting for purposes of determining the presence of a quorum. Abstentions will be counted, but “broker non-votes” will not be counted, as present and entitled to vote for purposes of determining the presence of a quorum. A broker non-vote occurs when brokers, banks, or other nominees who hold shares in “street name” for a beneficial owner of the shares, who have not received voting instructions from the beneficial owner of the shares, do not vote on a non-routine proposal because the bank, broker, or other nominee does not have discretionary authority to vote on such proposal, but the bank, broker, or other nominee does exercise its discretionary authority to vote the beneficial holder’s shares on at least one “routine” matter at the Special Meeting. EMCORE does not expect any “broker non-votes” at the Special Meeting because the rules applicable to brokers, banks, and other nominees only provide brokers with discretionary authority to vote on proposals that are considered “routine,” and each of the proposals to be presented at the Special Meeting is considered “non-routine.” As a result, a broker, bank, or other nominee will not be permitted to vote your shares of EMCORE common stock at the Special Meeting on any proposal for which such broker, bank, or other nominee has not received voting instructions.

 

35

Required Vote; Abstentions and “Broker Non-Votes”

EMCORE shareholders of record on the Record Date for the Special Meeting may vote “FOR,” “AGAINST,” or “ABSTAIN” with respect to each proposal.

Required Vote

Merger Agreement Proposal. The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve the Merger Agreement Proposal.

Compensation Proposal. The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve, on an advisory (non-binding basis), the Compensation Proposal.

Adjournment Proposal. The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve the Adjournment Proposal.

Failure to be Represented, Abstentions, and “Broker Non-Votes”

General

Abstentions will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal. Brokers, banks, and other nominees holding shares in “street name” have the authority to vote on routine proposals when they have not received instructions from beneficial owners. Brokers, banks, and other nominees are precluded from exercising their voting discretion with respect to the approval of non-routine matters, such as the Merger Agreement Proposal, the Compensation Proposal, and the Adjournment Proposal. As a result, absent specific instructions from the beneficial owner, brokers, banks, and other nominees are not empowered to vote those “street name” shares in connection with the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, and, assuming the broker, bank, or other nominee has not received voting instructions on any proposal to be considered at the Special Meeting, such shares will not be considered present and entitled to vote at the Special Meeting for the purposes of determining a quorum, regardless of whether they submit proxies.

All beneficial owners of shares of EMCORE common stock are urged to submit their proxy to indicate their votes or to contact the record holder of their shares to determine how to vote.

Failure to be Represented

If a quorum is present at the Special Meeting, the failure of any EMCORE shareholder of record to: (a) submit a signed proxy card; (b) grant a proxy over the Internet or by telephone (in accordance with the instructions detailed in “—Voting by Proxy or While Virtually Attending the Special Meeting”); or (c) virtually attend the Special Meeting will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal.

Abstentions

If a quorum is present at the Special Meeting, for EMCORE shareholders who virtually attend the Special Meeting or are represented by proxy and abstain from voting on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, such abstention will have no effect on the outcome of the vote on such proposal.

 

36

“Broker Non-Votes”

A broker non-vote occurs when brokers, banks, or other nominees who hold shares in “street name” for a beneficial owner of the shares, who have not received voting instructions from the beneficial owner of the shares, do not vote on a non-routine proposal because the bank, broker, or other nominee does not have discretionary authority to vote on such proposal, but the broker, bank, or other nominee does exercise its discretionary authority to vote the beneficial holder’s shares on at least one “routine” matter at the Special Meeting. Each “broker non-vote” will have no effect on the outcome of the vote on the Merger Agreement Proposal, the Compensation Proposal, or the Adjournment Proposal, because “broker non-votes” will not be counted as votes cast with respect to such proposals. Broker non-votes will generally not be considered present for the purposes of establishing a quorum and will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. However, if you hold your shares in “street name” and give voting instructions to your broker, bank, or other nominee with respect to one of the proposals, but give no instruction as to any other proposal, then those shares will be deemed present at the Special Meeting for purposes of establishing a quorum at the Special Meeting, will be voted as instructed with respect to the proposal as to which instructions were given, and will not be voted with respect to any other proposal. If your shares are held in a stock brokerage account or by a bank or other nominee, then the broker, bank, or other nominee is considered to be the shareholder of record with respect to those shares. However, you are still considered to be the beneficial owner of those shares, and your shares are said to be held in “street name.” “Street name” holders generally cannot submit a proxy or vote their shares directly and must instead instruct the broker, bank, or other nominee how to vote their shares using the methods described above. Since the proposals are “non-routine matters,” your broker, bank, or other nominee does not have discretionary authority to vote your shares on the proposals. If your shares are held in street name, your broker, bank, or other nominee has enclosed a voting instruction form with the proxy statement. Since all proposals presented to EMCORE shareholders will be considered non-routine, we do not anticipate any broker non-votes at the Special Meeting. Failure to instruct your broker on how to vote your shares will have the same effect as a vote “AGAINST” the Merger Agreement Proposal.

The Merger will not occur unless the Merger Agreement Proposal is approved. Approval of each proposal is not conditioned on the approval of any other proposal. Further, if the Merger closes, the compensation described in the Compensation Proposal may be paid to EMCORE’s named executive officers to the extent payable pursuant to the terms of their respective compensation agreements and contractual arrangements even if EMCORE shareholders do not approve the Compensation Proposal.

Voting by Proxy or While Virtually Attending the Special Meeting

Giving a proxy means that an EMCORE shareholder authorizes the person named in the enclosed proxy card to vote his or her shares at the Special Meeting in the manner such shareholder directs. An EMCORE shareholder may cause his or her shares to be voted by granting a proxy in advance of the Special Meeting or by voting while virtually attending the Special Meeting. Even if you plan to virtually attend the Special Meeting, we urge you to promptly follow the instructions on the enclosed proxy card to vote on the matters to be considered at the Special Meeting.

EMCORE shareholders of record may vote their shares as follows:

 

1.

Internet — go to the website printed on the enclosed proxy card (www.proxypush.com/EMKR) and follow the instructions outlined on the secured website using certain information provided on the front of the proxy card. If you vote using the Internet, there is no need to mail in your proxy card.

 

2.

Telephone — call the toll-free number that is listed on the enclosed proxy card (1-855-635-6594) and follow the instructions. If you vote using the telephone, there is no need to mail in your proxy card.

 

3.

Proxy Card — complete, sign, date, and return your proxy card in the postage-paid, self-addressed envelope provided.

 

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4.

Virtually Attending the Special Meeting — attending and voting at the Special Meeting if you are a shareholder of record or if you are a beneficial owner and have a legal proxy from the shareholder of record.

Submitting a proxy by Internet or by telephone provides the same authority to vote shares as if the shareholder had returned his or her proxy card by mail.

Each properly signed proxy received prior to the Special Meeting and not revoked before exercised at the Special Meeting will be voted at the Special Meeting according to the instructions indicated on the proxy or, if no instructions are given on a properly signed proxy, the shares represented by such proxy will be voted “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal and, if necessary or appropriate, “FOR” the Adjournment Proposal.

If an EMCORE shareholder of record plans to virtually attend the Special Meeting and wishes to vote while attending the Special Meeting, such shareholder will be able to do so by visiting www.proxydocs.com/EMKR. If an EMCORE shareholder’s shares are held in “street name” (through a broker, bank, or other nominee), such shareholder must obtain a legal proxy from the broker, bank, or other nominee to vote such shares while attending the Special Meeting. EMCORE requests that EMCORE shareholders complete, date, and sign the accompanying proxy card and return it to EMCORE in the enclosed postage-paid, self-addressed envelope or submit the proxy by telephone or the Internet as soon as possible.

Whether or not an EMCORE shareholder plans to virtually attend the Special Meeting, EMCORE requests that each EMCORE shareholder complete, sign, date, and return the enclosed proxy card in the enclosed postage-paid, self-addressed envelope, or submit a proxy through the Internet or by telephone as described in the instructions accompanying this proxy statement as soon as possible. This will not prevent any EMCORE shareholder from voting while virtually attending the Special Meeting, but will ensure that such shareholder’s vote is counted if such shareholder is unable to virtually attend the Special Meeting.

Revocability of Proxies and Changes to an EMCORE Shareholder’s Vote

EMCORE shareholders of record may revoke their proxies and change their votes at any time prior to the time their shares are voted at the Special Meeting. An EMCORE shareholder can revoke his or her proxy or change his or her vote by:

 

•

delivering a signed revocation letter to EMCORE’s Corporate Secretary, at EMCORE’s address set forth in this proxy statement, which must be received prior to the Special Meeting, which states that you have revoked your proxy;

 

•

voting again by Internet or telephone (prior to [    ], 202[ ] at [ ] p.m., Eastern Time), since only the latest vote will be counted;

 

•

signing and returning, prior to the prior proxy’s exercise at the Special Meeting, another proxy card that is dated after the date of the first proxy card, and submitting it following the instructions on the enclosed proxy card; or

 

•

virtually attending and voting at the Special Meeting.

Virtually attending the Special Meeting alone will not in and of itself revoke your previously submitted proxy. You must specifically vote at the Special Meeting for your previous proxy to be revoked.

Please note that to be effective, your new proxy card, Internet or telephonic voting instructions, or written notice of revocation must be received by EMCORE’s Corporate Secretary prior to the Special Meeting.

If your shares are held in “street name” by a broker, bank, or other nominee, you may change your voting instructions by following the instructions of your broker, bank, or other nominee. You may also vote at the

 

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Special Meeting if you register in advance to attend the Special Meeting and obtain a valid legal proxy from your broker, bank, or other nominee as set forth in this proxy statement. A registered EMCORE shareholder may revoke a proxy by any of these methods, regardless of the method used to deliver the shareholder’s previous proxy.

Any adjournment, recess, or postponement of the Special Meeting for the purpose of soliciting additional proxies will allow EMCORE shareholders who have already sent in their proxies to revoke them at any time prior to their use at the Special Meeting which was adjourned, recessed, or postponed.

Written notices of revocation and other communications with respect to the revocation of proxies should be addressed as follows:

EMCORE Corporation

450 Clark Drive

Budd Lake, New Jersey 07828

Attention: Corporate Secretary

Recommendation of the Board of Directors

The Board of Directors has unanimously: (a) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, are advisable and fair to, and in the best interests of EMCORE and EMCORE shareholders; (b) approved the execution, delivery, and performance of the Merger Agreement and the other transaction documents, and the transactions contemplated by the Merger Agreement; (c) recommended that EMCORE shareholders approve the Merger Agreement; and (d) directed that the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, be submitted for consideration by EMCORE shareholders at the Special Meeting.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE: (1) “FOR” THE MERGER AGREEMENT PROPOSAL; (2) “FOR” THE COMPENSATION PROPOSAL; AND (3) “FOR” THE ADJOURNMENT PROPOSAL.

Solicitation of Proxies

This proxy statement is being furnished in connection with the solicitation of proxies by the Board of Directors. EMCORE will bear the cost of the solicitation of proxies, including reimbursement of fees of certain brokers, banks, and nominees in obtaining voting instructions from beneficial owners, and the preparation and assembly of this proxy statement. All costs related to the printing and mailing of this proxy statement and any additional materials furnished to EMCORE shareholders will be borne by EMCORE.

In addition, EMCORE has retained Alliance to assist in the solicitation of proxies for a fee of approximately $25,000, plus additional fees to be determined at the conclusion of the solicitation and reimbursement of reasonable expenses. EMCORE has also agreed to indemnify Alliance for certain liabilities related to its engagement.

Proxies may be solicited by mail, telephone, facsimile, and other forms of electronic transmission, and may also be solicited by directors, officers, and employees of EMCORE without additional compensation. Copies of solicitation materials will be furnished to brokers, banks, and other nominees holding shares in their names that are beneficially owned by others so that they may forward these solicitation materials to the beneficial owners. In addition, if asked, EMCORE will reimburse these persons for their reasonable expenses in forwarding the solicitation materials to the beneficial owners in accordance with SEC and Nasdaq regulations. EMCORE has requested brokers, banks, and other nominees to forward all solicitation materials to the beneficial owners of the shares they hold of record.

 

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Certain Ownership of EMCORE Common Stock

As of the Record Date, EMCORE’s directors and executive officers beneficially owned [    ] shares of EMCORE common stock, representing approximately [ ]% of the shares of EMCORE common stock issued and outstanding as of such date.

EMCORE currently expects that each of its directors and executive officers will vote their shares of EMCORE common stock “FOR” the Merger Agreement Proposal, “FOR” the Compensation Proposal and, if necessary or appropriate, “FOR” the Adjournment Proposal, although none of them has entered into an agreement requiring them to do so.

Ownership of EMCORE Following the Merger

EMCORE shareholders will cease to own any shares of EMCORE and EMCORE will continue as an indirect wholly owned subsidiary of Parent following the Merger. See “The Merger Agreement—The Merger.”

Anticipated Date of Completion of the Merger

Assuming timely satisfaction of necessary closing conditions, including the approval by EMCORE shareholders of the Merger Agreement Proposal, we currently anticipate that the Merger will be consummated during the quarter ending March 31, 2025. However, the exact timing of completion of the Merger cannot be predicted as the Merger is subject to the closing conditions specified in the Merger Agreement and summarized in this proxy statement, many of which are outside of our control.

Dissenters’ Rights

Dissenters’ rights are statutory rights that, if applicable under law, enable shareholders to dissent from an extraordinary transaction, such as a merger, and to demand that the corporation pay the fair value for their shares as determined by agreement or by a court in a judicial proceeding instead of receiving the consideration offered to shareholders in connection with the extraordinary transaction. Under the NJBCA, a shareholder may not dissent from a merger with respect to shares (i) that are listed on a national securities exchange or held of record by not less than 1,000 holders on the record date fixed to determine the shareholders entitled to vote upon the plan of merger, or (ii) for which, pursuant to the plan of merger, such shareholder will receive (x) cash, (y) shares, obligations or other securities which, upon consummation of the merger, will either be listed on a national securities exchange or held of record by not less than 1,000 holders, or (z) cash and such securities.

Since the Merger Consideration will consist of cash, holders of EMCORE common stock will not be entitled to dissenters’ rights in the Merger with respect to their shares of EMCORE common stock under the NJBCA. Under the NJBCA, notwithstanding that EMCORE shareholders do not qualify as statutory dissenters, they may still have the right to claim fair compensation for their shares in the context of a cash-out merger, as a result of the fiduciary duty of the majority to treat the minority fairly.

For more information, see “Proposal 1: Approval of the Merger Agreement — Dissenters’ Rights.”

Delisting and Deregistration of EMCORE Common Stock

If the Merger is completed, the shares of EMCORE common stock will be delisted from Nasdaq and deregistered under the Exchange Act, and shares of EMCORE common stock will no longer be publicly traded.

Householding of Special Meeting Materials

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more shareholders sharing the same address by

 

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delivering a single proxy statement addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially provides extra convenience for shareholders and cost savings for companies. EMCORE and some brokers household proxy materials, delivering a single proxy statement to multiple shareholders sharing an address, unless contrary instructions have been received from the affected shareholders. Upon written or oral request, EMCORE will deliver free of charge a separate copy of each of the proxy related materials, as applicable, to a shareholder at a shared address to which a single copy was delivered. Once you have received notice from your broker or EMCORE that they or EMCORE will be sending householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement, or if you are receiving multiple copies of the proxy statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or EMCORE if you hold registered shares. You can notify EMCORE by sending a request to EMCORE Corporation, 450 Clark Drive, Budd Lake, New Jersey 07828, Attention: General Counsel, or by calling (626) 293-3400, and EMCORE will promptly deliver to you a separate copy of the proxy statement.

Questions and Additional Information

If you have any questions concerning the Merger, the Special Meeting, or this proxy statement, would like additional copies of this proxy statement, or need help voting your shares of EMCORE common stock, please contact our proxy solicitor:

Alliance Advisors, LLC

200 Broadacres Drive

Bloomfield, NJ 07003

Phone Number: 833-501-4822

Email: EMKR@AllianceAdvisors.com

Other Matters

As of the date of this proxy statement, the Board of Directors is not aware of any other matters that will be presented for consideration at the Special Meeting other than as described in this proxy statement.

This proxy statement and the proxy card are first being sent to EMCORE shareholders on or about [    ], 202[  ].

The matters to be considered at the Special Meeting are of great importance to EMCORE shareholders. Accordingly, EMCORE shareholders are urged to read and carefully consider the information presented in this proxy statement and the annexes hereto, and to complete, date, sign, and promptly return the enclosed proxy card in the enclosed postage-paid, self-addressed envelope, or vote by Internet or telephone, following the instructions on the enclosed proxy card.

 

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PROPOSAL 1:

APPROVAL OF THE MERGER AGREEMENT

At the Special Meeting, EMCORE shareholders will be asked to vote on a proposal to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger. The approval of Proposal 1 is required for Closing. Since the Board of Directors believes that it is in EMCORE’s and EMCORE shareholders’ best interest to engage in the Merger, the Board of Directors recommends that EMCORE shareholders approve Proposal 1. The affirmative vote of a majority of the votes cast by the holders of shares of EMCORE common stock entitled to vote on such proposal at the Special Meeting, where a quorum is present, is required to approve the Merger Agreement Proposal.

The following discussion of the Merger is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached to this proxy statement as Annex A and incorporated into this proxy statement by reference. You should carefully read and consider the entire Merger Agreement, which is the legal document that governs the Merger, because it contains important information about the Merger and how it affects you.

Overview

On November 7, 2024, EMCORE entered into the Merger Agreement with Parent, Parent Group Member, and Merger Sub. The Merger Agreement provides that, subject to the terms and conditions set forth in the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company surviving the Merger and becoming an indirect, wholly owned subsidiary of Parent.

Under the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of EMCORE common stock (subject to certain exceptions set forth in the Merger Agreement) will be converted into the right to receive $3.10 per share in cash, without interest, subject to any withholding taxes.

Immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any Company Equity Plan will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (1) the amount of the Merger Consideration by (2) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (1) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (2) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

 

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Pursuant to an equity commitment letter dated November 7, 2024, and subject to the terms and conditions set forth therein, the Guarantor has committed to invest or cause to be invested in the equity capital of Parent an aggregate amount in cash of up to $37.0 million solely for the purpose of funding, and to the extent necessary and being sufficient cash to fund, (a) the payment at the closing of the Aggregate Merger Consideration (as defined in the Merger Agreement), (b) any amounts payable in connection with the cancellation of outstanding stock options, restricted stock unit awards subject to time-based vesting restrictions, and restricted stock unit awards subject to performance-based vesting conditions pursuant to the Merger Agreement, and (c) the payment of any and all costs and expenses required to be paid by Parent or Merger Sub on the closing date in connection with the Merger and the other transactions contemplated by the Merger Agreement, pursuant to and in accordance with the Merger Agreement. In addition, the Guarantor has entered into a limited guarantee dated November 7, 2024 in favor of EMCORE, pursuant to which the Guarantor is guaranteeing certain of the termination fee obligations of Parent and Merger Sub in connection with the Merger Agreement.

Information about the Parties Involved in the Merger

EMCORE Corporation (“EMCORE,” the “Company,” “we,” “us,” and “our”)

EMCORE Corporation

450 Clark Drive

Budd Lake, New Jersey 07828

(626) 293-3400

EMCORE is a leading provider of sensors and navigation systems for the aerospace and defense market. We leverage industry-leading PIC and QMEMS chip-level technology to deliver state-of-the-art component and system-level products across our end-market applications. Over the last six years, we have expanded our scope and portfolio of inertial sensor products through the acquisitions of Systron Donner Inertial, Inc. in June 2019, the Space and Navigation business of L3Harris Technologies, Inc. in April 2022, and the FOG and Inertial Navigation Systems business of KVH Industries, Inc. in August 2022. Our multi-year transition from a broadband company to an inertial navigation company has now been completed following the sales of (i) our cable TV, wireless, sensing, and defense optoelectronics business lines, and (ii) our chips business line and indium phosphide wafer fabrication operations.

We have fully vertically-integrated manufacturing capability at our facilities in Budd Lake, NJ, Concord, CA, and Tinley Park, IL. These facilities support our manufacturing strategy for FOG, RLG, PIC, and QMEMS products for inertial navigation. Our manufacturing facilities maintain ISO 9001 quality management certification, and we are AS9100 aerospace quality certified at our facilities in Concord, CA and Budd Lake, NJ. Our best-in-class components and systems support a broad array of inertial navigation applications.

Our operations include quartz wafer fabrication, device design and production, fiber optic gyroscope design and manufacture, PIC-based and QMEMS-based component design and manufacture, and inertial measurement unit and inertial navigation system design and manufacture. Many of our manufacturing operations are computer-monitored or controlled to enhance production output and statistical control. Our manufacturing processes involve extensive quality assurance systems and performance testing. We have one reporting segment, Inertial Navigation, whose product technology categories include: (a) FOG, (b) QMEMS, and (c) RLG, in each case which serves the aerospace and defense market. Shares of EMCORE common stock are listed and traded on Nasdaq under the ticker symbol “EMKR.”

 

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Velocity One Holdings, LP (“Parent”)

Velocity One Holdings, LP

51 Dwight PL

Fairfield, NJ 07004

(862) 377-5355

Parent is a newly formed aerospace manufacturing holding company that was formed by Parent Group Member to facilitate the acquisition of EMCORE and will own, prior to the consummation of merger, Parent Group Member, a New Jersey corporation and Cartridge Actuated Devices, Inc. (“CAD”).

Aerosphere Power Inc. (“Parent Group Member”)

Aerosphere Power Inc.

51 Dwight PL

Fairfield, NJ 07004

(973) 575-1312

Parent Group Member was formed in January 2022 to acquire CAD from its prior shareholders. In addition to owning CAD, Parent Group Member is also a manufacturer of power system solutions for commercial and military aerospace, military ground vehicles, and UAV applications. In particular, Parent Group Member is developing a power inverter product (currently in research and development) designed to convert electrical power for aerospace applications. Parent Group Member believes that this advanced power inverter, once developed and commercialized, will enable critical systems onboard various aircraft (including medical equipment in air ambulances and operational technologies in defense aircraft) to function reliably with the appropriate power frequency and voltage.

CAD has over 50 years of experience in the field of custom pyrotechnic development, and was acquired by Parent Group Member in July 2022. CAD designs and manufactures energetic cartridge actuated devices and propellant actuated devices, including explosive squibs, pressure cartridges, valves, cable cutters, actuators, pin pullers, thrusters, explosive bolts, puncture devices, pneumatic actuation systems, underwater devices and oilfield products.

CAD specifically configures its products for the task at hand, and its products are employed in a wide variety of military, industrial and scientific applications all over the world. Since its founding in 1963, CAD has designed and sold products worldwide, with a specific focus on the defense, military, fire suppression and oil field sectors.

CAD currently has two locations: an 18,000 square foot manufacturing facility in Fairfield, New Jersey and 14 buildings located on 96 acres in Andover, New Jersey.

Velocity Merger Sub, Inc. (“Merger Sub”)

Velocity Merger Sub, Inc.

51 Dwight PL

Fairfield, NJ 07004

(862) 377-5355

Merger Sub was formed by Parent in November 2024 to enter into the Merger Agreement with EMCORE, and is a wholly-owned subsidiary of Parent.

Certain Effects of the Merger

Upon the terms and subject to the conditions of the Merger Agreement, and in accordance with the NJBCA, at the effective time of the Merger, Merger Sub will be merged with and into EMCORE, the separate corporate

 

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existence of Merger Sub will cease, EMCORE will continue as an indirect wholly owned subsidiary of Parent, and EMCORE common stock will no longer be publicly traded and will be delisted from Nasdaq. In addition, following the Merger it is expected that EMCORE common stock will be deregistered under the Exchange Act, and EMCORE will no longer file periodic or other reports with the SEC. If the Merger is consummated, you will not own any shares of the capital stock of EMCORE. See “The Merger Agreement — The Merger” and “The Merger Agreement — Delisting and Deregistration.”

The effective time of the Merger will occur at such time as the certificate of merger meeting the requirements of Section 14A of the NJBCA relating to the Merger has been properly executed and filed with the Secretary of State of the State of New Jersey in accordance with the NJBCA, or at such later time as may be mutually agreed by the parties and designated in the certificate of merger as the effective time of the certificate of merger in accordance with the NJBCA.

Effect on EMCORE If the Merger Is Not Completed

If the Merger Agreement is not adopted by EMCORE shareholders, or if the Merger is not completed for any other reason:

 

•

EMCORE shareholders will not be entitled to, nor will they receive, any payment for their respective shares of EMCORE common stock pursuant to the Merger Agreement;

 

•

(a) EMCORE will remain an independent public company; (b) EMCORE common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act; and (c) EMCORE will continue to file periodic and other reports with the SEC; and

 

•

under specified circumstances, in connection with a termination of the Merger Agreement,

 

•

EMCORE would be required to pay Parent a termination fee in an aggregate amount of $1.5 million; and

 

•

Parent would be required to pay EMCORE a termination fee in an aggregate amount of $2.0 million.

See “The Merger Agreement — Termination Fee Payable in Certain Circumstances.”

Merger Consideration

EMCORE Common Stock, Company Equity Awards, and the Warrant

At the effective time of the Merger, by virtue of the Merger and without any action on the part of EMCORE, Parent, Merger Sub, or the holders of any securities of EMCORE or Merger Sub, each share of EMCORE common stock that is issued and outstanding immediately prior to the effective time of the Merger (other than shares that are held by EMCORE as treasury stock and held directly by Parent Group Member, Parent, or Merger Sub, if any) will automatically be cancelled and converted automatically into the right to receive the Merger Consideration of $3.10 per share in cash, in accordance with the NJBCA, and immediately prior to the effective time of the Merger, by virtue of the Merger and without any action on the part of EMCORE, Parent, Merger Sub, or the holders of any securities of EMCORE, outstanding restricted stock unit awards subject to time-based vesting restrictions and outstanding restricted stock unit awards subject to performance vesting conditions (which, to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived) shall be cancelled in consideration for, and outstanding stock options (if any), shall automatically be cancelled and converted into, the right to receive a lump sum cash payment pursuant to a formula based on the Merger Consideration, in each case as set forth, on the terms, and subject to the conditions in the Merger Agreement, and subject to adjustment for stock split, reverse stock split, stock dividend, recapitalization, reclassification, combination, exchange of shares, or other similar event, to the extent appropriate to provide the same economic effect as contemplated by the Merger Agreement prior to such event, and without interest and subject to any required tax withholding. See “The Merger Agreement — Conversion of Securities in the Merger.”

 

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After the Merger is completed, you will have the right to receive the Merger Consideration in respect of each share of EMCORE common stock that you own (subject to certain exceptions set forth in the Merger Agreement) immediately prior to the effective time of the Merger, without interest and subject to any required tax withholding, but you will no longer have any rights as an EMCORE shareholder.

To the extent the Hale Capital Warrant is not exercised in connection with the Merger and the other transactions contemplated by the Merger Agreement, subject to and in accordance with the Hale Capital Warrant, immediately prior to and substantially concurrent with the effective time of the Merger, EMCORE will assign and Parent or the Surviving Corporation will assume, the rights and obligations under the Hale Capital Warrant, and Parent and the Surviving Corporation will perform, satisfy, and discharge when due, the obligations of EMCORE under the Hale Capital Warrant.

EMCORE Equity Plans

Prior to the effective time of the Merger, the Board of Directors or, if appropriate, any committee thereof, will adopt appropriate resolutions and take other actions as are necessary or advisable to effect the termination of all Company Equity Plans, effective as of the effective time of the Merger, consistent with the terms of the Merger Agreement. Following the effective time of the Merger, no stock options, restricted stock unit awards (whether subject to time-based vesting restrictions and/or performance vesting conditions), other equity interests, or other right that was outstanding immediately prior to the effective time of the Merger will remain outstanding and each former holder of the foregoing will cease to have any rights with respect thereto, except the right to receive such amounts set forth in the Merger Agreement, without interest and less all applicable taxes.

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement, including EMCORE’s identification and evaluation of strategic alternatives and the negotiation of the Merger Agreement. The following chronology does not purport to catalogue every conversation among the Board of Directors, the representatives of each party to the Merger Agreement, their respective advisors, or any other persons.

The Board of Directors, acting independently and with the advice of EMCORE’s management team, and in the ordinary course of business, reviews and assesses the operations, financial performance, liquidity, future growth prospects, market perception, and industry conditions of EMCORE in light of the totality of the circumstances, including current and anticipated business and industry trends, regulatory conditions, future growth prospects, the current and expected financing environment, and overall strategic direction of each business segment, in each case, with the goal of maximizing short-term and long-term value for its shareholders.

From time to time, the Board of Directors and EMCORE’s management team have evaluated and considered a variety of potential financial and strategic options to enhance business performance and shareholder value in light of industry developments and changing economic and market conditions. The evaluations have included, among other matters, the consideration, from time to time, of various potential opportunities for business combinations, various equity and debt financing transactions, the sale of certain assets, the divestiture and/or wind-down of certain business segments, including the broadband (“Broadband”) business segment, dissolution and liquidation of EMCORE, and other financial and strategic alternatives, as compared to the benefits and risks of continued operation as a standalone, publicly traded company, as well as ongoing analysis of EMCORE’s business segments, both on an individual and collective basis and with a focus on both actual performance and market perception.

Additionally, in December 2013, the Board of Directors formed the Strategy and Alternatives Committee (the “Strategy Committee”) to assist the Board of Directors’ review of potential strategic alternatives at that time. Since its formation, the Strategy Committee continued to review strategic alternatives, which also included potential acquisitions and divestitures of assets, business lines, and companies by EMCORE.

 

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From time to time throughout 2022, representatives of EMCORE, its advisors, and the Board of Directors had discussions regarding potential strategic alternatives that were considered to obtain or preserve additional cash and liquidity, including, but not limited to, potential equity and debt financing transactions, the sale of certain assets, divestitures of certain product lines, a sale of EMCORE, and other restructuring and cost-cutting measures. Additionally, starting in 2021, EMCORE sought to change from a primarily commercial Broadband industry optical component supplier to a pure-play inertial navigation solutions (“Inertial Navigation”) products supplier to the global aerospace and defense (“A&D”) industry. During this transition, EMCORE sustained liquidity challenges and uncertainty regarding revenue due to (i) the Broadband market being in decline during the transition, requiring EMCORE to incur costs and endure periods of losses and liabilities, and (ii) the costs incurred in connection with EMCORE’s transition to a pure-play Inertial Navigation products supplier to the A&D industry, including the costs to continue the development of its existing Inertial Navigation business and costs incurred in connection with the acquisitions of the Space and Navigation business of L3Harris Technologies, Inc. in April 2022, and the fiber optic gyroscope and Inertial Navigation systems business of KVH Industries, Inc. in August 2022.

On November 1, 2022, EMCORE entered into a purchase and sale agreement for the sale and leaseback of its real property located in Tinley Park, Illinois (the “Tinley Park Sale”), for the purpose of providing EMCORE with additional liquidity upon closing of the sale and leaseback transaction. As of October 31, 2022, EMCORE had cash and cash equivalents of approximately $15.8 million and outstanding debt obligations of approximately $12.6 million pursuant to the terms of EMCORE’s credit agreement (the “Wingspire Credit Agreement”) with Wingspire Capital LLC, EMCORE’s senior lender at the time (“Wingspire”).

On November 9, 2022, the Board of Directors held a meeting during which, among other things, Mr. Jeffrey Rittichier, a former Chief Executive Officer of EMCORE and former member of the Board of Directors, and Mr. Tom Minichiello, Chief Financial Officer of EMCORE, discussed with the Board of Directors actions that had recently been taken by management and other potential actions being contemplated by management with respect to managing and preserving cash and liquidity. The Board of Directors discussed potential actions to be taken by EMCORE to improve its cash and liquidity position.

Between November 9, 2022 and December 9, 2022, the Board of Directors held weekly meetings regarding EMCORE’s cash and liquidity.

On November 10, 2022, EMCORE, Photonics Foundries, Inc. (“PF”), and another party (“PF Sponsor”) entered into a non-binding letter of intent in connection with the anticipated acquisition by PF and PF Sponsor of EMCORE’s cable TV, wireless, sensing, and defense optoelectronics product lines (collectively, the “linear optics businesses”) for a purchase price of $27.5 million (the “PF LOI”).

On December 8 and 9, 2022, the Board of Directors held a meeting. Representatives of Pillsbury Winthrop Shaw Pittman LLP (“Pillsbury”) and a nationally-recognized investment banking firm (“Financial Advisor A”) attended the meeting. Representatives of Financial Advisor A provided an overview of EMCORE’s current financial and liquidity status and reviewed recent actions taken by EMCORE and actions being pursued by EMCORE with respect thereto. Financial Advisor A’s representatives then reviewed certain additional strategic actions that Financial Advisor A was recommending that EMCORE pursue, including with respect to additional financing and sale transactions, noting that Financial Advisor A’s recommendation was to pursue each such action simultaneously, and reviewed potential strategic acquirers and anticipated timeline of actions related thereto. Financial Advisor A’s representatives also recommended that EMCORE restructure by divesting or shutting down its Broadband business segment so that EMCORE could focus its efforts on its A&D business segment. After Financial Advisor A’s representatives departed the meeting, the Board of Directors discussed the potential engagement of Financial Advisor A to pursue certain additional financing and sale transactions, with the Board of Directors noting the need for EMCORE to proceed promptly with such actions and the corresponding advantage provided with respect thereto by engaging Financial Advisor A, given its previous engagements with EMCORE, as opposed to a different advisor. In this regard, the Board of Directors noted that

 

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EMCORE had worked with this Financial Advisor A banking team in the past, including with respect to EMCORE’s most recent strategic equity financing, and that the Financial Advisor A team had continued to informally engage with EMCORE since that time. The Board of Directors further noted that it had previously interviewed other potential financial advisors in connection with the prior financing, and for the reasons discussed at that time, the Board of Directors continued to believe that the Financial Advisor A team was the most qualified advisor to assist the Board of Directors in evaluating all strategic alternatives that may be available to EMCORE. Following discussion, the Board of Directors directed management to proceed with negotiating an engagement letter with Financial Advisor A with respect to such potential financing and sale transactions.

On December 13, 2022, EMCORE consummated the Tinley Park Sale resulting in net proceeds of approximately $10.3 million.

On or about December 23, 2022, PF and PF Sponsor notified EMCORE that they were no longer pursuing the transaction contemplated by the PF LOI.

On January 10, 2023, after receipt and review of the conflict disclosures provided by Financial Advisor A, the Board of Directors approved the terms of an engagement letter submitted by Financial Advisor A (the “Financial Advisor A Engagement Letter”) to engage Financial Advisor A as EMCORE’s exclusive financial advisor in connection with the potential sale of EMCORE (“Project Edge”), and directed EMCORE’s authorized officers to execute and deliver the Financial Advisor A Engagement Letter. Later that day, EMCORE and Financial Advisor A executed the Financial Advisor A Engagement Letter.

From time to time between January and May 2023, representatives of EMCORE, its advisors, and the Board of Directors had discussions regarding Project Edge as well as additional strategic alternatives being evaluated by management to obtain or preserve additional cash given EMCORE’s continued performance, growth, liquidity, and cash challenges, including, but not limited to, additional asset sales beyond those EMCORE was already pursuing, reductions in inventory and non-recurring engineering contracts, potential financing transactions, divestitures, and other restructuring and cost-cutting measures. On March 31, 2023 and April 28, 2023, EMCORE had cash and cash equivalents of approximately $24.8 million and approximately $24.2 million, respectively, and outstanding debt obligations pursuant to the terms of the Wingspire Credit Agreement of approximately $12.0 million and approximately $12.0 million, respectively. Representatives of Financial Advisor A routinely attended meetings held by the Board of Directors to provide updates with respect to the strategic transaction process and Financial Advisor A’s outreach to potential buyers.

On January 25, 2023, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors discussed with management the status and potential timeline with respect to an equity financing transaction that EMCORE was pursuing, noting potential counterparties and next steps with respect thereto. The Board of Directors directed management to divest certain capital equipment identified by management as soon as possible in order to generate additional liquidity.

On January 30, 2023, Financial Advisor A began contacting potential strategic and financial buyers, respectively, and distributing non-disclosure agreements and confidential information presentations.

On February 1, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. The Board of Directors discussed with management the potential divestiture of non-core product lines, including the potential sale of the linear optics businesses to PF and PF Sponsor, in a strategic effort to focus on EMCORE’s Inertial Navigation business within its A&D business segment, and to alleviate short-term liquidity and cash challenges. The Board of Directors also discussed its continued pursuit of an equity fundraise in parallel with Project Edge. Representatives of Financial Advisor A provided an overview of Financial Advisor A’s planned outreach approach and process with respect to Project Edge, as well as objectives and messaging to market the strategic value of EMCORE and its new core business focus on A&D, including Inertial Navigation.

 

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On February 8, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed Financial Advisor A’s outreach to date with respect to Project Edge.

On February 13, 2023, EMCORE, PF, and PF Sponsor entered into an addendum to the PF LOI pursuant to which the parties agreed to reinstate the principal terms of the PF LOI with an amended purchase price of $15.0 million.

On February 14, 2023, the Pricing Committee of the Board of Directors approved a form of securities purchase agreement and form of placement agency agreement in connection with EMCORE’s public offering of its common stock of up to 15,454,546 shares of EMCORE common stock.

On February 15, 2023, EMCORE entered into a placement agency agreement with A.G.P./Alliance Global Partners (“A.G.P.”), pursuant to which A.G.P. agreed to serve as the exclusive placement agent for the issuance and sale of up to 15,454,546 shares of EMCORE common stock in a public offering pursuant to EMCORE’s existing shelf registration statement on Form S-3.

On February 17, 2023, EMCORE consummated a public offering of 15,454,546 shares of EMCORE common stock at a price of $1.10 per share, with A.G.P. as the exclusive placement agent, resulting in net proceeds from the offering of $15.4 million, after deducting the placement agent commissions and other offering expenses.

On March 9, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed Financial Advisor A’s outreach to date with respect to Project Edge.

On April 5, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed Financial Advisor A’s outreach to date with respect to Project Edge. Management also reported on the status of discussions to divest the Broadband business, reporting that PF and PF Sponsor withdrew from negotiations due to anticipated declines in the Broadband business. The Board of Directors discussed the possibility of winding down the businesses that were to be divested in the proposed divestiture transactions if such transactions could not be executed in the near-term time period. The Board of Directors requested that management review a potential plan for winding down these businesses.

On April 19, 2023, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors authorized and approved management’s proposed restructuring plan that included the strategic shutdown of the Broadband business segment (including cable TV, wireless, sensing, and chips product lines) and the discontinuance of the defense optoelectronics product line (collectively, the “April 2023 Restructuring Program”). The Board of Directors performed a thorough review of a number of factors, including the competitive landscape, declining revenue and gross profit of these discontinued businesses, the current and expected profitability of these discontinued businesses, EMCORE’s cost structure and EMCORE’s strategic focus on its Inertial Navigation business, and concluded that these discontinued businesses were non-strategic, unsustainable, and could not be restructured in a way that would allow EMCORE to achieve profitable growth and cash preservation. In addition, management summarized the status of discussions with PF with respect to the potential divestiture transaction of the linear optics businesses that EMCORE had been pursuing, noting current status, anticipated timeline, and risks to potentially reaching execution of a definitive agreement. The Board of Directors confirmed that it supported moving forward with the April 2023 Restructuring Program if a definitive transaction agreement was not executed by April 20, 2023.

On April 21, 2023, EMCORE initiated the April 2023 Restructuring Program.

On May 3, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed Financial Advisor A’s outreach to date

 

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with respect to Project Edge, noting that since the outreach began on January 30, 2023, Financial Advisor A had initiated contact with 135 parties and a total of 102 potential buyers had passed. Financial Advisor A noted that, based on the feedback from parties who had passed, the primary concern was the lack of visibility to EMCORE’s profitability and the two distinct Broadband and A&D businesses with limited synergies. Management also discussed other transactional activity, including exploring potential follow-on public offerings with multiple banks and interest by a publicly-traded diversified holding company (“Party A”) in some form of debt and convertible/equity instrument. Management noted that multiple parties (including PF) had made inquiries into purchasing the linear optics businesses after the shutdown notification made in connection with the April 2023 Restructuring Program, however EMCORE had not yet received any term sheets or written indications of interest.

Between January 31, 2023 and May 31, 2023, 75 of the prospective counterparties which had been contacted with respect to Project Edge entered into confidentiality agreements with EMCORE (15 strategics and 60 financial sponsors), with a majority of the agreements containing customary standstill provisions (none of which include “don’t ask, don’t waive” restrictions) that terminate prior to the expiration of the term of such confidentiality agreements under certain circumstances, including upon the entry into certain fundamental transactions such as the Proposed Transaction (as defined below) (such agreements, the “Edge Confidentiality Agreements”). After execution of the Edge Confidentiality Agreements with EMCORE, the prospective counterparties received access to certain due diligence, business, and financial information relating to EMCORE, including certain financial projections. Between January 31, 2023 and May 31, 2023, seven of the prospective counterparties attended management meetings (two strategics and five financial sponsors).

Between May 10, 2023 to November 7, 2024, EMCORE disclosed in its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q filed during such period, that at the time of such filings, substantial doubt about EMCORE’s ability to continue as a going concern existed.

On May 17, 2023, a private equity firm submitted an indication of interest (“IOI”) with respect to a potential acquisition of EMCORE with an implied offer price of $0.81-$0.98 per share and an implied enterprise value of $35.0-$45.0 million. The closing price of EMCORE common stock on May 17, 2023 was $0.88 per share.

On May 18, 2023, a private equity firm submitted an IOI with respect to a potential acquisition of EMCORE with an implied offer price of $0.42 per share and an implied enterprise value of $22.0 million. The closing price of EMCORE common stock on May 18, 2023 was $0.88 per share.

On May 30, 2023, Party A submitted a preliminary term sheet for a private placement of $30.0 million of secured convertible notes and a purchase of 10.7 million shares of EMCORE common stock at a purchase price equal to the 15-day volume-weighted average price prior to the date of the definitive agreement, as well as issuance of approximately 4.73 million warrants that would be exercisable at the conversion price of such convertible notes as part of the private placement (the “Convertible Term Sheet”).

On May 31, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed the principal terms of each IOI and the Convertible Term Sheet, noting the benefits to EMCORE, risks, and other considerations related to each of (i) a transaction pursuant to either IOI, (ii) a transaction pursuant to the Convertible Term Sheet, or (iii) a stand-alone equity financing transaction. The Board of Directors discussed the benefits to EMCORE shareholders of continuing to operate as a standalone company, including the risks of execution of EMCORE’s business plan, EMCORE’s continued performance, growth, liquidity, and cash challenges, the dilutive impact, and potential risks of each of the potential financing alternatives to shareholders (including the additional cost and risks of incurring additional debt and applicable debt covenants in the Convertible Term Sheet), as well as the potential impact of the terms of the Wingspire Credit Agreement. The Board of Directors weighed these considerations against the relative benefits and risks to pursuing either of the IOIs and the potential benefits to shareholders of such transactions and the potential downside to shareholders of these potential transactions (including the

 

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inability for shareholders to participate in any future upside of EMCORE’s valuation if it were to execute on its business plans with additional capital resources). The Board of Directors discussed other considerations of these potential transactions, as well as a potential rights offering to existing EMCORE shareholders. Following discussion, the Board of Directors instructed Financial Advisor A and EMCORE’s management to continue to pursue each of (i) a transaction pursuant to either IOI, (ii) a transaction pursuant to the Convertible Term Sheet, and (iii) a stand-alone equity financing. The Board of Directors also approved and authorized the execution of a non-binding term sheet on the terms set forth in the Convertible Term Sheet, subject to any negotiation of terms more favorable to EMCORE in management’s discretion. Financial Advisor A further noted that given the variability of the historical financials and the lack of visibility into EMCORE’s financial projections, potential buyers had struggled to determine the appropriate valuation for EMCORE in a take-private transaction on a pro forma basis, excluding the Broadband business segment (including cable TV, wireless, sensing, and chips product lines) and the defense optoelectronics product line. Financial Advisor A also noted that EBITDA for the last several quarters had been meaningfully negative, making it difficult for potential buyers to use traditional comparable company valuation methodologies. Financial Advisor A additionally noted that potential buyers had also struggled to get comfortable with the forecasted increase in revenue, as there was a lack of visibility into certain programs and an unclear path to profitability from an ‘outsiders’ perspective. Financial Advisor A noted that the potential buyers that submitted IOIs believed that they had an informed view of the current cash burn rate and liquidity position of the business.

On June 6, 2023, representatives of Financial Advisor A and EMCORE met with representatives of Party A in New York City for an in-person diligence session.

On June 9, 2023, EMCORE had cash and cash equivalents of approximately $18.3 million and outstanding debt obligations pursuant to the terms of the Wingspire Credit Agreement of approximately $12.0 million.

On June 15, 2023, the Board of Directors held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative of Financial Advisor A reviewed the status of discussions with potentially interested acquisition or financing parties since the last meeting of the Board of Directors held on May 31, 2023, including with respect to discussions held earlier that day with potential investors, noting that term sheet discussions for a financing transaction were ongoing with multiple proposed counterparties and describing key remaining open items in each IOI received on May 17-18, 2023 and the Convertible Term Sheet. Financial Advisor A’s representative then described pro forma valuation, ownership, and dilution to existing EMCORE shareholders under various assumptions related to terms and stock price underlying the term sheets. Next, Financial Advisor A’s representative reviewed an anticipated timeline for a financing transaction with each potential counterparty and discussed recommended next steps. Following discussion, the Board of Directors instructed Financial Advisor A and management to continue communications with each potential investor with respect to certain specified terms and to provide a further update following such communications. In addition, management described the status of discussions with potential buyers with respect to a potential sale of some or all of EMCORE’s linear optics businesses, noting key risks with respect to any such transaction and anticipated next steps, including challenges in completing a transaction at the time in light of the recently announced April 2023 Restructuring Program and ongoing restructuring activities.

On August 2, 2023, the Board of Directors held a meeting. Representatives of Pillsbury attended the meeting. Mr. Ryan Hochgesang, Vice President, General Counsel of EMCORE, reviewed the key terms of an engagement letter with Craig-Hallum (the “Craig-Hallum Engagement Letter”). Management recommended that EMCORE enter into the Craig-Hallum Engagement Letter in connection with an equity financing transaction that EMCORE was planning to pursue. Management recommended Craig-Hallum instead of Financial Advisor A, as Craig-Hallum was experienced in equity financings of the size anticipated by the Board of Directors and such equity financings were not within Financial Advisor A’s primary capabilities. Following discussion, the Board of Directors approved EMCORE’s execution of the Craig-Hallum Engagement Letter and supported EMCORE’s pursuit of such potential equity financing transaction, subject to approval of the final pricing terms. Later that day, EMCORE and Craig-Hallum executed the Craig-Hallum Engagement Letter. The Board of Directors

 

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directed Financial Advisor A to pause discussions with potentially interested acquisition or financing parties and revisit such discussions after the equity financing, and potentially after EMCORE achieved cash flow break even and after completion of EMCORE’s contemplated divestitures, as the Board of Directors believed such events would increase interest from potential counterparties. The Board of Directors also reviewed EMCORE’s cash forecast which showed that EMCORE would be in default of the Wingspire Credit Agreement within 13 weeks.

On August 23, 2023, EMCORE consummated a public offering of 22,600,000 shares of EMCORE common stock at a price of $0.50 per share, and an offering to certain investors of pre-funded warrants (each, a “Pre-Funded Warrant”) to purchase 11,900,000 shares of EMCORE common stock at a price of $0.49999999 for each Pre-Funded Warrant (which represents the per share public offering price for EMCORE common stock in such offering less the $0.00000001 per share exercise price for each such Pre-Funded Warrant). Craig-Hallum acted as the sole managing underwriter, and the offering resulted in net proceeds of approximately $15.6 million, after deducting the placement agent commissions and other offering expenses.

On September 7, 2023, the Strategy Committee held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative from Financial Advisor A reviewed the status of discussions with potentially interested acquisition parties and Financial Advisor A’s recommendations with respect to re-engagement with such parties, including Financial Advisor A’s recommended messaging for such re-engagement efforts given the shutdown of the Broadband business was near completion and Financial Advisor A, and the Board of Directors believed that such messaging to potential parties could be more effective around a pure play A&D company. Following discussion, and taking into account the recommendations of Financial Advisor A, the Board of Directors instructed Financial Advisor A and management to continue communications with each potential acquisition party discussed by the Strategy Committee and to implement the messaging and timing that was discussed by the Strategy Committee. In addition, management reviewed the status of discussions with PF, a potential buyer of the linear optics businesses with whom EMCORE had entered into a non-binding term sheet, noting anticipated transaction terms, status of buyer-diligence, status of negotiation of definitive agreements, key risks with respect to consummation of such transaction, and anticipated next steps. The Board of Directors expressed its approval of the terms described and directed management to continue to pursue consummation of such transaction. Management also reviewed the status of discussions with potential buyers of EMCORE’s digital chips business and indium phosphide wafer fabrication assets and operations, noting nonbinding offers received to date and the status of discussions with additional potential buyers. Following the discussion, the Strategy Committee instructed management to continue to pursue potential sales of these businesses and assets while continuing to execute on planned “last time buy” activities as part of the April 2023 Restructuring Program.

On October 11, 2023, EMCORE entered into an Asset Purchase Agreement with PF and Ortel LLC, a Delaware limited liability company and wholly owned subsidiary of PF (“Ortel”), pursuant to which (i) EMCORE agreed to transfer to Ortel, and Ortel agreed to assume, substantially all of the assets and liabilities primarily related to EMCORE’s linear optics businesses, including with respect to employees, contracts, intellectual property, and inventory, and (ii) Ortel agreed to provide a limited license back to EMCORE of patents being sold to Ortel (the “PF Transaction”). The PF Transaction excluded EMCORE’s digital chips business, indium phosphide wafer fabrication facilities, and all assets not primarily related to EMCORE’s linear optics business.

On October 24, 2023, EMCORE entered into a non-binding letter of intent with Asia-Pacific Environment Investment Limited, a Hong Kong corporation (“APEI”) and an affiliate of HieFo Corporation, a Delaware corporation (“HieFo”), for the potential asset sale of EMCORE’s digital chips business and indium phosphide wafer fabrication assets and operations for a purchase price equal to $3.0 million in cash and assumption by APEI of certain assumed liabilities. $1.0 million was received on October 25, 2023 as an advanced payment of the proposed purchase price to help alleviate short-term liquidity and cash challenges (such non-binding letter of intent, the “HieFo LOI”).

On November 20, 2023, a customer of EMCORE terminated an agreement related to EMCORE’s Tri-Axial Inertial Measurement Unit program (the “TAIMU Termination”). The TAIMU Termination resulted in a

 

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$3.9 million decrease in revenue derived from the Budd Lake Facility for the three months ended March 31, 2024 as compared to the three months ended March 31, 2023, presenting performance, growth, liquidity, and cash challenges.

On December 7, 2023, the Strategy Committee held a meeting. A representative of Pillsbury attended the meeting. The Strategy Committee reviewed continued discussions/updates regarding Project Edge and re-engagement with certain potential buyers. The Strategy Committee also reviewed a potential asset sale of EMCORE’s digital chips business and indium phosphide wafer fabrication assets and operations to HieFo pursuant to the HieFo LOI that EMCORE had previously entered into with APEI with respect to such asset sale. After discussion, the Board of Directors unanimously approved the transaction on the terms set forth in the HieFo LOI and as described by management, and authorized management to execute any documentation in furtherance of the transaction and to take any other actions in furtherance of the transaction substantially consistent with the HieFo LOI.

On January 10, 2024, EMCORE entered into a cooperation agreement (the “Cooperation Agreement”) with Bradley L. Radoff and certain of his affiliates set forth in the signature pages thereto (collectively, the “Radoff Parties”). Pursuant to the Cooperation Agreement, the Board of Directors (i) accepted the resignation of Mr. Stephen L. Domenik as Chairman of the Board of Directors and a director of EMCORE, (ii) increased the size of the Board of Directors by one (1) member to a total of six (6) directors, and (iii) appointed Mr. Cletus C. Glasener (who currently serves as chairman of the Board of Directors) and Mr. Jeffrey J. Roncka (who currently serves as a member of the Board of Directors and as the chair of the Strategy Committee) (Mr. Glasener and Mr. Roncka, the “New Directors”), as members of the Board of Directors. In connection with the Cooperation Agreement, the Radoff Parties withdrew their notice of shareholder nomination of candidates for election as directors at the 2024 Annual Meeting of Shareholders previously delivered to EMCORE on December 5, 2023. Pursuant to the Cooperation Agreement, EMCORE agreed that the Board of Directors would (i) amend and restate the charter of the Strategy Committee to include the oversight and completion of a business review of EMCORE’s operational performance, cost structure, and portfolio composition, as well as to explore all value creation levers available to EMCORE, (ii) amend the composition of the Strategy Committee such that it would consist of the New Directors, Mr. Bruce E. Grooms, Ms. Noel Heiks, and Mr. Rex S. Jackson, and (iii) appoint Mr. Roncka to serve as the Chair of the Strategy Committee at least until the earlier of (x) the date that is thirty (30) calendar days prior to the deadline for the submission of shareholder nominations for EMCORE’s 2025 Annual Meeting of Shareholders, and (y) the date that is one hundred twenty (120) calendar days prior to the first anniversary of the 2024 Annual Meeting of Shareholders (the “Radoff Standstill Period”). In addition, EMCORE agreed to appoint Mr. Glasener to serve as the Chairman of the Board of Directors until the end of the Radoff Standstill Period and each committee and subcommittee of the Board of Directors would include at least one (1) New Director and the number of authorized directors on the Board of Directors would not exceed six (6) directors until the end of the Radoff Standstill Period without the Radoff Parties’ prior written consent. The Cooperation Agreement further provided that in the event that any New Director was unable or unwilling to serve as a director, resigned as a director, was removed as a director, or for any other reason failed to serve or was not serving as a director at any time prior to the expiration of the Radoff Standstill Period, the Radoff Parties would have the ability to recommend to the Board of Directors a person to be a replacement director in accordance with the criteria set forth in the Cooperation Agreement; provided that at such time the Radoff Parties beneficially own in the aggregate at least the lesser of (i) 5.0% of then-outstanding EMCORE common stock, and (ii) 3,691,000 shares of EMCORE common stock (subject to adjustment for stock splits, reclassifications, combinations, and similar adjustments). The Cooperation Agreement also included certain customary voting commitments, standstill, and mutual non-disparagement provisions during the Radoff Standstill Period.

On February 20, 2024, the Strategy Committee held a meeting. A representative of Pillsbury attended the meeting. Management provided an update on contemplated actions to raise or preserve cash given EMCORE’s continued performance, growth, liquidity, and cash challenges, including with respect to operational improvements and inventory reductions, additional asset sales, additional expense reductions and additional non-recurring engineering programs. Management also then provided an overview of the Wingspire Credit

 

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Agreement and described EMCORE’s recent communications with Wingspire and the possibility of drawing down additional capital on its facility with Wingspire. As of February 20, 2024, EMCORE had cash and cash equivalents of $14.3 million and outstanding debt obligations pursuant to the terms of the Wingspire Credit Agreement of $8.6 million.

On February 27, 2024, the Strategy Committee held a meeting. A representative of Pillsbury attended the meeting. The Strategy Committee and management met with representatives of a financial advisor that did not represent EMCORE, but was interested in representing EMCORE if there was a potential for a transaction, to review such advisor’s recommendations with respect to the Board of Directors’ exploration of potential strategic alternatives, including its view of the current status of EMCORE and its market positioning, for the purpose of obtaining a fresh perspective from a financial advisor about the status of EMCORE, its market positioning, and its review of strategic alternatives. Representatives of such advisor reviewed its detailed recommendations on the current optimal path forward, including consideration of a standalone path and exploration of strategic alternatives, its preliminary sensitivity/discounted cash flow analysis and potential financial improvement metrics, and its proposed scope of advisory services and approach. The Board of Directors discussed with management and noted that the actions recommended by the advisor were generally consistent with the actions that EMCORE had been taking with respect to strategic alternatives, generation of additional liquidity, and reduction of operating expenses.

On February 28, 2024, Wingspire delivered a default notice (the “Wingspire Default Notice”) to EMCORE alleging that EMCORE’s consolidated audited annual financial statements for the fiscal year ended September 30, 2023 contained a “going concern” qualification from KPMG LLP, EMCORE’s independent registered public accounting firm, and that therefore an event of default had occurred under the Wingspire Credit Agreement, but stating that Wingspire was electing not to pursue remedies at that time.

Also on February 28, 2024, Party A delivered a financing term sheet providing for the issuance of $5.0 million in principal amount of non-convertible notes and $20.0 million in principal amount of convertible notes.

On March 4, 2024, in response to the Wingspire Default Notice, Pillsbury delivered a letter to Wingspire’s counsel disputing that any event of default had occurred under the Wingspire Credit Agreement and requesting that Wingspire immediately retract such default notice.

On March 10, 2024, a private equity firm (“Party B”) delivered a financing term sheet for a $10.0 million first lien term loan, increasable by $5.0 million if EMCORE met negotiated milestones.

On March 12, 2024, Wingspire’s counsel delivered a letter to Pillsbury restating the initial default notice. EMCORE and Wingspire subsequently engaged in discussions with respect to a potential forbearance agreement under the Wingspire Credit Agreement.

On March 14, 2024, the Strategy Committee held a meeting. Representatives of Pillsbury and Financial Advisor A attended the meeting. A representative from Financial Advisor A reviewed the status of discussions with potentially interested acquisition parties, noting that since the outreach resumed in October 2023, Financial Advisor A had initiated contact with 63 parties and that a total of 24 confidential information presentations had been provided to parties. Financial Advisor A’s representative provided commentary from the parties that had passed on the opportunity and reviewed the key terms of two financing term sheets from Party A and Party B that had been received from interested parties and discussed recommended next steps.

On March 15, 2024, at the 2024 Annual Meeting of Shareholders, EMCORE shareholders approved an amendment to EMCORE’s certificate of incorporation to effect a reverse stock split of outstanding EMCORE common stock at a ratio ranging from 5:1 to 12:1 at the sole discretion of the Board of Directors. Following the meeting, on March 15, 2024, the Board of Directors approved a reverse split with a record date of March 18, 2024 and set a reverse stock split ratio of 10:1 for outstanding shares of EMCORE common stock (the “Reverse Stock Split”).

 

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On March 18, 2024, Financial Advisor A notified EMCORE of its termination of the Financial Advisor A Engagement Letter due to its belief that the available financing alternatives to EMCORE were not within Financial Advisor A’s primary capabilities and that it was unlikely that a full company sale would be available at this time in light of the feedback from potential buyers during the Project Edge process. Generally, the feedback from potential buyers included concerns regarding EMCORE’s challenges over the past few years in becoming a pure play A&D company at sufficient scale, resulting in sustained negative operating results, a steadily-declining stock price, and a weakening balance sheet.

On March 19, 2024, EMCORE submitted process letters to the four parties (including Party A, Party B, a publicly-traded holding company (“Party C”) and a private equity firm that would decline to submit any proposals) who remained interested in a potential acquisition of EMCORE and/or a financing transaction with EMCORE in order to keep the process moving forward.

Also on March 19, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Hochgesang and a representative of Pillsbury provided legal counsel to the Board of Directors regarding its fiduciary duties in evaluating these potential alternatives. Management reviewed with the Board of Directors recent discussions after the Wingspire Default Notice, including that Wingspire was increasingly expressing a desire to be repaid, expressing increased concerns about EMCORE’s liquidity, and requesting that EMCORE develop a plan to repay Wingspire, with Wingspire continuing to allege that EMCORE was in default, but reserving rights to declare an event of default. The Board of Directors discussed the potential engagement by EMCORE of a new financial advisor in connection with EMCORE’s exploration of strategic alternatives, including the pursuit of additional financing and/or sale transactions. Further discussion ensued regarding the potential engagement of various financial advisors by EMCORE, with various members of the Board of Directors noting the need for EMCORE to proceed promptly to consider whether a financial advisor was necessary to consummate the remaining available potential transactions and if it were so determined, to move quickly to engage such a financial advisor. The Board of Directors discussed Craig-Hallum as a potential financial advisor in light of its prior engagement with EMCORE in connection with the August 2023 equity financing, as well as other potential financial advisors with whom the Board of Directors had met. The Board of Directors determined not to engage a financial advisor at this time, but authorized Mr. Roncka, in his capacity as chair of the Strategy Committee, and management to solicit interest from the potential advisors noted by the Board of Directors, so that the Board of Directors could consider such advisors at a future meeting.

On March 20, 2024, the Board of Directors held a meeting during which, among other things, management summarized communications with multiple firms to potentially serve as EMCORE’s new financial advisor in connection with EMCORE’s continued exploration of strategic alternatives, including the pursuit of additional financing and/or sale transactions, noting that two such firms were expected to submit formal proposals by the end of the day. The Board of Directors directed management to proceed with requesting certain information and proposed terms from each of Craig-Hallum and another financial advisor in connection with potentially serving as EMCORE’s financial advisor with respect to potential financing and sale transactions.

On March 21, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors directed management to proceed with negotiating proposed terms with each of Craig-Hallum and another potential financial advisor in connection with potentially serving as EMCORE’s financial advisor with respect to potential financing and sale transactions.

On March 27, 2024, EMCORE received a non-binding IOI from Party B providing for a debt financing of an initial amount of $10.0 million and a potential additional financing of up to $10.0 million under certain circumstances and subject to certain conditions (the “Party B Proposal”).

Also on March 27, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Rittichier and Mr. Roncka summarized recent discussions with Party B with respect to a potential financing transaction. A representative of Pillsbury summarized process and timing considerations with respect

 

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to a potential bankruptcy filing, including the potential type of filing, the timing needed to prepare for such filings, the relative benefits and costs of such a filing, and other related considerations.

On March 28, 2024, EMCORE received a second IOI from Party A providing for a note financing of $15.0 million in the aggregate and the issuance of a warrant to purchase 31.1% of the fully diluted EMCORE common stock.

Also on March 28, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors discussed the two IOI proposals received from Party A and Party B with respect to a potential financing transaction and noted the status of discussions with one other interested party with respect to a potential financing and/or acquisition transaction. The Board of Directors instructed Mr. Glasener to communicate to each of the two parties who had submitted an IOI certain questions and clarifications with respect to the terms set forth in the applicable IOI, including with respect to the principal amount of each such financing, the expected timing for completion of each such financing, and other material remaining open items necessary to be addressed prior to the completion of each such financing. The Board of Directors then discussed messaging for the third party and the need to try to move this party along in the process.

On March 29, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors discussed in detail the Party B Proposal, considering that such proposal did not require EMCORE to enter into exclusive discussions with Party B, but allowed EMCORE to continue to explore all other potentially available transactions with two other counterparties and any other potential transactions that arose during the period of time in which EMCORE could try to finalize definitive documentation with Party B. After consideration of the written IOIs received, including the Party B Proposal, and taking into account recent discussions with Wingspire, including Wingspire’s continued allegations of a default under the Wingspire Credit Agreement and its desire to be repaid as soon as possible, the Board of Directors determined it would be in the best interest of EMCORE and its stakeholders to select a financing proposal and work to finalize definitive documentation as soon as possible to consummate a financing that would allow EMCORE to repay in full its outstanding obligations to Wingspire and obtain additional funds for working capital purposes, and approved the Party B Proposal. The Board of Directors also discussed how to move forward with the other potential parties and continued to consider whether a bankruptcy filing would be the better course of action in order to generate the best available outcome for its stakeholders. The Board of Directors determined to continue to pursue a financing transaction with Party B and to continue to engage with the two remaining parties who continued to be interested in a potential transaction.

As of March 31, 2024, EMCORE had cash and cash equivalents of $12.0 million and outstanding debt obligations pursuant to the terms of the Wingspire Credit Agreement of $8.3 million.

On April 1, 2024, the Reverse Stock Split became effective. The closing price of EMCORE’s common stock on (i) April 1, 2024, the last full trading day before the Reverse Stock Split became effective, was $0.35 per share and (ii) April 2, 2024, the first full trading day after the Reverse Stock Split became effective, was $3.64 per share.

On April 5, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Glasener discussed that Party B had informed EMCORE that it was pausing further work in pursuit of such potential transaction related to certain concerns about EMCORE’s business and future prospects. The Board of Directors instructed management to provide certain additional information to Party B in an effort to address Party B’s stated reasons for pausing its work. Additionally, the Board of Directors instructed management to take certain actions with respect to the other interested parties with respect to a potential acquisition of EMCORE and/or financing transaction as well as continuing discussions with Wingspire regarding a potential forbearance agreement. The Board of Directors continued to consider whether a bankruptcy filing would be the better course of action in order to generate the best available outcome for its stakeholders. The Board of Directors also discussed whether to move forward with engaging a financial advisor to assist on a potential transaction and

 

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continued exploration of strategic alternatives. After discussion, the Board of Directors determined that a financial advisor was not needed at that time to continue to explore the existing potential alternatives under consideration, but that the Board of Directors would continue to assess the advisability of retaining financial advisors should circumstances change, including if the Board of Directors determined that it needed advisory services in connection with a potential bankruptcy filing or should additional expertise be needed to evaluate any potential financing alternative.

On April 9, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Glasener summarized his discussions with two potential interested parties, Party A and Party B, with respect to potential financing transactions. The Board of Directors instructed management to continue to pursue a financing transaction with each such party. Mr. Glasener also summarized preliminary discussions with Hale Capital Management, L.P. (“Hale Capital”) with respect to a potential financing transaction, and Mr. Roncka summarized additional discussions with Party C, that had submitted an IOI with terms less favorable to EMCORE than the terms being proposed by Party B and Party A. Following discussion, the Board of Directors instructed management to continue discussions with each such party. Management then summarized recent discussions with Wingspire with respect to a potential forbearance of Wingspire’s rights and remedies under the Wingspire Credit Agreement. Management then provided an update on the status of the potential divestiture transaction with HieFo with respect to EMCORE’s chips business and indium phosphide wafer fab assets, including with respect to anticipated timing and next steps. A discussion ensued regarding other potential actions EMCORE could pursue to sell assets and improve liquidity.

On April 11, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Glasener summarized his discussions with Party A and Party B with respect to potential financing transactions, noting that Party A remained in discussions with EMCORE but that Party B had communicated that it was no longer interested in pursuing a transaction with EMCORE. The Board of Directors discussed the reasons provided by Party B for declining to move forward in a transaction, including actions that could be taken in response to address Party B’s concerns in order for Party B to continue to move forward. Following discussion, the Board of Directors instructed EMCORE’s management, with assistance from certain members of the Board of Directors, to continue to pursue a financing transaction with Party A and Party B, and to focus on addressing the concerns raised by Party B. The Board of Directors and management discussed preliminary discussions with Hale Capital with respect to a potential financing transaction with EMCORE. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue a financing transaction with Hale Capital as well. Management then summarized recent discussions with Wingspire, with respect to potential forbearance of Wingspire’s rights and remedies under the Wingspire Credit Agreement, noting that Wingspire had requested that EMCORE provide a draft forbearance agreement and that such a draft was in process. The Board of Directors also continued to evaluate other courses of action, including a potential bankruptcy filing, to assess what potential alternative would generate the best available outcome for its stakeholders. The Board of Directors discussed the need to begin to take preliminary steps to prepare for a restructuring process in light of the current status of discussions related to a potential financing, the current state of discussions with Wingspire, including Wingspire’s demand that EMCORE have an active term sheet for a financing in order for Wingspire to agree to a forbearance period, and other factors, including EMCORE’s current cash balance, accounts payable obligations, and projected/estimated restructuring-related costs. Following discussion, the Board of Directors unanimously instructed EMCORE’s management to retain Pillsbury as counsel to EMCORE on restructuring matters and other ongoing matters.

On April 16, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Hochgesang summarized recent discussions with Wingspire with respect to potential forbearance of Wingspire’s rights and remedies under the Wingspire Credit Agreement, noting that Wingspire had requested that EMCORE provide a signed IOI letter with respect to a financing transaction prior to Wingspire proceeding with further forbearance discussions. The Board of Directors also consulted a representative of Pillsbury for an overview of process and timing considerations with respect to a potential bankruptcy filing including recommended next steps in order to prepare EMCORE to obtain the best possible outcome for its stakeholders in

 

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a bankruptcy process. Mr. Glasener described the status of discussions with Hale Capital and Party A with respect to a potential financing transaction, noting that Hale Capital was pursuing an assignment and assumption of the Wingspire Credit Agreement and anticipating negotiating a separate forbearance agreement with EMCORE, and that Party A had submitted an updated term sheet with respect to a potential financing transaction shortly before the commencement of the Board of Directors meeting. Questions were asked and answered, and discussion ensued. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue a transaction with each such party.

On April 18, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Hochgesang described the status of activities between Wingspire and Hale Capital, noting that Wingspire and Hale Capital had signed a term sheet pursuant to which Wingspire would assign to Hale Capital and Hale Capital would assume the Wingspire Credit Agreement, and summarized discussions between EMCORE and Hale Capital with respect to a forbearance agreement to be entered into between Hale Capital and EMCORE in connection with Hale Capital’s assumption of the Wingspire Credit Agreement, noting that Hale Capital intended to provide proposed terms shortly. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue the forbearance agreement with Hale Capital. Mr. Glasener and Mr. Hochgesang described the status of discussions with Party A with respect to a potential financing transaction with EMCORE and summarized the terms of the most recent term sheet submitted by Party A with respect thereto. The Board of Directors instructed EMCORE’s management to communicate certain proposed counter-offer terms to Party A. The Board of Directors noted that under the currently proposed structure of a potential forbearance agreement with Hale Capital, EMCORE would still be able to pursue alternative financing transactions, including a transaction such as the one proposed with Party A. Mr. Rittichier and Mr. Hochgesang described the status of a potential transaction with respect to EMCORE’s sale of its digital chips business and indium phosphide wafer fab assets to HieFo, noting that EMCORE and HieFo were expecting to sign definitive documents and close the transaction on or about April 26, 2024, and summarized key terms of the contemplated transaction. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue the transaction on the terms described. The Board of Directors continued to review whether a potential bankruptcy filing could result in the best outcome for stakeholders. The Board of Directors also considered whether it should revert to discussions with Wingspire about a forbearance agreement from Wingspire, but concluded that EMCORE would be in no better position following a reasonable forbearance period from Wingspire as it was now, and that Hale Capital presented the best potential two-step transaction, with a lender agreeing to forbearance for a period of time and who would also assist in a subsequent capital raise. The Board of Directors, however, instructed management to continue to explore all other potential alternatives, including continuing discussions with Party A.

On April 21, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Mr. Hochgesang described the status of discussions between Wingspire and Hale Capital, noting that Wingspire and Hale Capital had reached agreement on a final version of an assignment and assumption agreement pursuant to which Wingspire would assign to Hale Capital and Hale Capital would assume the Wingspire Credit Agreement. Mr. Hochgesang also summarized discussions between EMCORE and Hale Capital with respect to a forbearance agreement to be entered into between Hale Capital and EMCORE in connection with Hale Capital’s assumption of the Wingspire Credit Agreement, noting that Hale Capital had provided an initial draft of the forbearance agreement the previous day. Mr. Roncka, Mr. Hochgesang, and representatives of Pillsbury then described proposed counter-offer terms that EMCORE was planning to communicate to Hale Capital. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue the forbearance agreement with Hale Capital on the terms described. The Board of Directors also discussed the need to try to determine as soon as possible if a reasonably acceptable transaction could be reached with Hale Capital, because if it could not reach such a transaction, the Board of Directors desired to make a decision as quickly as possible regarding a potential bankruptcy filing in order to best position EMCORE to maximize value in such a process. The Board of Directors also discussed potential alternatives to the Hale Capital transaction, including reinitiating direct discussions with Wingspire and/or Party A. The Board of Directors then discussed the need to continue to assess cost reduction actions that could be taken to reduce EMCORE’s expense structure should EMCORE

 

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remain as a standalone operating company. Management provided an update on its review of potential cost reduction actions and discussed timing for a more comprehensive plan to reduce costs. The Board of Directors discussed feedback from Hale Capital in regard to its view of the necessary level of cost reductions.

On April 23, 2024, the Board of Directors held a meeting. Representatives of Pillsbury attended the meeting. Mr. Hochgesang and representatives of Pillsbury described proposed terms of a forbearance agreement proposed to be entered into between Hale Capital and EMCORE in connection with Hale Capital’s assumption of the Wingspire Credit Agreement. The Board of Directors also discussed the proposed size of the warrant to be issued to Hale Capital in consideration of entering into the forbearance agreement. The Board of Directors discussed the rationale for entering into the forbearance agreement with Hale Capital, including the potential for Hale Capital to assist EMCORE in subsequent fundraising efforts, to allow for additional time in which EMCORE could explore fundraising efforts beyond what EMCORE perceived to be available with Wingspire as its current lender, and other benefits from certain proposed changes to the terms of the Wingspire Credit Agreement. The Board of Directors also discussed the risks associated with entering into a transaction with Hale Capital and the need to move quickly in light of EMCORE’s current cash balance and an increasing amount of past-due payables. The Board of Directors discussed potential alternatives, including the current status of discussions with Party A, as well as the potential to seek a formal restructuring. The Board of Directors then discussed the need to review and implement cost reduction measures as soon as possible. Mr. Rittichier reviewed the current status of a proposed cost reduction plan, including certain actions to reduce EMCORE’s headcount and other expenses. The Board of Directors discussed Hale Capital’s expectations with respect to cost reduction and management should EMCORE enter into the proposed transaction with Hale Capital.

On April 25, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. Management and the Board of Directors reviewed and discussed the terms of the forbearance agreement proposed to be entered into between Hale Capital and EMCORE in connection with Hale Capital’s assumption of the Wingspire Credit Agreement, noting that such terms were consistent with terms previously discussed with the Board of Directors. With a representative of Pillsbury, the Board of Directors and management also considered the proposed terms of a warrant to purchase shares of EMCORE common stock proposed to be issued to Hale Capital in connection with the forbearance agreement. After careful consideration of all of the factors impacting EMCORE, including but not limited to its current operations, its current cash balances and cash forecasts, outstanding liabilities and fundraising prospects, and taking into account recent discussions with Wingspire (including Wingspire’s desire to be repaid as soon as possible and its allegations of certain defaults by EMCORE), the Board of Directors believed it was in the best interest of EMCORE and its stakeholders to enter into a refinancing transaction with Hale Capital pursuant to which, among other actions: (i) Wingspire would sell and assign and Hale Capital would assume and purchase all current outstanding credit facilities and related obligations (the “Loan Documents”) of EMCORE (the “Assignment”); (ii) immediately following the Assignment, Hale Capital would agree to forbear certain alleged current and anticipated defaults under the Loan Documents subject to and in accordance with the terms set forth in the forbearance agreement (the “Forbearance Agreement”) and a second amendment to the Wingspire Credit Agreement to be entered into among EMCORE and the domestic subsidiaries of EMCORE (collectively, the “Borrowers”), the parties defined therein as Lenders, and Hale Capital as administrative agent for the Lenders (the “Second Amendment to Credit Agreement” and the Wingspire Credit Agreement as amended, the “Hale Capital Credit Agreement”); and (iii) as consideration, in part, for entering into the Forbearance Agreement, EMCORE would issue the Hale Capital Warrant, a warrant to Hale Capital to purchase up to 19.9% of EMCORE’s outstanding capital stock as of the issuance date of the warrant. The Board of Directors considered a number of factors, including the terms, anticipated benefits and strategic rationale, challenges, risks, and costs of the proposed transaction on the terms described. Management and the Board of Directors also discussed the terms of an asset purchase agreement proposed to be entered into between HieFo and EMCORE pursuant to which HieFo would acquire from EMCORE substantially all of the assets of EMCORE’s discontinued digital chips business, including EMCORE’s equipment related to EMCORE’s discontinued indium phosphide wafer fabrication operations. After careful consideration of the terms, the Board of Directors approved the transaction with HieFo.

 

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On April 29, 2024, Wingspire and Hale Capital entered into the Assignment and EMCORE and Hale Capital entered into the Forbearance Agreement and Second Amendment to Credit Agreement.

On April 30, 2024, EMCORE entered into an Asset Purchase Agreement with HieFo, pursuant to which EMCORE agreed to transfer to HieFo substantially all of the assets primarily related to EMCORE’s discontinued telecom chips business line, including with respect to equipment, contracts, intellectual property, and inventory, including without limitation EMCORE’s indium phosphide wafer fabrication equipment (the “Chips Transaction”), in consideration for a purchase price equal to $2.9 million in cash and assumption by HieFo of certain assumed liabilities, $1.0 million of which was received by EMCORE in the quarter ended December 31, 2023 in connection with the execution of the HieFo LOI and $1.9 million of which was received by EMCORE upon closing of the Chips Transaction.

On May 7, 2024, Mr. Rittichier departed from his roles as Chief Executive Officer and a member of the Board of Directors of EMCORE.

Effective on May 8, 2024, EMCORE appointed Mr. Matthew Vargas, Vice President, Sales of EMCORE at the time, as interim Chief Executive Officer of EMCORE.

On May 14, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. A representative from Hale Capital provided Hale Capital’s feedback to the restructuring analysis being undertaken by the Board of Directors and management reviewed recent discussions with various banks and financial advisors in connection with EMCORE potentially pursuing additional financing and/or sale transactions, including the terms proposed by Craig-Hallum with respect to serving as EMCORE’s financial advisor in connection with any such financing and/or sale transactions and potential counter-proposal terms that EMCORE was considering communicating. Following discussion, the Board of Directors determined to negotiate an engagement letter with Craig-Hallum substantially consistent with the terms discussed.

Between May 14, 2024 and July 19, 2024, four of the prospective counterparties which had been contacted with respect to a new process to explore the potential sale of EMCORE (“Project Enterprise”), but had not already entered into Edge Confidentiality Agreements, entered into confidentiality agreements with EMCORE (three strategics, including Parent Group Member and Mobix, and one financial sponsor), each containing customary standstill provisions (none of which include “don’t ask, don’t waive” restrictions) that terminate prior to the expiration of the term of such confidentiality agreements under certain circumstances, including upon the entry into certain fundamental transactions such as the Proposed Transaction (as defined below) (such agreements, the “Enterprise Confidentiality Agreements”). After execution of the Enterprise Confidentiality Agreements or the Edge Confidentiality Agreements with EMCORE, the prospective counterparties received access to certain due diligence, business, and financial information relating to EMCORE, including certain financial projections.

On May 20, 2024, the Restructuring Committee of the Board of Directors (the “Restructuring Committee”) held a meeting. The Restructuring Committee, consisting of the New Directors, was established by the Board of Directors on May 2, 2024 pursuant to the terms of the Forbearance Agreement. After reviewing factors including EMCORE’s competitive landscape, expected revenue and profitability, and cost structure, and concluding that EMCORE’s current structure and operations would not allow EMCORE to achieve profitable growth and cash generation, the Restructuring Committee approved a restructuring program (collectively, the “2024 Restructuring Program”) that included the full closure of EMCORE’s Alhambra, California facility, headcount reductions representing approximately 40% of EMCORE’s then-current workforce, and additional reductions in operating expenses expected to result in annualized cost savings of approximately $17.0 million, exclusive of severance costs.

On May 21, 2024, after negotiations between EMCORE and Craig-Hallum, EMCORE engaged Craig-Hallum to represent EMCORE on a strategic transaction and/or financing transaction.

On May 23, 2024, EMCORE announced the 2024 Restructuring Program.

 

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Between May 23, 2024 and June 4, 2024, Craig-Hallum contacted various interested parties that had expressed interest in or remained in active discussions regarding a potential acquisition of EMCORE and/or a financing transaction with EMCORE, including Parent Group Member, Party A, Party C, and a private equity firm (“Party D”), and entered into discussions with the various parties to assess their level of interest, understand and address any open questions, and encourage submissions of written offers regarding a potential acquisition of EMCORE and/or a financing transaction with EMCORE.

On June 7, 2024, EMCORE received notice of default (the “June 7 Default Notice”) from Hale Capital’s counsel with respect to the Loan Documents. Hale Capital alleged that these defaults were not covered by the Forbearance Agreement.

Also on June 7, 2024, EMCORE received a non-binding letter of intent from Parent Group Member with respect to a potential acquisition of EMCORE with an implied offer price of approximately $0.90-$1.20 per share. The closing price of EMCORE’s common stock on June 7, 2024 was $0.89 per share.

On June 12, 2024, Pillsbury delivered a letter to Hale Capital’s counsel disputing that any event of default had occurred under the Hale Capital Credit Agreement except certain defaults that had already been cured, and requesting that Hale Capital immediately retract such default notice.

On June 13, 2024, the Strategy Committee held a meeting. A representative of Pillsbury attended the meeting. Mr. Roncka and Mr. Hochgesang provided an update on recent correspondence between EMCORE and Hale Capital, noting that Hale Capital had delivered a notice to EMCORE alleging that EMCORE was in default under the Hale Capital Credit Agreement, which EMCORE was actively disputing, and that Hale Capital had provided a draft of an additional forbearance agreement with respect to such alleged defaults. Management and the Board of Directors then reviewed the forbearance terms proposed by Hale Capital. The Board of Directors provided feedback to management regarding next steps with respect to such potential forbearance agreement. Mr. Roncka provided a summary of various alternatives EMCORE was considering to reduce public company costs. Mr. Hochgesang reviewed actions and potential risks and benefits in connection with potentially delisting EMCORE common stock from Nasdaq and/or deregistering EMCORE’s securities from registration with the SEC, which was an action recommended by Hale Capital. Representatives of Craig-Hallum reviewed Craig-Hallum’s actions to date with respect to Project Enterprise, including discussions and status of diligence with respect to various potential strategic transaction counterparties. Representatives of Craig-Hallum also reviewed (i) preliminary and draft valuation and market premium analyses with respect to a potential strategic transaction with any such counterparty, (ii) various potential financing alternatives and considerations with respect to the risks, benefits, anticipated pricing, and anticipated timing with respect to each alternative, and (iii) analysis regarding the potential impact, with respect to existing EMCORE shareholders and a potential future transaction, of any action by EMCORE to delist its shares of common stock from Nasdaq. The Board of Directors also discussed the potential for an equity offering of EMCORE common stock and the likely prospects of being able to raise money in the public markets as an alternative to incurring additional debt, restructuring existing debt with replacement debt, and other alternatives. The Board of Directors also discussed the potential positive and negative impacts that delisting from Nasdaq would have on EMCORE’s ability to raise additional financing. Following discussion, the Strategy Committee directed management and Craig-Hallum to continue to pursue discussions with the parties who had expressed interest in a potential acquisition of EMCORE. As of June 13, 2024, EMCORE had cash and cash equivalents of $8.9 million and outstanding debt obligations pursuant to the terms of the Hale Capital Credit Agreement of $8.4 million.

Also, on June 13, 2024, EMCORE received a written revocation notice from HCP-FVU, LLC, as “Successor Agent” under the Hale Capital Credit Agreement, of the June 7 Default Notice.

On June 14, 2024, EMCORE received a written notice (“June 14 Notice”) from HCP-FVU, LLC, as “Successor Agent” under the Hale Capital Credit Agreement, reinstating the June 7 Default Notice. As a result of these alleged defaults, the June 14 Notice stated that the Successor Agent was exercising its right to accrue interest at

 

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the default rate of 18% beginning May 1, 2024 and that the Borrowers were required to appoint a Chief Restructuring Officer in accordance with the terms of the Hale Capital Credit Agreement, the selection of whom was subject to the consent of the Successor Agent, HCP Fund V-FVU, LLC and Bessel Holdings LLC (each an affiliate of Hale Capital and collectively, “New Lenders”).

Between June 17, 2024 and August 30, 2024, six prospective counterparties in Project Enterprise attended management meetings (four strategics and two financial sponsors).

On June 21, 2024, EMCORE received a subsequent written notice (the “June 21 Notice”) from the Successor Agent in which the Successor Agent stated that it would not be accelerating the amounts owed under the Hale Capital Credit Agreement nor taking any remedies afforded to it under the Hale Capital Credit Agreement other than accruing interest at the default rate of 18% for the seven-day period beginning June 21, 2024. The June 21 Notice further stated that the Successor Agent was not waiving any of New Lenders’ rights or remedy available under the Hale Capital Credit Agreement.

On June 23, 2024, EMCORE engaged FTI Consulting, Inc. (“FTI”) to provide Chief Restructuring Officer services.

On July 2, 2024, EMCORE entered into a non-binding letter of intent with Parent Group Member for the acquisition of all outstanding equity of EMCORE in an all-cash transaction, which provided for:

 

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a purchase price of $28.2 million estimated to equal $2.49 per share, including reductions for satisfaction of outstanding debt at closing and repurchasing the Hale Capital Warrant if not exercised, and assuming that EMCORE’s transaction expenses would be paid from the cash balance at close;

 

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a 20-day exclusivity period commencing on the date Parent Group Member secured financing for the transaction with a 10-day period autorenewal in good faith; and

 

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the definitive agreement to include a ‘no-shop’ provision and customary termination fee.

The closing price of EMCORE common stock on July 2, 2024 was $1.14 per share.

On July 3, 2024, EMCORE received a written notice (the “July 3 Notice”) from the Successor Agent that an alleged Event of Default (as defined in the Hale Capital Credit Agreement) had occurred due to the Borrowers’ failure to (i) comply with certain covenants set forth in the Forbearance Agreement, and (ii) deliver to the Successor Agent and New Lenders material sufficient to determine whether the Borrowers were in compliance with certain covenants set forth in the Forbearance Agreement. The Successor Agent stated that the loans under the Hale Capital Credit Agreement would continue to accrue interest at the default rate of 18% due to the additional default alleged in the July 3 Notice. The July 3 Notice did not state whether Hale Capital would be accelerating debt obligations under the Hale Capital Credit Agreement.

Also on July 3, 2024, Party A submitted a non-binding letter of intent for the acquisition of all outstanding shares of EMCORE for an all-cash transaction consummated through a negotiated merger agreement, which provided for:

 

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a purchase price of $1.30 per share based on 10,127,715 fully diluted shares outstanding, corresponding to a $13.2 million equity value;

 

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a 33-day exclusivity period through August 5, 2024 with no autorenewal; and

 

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a prohibition on other sales of equity or debt securities by EMCORE.

On July 12, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. A representative of Craig-Hallum reviewed actions taken to date with respect to the Board of Directors’ exploration of strategic alternatives, including Project Enterprise, and reviewed the principal terms of

 

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the letter of intent that had been received from Party A on July 3, 2024 with respect to a potential acquisition of EMCORE, including a comparison of such terms to the terms included in a letter of intent previously entered into by EMCORE with Parent Group Member on July 2, 2024. Following discussion, the Board of Directors directed Craig-Hallum to make certain counterproposal terms to Party A with respect to the letter of intent submitted by Party A and to continue to pursue a potential transaction with Parent Group Member.

On July 15, 2024, Craig-Hallum sent Party A a counterproposal to the non-binding letter of intent sent on July 3, 2024, with a purchase price of $2.61 per share.

Also, on July 15, 2024, Party D submitted a transaction proposal for the acquisition of all of the outstanding equity interests of EMCORE, which provided for:

 

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a $15.0 million purchase price on a cash-free/debt-free and fully-diluted basis;

 

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EMCORE’s equity holders to have the ability to elect to rollover a portion of equity into a holding company formed to acquire EMCORE;

 

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EMCORE’s debt and equity holders receiving up to a 10% warrant pool in the holding company formed to acquire EMCORE at a mutually agreed exercise price; and

 

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no mention of exclusivity, termination fee, or financing requirement.

On July 17, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives from FTI, EMCORE’s financial and restructuring consultant, summarized the status of discussions with potential counterparties with respect to a potential new debt financing facility, which would serve as a replacement facility to the current debt outstanding with Hale Capital. A representative of Craig-Hallum reviewed the status of discussions with potential counterparties with respect to the Board of Directors’ exploration of strategic alternatives, including a potential acquisition of EMCORE, noting that EMCORE had entered into a non-exclusive letter of intent with Parent Group Member which set forth the material terms of a proposed transaction and obligated EMCORE to enter into exclusivity upon EMCORE confirming that Parent Group Member presented to EMCORE written evidence demonstrating that Parent Group Member would have access to the resources, capital, and/or commitments to enable Parent Group Member to fund the cash acquisition price, that Parent Group Member was proceeding with diligence and pursuit of its financing for the transaction, and that EMCORE had provided a proposed revised draft of a letter of intent to Party A, and summarized certain additional diligence information that Party A had requested and potential next steps with respect thereto. Following discussion, the Board of Directors provided guidance to Craig-Hallum and management on continuing to explore strategic alternatives, directing them to, among other things, provide certain diligence information to Party A, continue to pursue a potential transaction with Parent Group Member and other potential counterparties and continue to pursue a potential new debt financing facility.

On July 18, 2024, Mobix entered into a mutual confidentiality agreement with EMCORE and was provided access to a virtual data room maintained by EMCORE for the purposes of evaluating a potential transaction. Additionally, as a result of EMCORE’s discussions with its customers regarding its planned shutdown of the Budd Lake Facility, discussions between EMCORE and a customer regarding a potential settlement of EMCORE’s TAIMU Termination-related claims, discussions with certain customers regarding the potential restructuring of other contracts related to products manufactured at the Budd Lake Facility, and negotiations with the landlord and a neighboring tenant of the Budd Lake Facility related to potentially remaining in the Budd Lake Facility on more advantageous lease/sublease terms, the Board of Directors concluded it should explore whether it might be more advantageous to continue operating the Budd Lake Facility until at least May 31, 2027.

Between July 19, 2024 and July 22, 2024, Craig-Hallum provided interested parties with information about the expected financial impact of these developments, and requested that parties submit proposals (or revise previously submitted proposals) to reflect these developments.

 

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On July 22, 2024, the Board of Directors held a meeting. A representative of Pillsbury attended the meeting. The Board of Directors, with its advisors, reviewed the status of discussions with external legal counsel to Hale Capital with respect to the alleged defaults under the Hale Capital Credit Agreement.

On July 29, 2024, Hale Capital submitted a term sheet for a preferred stock financing, which provided for:

 

•

an up to $7.5 million convertible preferred equity issuance, assuming (i) a pre-money $53.0 million enterprise value, (ii) $38.7 million in net liabilities and (iii) an equity market value of $14.7 million;

 

•

a 7% annual dividend payable quarterly in cash or in-kind; and

 

•

a warrant for EMCORE common stock equal to 50% of the total amount of the issuance divided by the market price of EMCORE common stock.

On August 1, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. A representative of Craig-Hallum reviewed the status of counterparty discussions, diligence, and financing with respect to a potential acquisition of EMCORE. A Craig-Hallum representative then reviewed a comparison summary of the terms proposed in nonbinding letters of intent received by EMCORE from two counterparties with respect to a potential acquisition of EMCORE and from Hale Capital with respect to a potential preferred stock financing transaction. The Board of Directors also discussed the potential for restructuring existing debt with replacement debt and other financing alternatives. Following discussion, the Board of Directors (i) provided guidance to management and Craig-Hallum on the continued exploration of strategic alternatives, (ii) directed Craig-Hallum and management to continue to pursue a potential acquisition transaction and to seek clarification from Hale Capital with respect to certain of the terms proposed in Hale Capital’s financing term sheet, (iii) directed FTI and management to continue to pursue a potential replacement debt financing facility, and (iv) authorized EMCORE’s management to repay in full EMCORE’s obligations to Hale Capital under the Hale Capital Credit Agreement.

On August 5, 2024, EMCORE voluntarily prepaid approximately $9.4 million under the Hale Capital Credit Agreement to repay in full all amounts outstanding and payable under the Hale Capital Credit Agreement (the “Hale Capital Prepayment”). Immediately after the Hale Capital Prepayment, EMCORE had cash and cash equivalents of $7.2 million. After the Hale Capital Prepayment, EMCORE had continued performance, liquidity, and cash challenges, did not have immediate access to any credit facilities or any lines of credit, and continued to have limited near term organic growth prospects in the view of the Board of Directors. In consideration of these factors, the Board of Directors continued to evaluate and consider a variety of potential financial and strategic options to create shareholder value.

On August 6, 2024, Party D submitted an updated transaction proposal for the acquisition of all of the outstanding equity interests of EMCORE, which provided for:

 

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a $20.0 million purchase price on a cash-free/debt-free and fully-diluted basis, representing consideration of approximately $1.64 per share for EMCORE shareholders;

 

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EMCORE’s equity holders to have the ability to elect to rollover a portion of equity into a holding company formed to acquire EMCORE; and

 

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a cash-free/debt-free structure, although the proposal had been delivered prior to Party D’s awareness of the Hale Capital Prepayment; and

 

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a sign and close within 60 days, with no mention of exclusivity, termination fee, or financing requirement.

On August 6, 2024, the closing price of EMCORE common stock was $0.95 per share.

Between August 6, 2024 and August 20, 2024, representatives of Craig-Hallum and EMCORE continued discussions with Party A, Party D, Parent Group Member, and Mobix regarding a potential acquisition of

 

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EMCORE, supported ongoing due diligence information requests, and negotiated for an increased purchase price per share for EMCORE shareholders based on the elimination of debt from the Hale Capital Prepayment.

On August 23, 2024, Mobix submitted a non-binding letter of intent for the acquisition of all EMCORE’s shares outstanding, which provided for:

 

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a $43.0 million purchase price to be paid in cash, representing, based upon certain assumptions, consideration of approximately $3.38 per share for EMCORE shareholders, subject to adjustment based upon EMCORE’s liabilities and any other contingent obligations identified through the due diligence process;

 

•

a 45-day due diligence period and targeted closing within 90 days of signing a definitive agreement;

 

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a 30-day exclusivity period with ongoing 3-day extensions if operating in good faith; and

 

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no termination fee or financing requirement.

On August 23, 2024, the closing price of EMCORE’s common stock was $1.12 per share.

On September 4, 2024, Mobix submitted an amended letter of intent, which provided for:

 

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an indicative transaction value of $43.0 million, representing consideration of approximately $3.38 per share for EMCORE shareholders, subject to adjustment based upon redemption and change of control liabilities and certain limited current and long-term liabilities including specified accounts payables, to be determined through the due diligence process;

 

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a 45-day due diligence period and targeted closing within 90 days of signing a definitive agreement;

 

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acceptance of the offer by 5 p.m. Pacific Time on September 9, 2024;

 

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a 30-day exclusivity period with ongoing 3-day extensions if operating in good faith;

 

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termination upon Mobix’s failure to deliver proof of funds in the form of a commitment or comfort letter within 7 days of execution of the letter of intent; and

 

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no termination fee.

On September 5, 2024, after discussions between EMCORE and Parent Group Member relating to the settlement of claims arising out of the TAIMU Termination, Parent Group Member submitted an amended letter of intent, which provided for:

 

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a one-step merger structure;

 

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a $30.0 million purchase price to be paid in cash, representing consideration of approximately $2.49 per share for EMCORE shareholders, including reductions for satisfaction of outstanding debt at closing and repurchasing the Hale Capital Warrant if not exercised, and assuming that EMCORE’s transaction expenses and any new working capital line are paid from EMCORE’s cash balance at/prior to close;

 

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delivery of a draft merger agreement by September 13, 2024;

 

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a 45-day exclusivity period starting upon countersignature of the amended letter of intent by EMCORE with autorenewal for 10-day periods if parties are negotiating in good faith and Parent Group Member confirms price;

 

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the definitive agreement to include a ‘no-shop’ provision and customary termination fee; and

 

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Parent Group Member to secure financing in connection with the transaction.

On September 5 and 6, 2024, the Strategy Committee and the Board of Directors held meetings. Representatives of Pillsbury and Craig-Hallum attended the meetings. A representative of Craig-Hallum reviewed Craig-

 

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Hallum’s actions taken to date with respect to Project Enterprise, noting that four parties (Parent Group Member, Mobix, Party A, and Party D) had submitted proposals with respect to a potential acquisition of EMCORE, describing the status of other potential counterparties with whom Craig-Hallum had transaction-related discussions, summarizing potential financing alternatives if EMCORE were to ultimately not consummate an acquisition transaction, and reviewing recommended next steps with respect to EMCORE’s pursuit of an acquisition transaction. A Craig-Hallum representative then reviewed the key terms of the four acquisition proposals that had been submitted to EMCORE, described structure, purchase price, anticipated timelines, financing status, and other key terms, and, with input from Mr. Roncka and Mr. Matthew Vargas, EMCORE’s interim Chief Executive Officer and a member of the Board of Directors, reviewed the four parties, their level of strategic interest in EMCORE, the nature and history of prior communications with each such party and other factors relating to deal certainty and other considerations in evaluating such proposals. A Craig-Hallum representative then reviewed an anticipated timeline through the closing of a potential acquisition. The Board of Directors also discussed the potential for EMCORE to remain a standalone business and to raise additional capital, either through an equity offering or the incurrence of debt, to support continued growth in operations. Following discussion, the Strategy Committee directed management and Craig-Hallum to continue to pursue discussions with the current parties who have expressed interest with respect to a potential acquisition of EMCORE and to propose specific communications back to each potential counterparty. The Board of Directors discussed a financing proposal submitted by Hale Capital, which referenced the potential conversion of Hale Capital’s secured debt prior to the Hale Capital Prepayment. The Board of Directors determined not to explore that financing proposal at this time while it continued to explore the various offers for the acquisition of EMCORE, in part, because of offer terms contained in the proposal and in part due to the history of default notices received by EMCORE and EMCORE’s challenges in addressing such default notices.

On September 13, 2024, the Strategy Committee held a meeting during which, among other things, representatives of Craig-Hallum and Mr. Roncka summarized recent communications with each potential interested buyer who had previously submitted a proposal with respect to a potential acquisition of EMCORE, described the status of activities with respect to each such counterparty and anticipated timeline and next steps with respect to each counterparty potentially providing an updated acquisition proposal. The Strategy Committee, with input from other participants in the meeting, discussed strategies to improve each of the respective offers from the various counterparties. Following discussion, the Strategy Committee directed management and Craig-Hallum to continue to pursue discussions with the parties who had recently provided proposals with respect to a potential acquisition of EMCORE and provided guidance on communications with these parties.

On September 19, 2024, the Strategy Committee held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Craig-Hallum summarized recent communications with each bidder who had previously submitted a proposal with respect to a potential acquisition of EMCORE, described the status of activities with respect to each such counterparty and anticipated timeline and next steps with respect to each counterparty potentially providing an updated acquisition proposal. Discussion ensued regarding each counterparty, process, timing, and other considerations related to the Board of Directors’ evaluation of strategic alternatives. Mr. Hochgesang and a representative of Pillsbury provided legal counsel to the Strategy Committee regarding its fiduciary duties in evaluating these potential alternatives. The Strategy Committee, with input from all participants at the meeting, discussed strategies to improve each party’s respective offers. Following discussion, the Strategy Committee directed management and Craig-Hallum to continue to pursue discussions with these parties and to communicate certain timeline-related items to each potential counterparty with respect to submitting an updated proposal. The Strategy Committee directed Craig-Hallum to communicate to each interested party that such party should submit a “best and final” offer for an all-cash acquisition of EMCORE and that the Board of Directors intended to select one party after receipt of “best and final” offers to enter exclusive negotiations in pursuit of a definitive agreement for the acquisition of EMCORE.

 

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On September 24, 2024, Parent Group Member’s external legal counsel, Foley & Lardner LLP (“Foley”), sent representatives of Pillsbury an initial draft of the merger agreement. The draft contemplated, among other things:

 

•

the proposed transaction would be conditioned on, among other things, EMCORE receiving shareholder approval for the merger;

 

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while EMCORE would have the right, prior to receipt of shareholder approval, to engage in negotiations with respect to unsolicited acquisition proposals that met certain requirements and the Board of Directors would have the right to change its recommendation to its shareholders and recommend that they vote against the proposed transaction in favor of an acquisition that constituted a superior proposal and met certain other requirements, EMCORE would have to submit the proposed transaction to its shareholders unless EMCORE terminated the merger agreement to accept such superior proposal and paid a termination fee to Parent Group Member (a “force the vote” provision);

 

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the Board of Directors did not have the right to change its recommendation to its shareholders or recommend that they vote against the proposed transaction if it became aware of some event or circumstance (typically called an “intervening event”) that would make the proposed transaction inadvisable;

 

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if the Board of Directors changed its recommendation and recommended that its shareholders vote against the proposed transaction or breached or failed to perform in any material respect certain obligations related to the no-shop or the shareholder meeting covenants, Parent Group Member could terminate the merger agreement and EMCORE would be required to pay Parent Group Member a termination fee;

 

•

no covenants with respect to the contemplated equity financing nor any right of EMCORE to cause Parent Group Member to specifically enforce the obligations of its financing partner, the Guarantor, under the equity commitment letter;

 

•

no reverse termination fee payable by Parent Group Member, including with respect to a failure to obtain financing; and

 

•

no financing contingency.

On September 25, 2024, Parent Group Member sent EMCORE an updated letter of intent (the “Final Parent Group Member LOI”) and support letter from the Guarantor. The Final Parent Group Member LOI contemplated, among other things (collectively, the “Proposed Transaction”):

 

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an all-cash acquisition of 100% of the fully diluted equity of EMCORE;

 

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EMCORE would be delisted from Nasdaq at closing of the Proposed Transaction;

 

•

the definitive agreement would not include a financing contingency;

 

•

an acquisition price of $32,284,000 in the aggregate resulting in a per share acquisition price of $2.73 based on 9,994,144 fully diluted shares outstanding (excluding the Hale Capital Warrant);

 

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a 20-day exclusivity period with an automatic 5-business day extension if the parties were engaged in good faith discussions and Parent Group Member confirmed in writing to EMCORE its intent to proceed with the Proposed Transaction on the terms set forth in the Final Parent Group Member LOI and that there were no changes to the proposed financing arrangements; and

 

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Parent Group Member would deliver to EMCORE a customary equity commitment letter and limited guarantee from the Guarantor, fully backstopping the Proposed Transaction.

Also on September 25, 2024, following additional diligence performed by Mobix, including diligence related to redemption and change of control liabilities and certain limited current and long-term liabilities (including specified accounts payables), Mobix sent EMCORE an amended letter of intent, which provided for:

 

•

a purchase price of $2.50 per share for EMCORE’s shareholders, based upon an enterprise value of $22,500,000;

 

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•

prior to execution of the letter of intent, delivery of a commitment and/or comfort letter evidencing Mobix’s ability to satisfy the purchase price;

 

•

a 20-day due diligence period, 20-day exclusivity period with a 5-business day extension if operating in good faith and engaged in active negotiations, and targeted closing within 90 days of signing a definitive agreement; and

 

•

no termination fee.

On September 26, 2024, Party A sent EMCORE an amended letter of intent, which provided for:

 

•

consideration of approximately $1.50 per share for EMCORE shareholders;

 

•

no financing contingency;

 

•

a 30-day due diligence period and 30-day exclusivity period; and

 

•

no termination fee.

On September 27, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. A representative from Craig-Hallum summarized the key terms of the “best and final” letters of intent delivered to EMCORE by bidders with respect to a potential acquisition of EMCORE, including with respect to proposed transaction structure and purchase price, anticipated timeline, financing status, and exclusivity requirements. The Board of Directors discussed the process conducted to date, timing of a potential transaction, certainty of financing for each bidder and the fact that one bidder did not require external financing, certainty of closing a sale transaction with respect to each bidder and other considerations with respect to each bidder related to the Board of Directors’ evaluation of strategic alternatives. The Board of Directors discussed historical communications with each potential buyer, the conduct of each bidder within the sale process, and the potential impact to EMCORE in the event that EMCORE entered into a transaction for the acquisition of EMCORE that failed to be consummated given EMCORE’s continued performance, growth, liquidity, and cash challenges. The Board of Directors then reviewed in detail, with the input of its advisors and management, each of the respective offers, deal certainty, and other factors with respect to each such proposal. The Board of Directors then discussed the potential benefits to shareholders should the Board of Directors elect to continue the business as a standalone company and not continue to pursue any of the acquisition proposals, and weighed these potential benefits against the risks facing EMCORE, including its continued performance, growth, liquidity, and cash challenges. The Board of Directors decided to enter into exclusivity with Parent Group Member as, in addition to offering the highest total consideration of the bidders, Parent Group Member’s proposal had high shareholder value and a higher degree of deal certainty as compared to Mobix’s proposal, including because Parent Group Member was backed by the Guarantor, which had provided a letter in support of Parent Group Member’s proposal, while Mobix had not shown financial capability to consummate its proposal and Mobix’s “best and final” offer of $2.50 per share was lower than Parent Group Member’s offer of $2.73 per share. The Board of Directors also directed Craig-Hallum to notify the other bidders prior to entering into exclusivity with Parent Group Member that the Board of Directors had elected to enter into exclusivity with a different party. Next, Mr. Hochgesang and a representative of Pillsbury summarized responses provided to EMCORE by Craig-Hallum with respect to potential conflicts of interest-related disclosures Craig-Hallum had provided to EMCORE with respect to Craig-Hallum’s previous activities and engagement (if any) with respect to each bidder. Following discussion and after consideration by the Board of Directors of the disclosures provided by Craig-Hallum, the Board of Directors determined that the disclosed relationships between Craig-Hallum and the bidders did not rise to the level of presenting a conflict of interest for Craig-Hallum with respect to any of the bidders, such that Craig-Hallum could continue to serve as the exclusive financial advisor to EMCORE.

Also on September 27, 2024, EMCORE and Parent Group Member executed the Final Parent Group Member LOI. Prior to execution of the Final Parent Group Member LOI, Craig-Hallum notified the other bidders that the Board of Directors had elected to enter into exclusivity with a different party.

 

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On September 28, 2024, representatives of Craig-Hallum received an unsolicited, non-binding proposal from Mobix for the acquisition of all of EMCORE’s outstanding shares for $3.80 per share in cash (the “Unsolicited Mobix Proposal”) and with support letters from Mr. James Peterson, executive chairman of Mobix, and Hale Capital. EMCORE did not respond in compliance with EMCORE’s exclusivity obligations in the Final Parent Group Member LOI.

On September 30, 2024, Mobix issued a press release announcing that it had submitted a non-binding proposal to the Board of Directors to acquire all of EMCORE’s outstanding shares for $3.80 per share in cash.

On October 1, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. A representative of Pillsbury reviewed the Unsolicited Mobix Proposal, including a comparison to the price previously proposed by Mobix prior to the Board of Directors’ most recent meeting in response to the Board of Directors’ request for “best and final” offers from each interested party, including Mobix. A representative of Pillsbury then discussed the press release that had been publicly issued the preceding day by Mobix disclosing Mobix’s nonbinding proposal to EMCORE. A Pillsbury representative then summarized actions taken by EMCORE at the direction of members of the Strategy Committee in response to Mobix’s updated proposal and press release, including (i) engaging in further discussions with Parent Group Member, with whom EMCORE had signed the Final Parent Group Member LOI and entered into exclusivity, (ii) delivery of a cease and desist letter to Mobix with respect to any further public communications in violation of Mobix’s nondisclosure agreement with EMCORE, and (iii) issuance of a press release and filing of a corresponding Current Report on Form 8-K with the SEC disclosing EMCORE’s receipt of such offer. Questions were asked and answered, and Mr. Hochgesang and representatives of Pillsbury reviewed considerations for the Board of Directors in exercising fiduciary duties in reaction to Mobix’s proposal and the current circumstances. A representative of Pillsbury then summarized discussions with Parent Group Member, including EMCORE’s request to be released from exclusivity restrictions in order to pursue a potential transaction with Mobix. A representative of Pillsbury described the terms of a counter proposal from Parent Group Member pursuant to which it would grant a limited waiver from EMCORE’s exclusivity obligations to permit EMCORE to engage in discussions with Mobix regarding a potential acquisition transaction. Questions were asked and answered, and discussion ensued, including discussion of Parent Group Member’s counter-proposal, the benefits and risks of engaging in discussions with Mobix under the terms proposed by Parent Group Member, the likelihood of reaching an agreement with Mobix within the timeframe allowed by Parent Group Member, the costs of paying a termination fee to Parent Group Member if EMCORE were to execute an agreement with Mobix, and other considerations with respect to each of Parent Group Member and Mobix. Following discussion, the Board of Directors instructed (i) Pillsbury to convey certain counterproposal terms to counsel for Parent Group Member with respect to a potential limited exclusivity waiver, and (ii) Craig-Hallum and Pillsbury to, solely to the extent that any such waiver had been entered into with Parent Group Member, convey certain proposed terms of engagement and acquisition transaction terms to Mobix. The Board of Directors authorized Mr. Vargas to execute the waiver agreement with Parent Group Member on the terms approved by the Board of Directors, with any substantive changes to such terms to be approved by the Strategy Committee or by the Board of Directors.

Also on October 1, 2024, Mobix acknowledged receipt of a cease and desist letter from EMCORE.

On October 2, 2024, after negotiations and discussions between Pillsbury and Foley, Parent Group Member and EMCORE, consistent with the Board of Directors’ direction, entered into a waiver (the “Waiver”) providing for the following:

 

•

during the period between and including October 2 and October 9, 2024 (the “Waiver Period”), Parent Group Member’s exclusivity would be waived with respect to discussions with Mobix and its respective affiliates, representatives, and financing sources regarding a strategic transaction;

 

•

EMCORE would have the right to terminate the Final Parent Group Member LOI or enter into a definitive agreement regarding a strategic transaction with Mobix, provided that EMCORE would be required to reimburse Parent Group Member and the Guarantor for their reasonable and documented

 

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out-of-pocket expenses up to a cap of $1.0 million (the “Final Parent Group Member LOI Reimbursement”); and

 

•

if the Final Parent Group Member LOI was not terminated or a definitive agreement was not entered into by EMCORE with Mobix during the Waiver Period, Parent Group Member and EMCORE would continue to be subject to the Final Parent Group Member LOI and the original exclusivity period with Parent Group Member would be extended by 7 days.

Also on October 2, 2024, after entry into the Waiver, EMCORE and Mobix, with its respective counsel and other representatives, met telephonically to discuss diligence, timing, and initial considerations with respect to a potential take-private transaction between EMCORE and Mobix (the “Potential Mobix Transaction”). The representatives of EMCORE outlined, among other items, the Final Parent Group Member LOI Reimbursement obligation, the process in which EMCORE envisioned reaching a final definitive agreement with Mobix within the Waiver Period, and the financing information that would be required by EMCORE in order to proceed with a transaction with Mobix and terminate the Final Parent Group Member LOI.

On October 3, 2024, representatives of Pillsbury sent the initial draft of the merger agreement for the Potential Mobix Transaction to Mobix’s external legal counsel. The draft contemplated, among other things:

 

•

a purchase price of $3.80 per share of outstanding EMCORE common stock;

 

•

assumption of the Hale Capital Warrant;

 

•

the Potential Mobix Transaction would be conditioned on, among other things, EMCORE receiving shareholder approval for the merger;

 

•

Mr. James Peterson, chief executive officer of Mobix, would agree to certain provisions in the merger agreement, including those relating to the financing, regulatory efforts, public announcements and specific performance;

 

•

Mobix would pay EMCORE $1.0 million immediately prior to execution of the merger agreement to offset the Final Parent Group Member LOI Reimbursement;

 

•

while EMCORE would have the right, prior to receipt of shareholder approval, to engage in negotiations with respect to unsolicited acquisition proposals that met certain requirements, and the Board of Directors would have the right to change its recommendation to its shareholders and recommend that they vote against the Potential Mobix Transaction in favor of an acquisition that constituted a superior proposal and met certain other requirements or if it became aware of an intervening event that would make the Potential Mobix Transaction inadvisable, EMCORE would have to submit the Potential Mobix Transaction to its shareholders unless EMCORE terminated the merger agreement to accept such superior proposal and paid a termination fee of $1.25 million to Mobix (a “force the vote” provision);

 

•

if the Board of Directors changed its recommendation and recommended that its shareholders vote against the Potential Mobix Transaction, Mobix could terminate the merger agreement and EMCORE would be required to pay Mobix a termination fee of $1.25 million;

 

•

a reverse termination fee payable by Mobix of $2.0 million in connection with certain terminations;

 

•

a limited guarantee from Mr. Peterson guaranteeing the reverse termination fee payable by Mobix;

 

•

EMCORE having third-party beneficiary rights to directly enforce any financing commitments; and

 

•

no financing contingency.

Also on October 3, 2024, Mobix sent Craig-Hallum a due diligence request list.

On October 4, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Craig-Hallum and Pillsbury and Mr. Vargas summarized the status of

 

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the Potential Mobix Transaction, including with respect to diligence, negotiation of a definitive acquisition agreement, and Mobix’s ability to finance the Potential Mobix Transaction. A representative of Pillsbury noted that an initial draft of the merger agreement had been provided to Mobix and its external legal counsel. Questions were asked and answered, and discussion ensued regarding process, timing, certainty of financing, certainty of closing a sale transaction, and other considerations with respect to the Potential Mobix Transaction. The Craig-Hallum representative provided additional information on the current understanding of Mobix’s financing. Mr. Vargas discussed the current status of Mobix’s diligence efforts and coordination. Mr. Hochgesang and representatives of Pillsbury discussed current workstreams and next steps to progress these workstreams with Mobix. The Board of Directors discussed additional strategic matters, including potential communications with Parent Group Member. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue the Potential Mobix Transaction on the principal terms discussed.

On October 5, 2024, Mobix’s external legal counsel sent representatives of Pillsbury a supplemental due diligence request list.

On October 7, 2024, Mobix’s external legal counsel sent representatives of Pillsbury a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

•

that Mobix and their debt financing sources were concerned with EMCORE’s net inventory at closing of the Potential Mobix Transaction and wanted to discuss a purchase price adjustment if EMCORE’s net inventory at closing of the Potential Mobix Transaction was less than EMCORE’s net inventory on September 30, 2024;

 

•

unusual conditions to closing of the Potential Mobix Transaction that would introduce deal uncertainty and conditionality, including conditions relating to (i) the amount of EMCORE’s net inventory at closing of the Potential Mobix Transaction, (ii) satisfaction of Mobix’s due diligence in its sole and absolute discretion, (iii) compliance with certain New Jersey laws, and (iv) receipt of all third-party consents from contract counterparties required in connection with the Potential Mobix Transaction;

 

•

the ability for Mobix to terminate the Potential Mobix Transaction if Mobix determined, in its sole and absolute discretion, that the due diligence condition noted in the bullet point above would not be satisfied, introducing deal uncertainty;

 

•

a debt financing with additional conditions not contemplated in the merger agreement and outside of the control of EMCORE as compared to an equity financing with no additional conditions;

 

•

no limited guarantee of the reverse termination fee payable by Mobix;

 

•

EMCORE would not have any third-party beneficiary rights to directly enforce any financing commitments;

 

•

Mr. Peterson would not agree to any provisions in the merger agreement;

 

•

Parent Group Member would have to enter into a standstill agreement upon receipt of the Final Parent Group Member LOI Reimbursement;

 

•

the termination fee payable by EMCORE would equal $2.5 million, while the reverse termination fee payable by Mobix would remain $2.0 million; and

 

•

capping damages (including for a knowing and intentional breach which could include a failure to fund the Potential Mobix Transaction when the closing conditions were met) to payment by EMCORE or Mobix, as applicable, of their respective termination fees.

On October 8, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Pillsbury, Mr. Roncka, and Mr. Vargas described recent communications between each of them and various points of contact from Mobix. Representatives of Pillsbury then summarized the status of the Potential Mobix Transaction, including with respect to diligence, Mobix’s

 

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ability to finance the Potential Mobix Transaction, and negotiation of a definitive acquisition agreement, including the material issues with the most recent draft of a definitive acquisition agreement received from Mobix’s counsel. Questions were asked and answered. Representatives of Pillsbury and Craig-Hallum then reviewed the limited financing information received to date from Mobix, noting that a draft commitment letter had been received from one potential financing source, but not for the full extent of the anticipated purchase price, and that EMCORE was continuing to request additional information from Mobix and each potential financing source with respect to evidencing their ability to potentially fund the anticipated purchase price. Representatives of Pillsbury and Craig-Hallum also provided a detailed report on the limited financing information that had been received to date, including the fact that Mobix only had less than $1 million in cash on hand, that financing information had been requested on October 5, 2024 but not yet provided by Mobix, and that inconsistent information had been provided to date by Mobix on its financing sources and the allocation of committed amounts amongst the two financing sources referenced by Mobix. Representatives of Pillsbury noted that Mobix’s legal counsel had indicated that draft commitment letters from each financing source would be delivered on October 5, 2024, and reiterated that such financing commitment letters would be provided on each successive day, but no financing commitment letter had been provided to date from one of the financing sources for a material portion of the purchase price. Representatives of Pillsbury then provided a summary of the material terms of the definitive purchase agreement which had been rejected by Mobix, which terms related to financing certainty and were intended to provide additional certainty to EMCORE regarding Mobix’s financing, noting the significance such terms would have on an evaluation of the financing commitment of Mobix’s financing sources to the transaction. Questions were asked and answered, and discussion ensued regarding process, timing, certainty of financing, certainty of closing a sale transaction, the potential impact to EMCORE in the event that EMCORE entered into a sale transaction that failed to be consummated given EMCORE’s continued performance, growth, liquidity, and cash challenges, and other considerations with respect to a potential acquisition transaction with Mobix. The Board of Directors directed Pillsbury and Craig-Hallum to continue to inquire as to the financing to be provided to Mobix in support of its full proposed purchase price as deal certainty was critical to the Board of Directors’ evaluation of whether to enter into a definitive agreement with Mobix, while Parent Group Member continued to present a compelling, fully-funded offer with the full and continued backing of its financing sources. Representatives of Pillsbury discussed current workstreams and next steps to progress these workstreams with Mobix. The Board of Directors also discussed the need for Mobix to provide funding of the Final Parent Group Member LOI Reimbursement at the time of signing a definitive agreement with EMCORE, including a discussion of potential alternative structures to protect EMCORE and encourage Mobix to pursue a transaction with EMCORE. The Board of Directors then discussed the current status of Mobix’s diligence review of EMCORE. Mr. Vargas commented on the site visits performed by Mobix and engagement of management to facilitate those site visits. Mr. Hochgesang and representatives of Craig-Hallum commented on the diligence production in the data room and EMCORE’s responses to supplemental diligence requests from Mobix. The Board of Directors discussed additional strategic matters, including potential communications with Parent Group Member. Following discussion, the Board of Directors instructed EMCORE’s management to continue to pursue the Potential Mobix Transaction on the principal terms discussed and to work earnestly to try to finalize outstanding issues, including confirmation of financing sources, financing capabilities, and related matters, within the Waiver Period.

Later that day, representatives of Pillsbury sent Mobix’s external legal counsel a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

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Hale Capital would guarantee the reverse termination fee payable by Mobix;

 

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removing the unusual conditions to closing of the Potential Mobix Transaction included in Mobix’s last draft;

 

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removing the ability for Mobix to terminate the Potential Mobix Transaction if Mobix determined, in its sole and absolute discretion, that the due diligence condition noted above would not be satisfied;

 

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EMCORE would have third-party beneficiary rights to directly enforce any financing commitments;

 

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decreasing the termination fees payable by Mobix and EMCORE to $1.5 million; and

 

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•

removing the damages cap for a knowing and intentional breach, including for Mobix’s failure to fund the Potential Mobix Transaction when the closing conditions were met.

On October 9, 2024, Mobix’s external legal counsel sent representatives of Pillsbury a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

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James Peterson would guarantee the reverse termination fee payable by Mobix instead of Hale Capital;

 

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EMCORE would not have any third-party beneficiary rights to directly enforce any financing commitments; and

 

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reinserting the damages cap for a knowing and intentional breach to payment by EMCORE or Mobix, as applicable, of their respective termination fees, including for Mobix’s failure to fund the Potential Mobix Transaction when the closing conditions were met.

Also on October 9, 2024, Mobix did not provide sufficient proof of the financial capability to complete the Potential Mobix Transaction, and the parties did not enter into a definitive agreement with respect to the Potential Mobix Transaction. The Waiver Period expired and exclusivity with Parent Group Member under the Final Parent Group Member LOI recommenced with a 7-day extension per the terms of the Waiver.

On October 10, 2024, Mr. Roncka and a representative of Craig-Hallum informed Parent Group Member that EMCORE had not executed a definitive agreement with Mobix and that EMCORE’s intent was to move forward with its efforts to agree to a definitive agreement with Parent Group Member. EMCORE communicated to Parent Group Member its desire that Parent Group Member would increase its offer price in light of Mobix’s interest and publicly announced offer price. Representatives of Parent Group Member indicated that they would consider increasing their offer price and would commence their final diligence process with respect to the Proposed Transaction.

On October 13, 2024, representatives of Pillsbury sent representatives of Foley a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

•

assumption of the Hale Capital Warrant;

 

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the Board of Directors would have the right to change its recommendation to its shareholders and recommend that they vote against the Proposed Transaction if it became aware of an intervening event that would make the Proposed Transaction inadvisable;

 

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removed Parent Group Member’s termination right in the event that EMCORE breached or failed to perform in any material respect certain obligations related to the no-shop or the shareholder meeting covenants;

 

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EMCORE would not need to hold a shareholders meeting if the Board of Directors changed its recommendation to its shareholders and recommend that they vote against the Proposed Transaction;

 

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the Waiver would terminate upon execution of the merger agreement;

 

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a reverse termination fee payable by Parent Group Member of $2.5 million in connection with certain terminations;

 

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a termination fee payable by EMCORE of $1.0 million in connection with certain terminations;

 

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the Guarantor would guarantee the reverse termination fee payable by Parent Group Member; and

 

•

covenants regarding the equity financing, including that EMCORE would have third-party beneficiary rights to directly enforce any financing commitments.

On October 18, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Pillsbury and Craig-Hallum and Mr. Roncka summarized status of the

 

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Proposed Transaction, including with respect to diligence, negotiation of a definitive acquisition agreement, and Parent Group Member’s ability to finance the Proposed Transaction. Mr. Roncka also summarized the current status of price discussions with Parent Group Member. Representatives of Craig-Hallum noted that Parent Group Member’s diligence efforts were ongoing, and representatives of Pillsbury noted that an initial set of comments to the definitive acquisition agreement had been provided to Parent Group Member and its counsel in response to the initial draft received from Parent Group Member, and that EMCORE expected to receive a revised draft from Foley on October 20, 2024. Representatives of Pillsbury provided an overview of the material open issues in the merger agreement. Questions were asked and answered, and discussion ensued regarding process, timing, certainty of financing, certainty of closing a sale transaction, and other considerations with respect to the Proposed Transaction, and the Board of Directors provided direction on the merger agreement. Representatives of Craig-Hallum provided additional information on the current understanding of Parent Group Member’s financing. Representatives of Pillsbury then summarized anticipated timeline and action for the period immediately following any signing of a definitive transaction agreement through the closing of any such transaction. The Board of Directors also discussed, with input from representatives of Pillsbury and Craig-Hallum, the process in which Mobix would be permitted to engage with EMCORE following the execution of a definitive agreement if Mobix remained interested in pursuing a transaction with EMCORE at that time. Questions were asked and answered, and discussion ensued. Following discussion, the Board of Directors instructed management to continue to pursue the Proposed Transaction.

On October 21, 2024, representatives of Foley sent representatives of Pillsbury a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

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a “force the vote” provision;

 

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reinserting Parent Group Member’s termination right in the event that EMCORE breached or failed to perform in any material respect certain obligations related to the no-shop or the shareholder meeting covenants;

 

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capping damages (including for a knowing and intentional breach) to payment by EMCORE or Parent Group Member, as applicable, of their respective termination fees;

 

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the termination fee payable by EMCORE would equal $2.5 million, while the reverse termination fee payable by Parent Group Member would remain $2.5 million; and

 

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removing EMCORE’s third-party beneficiary rights to directly enforce any financing commitments.

On October 23, 2024, pursuant to the Final Parent Group Member LOI, exclusivity was automatically extended to October 30, 2024, as (a) the parties were continuing to be engaged in good faith discussions regarding the Proposed Transaction and (b) Parent Group Member confirmed in writing (i) its intent to proceed with the Proposed Transaction on the terms set forth in the Final Parent Group Member LOI and (ii) that there were no changes to its proposed financing arrangements.

On October 24, 2024, representatives of Pillsbury sent representatives of Foley a revised draft of the merger agreement. The revised draft contemplated, among other things:

 

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removing closing conditions relating to antitrust laws and governmental approvals and consents;

 

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removing Parent Group Member’s termination right in the event that EMCORE breached or failed to perform in any material respect certain obligations related to the no-shop or the shareholder meeting covenants;

 

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EMCORE would have third-party beneficiary rights to directly enforce any financing commitments;

 

•

decreasing the termination fee payable by EMCORE to Parent Group Member to $1.25 million; and

 

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removing the damages cap for a knowing and intentional breach.

 

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On October 25, 2024, representatives of Foley sent representatives of Pillsbury initial drafts of the limited guarantee and the equity commitment letter from the Guarantor.

Between October 26, 2024, and November 7, 2024, representatives of Pillsbury and Foley exchanged various drafts of the merger agreement, limited guarantee, and the equity commitment letter, and negotiated the final outstanding terms. The revised drafts contemplated, among other things, the following compromises:

 

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Parent Group Member would be able to terminate the merger agreement and collect a termination fee in the event that EMCORE breached or failed to perform in any material respect certain obligations related to the no-shop covenant (but not the shareholder meeting covenant as initially proposed by Parent Group Member), but Parent Group Member would have to provide notice of such breach and EMCORE would have an opportunity to cure;

 

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damages would be uncapped for fraud or a willful breach;

 

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the termination fee payable by Parent Group Member to EMCORE would equal $2.0 million;

 

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the termination fee payable by EMCORE to Parent Group Member would equal $1.5 million; and

 

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EMCORE would have third-party beneficiary rights to directly enforce any financing commitments.

On October 28, 2024, the Strategy Committee held a meeting. Representatives of Pillsbury and Craig-Hallum attended. Representatives of Craig-Hallum and Mr. Roncka provided an update on recent communications with Parent Group Member, noting that Parent Group Member expected to complete its quality of earnings analysis within the next two days and to then provide a revised offer price to EMCORE, together with a request for a one-week exclusivity extension. Questions were asked and answered, and discussion ensued regarding strategies and rationale to increase the offer price from Parent Group Member, particularly in light of the previously received offer from Mobix, the risks and benefits to EMCORE of potentially granting any such exclusivity extension, the Strategy Committee’s willingness to potentially recommend to the Board of Directors the granting of an exclusivity extension at various revised offer prices, and other considerations with respect to the Proposed Transaction. The Strategy Committee discussed the possibility of not granting an exclusivity extension to Parent Group Member, the potential path of then re-engaging with Mobix, and the risk that Parent Group Member would abandon its efforts to acquire EMCORE under such circumstances, and other available alternatives and strategies under the circumstances. The Strategy Committee also considered the state of discussions with Mobix at the time it ended negotiations before re-entering exclusivity with Parent Group Member, including the fact that Mobix did not provide reasonable proof of available funds and a reasonable and customary commitment letter detailing its financing plans with the financing sources that it had disclosed to the Board of Directors. The Strategy Committee continued to weigh the level of deal certainty with Parent Group Member at its current offer price, or potentially a higher offer price subject to feedback from Parent Group Member later that week, compared to the higher nonbinding offer price from Mobix, but together with a lack of visibility from Mobix on its financing and less certainty of consummating a deal with Mobix, while also continuing to consider the potential impact to EMCORE in the event that EMCORE entered into a sale transaction that failed to be consummated given EMCORE’s continued performance, growth, liquidity, and cash challenges. Representatives of Pillsbury and Mr. Hochgesang provided legal counsel to the Strategy Committee members with respect to such considerations and any such recommendation. Representatives of Pillsbury reviewed key remaining open issues in the current draft of the merger agreement provided by Foley. Questions were asked and answered and the Strategy Committee provided direction with respect to EMCORE’s position on such open issues. The Strategy Committee also determined to withhold its recommendation on whether to grant Parent Group Member an additional extension to its exclusivity period until Parent Group Member delivered an updated offer price.

On October 30, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Craig-Hallum and Mr. Roncka provided an update on recent communications with Parent Group Member, noting that Parent Group Member had provided a draft amendment to the Final Parent Group Member LOI, and that in such draft amendment, Parent Group Member had increased

 

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its offer price from the price set forth in the Final Parent Group Member LOI to $3.10 per share and requested a nine-day extension to the exclusivity period. Representatives of Craig-Hallum then described unsolicited communications received the prior two days from two other parties expressing interest in an acquisition transaction with EMCORE (each of whom had previously entered into a nondisclosure agreement with EMCORE in connection with previous discussions regarding a potential acquisition transaction), including Mobix. Questions were asked and answered, and discussion ensued regarding the remaining process, timing, the state of negotiations of a definitive merger agreement with Parent Group Member, certainty of financing, certainty of closing a sale transaction, the risks and benefits to EMCORE of potentially granting any such exclusivity extension, and other considerations with respect to the Proposed Transaction. The Board of Directors discussed the possibility of not granting an exclusivity extension to Parent Group Member, the potential path of then re-engaging with Mobix and potentially a second party who had recently indicated interest in a transaction, and the risk that Parent Group Member would abandon its efforts to acquire EMCORE under such circumstances, and other available alternatives and strategies under the circumstances. The Board of Directors also considered the state of discussions with Mobix at the time it ended negotiations before re-entering exclusivity with Parent Group Member, including the fact that Mobix did not provide reasonable proof of available funds and a reasonable and customary commitment letter detailing its financing plans with the financing sources that it had disclosed to the Board of Directors. The Board of Directors continued to weigh the level of deal certainty with Parent Group Member at its updated nonbinding offer price, compared to the higher nonbinding offer price from Mobix, but together with a lack of visibility from Mobix on its financing and less certainty of consummating a deal with Mobix, while also continuing to consider the potential impact to EMCORE in the event that EMCORE entered into a sale transaction that failed to be consummated given EMCORE’s continued performance, growth, liquidity, and cash challenges. The Board of Directors also discussed the course of negotiations and interactions with Mobix and the impact they could have on reaching a definitive agreement with Mobix. Representatives of Pillsbury and Mr. Hochgesang provided legal counsel to the Strategy Committee members with respect to such considerations. Questions were asked and answered, and discussion ensued. Following discussion, the Board of Directors instructed Mr. Roncka and representatives of Craig-Hallum to communicate a counterproposal to Parent Group Member with respect to the Final Parent Group Member LOI, including a counterproposal on the duration of time for the extension and a requirement that Parent Group Member ultimately agree to a lower termination fee, thereby decreasing the hurdle Mobix would need to address if it remained interested in a transaction to acquire EMCORE. The Board of Directors authorized Mr. Roncka or Mr. Vargas to execute the exclusivity extension on the terms discussed by the Board of Directors. Later that day, EMCORE and Parent Group Member entered into an exclusivity amendment providing for an extension until November 4, 2024 and increasing the price per share to $3.10.

On November 4, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Craig-Hallum attended the meeting. Representatives of Craig-Hallum and Mr. Roncka provided an update on recent communications with Parent Group Member. Representatives of Pillsbury described the status of negotiations of a definitive agreement with Parent Group Member with respect to the Proposed Transaction, noting that, subject to the Board of Directors’ consultation and approval, the material business issues open between the parties appeared to be largely resolved and that the parties were nearing a fully agreed form of definitive agreement for the Board of Directors’ consideration given the proposed compromise reached regarding the termination fees payable by EMCORE and Parent Group Member of $1.5 million and $2.0 million, respectively, as well as the anticipated other avenues for recourse for failure to close by Parent Group Member under certain circumstances. Questions were asked and answered, and the members of the Board of Directors noted their agreement with the positions reached in negotiations. Mr. Roncka then noted that Parent Group Member had provided earlier in the day a draft amendment to the Final Parent Group Member LOI proposing a further four-day extension of the current exclusivity period that was scheduled to expire at the end of day. Representatives of Craig-Hallum then described communications received in the past two days from Mobix. Questions were asked and answered, and discussion ensued regarding process, timing, the status of negotiations of a definitive merger agreement with Parent Group Member, certainty of financing, certainty of closing a sale transaction, the risks and benefits to EMCORE of potentially granting any such exclusivity extension (including the risk that terminating the exclusivity could result in the deal process with Parent Group Member terminating), and other considerations

 

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with respect to the Proposed Transaction and potentially considering other offers outside of exclusivity. Representatives of Pillsbury and Mr. Hochgesang provided legal counsel to the Board of Directors with respect to such considerations. Questions were asked and answered, and discussion ensued. Following discussion, the Board of Directors (i) approved the amendment to the Final Parent Group Member LOI extending exclusivity for an additional four-day period through November 8, 2024, and (ii) instructed EMCORE’s management and advisors to continue to pursue finalization of, and mutual agreement to, a definitive agreement with Parent Group Member with respect to the acquisition of EMCORE. Later that day, EMCORE and Parent Group Member entered into an exclusivity amendment providing for an extension until November 8, 2024.

On November 7, 2024, the Board of Directors held a meeting. Representatives of Pillsbury and Connell Foley LLP, external legal counsel to EMCORE (“Connell Foley”) attended from the beginning of the meeting. Representatives of Pillsbury and Connell Foley advised the members of the Board of Directors on their fiduciary duties in connection with mergers and acquisitions transactions. Questions were asked and answered, including, among other things, with respect to how members of the Board of Directors should consider stock ownership and treatment of equity held by members of the Board of Directors and management under New Jersey law and the factors members of the Board of Directors would reasonably be expected to consider in addition to price in selecting a counterparty for a change of control transaction, such as closing and financing certainty. In addition, the Board of Directors was informed that Craig-Hallum had provided confirmation in writing that there had been no changes with respect to its previous conflict disclosures to the Board of Directors since last provided on September 27, 2024. The Board of Directors discussed Craig-Hallum and their previously provided conflict disclosures and re-affirmed that the disclosed relationships between Craig-Hallum and the bidders did not rise to the level of presenting a conflict of interest for Craig-Hallum with respect to any of the bidders, such that Craig-Hallum could continue to serve as the exclusive financial advisor to EMCORE. After such discussion, representatives of Craig-Hallum and FTI joined the meeting. Representatives of Pillsbury reviewed the principal terms of a merger agreement proposed to be entered into describing, among other items, the deal structure, the recourse available for failure to perform by the Guarantor and Parent Group Member pursuant to the merger agreement, the equity commitment letter and limited guarantee, the representations and warranties, covenants (including EMCORE’s regulatory obligations, Parent Group Member’s financing commitments and EMCORE’s interim operating covenants and exceptions thereto), EMCORE’s fiduciary out (including that EMCORE could terminate the merger agreement under certain circumstances to pursue a superior proposal and that the fee for such termination right was within market range based on Craig-Hallum’s analysis), closing conditions, and termination provisions. Representatives of Pillsbury presented a comparison of the key deal and financing certainty provisions between the potential Mobix and Parent Group Member transactions. Questions were asked and answered, and discussion ensued, and the Board of Directors noted in particular the superior financing, recourse, and other elements of closing certainty for the transaction contemplated with Parent Group Member as compared to Mobix. Representatives of FTI reviewed a 5-year financial forecast for the Board of Directors, noting that the first three years of the forecast were identical to the 3-year forecast reviewed by the Board of Directors at its meeting held on September 5-6, 2024, and describing the key assumptions underlying years 4 and 5 of the forecast, which were based on the same framework as the 3-year forecast with certain adjustments that had been made in consultation with management and Mr. Roncka, as the Chair of the Strategy Committee, to reflect facts and circumstances that would be expected to differ in years 4 and 5. A representative of FTI explained the reasoning for the adjustments and noted that the inputs being used in the model were reasonable in their view and reflected the best estimates of management, in consultation with Mr. Roncka as the Chair of the Strategy Committee. A representative of Craig-Hallum noted that extending the forecast by two years was required by Craig-Hallum to have Craig-Hallum’s customary data set for a fairness opinion. Questions were asked and answered, and discussion ensued, including with respect to the elements of the model that differed slightly for years 4 and 5 as compared to years 1-3. Following discussion, the Board of Directors approved the use of the 4 and 5-year forecast for purposes of Craig-Hallum’s transaction analysis and re-affirmed the use of the 3-year forecast. Representatives of Craig-Hallum then described the scope of Craig-Hallum’s engagement and analysis and reviewed implied purchase price multiples of forecasted revenue and EBITDA with respect to the Proposed Transaction and assumptions related thereto, summarized purchase price multiples as compared to comparable publicly traded companies in the technology and A&D industries and comparable precedent

 

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transactions and reviewed EMCORE’s forecasted financial results through fiscal year 2029 and Craig-Hallum’s discounted cash flow analysis. Questions were asked and answered, and discussion ensued. Following discussion, at the request of the Board of Directors, Craig-Hallum orally rendered its opinion to the Board of Directors (which was subsequently confirmed in writing by delivery of Craig-Hallum’s written opinion addressed to the Board of Directors dated November 7, 2024), to the effect that, based upon and subject to the assumptions, qualifications, limitations, and other matters considered in connection with the preparation of its opinion, that the Merger Consideration to be paid by Parent to the unaffiliated shareholders of EMCORE is fair, from a financial point of view, as of November 7, 2024. Questions were asked and answered, and discussion ensued regarding the merits of potentially entering into the merger agreement with Parent Group Member as opposed to other alternatives available to EMCORE, including continuing to operate as a stand-alone company and various financing alternatives that may be available to EMCORE under such approach, and other considerations with respect to the Proposed Transaction, including the following:

 

•

with respect to continuing to operate as a stand-alone company, the Board of Directors discussed, among other things, the hiring needs and increased costs of such hires that would be needed, the working capital needs of EMCORE and availability thereof, the cash needs to settle delinquent payments, the expected availability of credit to EMCORE in the short and long term, EMCORE’s historic performance and the execution risk of EMCORE’s growth plans;

 

•

the possibility that the value of the Merger Consideration offered by Parent Group Member may exceed the long-term value of continuing to operate as a stand-alone company to EMCORE shareholders;

 

•

the premium of the Merger Consideration offered by Parent Group Member;

 

•

the transaction process and the fact that over 100 potential acquirors were contacted and the resulting limited bids from a small number of parties received, each of which had been thoroughly reviewed and explored previously by the Board of Directors;

 

•

the reverse termination fee of $2.0 million payable by Parent Group Member to EMCORE under certain conditions and the fact such reverse termination fee is guaranteed by the Guarantor;

 

•

the reputation and expectation of performance of the Guarantor and Parent Group Member;

 

•

the recent and anticipated near-term future performance of EMCORE, including going concern risk;

 

•

the alternative transactions that may be available to EMCORE, including a potential transaction with Mobix;

 

•

the potential impact to EMCORE in the event that EMCORE entered into a sale transaction that failed to be consummated given EMCORE’s continued performance, growth, liquidity, and cash challenges;

 

•

the Board of Directors’ belief that the $1.5 million termination fee payable by EMCORE would not foreclose a superior proposal from a third party, including Mobix, particularly in light of the fact that Mobix had previously stated that it would pay $1.0 million with respect to the Final Parent Group Member LOI Reimbursement in connection with the Potential Mobix Transaction;

 

•

the terms of the merger agreement, including the fact that the proposed merger agreement includes flexibility in the event of a superior proposal, including flexibility allowing the Board of Directors to make a recommendation change and the ability to terminate the agreement and pay a termination fee to accept a superior proposal;

 

•

management’s recommendation in favor of the transaction;

 

•

Craig-Hallum’s view that the Merger Consideration to be paid by Parent to the unaffiliated shareholders of EMCORE is fair, from a financial point of view, as of November 7, 2024; and

 

•

the fact that each member of the Board of Directors owns shares and/or equity awards of EMCORE that will be exchanged for consideration in the Proposed Transaction (on the same terms as all other outstanding shares and equity awards).

 

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Representatives of Pillsbury and Mr. Hochgesang provided legal counsel to the members of the Board of Directors with respect to such considerations. After careful consideration, the Board of Directors resolved that the Proposed Transaction was advisable and in the best interests of EMCORE shareholders and unanimously approved the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents.

Following the Board of Directors’ approval, on November 7, 2024, the parties executed the Merger Agreement and the other transaction documents.

On November 8, 2024, EMCORE and Parent Group Member announced the Proposed Transaction in a joint news release.

Recommendation of the Board of Directors and Reasons for the Merger

Recommendation of the Board of Directors

The Board of Directors has unanimously: (a) determined that the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, are advisable and fair to, and in the best interests of EMCORE and EMCORE shareholders; (b) approved the execution, delivery, and performance of the Merger Agreement and the other transaction documents, and the transactions contemplated by the Merger Agreement; (c) recommended that EMCORE shareholders approve the Merger Agreement; and (d) directed that the adoption of the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, be submitted for consideration by EMCORE shareholders at the Special Meeting.

The Board of Directors unanimously recommends that you vote: (1) “FOR” the Merger Agreement Proposal; (2) “FOR” the Compensation Proposal; and (3) “FOR” the Adjournment Proposal.

Reasons for the Merger

The following discussion of the information and factors considered by the Board of Directors is not exhaustive. In view of the wide variety of factors considered by the Board of Directors in connection with its evaluation of the Proposed Transaction, and the complexity of these matters, the Board of Directors did not consider it practical to, nor did it attempt to, quantify, rank, or otherwise assign relative weight to the specific factors that it considered in reaching its decision. Rather, the Board of Directors based its recommendation on the totality of the information presented to and considered by it. The Board of Directors evaluated the factors described below with the assistance of EMCORE management and its legal and financial advisors. In considering the factors described below, individual members of the Board of Directors may have given different weight to other or different factors.

This explanation of the factors considered by the Board of Directors, and the factors themselves, are in part forward-looking in nature and, therefore, should be read in light of the factors discussed in “Cautionary Statement Concerning Forward-Looking Statements.”

In reaching its decision to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, and recommend that EMCORE shareholders approve the Merger Agreement, the Board of Directors considered, among other things, the amount of Merger Consideration offered to EMCORE shareholders in the Proposed Transaction, the results of operations and prospects of EMCORE, the alternatives to the Proposed Transaction, the risks and uncertainties associated with the Proposed Transaction, and alternatives to the Proposed Transaction, including continuing on a stand-alone basis.

 

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In the process of reaching its decision, the Board of Directors consulted with EMCORE’s financial and legal advisors and considered the following factors as generally supporting its decision to approve the Merger Agreement and the transactions contemplated by the Merger Agreement, including the Merger, and the other transaction documents, and recommend that EMCORE shareholders approve the Merger Agreement:

 

•

the fact that the Merger Consideration represents a premium of (i) 41.6% over EMCORE’s closing stock price of $2.19 on November 6, 2024, the day prior to the meeting of the Board of Directors during which the Board of Directors approved the Proposed Transaction, (ii) 54.2% over EMCORE’s closing stock price one week prior to that date, (iii) 26.5% over EMCORE’s closing stock price one month prior to that date, (iv) 226.3% over EMCORE’s closing stock price three months prior to that date, (v) 156.8% over the 90-calendar day volume-weighted average ending on September 27, 2024, the last trading day before the Announced Mobix Proposal, and (vi) 26.5% over EMCORE’s closing stock price of $2.45 on October 1, 2024, the first full trading day after the Announced Mobix Proposal;

 

•

the risks and uncertainties of remaining as an independent public company, including risks related to execution of EMCORE’s strategic growth initiatives, increasing the scale of EMCORE’s business, the difficulty of accurately forecasting customer demand in connection therewith, and EMCORE’s ability to continue as a going concern;

 

•

the fact that the Merger was the result of the Board of Directors’ thorough review of EMCORE’s standalone growth prospects and opportunities to maximize shareholder value, including contact, with the assistance of Craig-Hallum, with 9 parties, including 6 potential strategic partners and 3 financial sponsors (including Parent Group Member and its financial sponsor, the Guarantor), and with the assistance of Financial Advisor A, with 132 parties, including 48 potential strategic partners and 84 financial sponsors, concerning their interest in a strategic transaction involving EMCORE. The Board of Directors considered the nature of the engagement by each of these potential acquirors, and that, of these potential acquirors, only Parent Group Member and the Guarantor made a proposal for an acquisition of EMCORE that was capable of being accepted;

 

•

strategic alternatives to the Merger, including continuing to execute on EMCORE’s long-term plan without effecting the Merger;

 

•

the fact that the Merger Consideration of $3.10 will be paid in cash, and provides near term value and liquidity to EMCORE shareholders, enabling them to realize value for their interest in EMCORE while eliminating business and execution risk inherent in EMCORE’s business;

 

•

the Board of Directors’ belief that the value offered to EMCORE shareholders pursuant to the Merger is more favorable to EMCORE shareholders than the potential value from other alternatives reasonably available to EMCORE, including remaining an independent public company;

 

•

the Board of Directors’ belief that although the Merger Consideration of $3.10 in the Merger is lower than the $3.80 per share proposed by Mobix, the Merger has greater closing certainty than the Potential Mobix Transaction, as the Guarantor and Parent entered into an equity commitment letter providing sufficient commitments for the Aggregate Merger Consideration, which includes third-party beneficiary rights in favor of EMCORE, and the Merger Agreement provides that EMCORE would be able to seek damages beyond the Parent Termination Fee of $2.0 million payable by Parent if a willful breach or fraud occurred, while Mobix did not provide sufficient evidence of its ability to finance the Potential Mobix Transaction in the opinion of the Board of Directors and Mobix sought to cap damages to the reverse termination fee of $1.5 million payable by Mobix, even in the event of a knowing and intentional breach;

 

•

the fact that the Merger Consideration was the result of arm’s-length negotiations, and the fact that representatives of Parent informed representatives of EMCORE and its financial advisor that the Merger Consideration was the maximum price that Parent was willing to pay;

 

•

increased volatility and uncertain outlook for EMCORE driven by:

 

•

EMCORE’s smaller size as compared to our competitors;

 

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•

EMCORE’s limited liquidity;

 

•

the unpredictability of future revenue;

 

•

customer concentration; and

 

•

EMCORE’s dependence on a few products;

 

•

EMCORE’s ability to respond to and negotiate an alternative acquisition proposal from a third party, including Mobix, if such a proposal is determined to be or would reasonably be expected to lead to a superior proposal;

 

•

the Board of Directors’ belief that the EMCORE Termination Fee of $1.5 million is reasonable under the circumstances given the size of the Proposed Transaction and the range of such termination fees in similar transactions and will not preclude or substantially impede a possible competing proposal, particularly in light of the fact that Mobix had previously stated that it would pay $1.0 million with respect to the Final Parent Group Member LOI Reimbursement in connection with the Potential Mobix Transaction;

 

•

the Board of Directors’ right, under the Merger Agreement, to fail to make, withdraw, qualify, amend, or modify its recommendation that EMCORE shareholders vote to adopt the Merger Agreement under certain circumstances, subject to the terms of the Merger Agreement, including EMCORE’s payment of the EMCORE Termination Fee of $1.5 million if Parent elects to terminate the Merger Agreement in certain of such circumstances;

 

•

the fact that EMCORE, based upon arm’s-length negotiations, was able to increase the proposed price per share from approximately $0.90-$1.20 in Parent Group Member’s first proposal on June 7, 2024, $2.49 in Parent Group Member’s proposal on July 2, 2024 and $2.73 in Parent Group Member’s proposal on September 25, 2024 to ultimately $3.10 (as further described in “—Background of the Merger”);

 

•

the belief of the Board of Directors that, if the Board of Directors declined to approve the Merger Agreement and the transactions contemplated thereby, there likely will not be another opportunity for EMCORE shareholders to receive a better or comparably priced offer with a comparable level of closing certainty in the near term;

 

•

the Board of Directors’ assessment, after discussion with Craig-Hallum regarding its views, that EMCORE would be unlikely to receive a better or comparably priced offer with a comparable level of closing certainty in the near term;

 

•

the business reputation and capabilities of Parent Group Member and the Guarantor;

 

•

the Board of Directors’ belief that Parent Group Member has access to the resources needed to complete the Merger, based on, among other factors, that Parent Group Member has obtained committed equity financing from the Guarantor, and that Parent Group Member has agreed to use reasonable best efforts to consummate the equity financing in accordance with its terms;

 

•

the financial analysis presented by Craig-Hallum to the Board of Directors as well as the oral opinion of Craig-Hallum rendered to the Board of Directors on November 7, 2024 (which was subsequently confirmed in writing by delivery of Craig-Hallum’s written opinion addressed to the Board of Directors November 7, 2024), that, as of such date, the Merger Consideration to be received by EMCORE unaffiliated shareholders in the Merger pursuant to the Merger Agreement was fair, from a financial point of view, to such holders, as more fully described below in “—Opinion of Craig-Hallum” beginning on page 84. The full text of the written opinion of Craig-Hallum, dated November 7, 2024, which describes the procedures followed, assumptions made, qualifications and limitations on the review undertaken, and other matters considered by Craig-Hallum in connection with the preparation of its opinion, is attached as Annex B to this proxy statement;

 

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•

the likelihood that the Merger will be consummated, based upon, among other things, the limited number of conditions to the Merger, including absence of conditions related to regulatory approvals, the absence of a financing condition, and the remedies available under the Merger Agreement to EMCORE in the event of any breaches by Parent Group Member, including the $2.0 million Parent Termination Fee payable to EMCORE if the Merger Agreement is terminated in certain circumstances, which payment is guaranteed by the Guarantor;

 

•

EMCORE management’s recommendation in favor of the Merger;

 

•

the other terms and conditions of the Merger Agreement, including, among others, the following:

 

•

the customary nature of the representations, warranties, and covenants of EMCORE in the Merger Agreement;

 

•

the ability of the Board of Directors, subject to certain limitations, to respond to a bona fide unsolicited acquisition proposal received from a third party prior to obtaining shareholder approval of the Merger Agreement Proposal if the Board of Directors determines in good faith, after consultation with its financial advisor, that the acquisition proposal is or would reasonably be expected to lead to a superior proposal, and after consultation with its outside legal counsel, that the failure to respond would reasonably be expected to be inconsistent with the fiduciary duties of the Board of Directors under applicable law;

 

•

the ability of the Board of Directors, subject to certain limitations, to withdraw or modify its recommendation that shareholders vote in favor of the Merger Agreement Proposal in connection with the receipt of a superior proposal or the occurrence of an intervening event, and to terminate the Merger Agreement to accept a superior proposal and enter into a definitive agreement with respect to such superior proposal, subject to payment to Parent of an EMCORE Termination Fee of $1.5 million if the Board of Directors in good faith (after consultation with its financial and legal advisors) determines that the failure to do so would reasonably be expected to be inconsistent with its fiduciary duties;

 

•

the fact that Parent has received an equity commitment letter from the Guarantor, which will provide sufficient funds for Parent to consummate the Merger;

 

•

the fact that, pursuant to the Merger Agreement and subject to certain limitations, EMCORE is entitled to specific performance and other equitable remedies to prevent breaches of the Merger Agreement and, under specified circumstances, may enforce Parent’s obligation to cause the equity financing to be timely completed;

 

•

the fact that the Merger Agreement provides that, if the Merger is not consummated under certain specified circumstances, Parent Group Member will pay EMCORE a Parent Termination Fee of $2.0 million, and that the aggregate amount of such payment obligation is guaranteed by the Guarantor;

 

•

the fact that the End Date (as it may be extended) under the Merger Agreement is intended to allow for sufficient time to complete the Merger; and

 

•

the fact that the Merger would be subject to the adoption of the Merger Agreement by EMCORE shareholders, and EMCORE shareholders would be free to reject the Proposed Transactions by voting against the adoption of the Merger Agreement for any reason, including if a higher offer were to be made prior to the Special Meeting (which would be subject to payment by EMCORE in certain circumstances of an EMCORE Termination Fee of $1.5 million if EMCORE subsequently were to consummate an alternative acquisition proposal).

 

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The Board of Directors also considered certain factors in its deliberations concerning the Merger and the Proposed Transaction, including:

 

•

the fact that, following the Merger, EMCORE will no longer exist as an independent public company and EMCORE shareholders will not participate in any potential future earnings or growth of EMCORE, and will not benefit from any appreciation in its value as a private company;

 

•

the fact that there can be no assurance that all conditions to the parties’ obligations to consummate the Merger will be satisfied even if the Merger Agreement is adopted by EMCORE shareholders, as well as the risk that the equity financing contemplated by the equity commitment letter will not be obtained, resulting in Parent and Merger Sub not having sufficient funds to complete the Merger, or that Parent and Merger Sub may otherwise not obtain sufficient funds to complete the Merger;

 

•

the costs expected to be incurred in connection with the Proposed Transaction;

 

•

the risk that the Proposed Transaction may divert management attention and resources away from other strategic opportunities and from operational matters;

 

•

the risk that failure to complete the Proposed Transaction could negatively affect the price of EMCORE common stock and EMCORE’s future business, financial condition, and operating results;

 

•

the fact that the time between the signing of the Merger Agreement and the other transaction documents and the closing of the Merger could be an extended period and there would be uncertainty created for EMCORE, its employees, and customers during that period;

 

•

the risk that EMCORE may be unable to retain key employees;

 

•

the possibility that certain provisions of the Merger Agreement may dissuade third parties from seeking to acquire EMCORE or otherwise increase the cost of any potential acquisition;

 

•

the provisions of the Merger Agreement that restrict EMCORE’s ability to solicit or participate in discussions or negotiations regarding alternative acquisition proposals, subject to specified exceptions such as the fiduciary out;

 

•

the fact that under the Merger Agreement, EMCORE may be required to pay Parent Group Member an EMCORE Termination Fee of $1.5 million under certain circumstances;

 

•

the fact that, notwithstanding EMCORE’s specific performance remedy under the Merger Agreement, EMCORE’s remedy in the event of a breach of the Merger Agreement by Parent or Merger Sub is limited to (a) receipt of a Parent Termination Fee of $2.0 million under certain circumstances, or (b) the ability to seek damages suffered or incurred as a result of Parent Group Member’s, Parent’s, or Merger Sub’s willful and material breach or fraud with respect to Parent Group Member’s, Parent’s, or Merger Sub’s representations, warranties, covenants, or other agreements in the Merger Agreement in certain circumstances, and that under certain other circumstances, EMCORE may not be entitled to a Parent Termination Fee or recovery for damages at all;

 

•

the fact that the announcement and pendency of the transactions contemplated by the Merger Agreement, the failure to complete the Merger, and/or actions that EMCORE may be required, or Parent may be permitted, to take under the Merger Agreement could have an adverse impact on EMCORE’s existing and prospective business relationships with customers, retailers, and other third parties, and on EMCORE’s employees, including the risk that certain key members of EMCORE’s management might choose not to remain employed with EMCORE prior to the completion of the Merger, regardless of whether or not the Merger is completed;

 

•

the fact that any gain realized by EMCORE shareholders as a result of the Merger will generally be taxable for U.S. federal income tax purposes to those shareholders that are U.S. persons subject to taxation in the United States;

 

•

that EMCORE, prior to the closing of the Proposed Transaction, is required to conduct its business in the ordinary course consistent with past practice, subject to certain limitations and exceptions, which

 

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could delay or prevent EMCORE from undertaking business opportunities that may arise prior to the closing of the Proposed Transaction;

 

•

the risk that the Proposed Transaction may not be completed in a timely manner or at all and the potential adverse consequences, including substantial costs that would be incurred and potential damage to EMCORE’s reputation, if the Proposed Transaction is not completed;

 

•

the potential for litigation by shareholders in connection with the transactions contemplated by the Merger Agreement, which, even where lacking in merit, could nonetheless result in distraction and expense; and

 

•

the potential personal interests of directors and executive officers of EMCORE in the Proposed Transaction and that certain directors and executive officers may receive benefits that are different from, and in addition to, those of EMCORE shareholders, as described in “—Interests of EMCORE’s Directors and Executive Officers in the Merger.”

The foregoing discussion of the information and factors considered by the Board of Directors is not exhaustive, but it includes the material factors considered by the Board of Directors, including factors that support the Proposed Transaction as well as those that weigh against it. In view of the wide variety of factors considered by the Board of Directors in connection with its evaluation of the Proposed Transaction and the complexity of these matters, the Board of Directors did not consider it practical to, nor did it attempt to, quantify, rank, or otherwise assign relative weight to the specific factors that it considered in reaching its decision. Rather, the Board of Directors based its recommendation on the totality of the information presented to and considered by it. The Board of Directors evaluated the factors described above with the assistance of EMCORE management and its legal and financial advisors. In considering the factors described above, individual members of the Board of Directors may have given different weight to other or different factors.

Opinion of Craig-Hallum

All capitalized terms defined in this “—Opinion of Craig-Hallum” section have the meanings specified in this section unless the context otherwise requires.

Craig-Hallum rendered its opinion to the Board of Directors that, as of November 7, 2024, and based upon and subject to the factors and assumptions set forth therein, the Merger Consideration to be paid to the Unaffiliated Shareholders under the terms of the Merger Agreement is fair from a financial point of view to the Unaffiliated Shareholders.

The full text of the written opinion of Craig-Hallum, dated November 7, 2024, which sets forth assumptions made, procedures followed, matters considered, and limitations on the review undertaken in connection with the opinion, is attached as Annex B to this proxy statement. Craig-Hallum provided its opinion for the information and assistance of the Board of Directors in connection with its consideration of the Merger Agreement and the Merger. The Craig-Hallum opinion was not intended to and does not constitute a recommendation as to how any EMCORE shareholder should vote or make any election with respect to the Merger Agreement, the Merger, or any other matter.

In arriving at its opinion, Craig-Hallum, among other things:

 

•

reviewed EMCORE’s audited financial statements for the year ended September 30, 2023;

 

•

reviewed EMCORE’s unaudited preliminary financial results for the year ended September 30, 2024;

 

•

reviewed the detailed financial projection model for the years ending September 30, 2025 through 2027 approved by the Board of Directors on September 12, 2024 and the detailed financial projection model for the years ending September 30, 2028 through 2029 provided and approved by the management of EMCORE on October 4, 2024;

 

84

•

reviewed other internal documents, including the data room prepared by EMCORE and its advisors, relating to the history, past and current operations, financial conditions and expected outlook of EMCORE, provided by EMCORE’s management and advisors;

 

•

reviewed documents related to the Merger, including the Merger Agreement;

 

•

reviewed estimates, projections, and documents regarding net operating loss carryforwards

 

•

reviewed various SEC filings, press releases, internal presentation and marketing materials prepared by the management of EMCORE, industry and market reports, research reports and white papers;

 

•

discussed the information above with members of the management of EMCORE and had discussions concerning the information referred to above and the background and other elements of the Merger, the financial condition, recent restructuring actions, current operating results, and business outlook for EMCORE; and

 

•

performed certain valuation and comparative analyses using generally accepted valuation and analytical techniques including an analysis of comparable public companies that Craig-Hallum deemed relevant, an analysis of comparable M&A transactions that Craig-Hallum deemed relevant, a review of publicly available information for selected M&A transactions to determine the premiums (or discounts) paid over recent trading prices prior to announcement of the transaction, and discounted cash flow analyses.

In conducting its review and rendering its opinion, Craig-Hallum relied upon and assumed, without independent verification, the accuracy and completeness of data, material, and other information furnished, or otherwise made available to, discussed with, or reviewed by Craig-Hallum or publicly available, and did not attempt to independently verify, and assumed no responsibility for the independent verification, of such information; relied upon the assurances of the management of EMCORE that the financial information for EMCORE has been prepared on a reasonable basis in accordance with industry practice, and that they are not aware of any information or facts that would make any such information incomplete or misleading; assumed the financial forecasts, estimates and other forward-looking information has been reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of the management of EMCORE as to the expected future results of operations and financial condition of EMCORE, and Craig-Hallum expressed no opinion with respect to such financial forecasts, estimates or forward-looking information or the assumptions on which they were based; and relied on advice of outside counsel and the independent accountants of EMCORE, and on the assumptions of the management of EMCORE, as to all accounting, legal, tax and financial reporting matters with respect to EMCORE, the Merger, and the Merger Agreement.

EMCORE does not publicly disclose internal management projections of the type provided to Craig-Hallum in connection with Craig-Hallum’s analysis of the Merger, and such internal management projections were not prepared with a view toward public disclosure. These internal management projections provided to Craig-Hallum were prepared by the management of EMCORE and were based on numerous variables and assumptions that are inherently uncertain and may be beyond the control of management, including, without limitation, factors related to general economic and competitive conditions. Accordingly, actual results could vary significantly from those set forth in such internal management projections.

Craig-Hallum was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by Craig-Hallum, nor was Craig-Hallum furnished with any such verification, and Craig-Hallum does not assume any responsibility or liability for the accuracy or completeness thereof. Craig-Hallum did not conduct a physical inspection of any of the properties or assets of EMCORE. Craig-Hallum did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of EMCORE, nor was Craig-Hallum furnished with any such evaluations or appraisals, nor did Craig-Hallum evaluate the solvency of EMCORE under any state or federal laws.

Craig-Hallum also assumed that the final executed form of the Merger Agreement did not differ in any material respects from the latest draft provided to Craig-Hallum and, without independent verification, that (i) the

 

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representations and warranties of all parties to the Merger Agreement and all other related documents and instruments that are referred to therein were true and correct, (ii) each party to such agreements will fully and timely perform all of the covenants and agreements required to be performed by such party, (iii) the Merger will be consummated in accordance with the terms and conditions of the Merger Agreement without waiver, modification or amendment of any material term, condition or agreement, (iv) all conditions to the consummation of the Merger will be satisfied without waiver by any party of any conditions or obligations thereunder and (v) there will not be any adjustment to EMCORE’s capital structure prior to the Merger that results in any adjustment to the Merger Consideration. Additionally, Craig-Hallum assumed that all the necessary regulatory approvals and consents required (contractual or otherwise) for the Merger will be obtained in a manner that will not adversely affect EMCORE or the contemplated benefits of the Merger. Craig-Hallum is not a legal, tax or regulatory advisor and relied upon, without independent verification, the assessment of EMCORE and its legal, tax and regulatory advisors with respect to such matters.

Craig-Hallum’s opinion was necessarily based upon economic, market, monetary, regulatory, and other conditions as they existed and could be evaluated, and the information made available to Craig-Hallum, as of the

date of its opinion. Craig-Hallum did not express any opinion as to the prices or trading ranges at which EMCORE common stock will trade at any time. Furthermore, Craig-Hallum did not express any opinion as to the impact of the Merger on the solvency or viability of the Surviving Corporation in the Merger or the ability of the Surviving Corporation to pay its obligations when they become due.

Craig-Hallum expressed no opinion with respect to any transaction to which EMCORE may be a party other than the Merger. Craig-Hallum’s opinion addressed solely the fairness, from a financial point of view, to the Unaffiliated Shareholders of the Merger Consideration set forth in the Merger Agreement and does not address other terms or agreement relating to the Merger or any other terms of the Merger Agreement. Craig-Hallum expressed no opinion as to the basic business decision to proceed with or effect the Merger, the merits of the Merger relative to any alternative transaction or business strategy that may be available to EMCORE, or any other terms contemplated by the Merger Agreement. With respect to the Merger Consideration payable under the Merger Agreement, the opinion solely relates to the aggregate consideration payable to the Unaffiliated Shareholders based upon the valuation of the entire Company, and Craig-Hallum did not express any opinion regarding the consideration allocated or paid to any individual shareholders or holders of securities other than the Company’s common stock. Craig-Hallum expressed no opinion with respect to the amount or nature of compensation to any officer, director, or employee of any party to the Merger, or to any class of such persons, relative to the compensation to be received by holders of EMCORE common stock in the Merger with respect to the fairness of any such compensation.

Craig-Hallum delivered its opinion on November 7, 2024. Craig-Hallum assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date thereof and has not updated its opinion. Craig-Hallum’s opinion was approved by Craig Hallum’s fairness opinion committee in accordance with established procedures.

The Merger Consideration to be paid pursuant to the terms of the Merger Agreement was determined through arm’s-length negotiations between the Board of Directors and Parent and was approved by the Board of Directors. In addition, Craig-Hallum’s opinion and its presentation to the Board of Directors were one of many factors taken into consideration by the Board of Directors in deciding to approve the Merger.

Summary of Financial Analyses

In accordance with customary investment banking practice, Craig-Hallum employed generally accepted valuation methods in reaching its financial opinion. The following is a summary of the material financial analyses contained in the presentation that was made by Craig-Hallum to the Board of Directors on November 7, 2024, and that were utilized by Craig-Hallum in connection with providing its opinion. However, the following summary does not purport to be a complete description of the financial analyses performed by Craig-Hallum, nor

 

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does the order of analyses described represent the relative importance or weight given to those analyses by Craig-Hallum. Some of the summaries in the financial analyses include information presented in tabular format. The tables must be read together with the full text of each summary and are alone not a complete description of Craig-Hallum’s financial analyses. The following quantitative information is based on market data as it existed on or before November 7, 2024, and is not necessarily indicative of current or future market conditions.

For purposes of its stand-alone analyses performed on EMCORE, Craig-Hallum utilized EMCORE’s internal financial projections for fiscal years ending September 30, 2025 through 2027 approved by the Board of Directors and the internal financial projections for fiscal years ending September 30, 2028 through 2029, prepared by and furnished to Craig-Hallum by the management of EMCORE. Information regarding the cash, number of fully diluted shares of common stock outstanding, and net operating losses for EMCORE was provided by EMCORE management.

Comparable Public Company Analysis

Craig-Hallum reviewed and compared certain financial information for EMCORE to corresponding financial information, ratios, and public market multiples for the following publicly traded companies, which, in the exercise of its professional judgment, Craig-Hallum determined to be relevant to its analysis. In selecting comparable public companies, Craig-Hallum focused on businesses in the technology and aerospace and defense industries located in North America with a market capitalization less than $100 million and listed on a major U.S. exchange with similar financial attributes to EMCORE.

Selected Companies:

 

•

AmpliTech Group, Inc.

 

•

KVH Industries, Inc.

 

•

One Stop Systems, Inc.

 

•

Peraso Inc.

 

•

Pixelworks, Inc.

Craig-Hallum obtained financial metrics and projections for the selected companies from SEC filings, financial results, financial estimates, and stock price based on S&P Capital IQ, and enterprise value based on treasury stock method diluted shares outstanding as of November 6, 2024. In its analysis, Craig-Hallum derived and compared multiples for EMCORE and the selected companies, calculated as follows:

 

•

Enterprise value (“EV”) as a multiple of estimated revenue for calendar year 2024 (“CY 2024E”)

 

•

EV as a multiple of estimated revenue for calendar year 2025 (“CY 2025E”)

 

•

EV as a multiple of estimated adjusted EBITDA for CY 2025E

EV refers to market capitalization — calculated utilizing the treasury stock method — plus all outstanding debt, plus preferred stock, plus any minority interest and less cash and cash equivalents (“net debt”). This analysis indicated the following:

 

Financial Multiple

Low

25th Percentile

Median

75th Percentile

High

EV / CY 2024E Revenue

0.1x

0.4x

0.8x

0.9x

1.2x

EV / CY 2025E Revenue

0.1x

0.3x

0.4x

0.7x

0.9x

EV / CY 2025E Adjusted EBITDA

1.4x

1.9x

2.4x

2.9x

3.4x

Craig-Hallum then applied the respective representative ranges to calendar year 2024 estimated revenue, calendar year 2025 estimated revenue, and calendar year 2025 adjusted EBITDA resulting in ranges of implied enterprise

 

87

values and implied per share values. A summary of these implied enterprise value ranges and implied per share value ranges are shown in the table below.

 

Financial Multiple		Representative Range		Implied Enterprise Value Reference Range*		Implied Per Share Value Range
EV / CY 2024E Revenue		0.1x —1.2x		$8.0 — $105.6		$0.99 — $9.46
EV / CY 2025E Revenue		0.1x — 0.9x		$8.7 — $79.9		$1.07 — $7.30
EV / CY 2025E Adjusted EBITDA		1.4x — 3.4x		$7.0 — $16.6		$0.90 — $1.85

 

*	Dollars in millions

Although Craig-Hallum selected the companies reviewed in the analysis because, among other things, their industry and financial attributes are reasonably similar to that of EMCORE, no selected company is identical to EMCORE. In evaluating the financial multiples for the selected companies, Craig-Hallum made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters. Accordingly, Craig-Hallum’s comparison of selected companies to EMCORE and analysis of the results of such comparisons was not purely quantitative, but instead necessarily involved qualitative considerations and professional judgments concerning differences in financial and operating characteristics and other factors that could affect the relative value of EMCORE.

Premiums Paid Analysis

Craig-Hallum reviewed publicly available information for selected completed M&A transactions to determine the implied premiums paid in such M&A transactions over recent trading prices of the relevant target companies at certain dates immediately prior to announcement of the relevant transaction. Craig-Hallum selected M&A transactions completed or announced but not closed since January 1, 2019, involving U.S. or Canada based target companies, that were 100% cash transactions acquiring greater than 50% of the target company, with transaction values ranging from $5 million to $300 million, for companies involved in communications equipment and aerospace & defense.

Based on these criteria, Craig-Hallum reviewed 18 M&A transactions and compared the implied premiums paid in those selected M&A transactions over certain time periods to the premium that would be paid to the Unaffiliated Shareholders based on the Merger Consideration. 

For each of these transactions, Craig-Hallum calculated the premium per share paid by the acquirer by comparing the announced transaction value per share to the target company’s historical share price as of the following dates: (i) closing price on the last trading day prior to announcement of the transaction or first reference in the public news media about the transaction (the “1-Day Price”), (ii) closing price 7 calendar days prior to announcement of the transaction or first reference in the public news media about the transaction (the “1-Week Price”), (iii) closing price 30 calendar days prior to announcement of the transaction or first reference in the public news media about the transaction (the “1-Month Price”), and (iv) closing price 90 calendar days prior to announcement of the transaction or first reference in the public news media about the transaction (the “3-Month Price”). The 1-Day Price premiums were calculated by dividing the transaction offer price per share by the target’s closing share price one day prior to announcement of the transaction and subtracting one. The 1-Week Price premiums were calculated by dividing the transaction offer price per share by the target’s closing share price one week prior to announcement of the transaction and subtracting one. The 1-Month Price premiums were calculated by dividing the transaction offer price per share by the target’s closing share price one month prior to announcement of the transaction and subtracting one. The 3-Month Price premiums were calculated by dividing the transaction offer price per share by the target’s closing share price three months prior to announcement of the transaction and subtracting one.

 

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This analysis indicated the following implied premiums:

 

		Minimum				25th Percentile				Median				75th Percentile				Maximum
1-Day			(37.5	)%			17.7	%			31.8	%			47.9	%			208.5	%
1-Week			(63.8	)%			21.9	%			33.4	%			48.0	%			185.6	%
1-Month			(70.4	)%			11.5	%			28.8	%			67.0	%			171.8	%
3-Month			(74.2	)%			31.2	%			44.5	%			67.1	%			185.6	%

This analysis indicated the following approximate implied equity price per share range for EMCORE:

 

		Minimum				25th Percentile				Median				75th Percentile				Maximum
1-Day		$	1.37			$	2.58			$	2.89			$	3.24			$	6.76
1-Week		$	0.73			$	2.45			$	2.68			$	2.97			$	5.74
1-Month		$	0.73			$	2.73			$	3.16			$	4.09			$	6.66
3-Month		$	0.24			$	1.24			$	1.37			$	1.58			$	2.70

No target company or transaction utilized in the premiums paid analysis is identical to EMCORE nor the Merger. In evaluating the precedent transactions used for the premiums paid analysis, Craig-Hallum used its professional judgment to determine the scope and parameters of the selected M&A transactions, as described above.

Precedent M&A Transactions Analysis

Craig-Hallum performed a selected precedent M&A transactions analysis, which is designed to imply a value for a company based on publicly available financial terms of the selected transactions that share some characteristics with the Merger. Craig-Hallum reviewed and selected precedent transactions that, in the exercise of its professional judgment, it deemed to be relevant to its analysis after meeting the following criteria: transactions completed since August 2022 for companies operating in the technology and aerospace & defense industries with transaction values between $5 million and $250 million and with similar financial attributes to EMCORE. In its analysis, Craig-Hallum reviewed the following precedent transactions:

 

Target		Acquirer		Announced Date
GSE Systems, Inc.		Pelican Energy Partners		August 2024
BBTV Holdings Inc.		Impactreneur Capital		October 2023
Wireless Telecom Group, Inc.		Maury Microwave, Inc.		March 2023
Smart Employee Benefits Inc.		Co-Operators Financial Services Limited		January 2023
Qumu Corporation		Enghouse Systems Limited		December 2022
NexJ Systems Inc.		N. Harris Computer Corporation		August 2022
AutoWeb, Inc.		One Planet Group Inc		July 2022
RealNetworks, Inc.		Rober Glaser (CEO, Chairman)		July 2022

For each precedent transaction indicated above, using publicly available company filings and Capital IQ, Craig-Hallum calculated multiples of EV using the target company’s revenue for the last 12 months (“LTM Revenue”) and estimated revenue for the next 12 months (“Estimated NTM Revenue”), where available, at the time of transaction announcement. This analysis indicated the following:

 

Financial Multiple

Low

25th Percentile

Median

75th Percentile

High

EV / LTM Revenue

0.1x

0.3x

0.5x

0.8x

1.5x

EV / Estimated NTM Revenue

0.1x

0.2x

0.5x

0.6x

1.0x

 

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Craig-Hallum then applied the respective ranges of LTM Revenue and Estimated NTM Revenue multiples from the precedent transactions to LTM Revenue and Estimated NTM Revenue for EMCORE, resulting in ranges of implied enterprise values and implied per share values shown in the table below.

 

Financial Multiple

Range

Implied Enterprise Value Reference Range*

Implied Per Share Value Range

EV / LTM Revenue

0.1x — 1.5x

$11.6 — $128.3

$1.35 — $11.36

EV / Estimated NTM Revenue

0.1x — 1.0x

$13.8 — $97.0

$1.57 — $8.74

 

*	Dollars in millions

No target company or transaction utilized in the selected precedent transactions analysis is identical to EMCORE nor the Merger. In evaluating the precedent transactions used for the M&A transactions analysis, Craig-Hallum made judgments and assumptions with regard to industry performance, general business, economic, market and financial conditions, and other matters, many of which are beyond the control of EMCORE, such as the impact of competition on the business or the industry generally, industry growth and the absence of any adverse material change in the financial condition and prospects of EMCORE, the industry or in the financial markets in general.

Discounted Cash Flow Analysis

Craig-Hallum conducted a discounted cash flow analysis for EMCORE on a stand-alone basis, which is designed to estimate the implied value of a company by calculating the present value of the estimated future unlevered free cash flows and terminal value of the company. Craig-Hallum calculated a range of implied enterprise values of EMCORE based on forecasts of future unlevered free cash flows for fiscal year 2025 through fiscal year 2027 as of September 12, 2024, and for fiscal year 2028 through fiscal year 2029 as of October 4, 2024, provided by the management of EMCORE. Craig-Hallum first calculated unlevered free cash flows (calculated as net operating profit after tax plus EBITDA Adjustments, less capital expenditures, less increase in net working capital) of EMCORE for fiscal years 2025 to 2029, using an assumed blended federal and state tax rate of 24.1%.

Craig-Hallum then calculated terminal values for EMCORE using the terminal value method based on revenue multiples. The terminal value was calculated by applying a range of revenue multiples of 0.3x to 0.5x and a range of adjusted EBITDA multiples of 1.5x to 3.5x (selected based on Craig-Hallum’s professional judgment after consideration of comparable public company multiples) to EMCORE management’s revenue and adjusted EBITDA forecast for fiscal year 2029, respectively. In addition, Craig-Hallum added EMCORE’s net operating loss carryforwards expected to be utilized by EMCORE’s management to reduce future domestic federal and state taxes, in each case based on internal estimates of EMCORE’s management.

These unlevered free cash flows, terminal values and net operating loss carryforwards were then discounted to their respective present values as of November 7, 2024, using a weighted average cost of capital range of 15.8% to 23.8% (selected based on Craig-Hallum’s professional judgment and derived from an analysis of the estimated weighted average cost of capital of comparable public companies) to calculate a range of implied enterprise values and implied per share values for EMCORE set forth in the following table:

 

Discounted Cash Flow Analysis		Implied Enterprise Value Reference Range*		Implied Per Share Value Range
Terminal Revenue Method		$20.5 — $36.8		$2.43 — $3.97
Terminal EBITDA Method		$13.9 — $25.2		$1.78 — $3.00

 

*	Dollars in millions

 

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Miscellaneous

The foregoing summary of material financial analyses does not purport to be a complete description of the analyses or data presented by Craig-Hallum. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Craig-Hallum believes that the summary set forth above and its analyses must be considered as a whole and that selecting portions of it, without considering all of its analyses, could create an incomplete view of the processes underlying the analyses and its opinion. No single factor or analysis was determinative of Craig-Hallum’s fairness determination. Rather, Craig-Hallum considered the totality of the factors and analyses performed in arriving at its opinion. Craig-Hallum based its analyses on assumptions that it deemed reasonable, including those concerning general business and economic conditions and industry-specific factors. The other principal assumptions upon which Craig-Hallum based its analysis have been described under the description of each analysis in the foregoing summary. Analyses based upon forecasts of future results are inherently uncertain, as they are subject to numerous factors or events beyond the control of the parties and their advisors. Accordingly, forecasts and analyses used or made by Craig-Hallum are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by those analyses. Moreover, Craig-Hallum’s analyses are not, and do not, purport to be appraisals or otherwise reflective of the prices at which securities may trade at the present time or at any time in the future or at which businesses actually could be bought or sold.

As part of its investment banking business, Craig-Hallum and its affiliates are continually engaged in the valuation of businesses and their securities in connection with mergers and acquisitions. Craig-Hallum was selected as financial advisor to the Board of Directors on the basis of Craig-Hallum’s experience and its familiarity with EMCORE and the industry in which it operates.

Under the terms of the engagement letter dated May 21, 2024, EMCORE has paid Craig-Hallum a fee of $300,000 for rendering its written opinion. Furthermore, pursuant to the terms of the engagement letter, EMCORE has agreed to pay Craig-Hallum a cash transaction fee (based on a percentage of the aggregate value associated with the Merger) upon consummation of the Merger, which cash transaction fee currently is estimated to be $1,660,000, less the $300,000 previously paid for the written fairness opinion. In addition, EMCORE has agreed to reimburse Craig-Hallum for reasonable expenses incurred in connection with the engagement and to indemnify Craig-Hallum against certain liabilities that may arise out of its engagement by EMCORE and the rendering of the opinion.

Craig-Hallum’s analyses were prepared solely as part of Craig-Hallum’s analysis of the fairness, from a financial point of view, to the Unaffiliated Shareholders of the Merger Consideration set forth in the Merger Agreement and Craig-Hallum did not address other terms or agreements relating to the Merger or any other terms of the Merger Agreement. The opinion of Craig-Hallum was only one of the factors taken into consideration by the Board of Directors in making its determination to approve the Merger Agreement and the Merger.

In the ordinary course of its business, Craig-Hallum and its affiliates may actively trade securities of EMCORE for its own account or the account of its customers and, accordingly, may at any time hold a long or short position in such securities. Craig-Hallum has in the past provided investment banking and financial advisory services to EMCORE and has received fees for rendering such services. Craig-Hallum and its affiliates may from time to time perform various investment banking and financial advisory services for other clients and customers that may have conflicting interests with EMCORE, for which Craig-Hallum would expect to receive compensation.

Consistent with applicable legal and regulatory requirements, Craig-Hallum has adopted policies and procedures to establish and maintain the independence of Craig-Hallum’s research department and personnel. As a result, Craig-Hallum’s research analysts may hold opinions, make statements or investment recommendations and/or publish research reports with respect to the transaction and other participants in the transaction that differ from the opinions of Craig-Hallum’s investment banking personnel.

 

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Certain Unaudited Prospective Financial Information

Other than in connection with our regular earnings press releases and related investor materials, the Company does not, as a matter of course, publicly disclose long-term consolidated forecasts as to future performance, earnings, or other results given, among other reasons, the uncertainty, unpredictability, and subjectivity of the underlying assumptions and estimates. However, the Company is including a summary of certain previously nonpublic, unaudited prospective financial information (i) for the fiscal year ending September 30, 2025 through the fiscal year ending September 30, 2027 that members of the Board of Directors approved on September 12, 2024, and (ii) for the fiscal year ending September 30, 2028 and the fiscal year ending September 30, 2029 that members of the Company’s management provided to the Board of Directors on October 4, 2024 in connection with their evaluation of the Merger (the “Management Projections”). The Management Projections were prepared on a stand-alone basis and do not take into account any of the transactions contemplated by the Merger Agreement or any changes to the Company’s operations or strategy that may be implemented after the completion of the Merger.

The Management Projections are not included in this proxy statement to influence any decision on whether to vote for the Merger or any other proposal presented at the Special Meeting, or whether to make any investment decision, but rather are included in this proxy statement solely to give EMCORE shareholders access to certain non-public information that was provided to the Board of Directors, Craig-Hallum, and Parent, as applicable, for the purposes described above. In particular, the Management Projections should not be viewed as public guidance. By including the Management Projections in this proxy statement, none of the Company, the Board of Directors, Craig-Hallum, Parent, or any other person has made or makes any representation to any person regarding the Company’s ultimate performance as compared to the information contained in the Management Projections. The inclusion of the Management Projections should not be regarded as an indication that the Company, the Board of Directors, Craig-Hallum, Parent, or any other person considered, or now considers, them to be necessarily predictive of actual future results, and such information should not be relied on as such.

The Management Projections were not prepared with a view toward public disclosure or complying with GAAP. In addition, the Management Projections were not prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation or presentation of prospective financial information. The Management Projections were prepared by, and are the responsibility of, the Company’s management team. The Company’s independent registered public accounting firm, CohnReznick LLP, has not audited, reviewed, examined, compiled, nor applied agreed-upon procedures with respect to the Management Projections and, accordingly, CohnReznick LLP does not express an opinion or any other form of assurance with respect to such information or its achievability.

Although the Management Projections were prepared with numerical specificity, they are forward-looking statements that involve inherent risks and uncertainties. Further, the Management Projections cover multiple years in the future and projections by their nature become less reliable with each successive quarter and year. EMCORE shareholders are urged to read “Cautionary Statement Concerning Forward-Looking Statements” for additional information regarding the risks inherent in forward-looking information such as the Management Projections. EMCORE shareholders also should review those risk factors incorporated by reference into this proxy statement from Item 1A of EMCORE’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024, and subsequent filings with the SEC. The Management Projections also reflect numerous variables, expectations, and assumptions available at the time they were prepared as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in the Management Projections. Accordingly, there can be no assurance that the projected results summarized below will be realized. EMCORE shareholders are urged to review the description of the reported and anticipated results of operations and financial condition and capital resources, including the Company’s historical financial statements, included in its filings with the SEC. In light of the foregoing factors, and the uncertainties inherent in the Management Projections, EMCORE shareholders are cautioned not to place undue, if any, reliance on the Management Projections.

 

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The inclusion of the Management Projections in this proxy statement should not be regarded as an indication that the Company or any of its affiliates, advisors, officers, directors, or representatives considered or considers the Management Projections to be necessarily predictive of actual future events, and the Management Projections should not be relied upon as such. The inclusion of the Management Projections herein should not be deemed an admission or representation by the Company that its management views the Management Projections as material information.

Certain of the financial information contained in the Management Projections are considered non-GAAP financial measures. These non-GAAP measures are defined below and include Adjusted EBITDA and Adjusted EBITDA Margin. The most directly comparable GAAP financial measure to Adjusted EBITDA is net income from continuing operations, which reflects total revenue less total costs and expenses, interest expense, net, and provision for income taxes. The most directly comparable GAAP financial measure to Adjusted EBITDA Margin is Gross Profit Margin, which reflects total revenues less cost of goods sold, expressed as a percentage of total revenue. EMCORE management provided this information because EMCORE management believed it could be useful in evaluating the businesses that are the subject of such financial information. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by EMCORE may not be comparable to similarly titled amounts used by other companies. The non-GAAP financial measures were selected for use in the Management Projections as they were provided to and relied upon by Craig-Hallum for the purposes of the fairness opinion and/or by the Board of Directors in connection with its consideration of the Merger. Financial measures provided to any financial advisor in this context were not prepared with a view toward public disclosure and are excluded from the definition of non-GAAP financial measures under applicable SEC rules and regulations. The SEC rules which would otherwise require a reconciliation of a non-GAAP financial measure to a GAAP financial measure do not apply to non-GAAP financial measures included in disclosures relating to a proposed business combination such as the Merger if the disclosure is included in a document such as this proxy statement. In addition, reconciliations of non-GAAP financial measures were not relied upon by Craig-Hallum for purposes of the fairness opinion or by the Board of Directors in connection with its evaluation of the Merger. Accordingly, EMCORE has not provided a reconciliation of the financial measures included in the Management Projections to the relevant GAAP financial measures. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP, and non-GAAP financial measures as used by EMCORE may not be comparable to similarly titled amounts used by other companies. Furthermore, there are limitations inherent in non-GAAP financial measures because they exclude charges and credits that are required to be included in a GAAP presentation. Accordingly, this non-GAAP financial measure should be considered together with, and not as an alternative to, financial measures prepared in accordance with GAAP.

The Management Projections were based upon numerous estimates or expectations, beliefs, opinions, and assumptions with respect to the Company’s business, including its results of operations and financial condition, customer requirements and competition, and with respect to general business, economic, market, regulatory and financial conditions and other future events, all of which are difficult to predict and many of which are beyond the Company’s control and may not be realized. The Management Projections: (a) do not take into account any transactions, circumstances, or events occurring after the date they were prepared, including the Merger, costs and expenses incurred or to be incurred in connection with the Merger, synergies expected to result from the Merger or costs and expenses necessary to achieve anticipated synergies, or the effect of any failure of the Merger or any other merger to occur; (b) are not necessarily indicative of current market conditions or values or future performance, which may be significantly more or less favorable than as set forth in the Management Projections; and (c) are not, and should not be regarded as, a representation that any of the results or expectations contained in, or forming a part of, the Management Projections will be achieved.

EMCORE management believes that the assumptions used as a basis for the Management Projections were reasonable based on the information available to EMCORE management at the time prepared. However, the Management Projections are not a guarantee of actual future performance. The future financial results of

 

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EMCORE’s business may differ materially from those expressed in the Management Projections due to factors that are beyond EMCORE’s ability to control or predict.

The following table presents a summary of the Management Projections for the years ending September 30, 2025 through September 30, 2029. Information included in tables may not foot due to rounding.

 

Fiscal Year Ending September 30,		2025				2026				2027				2028				2029
Revenue			$93,013				$96,505				$98,139				$98,320				$102,320
Total COGS			$64,282				$66,664				$66,863				$64,657				$67,274
Gross Profit			$28,730				$29,841				$31,276				$33,663				$35,046
Gross Margin			30.9	%			30.9	%			31.9	%			34.2	%			34.3	%
Total Operating Expenses			$29,739				$28,648				$29,182				$29,965				$30,936
Operating (Loss) Income			$(1,008	)			$1,193				$2,094				$3,698				$4,110
EBITDA Adjustments			$5,528				$5,722				$5,187				$3,517				$3,702
Adjusted EBITDA(1)			$4,520				$6,915				$7,280				$7,216				$7,812
Adj. EBITDA Margin(2)			5	%			7	%			7	%			7	%			8	%

 

(1)

Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and adjusted for non-cash stock compensation expense, accretion of contract rights, amortization of acquired intangible assets, and restructuring separations and transitions and any restructuring-related items.

(2)	Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by Revenue.

THE COMPANY DOES NOT INTEND TO UPDATE OR OTHERWISE REVISE THE ABOVE MANAGEMENT PROJECTIONS TO REFLECT CIRCUMSTANCES EXISTING AFTER THE DATE WHEN MADE OR TO REFLECT THE OCCURRENCE OF FUTURE EVENTS, EVEN IN THE EVENT THAT ANY OR ALL OF THE ASSUMPTIONS UNDERLYING SUCH MANAGEMENT PROJECTIONS ARE NO LONGER APPROPRIATE, EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW.

Interests of EMCORE’s Directors and Executive Officers in the Merger

Certain of EMCORE’s directors and executive officers may have interests in the Merger that differ from, or are in addition to, those of EMCORE shareholders generally.

Overview

In considering the recommendations of the Board of Directors to approve the Merger Agreement Proposal, the Compensation Proposal, and the Adjournment Proposal in connection with the Merger, EMCORE shareholders should be aware that, similar to other transactions of this type, certain of EMCORE’s directors and executive officers have interests in the Merger that differ from, or are in addition to, those of EMCORE shareholders generally. The Board of Directors was aware of and considered these potential interests, among other matters, in evaluating, negotiating, and reaching the determination to approve the Merger Agreement and the other transaction documents, and the transactions contemplated by the Merger Agreement, and to recommend that EMCORE shareholders approve the Merger Agreement. These interests are described and quantified in detail in the narratives and tables below.

EMCORE’s executive officers for purposes of the discussion below are: Matthew Vargas, Tom Minichiello, Jeffrey Rittichier, and Iain Black.

 

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As of the January 10, 2025, no executive officers or directors of EMCORE beneficially own any shares or ownership interest in Parent, Parent Group Member, or Merger Sub.

Treatment of EMCORE Equity-Based Awards in the Merger

As explained above, subject to the terms and conditions of the Merger Agreement, immediately prior to the effective time of the Merger:

 

•

each outstanding restricted stock unit award subject to time-based vesting restrictions, whether vested or unvested, that is outstanding under any Company Equity Plan will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (a) the amount of the Merger Consideration by (b) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to time-based vesting restrictions;

 

•

each outstanding restricted stock unit award subject to performance vesting conditions that is outstanding under any Company Equity Plan (a) to the extent not vested, will be deemed to have satisfied such performance vesting conditions at 100% of target and will have any time-based vesting conditions waived, and (b) will be canceled in consideration for the right to receive a lump sum cash payment (less any applicable tax withholdings) equal to the product obtained by multiplying (i) the amount of the Merger Consideration by (ii) the total number of shares of EMCORE common stock represented by such restricted stock unit award subject to performance vesting conditions; and

 

•

each outstanding stock option of EMCORE (if any), whether vested or unvested, will be canceled and converted into the right to receive (without interest) a lump sum cash payment (less applicable tax withholdings) equal to the product obtained by multiplying (a) the excess, if any, of the amount of the Merger Consideration over the per share exercise price of such stock option by (b) the total number of shares of EMCORE common stock underlying such stock option. Any stock option, whether vested or unvested, for which the per share exercise price attributable to such stock option is equal to or greater than the Merger Consideration will be canceled as of the effective time of the Merger for no consideration.

Equity-Based Awards Held by Non-Employee Directors and Executive Officers 

The following table sets forth, as of January 10, 2025 (i.e., the latest practicable date prior to the filing of this proxy statement), for each of EMCORE’s non-employee directors and executive officers, (a) the number of shares of EMCORE common stock subject to his or her outstanding restricted stock unit awards that are subject to time-based vesting restrictions and/or performance vesting conditions (assuming achievement of 100% of target), and (b) assuming that the per share value of each share of EMCORE common stock underlying the restricted stock units is equal to the amount of the Merger Consideration, the value of each such director or executive officer’s outstanding restricted stock unit awards. None of EMCORE’s non-employee directors or executive officers hold options to purchase shares of EMCORE’s common stock.

 

		Restricted Stock Units
Name		Number of Shares (#)				Value ($)
Matthew Vargas			219,787				681,340
Jeffrey Rittichier			—				—
Tom Minichiello			116,523				361,221
Iain Black			—				—
Cletus C. Glasener			36,377				112,769
Bruce E. Grooms			23,219				71,979
David Rogers			47,619				147,619
Jeffrey J. Roncka			23,219				71,979

 

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For more information on equity holdings of EMCORE’s non-employee directors, see “Security Ownership of Certain Beneficial Owners and Management.”

Severance Arrangements for EMCORE Executive Officers

EMCORE has entered into an executive severance and change in control agreement with Mr. Vargas and an executive employment agreement with Mr. Minichiello. Each such agreement provides for certain severance benefits upon termination without “cause” by EMCORE or termination for “good reason” by such executive officer, subject to the executive entering into a general release agreement with EMCORE and compliance with certain confidentiality, nondisclosure, and other restrictive covenants.

The severance benefits under such arrangements that will be paid upon such terminations of employment, regardless of whether a “change in control” (including the Merger) occurs, are:

 

•

Continued payment of the executive officer’s current base salary for six (6) months for Mr. Vargas and twelve (12) months for Mr. Minichiello;

 

•

Subject to the executive officer’s timely election to continue existing health benefits under COBRA, payment of all or a portion of the executive officer’s COBRA premiums for the same period as such executive officer’s base salary is continued; and

 

•

For Mr. Minichiello only, payment of his target annual bonus for the fiscal year of such termination.

In addition to the benefits described above:

 

•

If Mr. Vargas’s employment is terminated by EMCORE without “cause” or he terminates his employment for “good reason” within three (3) months prior to or twelve (12) months following a “change in control” (including the Merger), he is also entitled to receive (a) an amount equal to his prorated target annual bonus for the fiscal year of such termination, payable over six (6) months, and (b) acceleration and immediate vesting of all of his outstanding equity awards that vest based solely on services over time (with any awards subject to performance-based vesting requirements subject to vesting on the terms set forth in the applicable agreement governing such award).

 

•

If Mr. Minichiello’s employment is terminated by EMCORE without “cause” or he terminates his employment for “good reason” within twelve (12) months of a “change in control” (including the Merger), he is also entitled to acceleration and immediate vesting of all of his outstanding equity awards (with any awards subject to performance-based vesting requirements vesting at a minimum of the target performance level).

Mr. Rittichier’s and Mr. Black’s employment was terminated by EMCORE without cause earlier in 2024, and while both received severance at the time of termination pursuant to the terms of their employment agreements, neither would receive any additional severance as a result of the Merger. Specifically:

 

•

Mr. Rittichier’s employment was terminated by EMCORE without cause effective May 7, 2024. In connection with such termination and in consideration for Mr. Rittichier’s execution and non-revocation of a release of claims in favor of EMCORE and his agreeing to comply with certain confidentiality, non-solicitation, and other restrictive covenants, EMCORE agreed to provide Mr. Rittichier with twelve (12) months of base salary continuation and eighteen (18) months of health insurance continuation.

 

•

Mr. Black’s employment was terminated by EMCORE without cause effective February 16, 2024. In connection with such termination and in consideration for Mr. Black’s execution and non-revocation of a release of claims in favor of EMCORE and his agreeing to comply with certain confidentiality, non-solicitation, and other restrictive covenants, EMCORE agreed to provide Mr. Black with six (6) months of base salary continuation and health insurance continuation.

 

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Quantification of Potential Payments to EMCORE’s Named Executive Officers in Connection with the Merger

The information below is intended to comply with Item 402(t) of Regulation S-K, which requires disclosure of information about compensation for each of EMCORE’s “named executive officers” that is based on or otherwise relates to the Merger. Under applicable SEC rules, EMCORE’s named executive officers for this purpose are:

 

•

Matthew Vargas, Interim Chief Executive Officer;

 

•

Jeffrey Rittichier, Former Chief Executive Officer;

 

•

Tom Minichiello, Chief Financial Officer; and

 

•

Iain Black, Former Senior Vice President, Operations.

The named executive officers’ compensation arrangements that are described in “—Interests of EMCORE’s Directors and Executive Officers in the Merger,” are incorporated herein by reference.

The amounts set forth in the table below, titled “Golden Parachute Compensation,” represent an estimate of each named executive officer’s “golden parachute” compensation, and assume the following:

 

•

that the Merger is consummated on January 10, 2025, which is the assumed date solely for purposes of this transaction-related compensation disclosure;

 

•

the relevant Merger Consideration is $3.10 per share of EMCORE common stock;

 

•

the amounts are based on compensation levels as of January 10, 2025; and

 

•

each named executive officer is terminated by EMCORE without “cause” or resigns for “good reason” (as each such term is defined in the relevant plans and agreements) on January 10, 2025 (except for Messrs. Rittichier and Black since their employment terminated prior to such date).

The amounts shown are estimates based on multiple assumptions and do not reflect compensation actions that could occur after the date of this proxy statement and before the Closing, such as the vesting of currently outstanding restricted stock unit awards, the grant of new equity awards or retention bonuses, and/or any amounts payable under the EMCORE Corporation Short-Term Incentive Plan for FY 2025. As a result, the actual amounts received by a named executive officer may differ materially from the amounts shown in the following table, titled “Golden Parachute Compensation.”

Golden Parachute Compensation

 

Executive Officer(1)

Cash ($)(2)

Equity ($)(3)

Perquisites/Benefits ($)(4)

Total ($)

Matthew Vargas Interim Chief Executive Officer

266,610

681,340

18,407

966,357

Jeffrey Rittichier Former Chief Executive Officer

—

—

—

—

Tom Minichiello Chief Financial Officer

638,750

361,211

17,238

1,017,199

Iain Black Former Senior Vice President, Operations

—

—

—

—

 

(1)	Mr. Rittichier’s employment was terminated by EMCORE without cause effective May 7, 2024. Mr. Black’s employment was terminated by EMCORE without cause effective February 16, 2024. In connection with their respective terminations and in consideration for the execution and non-revocation of a

 

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