Item 1.01 Entry into a Material
Definitive Agreement.
Purchase Agreement
On
August 9, 2022, EMCORE Corporation (“EMCORE”) entered into an Asset Purchase Agreement (the “Purchase Agreement”),
by and among EMCORE, Delta Acquisition Sub, Inc., a Delaware corporation and wholly owned subsidiary of EMCORE (“EMCORE Sub”),
and KVH Industries, Inc., a Delaware corporation (“Seller”), pursuant to which Seller agreed to sell the assets (the “Purchased
Assets”) primarily related to its Inertial Navigation segment (the “Business”), including Seller’s property interests
in its Tinley Park facility, to EMCORE (the “Transaction”). The signing and closing of the Transaction occurred simultaneously.
Under the terms of the Purchase Agreement, EMCORE paid approximately $55.0 million in cash for the Purchased Assets (the “Purchase
Price”), subject to certain working capital adjustments. The Transaction also involved EMCORE's assumption of specified liabilities,
generally including the liabilities primarily related to the Business. At the closing, $1.0 million of the Purchase Price (the “Holdback
Amount”) was held back by EMCORE as security for certain post-closing obligations of Seller. The Holdback Amount will be released
over time, if at all, upon satisfaction by Seller of certain of its post-closing obligations. In connection with the Transaction, the
parties entered a transition services agreement pursuant to which Seller will provide certain migration and transition services to facilitate
an orderly transaction of the operation of the Business to EMCORE in the 12 month period following consummation of the Transaction.
The Purchase Agreement contains
certain representations, warranties, covenants and indemnification provisions, including for breaches of covenants and for losses resulting
from Seller liabilities specifically excluded from the Transaction. In connection with its entry into the Purchase Agreement, EMCORE obtained
a customary representations and warranties insurance policy as recourse for certain losses arising out of breaches of representations
and warranties of Seller set forth in the Purchase Agreement. The representations and warranties insurance policy is subject to certain
policy limits, exclusions, deductibles and other terms and conditions.
Seller has agreed that, for
the period commencing on the date of closing until the five-year anniversary thereof, neither Seller nor any of its affiliates will, directly
or indirectly, compete with the business related to the development, engineering, manufacturing, marketing, distribution or sale of navigations
sensors and systems or inertial sensors and systems for defense or commercial applications (including self-driving vehicles), as operated
by Seller as of immediately prior to the closing, subject to certain limitations. Seller has also agreed that, for a period of 24 months
after the closing, neither Seller nor any of its affiliates will, directly or indirectly, solicit to employ or employ any employee of
EMCORE or any employee transferred to EMCORE as part of the Transaction.
The above description of
the Purchase Agreement is a summary only and is qualified in its entirety by the full text of the Purchase Agreement, a copy of
which is attached hereto as Exhibit 1.1 and is incorporated herein by reference. The Purchase Agreement governs the contractual
rights between the parties in relation to the Transaction. The Purchase Agreement has been filed as an exhibit to this Current
Report on Form 8-K to provide investors with information regarding the terms of the Transaction and is not intended to modify or
supplement any factual information about the parties. The terms of the Purchase Agreement govern the contractual rights and
relationships, and allocate risks, among the parties in relation to the transactions contemplated by the Purchase Agreement. In
particular, the assertions embodied in the representations and warranties in the Purchase Agreement reflect negotiations between,
and are solely for the benefit of, the parties thereto and may be limited, qualified or modified by a variety of factors, including:
subsequent events, information included in public filings, disclosures made during negotiations, correspondence between the parties
and in confidential disclosure schedules to the Purchase Agreement. Moreover, certain representations and warranties in the Purchase
Agreement were used for the purpose of allocating risk between the parties rather than establishing matters as facts and may not
describe the actual state of affairs at the date they were made or at any other time. Accordingly, you should not rely on the
representations and warranties in the Purchase Agreement as characterizations of the actual state of facts about the parties.
New ABL Credit Agreement
On August 9, 2022, EMCORE
and EMCORE Space & Navigation Corporation (the “Borrowers”) entered into that certain Credit Agreement, dated as of August
9, 2022 (the “Credit Agreement”), among the Borrowers, the lenders party thereto and Wingspire Capital LLC, as administrative
agent for the lenders (the “Agent”). The Credit Agreement provides for two credit facilities: (a) an asset-based revolving
credit facility in an aggregate principal amount of up to $40,000,000, subject to a borrowing base consisting of eligible accounts receivable
and eligible inventory (subject to certain reserves), and (b) a term loan facility in an aggregate principal amount of $5,965,000. The
making of the loans under the Credit Agreement is subject to the satisfaction of certain conditions precedent, including, among other
things, the execution and delivery of a pledge and security agreement, pursuant to which the obligations under the Credit Agreement will
be secured on a senior secured basis (subject to permitted liens) by substantially all assets of the Borrowers and substantially all assets
of any future guarantors. Although no subsidiaries of EMCORE are currently required to guarantee the Borrowers’ obligations under
the Credit Agreement, EMCORE Sub may be required to become a borrower or a guarantor under the Credit Agreement under certain circumstances
as determined by the Agent in its sole discretion, and domestic subsidiaries of EMCORE that are formed or acquired after the closing under
the Credit Agreement will be required to become guarantors under the Credit Agreement.
The proceeds of the loans
made on the closing date under the Credit Agreement may be used (i) to finance the Transaction and pay fees, costs and expenses in connection therewith, (ii) to pay fees, costs and expenses
in connection with the financing, and (iii) for general corporate purposes.
Borrowings under the Credit
Agreement will mature on August 8, 2025, and will bear interest, at a rate per annum equal to term SOFR plus a margin of 3.75% in the
case of revolving loans and term SOFR plus a margin of 5.50% in the case of term loans. In addition, the Borrowers will be responsible
for the Agent’s annual collateral monitoring fees as well as the lenders’ fees and expenses, including a closing fee of 1.00%
of the aggregate principal amount of the commitments as of the closing with respect to revolving loans and 1.50% of the aggregate principal
amount of the commitments as of the closing with respect to term loans. The Borrowers may also be required to pay an unused line fee of
0.50% in respect of the undrawn portion of the revolving commitments, which is generally based on average daily usage of the revolving
facility during the immediately preceding month.
The Credit Agreement contains
representations and warranties, reporting and other affirmative covenants, and negative covenants that are generally customary for credit
facilities of this type. Among others, the Credit Agreement contains various covenants that, subject to agreed upon exceptions, limit
the Borrowers’ and their respective subsidiaries’ ability to incur indebtedness, grant liens, enter into sale and leaseback
transactions, enter into swap agreements, make loans, acquisitions and investments, change the nature of their business, acquire or sell
assets or consolidate or merge with or into other persons or entities, declare or pay dividends or make other restricted payments, enter
into transactions with affiliates, enter into burdensome agreements, change fiscal year, amend organizational documents, and use proceeds
to fund any activities of or business with any person that is the subject of governmental sanctions. In addition, the Credit Agreement
requires that, for any period commencing upon the occurrence of an event of default or excess availability under the Credit Agreement
being less than the greater of $5,000,000 and 15% of the revolving commitments until such time as no event of default shall be continuing
and excess availability under the Credit Agreement shall be at least the greater of $5,000,000 and 15% of the revolving commitments for
a period of 60 consecutive days, the Borrowers satisfy a consolidated fixed charge coverage ratio of not less than 1.10:1.00.
The Credit Agreement also
includes customary events of default, the occurrence of which, following any applicable grace period, would permit the lenders to, among
other things, declare the principal, accrued interest and other obligations of the Borrowers under the Credit Agreement to be immediately
due and payable, and exercise rights and remedies available to the lenders under the Credit Agreement or applicable law or equity.
At the closing under the Credit
Agreement, the Borrowers borrowed revolving loans in an aggregate principal amount of $14,250,000 and term loans in an aggregate principal
amount equal to the entire term loan commitment.
The above description of the
Credit Agreement is a summary only and is qualified in its entirety by the full text of the Credit Agreement, a copy of which is attached
hereto as Exhibit 10.1 and is incorporated herein by reference.