Subsequent Events

Sale of Photovoltaics Business

On September 17, 2014, EMCORE entered into the Photovoltaics Agreement with Photon to acquire the Photovoltaics Business, for $150.0 million in cash, subject to a working capital adjustment pursuant to the Photovoltaics Agreement. At a special meeting of EMCORE's shareholders held on December 5, 2014, EMCORE's shareholders approved the Photovoltaics Asset Sale, and on December 10, 2014 EMCORE completed the Photovoltaics Asset Sale.

As we evaluate the impact of this transaction, we expect the financial results of the Photovoltaics Business will be presented as discontinued operations on the Consolidated Statements of Operations beginning in the first quarter of fiscal year 2015. Given shareholder vote was required to approve the sale of the Photovoltaics Business, the assets and liabilities did not qualify for available for sale presentation as of September 30, 2014.

We are in the process of evaluating the transaction and its impact on our financial statements, including evaluating the resulting gain to be recognized, based on the terms of the agreement. The following table presents our best estimate of the aggregate carry amounts of the major classes of assets and liabilities related to the Photovoltaics Business as of September 30, 2014 to be disposed of.



	As of
(in thousands)	September 30, 2014
	(unaudited)
Assets:
Accounts receivable, net of allowance of $0	$	17,827
Inventory	7,203
Prepaid expenses and other current assets	1,512
Property, plant and equipment, net	26,486
Goodwill	20,384
Other non-current assets, net	254
Total assets	$	73,666
Liabilities:
Accounts payable	$	4,640
Accrued expenses and other current liabilities	5,398
Asset retirement obligations	720
Total liabilities	$	10,758

Planned Asset Sale Transaction with NeoPhotonics Corporation

On October 22, 2014, EMCORE entered into an Asset Purchase Agreement (the "Digital Products Agreement") with NeoPhotonics Corporation, a Delaware Corporation ("NeoPhotonics") pursuant to which the Company has agreed to sell certain assets, and transfer certain liabilities of the Company's telecommunications business (collectively, the "Digital Products Business" and, the sale of the Digital Products Business, the "Digital Products Assets Sale") to NeoPhotonics for an aggregate purchase price of $17.5 million, subject to certain adjustments, consisting of $1.5 million in cash at closing and a promissory note in the principal amount of $16.0 million (the "Promissory Note"). The Promissory Note will bear interest of 5.0% per annum for the first year and 13.0% per annum for the second year, payable semi-annually in cash, and matures two years from the closing of the transaction contemplated by the Digital Products Agreement. In addition, the promissory note will be subject to prepayments under certain circumstances, and will be secured by certain of the assets to be sold to NeoPhotonics in the transaction. The assets sold pursuant to the Digital Products Agreement include fixed assets, inventory, and intellectual property for the ITLA, micro-ITLA, T-TOSA and T-XFP product lines within the Company’s telecommunications business. The purchase price is subject to certain adjustments for inventory, net accounts receivable and pre-closing revenue levels, which will increase or decrease the principal amount under the Promissory Note as applicable. The transaction is subject to customary closing conditions and is expected to close by early January 2015.

As a result of this transaction, we expect the financial results of the Digital Products Business to be presented as discontinued operations on the Consolidated Statements of Operations and assets and liabilities of the Digital Products Business to be disposed of will be presented as held for sale on the Consolidated Balance Sheets beginning of the first quarter of fiscal year 2015.

We are in the process of evaluating the transaction and its impact on our financial statements, including evaluating the resulting gain to be recognized, based on the terms of the agreement. The following table presents our best estimate of the aggregate carry amounts of the major classes of assets and liabilities related to the Digital Products Business as of September 30, 2014 to be disposed of.



	As of
(in thousands)	September 30, 2014
	(unaudited)
Assets:
Accounts receivable, net of allowance of $17	$	14,268
Inventory	3,225
Prepaid expenses and other current assets	30
Property, plant and equipment, net	7,889
Other intangible assets, net	1,060
Total assets	$	26,472
Liabilities:
Accounts payable	10,848
Accrued expenses and other current liabilities	38
Total liabilities	$	10,886

Following the closing of the Photovoltaics and Digital Products Assets Sales EMCORE will continue to operate its fiber optics division which provides optical components, subsystems and systems for high-speed telecommunications, Cable Television (CATV) and Fiber-To-The-Premise (FTTP) networks, as well as products for satellite communications, video transport and specialty photonics technologies for defense and homeland security applications.

Management changes

On December 10, 2014, the Company announced the hiring of Mr. Jeff Rittichier as its Chief Executive Officer, effective January 3, 2015. Mr. Rittichier's annual salary will be $325,000. In addition, Mr. Rittichier was granted 300,000 RSUs, of which 25% vested immediately, and 25% will vest on each subsequent anniversary date.

With the hiring of Mr. Rittichier, Dr. Hong Q. Hou's employment with the Company as Chief Executive Officer will terminate on January 2, 2015 as previously announced. See also Note 10 - Accrued Expenses and Other Current Liabilities for additional disclosure on Dr. Hou's termination.

On December 10, 2014, the Company entered into Separation Agreements with its General Counsel, Mr. Alfredo Gomez, and its Chief Administration Officer, Ms. Monica Van Berkel. Mr. Gomez's separation agreement provides for the continuation of his base salary for 68 weeks, benefits for 18 months, and the immediate vesting of all outstanding unvested equity awards. Mr. Gomez will resign from his position effective the earlier of February 13, 2015 or the date following 10 business days from notice to him that the Company has hired a new in-house general counsel. Ms. Van Berkel's separation agreement provides for the continuation of her base salary for 74 weeks, benefits for 18 months, and the immediate vesting of all outstanding unvested equity awards. Ms. Van Berkel's resignation will be effective January 2, 2015. The Company expects to record a charge of $1.1 million in fiscal year 2015 related to Mr. Gomez and Ms. Van Berkel's separation agreements.