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As filed with the Securities and Exchange Commission on July 20, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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EMCORE CORPORATION
(Exact name of registrant as specified in its charter)
NEW JERSEY 22-2746503
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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145 BELMONT DRIVE, SOMERSET, NEW JERSEY 08873
(732) 271-9090
(Address, including zip code, and telephone number, including
area code, of registrant's agent for service and principal executive offices)
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THOMAS G. WERTHAN
EMCORE CORPORATION
145 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
(732) 271-9090
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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WITH COPIES TO:
JORGE L. FREELAND, ESQ.
WHITE & CASE LLP
200 SOUTH BISCAYNE BLVD.
MIAMI, FLORIDA 33131
TEL: (305) 371-2700
FAX: (305) 358-5744
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Approximate date of commencement of proposed sale to the public: At such
time or times after the effective date of this Registration Statement as the
selling security holders shall determine.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. [ ]
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If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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Proposed Maximum Proposed Maximum
Title of Securities Amount to be Aggregate Price Per Aggregate Offering Amount of
to be Registered Registered Unit Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------
5% Convertible $175,000,000 81.9768%(1) $143,459,400(1) $35,865
Subordinated Notes
Due 2006
Common Stock, no par 3,588,793(2) (2) (2) (3)
value
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(1) Estimated solely for purposes of calculating the amount of the
registration fee, pursuant to Rule 457(c), based upon the average of the
bid and asked prices of the Convertible Subordinated Notes due 2006 on
the PORTAL Market on July 18, 2001.
(2) Includes 3,588,793 shares of common stock issuable upon conversion of the
notes at the conversion price of $48.7629 per share of common stock.
Pursuant to Rule 416 under the Securities Act, such number of shares of
common stock registered hereby shall include an indeterminate number of
shares of common stock that may be issued in connection with a stock
split, stock dividend, recapitalization or similar event.
(3) Pursuant to Rule 457(i), there is no additional filing fee with respect
to the shares of common stock issuable upon conversion of the notes
because no additional consideration will be received in connection with
the exercise of the conversion privilege.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.
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Subject to Completion, Dated July 20, 2001
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER OR SALE IS NOT PERMITTED.
PROSPECTUS
$175,000,000
EMCORE CORPORATION
5% CONVERTIBLE SUBORDINATED NOTES DUE 2006 AND
THE COMMON STOCK ISSUABLE UPON CONVERSION OF THE NOTES
We issued the notes in a private placement in May 2001. This prospectus
will be used by selling securityholders to resell their notes and the common
stock issuable upon conversion of their notes.
The notes are convertible, at the option of the holder, at any time on or
prior to maturity into shares of our common stock. The notes are convertible at
a conversion price of $48.7629 per share, which is equal to 20.5074 shares per
$1,000 principal amount of notes, subject to adjustment. We will pay interest on
the notes on May 15 and November 15 of each year, beginning November 15, 2001.
The notes will mature on May 15, 2006, unless earlier converted or redeemed.
We may redeem some or all of the notes at any time before May 20, 2004 at a
redemption price of $1,000 per $1,000 principal amount of notes, plus accrued
and unpaid interest, if any, to the redemption date, if (a) the closing price of
our common stock has exceeded 150% of the conversion price then in effect for at
least 20 trading days within a period of 30 consecutive trading days ending on
the trading day before the date of mailing of the provisional redemption notice
and (b) the shelf registration statement covering resales of the notes and the
common stock issuable upon conversion of the notes is effective and available
for use and is expected to remain effective and available for use for the 30
days following the provisional redemption date, unless registration is no longer
required. We will make an additional payment in cash or common stock with
respect to the notes called for provisional redemption in an amount equal to
$150.00 per $1,000 principal amount of notes, less the amount of any interest
actually paid on the notes before the date of redemption. We may redeem some or
all of the notes at any time on or after May 20, 2004 at the redemption prices
described in this prospectus.
Our common stock is quoted on the Nasdaq National Market under the symbol
"EMKR." On July 17, 2001, the last reported sale price of the common stock on
the Nasdaq National Market was $26.05 per share.
Investing In The Securities Offered Hereby Involves A High Degree Of Risk. See
"Risk Factors" Beginning On Page 10.
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS _________________ __, 2001
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TABLE OF CONTENTS
PAGE
ABOUT THIS PROSPECTUS........................................................3
WHERE YOU CAN FIND MORE INFORMATION..........................................3
INCORPORATION BY REFERENCE...................................................3
FORWARD-LOOKING STATEMENTS...................................................4
SUMMARY......................................................................5
RISK FACTORS................................................................10
USE OF PROCEEDS.............................................................19
RATIO OF EARNINGS TO FIXED CHARGES..........................................19
DESCRIPTION OF THE NOTES....................................................20
DESCRIPTION OF CAPITAL STOCK................................................35
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS..............................35
PLAN OF DISTRIBUTION........................................................40
SELLING SECURITYHOLDERS.....................................................43
LEGAL MATTERS...............................................................44
EXPERTS.....................................................................44
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ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with
the SEC using a "shelf" registration process. Under this shelf registration
process, selling securityholders may, from time to time, resell their notes, and
the common stock issuable upon the sale of their notes, in one or more
offerings. Please carefully read both this prospectus and any applicable
prospectus supplement together with additional information described under the
headings "Where You Can Find More Information" and "Incorporation by Reference."
You should rely only on the information contained or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this prospectus. This
prospectus does not constitute an offer to sell or a solicitation of an offer to
buy any securities in any jurisdiction where it is unlawful to do so. You should
not assume that the information contained in this prospectus is accurate as of
any date other than its date, and neither the delivery of this prospectus nor
the sale of securities hereunder shall create any implication to the contrary.
In this prospectus, the "Company," "EMCORE," "we," "us" and "our" refer to
EMCORE Corporation, and its subsidiaries.
Each trademark, trade name or service mark of any other company appearing
in this prospectus belongs to its holder.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC under the Exchange Act. The Exchange Act file number
for our SEC filings is 000-22175. You may read and copy any document we file at
the following SEC public reference rooms:
Judiciary Plaza 500 West Madison Street 7 World Trade Center
450 Fifth Street, N.W 14th Floor Suite 1300
Rm. 1024 Chicago, Illinois 60661 New York, New York 10048
Washington, D.C. 20549
You may obtain information on the operation of the public reference room in
Washington, D.C. by calling the SEC at 1-800-SEC-0330. We file information
electronically with the SEC. Our SEC filings are available from the SEC's
Internet site at HTTP://WWW.SEC.GOV, which contains reports, proxy and
information statements and other information regarding issuers that file
electronically.
INCORPORATION BY REFERENCE
We can disclose important information to you by referring you to those
documents that we have previously filed with the SEC or documents that we will
file with the SEC in the future. The information incorporated by reference is
considered to be part of this prospectus, and information in documents that we
file later with the SEC will automatically update and supersede information in
this prospectus. We incorporate by reference the documents listed below into
this prospectus, and any future filings made by us with the SEC under Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), until we terminate this offering and the option we have
granted to the initial purchasers expires or is exercised. The documents we
incorporate by reference are:
1. The description of our common stock in our Registration Statement on
Form 8-A, as filed with the SEC on February 26, 1997;
2. Our annual report on Form 10-K for the fiscal year ended September 30,
2000 (except for Part IV Item 14(a)(2) Schedule I);
3. Our quarterly reports on Form 10-Q for the fiscal quarters ended
December 31, 2000 and March 31, 2001; and
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4. Our definitive proxy materials on Schedule 14A as filed with the SEC on
January 26, 2001.
We furnish our stockholders with annual reports that contain audited
financial statements.
We will provide to you, without charge, a copy of any and all of the
documents or information referred to above that we have incorporated by
reference in this prospectus (other than exhibits to the documents unless those
exhibits are specifically incorporated by reference into this prospectus).
Requests for such copies should be directed to the following address:
EMCORE Corporation
145 Belmont Drive
Somerset, New Jersey
Attn: Chief Financial Officer
Telephone (732) 271-9090.
This prospectus is part of a registration statement that we filed with the
SEC. You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. You should not assume that the
information in this prospectus or any supplement is accurate as of any date
other than the date on the front of that document.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act. We have
based these forward-looking statements largely on our current expectations and
projections about future events and financial trends affecting the financial
condition of our business. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions about us, including, among other
things:
o general economic and business conditions, both nationally and in our
markets;
o our expectations and estimates concerning our future financial
performance, financing plans and the effect of competition;
o anticipated trends in the compound semiconductor wafers and devices
business;
o existing and future regulations affecting the compound semiconductor
wafers and devices business; and
o other risk factors set forth in the "Risk Factors" section of this
prospectus.
In addition, in this prospectus, the words "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect" and similar
expressions, as they relate to us, our business or our management, are intended
to identify forward-looking statements.
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SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
INCLUDING THE INCORPORATED FINANCIAL STATEMENTS AND RELATED NOTES, BEFORE MAKING
AN INVESTMENT. UNLESS THE CONTEXT OTHERWISE REQUIRES, IN THIS PROSPECTUS, THE
"COMPANY," "EMCORE," "WE," "US," AND "OUR" REFER TO EMCORE CORPORATION AND ITS
SUBSIDIARIES.
COMPANY OVERVIEW
We design, develop and manufacture compound semiconductor wafers and
devices and are a leading developer and manufacturer of the tools and
manufacturing processes used to fabricate compound semiconductor wafers and
devices. Compound semiconductors are composed of two or more elements and
usually consist of a metal, such as gallium, aluminum or indium, and a non-metal
such as arsenic, phosphorus or nitrogen. Many compound semiconductors have
unique physical properties that enable electrons to move through them at least
four times faster than through silicon-based devices and are therefore well
suited to serve the growing need for efficient, high performance electronic
systems.
We offer a comprehensive portfolio of products and systems for the rapidly
expanding broadband, wireless communications and solid state lighting markets.
We have developed extensive materials science expertise and process technology
to address our customers' needs. Customers can take advantage of our vertically
integrated solutions approach by purchasing custom-designed wafers and devices
from us, or by manufacturing their own devices in-house using one of our metal
organic chemical vapor deposition ("MOCVD") production systems configured to
their specific needs. Our products and systems enable our customers to cost
effectively introduce new and improved high performance products to the market
faster in high volumes.
The growth in our business is driven by the widespread deployment of fiber
optic networks, introduction of new wireless networks and services, rapid
build-out of satellite communication systems, increasing use of more power
efficient lighting sources, increasing use of electronics in automobiles and
emergence of advanced consumer electronic applications. Also, the growing
demands for higher volumes of a broad range of higher performance devices has
resulted in manufacturers increasingly outsourcing their needs for compound
semiconductor wafers and devices. Our expertise in materials science and process
technology provides us with a competitive advantage to manufacture compound
semiconductor wafers and devices in high volumes. We have increased revenues at
a compound annual growth rate ("CAGR") of 30% over the three fiscal years ended
September 30, 2000, from $47.8 million in fiscal 1997 to $104.5 million in
fiscal 2000.
WAFERS AND DEVICES. We offer a broad array of compound semiconductor wafers
and devices, including optical components and components for use in high-speed
data communications and telecommunications networks, radio frequency materials
("RF materials") used in mobile communications products such as wireless modems
and handsets, solar cells that power commercial and military satellites, high
brightness light-emitting diodes ("HB LEDs") for several lighting markets, and
magneto resistive sensors ("MR sensors") for various automotive applications.
o OPTICAL COMPONENTS AND MODULES. Our family of vertical cavity surface
emitting lasers ("VCSELs") and VCSEL array transceiver and transponder
products, as well as our photodiode array components, serve the
rapidly growing high-speed data communications network markets,
including the Gigabit Ethernet, FibreChannel, Infiniband, and Very
Short Reach OC-192, the emerging Very Short Reach OC-768 and related
markets. Our strategy is to manufacture high cost optical components
and subassemblies in-house, using our proprietary technologies, to
reduce the overall cost of our transceiver and transponder modules.
o RF MATERIALS. We currently produce 4-inch and 6-inch InGaP HBT and
pHEMT materials that are used by our wireless customers for power
amplifiers for GSM, TDMA, CDMA and the emerging 3G multiband wireless
handsets.
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o SOLAR CELLS. Solar cells are typically the largest single cost
component of a satellite. Our compound semiconductor solar cells,
which are used to power commercial and military satellites, have
achieved industry-leading efficiencies. Solar cell efficiency dictates
the electrical power of the satellite and bears upon the weight and
launch costs of the satellite. We began shipping our triple junction
solar cells in December 2000.
o HB LEDS. Through our joint ventures with General Electric Lighting and
Uniroyal Technology Corporation, we provide advanced HB LED technology
used in such products as wafers and package-ready devices and in such
applications as traffic lights, miniature lamps, automotive lighting,
and flat panel displays.
PRODUCTION SYSTEMS. We are a leading provider of compound semiconductor
technology processes and MOCVD production tools. We believe that our proprietary
TurboDisc deposition technology makes possible one of the most cost-effective
production processes for the commercial volume manufacture of high-performance
compound semiconductor wafers and devices, which are integral to broadband
communication applications. According to VLSI Research, the worldwide market for
MOCVD tools is expected to reach $550.4 million by 2005.
CUSTOMERS
Our customers include Agilent Technologies Ltd., Anadigics Inc.,
Boeing-Spectrolab, Corning, Inc., General Motors Corp., Hewlett Packard Co.,
Honeywell International Inc., IBM, JDS Uniphase Corp., Loral Space &
Communications Ltd., Lucent Technologies, Inc., Motorola, Inc., Nortel Networks
Corp., Siemens AG's Osram GmbH subsidiary, TriQuint Semiconductor, Inc. and more
than a dozen of the largest electronics manufacturers in Japan.
BENEFITS OF COMPOUND SEMICONDUCTORS
Recent advances in information technologies have created a growing need for
efficient, high-performance electronic systems that operate at very high
frequencies, have increased storage capacity and computational and display
capabilities and can be produced cost-effectively in commercial volumes. In the
past, electronic systems manufacturers have relied on advances in silicon
semiconductor technology to meet many of these demands. However, the newest
generation of high-performance electronic and optoelectronic applications
require certain functions that are generally not achievable using silicon-based
components.
Compound semiconductors have emerged as an enabling technology to meet the
complex requirements of today's advanced information systems. Many compound
semiconductor materials have unique physical properties that allow electrons to
move at least four times faster than through silicon-based devices. Advantages
of compound semiconductor devices over silicon devices include:
o operation at higher speeds;
o lower power consumption;
o less noise and distortion; and
o optoelectronic properties that enable these devices to emit and detect
light.
Although compound semiconductors are more expensive to manufacture than the
more traditional silicon-based semiconductors, electronics manufacturers are
increasingly integrating compound semiconductors into their products in order to
achieve the higher performance demands of today's electronic products and
systems.
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STRATEGY
Our objective is to capitalize on our position as a leading developer and
manufacturer of compound semiconductor tools and manufacturing processes to
become the leading supplier of compound semiconductor wafers and devices. The
key elements of our strategy are to:
o apply our core materials and manufacturing expertise across multiple
product applications;
o target high growth market opportunities;
o continue to recognize greater value for our core technology;
o partner with key industry participants; and
o continue our investment in research and development to maintain
technology leadership.
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Our principal executive offices are located at 145 Belmont Drive, Somerset,
New Jersey 08873, and our telephone number is (732) 271-9090.
RECENT DEVELOPMENTS
We and Uniroyal Compound Semiconductors, Inc ("UCS"), a wholly-owned
subsidiary of Uniroyal Technology Corporation, have begun negotiations for a
buyout by UCS of our interest in the Uniroyal Optoelectronics, LLC joint
venture. Capital contributions solely funded by UCS have increased its
percentage interest in the profits and losses of the joint venture to 64% with
our interest at 36% as of June 30, 2001. We have reserved the right to resume
making capital contributions in the future.
RISK FACTOR
WE MAY NOT COMPLETE THE SALE OF OUR OWNERSHIP INTEREST IN UNIROYAL
OPTOELECTRONICS, AND OUR OWNERSHIP MAY BE FURTHER DILUTED IN THE FUTURE.
Our negotiations with UCS regarding the sale to UCS of our ownership
interest in Uniroyal Optoelectronics, LLC are only in preliminary stages. We
cannot be certain that we will be able to finalize the sale on mutually
acceptable terms. In addition, if the sale is not completed, we may choose not
to participate in future capital calls, which could result in further dilution
of our interest.
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THE OFFERING
Securities offered.................. $175,000,000 aggregate principal amount of
5% Convertible Subordinated Notes due 2006
and the underlying common stock.
Interest ........................... The notes will bear interest at an annual
rate of 5%. Interest is payable on May 15
and November 15 of each year, beginning
November 15, 2001.
Maturity date....................... May 15, 2006
Conversion rights................... Holders may convert all or some of their
notes at any time prior to the close of
business on the business day immediately
preceding the maturity date at a
conversion price of $48.7629 per share.
The initial conversion price is equivalent
to a conversion rate of 20.5074 shares per
$1,000 principal amount of notes. The
conversion price is subject to adjustment.
Upon conversion, you will not receive any
cash representing accrued interest.
Provisional redemption.............. We may redeem the notes, in whole or in
part, at any time before May 20, 2004, at
a redemption price equal to $1,000 per
$1,000 principal amount of notes to be
redeemed plus accrued and unpaid interest,
if any, to the date of redemption if (a)
the closing price of our common stock has
exceeded 150% of the conversion price then
in effect for at least 20 trading days
within a period of 30 consecutive trading
days ending on the trading day before the
date of mailing of the provisional
redemption notice and (b) the shelf
registration statement covering resales of
the notes and the common stock issuable
upon conversion of the notes is effective
and available for use and is expected to
remain effective and available for use for
the 30 days following the provisional
redemption date, unless registration is no
longer required. Upon any provisional
redemption we will make an additional
payment in cash or common stock, or a
combination thereof, with respect to the
notes called for redemption in an amount
equal to $150.00 per $1,000 principal
amount of notes, less the amount of any
interest actually paid on the notes before
the date of redemption. We will be
obligated to make this additional payment
on all notes called for provisional
redemption, including any notes converted
after the notice date and before the
provisional redemption date.
Optional redemption................. We may redeem the notes on or after May
20, 2004, at the redemption prices set
forth in this prospectus.
Change in control................... Upon a change in control, we may be
required to make an offer to purchase each
holder's notes at a price equal to 100% of
the principal amount thereof, plus accrued
and unpaid interest, if any, to the date
of purchase.
Subordination....................... The notes will be our unsecured
obligations. The notes will be
subordinated in right of payment to all of
our existing and future senior
indebtedness and structurally subordinated
to all of our existing and future
indebtedness and other liabilities of our
subsidiaries. As of July 17, 2001, we had
senior indebtedness of approximately $0.1
million. The indenture governing the notes
will not limit our or our subsidiaries'
ability to incur senior indebtedness or
other debt.
Registration rights................. We have agreed to file this shelf
registration statement with the SEC with
respect to the notes and the common stock
issuable upon conversion of the notes. If
we fail to fulfill certain related
obligations within specified time
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periods, we will pay additional interest
of 0.5% per annum on the notes until we
fulfill those obligations.
Use of proceeds..................... We will not receive any proceeds from the
sale by any selling securityholder of the
notes or the underlying common stock.
Trading............................. The notes are eligible for trading in
PORTAL. However, we cannot give any
assurance as to the liquidity of, or
trading market for, the notes.
Common stock........................ Our common stock is quoted on The Nasdaq
National Market under the symbol "EMKR."
RISK FACTORS
Investment in the securities involves certain risks. You should carefully
consider the information under "Risk Factors" and all other information included
in this prospectus before investing in the securities.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW BEFORE MAKING AN
INVESTMENT DECISION. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCURS, OUR
BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS COULD BE MATERIALLY AND
ADVERSELY AFFECTED. IN SUCH CASE, OUR ABILITY TO MAKE PAYMENTS ON THE NOTES
COULD BE IMPAIRED, THE TRADING PRICE OF THE NOTES AND OUR COMMON STOCK COULD
DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS,
INCLUDING THE RISKS FACED BY US DESCRIBED BELOW AND ELSEWHERE IN THIS
PROSPECTUS.
RISK FACTORS RELATING TO OUR BUSINESS
OUR RAPID GROWTH PLACES A STRAIN ON OUR RESOURCES.
We are experiencing rapid growth, having added a significant number of new
employees within the last year. We have also expanded our manufacturing
facilities in Albuquerque, New Mexico and in Somerset, New Jersey. This growth
has placed and will continue to place a significant strain on our management,
financial, sales and other employees and on our internal systems and controls.
If we are unable to effectively manage multiple facilities and multiple joint
ventures in geographically distant locations, our business, financial condition
and results of operations will be materially and adversely affected. We are also
in the process of installing new manufacturing software for all of our
facilities and are replacing our accounting and purchasing systems. Most of the
new manufacturing software is customized to our particular business and
manufacturing processes. It will take time and require evaluation to eliminate
any of the malfunctions in the software and to train personnel to use the new
software. In this transition we may experience delays in production, cost
overruns and disruptions in our operations.
On July 17, 2001, we had approximately $100,000 of Senior indebtedness and
$14.9 million available for additional borrowing under our credit facility.
WE MAY CONTINUE TO INCUR OPERATING LOSSES.
We started operations in 1984 and as of December 31, 2000 had an
accumulated deficit of $115.9 million. We incurred net losses of $36.4 million
in fiscal 1998, $22.7 million in fiscal 1999, $25.5 million in fiscal 2000 and
$4.1 million in the first six months of fiscal 2001. We may continue to incur
losses. To support our growth, we have increased our expense levels and our
investments in inventory and capital equipment. As a result, we will need to
significantly increase revenues and profit margins to become and stay
profitable. If our sales and profit margins do not increase to support the
higher levels of operating expenses and if our new product offerings are not
successful, our business, financial condition and results of operations will be
materially and adversely affected.
WE MUST CONTINUALLY IMPROVE EXISTING PRODUCTS, DESIGN AND SELL NEW PRODUCTS AND
MANAGE THE COSTS OF RESEARCH AND DEVELOPMENT IN ORDER TO EFFECTIVELY COMPETE.
We compete in markets characterized by rapid technological change, evolving
industry standards and continuous improvements in products. Due to constant
changes in these markets, our future success depends on our ability to improve
our manufacturing processes, tools and products. To remain competitive we must
continually introduce manufacturing tools with higher capacity and better
production yields.
We have recently introduced a number of new products, and, in connection
with recent joint ventures and internal development, we will be introducing
additional new products in the future. The commercialization of new products
involves substantial expenditures for research and development, production and
marketing. We may be unable to successfully design, develop or manufacture these
new products and may have difficulty penetrating new markets.
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Because it is generally not possible to predict the amount of time required
and the costs involved in achieving certain research, development and
engineering objectives, actual development costs may exceed budgeted amounts and
estimated product development schedules may be extended. Our business, financial
condition and results of operations may be materially and adversely affected if:
o we are unable to improve our existing products on a timely basis;
o our new products are not introduced on a timely basis or do not
achieve sufficient market penetration;
o we incur budget overruns or delays in our research and development
efforts; or
o our new products experience reliability or quality problems.
OUR INDUSTRY IS RAPIDLY CHANGING.
The compound semiconductor industry is changing rapidly due to, among other
things, continuous technological improvements in products and evolving industry
standards. This industry is marked by the continuous introduction of new
products and increased capacity for services similar to those provided by us.
Future technological advances in the compound semiconductor industry may result
in the availability of new products or increase the efficiency of existing
products. If a technology becomes available that is more cost-effective or
creates a superior product, we may be unable to access such technology or its
use may involve substantial capital expenditures which we may be unable to
finance. There can be no assurance that existing, proposed or as yet undeveloped
technologies will not render our technology less profitable or that we will have
available the financial and other resources necessary to compete effectively
against companies possessing such technologies. There can be no assurance that
we will be able to adapt to technological changes or offer competitive products
on a timely or cost effective basis.
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS MAY NEGATIVELY IMPACT OUR STOCK
PRICE.
Our revenues and operating results may vary significantly from quarter to
quarter due to a number of factors particular to us and the compound
semiconductor industry. Not all of these factors are in our control. These
factors include:
o the volume and timing of orders for our products, particularly
TurboDisc systems, which have an average selling price in excess of
$1.0 million;
o the timing of our announcements and introduction of new products and
of similar announcements by our competitors;
o downturns in the market for our customers' products;
o regional economic conditions, particularly in Asia where we derive a
significant portion of our revenues;
o price volatility in the compound semiconductor industry;
o changes in product mix; and
o timing of customer orders.
These factors may cause our operating results for future periods to be
below the expectations of analysts and investors. This may cause a decline in
the price of our common stock and adversely affect the price of the notes.
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OUR JOINT VENTURE PARTNERS, WHO HAVE CONTROL OF THESE VENTURES, MAY MAKE
DECISIONS THAT WE DO NOT AGREE WITH AND THAT ADVERSELY AFFECT OUR NET INCOME.
We do not have a majority interest in our joint ventures with Uniroyal
Technology Corporation or General Electric Lighting. Each joint venture is
governed by a board of managers with representatives from our strategic partner
and us. Many fundamental decisions must be approved by both parties to the joint
venture, which means we will be unable to direct the operation and direction of
these joint ventures without the agreement of our joint venture partners. If we
are unable to agree on important issues with a joint venture partner, the
business of that joint venture may be delayed or interrupted, which may, in
turn, materially and adversely affect our business, financial condition and
results of operations.
We have devoted and will be required to continue to devote significant
funds and technologies to our joint ventures to develop and enhance their
products. In addition, our joint ventures will require that some of our
employees devote much of their time to joint venture projects. This will place a
strain on our management, scientific, financial and sales employees. If our
joint ventures are unsuccessful in developing and marketing their products, our
business, financial condition and results of operations may be materially and
adversely affected.
We have agreed with General Electric Lighting that our joint venture will
be the sole vehicle for each party's participation in the solid state lighting
market. The two parties have also agreed to several limitations during the life
of the venture and thereafter relating to how each of us can make use of the
joint venture's technology. One consequence of these limitations is that in
certain circumstances, such as a material default by us or certain sales of our
interest in the joint venture, we would not be permitted to use the joint
venture's technology to compete against General Electric Lighting in the solid
state lighting market.
SINCE A LARGE PERCENTAGE OF OUR REVENUES ARE FROM FOREIGN SALES, CERTAIN EXPORT
RISKS MAY DISPROPORTIONATELY AFFECT OUR REVENUES.
Sales to customers located outside the United States accounted for
approximately 39.1% of our revenues in fiscal 1998, 52.6% of our revenues in
fiscal 1999, 38.6% of our revenues in fiscal 2000 and 48.0% of our revenues in
the first six months of fiscal 2001. Sales to customers in Asia represent the
majority of our international sales. We believe that international sales will
continue to account for a significant percentage of our revenues. Because of
this, the following export risks may disproportionately affect our revenues:
o political and economic instability may inhibit export of our systems
and devices and limit potential customers' access to U.S. dollars;
o shipping and installation costs of our systems may increase;
o we may experience difficulties in the timeliness of collection of
foreign accounts receivable and be forced to write off receivables
from foreign customers;
o a strong dollar may make our systems less attractive to foreign
purchasers who may decide to postpone making such capital
expenditures;
o tariffs and other barriers may make our systems and devices less cost
competitive;
o we may have difficulty in staffing and managing our international
operations;
o the laws of certain foreign countries may not adequately protect our
trade secrets and intellectual property; and
o potentially adverse tax consequences to our customers may make our
systems and devices not cost-competitive.
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WE WILL LOSE SALES IF WE ARE UNABLE TO OBTAIN GOVERNMENT AUTHORIZATION TO EXPORT
OUR PRODUCTS.
Exports of our products to certain destinations, such as the People's
Republic of China, Malaysia and Taiwan, may require pre-shipment authorization
from U.S. export control authorities, including the U.S. Departments of Commerce
and State. Authorization may be conditioned on end-use restrictions. On certain
occasions, we have been denied authorization, particularly with respect to the
People's Republic of China. Failure to receive these authorizations may
materially and adversely affect our revenues and in turn our business, financial
condition and results of operations from international sales. Additionally,
export jurisdiction relating to exports of satellites and associated components
has not been definitively settled. Such exports may in the future require a
license from the Department of State. This may cause delays in shipping solar
cells abroad. Delays in receiving export licenses for solar cells may materially
and adversely affect our revenues and in turn our business, financial condition
and results of operations.
OUR OPERATING RESULTS COULD BE HARMED IF WE LOSE ACCESS TO SOLE OR LIMITED
SOURCES OF MATERIALS OR SERVICES.
We currently obtain some components and services for our products from
limited or single sources, such as substrates from AXT, Inc. We purchase these
components and services on a purchase order basis, do not carry significant
inventories of these components and do not have any long-term supply contracts
with these vendors. Because we often do not account for a significant part of
our vendors' business, we may not have access to sufficient capacity from these
vendors in periods of high demand. If we were to change any of our limited or
sole source vendors, we would be required to requalify each new vendor.
Requalification could prevent or delay product shipments that could negatively
affect our results of operations. In addition, our reliance on these vendors may
negatively affect our production if the components vary in quality or quantity.
If we are unable to obtain timely deliveries of sufficient components of
acceptable quality or if the prices of components for which we do not have
alternative sources increase, our business, financial condition and results of
operations could be materially and adversely affected.
OUR PRODUCTS ARE DIFFICULT TO MANUFACTURE AND OUR PRODUCTION COULD BE DISRUPTED
IF WE ARE UNABLE TO AVOID MANUFACTURING DIFFICULTIES.
We manufacture all of our wafers and devices in our manufacturing
facilities and our joint venture with Uniroyal Technology Corporation plans to
manufacture HB LED wafers and package-ready devices at its facility. Minute
impurities, difficulties in the production process, defects in the layering of
the devices' constituent compounds, wafer breakage or other factors can cause a
substantial percentage of wafers and devices to be rejected or numerous devices
on each wafer to be non-functional. These factors can result in lower than
expected production yields, which would delay product shipments and may
materially and adversely affect our operating results. Because the majority of
our costs of manufacture are relatively fixed, the number of shippable devices
per wafer for a given product is critical to our financial results.
Additionally, because we manufacture all of our products at our facilities in
Somerset, New Jersey and Albuquerque, New Mexico, and our joint venture with
Uniroyal Technology Corporation will manufacture HB LED wafers and package-ready
devices at its sole facility in Tampa, Florida, any interruption in
manufacturing resulting from fire, natural disaster, equipment failures or
otherwise would materially and adversely affect our business, financial
condition and results of operations.
WE FACE LENGTHY SALES AND QUALIFICATIONS CYCLES FOR OUR PRODUCTS AND, IN MANY
CASES, MUST INVEST A SUBSTANTIAL AMOUNT OF TIME AND FUNDS BEFORE WE RECEIVE
ORDERS.
Sales of our TurboDisc systems primarily depend upon the decision of a
prospective customer to increase its manufacturing capacity, which typically
involves a significant capital commitment by the customer. Customers usually
place orders with us between two to nine months after our initial contact with
them. We often experience delays in obtaining system sales orders while
customers evaluate and receive internal approvals for the purchase of these
systems. These delays may include the time necessary to plan, design or complete
a new or expanded compound semiconductor fabrication facility. Due to these
factors, we expend substantial funds and sales, marketing and management efforts
to sell our compound semiconductor production systems. These expenditures
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and efforts may not result in sales. In order to expand our materials production
capabilities, we have dedicated a number of our TurboDisc systems to the
manufacture of wafers and devices. Several of our products are currently being
tested to determine whether they meet customer or industry specifications.
During this qualification period, we invest significant resources and dedicate
substantial production capacity to the manufacture of these new products, prior
to any commitment to purchase by the prospective customer and without generating
significant revenues from the qualification process. If we are unable to meet
these specifications or do not receive sufficient orders to profitably use the
dedicated production capacity, our business, financial condition and results of
operations would be materially and adversely affected.
Our historical and future budgets for operating expenses, capital
expenditures, operating leases and service contracts are based upon our
assumptions as to the anticipated market acceptance of our products. Because of
the lengthy lead time required for our product development and the changes in
technology that typically occur during such period, it is difficult to estimate
customer demand for a product accurately. If our products do not achieve
expected customer demand, our business, financial condition and results of
operation will be materially and adversely affected.
INDUSTRY DEMAND FOR SKILLED EMPLOYEES, PARTICULARLY SCIENTIFIC AND TECHNICAL
PERSONNEL WITH COMPOUND SEMICONDUCTOR EXPERIENCE, EXCEEDS THE NUMBER OF SKILLED
PERSONNEL AVAILABLE.
Our future success depends, in part, on our ability to attract and retain
certain key personnel, including scientific, operational and management
personnel. We anticipate that we will need to hire additional skilled personnel
to continue to expand all areas of our business. The competition for attracting
and retaining these employees, especially scientists, is intense. Because of
this intense competition for these skilled employees, we may be unable to retain
our existing personnel or attract additional qualified employees in the future.
If we are unable to retain our skilled employees and attract additional
qualified employees to keep up with our expansion, our business, financial
condition and results of operations will be materially and adversely affected.
PROTECTING OUR TRADE SECRETS AND OBTAINING PATENT PROTECTION IS CRITICAL TO OUR
ABILITY TO EFFECTIVELY COMPETE FOR BUSINESS.
Our success and competitive position depend on protecting our trade secrets
and other intellectual property. Our strategy is to rely both on trade secrets
and patents to protect our manufacturing and sales processes and products.
Reliance on trade secrets is only an effective business practice insofar as
trade secrets remain undisclosed and a proprietary product or process is not
reverse engineered or independently developed. We take certain measures to
protect our trade secrets, including executing non-disclosure agreements with
our employees, joint venture partners, customers and suppliers. If parties
breach these agreements or the measures we take are not properly implemented, we
may not have an adequate remedy. Disclosure of our trade secrets or reverse
engineering of our proprietary products, processes or devices could materially
and adversely affect our business, financial condition and results of
operations. We are actively pursuing patents on some of our recent inventions.
There is no assurance that any patents will be obtained. If obtained, there is
no assurance that any patents will afford us commercially significant protection
of our technologies or that we will have adequate resources to enforce our
patents. In addition, the laws of certain other countries may not protect our
intellectual property to the same extent as U.S. laws.
OUR FAILURE TO OBTAIN OR MAINTAIN THE RIGHT TO USE CERTAIN INTELLECTUAL PROPERTY
MAY ADVERSELY AFFECT OUR FINANCIAL RESULTS.
The compound semiconductor, optoelectronics, and fiberoptic communications
industries are characterized by frequent litigation regarding patent and other
intellectual property rights. From time to time we have received and may receive
in the future, notice of claims of infringement of other parties' proprietary
rights and licensing offers to commercialize third party patent rights. Although
we are not currently involved in any litigation relating to our intellectual
property, there can be no assurance that:
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o infringement claims (or claims for indemnification resulting from
infringement claims) will not be asserted against us or that such
claims will not be successful;
o future assertions will not result in an injunction against the sale of
infringing products or otherwise significantly impair our business and
results of operations; or
o we will not be required to obtain licenses, the expense of which may
adversely affect our results of operations and profitability.
INTERRUPTIONS IN OUR BUSINESS AND A SIGNIFICANT LOSS OF SALES TO ASIA MAY RESULT
IF OUR PRIMARY ASIAN DISTRIBUTOR FAILS TO EFFECTIVELY MARKET AND SERVICE OUR
PRODUCTS.
We rely on a single marketing, distribution and service provider, Hakuto
Co. Ltd., to market and service many of our products in Japan, China and
Singapore. Hakuto is one of our shareholders and Hakuto's president is a member
of our Board of Directors. We have distributorship agreements with Hakuto which
expire in March 2008 and give Hakuto exclusive distribution rights for certain
of our products in Japan. Hakuto's failure to effectively market and service our
products or termination of our relationship with Hakuto could result in
significant delays or interruption in our marketing and service programs in
Asia. This could materially and adversely affect our business, financial
condition and results of operations.
OUR MANAGEMENT'S STOCK OWNERSHIP GIVES THEM THE POWER TO CONTROL BUSINESS
AFFAIRS AND PREVENT A TAKEOVER THAT COULD BE BENEFICIAL TO UNAFFILIATED
SHAREHOLDERS.
Certain members of our management, specifically Thomas J. Russell, Chairman
of our Board, Reuben F. Richards, President, Chief Executive Officer and a
director, and Robert Louis-Dreyfus, a director, are former members of Jesup &
Lamont Merchant Partners, L.L.C. They collectively beneficially own more than
20% of our common stock. Accordingly, such persons will continue to hold
sufficient voting power to control our business and affairs for the foreseeable
future. This concentration of ownership may also have the effect of delaying,
deferring or preventing a change in control of our company, which could have a
material adverse effect on our stock price.
UNSUCCESSFUL CONTROL OF THE HAZARDOUS RAW MATERIALS USED IN OUR MANUFACTURING
PROCESS COULD RESULT IN COSTLY REMEDIATION FEES, PENALTIES OR DAMAGES UNDER
ENVIRONMENTAL AND SAFETY REGULATIONS.
The production of wafers and devices involves the use of certain hazardous
raw materials, including, but not limited to, ammonia, phosphine and arsine. If
our control systems are unsuccessful in preventing a release of these materials
into the environment or other adverse environmental conditions occur, we could
experience interruptions in our operations and incur substantial remediation and
other costs. Failure to comply with environmental and health and safety laws and
regulations may materially and adversely affect our business, financial
condition and results of operations.
OUR BUSINESS OR OUR STOCK PRICE COULD BE ADVERSELY AFFECTED BY ISSUANCE OF
PREFERRED STOCK.
Our board of directors is authorized to issue up to 5,882,352 shares of
preferred stock with such dividend rates, liquidation preferences, voting
rights, redemption and conversion terms and privileges as our board of
directors, in its sole discretion, may determine. The issuance of shares of
preferred stock may result in a decrease in the value or market price of our
common stock, or our board of directors could use the preferred stock to delay
or discourage hostile bids for control of us in which shareholders may receive
premiums for their common stock or to make the possible sale of the company or
the removal of our management more difficult. The issuance of shares of
preferred stock could adversely affect the voting and other rights of the
holders of common stock.
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CERTAIN PROVISIONS OF NEW JERSEY LAW AND OUR CHARTER MAY MAKE A TAKEOVER OF OUR
COMPANY DIFFICULT EVEN IF SUCH TAKEOVER COULD BE BENEFICIAL TO SOME OF OUR
SHAREHOLDERS.
New Jersey law and our certificate of incorporation, as amended, contain
certain provisions that could delay or prevent a takeover attempt that our
shareholders may consider in their best interests. Our board of directors is
divided into three classes. Directors are elected to serve staggered three-year
terms and are not subject to removal except for cause by the vote of the holders
of at least 80% of our capital stock. In addition, approval by the holders of
80% of our voting stock is required for certain business combinations unless
these transactions meet certain fair price criteria and procedural requirements
or are approved by two-thirds of our continuing directors. We may in the future
adopt other measures that may have the effect of delaying or discouraging an
unsolicited takeover, even if the takeover were at a premium price or favored by
a majority of unaffiliated shareholders. Certain of these measures may be
adopted without any further vote or action by our shareholders.
THE PRICE OF OUR COMMON STOCK HAS FLUCTUATED WIDELY IN THE LAST YEAR AND MAY
FLUCTUATE WIDELY IN THE FUTURE.
Our common stock is traded on The Nasdaq National Market, which has
experienced and may continue to experience significant price and volume
fluctuations that could adversely affect the market price of our common stock
without regard to our operating performance. In addition, we believe that
factors such as quarterly fluctuations in financial results, earnings below
analysts' estimates, and financial performance and other activities of other
publicly traded companies in the semiconductor industry could cause the price of
our common stock to fluctuate substantially. In addition, in recent periods our
common stock, the stock market in general, and the market for shares of small
capitalization and semiconductor industry-related stocks in particular, have
experienced extreme price fluctuations which have often been unrelated to the
operating performance of affected companies. Any similar fluctuations in the
future could adversely affect the market price of our common stock.
Our stock price has fluctuated widely in the last year and may fluctuate
widely in the future. Since March 31, 2000, our closing stock price has been as
high as $62.50 per share and as low as $20.06 per share. Volatility in the price
of our common stock may be caused by other factors outside of our control and
may be unrelated or disproportionate to our operating results.
WE MAY ENGAGE IN ACQUISITIONS THAT MAY HARM OUR OPERATING RESULTS, DILUTE OUR
STOCKHOLDERS AND CAUSE US TO INCUR DEBT OR ASSUME CONTINGENT LIABILITIES.
We may pursue acquisitions to acquire new technologies, products or service
offerings. Future acquisitions by us may involve the following:
o use of significant amounts of cash;
o potentially dilutive issuances of equity securities; and
o incurrence of debt or amortization expenses related to goodwill and
other intangible assets.
In addition, acquisitions involve numerous risks, including:
o difficulties in the integration of the operations, technologies,
products and personnel of the acquired company;
o diversion of management's attention from other business concerns;
o risks of entering markets in which we have no or limited prior
experience; and
o potential loss of key employees of the acquired company.
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From time to time, we have engaged in discussions with acquisition
candidates regarding potential acquisitions of product lines, technologies and
businesses. However, we currently have no commitments or agreements with respect
to any such transaction. If such an acquisition does occur, we cannot be certain
that our business, operating results and financial condition will not be
materially and adversely affected.
THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE. AN INCREASE IN
COMPETITION WOULD LIMIT OUR ABILITY TO MAINTAIN AND INCREASE OUR MARKET SHARE.
We face substantial competition from a number of companies, many of which
have greater financial, marketing, manufacturing and technical resources. Larger
competitors could spend more on research and development, which could give those
competitors an advantage in meeting customer demand. We expect that existing and
new competitors will improve the design of their existing products and will
introduce new products with enhanced performance characteristics. The
introduction of new products or more efficient production of existing products
by our competitors could diminish our market share and gross margins.
RISK FACTORS RELATING TO THE NOTES
THE NOTES ARE SUBORDINATED.
The notes are unsecured and subordinated in right of payment to all of our
existing and future senior indebtedness. The indenture defines senior
indebtedness as all indebtedness of EMCORE Corporation other than any
indebtedness that expressly states that it is subordinated to the notes. In the
event of our bankruptcy, liquidation or reorganization or upon acceleration of
the notes due to an event of default under the indenture and in certain other
events, our assets will be available to pay obligations on the notes only after
all senior indebtedness has been paid. In addition, the subordination provisions
of the indenture provide that payments with respect to the notes will be blocked
in the event of a payment default on senior indebtedness and may be blocked for
up to 179 days each year in the event of certain non-payment defaults on senior
indebtedness. As a result, there may not be sufficient assets remaining to pay
amounts due on any or all of the outstanding notes. In addition, under the
subordination provisions of the indenture, payments that would otherwise be made
to holders of the notes will instead be paid to holders of senior indebtedness
under certain circumstances. As a result of these provisions, our other
creditors (including trade creditors) that are not holders of senior
indebtedness may recover more, ratably, than the holders of the notes. The notes
are also structurally subordinated to all liabilities, including trade payables,
of our subsidiaries. The indenture governing the notes does not limit our or our
subsidiaries' ability to incur debt, including senior indebtedness. If we or our
subsidiaries were to incur additional debt or liabilities, our ability to pay
our obligations on the notes could be adversely affected. See "Description of
the Notes -- Subordination of Notes."
On July 17, 2001, we had approximately $100,000 of senior indebtedness and
$14.9 million available for additional borrowing under our credit facility.
WE MAY BE UNABLE TO MEET THE REDEMPTION REQUIREMENTS UPON A CHANGE IN CONTROL.
Upon a change in control, you may require us to purchase all or a portion
of your notes. If a change in control were to occur, we may not have enough
funds to pay the purchase price for all tendered notes. Our current credit
agreement contains, or other future agreements relating to our indebtedness
might contain, provisions that prohibit the repurchase of the notes upon a
change in control. If a change in control occurs at a time when we are
prohibited from purchasing the notes, we could seek the consent of our lenders
to purchase the notes or could attempt to refinance this debt. If we do not
obtain a consent, we could not purchase the notes. Our failure to purchase
tendered notes would constitute an event of default under the indenture, which
will constitute a default under our credit facility and might constitute a
default under the terms of our other debt. In such circumstances, or if a change
in control would constitute an event of default under our senior indebtedness,
the subordination provisions of the indenture would restrict payments to you.
The term "change in control" is limited to certain specified transactions and
may not include other events that might harm our financial condition. Our
obligation to offer to purchase the notes upon a change in control would not
necessarily afford you protection in the event of a highly leveraged
transaction, reorganization, merger or similar transaction involving us.
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A PUBLIC MARKET FOR THE NOTES MAY NOT BE MAINTAINED.
The initial purchasers are not obligated to make a market for the notes and
may discontinue any market making activity at any time without notice. In
addition, market-making activity by the initial purchasers will be subject to
the limits imposed by the Securities Act and the Exchange Act. As a result, we
cannot assure you that any market for the notes will be maintained. If an active
market for the notes fails to develop or be sustained, the trading price of the
notes could decline significantly.
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USE OF PROCEEDS
We will not receive any proceeds from the sale by any selling
securityholder of the notes or the underlying common stock.
RATIO OF EARNINGS TO FIXED CHARGES
Earnings were insufficient to cover fixed charges for each of the periods
indicated by the amount set forth (in thousands):
Fiscal Years Ended September 30, Six Months
------------------------------------------------------- Ended
1996 1997 1998 1999 2000 March 31, 2001
------ ------ ------- ------- ------- --------------
Insufficiency of Earnings to
Cover Fixed Charges........... $3,176 $5,197 $36,221 $16,358 $12,220 --
Ratio of Earnings
to Fixed Charges.............. N/A* N/A* N/A* N/A* N/A* 22
* Indicates less than one to one coverage ratio.
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DESCRIPTION OF THE NOTES
We issued the notes under an indenture dated as of May 7, 2001 between us
and Wilmington Trust Company, as trustee (the "indenture"). The following
summarizes some, but not all, provisions of the notes and the indenture. We urge
you to read the indenture because it, and not this description, defines your
rights as a holder of the notes.
In this section of the prospectus entitled "Description of the Notes," when
we refer to "EMCORE," "we," "our," or "us," we are referring to EMCORE
Corporation and not any of its subsidiaries.
GENERAL
The notes are unsecured general obligations of EMCORE and are subordinate
in right of payment as described under "Subordination of Notes." The notes are
convertible into common stock as described under "Conversion of Notes." The
notes have been issued only in denominations of $1,000 or in multiples of
$1,000. The notes will mature on May 15, 2006, unless earlier redeemed at our
option by us or purchased by us at your option upon a change in control.
The indenture does not limit our or our subsidiaries' ability to pay
dividends, incur debt or issue or repurchase securities. In addition, there are
no financial covenants in the indenture. You are not protected under the
indenture in the event of a highly leveraged transaction or a change in control
of EMCORE, except to the extent described under "Purchase of Notes at Your
Option Upon a Change in Control."
The notes bear interest at the annual rate of 5% subject to increases
described in "Registration Rights" below. Interest is payable on May 15 and
November 15 of each year, beginning November 15, 2001, subject to limited
exceptions if the notes are converted, redeemed or purchased prior to the
interest payment date. The record dates for the payment of interest will be May
1 and November 1. We may, at our option, pay interest on the notes by check
mailed to the holders. However, a holder with an aggregate principal amount of
notes in excess of $2,000,000 will be paid by wire transfer in immediately
available funds at its election. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months. We will not be required to make
any payment on the notes due on any day which is not a business day until the
next succeeding business day. The payment made on the next succeeding business
day will be treated as though it were paid on the original due date and no
interest will accrue on the payment for the additional period of time.
We maintain, through the Trustee, an office in The City of New York where
the notes may be presented for registration, transfer, exchange or conversion.
Except under the limited circumstances described below, the notes will be issued
only in fully-registered book-entry form, without coupons, and will be
represented by one or more global notes. There will be no service charge for any
registration of transfer or exchange of notes. We may, however, require holders
to pay a sum sufficient to cover any tax or other governmental charge payable in
connection with certain transfers or exchanges.
CONVERSION OF NOTES
You will have the right, at your option, to convert your notes into shares
of our common stock at any time prior to maturity, unless previously redeemed or
purchased, at the conversion price of $48.7629 per share, subject to the
adjustments described below.
Except as described below, we will not make any payment or other adjustment
for accrued interest or dividends on any common stock issued upon conversion of
the notes. If you submit your notes for conversion between a record date and the
opening of business on the next interest payment date, you must pay funds equal
to the interest payable on the converted principal amount, except if the
submitted notes or portions of notes are called for redemption or are subject to
purchase following a change in control on a date during the period from the
close of business on a record date and ending on the opening of business on the
first business day after the next interest payment date, or if this interest
payment date is not a business day, the second business day after the interest
payment date. As a result of the foregoing provisions, if the exception
described in the preceding sentence does not
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apply and you surrender notes for conversion on a date that is not an interest
payment date, you will not receive any interest for the period from the interest
payment date next preceding the date of conversion to the date of conversion or
for any later period.
We will not issue fractional shares of common stock upon conversion of
notes. Instead, we will pay a cash amount based upon the closing market price of
the common stock on the last trading day prior to the date of conversion.
If the notes are called for redemption or are subject to purchase following
a change in control, your conversion rights on the notes called for redemption
or so subject to purchase will expire at the close of business on the last
business day before the redemption date or purchase date, as the case may be,
unless we default in the payment of the redemption price or purchase price. If
you have submitted your notes for purchase upon a change in control, you may
only convert your notes if you withdraw your election in accordance with the
indenture.
The conversion price will be adjusted upon the occurrence of:
(1) the issuance of shares of our common stock as a dividend or
distribution on our common stock;
(2) the subdivision or combination of our outstanding common stock;
(3) the issuance to all or substantially all holders of our common stock
of rights or warrants entitling them for a period of not more than 60
days to subscribe for or purchase our common stock, or securities
convertible into our common stock, at a price per share or a
conversion price per share less than the then current market price per
share, provided that the conversion price will be readjusted to the
extent that such rights or warrants are not exercised prior to the
expiration;
(4) the distribution to all or substantially all holders of our common
stock of shares of our capital stock, evidences of indebtedness or
other non-cash assets, or rights or warrants, excluding:
o dividends, distributions and rights or warrants referred to in
clause (1) or (3) above;
o dividends or distributions exclusively in cash referred to in
clause (5) below; and
o distribution of rights to all holders of common stock pursuant to
an adoption of a shareholder rights plan;
(5) the dividend or distribution to all or substantially all holders of
our common stock of all-cash distributions in an aggregate amount that
together with (A) any cash and the fair market value of any other
consideration payable in respect of any tender offer by us or any of
our subsidiaries for our common stock consummated within the preceding
12 months not triggering a conversion price adjustment and (B) all
other all-cash distributions to all or substantially all holders of
our common stock made within the preceding 12 months not triggering a
conversion price adjustment, exceeds an amount equal to 10% of our
market capitalization on the business day immediately preceding the
day on which we declare such distribution; and
(6) the purchase of our common stock pursuant to a tender offer (within
the meaning of the U.S. federal securities laws) made by us or any of
our subsidiaries to the extent that the same involves aggregate
consideration that together with (A) any cash and the fair market
value of any other consideration payable in respect of any tender
offer by us or any of our subsidiaries for our common stock
consummated within the preceding 12 months not triggering a conversion
price adjustment and (B) all-cash distributions to all or
substantially all holders of our common stock made within the
preceding 12 months not triggering a conversion price adjustment,
exceeds an amount equal to 10% of our market capitalization on the
expiration date of such tender offer.
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In the event of:
o any reclassification of our common stock; or
o a consolidation, merger or combination involving EMCORE; or
o a sale or conveyance to another person of the property and assets of
EMCORE as an entirety or substantially as an entirety,
in which holders of our outstanding common stock would be entitled to receive
stock, other securities, other property, assets or cash for their common stock,
holders of notes will generally be entitled to convert their notes into the same
type of consideration received by common stockholders immediately prior to one
of these types of events.
We are permitted to reduce the conversion price of the notes by any amount
for a period of at least 20 days if our board of directors determines that such
reduction would be in the best interest of EMCORE. We are required to give at
least 15 days prior notice of any reduction in the conversion price. We may also
reduce the conversion price to avoid or diminish income tax to holders of our
common stock in connection with a dividend or distribution of stock or similar
event.
You may, in some circumstances, be deemed to have received a distribution
or dividend subject to United States federal income tax as a result of an
adjustment or the non-occurrence of an adjustment to the conversion price.
No adjustment in the conversion price will be required unless it would
result in a change in the conversion price of at least one percent. Any
adjustment not made will be taken into account in subsequent adjustments. Except
as stated above, we will not adjust the conversion price for the issuance of our
common stock or any securities convertible into or exchangeable for our common
stock or the right to purchase our common stock or such convertible or
exchangeable securities.
SUBORDINATION OF NOTES
The payment of the principal of, premium, if any, and interest on the notes
is subordinated to the extent provided in the indenture to the prior payment in
full, in cash or other payment satisfactory to the holders of senior
indebtedness, of all senior indebtedness.
Upon any distribution of our assets upon any dissolution, winding-up,
liquidation or reorganization, or in bankruptcy, insolvency, receivership or
similar proceedings, payment of the principal of, premium, if any, and interest
(including any additional interest) on the notes is to be subordinated in right
of payment to the prior payment in full, in cash or other payment satisfactory
to the holders of senior indebtedness, of all senior indebtedness.
In the event of any acceleration of the notes because of an event of
default, the holders of any senior indebtedness then outstanding would be
entitled to payment in full, in cash or other payment satisfactory to the
holders of senior indebtedness, of all obligations with respect to such senior
indebtedness before the holders of notes are entitled to receive any payment or
other distribution. We are required to promptly notify holders of senior
indebtedness if payment of the notes is accelerated because of an event of
default.
We also may not make any payment on the notes if:
o a default in the payment of designated senior indebtedness occurs and
is continuing beyond any applicable period of grace; or
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o any other default occurs and is continuing with respect to designated
senior indebtedness that permits holders of the designated senior
indebtedness to accelerate its maturity and the trustee receives a
notice of such default, which we refer to as a payment blockage
notice, from any person permitted to give this notice under the
indenture.
We may resume making payments on the notes:
o in the case of a payment default, when the default is cured or waived
or ceases to exist; and
o in the case of a nonpayment default, the earlier of (1) when the
default is cured or waived or ceases to exist and (2) 179 days after
receipt of the payment blockage notice.
No new period of payment blockage may be commenced pursuant to a payment
blockage notice unless and until 365 days have elapsed since our receipt of the
prior payment blockage notice.
No default that existed on the date of delivery of any payment blockage
notice to the trustee shall be the basis for a subsequent payment blockage
notice.
By reason of the subordination provisions described above, in the event of
our bankruptcy, dissolution or reorganization, holders of senior indebtedness
may receive more, ratably, and holders of the notes may receive less, ratably,
than the other creditors of EMCORE. These subordination provisions will not
prevent the occurrence of any event of default under the indenture. The
indenture does not limit our ability to incur additional indebtedness, including
senior indebtedness. The incurrence of significant amounts of additional debt
could adversely affect our ability to service our debt, including the notes.
A portion of our operations are or in the future may be conducted through
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the notes, would depend upon the earnings of our subsidiaries. In
addition, we would be dependent on the distribution of earnings, loans or other
payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the notes or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us could be subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
notes to participate in those assets, will be structurally subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us. As of July
17, 2001, we had approximately $100,000 of indebtedness outstanding that would
constitute senior indebtedness. The indenture does not limit our ability or the
ability of our subsidiaries to incur senior indebtedness or any other
indebtedness.
CERTAIN DEFINITIONS
"CREDIT FACILITY" means that certain Amended and Restated Revolving Loan
and Security Agreement dated as of March 1, 2001 with First Union National Bank,
including any related notes, guarantees, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended
(including any amendment and restatement thereof), modified, renewed, refunded,
replaced, refinanced or restructured (including, without limitation, any
amendment increasing the amount of available borrowing thereunder) from time to
time and whether with the same or any other agent, lender or group of lenders.
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"DESIGNATED SENIOR INDEBTEDNESS" means the credit facility and any other
particular senior indebtedness that expressly provides that such senior
indebtedness is "designated senior indebtedness" for purposes of the indenture.
"INDEBTEDNESS" means:
(1) all of our indebtedness, obligations and other liabilities, contingent
or otherwise, for borrowed money, including:
o overdrafts, foreign exchange contracts, currency exchange agreements,
interest rate protection agreements, and any loans or advances from
banks, whether or not evidenced by notes or similar instruments; or
o evidenced by a credit or loan agreement, bonds, debentures, notes or
other written obligations, whether or not the recourse of the lender
is to all of our assets or to only a portion thereof, other than any
account payable or other accrued current liability or obligation
incurred in the ordinary course of business in connection with the
obtaining of materials or services;
(2) all of our reimbursement obligations and other liabilities, contingent
or otherwise, with respect to letters of credit, bank guarantees or
bankers' acceptances;
(3) all of our obligations and liabilities, contingent or otherwise, in
respect of leases required, in conformity with generally accepted
accounting principles, to be accounted for as capitalized lease
obligations on our balance sheet;
(4) all of our obligations evidenced by a note or similar instrument given
in connection with the acquisition of any businesses, properties or
assets of any kind;
(5) all of our obligations issued or assumed as the deferred purchase
price of property or services, but excluding trade accounts payable
and accrued liabilities arising in the ordinary course of business;
(6) all of our obligations and other liabilities, contingent or otherwise,
under any lease or related document, including a purchase agreement,
in connection with the lease of real property or improvements (or any
personal property included as part of any such lease) which provides
that we are contractually obligated to purchase or cause a third party
to purchase the leased property and thereby guarantee a residual value
of leased property to the lessor and all of our obligations under such
lease or related document to purchase or to cause a third party to
purchase the leased property (whether or not such lease transaction is
characterized as an operating lease or a capitalized lease in
accordance with generally accepted accounting principles);
(7) all of our obligations, contingent or otherwise, with respect to an
interest rate currency or other swap, cap, floor or collar agreement,
hedge agreement, forward contract, or other similar instrument or
agreement or foreign currency hedge, exchange, purchase or similar
instrument or agreement;
(8) all of our direct or indirect guarantees or similar agreements to
purchase or otherwise acquire or otherwise assure a creditor against
loss in respect of indebtedness, obligations or liabilities of another
person of the kind described in clauses (1) through (7); and
(9) any and all deferrals, renewals, extensions and refundings of, or
amendments, modifications, supplements to, any indebtedness,
obligation or liability of the kind described in clauses (1) through
(8).
"SENIOR INDEBTEDNESS" means the principal of, premium, if any, interest
including all interest accruing subsequent to the commencement of any bankruptcy
or similar proceeding, whether or not a claim for post-petition interest is
allowable as a claim in any such proceeding, and rent payable on or in
connection with, and all fees, costs, expenses and other amounts accrued or due
on or in connection with, indebtedness of EMCORE whether secured or
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unsecured, absolute or contingent, due or to become due, outstanding on the date
of the indenture or thereafter created, incurred, assumed, guaranteed or in
effect guaranteed by EMCORE, including all deferrals, renewals, extensions or
refundings of, or amendments, modifications or supplements to, the foregoing,
unless in the case of any particular indebtedness the instrument creating or
evidencing the same or the assumption or guarantee thereof expressly provides
that such indebtedness shall not be senior in right of payment to the notes or
expressly provides that such indebtedness is on the same basis or junior to the
notes.
Senior indebtedness does not include any indebtedness of EMCORE to any
subsidiary of EMCORE or any obligation for federal, state, local or other taxes.
PROVISIONAL REDEMPTION
We may redeem any portion of the notes at any time prior to May 20, 2004
upon at least 20 and not more than 60 days' notice by mail to the holders of the
notes, at a redemption price equal to $1,000 per note plus accrued and unpaid
interest to the redemption date if (1) the closing price of our common stock has
exceeded 150% of the conversion price for at least 20 trading days in any
consecutive 30-day trading period ending on the trading day prior to the mailing
of the notice of redemption and (2) this shelf registration statement covering
resales of the notes and the common stock is effective and expected to remain
effective and available for use for the 30 days following the redemption date,
unless registration is no longer required.
If we redeem the notes under these circumstances, we will make an
additional "make whole" payment on the redeemed notes equal to $150.00 per
$1,000 note, minus the amount of any interest actually paid on the note prior to
the redemption date. We must make these "make whole" payments on all notes
called for redemption, including notes converted after the date we mailed the
notice. The "make whole" payment for notes converted shall not be reduced by
accrued and unpaid interest. We may make these "make whole" payments, at our
option, either in cash or in our common stock or a combination of cash and
stock, if a shelf registration covering resales of such common stock is
effective and expected to remain effective and available for use for the 30 days
following the redemption date. We will specify the type of consideration for the
"make whole" payment in the redemption notice. Payments made in our common stock
will be valued at 97% of the average of the closing sales prices of our common
stock for the five trading days ending on the day prior to the redemption date.
OPTIONAL REDEMPTION BY EMCORE
Except as set forth under "Provisional Redemption," the notes may not be
redeemed at the option of the Company prior to May 20, 2004. Thereafter the
notes may be redeemed at the option of the Company in whole, or in part, upon
not less than 20 nor more than 60 days' notice by mail to holders of the notes.
The redemption prices (expressed as a percentage of principal amount) are
as follows for notes redeemed during the periods set forth below:
Redemption
Period Price
------ ----------
Beginning on May 20, 2004 through May 14, 2005................ 101.25%
Beginning on May 15, 2005 and thereafter...................... 100.00%
in each case together with accrued interest up to, but not including, the
redemption date; provided that if the redemption date falls after an interest
payment record date and on or before an interest payment date, then the interest
payment shall be payable to holders of record on the relevant record date.
If fewer than all of the notes are to be redeemed, the trustee will select
the notes to be redeemed by lot, or in its discretion, on a pro rata basis. If
any note is to be redeemed in part only, a new note in principal amount equal to
the unredeemed principal portion will be issued. If a portion of your notes is
selected for partial redemption and
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you convert a portion of your notes, the converted portion will be deemed to be
of the portion selected for redemption.
No sinking fund is provided for the notes.
PURCHASE OF NOTES AT YOUR OPTION UPON A CHANGE IN CONTROL
If a change in control occurs, you will have the right to require us to
purchase all or any part of your notes 30 business days after the occurrence of
a change in control at a purchase price equal to 100% of the principal amount of
the notes plus accrued and unpaid interest to, but excluding, the purchase date.
Notes submitted for purchase must be in a principal amount of $1,000 or
multiples of $1,000.
We will mail to the trustee and to each holder of a note a written notice
of the change in control within 10 business days after the occurrence of a
change in control. This notice will state:
o the terms and conditions of the change in control;
o the procedures required for exercise of the change in control purchase
feature; and
o the holder's right to require EMCORE to purchase the notes.
You must deliver written notice of your exercise of this purchase right to
the paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date. The written notice must specify
the notes for which the purchase right is being exercised. If you wish to
withdraw this election, you must provide a written notice of withdrawal to the
paying agent at any time prior to the close of business on the business day
prior to the change in control purchase date.
A change in control will be deemed to have occurred if any of the following
occurs:
o any "person" or "group" is or becomes the "beneficial owner," directly
or indirectly (other than as a direct result of repurchases of stock
by EMCORE or its subsidiaries), of shares of voting stock of EMCORE
representing 50% or more of the total voting power of all outstanding
classes of voting stock of EMCORE or such person or group (other than
the management group) has the power, directly or indirectly, to elect
a majority of the members of the board of directors of EMCORE;
provided, that voting stock acquired in an exempt transaction shall
not constitute an acquisition that would cause a change in control;
o EMCORE consolidates with, or merges with or into, another person or
EMCORE sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of the assets of EMCORE, or any
person consolidates with, or merges with or into, EMCORE, in any such
event other than pursuant to a transaction in which (a) the persons
that "beneficially owned," directly or indirectly, the shares of
voting stock of EMCORE immediately prior to such transaction
"beneficially own," directly or indirectly, shares of voting stock of
EMCORE, representing at least a majority of the total voting power of
all outstanding classes of voting stock of the surviving or transferee
person, or (b) an exempt transaction occurs; or
o EMCORE is dissolved or liquidated.
However, a change in control will not be deemed to have occurred if either:
o the last sale price of our common stock for any five trading days
during the ten trading days immediately preceding the change in
control is at least equal to 105% of the conversion price in effect on
such day; or
o in the case of a merger or consolidation, all of the consideration
excluding cash payments for fractional shares in the merger or
consolidation constituting the change in control consists of common
stock traded
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on a United States national securities exchange or quoted on The
Nasdaq National Market (or which will be so traded or quoted when
issued or exchanged in connection with such change in control) and as
a result of such transaction or transactions the notes become
convertible solely into such common stock.
For purposes of this change in control definition:
o "person" or "group" have the meanings given to them for purposes of
Sections 13(d) and 14(d) of the Exchange Act or any successor
provisions, and the term "group" includes any group acting for the
purpose of acquiring, holding or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act, or any successor
provision;
o a "beneficial owner" will be determined in accordance with Rule 13d-3
under the Exchange Act, as in effect on the date of the indenture,
except that the number of shares of voting stock of EMCORE will be
deemed to include, in addition to all outstanding shares of voting
stock of EMCORE and unissued shares deemed to be held by the "person"
or "group" or other person with respect to which the change in control
determination is being made, all unissued shares deemed to be held by
all other persons;
o "beneficially owned" has a meaning correlative to that of beneficial
owner;
o "exempt transaction" means any purchase from EMCORE of equity
interests in EMCORE by any of Thomas Russell, The AER 1997 Trust,
Robert Louis-Dreyfus, Gallium Enterprises, Inc. and Reuben Richards
(the "management group"); provided that the management group does not
collectively beneficially own more than 65% of the total voting power
of all outstanding classes of voting stock of EMCORE following such
purchase.
o "unissued shares" means shares of voting stock not outstanding that
are subject to options, warrants, rights to purchase or conversion
privileges exercisable within 60 days of the date of determination of
a change in control; and
o "voting stock" means any class or classes of capital stock pursuant to
which the holders of capital stock under ordinary circumstances have
the power to vote in the election of the board of directors, managers
or trustees of any person or other persons performing similar
functions irrespective of whether or not, at the time capital stock of
any other class or classes shall have, or might have, voting power by
reason of the happening of any contingency.
The term "all or substantially all" as used in the definition of change in
control will likely be interpreted under applicable state law and will be
dependent upon particular facts and circumstances. There may be a degree of
uncertainty in interpreting this phrase. As a result, we cannot assure you how a
court would interpret this phrase under applicable law if you elect to exercise
your rights following the occurrence of a transaction which you believe
constitutes a transfer of "all or substantially all" of our assets.
We will:
o comply with the provisions of Rule 13e-4 and Rule 14e-1, if
applicable, under the Exchange Act;
o file a Schedule TO or any successor or similar schedule if required
under the Exchange Act; and
o otherwise comply with all federal and state securities laws in
connection with any offer by us to purchase the notes upon a change in
control.
This change in control purchase feature may make more difficult or
discourage a takeover of EMCORE and the removal of incumbent management.
However, we are not aware of any specific effort to accumulate shares of our
common stock or to obtain control of us by means of a merger, tender offer,
solicitation or otherwise. In addition,
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the change in control purchase feature is not part of a plan by management to
adopt a series of anti-takeover provisions. Instead, the change in control
purchase feature is a result of negotiations between us and the initial
purchasers.
We could, in the future, enter into certain transactions, including
recapitalizations, that would not constitute a change in control but would
increase the amount of indebtedness, including senior indebtedness, outstanding
or otherwise adversely affect a holder. Neither we nor our subsidiaries are
prohibited from incurring indebtedness, including senior indebtedness, under the
indenture. The incurrence of significant amounts of additional indebtedness
could adversely affect our ability to service our debt, including the notes.
We may not repurchase any note at any time when the subordination
provisions of the indenture otherwise would prohibit us from making such
repurchase. If we fail to repurchase the notes when required, this failure will
constitute an event of default under the indenture whether or not repurchase is
permitted by the subordination provisions of the indenture.
If a change in control were to occur, we may not have sufficient funds to
pay the change in control purchase price for the notes tendered by holders. In
addition, we may in the future incur indebtedness that has similar change of
control provisions that permit holders of that debt to accelerate or require us
to repurchase that indebtedness upon the occurrence of events similar to a
change in control. Our failure to repurchase the notes upon a change in control
will result in an event of default under the indenture, whether or not the
purchase is permitted by the subordination provisions of the indenture.
EVENTS OF DEFAULT
Each of the following constitutes an event of default under the indenture:
(1) we fail to pay principal or premium, if any, on any note when due,
whether or not prohibited by the subordination provisions of the
indenture;
(2) we fail to pay any interest on any note when due if such failure
continues for 30 days, whether or not prohibited by the subordination
provisions of the indenture;
(3) we fail to perform any other covenant required of us in the indenture
if such failure continues for 60 days after notice is given in
accordance with the indenture;
(4) we fail to pay the purchase price of any note when due, whether or not
prohibited by the subordination provisions of the indenture;
(5) we fail to provide timely notice of a change in control; or
(6) certain events in bankruptcy, insolvency or reorganization of EMCORE.
If an event of default, other than an event of default described in clause
(6) above, occurs and is continuing, either the trustee or the holders of at
least 25% in aggregate principal amount of the outstanding notes may declare the
principal amount of the notes to be due and payable immediately. If an event of
default described in clause (6) above occurs, the principal amount of the notes
will automatically become immediately due and payable. Any payment by us on the
notes following any such acceleration will be subject to the subordination
provisions described above.
After any such acceleration, but before a judgment or decree based on
acceleration, the holders of a majority in aggregate principal amount of the
notes may, under certain circumstances, rescind and annul such acceleration.
Subject to the trustee's duties in the case of an event of default, the
trustee is not obligated to exercise any of its rights or powers at the request
of the holders, unless the holders have offered to the trustee reasonable
indemnity.
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Subject to the trustee's indemnification, the holders of a majority in aggregate
principal amount of the outstanding notes have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
trustee or exercising any trust or power conferred on the trustee with respect
to the notes.
No holder has any right to institute any proceeding under the indenture, or
for the appointment of a receiver or a trustee, or for any other remedy under
the indenture unless:
o the holder has previously given to the trustee written notice of a
continuing event of default;
o the holders of at least 25% in aggregate principal amount of the
outstanding notes have made a written request and have offered
reasonable indemnity to the trustee to institute such proceeding as
trustee;
o the trustee has not complied with the request within 60 days after
receipt of the request and the offer of security or indemnity; and
o the holders of a majority in principal amount of the outstanding notes
have not given the trustee a direction inconsistent with the request
within the 60-day period.
However, these limitations do not apply to a suit instituted by a holder for the
enforcement of payment of the principal of or any premium or interest on any
note on or after the applicable due date or the right to convert the note.
Generally, the holders of not less than a majority of the aggregate
principal amount of outstanding notes may waive any default or event of default
unless:
o we fail to pay principal, premium or interest on any note when due;
o we fail to convert any note into common stock; or
o we fail to comply with any of the provisions of the indenture that
would require the consent of the holder of each outstanding note
affected.
We are required to furnish to the trustee, on an annual basis, a statement
by our officers as to whether or not EMCORE, to the officer's knowledge, is in
default in the performance or observance of any of the terms, provisions and
conditions of the indenture, specifying any known defaults.
MODIFICATION AND WAIVER
We and the trustee may make certain modifications and amendments to the
indenture or the notes without notice to or the consent of any holder, including
modifications or amendments to comply with the merger provisions described in
the indenture, to provide for uncertificated notes in addition to or in place of
certificated notes, to comply with the provisions of the Trust Indenture Act, to
appoint a successor trustee, to cure any ambiguity, defect or inconsistency, or
to make any other change that does not adversely affect the rights of the
holders.
We and the trustee may make modifications and amendments to the indenture
or the notes with the consent of the holders of a majority in aggregate
principal amount of the outstanding notes.
However, neither we nor the trustee may make any modification or amendment
without the consent of the holder of each outstanding note if such modification
or amendment would:
o change the stated maturity of the principal of or interest on any
note;
o reduce the principal amount of, or any premium or interest on, any
note;
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o reduce the amount of principal payable upon acceleration of the
maturity of any note;
o change the place or currency of payment of principal of, or any
premium or interest on, any note;
o impair the right to institute suit for the enforcement of any payment
on, or with respect to, any note;
o modify the subordination provisions in a manner materially adverse to
the holders of notes;
o adversely affect the right of holders to convert notes other than as
provided in or under the indenture;
o reduce the percentage in principal amount of outstanding notes
required for modification or amendment of the indenture;
o reduce the percentage in principal amount of outstanding notes
necessary for waiver of compliance with certain provisions of the
indenture or for waiver of certain defaults; or
o modify the foregoing requirements.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey, transfer
or lease our properties and assets substantially as an entirety to any successor
person, unless:
o the successor person, if any, is a corporation or limited liability
company organized and existing under the laws of the United States, or
any state of the United States, and assumes our obligations on the
notes and under the indenture;
o immediately after giving effect to the transaction, no default or
event of default shall have occurred and be continuing; and
o other conditions specified in the indenture are met.
REGISTRATION RIGHTS
The following summary of the registration rights provided in the
registration rights agreement and the notes is not complete. You should refer to
the registration rights agreement for a full description of the registration
rights that apply to the notes.
We have agreed to file a shelf registration statement under the Securities
Act within 90 days after the first date of original issuance of the notes to
register resales of the notes and the shares of common stock into which the
notes are convertible, referred to as registrable securities. We have agreed to
use commercially reasonable efforts to have this shelf registration statement
declared effective within 180 days after the first date of original issuance of
the notes, and to keep it effective until the earliest of:
(1) two years after the closing date;
(2) the date when all registrable securities shall have been registered
under the Securities Act and disposed of; and
(3) the date on which all registrable securities (other than those held by
affiliates of EMCORE) are eligible to be sold to the public pursuant
to Rule 144(k) under the Securities Act.
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We will be permitted to suspend the use of the prospectus which is a part
of the registration statement for a period not to exceed 90 consecutive days or
an aggregate of 120 days in any twelve-month period under certain circumstances
relating to pending corporate developments, public filings with the Securities
and Exchange Commission and similar events.
A holder of registrable securities that sells registrable securities
pursuant to the shelf registration statement generally will be required to
provide information about itself and the specifics of the sale, be named as a
selling security holder in the related prospectus and deliver a prospectus to
purchasers, be subject to relevant civil liability provisions under the
Securities Act in connection with such sales and be bound by the provisions of
the registration rights agreements which are applicable to such holder.
If:
(1) on or prior to the 90th day after the first date of original issuance
of the notes the shelf registration statement has not been filed with
the SEC;
(2) on or prior to the 180th day after the first date of original issuance
of the notes the shelf registration statement has not been declared
effective by the SEC;
(3) we fail with respect to a note holder that supplies the questionnaire
described below to supplement the shelf registration statement in a
timely manner in order to name additional selling securities holders;
or
(4) after the shelf registration statement has been declared effective
such shelf registration statement ceases to be effective or fails to
be usable in connection with resales of notes and the common stock
issuable upon the conversion of the notes in accordance with and
during the periods specified in the registration rights agreement and
(A) we do not cure the shelf registration statement within five
business days by a post-effective amendment or a report filed pursuant
to the Exchange Act or (B) if applicable, we do not terminate the
suspension period described above by the 90th day, as the case may be;
(each such event referred to in clauses (1) through (4), a registration
default), additional interest will accrue daily on registrable securities over
and above the rate set forth in the title of the notes, from and including the
date on which any such registration default shall occur to but excluding the
date on which all registration defaults have been cured, at the annual rate of
0.5% for the notes or, if applicable, on an equivalent basis per share (subject
to adjustment in the case of stock splits, stock recombinations, stock dividends
and the like) of common stock constituting registrable securities. We will have
no other liabilities for monetary damages with respect to our registration
obligations. With respect to each holder our obligations to pay additional
interest remain in effect only so long as the notes and the common stock
issuable upon the conversion of the notes held by the holder are "registrable
securities" within the meaning of the registration rights agreement.
We will pay all expenses of the shelf registration statement, provide each
holder that is selling registrable securities pursuant to the shelf registration
statement copies of the related prospectus and take other actions as are
required to permit, subject to the foregoing, registered resales of the
registrable securities.
SATISFACTION AND DISCHARGE
We may discharge our obligations under the indenture while notes remain
outstanding if (1) all outstanding notes will become due and payable at their
scheduled maturity within 90 days or (2) all outstanding notes have been called
for redemption within 90 days and in either case we have deposited with the
trustee an amount sufficient to pay and discharge all outstanding notes on the
date of their scheduled maturity or the scheduled date of redemption.
TRANSFER AND EXCHANGE
We have initially appointed the trustee as security registrar, paying agent
and conversion agent acting through its corporate trust office. We reserve the
right to:
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o vary or terminate the appointment of the security registrar, paying
agent or conversion agent;
o appoint additional paying agents or conversion agents; or
o approve any change in the office through which any security registrar
or any paying agent or conversion agent acts.
PURCHASE AND CANCELLATION
All notes surrendered for payment, redemption, registration of transfer or
exchange or conversion shall, if surrendered to any person other than the
trustee, be delivered to the trustee. All notes delivered to the trustee shall
be cancelled promptly by the trustee. No notes shall be authenticated in
exchange for any notes cancelled as provided in the indenture.
We may, to the extent permitted by law, purchase notes in the open market
or by tender offer at any price or by private agreement. Any notes purchased by
us may, to the extent permitted by law, be reissued or resold or may, at our
option, be surrendered to the trustee for cancellation. Any notes surrendered
for cancellation may not be reissued or resold and will be promptly cancelled.
REPLACEMENT OF NOTES
We will replace mutilated, destroyed, stolen or lost notes at your expense
upon delivery to the trustee of the mutilated notes, or evidence of the loss,
theft or destruction of the notes satisfactory to us and the trustee. In the
case of a lost, stolen or destroyed note, indemnity satisfactory to the trustee
and us may be required at the expense of the holder of such note before a
replacement note will be issued.
GOVERNING LAW
The indenture and the notes are governed by and construed in accordance
with the laws of the State of New York, without regard to conflicts of laws
principles.
THE TRUSTEE
Wilmington Trust Company serves as the trustee under the indenture. The
trustee will be permitted to deal with us and any of our affiliates with the
same rights as if it were not trustee. However, under the Trust Indenture Act,
if the trustee acquires any conflicting interest and there exists a default with
respect to the notes, the trustee must eliminate such conflicts or resign.
The holders of a majority in principal amount of all outstanding notes will
have the right to direct the time, method and place of conducting any proceeding
for exercising any remedy or power available to the trustee. However, any such
direction may not conflict with any law or the indenture, may not be unduly
prejudicial to the rights of another holder or the trustee and may not involve
the trustee in personal liability.
BOOK-ENTRY, DELIVERY AND FORM
We initially issued the notes in the form of one or more global securities.
The global security was deposited with the trustee as custodian for DTC and
registered in the name of a nominee of DTC. Except as set forth below, the
global security may be transferred, in whole and not in part, only to DTC or
another nominee of DTC. You may hold your beneficial interests in the global
security directly through DTC if you have an account with DTC or indirectly
through organizations which have accounts with DTC. Notes in definitive
certificated form (called "certificated securities") will be issued only in
certain limited circumstances described below.
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DTC has advised us that it is:
o a limited purpose trust company organized under the laws of the State
of New York;
o a member of the Federal Reserve System;
o a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
o a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
DTC was created to hold securities of institutions that have accounts with
DTC (called "participants") and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. DTC's
participants include securities brokers and dealers, which may include the
initial purchasers, banks, trust companies, clearing corporations and certain
other organizations. Access to DTC's book-entry system is also available to
others such as banks, brokers, dealers and trust companies (called "indirect
participants") that clear through or maintain a custodial relationship with a
participant, whether directly or indirectly.
We expect that pursuant to procedures established by DTC, upon the deposit
of the global security with DTC, DTC will credit on its book-entry registration
and transfer system the principal amount of notes represented by such global
security to the accounts of participants. The accounts to be credited shall be
designated by the initial purchasers. Ownership of beneficial interests in the
global security will be limited to participants or persons that may hold
interests through participants. Ownership of beneficial interests in the global
security will be shown on, and the transfer of those ownership interests will be
effected only through, records maintained by DTC (with respect to participants'
interests), the participants and the indirect participants. The laws of some
jurisdictions may require that certain purchasers of securities take physical
delivery of such securities in definitive form. These limits and laws may impair
the ability to transfer or pledge beneficial interests in the global security.
Beneficial owners of interests in global securities who desire to convert
their interests into common stock should contact their brokers or other
participants or indirect participants through whom they hold such beneficial
interests to obtain information on procedures, including proper forms and
cut-off times, for submitting requests for conversion.
So long as DTC, or its nominee, is the registered owner or holder of a
global security, DTC or its nominee, as the case may be, will be considered the
sole owner or holder of the notes represented by the global security for all
purposes under the indenture and the notes. In addition, no beneficial owner of
an interest in a global security will be able to transfer that interest except
in accordance with the applicable procedures of DTC. Except as set forth below,
as an owner of a beneficial interest in the global security you will not be
entitled to have the notes represented by the global security registered in your
name, will not receive or be entitled to receive physical delivery of
certificated securities and will not be considered to be the owner or holder of
any notes under the global security. We understand that under existing industry
practice if an owner of a beneficial interest in the global security desires to
take any action that DTC, as the holder of the global security, is entitled to
take, DTC would authorize the participants to take such action and the
participants would authorize beneficial owners owning through such participants
to take such action or would otherwise act upon the instructions of beneficial
owners owning through them.
We will make payments of principal of, premium, if any, and interest
(including any additional interest) on the notes represented by the global
security registered in the name of and held by DTC or its nominee to DTC or its
nominee, as the case may be, as the registered owner and holder of the global
security. Neither we, the trustee nor any paying agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the global
security or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
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We expect that DTC or its nominee, upon receipt of any payment of principal
of, premium, if any, or interest (including any additional interest) on the
global security, will credit participants' accounts with payments in amounts
proportionate to their respective beneficial interests in the principal amount
of the global security as shown on the records of DTC or its nominee. We also
expect that payments by participants or indirect participants to owners of
beneficial interests in the global security held through such participants or
indirect participants will be governed by standing instructions and customary
practices and will be the responsibility of such participants or indirect
participants. We will not have any responsibility or liability for any aspect of
the records relating to, or payments made on account of, beneficial ownership
interests in the global security for any note or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests or for any
other aspect of the relationship between DTC and its participants or indirect
participants or the relationship between such participants or indirect
participants and the owners of beneficial interests in the global security
owning through such participants.
Transfers between participants in DTC will be effected in the ordinary way
in accordance with DTC rules and will be settled in same-day funds.
DTC has advised us that it will take any action permitted to be taken by a
holder of notes only at the direction of one or more participants to whose
account the DTC interests in the global security is credited and only in respect
of such portion of the aggregate principal amount of notes as to which such
participant or participants has or have given such direction. However, if DTC
notifies us that they are unwilling to be a depository for the global security
or ceases to be a clearing agency or there is an event of default under the
notes, DTC will exchange the global security for certificated securities which
it will distribute to its participants and which will be legended, if required.
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in the global security among participants of
DTC, they are under no obligation to perform or continue to perform such
procedures, and such procedures may be discontinued at any time. Neither we nor
the trustee will have any responsibility or liability for the performance by DTC
or the participants or indirect participants of their respective obligations
under the rules and procedures governing their respective operations.
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DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, no par value per share, and 5,882,352 shares of preferred stock, par
value $.0001 per share.
As of July 17, 2001, there were 34,518,240 shares of common stock
outstanding, held of record by approximately 6,300 shareholders. The holders of
common stock are entitled to one vote per share on all matters to be voted upon
by the shareholders. Subject to preferences that may be applicable to any
outstanding preferred stock, the holders of common stock are entitled to receive
ratably dividends, if any, as may be declared from time to time by our board of
directors out of funds legally available. In the event of our liquidation,
dissolution or winding up, the holders of common stock are entitled to share
ratably in assets remaining after payment of liabilities, subject to prior
distribution rights of preferred stock, if any, then outstanding. The common
stock has no preemptive or conversion rights or other subscription rights. There
are no redemption or sinking fund provisions applicable to the common stock. All
outstanding shares of common stock are fully paid and non-assessable, and the
shares of common stock to be issued upon completion of any offering will be
fully paid and non-assessable.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
This section summarizes some of the U.S. federal income tax considerations
relating to the purchase, ownership, and disposition of the notes and of the
common stock into which the notes may be converted. This summary does not
provide a complete analysis of all potential tax considerations. The information
provided below is based on existing authorities. These authorities may change,
or the Internal Revenue Service (the "IRS") might interpret the existing
authorities differently. In either case, the tax consequences of purchasing,
owning or disposing of notes or common stock could differ from those described
below. The summary generally applies only to "U.S. Holders" that purchase notes
in the offering at their issue price and hold the notes or common stock as
"capital assets" (generally, for investment). For this purpose, U.S. Holders
include individual citizens or residents of the United States and corporations
(or entities treated as corporations for U.S. federal income tax purposes)
organized under the laws of the United States or any state or the District of
Columbia. Trusts are U.S. Holders if they are subject to the primary supervision
of a U.S. court and the control of one of more U.S. persons with respect to
substantial trust decisions. An estate is a U.S. holder if the income of the
estate is subject to U.S. federal income taxation regardless of the source of
the income. Special rules apply to nonresident alien individuals and foreign
corporations, estates or trusts ("Non-U.S. Holders"). This summary describes
some, but not all, of these special rules. The tax treatment of a holder of
notes or common stock may vary depending on such holder's particular situation.
This summary does not address all of the tax consequences that may be relevant
to you in light of your particular circumstances, such as the application of the
alternative minimum tax or rules applicable to taxpayers in special
circumstances. Special rules may apply, for instance, to banks and financial
institutions, insurance companies, S-corporations, broker-dealers, tax-exempt
organizations, persons who hold notes or common stock as part of a hedge,
conversion or constructive sale transaction, straddle or other risk reduction
transaction, to persons that have a "functional currency" other than the U.S.
dollar, or to persons subject to taxation as expatriates. Furthermore, in
general, this discussion does not address the tax consequences applicable to
holders that are treated as partnerships or other pass-through entities for U.S.
federal income tax purposes. This summary is based on the U.S. federal income
tax law in effect as of the date hereof, which is subject to change, possibly on
a retroactive basis. Finally, the summary does not describe the effect of the
federal estate tax laws on U.S. Holders or the effects of any other federal or
any applicable foreign, state, or local laws.
PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE APPLICATION OF THE U.S.
FEDERAL INCOME TAX LAWS TO YOUR PARTICULAR SITUATION AND THE CONSEQUENCES OF
OTHER FEDERAL TAX LAWS, FOREIGN, STATE, OR LOCAL LAWS, AND TAX TREATIES.
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U.S. HOLDERS
TAXATION OF INTEREST
You will be required to recognize as ordinary income any interest paid or
accrued on the notes, in accordance with your regular method of accounting for
U.S. federal income tax purposes. In general, if a holder of a debt instrument
may receive payments of other than fixed periodic interest that exceed the issue
price of the instrument, the holder may be required to recognize additional
interest as "original issue discount" over the term of the instrument. We
believe that the notes will not be issued with original issue discount. If the
price of our common stock exceeds 150% of the conversion price of the notes
during a prescribed period, and certain other conditions are met regarding the
registration of the notes and common stock, we will be able to call the notes
for redemption at a price that will include an additional amount in excess of
their principal amount. The original issue discount regulations allow contingent
payments such as this to be disregarded in computing a holder's interest income
if the contingency is either "incidental" or "remote." If we exercise our
provisional redemption right, it is likely that holders of the notes would
convert them into common stock. Therefore, we believe that the possibility that
we will pay the prescribed redemption premium is remote. Our determination that
this contingency is incidental or remote is binding on holders unless they
disclose their contrary position. Any such determination, however, would not be
binding upon a taxing authority. If we pay a redemption premium in connection
with our exercise of our provisional redemption right, the premium would most
likely be treated as capital gain.
Under the terms of the notes, if a noteholder converts a note to our common
stock after the record date but prior to the interest payment date, the
noteholder is obligated to pay us funds equal to the interest payable on the
converted principal amount. The tax consequences to the noteholder of the
receipt and repayment of interest are uncertain. We believe that neither the
receipt nor the repayment should be taken into account in computing the
noteholder's taxable income. A taxing authority, however, may require the
noteholder to recognize ordinary income in an amount equal to the interest
received. In that case, the noteholder should be allowed an offsetting deduction
for the repayment. The noteholder, however, may be required to capitalize
(rather than deduct) the repaid interest payment as an addition to tax basis in
the common stock received in the conversion.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
You will generally recognize capital gain or loss if you dispose of a note
in a sale, redemption or exchange other than a conversion of the note into
common stock. Your gain or loss will equal the difference between the proceeds
received by you and your adjusted tax basis in the note. The proceeds received
by you will include the amount of any cash and the fair market value of any
other property received for the note. Your tax basis in the note will generally
equal the amount you paid for the note. The portion of any proceeds that is
attributable to accrued interest will not be taken into account in computing
your capital gain or loss. Instead, that portion will be recognized as ordinary
interest income to the extent that you have not previously included the accrued
interest in income. The gain or loss recognized by you on a disposition of the
note will be long-term capital gain or loss if you held the note for more than
one year. Long-term capital gains of individual taxpayers are generally taxed at
a maximum rate of 20 percent, or 18 percent for assets acquired after the year
2000 and held for more than five years. The deductibility of capital losses is
subject to limitation.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on converting a
note into common stock. If you receive cash in lieu of a fractional share of
stock, however, you would be treated as if you received the fractional share and
then had the fractional share redeemed for the cash. You would recognize gain or
loss equal to the difference between the cash received and that portion of your
basis in the stock attributable to the fractional share. Your aggregate basis in
the common stock will equal your adjusted basis in the note (less the basis
allocable to the fractional share). Your holding period for the stock will
include the period during which you held the note.
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DIVIDENDS ON COMMON STOCK
If, after you convert a note into common stock, we make a distribution in
respect of that stock, the distribution will be treated as a dividend, taxable
to you as ordinary income, to the extent it is paid from our current or
accumulated earnings and profits. If the distribution exceeds our current and
accumulated profits, the excess will be treated first as a tax-free return of
your investment, up to your basis in the common stock. Any remaining excess will
be treated as capital gain. If you are a U.S. corporation, you may be able to
claim a deduction equal to a portion of any dividends received.
ADJUSTMENT OF CONVERSION RATE
The terms of the notes allow for changes in the conversion price of the
notes in certain circumstances. A change in conversion price that allows
noteholders to receive more shares of common stock on conversion may increase
the noteholders' proportionate interests in our earnings and profits or assets.
In that case, the noteholders would be treated as though they received a
dividend in the form of our stock. Such a constructive stock dividend could be
taxable to the noteholders, although they would not actually receive any cash or
other property. A taxable constructive stock dividend would result, for example,
if the conversion price is adjusted to compensate noteholders for distributions
of cash or property to our shareholders. Not all changes in conversion price
that allow noteholders to receive more stock on conversion, however, increase
the noteholders' proportionate interests in the company. For instance, a change
in conversion price could simply prevent the dilution of the noteholders'
interests upon a stock split or other change in capital structure. Changes of
this type, if made by a bona fide, reasonable adjustment formula, are not
treated as constructive stock dividends. Conversely, if an event occurs that
dilutes the noteholders' interests and the conversion price is not adjusted, the
resulting increase in the proportionate interests of our shareholders could be
treated as a taxable stock dividend to them. Any taxable constructive stock
dividends resulting from a change to, or failure to change, the conversion price
would be treated like dividends paid in cash or other property. They would
result in ordinary income to the recipient, to the extent of our current or
accumulated earnings and profits, with any excess treated as a tax-free return
of capital up to the recipient's tax basis and then as capital gain.
SALE OF COMMON STOCK
You will generally recognize capital gain or loss on a sale or exchange of
common stock. Your gain or loss will equal the difference between the proceeds
received by you and your adjusted tax basis in the stock. The proceeds received
by you will include the amount of any cash and the fair market value of any
other property received for the stock. The gain or loss recognized by you on a
sale or exchange of stock will be long-term capital gain or loss if you held the
stock for more than one year. In the case of individuals, long-term capital
gains are generally taxed at a maximum rate of 20 percent, or 18 percent for
assets acquired after the year 2000 and held for more than five years, while the
deductibility of capital losses is subject to limitation.
SPECIAL TAX RULES APPLICABLE TO NON-U.S. HOLDERS
The following rules apply to you if you are a Non-U.S. Holder.
TAXATION OF INTEREST
Payments of interest to nonresident persons or entities are generally
subject to U.S. federal withholding tax at a rate of 30 percent of the amount of
interest collected by means of withholding by the payor. Payments of interest on
the notes to most Non-U.S. Holders, however, will qualify as "portfolio
interest," and thus will be exempt from the withholding tax, if the holders
certify their nonresident status as described below. The portfolio interest
exception will not apply to payments of interest to you if
o you own, directly or indirectly, 10 percent or more of the total
combined voting power of all classes of our stock entitled to vote,
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o you are a "controlled foreign corporation" that is related to us.
In general, a foreign corporation is a controlled foreign corporation if
more than 50 percent of its stock is owned, directly or indirectly, by one or
more U.S. persons that each owns, directly or indirectly, 10 percent or more of
the total combined voting power of all classes of stock entitled to vote. If you
are a bank investing in the notes as an extension of credit made pursuant to a
loan agreement entered into in the ordinary course of your trade or business,
please consult your own tax advisor regarding your investment in the notes. Even
if the portfolio interest exemption does not apply, U.S. federal withholding tax
may be reduced or eliminated under an applicable treaty assuming you properly
certify your entitlement of the benefit under the treaty.
The portfolio interest exception and several of the special rules for
Non-U.S. Holders described below apply only if you certify your nonresident
status. You can meet this certification requirement by providing a Form W-8BEN
or appropriate substitute form to us, or our paying agent. If you hold the note
through a financial institution or other agent acting on your behalf, you will
be required to provide appropriate documentation to the agent. Your agent will
then be required to provide certification to us or our paying agent, either
directly or through other intermediaries. For payments made to a foreign
partnership, the certification requirements will generally apply to the partners
rather than the partnership.
SALE, EXCHANGE OR REDEMPTION OF NOTES
You generally will not be subject to U.S. federal income tax on any gain
realized on the sale, exchange, or other disposition of notes. This general
rule, however, is subject to several exceptions. For example, the gain would be
subject to U.S. federal income tax if
o the gain is effectively connected with the conduct by you of a U.S.
trade or business,
o you are a former citizen or long-term resident of the United States
subject to special rules that apply to expatriates, or
o you are an individual present in the United States for 183 days or
more in the year of such sale, exchange or disposition and certain
other requirements are met.
CONVERSION OF THE NOTES
You generally will not recognize any income, gain or loss on converting a
note into common stock.
DIVIDENDS
Dividends paid to you on common stock received on conversion of a note will
generally be subject to U.S. withholding tax at a 30 percent rate. The
withholding tax might not apply, however, or might apply at a reduced rate,
under the terms of a tax treaty between the United States and your country of
residence. In order to claim the benefits of a tax treaty, you must demonstrate
your entitlement by certifying your nonresident status and eligibility for
treaty benefits. Some of the common means of meeting this requirement are
described above under "Special Tax Rules Applicable to Non-U.S. Holders --
Taxation of Interest."
SALE OF COMMON STOCK
You will generally not be subject to U.S. federal income tax on any gain
realized on the sale, exchange, or other disposition of common stock. This
general rule, however, is subject to exceptions, some of which are described
above under "Special Tax Rules Applicable to Non-U.S. Holders -- Sale, Exchange
or Redemption of Notes."
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INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS
The preceding discussion of the tax consequences of the purchase, ownership
or disposition of notes or common stock by a Non-U.S. Holder assumes that the
holder is not engaged in a U.S. trade or business. If any interest on the notes,
dividends on common stock, or gain from the sale, exchange or other disposition
of the notes or stock is effectively connected with a U.S. trade or business
conducted by you, then the income or gain will be subject to U.S. federal income
tax at the regular graduated rates. If you are eligible for the benefits of a
tax treaty between the United States and your country of residence, any
"effectively connected" income or gain generally will be subject to U.S. federal
income tax only if it is also attributable to a permanent establishment
maintained by you in the United States. Payments of interest or dividends that
are effectively connected with a U.S. trade or business, and therefore included
in your gross income, will not be subject to the 30 percent withholding tax. To
claim this exemption from withholding, you must certify your qualification,
which can be done by filing a Form W-8ECI. If you are a foreign corporation,
your income effectively connected with a U.S. trade or business would generally
be subject to an additional "branch profits tax." The branch profits tax rate is
generally 30 percent, although an applicable tax treaty might provide for a
lower rate.
UNITED STATES REAL PROPERTY HOLDING CORPORATION STATUS
The Foreign Investment in Real Property Tax Act ("FIRPTA") rules may apply
to a sale, exchange or other disposition of notes or common stock if we are, or
were within five years before the transaction, a "United States real property
holding corporation"("USRPHC"). In general, we would be a USRPHC if interests in
U.S. real estate comprised most of our assets. We do not believe that we are a
USRPHC or that we will become one in the future. The FIRPTA rules would apply to
a disposition by you only if we otherwise were a USRPHC and (i) in the case of
common stock, you owned, directly or indirectly, more than five percent of our
common stock within five years before the disposition of the common stock and
(ii) in the case of the notes, you owned, directly or indirectly, notes which,
as of any date on which such notes were acquired by you, had a fair market value
greater than the fair market value on that date of five percent of our common
stock (or, possibly, of the regularly traded class of stock with the lowest fair
market value). If all of these conditions were met, and the FIRPTA rules applied
to the sale, exchange, or other disposition of notes or common stock by you,
then any gain recognized by you would be treated as effectively connected with a
U.S. trade or business, and would thus be subject to U.S. federal income tax.
U.S. FEDERAL ESTATE TAX
The estates of nonresident alien individuals are subject to U.S. federal
estate tax on property with a U.S. situs. The notes will not be U.S. situs
property as long as interest on the notes would have qualified as portfolio
interest (as described above under "Special Tax Rules Applicable to Non-U.S.
Holders -- Taxation of Interest") were it received by the decedent at the time
of death. Because we are a U.S. corporation, our common stock will be U.S. situs
property, and therefore will be included in the taxable estate of a nonresident
alien decedent. The U.S. federal estate tax liability of the estate of a
nonresident alien may be affected by a tax treaty between the United States and
the decedent's country of residence.
BACKUP WITHHOLDING AND INFORMATION REPORTING
The Internal Revenue Code and the Treasury regulations require those who
make specified payments to report the payments to the IRS. Among the specified
payments are interest, dividends, and proceeds paid by brokers to their
customers. The required information returns enable the IRS to determine whether
the recipient properly included the payments in income. This reporting regime is
reinforced by "backup withholding" rules. These rules require the payors to
withhold tax at the applicable backup withholding tax rate from payments subject
to information reporting if the recipient fails to cooperate with the reporting
regime, fails to provide a correct taxpayer identification number to the payor
or if the IRS or a broker informs the payor that withholding is required. The
information reporting and backup withholding rules do not apply to payments to
corporations, whether domestic or foreign. Under recently enacted legislation,
the current backup withholding rate of 31% will be reduced as of
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August 7, 2001 to 30.5%. This rate will be further reduced to 30% for years 2002
and 2003, 29% for years 2004 and 2005, and 28% for 2006 and thereafter.
If you are an individual U.S. holder of notes or common stock, payments of
interest or dividends to you will generally be subject to information reporting,
and will be subject to backup withholding unless you provide us with a correct
taxpayer identification number and neither the IRS nor a broker informs us that
withholding is required.
The backup withholding rules do not apply to payments that are subject to
the 30 percent withholding tax on dividends or interest paid to nonresidents, or
to payments that are exempt from that tax by application of a tax treaty or
special exception. Therefore, payments of dividends on common stock, or interest
on notes, will generally not be subject to backup withholding. To avoid backup
withholding on dividends, you will have to certify your nonresident status. Some
of the common means of doing so are described under "Special Rules Applicable to
Non-U.S. Holders -- Taxation of Interest." Even if certification is provided,
information reporting may still apply to payments of dividends and interest.
If you are a U.S. Holder payments made to you by a broker upon a sale of
notes or common stock will generally be subject to information reporting and
possible backup withholding. If you are a Non-U.S. Holder payments made to you
by a broker upon a sale of notes or common stock will not be subject to
information reporting or backup withholding as long as you certify your foreign
status.
Any amounts withheld from a payment to a holder of notes or common stock
under the backup withholding rules can be credited against any U.S. federal
income tax liability of the holder.
THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. YOU SHOULD CONSULT YOUR
OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL, AND FOREIGN
TAX CONSEQUENCES OF PURCHASING, HOLDING, AND DISPOSING OF OUR NOTES OR COMMON
STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the notes and the
underlying common stock offered by this prospectus. The notes and the underlying
common stock may be sold from time to time to purchasers:
o directly by the selling securityholders; or
o by the selling securityholders through underwriters, broker-dealers or
agents who may receive compensation in the form of discounts,
concessions or commissions from the selling securityholders or the
purchasers of the notes and the underlying common stock.
The selling securityholders and any such broker-dealers or agents who
participate in the distribution of the notes and the underlying common stock may
be deemed to be "underwriters." As a result, any profits on the sale of the
notes and underlying common stock by selling securityholders and any discounts,
commissions or concessions received by any such broker-dealers or agents might
be deemed to be underwriting discounts and commissions under the Securities Act.
If the selling securityholders were to be deemed underwriters, the selling
securityholders may be subject to certain statutory liabilities of, including,
but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5
under the Exchange Act.
If the notes and underlying common stock are sold through underwriters or
broker-dealers, the selling securityholders will be responsible for underwriting
discounts or commissions or agent's commissions.
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43
The notes and underlying common stock may be sold in one or more
transactions at:
o fixed prices;
o prevailing market prices at the time of sale;
o varying prices determined at the time of sale; or
o negotiated prices.
These sales may be effected in transactions:
o on any national securities exchange or quotation service on which the
notes and underlying common stock may be listed or quoted at the time
of the sale, including the Nasdaq National Market in the case of the
common stock;
o in the over-the-counter market;
o in transactions otherwise than on such exchanges or services or in the
over-the-counter market; or
o through the writing of options.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the notes and underlying common stock or
otherwise, the selling securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
notes and underlying common stock in the course of hedging their positions. The
selling securityholders may also sell the notes and underlying common stock
short and deliver notes and underlying common stock to close out short
positions, or loan or pledge notes and underlying common stock to broker-dealers
that in turn may sell the notes and underlying common stock.
To our knowledge, there are currently no plans, arrangement or
understandings between any selling securityholders and any underwriter,
broker-dealer or agent regarding the sale of the notes and the underlying common
stock by the selling securityholders. In addition, we cannot assure you that any
such selling securityholder will not transfer, devise or gift the notes and the
underlying common stock by other means not described in this prospectus.
Our common stock trades on the Nasdaq National Market under the symbol
"EMKR." We do not intend to apply for listing of the notes on any securities
exchange or for quotation through Nasdaq. Accordingly, no assurance can be given
as to the development of liquidity or any trading market for the notes. See
"Risk Factors -- A Public Market for the Notes May Not Be Maintained."
There can be no assurance that any selling securityholder will sell any or
all of the notes or underlying common stock pursuant to this prospectus. In
addition, any notes or underlying common stock covered by this prospectus that
qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be
sold under Rule 144 or Rule 144A rather than pursuant to this prospectus.
The selling securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the notes and the underlying common stock by the
selling securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the notes and the underlying common stock to engage in
market-making activities with respect to the particular notes and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
notes and the underlying
41
44
common stock and the ability of any person or entity to engage in market-making
activities with respect to the notes and the underlying common stock.
Pursuant to the registration rights agreement filed as an exhibit to this
registration statement, we and the selling securityholders will be indemnified
by the other against certain liabilities, including certain liabilities under
the Securities Act or will be entitled to contribution in connection with these
liabilities.
We have agreed to pay substantially all of the expenses incidental to the
registration, offering and sale of the notes and underlying common stock to the
public other than commissions, fees and discounts of underwriters, brokers,
dealers and agents.
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SELLING SECURITYHOLDERS
We originally issued the notes in a private placement in May 2001. The
notes were resold by the initial purchasers to qualified institutional buyers
under Rule 144A under the Securities Act. Selling securityholders may offer and
sell the notes and the underlying common stock pursuant to this prospectus.
The following table contains information as of July 19, 2001, with respect
to the selling securityholders and the principal amount of notes and the
underlying common stock beneficially owned by each selling security holder that
may be offered using this prospectus.
Principal Amount of Number of Shares
Maturity of Notes Percentage of of Common Stock Percentage of
Beneficially Owned Notes That May Be Common Stock
Name that May be Sold Outstanding Sold(1) Outstanding(2)
- ---- ------------------ ------------- ---------------- --------------
AFTRA Health Fund $ 290,000 * 5,947 *
c/o Mackay Shields
9 West 57th Street
33rd Floor
New York, NY 10019
Alpine Associates 8,000,000 4.6 164,059 *
c/o V.E.Z. Systems
120 Broadway
9th Floor, Rm. 913
New York, NY 10271
Alpine Partners, L.P. 1,250,000 * 25,634 *
120 Broadway
9th Floor, Rm. 913
New York, NY 10271
Amaranth Securities LLC 1,900,000 1.1 38,964 *
Two American Lane
Greenwich, CT 06836-2571
American Samoa Government Employees 50,000 * 1,025 *
Retirement
357 N. Canon Drive
Beverly Hills, CA 91377
Bear, Stearns & Co., Inc. 500,000 * 10,253 *
245 Park Avenue, 13th Floor
Global Fund Management
New York, NY 10167
Chrysler Corporation Master Retirement $6,140,000 3.6 125,915 *
Trust
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Delta Air Lines Master Trust 1,165,000 * 23,891 *
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Delta Pilots D & S Trust 575,000 * 11,791 *
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Mainstay Covertible Fund 4,170,000 2.4 85,515 *
c/o Mackay Shields
9 West 57th Street
33rd Floor
New York, NY 10019
Mainstay VP Covertible Portfolio 1,130,000 * 23,173 *
c/o Mackay Shields
9 West 57th Street
New York, NY 10019
Motion Picture Industry Health Plan - 410,000 * 8,408 *
Active Member Fund
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Motion Picture Industry Health Plan - 205,000 * 4,204 *
Retiree Member Fund
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
New York Life Separate Account #7 560,000 * 11,484 *
c/o Mackay Shields
9 West 57th Street
New York, NY 10019
OCM Convertible Trust 2,600,000 1.5 53,319 *
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Paloma Securities LLC 18,400,000 10.6 377,336 1.1
Two American Lane
Greenwich, CT 06836-2571
Partner Reinsurance Company Ltd. 680,000 * 13,945 *
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
Pioneer High Yield Fund 1,000,000 * 20,507 *
60 State Street
Boston, MA 02109
Spear, Leeds & Kellogg LP 1,750,000 1.0 35,887 *
120 Broadway
7th Floor
New York, NY 10271
State of Connecticut Combined 3,360,000 2.0 68,904 *
Investment Funds
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
State Employees' Retirement Fund 1,765,000 1.1 36,195 *
of the State of Delaware
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
The Estate of James Campbell 146,000 * 2,994 *
357 N. Canon Drive
Beverly Hills, CA 91377
The James Campbell Corporation 104,000 * 2,132 *
357 N. Canon Drive
Beverly Hills, CA 91377
TQA Master Fund Ltd. 2,000,000 1.2 41,014 *
405 Lexington Ave.
New York, NY 10174
TQA Master Fund Plus Ltd. 2,000,000 1.2 41,014 *
405 Lexington Ave.
New York, NY 10174
Vanguard Convertible Securities 4,400,000 2.6 90,232 *
Fund, Inc.
c/o Oaktree Capital Management, LLC
333 So. Grand Avenue, 28th Floor
Los Angeles, CA 90071
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Principal Amount of Number of Shares
Maturity of Notes Percentage of of Common Stock Percentage of
Beneficially Owned Notes That May Be Common Stock
Name that May be Sold Outstanding Sold(1) Outstanding(2)
- ---- ------------------ ------------- ---------------- --------------
White River Securities L.L.C. 500,000 * 10,253 *
245 Park Avenue, 13th Floor
Global Fund Management
New York, NY 10167
Any other holder of notes or
future transferee, pledgee, donee
or successor of any holder(3)(4)
- --------------------
* Less than 1%.
(1) Assumes conversion of all of the holder's notes at a conversion price of
$48.7629 per share of common stock. However, this conversion price will
be subject to adjustment as described under "Description of Notes --
Conversion of Notes." As a result, the amount of common stock issuable
upon conversion of the notes may increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using 34,518,240
shares of common stock outstanding as of July 17, 2001. In addition, we
treated as outstanding the number of shares of common stock issuable upon
conversion of all of that particular holder's notes. However, we did not
assume the conversion of any other holder's notes.
(3) Information about other selling security holders will be set forth in
prospectus supplements, if required.
(4) Assumes that any other holders of notes, or any future transferees,
pledgees, donees or successors of or from any such other holders of
notes, do not beneficially own any common stock other than the common
stock issuable upon conversion of the notes at the initial conversion
rate.
We prepared this table based on the information supplied to us by the
selling securityholders named in the table.
The selling securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their notes since the date on which the
information in the above table is presented. Information about the selling
securityholders may change from over time. Any changed information may be set
forth in prospectus supplements.
Because the selling securityholders may offer all or some of their notes or
the underlying common stock from time to time, we cannot estimate the amount of
the notes or underlying common stock that will be held by the selling
securityholders upon the termination of any particular offering. See "Plan of
Distribution."
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
EMCORE by White & Case LLP, who may rely upon Dillon, Bitar & Luther, New Jersey
counsel for EMCORE, as to matters of New Jersey law.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of EMCORE Corporation incorporated in this prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended September 30, 2000
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and has been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of Uniroyal Optoelectronics, LLC for the years
ended October 1, 2000 and September 26, 1999 and for the period from February
28, 1998 (date of formation) to September 27, 1998, included in this prospectus,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein, and are included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All amounts shown are estimates except
the Securities and Exchange Commission registration fee.
TO BE PAID
BY THE
REGISTRANT
------------
Securities and Exchange Commission registration fee......... $ 35,493
Nasdaq Listing Fee.......................................... 17,500
Accounting fees and expenses ............................... 6,500
Printing expenses .......................................... 2,000
Legal fees and expenses .................................... 10,000
Other expenses ............................................. 5,000
-----------
Total ...................................................... $ 76,493
===========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
EMCORE's Restated Certificate of Incorporation provides that the Company
shall indemnify its directors and officers to the full extent permitted by New
Jersey law, including in circumstances in which indemnification is otherwise
discretionary under New Jersey law.
Section 14A:2-7 of the New Jersey Business Corporation Act provides that a
New Jersey corporation's:
"certificate of incorporation may provide that a director or officer shall
not be personally liable, or shall be liable only to the extent therein
provided, to the corporation or its shareholders for damages for breach of any
duty owed to the corporation or its shareholders, except that such provision
shall not relieve a director or officer from liability for any breach of duty
based upon an act or omission (a) in breach of such person's duty of loyalty to
the corporation or its shareholders, (b) not in good faith or involving a
knowing violation of law or (c) resulting in receipt by such person of an
improper personal benefit. As used in this subsection, an act or omission in
breach of a person's duty of loyalty means an act or omission which that person
knows or believes to be contrary to the best interests of the corporation or its
shareholders in connection with a matter in which he has a material conflict of
interest."
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In addition, Section 14A:3-5 (1995) of the New Jersey Business Corporation Act
(1995) provides as follows:
INDEMNIFICATION OF DIRECTORS, OFFICERS AND EMPLOYEES
(1) As used in this section,
(a) "Corporate agent" means any person who is or was a
director, officer, employee or agent of the indemnifying corporation or
of any constituent corporation absorbed by the indemnifying corporation
in a consolidation or merger and any person who is or was a director,
officer, trustee, employee or agent of any other enterprise, serving as
such at the request of the indemnifying corporation, or of any such
constituent corporation, or the legal representative of any such
director, officer, trustee, employee or agent;
(b) "Other enterprise" means any domestic or foreign
corporation, other than the indemnifying corporation, and any
partnership, joint venture, sole proprietorship, trust or other
enterprise, whether or not for profit, served by a corporate agent;
(c) "Expenses" means reasonable costs, disbursements and
counsel fees;
(d) "Liabilities" means amounts paid or incurred in
satisfaction of settlements, judgments, fines and penalties;
(e) "Proceeding" means any pending, threatened or completed
civil, criminal, administrative or arbitrative action, suit or
proceeding, and any appeal therein and any inquiry or investigation
which could lead to such action, suit or proceeding; and
(f) References to "other enterprises" include employee benefit
plans; references to "fines" include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to
"serving at the request of the indemnifying corporation" include any
service as a corporate agent which imposes duties on, or involves
services by, the corporate agent with respect to an employee benefit
plan, its participants, or beneficiaries; and a person who acted in
good faith and in a manner the person reasonably believed to be in the
interest of the participants and beneficiaries of an employee benefit
plan shall be deemed to have acted in a manner "not opposed to the best
interests of the corporation" as referred to in this section.
(2) Any corporation organized for any purpose under any general or
special law of this State shall have the power to indemnify a corporate agent
against his expenses and liabilities in connection with any proceeding involving
the corporate agent by reason of his being or having been such a corporate
agent, other than a proceeding by or in the right of the corporation, if
(a) such corporate agent acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of
the corporation; and
(b) with respect to any criminal proceeding, such corporate
agent had no reasonable cause to believe his conduct was unlawful. The
termination of any proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, shall
not of itself create a presumption that such corporate agent did not
meet the applicable standards of conduct set forth in paragraphs
14A:3-5(2)(a) and 14A:3-5(2)(b).
(3) Any corporation organized for any purpose under any general or
special law of this State shall have the power to indemnify a corporate agent
against his expenses in connection with any proceeding by or in the right of the
corporation to procure a judgment in its favor which involves the corporate
agent by reason of his being or having been such corporate agent, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation. However, in such proceeding no
indemnification shall be provided in respect of any claim, issue or matter as to
which such corporate agent shall have been adjudged to be liable to the
corporation, unless and only to the extent that the Superior Court or the court
in which such proceeding was brought shall determine upon application that
despite the adjudication of liability, but in view of all circumstances of the
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49
case, such corporate agent is fairly and reasonably entitled to indemnity for
such expenses as the Superior Court or such other court shall deem proper.
(4) Any corporation organized for any purpose under any general or
special law of this State shall indemnify a corporate agent against expenses to
the extent that such corporate agent has been successful on the merits or
otherwise in any proceeding referred to in subsections 14A:3-5(2) and 14A:3-5(3)
or in defense of any claim, issue or matter therein.
(5) Any indemnification under subsection 14A:3-5(2) and, unless ordered
by a court, under subsection 14A:3-5(3) may be made by the corporation only as
authorized in a specific case upon a determination that indemnification is
proper in the circumstances because the corporate agent met the applicable
standard of conduct set forth in subsection 14A:3-5(2) or subsection 14A:3-5(3).
Unless otherwise provided in the certificate of incorporation or bylaws, such
determination shall be made
(a) by the board of directors or a committee thereof, acting
by a majority vote of a quorum consisting of directors who were not
parties to or otherwise involved in the proceeding; or
(b) if such a quorum is not obtainable, or, even if obtainable
and such quorum of the board of directors or committee by a majority
vote of the disinterested directors so directs, by independent legal
counsel, in a written opinion, such counsel to be designated by the
board of directors; or
(c) by the shareholders if the certificate of incorporation or
bylaws or a resolution of the board of directors or of the shareholders
so directs.
(6) Expenses incurred by a corporate agent in connection with a
proceeding may be paid by the corporation in advance of the final disposition of
the proceeding as authorized by the board of directors upon receipt of an
undertaking by or on behalf of the corporate agent to repay such amount if it
shall ultimately be determined that he is not entitled to be indemnified as
provided in this section.
(7) (a) If a corporation upon application of a corporate agent has
failed or refused to provide indemnification as required under subsection
14A:3-5(4) or permitted under subsections 14A:3-5(2), 14A:3-5(3) and 14A:3-5(6),
a corporate agent may apply to a court for an award of indemnification by the
corporation, and such court
(i) may award indemnification to the extent authorized under
subsections 14A:3-5(2) and 14A:3-5(3) and shall award indemnification
to the extent required under subsection 14A:3-5(4), notwithstanding any
contrary determination which may have been made under subsection
14A:3-5(5); and
(ii) may allow reasonable expenses to the extent authorized
by, and subject to the provisions of, subsection 14A:3-5(6), if the
court shall find that the corporate agent has by his pleadings or
during the course of the proceeding raised genuine issues of fact or
law.
(b) Application for such indemnification may be made:
(i) in the civil action in which the expenses were or are to
be incurred or other amounts were or are to be paid; or
(ii) to the Superior Court in a separate proceeding. If the
application is for indemnification arising out of a civil action, it
shall set forth reasonable cause for the failure to make application
for such relief in the action or proceeding in which the expenses were
or are to be incurred or other amounts were or are to be paid.
The application shall set forth the disposition of any previous
application for indemnification and shall be made in such manner and form as may
be required by the applicable rules of court or, in the absence thereof, by
direction of the court to which it is made. Such application shall be upon
notice to the corporation. The court may also direct that notice shall be given
at the expense of the corporation to the shareholders and such other persons as
it may designate in such manner as it may require.
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50
(8) The indemnification and advancement of expenses provided by or
granted pursuant to the other subsections of this section shall not exclude any
other rights, including the right to be indemnified against liabilities and
expenses incurred in proceedings by or in the right of the corporation, to which
a corporate agent may be entitled under a certificate of incorporation, bylaw,
agreement, vote of shareholders, or otherwise; provided that no indemnification
shall be made to or on behalf of a corporate agent if a judgment or other final
adjudication adverse to the corporate agent establishes that his acts or
omissions (a) were in breach of his duty of loyalty to the corporation or its
shareholders, as defined in subsection (3) of N.J.S.14A:2-7, (b) were not in
good faith or involved a knowing violation of law or (c) resulted in receipt by
the corporate agent of an improper personal benefit.
(9) Any corporation organized for any purpose under any general or
special law of this State shall have the power to purchase and maintain
insurance on behalf of any corporate agent against any expenses incurred in any
proceeding and any liabilities asserted against him by reason of his being or
having been a corporate agent, whether or not the corporation would have the
power to indemnify him against such expenses and liabilities under the
provisions of this section. The corporation may purchase such insurance from, or
such insurance may be reinsured in whole or in part by, an insurer owned by or
otherwise affiliated with the corporation, whether or not such insurer does
business with other insureds.
(10) The powers granted by this section may be exercised by the
corporation, notwithstanding the absence of any provision in its certificate of
incorporation or bylaws authorizing the exercise of such powers.
(11) Except as required by subsection 14A:3-5(4), no indemnification
shall be made or expenses advanced by a corporation under this section, and none
shall be ordered by a court, if such action would be inconsistent with a
provision of the certificate of incorporation, a bylaw, a resolution of the
board of directors or of the shareholders, an agreement or other proper
corporate action, in effect at the time of the accrual of the alleged cause of
action asserted in the proceeding, which prohibits, limits or otherwise
conditions the exercise of indemnification powers by the corporation or the
rights of indemnification to which a corporate agent may be entitled.
(12) This section does not limit a corporation's power to pay or
reimburse expenses incurred by a corporate agent in connection with the
corporate agent's appearance as a witness in a proceeding at a time when the
corporate agent has not been made a party to the proceeding.
ITEM 16. EXHIBITS
The following exhibits are filed with this Registration Statement:
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Restated Certificate of Incorporation, dated December
21, 2000 (incorporated by reference to Exhibit 3.1 to
the registrant's annual report on Form 10-K for the
fiscal year ended September 30, 2000).
4.2 -- Specimen certificate for shares of common stock
(incorporated by reference to Exhibit 4.1 to Amendment
No. 3 to the Registration Statement on Form S-1 (File
No. 333-18565) filed with the Commission on February 24,
1997).
4.3 -- Form of $10.20 (pre-split) Warrant (incorporated by
reference to Exhibit 10.12 to Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 333-18565)
filed with the Commission on February 6, 1997).
4.4 -- Form of $11.375 (pre-split) Warrant (incorporated by
reference to Exhibit 4.2 to the registrant's annual
report on Form 10-K for the fiscal year ended September
30, 1998).
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EXHIBIT NO. DESCRIPTION
----------- -----------
4.5 -- Registration Rights Agreement relating to September 1996
warrant issuance (incorporated by reference to Exhibit
10.6 to Amendment No. 1 to the Registration Statement on
Form S-1 (File No. 333-18565) filed with the Commission
on February 6, 1997).
4.6 -- Registration Rights Agreement relating to December 1996
warrant issuance (incorporated by reference to Exhibit
10.7 to Amendment No. 1 to the Registration Statement on
Form S-1 (File No. 333-18565) filed with the Commission
on February 6, 1997).
4.7 -- Registration Rights Agreement, dated November 30, 1998
by and between the Company, Hakuto, UMI and UTC
(incorporated by reference to Exhibit 10.16 to the
registrant's annual report on Form 10-K for the fiscal
year ended September 30, 1998).
4.8 -- Registration Rights Agreement, dated as of May 26, 1999,
by and between EMCORE Corporation and GE Capital Equity
Investments, Inc. (incorporated by reference to Exhibit
10.19 to Amendment No. 2 to the Registration Statement
on Form S-3 (File No. 333-71791) filed with the
Commission on June 9, 1999).
4.9 -- Indenture, dated as of May 7, 2001, between the Company
and Wilmington Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to the registrant's
quarterly report on Form 10-Q for the fiscal quarter
ended March 31, 2001).
4.10 -- Note, dated as of May 7, 2001, in the amount of
$175,000,000 (incorporated by reference to Exhibit 4.2
to the registrant's quarterly report on Form 10-Q for
the fiscal quarter ended March 31, 2001).
4.11 -- Amended and Restated Revolving Loan and Security
Agreement, dated as of March 1, 2001, between the
Company and First Union National Bank (incorporated by
reference to Exhibit 4.3 to the registrant's quarterly
report on Form 10-Q for the fiscal quarter ended March
31, 2001).
4.12 -- Registration Rights Agreement, dated as of May 7, 2001,
among the Company and the Credit Suisse First Boston
Corporation, on behalf of the initial purchasers
(incorporated by reference to Exhibit 10.1 to the
registrant's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 2001).
5.1 -- Opinion of White & Case LLP*
23.1 -- Consent of Deloitte & Touche LLP.*
23.2 -- Consent of Deloitte & Touche LLP.*
23.3 -- Consent of White & Case LLP (included in Exhibit 5.1).*
24.1 -- Power of Attorney (included in signature page of this
Registration Statement).*
25.1 -- Form T-1 Statement of Eligibility of Trustee for
Indenture under the Trust Indenture Act of 1939.*
99.1 -- Uniroyal Optoelectronics, LLC Financial Statements as
of October 1, 2000 and September 26, 1999, for the
Fiscal Years Ended October 1, 2000 and
September 26, 1999, for the Period February 20, 1998
(date of formation) to September 27, 1998 and for the
Period February 20, 1998 (date of formation) to
October 1, 2000 and Independent Auditors Report.*
* Filed herewith
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ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of
the Securities Act;
(b) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the registration statement;
(c) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; Provided however, that paragraphs (1)(a) and
(1)(b) do not apply if the registration statement is on Form S-3, Form
S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
(the "Exchange Act") that are incorporated by reference in the
registration statement.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each filing
of an employee benefit plan's annual report pursuant to Section 15(d) of the
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(6) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to provisions described in Item 15 or otherwise, the
registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
II-6
53
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-7
54
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Township of Somerset, State of New Jersey, on July 20, 2001.
EMCORE CORPORATION
By: /s/ Reuben F. Richards, Jr.
------------------------------------
Reuben F. Richards, Jr.
President and Chief Executive
Officer
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Reuben F. Richards, Jr. and Thomas G.
Werthan, or either or them, his attorney-in-fact, with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to sign any registration statement for the
same offering covered by this Registration Statement that is to be effective
upon filing pursuant to Rule 462(b) promulgated under the Securities Act of
1933, as amended, and all post-effective amendments thereto, and to file the
same, with all exhibits thereto and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or their substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons in
the capacities indicated, on July 20, 2001.
SIGNATURE TITLE
--------- -----
/s/ Thomas J. Russell Chairman of the Board and Director
- ---------------------------------------
Thomas J. Russell
/s/ Reuben F. Richards, Jr. President, Chief Executive Officer and Director
- --------------------------------------- (Principal Executive Officer)
Reuben F. Richards, Jr.
/s/ Thomas G. Werthan Vice President, Chief Financial Officer, and Director
- --------------------------------------- (Principal Accounting and Financial Officer)
Thomas G. Werthan
/s/ Richard A. Stall Vice President-Technology, Chief Technical
- --------------------------------------- Officer and Director
Richard A. Stall
/s/ Charles Scott Director
- ---------------------------------------
Charles Scott
/s/ Robert Louis-Dreyfus Director
- ---------------------------------------
Robert Louis-Dreyfus
/s/ Hugh H. Fenwick Director
- ---------------------------------------
Hugh H. Fenwick
/s/ Shigeo Takayama Director
- ---------------------------------------
Shigeo Takayama
/s/ John J. Hogan, Jr. Director
- ---------------------------------------
John J. Hogan, Jr.
II-8
55
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 -- Restated Certificate of Incorporation, dated December
21, 2000 (incorporated by reference to Exhibit 3.1 to
the registrant's annual report on Form 10-K for the
fiscal year ended September 30, 2000).
4.2 -- Specimen certificate for shares of common stock
(incorporated by reference to Exhibit 4.1 to Amendment
No. 3 to the Registration Statement on Form S-1 (File
No. 333-18565) filed with the Commission on February 24,
1997).
4.3 -- Form of $10.20 (pre-split) Warrant (incorporated by
reference to Exhibit 10.12 to Amendment No. 1 to the
Registration Statement on Form S-1 (File No. 333-18565)
filed with the Commission on February 6, 1997).
4.4 -- Form of $11.375 (pre-split) Warrant (incorporated by
reference to Exhibit 4.2 to the registrant's annual
report on Form 10-K for the fiscal year ended September
30, 1998).
4.5 -- Registration Rights Agreement relating to September 1996
warrant issuance (incorporated by reference to Exhibit
10.6 to Amendment No. 1 to the Registration Statement on
Form S-1 (File No. 333-18565) filed with the Commission
on February 6, 1997).
4.6 -- Registration Rights Agreement relating to December 1996
warrant issuance (incorporated by reference to Exhibit
10.7 to Amendment No. 1 to the Registration Statement on
Form S-1 (File No. 333-18565) filed with the Commission
on February 6, 1997).
4.7 -- Registration Rights Agreement, dated November 30, 1998
by and between the Company, Hakuto, UMI and UTC
(incorporated by reference to Exhibit 10.16 to the
registrant's annual report on Form 10-K for the fiscal
year ended September 30, 1998).
4.8 -- Registration Rights Agreement, dated as of May 26, 1999,
by and between EMCORE Corporation and GE Capital Equity
Investments, Inc. (incorporated by reference to Exhibit
10.19 to Amendment No. 2 to the Registration Statement
on Form S-3 (File No. 333-71791) filed with the
Commission on June 9, 1999).
4.9 -- Indenture, dated as of May 7, 2001, between the Company
and Wilmington Trust Company, as Trustee (incorporated
by reference to Exhibit 4.1 to the registrant's
quarterly report on Form 10-Q for the fiscal quarter
ended March 31, 2001).
4.10 -- Note, dated as of May 7, 2001, in the amount of
$175,000,000 (incorporated by reference to Exhibit 4.2
to the registrant's quarterly report on Form 10-Q for
the fiscal quarter ended March 31, 2001).
4.11 -- Amended and Restated Revolving Loan and Security
Agreement, dated as of March 1, 2001, between the
Company and First Union National Bank (incorporated by
reference to Exhibit 4.3 to the registrant's quarterly
report on Form 10-Q for the fiscal quarter ended March
31, 2001).
II-9
56
EXHIBIT NO. DESCRIPTION
----------- -----------
4.12 -- Registration Rights Agreement, dated as of May 7, 2001,
among the Company and the Credit Suisse First Boston
Corporation, on behalf of the initial purchasers
(incorporated by reference to Exhibit 10.1 to the
registrant's quarterly report on Form 10-Q for the
fiscal quarter ended March 31, 2001).
5.1 -- Opinion of White & Case LLP*
23.1 -- Consent of Deloitte & Touche LLP.*
23.2 -- Consent of Deloitte & Touche LLP.*
23.3 -- Consent of White & Case LLP (included in Exhibit 5.1).*
24.1 -- Power of Attorney (included in signature page of this
Registration Statement).*
25.1 -- Form T-1 Statement of Eligibility of Trustee for
Indenture under the Trust Indenture Act of 1939.*
99.1 -- Uniroyal Optoelectronics, LLC Financial Statements as
of October 1, 2000 and September 26, 1999, for the
Fiscal Years Ended October 1, 2000 and
September 26, 1999, for the Period February 20, 1998
(date of formation) to September 27, 1998 and for the
Period February 20, 1998 (date of formation) to
October 1, 2000 and Independent Auditors Report.*
* Filed herewith
II-10
1
Exhibit 5.1
(WHITE & CASE LLP LETTERHEAD)
July 20, 2001
Re: The 5% Convertible Subordinated Notes Due 2006 (the "Notes")
and the Common Stock Issuable Upon Conversion of the Notes of
EMCORE Corporation
Gentlemen:
On the date hereof, EMCORE Corporation, a New Jersey corporation (the
"Company"), filed with the Securities and Exchange Commission a Registration
Statement on Form S-3 (the "Registration Statement") under the Securities Act of
1933, as amended (the "Act"). The Registration Statement relates to (i) the
resale of the Notes; and (ii) the issuance of shares of the Company's common
stock, no par value (the "Common Stock"), issuable upon conversion of the Notes.
We have acted as counsel to the Company in connection with the preparation and
filing of the Registration Statement.
In connection therewith, we have examined and relied upon the original
or a copy, certified to our satisfaction, of (i) the Articles of Incorporation
and the Bylaws of the Company; (ii) resolutions of the Board of Directors of the
Company authorizing the offering and related matters; (iii) the Registration
Statement and exhibits thereto; and (iv) such other documents and instruments as
we have deemed necessary or appropriate for the expression of the opinion herein
contained. In making the foregoing examinations, we have assumed the genuineness
of all signatures and the authenticity of all documents submitted to us as
originals, and the conformity to original documents of all documents submitted
to us as certified or photostatic copies. As to various questions of fact
material to this opinion, we have relied, to the extent we deem reasonably
appropriate, upon representations or certificates of officers or directors of
the Company and upon documents, records and instruments furnished to us by the
Company, without independently checking or verifying the accuracy of such
documents, records and instruments.
Based upon the foregoing examination, we are of the opinion that (i)
the Notes have been duly authorized for issuance by the Company and the
Indenture filed as Exhibit 4.9 to the Registration Statement has been duly
executed and delivered by the parties thereto; (ii) the Notes are duly executed,
authenticated, issued and delivered in accordance with such Indenture; (iii) the
Notes are legally issued and constitute valid and legally binding obligations of
the Company subject to bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity;
and (iv) the shares of Common Stock issuable upon conversion of the Notes have
been duly and validly authorized and, when issued upon conversion of the Notes
in accordance with the terms of the Indenture, will be validly issued, fully
paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving such consent, we do not admit that we come within the category of persons
whose consent is required by Section 7 of the Act or the rules and regulations
of the Commission hereunder.
Sincerely
WHITE & CASE LLP
1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
EMCORE Corporation on Form S-3 of our report dated November 15, 2000, appearing
in the Annual Report on Form 10-K of EMCORE Corporation for the year ended
September 30, 2000, and to the reference to us under the heading "Experts" in
the Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
Parsippany, New Jersey
July 19, 2001
1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of EMCORE Corporation on
Form S-3 of our report dated December 5, 2000 (June 30, 2001 as to Note 9),
relating to the financial statements of Uniroyal Optoelectronics, LLC for the
years ended October 1, 2000 and September 26, 1999, and for the period from
February 28, 1998 (date of formation) to September 27, 1998, appearing in the
Prospectus, which is part of this Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Deloitte & Touche LLP
Tampa, Florida
July 19, 2001
1
EXHIBIT 25.1
Registration No.
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(B)(2) [X]
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
RODNEY SQUARE NORTH
1100 NORTH MARKET STREET
WILMINGTON, DELAWARE 19890
(Address of principal executive offices)
CYNTHIA L. CORLISS
VICE PRESIDENT AND TRUST COUNSEL
WILMINGTON TRUST COMPANY
RODNEY SQUARE NORTH
WILMINGTON, DELAWARE 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
EMCORE CORPORATION
(Exact name of obligor as specified in its charter)
NEW JERSEY 22-2746503
(State of incorporation) (I.R.S. employer identification no.)
145 BELMONT DRIVE
SOMERSET, NEW JERSEY 08873
(Address of principal executive offices) (Zip Code)
5% CONVERTIBLE SENIOR NOTES DUE 2006
(Title of the indenture securities)
- --------------------------------------------------------------------------------
2
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the trustee and
upon information furnished by the obligor, the obligor is not an affiliate of
the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of Eligibility
and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which includes the
certificate of authority of Wilmington Trust Company to commence
business and the authorization of Wilmington Trust Company to exercise
corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b) of Trust
Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 12th day
of June, 2001.
WILMINGTON TRUST COMPANY
[SEAL]
Attest: /s/ Anita E. Dallago By: /s/ James P. Lawler
---------------------------- ------------------------------------
Assistant Secretary Name: James P. Lawler
Title: Vice President
3
EXHIBIT A
AMENDED CHARTER
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON MAY 9, 1987
4
AMENDED CHARTER
OR
ACT OF INCORPORATION
OF
WILMINGTON TRUST COMPANY
WILMINGTON TRUST COMPANY, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "WILMINGTON TRUST COMPANY" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
FIRST: - The name of this corporation is WILMINGTON TRUST COMPANY.
SECOND: - The location of its principal office in the State of Delaware
is at Rodney Square North, in the City of Wilmington, County of New
Castle; the name of its resident agent is WILMINGTON TRUST COMPANY
whose address is Rodney Square North, in said City. In addition to such
principal office, the said corporation maintains and operates branch
offices in the City of Newark, New Castle County, Delaware, the Town of
Newport, New Castle County, Delaware, at Claymont, New Castle County,
Delaware, at Greenville, New Castle County Delaware, and at Milford
Cross Roads, New Castle County, Delaware, and shall be empowered to
open, maintain and operate branch offices at Ninth and Shipley Streets,
418 Delaware Avenue, 2120 Market Street, and 3605 Market Street, all in
the City of Wilmington, New Castle County, Delaware, and such other
branch offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
THIRD: - (a) The nature of the business and the objects and purposes
proposed to be transacted, promoted or carried on by this Corporation
are to do any or all of the things herein mentioned as fully and to the
same extent as natural persons might or could do and in any part of the
world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter the
seal at pleasure, to hold, purchase, convey, mortgage or
otherwise deal in real and personal estate and property, and
to appoint such officers and agents as the business of the
Corporation shall require, to make by-laws not inconsistent
with the Constitution or laws of the United States or of this
State, to discount bills, notes or other evidences of debt, to
receive deposits of money, or securities for money, to buy
gold and silver bullion and foreign coins, to buy and sell
bills of exchange, and generally to use, exercise and enjoy
all the powers, rights, privileges and franchises incident to
a corporation which are proper or necessary for the
transaction of the business of the Corporation hereby created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or claims,
adverse to his interest therein, and to prepare and give
certificates of title for any lands or premises in the State
of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all
-4-
5
descriptions, and to prepare and execute all papers which may
be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds, leases,
conveyances, mortgages, bonds and legal papers of every
description, and to carry on the business of conveyancing in
all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property of
every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other persons
and individuals, and from all corporations whether state,
municipal, corporate or private, and to rent boxes, safes,
vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage, bond
or other instrument issued by any state, municipality, body
politic, corporation, association or person, either alone or
in conjunction with any other person or persons, corporation
or corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any trust,
office, duty, contract or agreement, either by itself or in
conjunction with any other person, or persons, corporation, or
corporations, or in like manner become surety upon any bond,
recognizance, obligation, judgment, suit, order, or decree to
be entered in any court of record within the State of Delaware
or elsewhere, or which may now or hereafter be required by any
law, judge, officer or court in the State of Delaware or
elsewhere.
(9) To act by any and every method of appointment as trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian, bailee, or in
any other trust capacity in the receiving, holding, managing,
and disposing of any and all estates and property, real,
personal or mixed, and to be appointed as such trustee,
trustee in bankruptcy, receiver, assignee, assignee in
bankruptcy, executor, administrator, guardian or bailee by any
persons, corporations, court, officer, or authority, in the
State of Delaware or elsewhere; and whenever this Corporation
is so appointed by any person, corporation, court, officer or
authority such trustee, trustee in bankruptcy, receiver,
assignee, assignee in bankruptcy, executor, administrator,
guardian, bailee, or in any other trust capacity, it shall not
be required to give bond with surety, but its capital stock
shall be taken and held as security for the performance of the
duties devolving upon it by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or be
called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to receive
a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to receive,
collect, receipt for, and dispose of interest, dividends and
income upon and from any of the bonds, mortgages, debentures,
notes, shares of capital stock,
-5-
6
securities, obligations, contracts, evidences of indebtedness
and other property held and owned by it, and to exercise in
respect of all such bonds, mortgages, debentures, notes,
shares of capital stock, securities, obligations, contracts,
evidences of indebtedness and other property, any and all the
rights, powers and privileges of individual owners thereof,
including the right to vote thereon; to invest and deal in and
with any of the moneys of the Corporation upon such securities
and in such manner as it may think fit and proper, and from
time to time to vary or realize such investments; to issue
bonds and secure the same by pledges or deeds of trust or
mortgages of or upon the whole or any part of the property
held or owned by the Corporation, and to sell and pledge such
bonds, as and when the Board of Directors shall determine, and
in the promotion of its said corporate business of investment
and to the extent authorized by law, to lease, purchase, hold,
sell, assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers conferred
by the laws of the State of Delaware, it is hereby expressly provided
that the said Corporation shall also have the following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and franchises
and to undertake the whole or any part of the assets and
liabilities of any person, firm, association or corporation,
and to pay for the same in cash, stock of this Corporation,
bonds or otherwise; to hold or in any manner to dispose of the
whole or any part of the property so purchased; to conduct in
any lawful manner the whole or any part of any business so
acquired, and to exercise all the powers necessary or
convenient in and about the conduct and management of such
business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or corporation,
and, without limit as to amount, to draw, make, accept,
endorse, discount, execute and issue promissory notes, drafts,
bills of exchange, warrants, bonds, debentures, and other
negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of its
operations and businesses, without restriction to the same
extent as natural persons might or could do, to purchase or
otherwise acquire, to hold, own, to mortgage, sell, convey or
otherwise dispose of, real and personal property, of every
class and description, in any State, District, Territory or
Colony of the United States, and in any foreign country or
place.
(6) It is the intention that the objects, purposes and powers
specified and clauses contained in this paragraph shall
(except where otherwise expressed in said paragraph) be nowise
limited or restricted by reference to or inference from the
terms of any other clause of this or any other paragraph in
this charter, but that the objects, purposes and powers
specified in each of the clauses of this paragraph shall be
regarded as independent objects, purposes and powers.
FOURTH: - (a) The total number of shares of all classes of stock which
the Corporation shall have authority to issue is forty-one million
(41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as "Preferred
Stock"); and
-6-
7
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in one or
more series as may from time to time be determined by the Board of
Directors each of said series to be distinctly designated. All shares
of any one series of Preferred Stock shall be alike in every
particular, except that there may be different dates from which
dividends, if any, thereon shall be cumulative, if made cumulative. The
voting powers and the preferences and relative, participating, optional
and other special rights of each such series, and the qualifications,
limitations or restrictions thereof, if any, may differ from those of
any and all other series at any time outstanding; and, subject to the
provisions of subparagraph 1 of Paragraph (c) of this Article Fourth,
the Board of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock, the
voting powers and the designations, preferences and relative, optional
and other special rights, and the qualifications, limitations and
restrictions of such series, including, but without limiting the
generality of the foregoing, the following:
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the number
of shares thereof then outstanding) from time to time by like
action of the Board of Directors;
(2) The rate and times at which, and the terms and conditions
on which, dividends, if any, on Preferred Stock of such series
shall be paid, the extent of the preference or relation, if
any, of such dividends to the dividends payable on any other
class or classes, or series of the same or other class of
stock and whether such dividends shall be cumulative or
non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same for,
shares of any other class or classes or of any series of the
same or any other class or classes of stock of the Corporation
and the terms and conditions of such conversion or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices and
the time or times at which, and the terms and conditions on
which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the generality
of the foregoing include the right, voting as a series or by
itself or together with other series of Preferred Stock or all
series of Preferred Stock as a class, to elect one or more
directors of the Corporation if there shall have been a
default in the payment of dividends on any one or more series
of Preferred Stock or under such circumstances and on such
conditions as the Board of Directors may determine.
(c) (1) After the requirements with respect to preferential dividends
on the Preferred Stock (fixed in accordance with the provisions of
section (b) of this Article Fourth), if any, shall have been met and
after the Corporation shall have complied with all the requirements, if
any, with respect to the setting aside of sums as sinking funds or
redemption or purchase accounts (fixed in accordance with the
provisions of section (b) of this Article Fourth), and subject further
to any conditions which may be
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fixed in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to time
by the Board of Directors.
(2) After distribution in full of the preferential amount, if
any, (fixed in accordance with the provisions of section (b)
of this Article Fourth), to be distributed to the holders of
Preferred Stock in the event of voluntary or involuntary
liquidation, distribution or sale of assets, dissolution or
winding-up, of the Corporation, the holders of the Common
Stock shall be entitled to receive all of the remaining assets
of the Corporation, tangible and intangible, of whatever kind
available for distribution to stockholders ratably in
proportion to the number of shares of Common Stock held by
them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be adopted
by the Board of Directors pursuant to section (b) of this
Article Fourth, each holder of Common Stock shall have one
vote in respect of each share of Common Stock held on all
matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock or
of options, warrants or other rights to purchase shares of any class or
series of stock or of other securities of the Corporation shall have
any preemptive right to purchase or subscribe for any unissued stock of
any class or series or any additional shares of any class or series to
be issued by reason of any increase of the authorized capital stock of
the Corporation of any class or series, or bonds, certificates of
indebtedness, debentures or other securities convertible into or
exchangeable for stock of the Corporation of any class or series, or
carrying any right to purchase stock of any class or series, but any
such unissued stock, additional authorized issue of shares of any class
or series of stock or securities convertible into or exchangeable for
stock, or carrying any right to purchase stock, may be issued and
disposed of pursuant to resolution of the Board of Directors to such
persons, firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board of
Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case, be
as fixed from time to time by the Board of Directors in the resolution
or resolutions adopted pursuant to authority granted in section (b) of
this Article Fourth and the consent, by class or series vote or
otherwise, of the holders of such of the series of Preferred Stock as
are from time to time outstanding shall not be required for the
issuance by the Board of Directors of any other series of Preferred
Stock whether or not the powers, preferences and rights of such other
series shall be fixed by the Board of Directors as senior to, or on a
parity with, the powers, preferences and rights of such outstanding
series, or any of them; provided, however, that the Board of Directors
may provide in the resolution or resolutions as to any series of
Preferred Stock adopted pursuant to section (b) of this Article Fourth
that the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of such
series voting thereon shall be required for the issuance of any or all
other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series of
Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and for
such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the Board
of Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(h) The authorized amount of shares of Common Stock and of Preferred
Stock may, without a class or series vote, be increased or decreased
from time to time by the affirmative vote of the holders of a majority
of the stock of the Corporation entitled to vote thereon.
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FIFTH: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of directors
constituting the entire Board shalL be not less than five nor more than
twenty-five as fixed from time to time by vote of a majority of the
whole Board, provided, however, that the number of directors shall not
be reduced so as to shorten the term of any director at the time in
office, and provided further, that the number of directors constituting
the whole Board shall be twenty-four until otherwise fixed by a
majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of one
class expiring each year. At the annual meeting of stockholders in
1982, directors of the first class shall be elected to hold office for
a term expiring at the next succeeding annual meeting, directors of the
second class shall be elected to hold office for a term expiring at the
second succeeding annual meeting and directors of the third class shall
be elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any reason,
and any newly created directorships resulting from any increase in the
directors, may be filled by the Board of Directors, acting by a
majority of the directors then in office, although less than a quorum,
and any directors so chosen shall hold office until the next annual
election of directors. At such election, the stockholders shall elect a
successor to such director to hold office until the next election of
the class for which such director shall have been chosen and until his
successor shall be elected and qualified. No decrease in the number of
directors shall shorten the term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and notwithstanding
the fact that some lesser percentage may be specified by law, this
Charter or Act of Incorporation or the By-Laws of the Corporation), any
director or the entire Board of Directors of the Corporation may be
removed at any time without cause, but only by the affirmative vote of
the holders of two-thirds or more of the outstanding shares of capital
stock of the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a meeting
of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the Board
of Directors or by any stockholder entitled to vote for the election of
directors. Such nominations shall be made by notice in writing,
delivered or mailed by first class United States mail, postage prepaid,
to the Secretary of the Corporation not less than 14 days nor more than
50 days prior to any meeting of the stockholders called for the
election of directors; provided, however, that if less than 21 days'
notice of the meeting is given to stockholders, such written notice
shall be delivered or mailed, as prescribed, to the Secretary of the
Corporation not later than the close of the seventh day following the
day on which notice of the meeting was mailed to stockholders. Notice
of nominations which are proposed by the Board of Directors shall be
given by the Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name, age,
business address and, if known, residence address of each nominee
proposed in such notice, (ii) the principal occupation or employment of
such nominee and (iii) the number of shares of stock of the Corporation
which are beneficially owned by each such nominee.
(f) The Chairman of the meeting may, if the facts warrant, determine
and declare to the meeting that a nomination was not made in accordance
with the foregoing procedure, and if he should so determine, he shall
so declare to the meeting and the defective nomination shall be
disregarded.
(g) No action required to be taken or which may be taken at any annual
or special meeting of stockholders of the Corporation may be taken
without a meeting, and the power of stockholders to consent in writing,
without a meeting, to the taking of any action is specifically denied.
SIXTH: - The Directors shall choose such officers, agents and servants
as may be provided in the By-Laws as they may from time to time find
necessary or proper.
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SEVENTH: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
EIGHTH: - This Act shall be deemed and taken to be a private Act.
NINTH: - This Corporation is to have perpetual existence.
TENTH: - The Board of Directors, by resolution passed by a majority of
the whole Board, may designate any of their number to constitute an
Executive Committee, which Committee, to the extent provided in said
resolution, or in the By-Laws of the Company, shall have and may
exercise all of the powers of the Board of Directors in the management
of the business and affairs of the Corporation, and shall have power to
authorize the seal of the Corporation to be affixed to all papers which
may require it.
ELEVENTH: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
TWELFTH: - The Corporation may transact business in any part of the
world.
THIRTEENTH: - The Board of Directors of the Corporation is expressly
authorized to make, alter or repeal the By-Laws of the Corporation by a
vote of the majority of the entire Board. The stockholders may make,
alter or repeal any By-Law whether or not adopted by them, provided
however, that any such additional By-Laws, alterations or repeal may be
adopted only by the affirmative vote of the holders of two-thirds or
more of the outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (considered for
this purpose as one class).
FOURTEENTH: - Meetings of the Directors may be held outside of the
State of Delaware at such places as may be from time to time designated
by the Board, and the Directors may keep the books of the Company
outside of the State of Delaware at such places as may be from time to
time designated by them.
FIFTEENTH: - (a) (1) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and (c)
of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation, would
be an Affiliate (as hereinafter defined) of an Interested
Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair market
value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities or
other property (or a combination thereof) having an aggregate
fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any reverse
stock split), or recapitalization of the Corporation, or any
merger or consolidation of the Corporation with any of its
Subsidiaries
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or any similar transaction (whether or not with or into or
otherwise involving an Interested Stockholder) which has the
effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of
equity or convertible securities of the Corporation or any
Subsidiary which is directly or indirectly owned by any
Interested Stockholder, or any Affiliate of any Interested
Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares"). Such affirmative vote shall be
required notwithstanding the fact that no vote may be required, or that some
lesser percentage may be specified, by law or in any agreement with any national
securities exchange or otherwise.
(2) The term "business combination" as used in this Article
Fifteenth shall mean any transaction which is referred to in
any one or more of clauses (A) through (E) of paragraph 1 of
the section (a).
(b) The provisions of section (a) of this Article Fifteenth shall not
be applicable to any particular business combination and such business
combination shall require only such affirmative vote as is required by
law and any other provisions of the Charter or Act of Incorporation or
By-Laws if such business combination has been approved by a majority of
the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual, firm, corporation or
other entity.
(2) "Interested Stockholder" shall mean, in respect of any
business combination, any person (other than the Corporation
or any Subsidiary) who or which as of the record date for the
determination of stockholders entitled to notice of and to
vote on such business combination, or immediately prior to the
consummation of any such transaction:
(A) is the beneficial owner, directly or indirectly,
of more than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any
time within two years prior thereto was the
beneficial owner, directly or indirectly, of not less
than 10% of the then outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in
any share of capital stock of the Corporation which
were at any time within two years prior thereto
beneficially owned by any Interested Stockholder, and
such assignment or succession shall have occurred in
the course of a transaction or series of transactions
not involving a public offering within the meaning of
the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting
Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter defined) beneficially own,
directly or indirectly, or
(B) which such person or any of its Affiliates or
Associates has (i) the right to acquire (whether such
right is exercisable immediately or only after the
passage of time), pursuant to any agreement,
arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrants or
options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or
understanding, or
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(C) which are beneficially owned, directly or
indirectly, by any other person with which such first
mentioned person or any of its Affiliates or
Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding,
voting or disposing of any shares of capital stock of
the Corporation.
(4) The outstanding Voting Shares shall include shares deemed
owned through application of paragraph (3) above but shall not
include any other Voting Shares which may be issuable pursuant
to any agreement, or upon exercise of conversion rights,
warrants or options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective
meanings given those terms in Rule 12b-2 of the General Rules
and Regulations under the Securities Exchange Act of 1934, as
in effect on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a
majority of any class of equity security (as defined in Rule
3a11-1 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as in effect on December 31,
1981) is owned, directly or indirectly, by the Corporation;
provided, however, that for the purposes of the definition of
Investment Stockholder set forth in paragraph (2) of this
section (c), the term "Subsidiary" shall mean only a
corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty to
determine for the purposes of this Article Fifteenth on the basis of
information known to them, (1) the number of Voting Shares beneficially
owned by any person (2) whether a person is an Affiliate or Associate
of another, (3) whether a person has an agreement, arrangement or
understanding with another as to the matters referred to in paragraph
(3) of section (c), or (4) whether the assets subject to any business
combination or the consideration received for the issuance or transfer
of securities by the Corporation, or any Subsidiary has an aggregate
fair market value of $1,000,000 or more.
(e) Nothing contained in this Article Fifteenth shall be construed to
relieve any Interested Stockholder from any fiduciary obligation
imposed by law.
SIXTEENTH: Notwithstanding any other provision of this Charter or Act
of Incorporation or the By-Laws of the Corporation (and in addition to
any other vote that may be required by law, this Charter or Act of
Incorporation by the By-Laws), the affirmative vote of the holders of
at least two-thirds of the outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors
(considered for this purpose as one class) shall be required to amend,
alter or repeal any provision of Articles Fifth, Thirteenth, Fifteenth
or Sixteenth of this Charter or Act of Incorporation.
SEVENTEENTH: (a) a Director of this Corporation shall not be liable to
the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a Director, except to the extent such exemption from
liability or limitation thereof is not permitted under the Delaware
General Corporation Laws as the same exists or may hereafter be
amended.
(b) Any repeal or modification of the foregoing paragraph shall not
adversely affect any right or protection of a Director of the
Corporation existing hereunder with respect to any act or omission
occurring prior to the time of such repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
AS EXISTING ON FEBRUARY 20, 2000
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BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
STOCKHOLDERS' MEETINGS
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at any
time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be given by
mailing to each stockholder at least ten (10) days before said meeting, at his
last known address, a written or printed notice fixing the time and place of
such meeting.
Section 4. A majority in the amount of the capital stock of the Company
issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each share of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
DIRECTORS
Section 1. The authorized number of directors that shall constitute the
Board of Directors shall be fixed from time to time by or pursuant to a
resolution passed by a majority of the Board within the parameters set by the
Charter of the Bank. No more than two directors may also be employees of the
Company or any affiliate thereof.
Section 2. Except as provided in these Bylaws or as otherwise required
by law, there shall be no qualifications for election or service as directors of
the Company. In addition to any other provisions of these Bylaws, to be
qualified for nomination for Election or appointment to the Board of Directors
each person must have not attained the age of sixty nine years at the time of
such election or appointment, provided however, the Nominating and Corporate
Governance Committee may waive such qualification as to a particular candidate
otherwise qualified to serve as a director upon a good faith determination by
such committee that such a waiver is in the best interests of the Company and
its stockholders. The Chairman of the Board of Directors shall not be qualified
to continue to serve as a director upon the termination of his or her service in
that office for any reason.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed and
conducted by the Board of Directors.
Section 5. The Board of Directors shall meet at the principal office of
the Company or elsewhere in its discretion at such times to be determined by a
majority of its members, or at the call of the Chairman of the Board of
Directors or the President.
Section 6. Special meetings of the Board of Directors may be called at
any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
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Section 7. A majority of the directors elected and qualified shall be
necessary to constitute a quorum for the transaction of business at any meeting
of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of any
special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal, inability
to act, or disqualification of any director, the Board of Directors, although
less than a quorum, shall have the right to elect the successor who shall hold
office for the remainder of the full term of the class of directors in which the
vacancy occurred, and until such director's successor shall have been duly
elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be in
charge of such of the departments or divisions of the Company as it may deem
advisable.
ARTICLE III
COMMITTEES
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not more than
nine members who shall be selected by the Board of Directors from its own
members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers of the
Board of Directors when it is not in session to transact all business for and in
behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal office
of the Company or elsewhere in its discretion at such times to be determined by
a majority of its members, or at the call of the Chairman of the Executive
Committee or at the call of the Chairman of the Board of Directors. The majority
of its members shall be necessary to constitute a quorum for the transaction of
business. Special meetings of the Executive Committee may be held at any time
when a quorum is present.
(D) Minutes of each meeting of the Executive Committee shall
be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and superintend all
investments that may be made of the funds of the Company, and shall direct the
disposal of the same, in accordance with such rules and regulations as the Board
of Directors from time to time make.
(F) In the event of a state of disaster of sufficient severity
to prevent the conduct and management of the affairs and business of the Company
by its directors and officers as contemplated by these By-Laws any two available
members of the Executive Committee as constituted immediately prior to such
disaster shall constitute a quorum of that Committee for the full conduct and
management of the affairs and business of the
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Company in accordance with the provisions of Article III of these By-Laws; and
if less than three members of the Trust Committee is constituted immediately
prior to such disaster shall be available for the transaction of its business,
such Executive Committee shall also be empowered to exercise all of the powers
reserved to the Trust Committee under Article III Section 2 hereof. In the event
of the unavailability, at such time, of a minimum of two members of such
Executive Committee, any three available directors shall constitute the
Executive Committee for the full conduct and management of the affairs and
business of the Company in accordance with the foregoing provisions of this
Section. This By-Law shall be subject to implementation by Resolutions of the
Board of Directors presently existing or hereafter passed from time to time for
that purpose, and any provisions of these By-Laws (other than this Section) and
any resolutions which are contrary to the provisions of this Section or to the
provisions of any such implementary Resolutions shall be suspended during such a
disaster period until it shall be determined by any interim Executive Committee
acting under this section that it shall be to the advantage of the Company to
resume the conduct and management of its affairs and business under all of the
other provisions of these By-Laws.
Section 2. Audit Committee
(A) The Audit Committee shall be composed of five members who
shall be selected by the Board of Directors from its own members, none of whom
shall be an officer of the Company, and shall hold office at the pleasure of the
Board.
(B) The Audit Committee shall have general supervision over
the Audit Division in all matters however subject to the approval of the Board
of Directors; it shall consider all matters brought to its attention by the
officer in charge of the Audit Division, review all reports of examination of
the Company made by any governmental agency or such independent auditor employed
for that purpose, and make such recommendations to the Board of Directors with
respect thereto or with respect to any other matters pertaining to auditing the
Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and wherever the
majority of its members shall deem it to be proper for the transaction of its
business, and a majority of its Committee shall constitute a quorum.
Section 3. Compensation Committee
(A) The Compensation Committee shall be composed of not more
than five (5) members who shall be selected by the Board of Directors from its
own members who are not officers of the Company and who shall hold office during
the pleasure of the Board.
(B) The Compensation Committee shall in general advise upon
all matters of policy concerning the Company brought to its attention by the
management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be called at
any time by the Chairman of the Compensation Committee, the Chairman of the
Board of Directors, or the President of the Company.
Section 4. Associate Directors
(A) Any person who has served as a director may be elected by
the Board of Directors as an associate director, to serve during the pleasure of
the Board.
(B) An associate director shall be entitled to attend all
directors meetings and participate in the discussion of all matters brought to
the Board, with the exception that he would have no right to vote. An associate
director will be eligible for appointment to Committees of the Company, with the
exception of the Executive Committee, Audit Committee and Compensation
Committee, which must be comprised solely of active directors.
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Section 5. Absence or Disqualification of Any Member of a Committee
(A) In the absence or disqualification of any member of any
Committee created under Article III of the By-Laws of this Company, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member.
ARTICLE IV
OFFICERS
Section 1. The Chairman of the Board of Directors shall preside at all
meetings of the Board and shall have such further authority and powers and shall
perform such duties as the Board of Directors may from time to time confer and
direct. He shall also exercise such powers and perform such duties as may from
time to time be agreed upon between himself and the President of the Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties pertaining to
the office of the President conferred or imposed upon him by statute or assigned
to him by the Board of Directors. In the absence of the Chairman of the Board
the President shall have the powers and duties of the Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President as
designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
Section 7. The Treasurer shall have general supervision over all assets
and liabilities of the Company. He shall be custodian of and responsible for all
monies, funds and valuables of the Company and for the keeping of proper records
of the evidence of property or indebtedness and of all the transactions of the
Company. He shall have general supervision of the expenditures of the Company
and shall report to the Board of Directors at each regular meeting of the
condition of the Company, and perform such other duties as may be assigned to
him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
-17-
18
There may be one or more subordinate accounting or controller officers
however denominated, who may perform the duties of the Controller and such
duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be in
charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit Officers,
however denominated, who may perform all the duties of the Auditor and such
duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank to
all Vice Presidents with such functional titles as shall be determined from time
to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the Company
shall be those usually pertaining to their respective offices, subject to the
direction of the Board of Directors, the Executive Committee, Chairman of the
Board of Directors or the President and the officer in charge of the department
or division to which they are assigned.
ARTICLE V
STOCK AND STOCK CERTIFICATES
Section 1. Shares of stock shall be transferrable on the books of the
Company and a transfer book shall be kept in which all transfers of stock shall
be recorded.
Section 2. Certificates of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to fix
in advance a record date for the determination of the stockholders entitled to
notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
SEAL
Section 1. The corporate seal of the Company shall be in the following
form:
Between two concentric circles the words "Wilmington
Trust Company" within the inner circle the words
"Wilmington, Delaware."
-18-
19
ARTICLE VII
FISCAL YEAR
Section 1. The fiscal year of the Company shall be the calendar year.
ARTICLE VIII
EXECUTION OF INSTRUMENTS OF THE COMPANY
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
COMPENSATION OF DIRECTORS AND MEMBERS OF COMMITTEES
Section 1. Directors and associate directors of the Company, other than
salaried officers of the Company, shall be paid such reasonable honoraria or
fees for attending meetings of the Board of Directors as the Board of Directors
may from time to time determine. Directors and associate directors who serve as
members of committees, other than salaried employees of the Company, shall be
paid such reasonable honoraria or fees for services as members of committees as
the Board of Directors shall from time to time determine and directors and
associate directors may be employed by the Company for such special services as
the Board of Directors may from time to time determine and shall be paid for
such special services so performed reasonable compensation as may be determined
by the Board of Directors.
ARTICLE X
INDEMNIFICATION
Section 1. (A) The Corporation shall indemnify and hold harmless, to
the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal representative, is or was
a director, officer, employee or agent of the Corporation or is or was serving
at the request of the Corporation as a director, officer, employee, fiduciary or
agent of another corporation or of a partnership, joint venture, trust,
enterprise or non-profit entity, including service with respect to employee
benefit plans, against all liability and loss suffered and expenses reasonably
incurred by such person. The Corporation shall indemnify a person in connection
with a proceeding initiated by such person only if the proceeding was authorized
by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, PROVIDED, HOWEVER,
that the payment of expenses incurred by a Director or officer in his capacity
as a Director or officer in advance of the final disposition of the proceeding
shall be made only upon receipt of an undertaking by the Director or officer to
repay all amounts advanced if it should be ultimately determined that the
Director or officer is not entitled to be indemnified under this Article or
otherwise.
(C) If a claim for indemnification or payment of expenses,
under this Article X is not paid in full within ninety days after a written
claim therefor has been received by the Corporation the claimant may file suit
to recover the unpaid amount of such claim and, if successful in whole or in
part, shall be entitled to be paid the
-19-
20
expense of prosecuting such claim. In any such action the Corporation shall have
the burden of proving that the claimant was not entitled to the requested
indemnification of payment of expenses under applicable law.
(D) The rights conferred on any person by this Article X shall
not be exclusive of any other rights which such person may have or hereafter
acquire under any statute, provision of the Charter or Act of Incorporation,
these By-Laws, agreement, vote of stockholders or disinterested Directors or
otherwise.
(E) Any repeal or modification of the foregoing provisions of
this Article X shall not adversely affect any right or protection hereunder of
any person in respect of any act or omission occurring prior to the time of such
repeal or modification.
ARTICLE XI
AMENDMENTS TO THE BY-LAWS
Section 1. These By-Laws may be altered, amended or repealed, in whole
or in part, and any new By-Law or By-Laws adopted at any regular or special
meeting of the Board of Directors by a vote of the majority of all the members
of the Board of Directors then in office.
-20-
21
EXHIBIT C
SECTION 321(b) CONSENT
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: June 12, 2001 By: /s/ James P. Lawler
-------------------------------------
Name: James P. Lawler
Title: Vice President
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22
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has not
been approved by any state banking authorities. Refer to your
appropriate state banking authorities for your state
publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business on March 31, 2001.
------------
ASSETS
Thousands of dollars
--------------------
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins 195,465
Interest-bearing balances 0
Held-to-maturity securities 17,881
Available-for-sale securities 1,294,541
Federal funds sold and securities purchased under agreements to resell 505,993
Loans and lease financing receivables:
Loans and leases, net of unearned income 4,687,583
LESS: Allowance for loan and lease losses 70,510
LESS: Allocated transfer risk reserve 0
Loans and leases, net of unearned income, allowance, and reserve 4,617,073
Assets held in trading accounts 0
Premises and fixed assets (including capitalized leases) 127,356
Other real estate owned 523
Investments in unconsolidated subsidiaries and associated companies 1,748
Customers' liability to this bank on acceptances outstanding 0
Intangible assets:
a. Goodwill 249
b. Other intangible assets 4,883
Other assets 161,175
Total assets 6,926,887
CONTINUED ON NEXT PAGE
-22-
23
LIABILITIES
Deposits:
In domestic offices 5,420,816
Noninterest-bearing 1,004,202
Interest-bearing 4,416,614
Federal funds purchased and Securities sold under agreements to repurchase 247,037
Trading liabilities (from Schedule RC-D) 0
Other borrowed money (includes mortgage indebtedness and obligations under
capitalized leases: 631,250
Bank's liability on acceptances executed and outstanding 0
Subordinated notes and debentures 0
Other liabilities (from Schedule RC-G) 117,530
Total liabilities 6,416,633
EQUITY CAPITAL
Perpetual preferred stock and related surplus 0
Common Stock 500
Surplus (exclude all surplus related to preferred stock) 62,118
a. Retained earnings 440,962
b. Accumulated other comprehensive income 6,674
Total equity capital 510,254
Total liabilities, limited-life preferred stock, and equity capital 6,926,887
-23-
1
Exhibit 99.1
UNIROYAL OPTOELECTRONICS, LLC
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS AS OF OCTOBER 1, 2000 AND SEPTEMBER 26, 1999, FOR THE
FISCAL YEARS ENDED OCTOBER 1, 2000 AND SEPTEMBER 26, 1999, FOR THE PERIOD
FEBRUARY 20, 1998 (DATE OF FORMATION) TO SEPTEMBER 27, 1998 AND FOR THE PERIOD
FEBRUARY 20, 1998 (DATE OF FORMATION) TO OCTOBER 1, 2000 AND INDEPENDENT
AUDITORS' REPORT.
2
FINANCIAL STATEMENTS
INDEX TO FINANCIAL STATEMENTS
Financial Statements as of October 1, 2000 and September 26, 1999, for the Years
Ended October 1, 2000 and September 26, 1999, for the Period February 20, 1998
(date of formation) to September 27, 1998 and for the Period February 20, 1998
(date of formation) to October 1, 2000
Independent Auditors' Report F-2
Balance Sheets as of October 1, 2000 and September 26, 1999 F-3
Statements of Operations for the Years Ended October 1, 2000 and September 26, 1999,
for the Period February 20, 1998 (date of formation) to September 27, 1998 and for the
Period February 20, 1998 (date of formation) to October 1, 2000 F-4
Statements of Changes in Members' Equity for the Years Ended October 1, 2000 and
September 26, 1999, and for the Period February 20, 1998 (date of formation) to
September 27, 1998 F-5
Statements of Cash Flows for the Years Ended October 1, 2000 and September 26, 1999,
for the Period February 20, 1998 (date of formation) to September 27, 1998 and for the
Period February 20, 1998 (date of formation) to October 1, 2000 F-6
Notes to Financial Statements F-7
F-1
3
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
Uniroyal Optoelectronics, LLC:
We have audited the accompanying balance sheets of Uniroyal Optoelectronics, LLC
(a development stage company, (the "Company") as of October 1, 2000 and
September 26, 1999, the related statements of operations and of cash flows for
the years ended October 1, 2000 and September 26, 1999, for the period February
28, 1998 (date of formation) to September 27, 1998, and for the period February
20, 1998 (date of formation) to October 1, 2000, and the related statements of
changes in members' equity for the years ended October 1, 2000 and September 26,
1999, and for the period February 20, 1998 (date of formation) to September 27,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of October 1, 2000 and
September 26, 1999, and the results of its operations and its cash flows for the
years ended October 1, 2000 and September 26, 1999, for the period February 20,
1998 (date of formation) to September 27, 1998, and for the period February 20,
1998 (date of formation) to October 1, 2000, in conformity with accounting
principles generally accepted in the United States of America.
The Company is in the development stage at October 1, 2000. As discussed in Note
1 to the financial statements, successful completion of the Company's
development program and, ultimately, the attainment of profitable operations is
dependent upon future events, including maintaining adequate financing to
fulfill its development activities and achieving a level of sales adequate to
support the Company's cost structure.
Deloitte and Touche LLP
Certified Public Accountants
Tampa, Florida
December 5, 2000
(June 30, 2001 as to Note 9)
F-2
4
UNIROYAL OPTOELECTRONICS, LLC
(A Development Stage Company)
BALANCE SHEETS
(In thousands)
October 1, September 26,
2000 1999
---------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 470 $ 456
Trade accounts receivable 91 12
Inventories (Note 3) 2,028 448
Prepaid expenses and other current assets 304 90
Due from affiliate (Note 8) 1,233 --
-------- --------
Total current assets 4,126 1,006
Property, plant and equipment - net (Note 4) 30,748 21,434
Deposits 29 34
-------- --------
TOTAL ASSETS $ 34,903 $ 22,474
======== ========
LIABILITIES AND MEMBERS' EQUITY
Current liabilities:
Current obligations under capital leases (Note 5) $ 3,807 $ 3,345
Trade accounts payable 2,479 1,026
Accrued expenses:
Compensation and benefits 241 244
Due to affiliate (Note 8) -- 1,345
Other 135 52
-------- --------
Total current liabilities 6,662 6,012
Long-term obligations under capital leases (Note 5) 13,322 14,839
-------- --------
Total liabilities 19,984 20,851
-------- --------
Commitments and contingencies (Note 7)
Members' equity (Note 6):
Capital contributions 35,956 6,500
Deficit accumulated during the development stage (21,037) (4,877)
-------- --------
Total members' equity 14,919 1,623
-------- --------
TOTAL LIABILITIES AND MEMBERS' EQUITY $ 34,903 $ 22,474
======== ========
See notes to financial statements.
F-3
5
UNIROYAL OPTOELECTRONICS, LLC
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(In thousands)
For the Period February 20, 1998
Fiscal Year Ended (date of formation) to
----------------------------- --------------------------------
October 1, September 26, September 27, October 1,
2000 1999 1998 2000
---------- ------------- ------------- ----------
Net sales $ 1,805 $ 485 $ -- $ 2,290
Costs and expenses:
Costs of goods sold 1,744 435 -- 2,179
Selling and administrative 12,667 4,345 397 17,409
Depreciation 2,305 210 1 2,516
-------- -------- -------- --------
Loss before interest (14,911) (4,505) (398) (19,814)
Interest (expense) income - net (1,249) 33 (7) (1,223)
-------- -------- -------- --------
Net loss $(16,160) $ (4,472) $ (405) $(21,037)
======== ======== ======== ========
See notes to financial statements.
F-4
6
UNIROYAL OPTOELECTRONICS, LLC
(A Development Stage Company)
STATEMENTS OF CHANGES IN MEMBERS' EQUITY
(In thousands)
Uniroyal
Optoelectronics, Emcore Members'
Inc. Corporation Equity
---------------- ----------- --------
BALANCE AT FEBRUARY 20, 1998 $ -- $ -- $ --
Capital contributions 510 490 1,000
Net loss (207) (198) (405)
-------- -------- --------
BALANCE AT SEPTEMBER 27, 1998 303 292 595
Capital contributions -- 5,500 5,500
Net loss (2,281) (2,191) (4,472)
-------- -------- --------
BALANCE AT SEPTEMBER 26, 1999 (1,978) 3,601 1,623
Capital contributions 17,828 11,628 29,456
Net loss (8,242) (7,918) (16,160)
-------- -------- --------
BALANCE AT OCTOBER 1, 2000 $ 7,608 $ 7,311 $ 14,919
======== ======== ========
See notes to financial statements.
F-5
7
UNIROYAL OPTOELECTRONICS, LLC
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(In thousands)
For the Period February 20, 1998
Fiscal Year Ended (date of formation) to
------------------------------- --------------------------------
October 1, September 26, September 27, October 1,
2000 1999 1998 2000
---------- ------------- ------------- ----------
OPERATING ACTIVITIES:
Net loss $(16,160) $ (4,472) $ (405) $(21,037)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 2,305 210 1 2,516
Loss on disposal of fixed assets 118 -- -- 118
Changes in assets and liabilities:
Increase in trade accounts receivable (79) (12) -- (91)
Increase in inventories (1,580) (448) -- (2,028)
(Increase) decrease in prepaid expenses and
deposits (98) 1,705 (1,829) (222)
Increase in trade accounts payable 1,453 853 173 2,479
Increase in accrued expenses 80 284 12 376
(Decrease) increase in due to affiliates (2,578) (553) 1,898 (1,233)
-------- -------- -------- --------
Net cash used in operating activities (16,539) (2,433) (150) (19,122)
-------- -------- -------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (9,358) (1,105) (293) (10,756)
Proceeds from sale of fixed assets 110 -- -- 110
-------- -------- -------- --------
Net cash used in investing activities (9,248) (1,105) (293) (10,646)
-------- -------- -------- --------
FINANCING ACTIVITIES:
Capital contributions 29,456 5,500 1,000 35,956
Repayments of capital leases (3,655) (2,063) -- (5,718)
-------- -------- -------- --------
Net cash provided by financing activities 25,801 3,437 1,000 30,238
-------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents 14 (101) 557 470
Cash and cash equivalents at beginning of period 456 557 -- --
-------- -------- -------- --------
Cash and cash equivalents at end of period $ 470 $ 456 $ 557 $ 470
======== ======== ======== ========
Supplemental Disclosures:
Interest payments (net of capitalized interest) were approximately $1,344,000
for the year ended October 1, 2000. There were no payments of interest expense
(net of capitalized interest) for the year ended September 26, 1999 or for the
period February 20, 1998 (date of formation) to September 27, 1998.
Purchases of property, plant and equipment and financing activities for the
fiscal years ended October 1, 2000 and September 26, 1999 do not include
$2,600,000 and $18,450,000, respectively, related to property acquired under
capitalized leases. There were no purchases of property, plant and equipment
under capitalized leases during the period February 20, 1998 (date of formation)
to September 27, 1998.
See notes to financial statements.
F-6
8
UNIROYAL OPTOELECTRONICS, LLC
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
For the Fiscal Years Ended October 1, 2000 and September 26, 1999,
for the Period February 20, 1998 (date of formation)
to September 27, 1998 and for the Period
February 20, 1998 (date of formation) to October 1, 2000
1. THE COMPANY
Uniroyal Optoelectronics, LLC (the "Company") is in the development
stage. The Company will ultimately engage in the production of wafers
for high brightness light emitting diodes (LEDs) and package-ready dies
for use in the lighting, signage and transportation industries. The
Company anticipates commercial production at its newly constructed
Tampa, Florida facility during the first half of Fiscal 2001.
On February 20, 1998, the Company was organized as a State of Delaware
limited liability corporation. The Company operates under a joint
venture agreement between Uniroyal Optoelectronics, Inc. (wholly-owned
subsidiary of Uniroyal Technology Corporation ("UTC")) (51% owner), and
Emcore Corporation ("Emcore") (49% owner).
The Company is subject to the risks and difficulties experienced by any
new business such as obtaining adequate capital or financing, limited
operating history, competition and lack of distribution channels. The
Company's operations to date have been conducted primarily for the
purpose of financial planning, raising capital, acquiring property,
plant, equipment and other operating assets, recruiting and training
personnel, developing markets and starting up production. The Company's
success is dependent upon its ability to maintain adequate financing to
fulfill its development activities and to achieve a level of sales
adequate to support the Company's cost structure. Financial support
from one or both owners will continue as necessary to meet the
financial obligations of the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR END
The Company's fiscal year ends on the Sunday following the last Friday
in September. The dates on which the fiscal year ended for the fiscal
years since inception were October 1, 2000 ("Fiscal 2000"), September
26, 1999 ("Fiscal 1999") and September 27, 1998 ("Fiscal 1998").
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include all highly liquid investments
purchased with an original maturity of three months or less.
FINANCIAL INSTRUMENTS
The carrying value of all current assets and liabilities approximates
the fair value because of their short-term nature. The fair values of
the Company's capital lease obligations approximate their carrying
value due to interest rates which are comparable to current market
rates.
F-7
9
TRADE ACCOUNTS RECEIVABLE
The Company grants credit to its customers generally in the form of
short-term trade accounts receivable. The creditworthiness of customers
is evaluated prior to the sale of inventory. There are no significant
concentrations of credit risk to the Company.
INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using standard costs (which approximate actual costs) for
raw materials and supplies.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. The cost of property,
plant and equipment held under capital leases is equal to the lower of
the net present value of the minimum lease payments or the fair value
of the leased assets at the inception of the lease. Depreciation is
computed under the straight-line method based on the cost and estimated
useful lives of the related assets including assets held under capital
leases. Interest costs applicable to the construction of the Tampa,
Florida facility have been capitalized to the cost of the related
assets. Interest capitalized during Fiscal 2000 and Fiscal 1999
approximated $287,000 and $791,000, respectively.
START-UP COSTS
The Company follows the American Institute of Certified Public
Accountant Statement of Position 98-5, REPORTING COSTS OF START-UP
ACTIVITIES. This statement requires that the cost of start-up
activities and organizational costs be expensed as incurred.
INCOME TAXES
The limited liability corporation is considered a partnership for
Federal and State income tax purposes. Accordingly, the equity owners
account for their pro rata share of the Company's income, deductions
and credits in their separate tax returns. As a result, income tax
expenses, assets and liabilities are not recognized in the financial
statements of the Company.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES. SFAS No. 133 establishes accounting and reporting standards
for derivative instruments and hedging activities. It requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair
value. The accounting for changes in the fair value of a derivative
(that is, gains and losses) depends upon the intended use of the
derivative and resulting designation. In July 1999, FASB issued SFAS
No. 137, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -
DEFERRAL OF THE EFFECTIVE DATE OF SFAS NO. 133, which postponed the
effective date of SFAS No. 133 for one year. SFAS No. 133 will now be
effective for the Company beginning in Fiscal 2001. In June 2000, FASB
issued SFAS No. 138, ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND
CERTAIN HEDGING ACTIVITIES, an amendment to SFAS No. 133. The Company
currently does not anticipate there will be a material impact on the
results of operations or financial position upon adoption of SFAS No.
133 as amended by SFAS No. 138.
3. INVENTORIES
Inventories consist of raw materials and supplies at October 1, 2000
and September 26, 1999 at a value of $2,028,000 and $448,000,
respectively. There was no inventory at September 27, 1998.
F-8
10
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in thousands):
Estimated Useful October 1, September 26,
Lives 2000 1999
---------------- ----------- -----------
Buildings and leasehold improvements 3-20 years $ 5,854 $ 5,544
Machinery, equipment and office furnishings 3-15 years 24,515 5,503
Construction in progress 2,842 10,598
----------- -----------
33,211 21,645
Accumulated depreciation (2,463) (211)
----------- -----------
Total $ 30,748 $ 21,434
=========== ===========
5. OBLIGATIONS UNDER CAPITAL LEASES
During both Fiscal 2000 and Fiscal 1999, the Company entered into
non-cancelable capital lease agreements for certain leasehold
improvements, machinery and equipment. Future minimum capital lease
obligations during subsequent fiscal years ending in September are as
follows (in thousands):
Fiscal Year
-----------
2001 $ 5,141
2002 5,428
2003 5,428
2004 4,125
2005 220
-----------
Total minimum lease payments 20,342
Less imputed interest at 8.5% - 9.6% (3,213)
-----------
Present value of minimum capital lease payments 17,129
Current portion 3,807
-----------
Long-term obligations under capital leases $ 13,322
===========
Interest incurred (including capitalized interest) totaled
approximately $1,580,000, $791,000 and $11,000 for Fiscal 2000, Fiscal
1999 and Fiscal 1998, respectively.
UTC has guaranteed all of the above capital lease obligations.
The Company's property held under capitalized leases included in
property, plant and equipment (Note 4) consisted of the following (in
thousands):
October 1, September 26,
2000 1999
---------- -------------
Leasehold improvements $ 5,429 $ 5,426
Machinery, equipment and office
furnishings 18,249 5,066
Construction in progress - 9,755
---------- ----------
23,678 20,247
Less accumulated amortization (2,117) (181)
---------- ----------
Total $ 21,561 $ 20,066
========== ==========
F-9
11
6. MEMBERS' EQUITY
The members of the Company include Uniroyal Optoelectronics, Inc. and
Emcore Corporation. Initial capital contributions to the Company
included $510,000 from Uniroyal Optoelectronics, Inc. and $490,000 from
Emcore and were made in July 1998. In Fiscal 1999, Emcore made
additional capital contributions to the Company of $5,500,000. During
Fiscal 2000, Uniroyal Optoelectronics, Inc. contributed $17,828,000 in
cash while Emcore contributed an additional $11,628,000 in cash. As of
year end, accumulated capital contributions totaled $18,338,000, or
51%, for Uniroyal Optoelectronics, Inc. and $17,618,000, or 49%, for
Emcore.
Earnings and losses are allocated to the members in amounts equivalent
to their ownership percentages.
7. COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases equipment and warehouse and office space under
various lease agreements, certain of which are subject to escalations
based upon increases in specified operating expenses or increases in
the Consumer Price Index. The approximate future minimum rentals under
non-cancelable operating leases during subsequent fiscal years ending
in September are as follows (in thousands):
Fiscal Year
-----------
2001 $ 382
2002 391
2003 401
2004 395
2005 393
Subsequent years 1,174
------------
Total $ 3,136
============
Rent expense was approximately $399,000, $370,000 and $56,000 for
Fiscal 2000, Fiscal 1999 and Fiscal 1998, respectively.
8. RELATED PARTY TRANSACTIONS
UTC
The Company is party to an administrative agreement with UTC, in which
UTC will provide management, legal, accounting, tax, information
systems, treasury, human resource, risk management, environmental and
all other support services that may be necessary for the operations of
the Company. The management fee to the Company is calculated as the
greater of $25,000 per month or 3.5% of monthly net sales. Fees under
this agreement approximated $300,000, $300,000 and $50,000 for Fiscal
2000, Fiscal 1999 and Fiscal 1998, respectively.
The Company's employees participate in health and welfare benefit plans
administered by UTC. Costs for these plans are charged to the Company
based upon various methods including actual cost per employee,
headcount allocations and ratios of compensation expense. Expenses
included in the statements of operations were approximately $284,000,
$51,000 and $5,000 for Fiscal 2000, Fiscal 1999 and Fiscal 1998,
respectively.
UTC administers all of the insurance programs for the Company. Costs of
these programs are allocated to the Company based on various factors
including percentage of assets, employee base and sales and historical
loss experience. Included in the statements of operations for Fiscal
2000 and Fiscal 1999 were approximately $96,000 and $31,000,
respectively, of such costs. No insurance charges were allocated to the
Company in Fiscal 1998.
UTC provides a savings plan under Section 401(k) of the Internal
Revenue Code. The savings plan allows all eligible employees to defer
up to 15% of their income on a pre-tax basis through contributions to
the
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savings plan. For every dollar an employee contributes, UTC may
contribute an amount equal to 25% of each participant's before-tax
obligation up to 6% of the participant's compensation. Such employee
compensation may be made in cash or in UTC common stock. The expenses
allocated to the Company by UTC pertaining to this savings plan were
approximately $635,000, $11,000 and $1,000 for Fiscal 2000, Fiscal 1999
and Fiscal 1998, respectively.
Included in due from affiliate as of October 1, 2000 is a capital
contribution of approximately $1,849,000 made in cash by UTC on October
3, 2000. This amount is partially offset by charges from UTC relating
to benefit plans, property insurance programs and UTC administration
fees.
Included in due to affiliate as of September 26, 1999, are amounts due
UTC for items paid on behalf of the Company of approximately $963,000,
amounts due UTC for the UTC administrative agreement of approximately
$300,000, and charges from UTC relating to the benefit plans, property
insurance programs and savings plans totaling approximately $82,000.
EMCORE
Under a supply agreement dated July 31, 1998, Emcore will provide
product for the Company as required until the Company's facility in
Tampa, Florida is ready for commercial production. During Fiscal 2000,
approximately $1,600,000 of the Company's net sales were for products
supplied by Emcore at a cost of approximately $1,600,000. During Fiscal
1999, approximately $479,000 of the Company's net sales were for
products supplied by Emcore at an approximate cost of $428,000. There
were no sales in Fiscal 1998.
During Fiscal 2000, the Company purchased approximately $1,444,000 of
inventory from Emcore for use in testing and completing the Company's
manufacturing processes. Corresponding purchases totaled approximately
$125,000 for Fiscal 1999. Also during Fiscal 2000, the Company spent
approximately $4,612,000 for MOCVD epitaxy reactors and approximately
$289,000 for machine parts and supplies purchased from Emcore. There
were no such expenditures during Fiscal 1999 or Fiscal 1998.
During Fiscal 2000, Emcore provided technical and administrative
services to the Company at a cost of approximately $207,000. Similar
services provided in Fiscal 1999 totaled approximately $311,000. There
were no such services provided by Emcore in Fiscal 1998.
At October 1, 2000, approximately $110,000 of net payables to Emcore is
included in accounts payable in connection with Emcore inventory
provided to the Company. This corresponding amount at September 26,
1999 was approximately $110,000.
9. SUBSEQUENT EVENTS
Effective December 20, 2000, Uniroyal Optoelectronics, Inc., the
majority owner of the Company, changed its name to Uniroyal Compound
Semiconductors, Inc. ("UCS").
UCS and Emcore have begun negotiations for a buyout by UCS of Emcore's
minority interest in the Company. Capital contributions solely funded
by UCS have increased its percentage interest in the Company and the
Company's profits and losses and correspondingly decreased Emcore's
percentage interest as of June 30, 2001. UCS has informed the Company
that UCS intends to continue funding the Company and Emcore has
reserved the right to make capital contributions to the Company in the
future.
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