ELON Echelon Corp. (delisted)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

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

Check the appropriate box:

ECHELON CORPORATION

(Name of Registrant as Specified In Its Charter)

N/A

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

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION

Echelon Corporation

2901 Patrick Henry Drive

Santa Clara, CA 95054

[ ● ], 2018

Dear Echelon Stockholder:

You are cordially invited to attend a special meeting of stockholders, which we refer to as the “special meeting,” of Echelon Corporation, which we refer to as “Echelon,” to be held on [●], 2018, at [●], Pacific time, at Echelon’s principal executive offices, located at 2901 Patrick Henry Drive, Santa Clara, California 95054.

At the special meeting, you will be asked to consider and vote on a proposal to adopt the Agreement and Plan of Merger, dated as of June 28, 2018, as it may be amended from time to time, which we refer to as the “merger agreement,” by and among Echelon, Adesto Technologies Corporation, which we refer to as “Adesto,” and Circuit Acquisition Corporation. We refer to the acquisition of Echelon by Adesto as the “merger.” At the special meeting, you will also be asked to consider and vote on (1) a proposal for the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (2) a proposal to approve the compensation that will or may become payable by Echelon to its named executive officers in connection with the merger on a non-binding, advisory basis.

If the merger is completed, you will be entitled to receive $8.50 in cash, without interest and subject to any applicable withholding taxes, for each share of common stock that you own (unless you have properly exercised your appraisal rights), which represents a premium of approximately 104% over the closing price of Echelon’s common stock on June 28, 2018, the last trading day prior to the public announcement of the merger.

Echelon’s Board of Directors, after considering the factors more fully described in the enclosed proxy statement, has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Echelon and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

Echelon’s Board of Directors unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

The enclosed proxy statement provides detailed information about the special meeting, the merger agreement and the merger. A copy of the merger agreement is attached as Annex A to this proxy statement.

This proxy statement also describes the actions and determinations of Echelon’s Board of Directors in connection with its evaluation of the merger agreement and the merger. We encourage you to read this proxy statement and its annexes, including the merger agreement, carefully and in their entirety, as they contain important information.

Whether or not you plan to attend the special meeting in person, please sign, date and return, as promptly as possible, the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone. If you attend the special meeting and vote in person by ballot, your vote will

revoke any proxy that you have previously submitted. If you fail to return your proxy or to attend the special meeting in person, your shares will not be counted for purposes of determining whether a quorum is present at the special meeting and will have the same effect as a vote against the adoption of the merger agreement.

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or voted at the meeting, and that will have the same effect as voting against the adoption of the merger agreement.

Your vote is very important, regardless of the number of shares that you own.

If you have any questions or need assistance voting your shares, please contact our proxy solicitor:

The Proxy Advisory Group, LLC

18 East 41st Street, Suite 2000

New York, New York 10017

Stockholders May Call:

(888) 557-7699 (Toll-Free From the U.S. and Canada)

or

(212) 616-2180 (From Other Locations)

On behalf of Echelon’s Board of Directors, thank you for your support.

Very truly yours,

Ronald A. Sege

Chairman of the Board of Directors, President and

Chief Executive Officer

The accompanying proxy statement is dated [●], 2018, and, together with the enclosed form of proxy card, is first being mailed on or about [●], 2018.

PRELIMINARY PROXY STATEMENT—SUBJECT TO COMPLETION

Echelon Corporation

2901 Patrick Henry Drive

Santa Clara, CA 95054

If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or voted at the meeting, and that will have the same effect as voting against the adoption of the merger agreement.

By Order of the Board of Directors,

Alicia Jayne Moore

SVP, Chief Legal and Administration Officer and Secretary

Dated: [●], 2018

Santa Clara, CA

IMPORTANT INFORMATION

Whether or not you plan to attend the special meeting in person, we encourage you to submit your proxy as promptly as possible (1) over the internet; (2) by telephone; or (3) by signing and dating the enclosed proxy card and returning it in the accompanying prepaid reply envelope. You may revoke your proxy or change your vote at any time before your proxy is voted at the special meeting.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.” If you hold your shares in “street name,” you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or voted at the meeting, and that will have the same effect as voting against the adoption of the merger agreement.

If you are a stockholder of record, voting in person by ballot at the special meeting will revoke any proxy that you previously submitted. If you hold your shares through a bank, broker or other nominee, you must obtain a “legal proxy” from the bank, broker or other nominee that holds your shares in order to vote in person by ballot at the special meeting.

We encourage you to read the accompanying proxy statement and its annexes, including all documents incorporated by reference into the accompanying proxy statement, carefully and in their entirety. If you have any questions concerning the merger, the special meeting or the accompanying proxy statement, would like additional copies of the accompanying proxy statement, or need help voting your shares of common stock, please contact our proxy solicitor:

The Proxy Advisory Group, LLC

18 East 41st Street, Suite 2000

New York, New York 10017

Stockholders May Call:

(888) 557-7699 (Toll-Free From the U.S. and Canada)

or

(212) 616-2180 (From Other Locations)

TABLE OF CONTENTS

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QUESTIONS AND ANSWERS

The following questions and answers address some commonly asked questions regarding the merger, the merger agreement and the special meeting. These questions and answers may not address all questions that are important to you. We encourage you to carefully read the more detailed information contained elsewhere in this proxy statement, including the annexes to this proxy statement and the other documents to which we refer in this proxy statement. You may obtain the information incorporated by reference in this proxy statement without charge by following the instructions in the section of this proxy statement captioned “Where You Can Find More Information.”

This proxy statement, which you should read carefully, contains important information about the merger, the merger agreement, the special meeting and the matters to be voted on at the special meeting. The enclosed materials allow you to submit a proxy to vote your shares of common stock without attending the special meeting and to ensure that your shares of common stock are represented and voted at the special meeting.

Your vote is very important. Even if you plan to attend the special meeting, we encourage you to submit a proxy as soon as possible.

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Even if you plan to attend the special meeting in person, to ensure that your shares will be represented at the special meeting, we encourage you to sign, date and return the enclosed proxy card in the accompanying prepaid reply envelope or grant your proxy electronically over the internet or by telephone. If you attend the special meeting and vote in person by ballot, your vote will revoke any proxy previously submitted.

If, as of the record date, you are a beneficial owner of shares held in “street name,” you may not vote your shares in person at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares in person at the special meeting. Otherwise, you should instruct your bank, broker or other nominee how to vote your shares in accordance with the voting instruction form that you will receive from your bank, broker or other nominee. Your bank, broker or other nominee cannot vote on any of the proposals to be considered at the special meeting without your instructions. Without your instructions, your shares will not be counted for purposes of a quorum or voted at the meeting, which will have the same effect as voting against the adoption of the merger agreement.

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Echelon has agreed to pay Adesto a termination fee of $1.54 million if the merger agreement is terminated in specified circumstances. In other circumstances, Echelon may be obligated to reimburse up to $440,000 of Adesto’s expenses.

Adesto has agreed to pay Echelon a termination fee of $4.41 million if the transaction is terminated due to, generally speaking, Adesto’s failure to close the merger following receipt of Echelon stockholder approval of the merger.

For more information, see the section of this proxy statement captioned “The Merger Agreement—Termination Fees.”

The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote in person by ballot at the special meeting will have the same effect as a vote “ AGAINST ” the proposal to adopt the merger agreement. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will have the same effect as a vote “ AGAINST ” the proposal to adopt the merger agreement. Abstentions will have the same effect as a vote “ AGAINST ” the proposal to adopt the merger agreement.

Approval of the proposal to approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger, on a non-binding, advisory basis, requires the affirmative vote of holders of a majority of the shares of common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

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The failure of any stockholder of record to (1) submit a signed proxy card; (2) grant a proxy over the internet or by telephone; or (3) vote in person by ballot at the special meeting will not have any effect on the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting, or the proposal to approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis. If you hold your shares in “street name,” the failure to instruct your bank, broker or other nominee how to vote your shares will not have any effect on these proposals. In all cases, abstentions will have the same effect as a vote “AGAINST” these proposals.

If your shares are held through a bank, broker or other nominee, you are considered the “beneficial owner” of shares of common stock held in “street name.” If you are a beneficial owner of shares of common stock held in “street name,” this proxy statement has been forwarded to you by your bank, broker or other nominee who is considered, with respect to those shares, to be the stockholder of record. As the beneficial owner, you have the right to direct your bank, broker or other nominee how to vote your shares by following their instructions for voting. You are also invited to attend the special meeting. However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

A control number, located on your proxy card, is designed to verify your identity and allow you to vote your shares of common stock and to confirm that your voting instructions have been properly recorded when voting electronically over the internet or by telephone. Although there is no charge for voting your shares, if you vote electronically over the internet or by telephone, you may incur costs such as internet access and telephone charges for which you will be responsible.

Even if you plan to attend the special meeting in person, you are strongly encouraged to vote your shares of common stock by proxy. If you are a stockholder of record or if you obtain a “legal proxy” to vote shares that you beneficially own, you may still vote your shares of common stock in person by ballot at the special meeting even if you have previously voted by proxy. If you are present at the special meeting and vote in person by ballot, your vote will revoke any previously submitted proxy.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank, broker or other nominee, or, if such a service is provided by your bank, broker or other nominee, electronically over the internet or by telephone. To vote over the internet or by telephone through your bank, broker or other nominee, you should follow the instructions on the voting instruction form provided by your

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bank, broker or nominee. However, because you are not the stockholder of record, you may not vote your shares in person by ballot at the special meeting unless you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

If you sign and date your proxy card but do not mark the boxes showing how your shares should be voted on a matter, the shares represented by your properly signed proxy will be voted as recommended by the Echelon Board with respect to each proposal. This means that they will be voted (1) “ FOR ” the adoption of the merger agreement; (2) “ FOR ” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “ FOR ” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

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You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction forms, if your shares are registered differently or are held in more than one account. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction form for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please vote all voting materials that you receive.

A Non-U.S. Holder (as defined in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger”) generally will not be subject to U.S. federal income tax with respect to the exchange of common stock for cash in the merger unless such Non-U.S. Holder has certain connections to the United States.

Because particular circumstances may differ, we recommend that you consult your own tax advisor to determine the U.S. federal income tax consequences relating to the merger in light of your own particular circumstances and any consequences arising under U.S. federal non-income tax laws or the laws of any state, local or foreign taxing jurisdiction. A more complete description of material U.S. federal income tax consequences of the merger is provided in the section of this proxy statement captioned “The Merger—Material U.S. Federal Income Tax Consequences of the Merger.”

With respect to any company options for which the exercise price per share attributable to such company options is equal to or greater than the per share merger consideration, such company options will be cancelled without any cash payment being made in exchange for such cancellation.

At the effective time of the merger, each company RSU outstanding as of immediately prior to the effective time of the merger, whether vested or unvested, will be cancelled and converted into a right to receive an

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amount in cash, without interest, equal to the RSU consideration. For the purposes of the previous sentence, the number of shares of Echelon common stock issuable pursuant to a company RSU will be deemed to be the number of shares issuable following full performance and satisfaction of the target (to the extent applicable). The payment of the RSU consideration will be subject to any applicable withholding taxes.

For more detail on the treatment of our directors’ and executive officers’ company options and company RSUs in the merger, see below under the section of this proxy statement captioned “The Merger—Interests of Echelon’s Directors and Executive Officers in the Merger—Treatment of Equity-Based Awards.”

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The Proxy Advisory Group, LLC

18 East 41st Street, Suite 2000

New York, New York 10017

Stockholders May Call:

(888) 557-7699 (Toll-Free From the U.S. and Canada)

or

(212) 616-2180 (From Other Locations)

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FORWARD-LOOKING STATEMENTS

This proxy statement, the documents to which we refer you in this proxy statement and information included in oral statements or other written statements made or to be made by us or on our behalf contain “forward-looking statements” that do not directly or exclusively relate to historical facts. You can typically identify forward-looking statements by the use of forward-looking words, such as “may,” “should,” “could,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “continue,” “potential,” “plan,” “forecast” and other words of similar import. Stockholders are cautioned that any forward-looking statements are not guarantees of future performance and may involve significant risks and uncertainties, and that actual results may vary materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to, the risks detailed in our filings with the SEC, including in our most recent filings on Forms 10-K and 10-Q, factors and matters described or incorporated by reference in this proxy statement, and the following factors:

Consequently, all of the forward-looking statements that we make in this proxy statement are qualified by the information contained or incorporated by reference in this proxy statement, including (1) the information contained under this caption; and (2) the information contained under the caption “Risk Factors,” and information in our consolidated financial statements and notes thereto included in our most recent filings on Form 10-K and Form 10-Q. No assurance can be given that these are all of the factors that could cause actual results to vary materially from the forward-looking statements.

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Except as required by applicable law, we undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. Stockholders are advised to consult any future disclosures that we make on related subjects as may be detailed in our other filings made from time to time with the SEC.

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THE SPECIAL MEETING

This proxy statement is being provided to Echelon stockholders as part of a solicitation by the Echelon Board of proxies for use at the special meeting.

Date, Time and Place

We will hold the special meeting on [●], 2018, at [●], Pacific time, at our principal executive offices, located at 2901 Patrick Henry Drive, Santa Clara, California 95054.

Purpose of the Special Meeting

At the special meeting, we will ask stockholders to vote on proposals to (1) adopt the merger agreement; (2) adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

Record Date; Shares Entitled to Vote; Quorum

Only Echelon stockholders as of the close of business on the record date are entitled to notice of, and to vote at, the special meeting. A list of stockholders of record entitled to vote at the special meeting will be available at our principal executive offices located at 2901 Patrick Henry Drive, Santa Clara, CA 95054, during regular business hours for a period of no less than 10 days before the special meeting and at the place of the special meeting during the meeting.

As of the record date, there were [●] shares of common stock outstanding and entitled to vote at the special meeting. Each share of common stock is entitled to one vote per share on each matter properly brought before the special meeting.

The presence in person or by proxy of the holders of a majority of the shares of common stock issued and outstanding and entitled to vote at the special meeting will constitute a quorum at the special meeting.

Vote Required; Abstentions and Broker Non-Votes

Approval of the proposal to adopt the merger agreement requires the affirmative vote of the holders of a majority of the outstanding shares of common stock entitled to vote on the proposal. Adoption of the merger agreement by Echelon’s stockholders is a condition to the closing of the merger.

Approval of the proposal to adjourn the special meeting to a later date or dates to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting requires the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

Approval, on a non-binding, advisory basis, of the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger requires the affirmative vote of the holders of a majority of the shares of common stock present in person or represented by proxy at the special meeting and entitled to vote on the proposal.

If a stockholder abstains from voting, that abstention will have the same effect as if the stockholder voted: (1) “AGAINST” the proposal to adopt the merger agreement; (2) “AGAINST” any proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger

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agreement at the time of the special meeting; and (3) “AGAINST” the proposal to approve, on a non-binding, advisory basis, compensation that will or may become payable by Echelon to our named executive officers in connection with the merger. Abstentions will be counted as present for purposes of determining whether a quorum exists.

A “broker non-vote” generally occurs when a bank, broker or other nominee holding shares on your behalf does not vote on a proposal because the bank, broker or other nominee has not received your voting instructions and lacks discretionary power to vote your shares. We do not expect any “broker non-votes” at the special meeting, but if there are any, they will be counted for the purpose of determining whether a quorum is present. If there are broker non-votes, each broker non-vote will count as a vote “AGAINST” the proposal to adopt the merger agreement, but will have no effect on (1) the proposal to adjourn the special meeting to a later date to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; or (2) the proposal to approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

Shares Held by Echelon’s Directors and Executive Officers

As of the record date, our directors and executive officers beneficially owned and were entitled to vote, in the aggregate, [●] shares of common stock, representing approximately [●] percent of the shares of common stock outstanding as of the record date. Our directors and executive officers have informed us that they intend to vote all of their shares of common stock: (1) “ FOR ” the adoption of the merger agreement; (2) “ FOR ” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “ FOR ” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

Voting of Proxies

If your shares are registered in your name with our transfer agent, Computershare Inc., you may vote your shares by returning a signed and dated proxy card in the accompanying prepaid reply envelope, or you may vote in person by ballot at the special meeting. Additionally, you may grant a proxy electronically over the internet or by telephone by following the instructions on your proxy card. You must have the enclosed proxy card available, and follow the instructions on the proxy card, in order to grant a proxy electronically over the internet or by telephone. Based on your proxy cards or internet and telephone proxies, the proxy holders will vote your shares according to your directions.

If you plan to attend the special meeting and wish to vote in person, you will be given a ballot at the special meeting. Stockholders will need to present proof of ownership of shares of common stock, such as a bank or brokerage account statement, and a form of personal identification to be admitted to the special meeting. If your shares are registered in your name, you are encouraged to vote by proxy even if you plan to attend the special meeting in person. If you attend the special meeting and vote in person by ballot, your vote will revoke any previously submitted proxy.

All shares represented by properly signed and dated proxies received will, if received before the special meeting, be voted at the special meeting in accordance with the instructions of the stockholder. Properly signed and dated proxies that do not contain voting instructions will be voted: (1) “FOR” adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

If your shares are held in “street name” through a bank, broker or other nominee, you may vote through your bank, broker or other nominee by completing and returning the voting instruction form provided by your bank,

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broker or other nominee. You may also attend the special meeting and vote in person by ballot if you have a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting. If available, you may vote over the internet or telephone through your bank, broker or other nominee by following the instructions on the voting instruction form provided by your bank, broker or other nominee. If you do not (1) return your bank’s, broker’s or other nominee’s voting instruction form; (2) vote over the internet or by telephone through your bank, broker or other nominee, if possible; or (3) attend the special meeting and vote in person with a “legal proxy” from your bank, broker or other nominee, it will have the same effect as if you voted “AGAINST” the proposal to adopt the merger agreement. It will not have any effect on the proposals: (1) to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; or (2) to approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

Revocability of Proxies

If you are a stockholder of record, you may change your vote or revoke your proxy at any time before it is voted at the special meeting by:

If you have submitted a proxy, your appearance at the special meeting, in the absence of voting in person or submitting an additional proxy or revocation, will not have the effect of revoking your prior proxy.

If you hold your shares of common stock in “street name,” you should contact your bank, broker or other nominee for instructions regarding how to change your vote. You may also vote in person at the special meeting if you obtain a “legal proxy” from your bank, broker or other nominee giving you the right to vote your shares at the special meeting.

Any adjournment, postponement or other delay of the special meeting, including for the purpose of soliciting additional proxies, will allow Echelon stockholders who have already sent in their proxies to revoke them at any time prior to their use at the special meeting as adjourned, postponed or delayed.

The Echelon Board’s Recommendation

The Echelon Board, after considering various factors described in the section of this proxy statement captioned “The Merger—Recommendation of the Echelon Board and Reasons for the Merger,” has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Echelon and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

The Echelon Board unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

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Adjournment

In addition to the proposals to (1) adopt the merger agreement and (2) approve the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis, Echelon stockholders are also being asked to approve a proposal to adjourn the special meeting to a later date or dates, if necessary or appropriate, to solicit additional votes or proxies in favor of the proposal to adopt the merger agreement if there are insufficient votes at the time of the special meeting to approve the merger agreement. If a quorum is not present, the chairperson of the special meeting or the stockholders entitled to vote at the special meeting, present in person or represented by proxy, may adjourn the special meeting, from time to time, without notice other than announcement at the meeting, until a quorum is present or represented. In addition, the special meeting could be postponed before it commences, subject to the terms of the merger agreement. If the special meeting is adjourned or postponed, Echelon stockholders who have already submitted their proxies will be able to revoke them at any time before they are voted at the special meeting.

Solicitation of Proxies

The expense of soliciting proxies will be borne by Echelon. We have retained The Proxy Advisory Group, LLC, a professional proxy solicitation firm, to assist in the solicitation of proxies, and provide related advice and informational support during the solicitation process, for a services fee, plus customary disbursements, which are not expected to exceed $35,000 in total. We will indemnify The Proxy Advisory Group, LLC against losses arising out of its provisions of these services on our behalf. In addition, we may reimburse banks, brokers and other nominees representing beneficial owners of shares for their expenses in forwarding soliciting materials to such beneficial owners. Proxies may also be solicited by our directors, officers and employees, personally or by telephone, email, fax or over the internet. No additional compensation will be paid for such services.

Anticipated Date of Completion of the Merger

We currently expect to complete the merger in 2018. However, the exact timing of completion of the merger, if at all, cannot be predicted because the merger is subject to the closing conditions specified in the merger agreement, many of which are outside of our control.

Appraisal Rights

If the merger is consummated, stockholders who (1) do not vote in favor of the adoption of the merger agreement; (2) continuously hold such shares through the effective time of the merger; (3) properly perfect appraisal of their shares; (4) meet certain other conditions and statutory requirements described in this proxy statement; and (5) do not withdraw their demands or otherwise lose their rights to appraisal will be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL. This means that such stockholders will be entitled to seek appraisal of their shares by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of their shares of common stock, exclusive of any elements of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment at a rate of 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation pays to each stockholder entitled to appraisal an amount in cash, interest will accrue thereafter only upon the sum of (i) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (ii) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment. Due to the complexity of the appraisal process, stockholders who wish to seek appraisal of their shares are encouraged to seek the advice of legal counsel with respect to the exercise of appraisal rights.

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Stockholders considering seeking appraisal should be aware that the fair value of their shares as determined pursuant to Section 262 of the DGCL could be more than, the same as or less than the value of the consideration that they would receive pursuant to the merger agreement if they did not seek appraisal of their shares.

Only a stockholder of record may submit a demand for appraisal. To exercise appraisal rights, the stockholder of record must (1) submit a written demand for appraisal to Echelon before the vote is taken on the proposal to adopt the merger agreement; (2) not vote, in person or by proxy, in favor of the proposal to adopt the merger agreement; (3) continue to hold the subject shares of common stock of record through the effective time of the merger; and (4) strictly comply with all other procedures for exercising appraisal rights under the DGCL. The failure to follow exactly the procedures specified under the DGCL may result in the loss of appraisal rights. In addition, the Delaware Court of Chancery will dismiss appraisal proceedings in respect of Echelon unless certain conditions are satisfied by the stockholders seeking appraisal, as described further below. The requirements under Section 262 of the DGCL for exercising appraisal rights are described in further detail in this proxy statement, which description is qualified in its entirety by Section 262 of the DGCL, the relevant section of the DGCL regarding appraisal rights, a copy of which is attached as Annex C to this proxy statement. If you hold your shares of common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or other nominee to determine the appropriate procedures for the making of a demand for appraisal on your behalf by your bank, broker or other nominee.

Questions and Additional Information

If you have any questions concerning the merger, the special meeting or this proxy statement, would like additional copies of this proxy statement or need help submitting your proxy or voting your shares of common stock, please contact our proxy solicitor:

The Proxy Advisory Group, LLC

18 East 41st Street, Suite 2000

New York, New York 10017

Stockholders May Call:

(888) 557-7699 (Toll-Free From the U.S. and Canada)

or

(212) 616-2180 (From Other Locations)

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THE MERGER

The rights and obligations of the parties to the merger agreement are governed by the specific terms and conditions of the merger agreement and not by any summary or other information in this proxy statement. Therefore, this discussion of the merger is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement and incorporated into this proxy statement by reference. You should read the entire merger agreement carefully as it is the legal document that governs the merger.

Parties Involved in the Merger

Echelon Corporation

2901 Patrick Henry Drive

Santa Clara, CA 95054

(408) 938-5200

Echelon has pioneered the development of open-standard networking platforms for connecting, monitoring and controlling devices in commercial and industrial applications. With more than 140 million connected devices installed worldwide, Echelon’s solutions host a range of applications enabling customers to reduce energy and operational costs, improve safety and comfort, and create efficiencies through optimizing physical systems. Echelon is focusing today on two IoT (Internet of Things) market areas: creating smart cities and smart campuses through connected outdoor lighting systems, and enabling device makers to bring connected products to market faster via a range of IoT-optimized embedded systems.

Echelon’s common stock is listed on Nasdaq under the symbol “ELON.”

Adesto Technologies Corporation

3600 Peterson Way

Santa Clara, CA 95054

(408) 400-0578

Adesto is a leading provider of innovative application-specific semiconductors for the IoT era. Adesto’s technology is used by more than 2,000 customers worldwide who are creating differentiated solutions across industrial, consumer, medical and communications markets. With its growing portfolio of high-value technologies, Adesto is helping its customers usher in the era of the Internet of Things.

Adesto’s common stock is listed on Nasdaq under the symbol “IOTS.”

Circuit Acquisition Corporation

3600 Peterson Way

Santa Clara, CA 95054

(408) 400-0578

Merger Sub is a wholly owned subsidiary of Adesto and was formed on June 22, 2018, solely for the purpose of engaging in the transactions contemplated by the merger agreement. Merger Sub has not engaged in any business activities other than in connection with the transactions contemplated by the merger agreement.

Effect of the Merger

Upon the terms and subject to the conditions of the merger agreement, and in accordance with the DGCL, at the effective time of the merger, (1) Merger Sub will merge with and into Echelon; (2) the separate corporate existence of Merger Sub will cease; and (3) Echelon will continue as the surviving corporation in the merger and a wholly owned subsidiary of Adesto.

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As a result of the merger, Echelon will cease to be a publicly traded company. If the merger is completed, you will not own any shares of capital stock of the surviving corporation.

The effective time of the merger will occur upon the filing of a certificate of merger with, and acceptance of that certificate by, the Secretary of State of the State of Delaware (or at a later time as we, Adesto and Merger Sub may agree and specify in such certificate of merger).

Effect on Echelon if the Merger is Not Completed

If the merger agreement is not adopted by Echelon stockholders, or if the merger is not completed for any other reason, Echelon stockholders will not receive any payment for their shares of common stock in connection with the merger. Instead, (1) Echelon will remain an independent public company; (2) our common stock will continue to be listed and traded on Nasdaq and registered under the Exchange Act; and (3) we will continue to file periodic reports with the SEC. In addition, if the merger is not completed, we expect that: (1) our management will operate the business in a manner similar to that in which it is being operated today; and (2) Echelon stockholders will continue to be subject to the same risks and opportunities to which they are currently subject, including risks related to the highly competitive industry in which Echelon operates and adverse economic conditions.

Furthermore, if the merger is not completed, and depending on the circumstances that caused the merger not to be completed, the price of our common stock may decline significantly. If that were to occur, it is uncertain when, if ever, the price of our common stock would return to the price at which it trades as of the date of this proxy statement.

Accordingly, if the merger is not completed, there can be no assurance as to the effect of the merger not being completed on the future value of your shares of common stock. If the merger is not completed, the Echelon Board will continue to evaluate and review, among other things, Echelon’s business, operations, strategic direction and capitalization, and will make whatever changes it deems appropriate. If the merger agreement is not adopted by Echelon stockholders or if the merger is not completed for any other reason, Echelon’s business, prospects or results of operation may be adversely impacted.

Per Share Merger Consideration

Upon the terms and subject to the conditions of the merger agreement, at the effective time of the merger:

At or prior to the closing of the merger, a sufficient amount of cash will be deposited with a designated payment agent to pay the aggregate per share merger consideration. Once a Echelon stockholder has provided the payment agent with his, her or its stock certificates (or affidavit of loss in lieu of a stock certificate) or customary agent’s message with respect to book-entry shares, letter of transmittal and other items specified by the payment

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agent, the payment agent will promptly pay the stockholder its per share merger consideration. For more information, see the section of this proxy statement captioned “The Merger Agreement—Payment Agent, Exchange Fund and Exchange and Payment Procedures.”

After the merger is completed, each Echelon stockholder will have the right to receive its per share merger consideration, as described in the section of this proxy statement captioned “The Merger Agreement—Conversion of Shares,” but will no longer have any rights as a Echelon stockholder (except that Echelon stockholders who properly and validly exercise and perfect, and do not validly withdraw or subsequently lose, their appraisal rights will have the right to receive payment for the “fair value” of their shares, determined pursuant to an appraisal proceeding contemplated by Delaware law as described below under the section of this proxy statement captioned “The Merger—Appraisal Rights”).

Background of the Merger

The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. This chronology does not purport to catalogue every conversation of or among the Echelon Board, Echelon’s representatives, and other parties. Other than as described below, there have been no material contacts between Echelon and Adesto in the past two years.

The Echelon Board regularly evaluates Echelon’s strategic direction and ongoing business plans with a view toward strengthening Echelon’s business and enhancing stockholder value. As part of this evaluation, the Echelon Board has, from time to time, considered a variety of strategic alternatives. These have included, among others, (1) the continuation of Echelon’s current business plan as a standalone entity; (2) investment in, and development of, new products; (3) potential expansion opportunities into new business lines through acquisitions and combinations of Echelon with other businesses, as well as through potential partnerships or other commercial relationships; (4) the sale of Echelon or one or more of its business units; and (5) strategic investments in Echelon and other capital raising activities.

In 2012, Echelon retained an internationally recognized investment bank to assist the Echelon Board in understanding, among other things, market trends, public and industry perspectives on its business, and potential strategic alternatives for Echelon. In 2014, with the assistance of that investment bank, the Echelon Board began to focus on a potential sale of Echelon’s smart metering business, although the Echelon Board remained open to all potential strategic alternatives. In September 2014, Echelon completed the sale of its smart metering business.

Beginning in early 2015 and continuing into 2016, with the assistance of that investment bank, the Echelon Board conducted a comprehensive review of strategic alternatives for Echelon. Echelon publicly announced this process on August 6, 2015. As part of this process, Echelon contacted over 60 potential acquirers, composed of a mix of strategic buyers and private equity firms. Although Echelon engaged in preliminary discussions with various parties, this process did not result in any specific proposal.

By late 2016, the Echelon Board was no longer actively pursuing a review of strategic alternatives due to a lack of interested parties, although it did not formally terminate the review process. From time to time, members of Echelon management received communications from parties considering a transaction with Echelon. These communications were exploratory in nature and each was evaluated by Echelon management. None of these communications resulted in a specific proposal.

In late February 2017, Ronald A. Sege, Echelon’s Chairman, President and Chief Executive Officer, was contacted by a representative of a company referred to as “Party A” concerning Party A’s interest in pursuing an acquisition of Echelon. Party A was not among the potential acquirers contacted as part of Echelon’s prior reviews of strategic alternatives in 2014 and 2015.

On March 21, 2017, Party A sent a letter to Echelon proposing to acquire Echelon in an all-cash transaction for $6.25 per share of common stock.

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In late March 2017 and again in early April 2017, the Echelon Board met to review the proposal from Party A. Members of Echelon management and representatives of Wilson Sonsini Goodrich & Rosati, Professional Corporation, legal counsel to Echelon (which we refer to as “Wilson Sonsini”) attended these meetings. The representatives of Wilson Sonsini discussed with the members of the Echelon Board their fiduciary duties as directors. The Echelon Board authorized Echelon management to continue discussions with Party A. The Echelon Board also authorized Echelon management to enter into a limited period of exclusivity if Echelon management determined that was appropriate in order to secure a transaction.

During the remainder of April 2017 and into May 2017, members of Echelon management and representatives of Wilson Sonsini negotiated the key terms of an acquisition of Echelon by Party A. Echelon management kept the Echelon Board regularly updated on the status of negotiations with Party A. From the start of discussions with Party A, Echelon repeatedly stressed its need to understand Party A’s proposed financing in order to properly evaluate Party A’s acquisition proposal.

On May 18, 2017, Party A and Echelon signed a term sheet for Party A to acquire Echelon for $7.50 per share in cash. Echelon also agreed to negotiate exclusively with Party A for 30 days. The exclusivity period was later extended to June 30, 2017.

Throughout June 2017 and into July 2017, Party A engaged in an extensive due diligence review of Echelon. In addition, Party A and its legal counsel exchanged numerous drafts of a proposed merger agreement with Echelon and Wilson Sonsini.

By late June 2017, Party A had missed numerous deadlines to provide information to the Echelon Board concerning how Party A would obtain the financing necessary to consummate an acquisition of Echelon.

On June 30, 2017, Party A requested an extension of Echelon’s obligation to negotiate exclusively with Party A. Echelon declined to extend the exclusivity period but agreed to continue to work with Party A toward a possible acquisition of Echelon.

On July 21, 2017, the Echelon Board met, with members of Echelon management and representatives of Wilson Sonsini in attendance. It was the consensus of the Echelon Board that Echelon should not actively pursue additional discussions with Party A until Party A could provide definitive information on how it would obtain the financing necessary to consummate an acquisition of Echelon. The Echelon Board remained open to future discussions with Party A should it provide such documentation. As the engagement with the investment bank retained in 2012 had concluded, the Echelon Board authorized Echelon management to interview investment banks in connection with a possible review of strategic alternatives for Echelon.

After July 21, 2017, members of Echelon management had sporadic contact with representatives of Party A concerning Party A’s continued interest in an acquisition of Echelon. During these discussions, members of Echelon management reiterated the willingness of the Echelon Board to continue acquisition discussions following Echelon’s receipt of customary financing documentation. Party A never provided evidence of its ability to secure the financing necessary to consummate an acquisition of Echelon.

In September 2017, members of each of Adesto management and Echelon management met to discuss a potential commercial collaboration, but these discussions did not result in an agreement at that time. This represented the first discussions of any type between Adesto management and Echelon management.

On September 21, 2017, the Echelon Board met, with members of Echelon management in attendance. Representatives of Wilson Sonsini also attended a portion of this meeting. Echelon management discussed with the Echelon Board the results of its interviews of several investment banks. The Echelon Board selected Piper Jaffray to serve as its financial advisor in connection with a possible sale of Echelon or one or more of its businesses. The Echelon Board selected Piper Jaffray due to that firm’s qualifications, expertise, international

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reputation and knowledge of the industry in which Echelon operates, and Piper Jaffray’s experience in similar situations. Although the Echelon Board expressed a preference for selling all of the common stock in a single transaction—as it believed that outcome would best maximize stockholder value—it informed Piper Jaffray of the Echelon Board’s willingness to consider any type of value-enhancing transaction, including (1) a sale of one or more of Echelon’s businesses and (2) a substantial investment in Echelon.

On September 25, 2017, Adesto entered into a confidentiality agreement with Echelon.

On October 5, 2017, members of each of Adesto management and Echelon management met to discuss the state of their respective businesses.

On October 6, 2017, Echelon formally engaged Piper Jaffray to serve as its financial advisor.

Starting in October 2017 and continuing into February 2018, Piper Jaffray, using an evolving process, ultimately contacted 132 potential acquirers, composed of 109 strategic buyers (including Adesto) and 23 private equity firms. These potential acquirers were composed of a mix of parties previously contacted during earlier recent reviews of strategic alternatives and other parties not previously contacted that were thought to have an interest in a transaction with Echelon. Echelon determined not to contact Party A about participating in this process due to concerns about Party A’s lack of sufficient financial resources to complete an acquisition of Echelon.

In December 2017, Adesto received access to an online data room containing due diligence information about Echelon and began its due diligence review of Echelon

In late January 2018, Echelon received three preliminary, non-binding indications of interest. Adesto proposed an all-cash acquisition of Echelon for $7.25 to $8.00 per share of common stock. A company referred to as “Party B” proposed an all-cash acquisition of Echelon for $8.11 per share of common stock. A private equity firm referred to as “Party C” proposed an all-cash acquisition of Echelon for $8.00 per share of common stock. Party C also submitted a separate proposal to, among other things, acquire a minority stake in Echelon in lieu of a full acquisition.

On January 31, 2018, the Echelon Board met, with members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini in attendance. The representatives of Piper Jaffray reviewed for, and discussed with, the Echelon Board a summary of Piper Jaffray’s preliminary financial analysis of Echelon. The Echelon Board determined that Echelon management and representatives of Piper Jaffray should continue discussions with Adesto, Party B and Party C with the goal of improving the terms of their respective preliminary proposals. In addition, the Echelon Board instructed Piper Jaffray to continue discussions with other parties that were considering a transaction with Echelon but had yet to make a formal proposal.

On February 21, 2018, Piper Jaffray notified those parties that were still considering a transaction with Echelon, including Adesto, Party B and Party C, that they should submit final proposals by March 22, 2018.

In February 2018 and into March 2018, Echelon management and Piper Jaffray assisted various interested parties, including Adesto, Party B and Party C, with due diligence in order to allow them to develop an increased understanding of Echelon and its prospects.

In early March 2018, Echelon made available a draft of the merger agreement for review by those parties that were still considering a transaction with Echelon.

On March 22, 2018, Echelon received four preliminary, non-binding indications of interest. Adesto proposed an all-cash acquisition of Echelon for $7.50 per share of common stock. Adesto’s proposal also required that Echelon have at least $17 million in cash on hand at the closing. Party B proposed an all-cash

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acquisition of Echelon for $7.97 per share of common stock. Party B’s proposal provided that its obligation to close the acquisition would be conditioned on the agreement of two of Echelon’s key suppliers to extend the terms of their supply agreements. Party B also requested, as part of its due diligence investigation, interviews with numerous Echelon employees, many of whom were not aware that Echelon was conducting a review of strategic alternatives. Party C proposed an all-cash acquisition of Echelon for $8.75 per share of common stock. Party C’s proposal also required that Echelon have at least $18 million in cash on hand at the closing. A private equity firm referred to as “Party D” proposed an all-cash acquisition of Echelon for $8.68 per share of common stock. Party D’s proposal also required that Echelon have at least $20 million in cash on hand at the closing. The proposals from Adesto, Party B, Party C and Party D were accompanied by a request for Echelon to negotiate with the respective party on an exclusive basis. Echelon also received a highly preliminary proposal from an investor referred to as “Party E” to acquire Echelon’s lighting business for little value.

On April 4, 2018, Party D reduced the value of its proposal to $7.74 per share in cash, citing the impact of anticipated transaction-related expenses on Echelon’s projected cash balance.

On April 5, 2018, the Echelon Board met, with members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini in attendance. The representatives of Wilson Sonsini discussed with the members of the Echelon Board their fiduciary duties as directors. The Echelon Board reviewed the proposals from Adesto, Party B, Party C, Party D and Party E. The Echelon Board discussed that, although the proposal from Party C had the highest value per share, the financial resources of Party C were unproven. The Echelon Board was concerned that the investment funds directly managed by Party C would provide a comparatively small amount of the equity portion of its proposal; most of the equity investment would come from a number of third parties, each of which had their own due diligence requirements and internal approvals processes. The significant debt required by Party C’s proposal was also a concern for the Echelon Board. Although Party C’s proposal included a debt commitment letter from a financing source, the due diligence and other conditions in that letter, in the opinion of the Echelon Board, imposed potentially significant risk on Party C’s ability to complete a transaction with Echelon. The Echelon Board also considered its overall familiarity with Party C, as certain of its principals previously discussed a number of transaction structures with Echelon management during and after Echelon’s review of strategic alternatives in 2015. Despite the investment of significant time and attention by Echelon management, these discussions never advanced beyond the exploratory structuring stage. In comparison, the proposals from Adesto and Party B did not include financing contingencies and were from operating companies with meaningful assets and the ability to access the capital markets. In the case of Party B, that company then had sufficient cash on its balance sheet to pay for an acquisition of Echelon. In view of (1) the greater certainty of closing of a transaction with Adesto or Party B as compared to Party C; (2) concerns over Party C’s ability to secure the necessary debt and equity financing to consummate a transaction with Echelon as compared to Adesto and Party B; (3) the higher per share price of Party B’s proposal as compared to Adesto’s; and (4) the cash resources of Party B, the Echelon Board instructed Echelon management and Piper Jaffray to seek to improve the terms of Party B’s proposal. In order to seek to preserve a competitive bidding dynamic, the Echelon Board also instructed Piper Jaffray to continue to engage with Adesto, Party C and Party D in the hopes of preserving their interest in an acquisition as well as potentially causing them to improve the price and deal certainty terms of their respective proposals. With respect to Party E, the Echelon Board determined that it was not presently interested in considering Party E’s proposal in view of the significantly more attractive nature of the proposals received from Adesto and Party B. The Echelon Board also authorized Echelon management to enter into a limited period of exclusivity if Echelon management determined that was appropriate in order to secure a transaction. The Echelon Board stressed the importance that it placed on certainty of closing; the Echelon Board believed that announcing and failing to close an acquisition of Echelon would be significantly damaging to Echelon’s business.

Following the meeting of the Echelon Board on April 5, 2018, representatives of Piper Jaffray contacted representatives of Adesto, Party B, Party C and Party D and informed each that its respective proposal was not differentiated from the proposals received from other bidders and that each should improve the terms of its proposal. Party D declined to change its proposal.

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On April 11, 2018, Party B increased the value of its proposal to $8.31 per share of common stock. Party B continued to insist on burdensome due diligence requirements (including a significant number of employee interviews) and, as conditions to closing, the extension of two supply agreements.

On April 12, 2018, Adesto increased the value of its proposal to $8.50 per share of common stock.

On April 13, 2018, following consultation with members of Echelon management, representatives of Piper Jaffray informed representatives of each of Adesto, Party B and Party C that their respective revised proposals were not differentiated from the proposals received from other bidders and that each should further improve the terms of its proposal.

On April 14, 2018, Party B modified the terms of its proposal such that, as conditions to closing an acquisition of Echelon, (1) one of Echelon’s key suppliers would need to agree to extend the terms of its supply agreement; and (2) another key supplier would need to confirm that it did not intend to terminate its supply agreement. Party B informed Echelon that it would not further change its proposed purchase price. As part of its due diligence investigation, Party B continued to insist on interviews with certain Echelon employees who were not aware that Echelon was conducting a review of strategic alternatives. Despite repeated efforts, members of Echelon management were unable to get Party B to agree to remove these closing conditions or to conduct these interviews after a transaction with Party B was announced. Echelon management was of the opinion that the closing conditions insisted on by Party B resulted in significant uncertainty as to Party B’s obligation to consummate an acquisition of Echelon, as it conditioned the closing on the actions of third parties. This uncertainty was inconsistent with the Echelon Board’s stated desire for a transaction that had a high degree of certainty. Echelon management was also concerned about disclosing the strategic review process to additional employees and third parties. Accordingly, and in review of the higher per share price offered by Adesto, Echelon management began to focus on pursuing a transaction with Adesto.

On April 16, 2018, Mr. Sege communicated with Narbeh Derhacobian, Adesto’s President and Chief Executive Officer. Mr. Sege conveyed Echelon’s concerns with the minimum cash closing condition requested by Adesto.

From April 16, 2018, to April 19, 2018, Echelon and Adesto negotiated the amount of cash that Echelon was required to have at the closing for Adesto to be obligated to proceed with the acquisition. Adesto ultimately proposed that Echelon have at least $12.55 million of cash as of the end of July 31, 2018, and that this amount be adjusted for certain expenses that Echelon had incurred, and would continue to incur, in connection with a transaction with Adesto.

On April 18, 2018, Party C submitted a revised proposal for a minority investment in Echelon. This proposal did not include the use of debt financing but was otherwise not materially different from Party C’s prior minority investment proposal.

On April 19, 2018, Adesto and Echelon signed a term sheet for Adesto to acquire Echelon for $8.50 per share of common stock. Echelon also agreed to negotiate exclusively with Adesto until May 10, 2018, with the ability for Adesto to extend this period by seven days.

On April 24, 2018, on behalf of Adesto, representatives of Fenwick & West LLP, legal counsel to Adesto, which we refer to as “Fenwick,” provided comments to a draft merger agreement.

From April 24, 2018, until May 15, 2018, representatives of Wilson Sonsini, on behalf of Echelon, and representatives of Fenwick on behalf of Adesto, negotiated the terms of the merger agreement. The key items of negotiation were (1) the nature of any reimbursement of Adesto’s expenses in connection with a termination of the merger agreement; (2) the financing commitments to be made by Adesto; and (3) the obligations of Echelon during the period between signing of the merger agreement and the closing of the merger.

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On May 7, 2018, Adesto elected to extend the exclusivity period to May 17, 2018.

On May 8, 2018, Mr. Derhacobian informed Mr. Sege that Adesto was in advanced discussions to acquire another company.

On May 9, 2018, Adesto publicly announced the acquisition of S3 Semiconductors using financing from a senior term loan.

On May 12, 2018, and May 14, 2018, members of Adesto management communicated separately with members of Echelon management and representatives of Piper Jaffray. During these conversations, the members of Adesto management stated that Adesto intended to pursue an equity offering to finance the acquisition of Echelon and would not secure debt financing at that time to fund the acquisition.

Early on May 15, 2018, representatives of Fenwick, on behalf of Adesto, provided a revised draft of the merger agreement to representatives of Wilson Sonsini, on behalf of Echelon. Among other things, this draft provided that Adesto (1) would use its reasonable best efforts to obtain the financing necessary for an acquisition of Echelon; and (2) would pay Echelon a termination fee of approximately $3 million as a sole and exclusive remedy if Echelon terminated the merger agreement because Adesto did not consummate the merger after all closing conditions were satisfied.

Later on May 15, 2018, the Echelon Board met, with members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini in attendance. The Echelon Board discussed the status of the acquisition by Adesto and the terms of Adesto’s latest draft of the merger agreement. The Echelon Board determined that the transaction proposed by Adesto was unacceptable because there was no certainty that Adesto could obtain the necessary financing to acquire Echelon. As a result, the Echelon Board viewed the exclusivity agreement with Adesto to no longer be in effect. The Echelon Board instructed Echelon management and Piper Jaffray to inform Adesto of this and promptly begin discussions with other potentially interested parties.

Following the meeting of the Echelon Board on May 15, 2018, Echelon delivered a letter to Adesto stating that, in light of Adetso’s statements and intentions, the exclusivity agreement was no longer effective. Representatives of Piper Jaffray also contacted Party B and Party C to determine whether either was still interested in an acquisition of Echelon. Party B and Party C later confirmed their respective continued interest.

On May 17, 2018, representatives of Piper Jaffray, following consultation with members of Echelon management, delivered a draft merger agreement to representatives of Party B that reflected negotiated terms that Echelon was prepared to agree to immediately.

Throughout the remainder of May 2018 and into June 2018, members of Echelon management and representatives of Piper Jaffray had continued discussions with representatives of Adesto, Party B and Party C concerning their interest in an acquisition of Echelon. With respect to Adesto, these discussions also included periodic updates on the status of Adesto’s efforts to obtain the financing necessary for an acquisition of Echelon.

On May 31, 2018, Party B informed representatives of Piper Jaffray that Party B would not actively pursue an acquisition of Echelon and would instead wait to see if Echelon entered into a transaction with another party.

On June 7, 2018, Party C delivered a new proposal to Echelon. This proposal contemplated Party C making a significant minority investment in Echelon, with Echelon using the proceeds from that investment to repurchase outstanding shares of common stock. In addition, the Echelon Board would be substantially reconstituted. Party C did not provide specific information as to its operational plan for Echelon following the investment.

On June 8, 2018, Adesto renewed its proposal to acquire Echelon for $8.50 per share of common stock. Although Adesto did not then have sufficient cash to acquire Echelon, it stated that it was making plans to

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conduct an equity offering in the near future. Adesto reiterated its willingness to pay Echelon a termination fee of approximately $3 million if Echelon terminated the merger agreement because Adesto did not consummate the merger after all closing conditions were satisfied.

On June 11, 2018, Party C provided additional information about its proposal and confirmed its continued interest in a minority investment in Echelon.

On June 16, 2018, and June 19, 2018, representatives of each of Wilson Sonsini and Fenwick discussed the structure and terms of a termination fee payable by Adesto to Echelon if Echelon terminated the merger agreement because Adesto did not consummate the merger after all closing conditions were satisfied.

During the week of June 18, 2018, members of Echelon management negotiated with members of Adesto management the termination fee payable by Adesto if Echelon terminated the acquisition because of Adesto’s failure to close. The parties ultimately agreed on a termination fee of $4,410,000.

Also during the week of June 18, 2018, Mr. Sege informed Mr. Derhacobian that, in Mr. Sege’s opinion, the Echelon Board would not accept any type of minimum cash closing condition. Mr. Derhacobian informed Mr. Sege that he anticipated Adesto would no longer seek a minimum cash closing condition.

On June 21, 2018, members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini attended a due diligence meeting with Adesto management and representatives of each of Fenwick, three investment banking firms assisting Adesto, and counsel to those investment banks. During this meeting, (1) the attendees discussed the status of Adesto’s efforts to acquire Echelon; and (2) the investment banks conducted preliminary due diligence on Echelon.

On June 22, 2018, the Echelon Board met, with members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini in attendance. The Echelon Board discussed the proposals from Adesto and Party C and the risks and uncertainties of each. The Echelon Board determined to proceed with additional negotiations with Adesto because, in the judgment of the Echelon Board, Adesto’s proposal had the potential to deliver the best value (taking into consideration both deal terms and closing certainty) to Echelon stockholders.

During the week of June 25, 2018, Adesto completed its due diligence investigation of Echelon. In addition, representatives of each of Wilson Sonsini and Fenwick completed negotiation of the merger agreement and the accompanying disclosure letter. These negotiations principally focused on the circumstances in which Echelon could terminate the merger agreement and collect a termination fee from Adesto if it failed to close. The investment banks retained by Adesto also continued their due diligence investigation of Echelon.

Also during the week of June 25, 2018, Adesto withdrew its request that Echelon have a minimum amount of cash at the closing.

On June 28, 2018, the Echelon Board met, with members of Echelon management and representatives of each of Piper Jaffray and Wilson Sonsini in attendance. The representatives of Wilson Sonsini discussed with the members of the Echelon Board their fiduciary duties as directors. The representatives of Piper Jaffray reviewed for, and discussed with, the Echelon Board the financial analyses of Piper Jaffray of the proposed consideration of $8.50 per share of common stock pursuant to the proposed transaction with Adesto. The representatives of Piper Jaffray delivered Piper Jaffray’s oral opinion to the Echelon Board, which was confirmed by delivery of a written opinion dated June 28, 2018, to the effect that, as of June 28, 2018, and based upon and subject to the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken set forth in Piper Jaffray’s written opinion, the $8.50 in cash per share of common stock to be received by the holders of common stock, other than Adesto, Merger Sub and their respective affiliates, if any, pursuant to the merger agreement was fair, from a financial point of view, to such holders of common stock. The representatives of Wilson Sonsini reviewed with the members of the Echelon Board the key terms of the merger

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agreement. The members of the Echelon Board discussed potential reasons for and against entering into the merger with Adesto. The Echelon Board, after considering the factors more fully described in this proxy statement, unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Echelon and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement. The merger agreement was subsequently signed.

On June 29, 2018, prior to the opening of trading of the common stock on Nasdaq, Echelon and Adesto publicly announced the signing of the merger agreement.

On July 13, 2018, Adesto completed the sale of 6,700,000 shares of its common stock for net proceeds of $37.3 million.

Recommendation of the Echelon Board and Reasons for the Merger

Recommendation of the Echelon Board

The Echelon Board has unanimously (1) determined that the merger agreement, the merger and the other transactions contemplated by the merger agreement are fair to, advisable and in the best interests of Echelon and its stockholders; and (2) adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement.

The Echelon Board unanimously recommends that you vote (1) “FOR” the adoption of the merger agreement; (2) “FOR” the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies if there are insufficient votes to adopt the merger agreement at the time of the special meeting; and (3) “FOR” the compensation that will or may become payable by Echelon to our named executive officers in connection with the merger on a non-binding, advisory basis.

Reasons for the Merger

In evaluating the merger agreement, the merger and the other transactions contemplated by the merger agreement, the Echelon Board consulted with Echelon management, outside legal counsel and Piper Jaffray. In recommending that Echelon stockholders vote “FOR” the adoption of the merger agreement, the Echelon Board considered a number of factors, including the following (which factors are not necessarily presented in order of relative importance):

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In recommending that Echelon stockholders vote “FOR” the adoption of the merger agreement, the Echelon Board also considered a number of uncertainties and risks and other potentially negative factors, including the following (which factors are not necessarily presented in order of relative importance):

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This discussion is not meant to be exhaustive, but summarizes the material factors considered by the Echelon Board in its consideration of the merger. After considering these and other factors, the Echelon Board concluded that the potential benefits of the merger outweighed the uncertainties and risks. In view of the variety of factors considered by the Echelon Board and the complexity of these factors, the Echelon Board did not find it practicable to, and did not, quantify or otherwise assign relative weights to the foregoing factors in reaching its determination and recommendations. Moreover, each member of the Echelon Board applied his or her own personal business judgment to the process and may have assigned different weights to different factors. The Echelon Board unanimously adopted and approved the merger agreement, the merger and the other transactions contemplated by the merger agreement and recommended that Echelon stockholders adopt the merger agreement based upon the totality of the information presented to and considered by the Echelon Board.

Fairness Opinion of Piper Jaffray

Echelon retained Piper Jaffray to act as financial advisor to the Echelon Board, and, if requested, to render to the Echelon Board an opinion as to the fairness, from a financial point of view, of the merger consideration of $8.50 in cash per share to be received by the holders of common stock, other than Adesto, Merger Sub and their respective affiliates, if any.

The full text of the Piper Jaffray written opinion dated June 28, 2018, which sets forth, among other things, the assumptions made, procedures followed, matters considered and limitations on the scope of the review undertaken by Piper Jaffray in rendering its opinion, is attached as Annex B. You are urged to, and should, carefully read the Piper Jaffray opinion in its entirety and this summary is qualified in its entirety by reference to the written opinion. The Piper Jaffray opinion addresses only the fairness, from a financial point of view and as of the date of the opinion, of the merger consideration of $8.50 in cash per share to be received by the holders of common stock (other than Adesto, Merger Sub and their respective affiliates, if any) in the merger. Piper Jaffray’s opinion was directed to the Echelon Board in connection with its consideration of the merger and was not intended to be, and does not constitute, a recommendation to any holders of common stock as to how such holders should vote or act with respect to the merger or any other matter.

In connection with rendering the opinion described above and performing its related financial analyses, Piper Jaffray, among other things:

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In addition, Piper Jaffray conducted such other analyses, examinations and inquiries and considered such other financial, economic and market criteria as Piper Jaffray deemed necessary in arriving at its opinion.

The following is a summary of the material financial analyses performed by Piper Jaffray in connection with the preparation of its fairness opinion and reviewed with the Echelon Board at a meeting held on June 28, 2018.

This summary includes information presented in tabular format, which tables must be read together with the text of each analysis summary and considered as a whole in order to fully understand the financial analyses presented by Piper Jaffray. The tables alone do not constitute a complete summary of the financial analyses. The order in which these analyses are presented below, and the results of those analyses, should not be taken as any indication of the relative importance or weight given to these analyses by Piper Jaffray or the Echelon Board. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before June 27, 2018, and is not necessarily indicative of current market conditions.

For purposes of its analyses, and unless the context indicates otherwise, Piper Jaffray calculated (1) Echelon’s implied equity value based on diluted shares of common stock and common stock equivalents outstanding, including options and stock units calculated using the treasury stock method; and (2) enterprise value (which is referred to as “EV”) to be implied equity value, plus debt, which in the case of Echelon was approximately zero, as of June 27, 2018, less cash, which was approximately $18.1 million, as of May 31, 2018.

Historical Trading Analysis

Piper Jaffray reviewed the historical closing prices and trading volumes for the common stock over the one-year period ended June 27, 2018, in order to provide background information on the prices at which the common stock has historically traded. The following table summarizes some of these historical closing prices, and average closing prices, as well as the premium that the merger consideration reflects as compared to the reference closing prices:

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Selected Public Companies Analysis

Semiconductor Companies

Piper Jaffray reviewed projected financial data of Echelon for the year ended December 31, 2018, and compared such data to corresponding historical balance sheet data and Wall Street research forecasts for public companies in the semiconductor industry that Piper Jaffray believed were comparable to Echelon’s business profile. Piper Jaffray selected public semiconductor companies that it considered to be relevant, consisting of semiconductor companies with revenue for calendar year 2017 between $35 million and $200 million, enterprise value between $20 million and $350 million, revenue growth less than 35% in calendar year 2017, gross margin less than 75% in calendar year 2017, and excluding companies focused on the wearables market or solar market.

Based on these criteria, Piper Jaffray selected the following eight companies:

For the selected public semiconductor companies analysis, Piper Jaffray compared projected implied EV/revenue multiples for Echelon for the 2018 calendar year (which we refer to as “calendar year” or “CY”) based on the merger consideration, on the one hand, to the corresponding implied EV/revenue multiples for the selected public companies derived from their closing prices per share on June 27, 2018, and their cash and debt outstanding amounts as indicated in public filings as of such date, on the other hand. Projected CY 2018 revenue for Echelon was based on estimates provided by Echelon management. Projected CY 2018 revenue for the selected public companies were based on Wall Street estimates. Piper Jaffray omitted from the analysis the EV/revenue multiples of companies that were not covered by Wall Street and therefore did not have Wall Street estimates of CY 2018 revenue.

The analysis indicated the following multiples:

Based on this analysis, Piper Jaffray noted that, with respect to Echelon, based on the merger consideration, the EV/revenue multiples fell below the “Low” end of the range of implied EV/revenue multiples for the selected public companies. In addition, Piper Jaffray observed that the range implied per share values for common stock based on these multiples yielded the following, as compared to the merger consideration:

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Financial Profile

Piper Jaffray reviewed projected financial data of Echelon for the year ended December 31, 2018, and compared such data to corresponding historical balance sheet data and Wall Street research forecasts for public companies headquartered in the United States that Piper Jaffray believed were comparable to Echelon’s financial profile. Piper Jaffray selected public companies across all industries with revenue for calendar year 2017 between $10 million and $50 million, enterprise value between $20 million and $100 million, revenue growth less than 5% in calendar year 2017, gross margin between 30% and 60% in calendar year 2017, and earnings before interest, taxes, depreciation and amortization (which we refer to as “EBITDA”) margin less than 0%.

Based on these criteria, Piper Jaffray selected the following six companies:

For the selected companies in this analysis, Piper Jaffray compared calendar year projected implied EV/revenue multiples for Echelon based on the merger consideration, on the one hand, to the corresponding implied EV multiples for the selected public companies derived from their closing prices per share on June 27, 2018, and their cash and debt outstanding amounts as indicated in public filings as of such date, on the other hand. Projected CY 2018 revenue for Echelon was based on estimates provided by Echelon management. Projected CY 2018 revenue for the selected public companies were based on Wall Street estimates. Piper Jaffray omitted from the analysis the EV/revenue multiples of companies that were not covered by Wall Street and therefore did not have Wall Street estimates of CY 2018 revenue.

The analysis indicated the following multiples:

Based on this analysis, Piper Jaffray noted that, with respect to Echelon, based on the merger consideration, the EV/revenue multiples fell between the “Low” and the 25th percentile range of implied EV/revenue multiples for the selected public companies. In addition, Piper Jaffray observed that the range of implied per share values for common stock based on these multiples yielded the following, as compared to the merger consideration:

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Selected M&A Transaction Analysis

Piper Jaffray reviewed merger and acquisition (which we referred to as “M&A”) transactions involving target companies in the technology industry that Piper Jaffray believed were comparable to Echelon’s financial profile. Piper Jaffray selected transactions that closed after June 27, 2015, for which it believed the targets to have been primarily public technology companies headquartered in the United States where the total transaction value was greater than $10 million and the implied enterprise value of the target was between $10 million and $100 million.

Based on these criteria, Piper Jaffray selected the following 10 transactions:

For the selected M&A transactions analysis, Piper Jaffray compared implied EV to the last twelve months (which is referred to as “LTM”) revenue multiples for Echelon, based on the merger consideration, to the corresponding multiples for each selected transaction. LTM revenues for Echelon were based on preliminary historical financial data for the 12 months ended March 31, 2018.

The analysis indicated the following multiples:

Based on this analysis, Piper Jaffray noted that, with respect to Echelon, based on the merger consideration, the EV/revenue multiple fell between the “Low” and 25th percentile range of implied multiples for the selected M&A transactions. In addition, Piper Jaffray observed that the implied per share values for common stock based on these multiples yielded the following, as compared to the merger consideration:

Premiums Paid Analysis

Piper Jaffray reviewed publicly available information for selected completed or pending M&A transactions to determine the premiums paid in such transactions over recent trading prices of the target companies prior to announcement of the transaction. Piper Jaffray selected transactions for which Piper Jaffray considered the target to be a US listed public technology company (excluding IT services and consulting companies), and applied, among others, the following criteria:

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Based on these criteria, Piper Jaffray selected 39 transactions, and the table below shows a comparison of premiums paid in the selected transactions over certain time periods to the premium that would be paid to the holders of common stock based on the merger consideration of $8.50 per share.

The analysis indicated the following premiums:

The premiums paid analysis showed that the premiums over the market prices for one day prior to the announcement of the merger for common stock implied by the merger consideration fell between the “High” and 75 ^th percentile range of premiums paid in the selected transactions for the corresponding period. In addition, Piper Jaffray observed that the range of implied per share values for common stock, based on the ranges for this analysis yielded the following, as compared to the merger consideration:

Discounted Cash Flows Analysis

Using a discounted cash flows analysis, Piper Jaffray calculated an estimated range of theoretical enterprise values for Echelon based on the net present value of (1) projected unlevered free cash flows from May 31, 2018, to December 31, 2022, and (2) a projected terminal value at December 31, 2022 based upon terminal year multiples of projected revenue, discounted back to May 31, 2018. The free cash flows for each year and terminal year revenue were calculated from the Financial Forecasts, which were provided to Piper Jaffray by Echelon and are described in the section of this proxy statement captioned “The Merger—Financial Forecasts.” Piper Jaffray calculated the range of net present values for unlevered free cash flows for such periods based on a range of discount rates ranging from 25% to 35%, based on its estimation of Echelon’s weighted average cost of capital. Piper Jaffray calculated a range of terminal values using terminal revenue multiples ranging from 0.5x to 1.7x applied to projected 2022 revenue, and discounted such resulting values back to May 31, 2018, using discount rates ranging from 25% to 35%.

This analysis resulted in implied per share values for common stock ranging from $6.67 to $14.65 (excluding the value of Echelon’s net operating losses). Piper Jaffray observed that the merger consideration was within the range of implied per share values derived from this analysis. Piper Jaffray also calculated a theoretical range of present values of Echelon’s net operating losses based on discounting Echelon’s projected tax savings from utilizing the net operating losses at discount rates ranging from 30% to 40%, which were selected by Piper Jaffray utilizing its professional judgment and experience, with long-term earnings growth rates ranging from 0% to 3.0%. This analysis resulting in implied per share values of Echelon’s net operating losses ranging from $0.88 to $1.39.

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Miscellaneous

The summary set forth above does not contain a complete description of the analyses performed by Piper Jaffray and reviewed with the Echelon Board, but summarizes the material analyses performed by Piper Jaffray in rendering its opinion. The preparation of a fairness opinion is not necessarily susceptible to partial analysis or summary description. Piper Jaffray believes that its analyses and the summary set forth above must be considered as a whole and that selecting portions of its analyses or of the summary, without considering the analyses as a whole or all of the factors included in its analyses, would create an incomplete view of the processes underlying the analyses set forth in the Piper Jaffray opinion. In arriving at its opinion, Piper Jaffray considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis. Instead, Piper Jaffray made its determination as to fairness on the basis of its experience and financial judgment after considering the results of all of its analyses. In addition, the ranges of valuations resulting from any particular analysis described above should not be taken to be Piper Jaffray’s view of the actual value of common stock.

None of the selected companies or transactions used in the analyses above is directly comparable to Echelon or the merger. Accordingly, an analysis of the results of the comparisons is not purely mathematical; rather, it involves considerations and judgments concerning differences in historical and projected financial and operating characteristics of the selected companies and target companies in the selected transactions and other factors that could affect the public trading value or transaction value of the companies involved.

Piper Jaffray performed its analyses for purposes of providing its opinion to the Echelon Board. In performing its analyses, Piper Jaffray made numerous assumptions with respect to industry performance, general business and economic conditions and other matters. Certain of the analyses performed by Piper Jaffray are based upon financial projections of future results furnished to Piper Jaffray by Echelon management, which are not necessarily indicative of actual future results and may be significantly more or less favorable than actual future results. These financial projections are inherently subject to uncertainty because, among other things, they are based upon numerous factors or events beyond the control of the parties or their respective advisors. Neither Piper Jaffray nor Echelon assumes responsibility if future results are materially different from projected financial results.

Piper Jaffray’s opinion was one of many factors taken into consideration by the Echelon Board in making the determination to approve the merger agreement. While Piper Jaffray provided advice to the Echelon Board during Echelon’s negotiations with Adesto, the Echelon Board determined the amount of merger consideration and Piper Jaffray did not recommend any specific amount or type of merger consideration.

Piper Jaffray relied upon and assumed, without assuming liability or responsibility for independent verification, the accuracy and completeness of all information that was publicly available or was furnished, or otherwise made available, to Piper Jaffray or discussed with or reviewed by Piper Jaffray. Piper Jaffray further relied upon the assurances of Echelon management that the financial information provided to Piper Jaffray by Echelon management was prepared on a reasonable basis in accordance with industry practice, and that Echelon management was not aware of any information or facts that would make any information provided to Piper Jaffray incomplete or misleading. Without limiting the generality of the foregoing, for the purpose of its opinion, Piper Jaffray assumed that with respect to financial forecasts, estimates and other forward-looking information reviewed by Piper Jaffray, that such information was reasonably prepared based on assumptions reflecting the best currently available estimates and judgments of Echelon management as to the expected future results of operations and financial condition of Echelon. Piper Jaffray expressed no opinion as to any such financial forecasts, estimates or forward-looking information or the assumptions on which they were based. Piper Jaffray relied, with consent of the Echelon Board, on advice of the outside counsel, and independent accountants to Echelon, and on the assumptions of the management of Echelon, as to all accounting, legal, tax and financial reporting matters with respect to Echelon and the merger agreement.

In arriving at its opinion, Piper Jaffray assumed that the executed merger agreement was in all material respects identical to the last draft reviewed by Piper Jaffray. Piper Jaffray relied upon and assumed, without

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independent verification, that (1) the representations and warranties of all parties to the merger agreement and all other related documents and instruments that are referred to therein are true and correct; (2) each party to such agreements will fully and timely perform all of the covenants and agreements required to be performed by such party; (3) the merger will be consummated pursuant to the terms of the merger agreement without amendments thereto; and (4) all conditions to the consummation of the merger will be satisfied without waiver by any party of any conditions or obligations thereunder. Additionally, Piper Jaffray assumed that all the necessary regulatory approvals and consents required for the merger will be obtained in a manner that would not adversely affect Echelon or the contemplated benefits of the merger.

In arriving at its opinion, Piper Jaffray did not perform any appraisals or valuations of any specific assets or liabilities (fixed, contingent or other) of Echelon, and Piper Jaffray was not furnished or provided with any such appraisals or valuations, nor did Piper Jaffray evaluate the solvency of Echelon under any state or federal law relating to bankruptcy, insolvency or similar matters. The analyses performed by Piper Jaffray in connection with its opinion were going concern analyses. Piper Jaffray expressed no opinion regarding the liquidation value of Echelon or any other entity. Without limiting the generality of the foregoing, Piper Jaffray undertook no independent analysis of any pending or threatened litigation, regulatory action, possible unasserted claims or other contingent liabilities, to which Echelon or any of its affiliates is a party or may be subject, and at Echelon’s direction and with its consent, Piper Jaffray’s opinion made no assumption concerning, and therefore did not consider, the possible assertion of claims, outcomes or damages arising out of any such matters. Piper Jaffray also assumed that neither Echelon nor Adesto is party to any material pending transaction, including without limitation, any financing, recapitalization, acquisition or merger, divestiture or spin-off, other than the merger.

Piper Jaffray’s opinion was necessarily based upon the information available to it and facts and circumstances as they existed and were subject to evaluation on the date of its opinion. Events occurring after the date of its opinion could materially affect the assumptions used in preparing its opinion. Piper Jaffray did not undertake to reaffirm or revise its opinion or otherwise comment upon any events occurring after the date of its opinion and does not have any obligation to update, revise or reaffirm its opinion.

Piper Jaffray’s opinion addressed solely the fairness, from a financial point of view, to holders of common stock of the proposed merger consideration set forth in the merger agreement and did not address any other terms or agreement relating to the merger or any other terms of the merger agreement. Piper Jaffray was not requested to opine as to, and its opinion does not address, the basic business decision to proceed with or effect the merger, the merits of the merger relative to any alternative transaction or business strategy that may be available to Echelon, Adesto’s ability to fund the merger consideration, or any other terms contemplated by the merger agreement or the fairness of the merger to any other class of securities, creditor or other constituency of Echelon. Furthermore, Piper Jaffray expressed no opinion with respect to the amount or nature of compensation to any officer, director or employee of any party to the merger, or any class of such persons, relative to the merger consideration or with respect to the fairness of any such compensation.

Information about Piper Jaffray

As a part of its investment banking business, Piper Jaffray is regularly engaged in the valuation of businesses in the semiconductor industry and other industries and their securities in connection with mergers and acquisitions, underwritings, secondary distributions of listed and unlisted securities, private placements, and valuations for corporate and other purposes. The Echelon Board selected Piper Jaffray to be its financial advisor and render its fairness opinion in connection with the merger on the basis of such experience and its familiarity with Echelon.

Piper Jaffray acted as a financial advisor to Echelon in connection with the merger and will receive a fee, currently estimated to be approximately $1.9 million, from Echelon, all of which is contingent upon the consummation of the merger, except for $500,000 of such fee, which has been earned by Piper Jaffray for rendering its fairness opinion. The opinion fee was not contingent upon the consummation of the merger or the

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conclusions reached in Piper Jaffray’s opinion. Echelon has also agreed to indemnify Piper Jaffray against certain liabilities and reimburse Piper Jaffray for certain expenses in connection with its services. In the ordinary course of its business, Piper Jaffray and its affiliates may actively trade securities of Echelon and Adesto for its own account or the account of its customers and, accordingly, may at any time hold a long or short position in such securities. In the ordinary course of its business, Piper Jaffray also publishes research on the common stock of Echelon and the common stock of Adesto. Piper Jaffray may also, in the future, provide investment banking and financial advisory services to Echelon or Adesto or entities that are affiliated with Echelon or Adesto, for which Piper Jaffray would expect to receive compensation. Piper Jaffray has not acted as financial advisor to Echelon in the two years prior to the issuance of its fairness opinion, other than in connection with the merger. Piper Jaffray has not received fees or other compensation from Adesto in the two years prior to the issuance of its fairness opinion.

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

Financial Forecasts

Echelon does not, as a matter of course, make public projections as to its future financial performance. However, Echelon has in the past provided quarterly guidance with respect to certain metrics, including total revenues and operating expenses. Echelon management also regularly prepares internal financial forecasts regarding its future operations for subsequent fiscal years.

In connection with Echelon’s strategic planning process, Echelon management prepared and provided to the Echelon Board various forward-looking financial information for fiscal years 2018 through 2022. This financial information was also made available to certain parties considering a transaction with Echelon, including Adesto, Party B, Party C, Party D and Party E. This financial information is collectively referred to as the “Management Original Forecasts.”

In connection with the preparation of the fairness opinion by Piper Jaffray, Echelon management updated the Management Original Forecasts solely to account for the passage of time and Echelon’s business results since the preparation of the Management Original Forecasts. This financial information is collectively referred to as the “Management Refreshed Forecasts.” Echelon provided the Management Refreshed Forecasts to Piper Jaffray for use in the preparation of its fairness opinion, but did not make the Management Refreshed Forecasts available to any parties considering a transaction with Echelon. The Management Original Forecasts and the Management Refreshed Forecasts are collectively referred to as the “Forecasts.” A summary of the Forecasts is set forth below.

The Forecasts were not prepared with a view toward public disclosure or to complying with accounting principles generally accepted in the United States (which we refer to as “GAAP”). In addition, the Forecasts were not prepared with a view toward complying with the guidelines established by the SEC or by the American Institute of Certified Public Accountants with respect to prospective financial information. In addition, the Forecasts assume that Echelon would continue as a standalone company and do not reflect the impact of the merger (if it is completed).

In the opinion of Echelon management, the Forecasts (1) were prepared on a reasonable basis; (2) reflected the best currently available estimates and judgments; and (3) presented, to Echelon management’s knowledge, the expected future financial performance of Echelon within the parameters and under the assumptions specified in preparing the Forecasts. Because the Forecasts reflect estimates and judgments, they are susceptible to sensitivities and assumptions, as well as multiple interpretations based on actual experience and business developments. The Forecasts also cover multiple years and such information by its nature becomes less predictive with each succeeding year.

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Neither Echelon’s independent registered public accounting firm nor any other independent accountants have (1) compiled, reviewed, audited, examined or performed any procedures with respect to the Forecasts; (2) expressed any opinion or any other form of assurance on such information or the achievability of such information; or (3) assumed any responsibility for the Forecasts. Echelon’s independent registered public accounting firm disclaims any association with the Forecasts.

The Forecasts are forward-looking statements. Although the Forecasts are presented with numerical specificity, they reflect numerous assumptions and estimates as to future events made by Echelon management that Echelon management believed were reasonable at the time that the Forecasts were prepared, taking into account the relevant information available to Echelon management at that time. However, the Forecasts are not fact and should not be relied upon as being necessarily indicative of future results. Important factors that may affect actual results and cause the Forecasts not to be achieved include, among others, (1) general economic conditions; (2) the accuracy of certain accounting assumptions; (3) changes in actual or projected cash flows; (4) competitive pressures; and (5) changes in tax laws. Additional factors that may impact Echelon and its business can be found in the various risk factors included in Echelon’s periodic filings with the SEC. All of these factors are difficult to predict, and many of them are outside of Echelon’s control. As a result, there can be no assurance that the Forecasts will be realized, and actual results may be materially better or worse than those contained in the Forecasts. The Forecasts may differ from publicized analyst estimates and forecasts and do not take into account any events or circumstances after the date that they were prepared, including the announcement of the merger. Echelon does not intend to update or otherwise revise the Forecasts to reflect circumstances existing after the date they were made or to reflect the occurrence of future events, even if any or all of the assumptions underlying the Forecasts are shown to be in error or no longer appropriate.

By including the Forecasts in this proxy statement, neither Echelon nor any of its representatives has made or makes any representation to any person regarding Echelon’s ultimate performance as compared to the information contained in the Forecasts. The inclusion of the Forecasts should not be regarded as an indication that the Echelon Board, Echelon or any other recipient of the Forecasts considered, or now considers, the Forecasts to be predictive of actual future results. Further, the inclusion of the Forecasts in this proxy statement does not constitute an admission or representation by Echelon that the information presented is material. The summary of the Forecasts is not being included in this proxy statement to influence the decision of any Echelon stockholder on how to vote at the special meeting.

Echelon stockholders are cautioned not to place undue reliance on the Forecasts, as Echelon may not achieve the Forecasts whether or not the merger is completed.

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

When considering the recommendation of the Echelon Board that you vote to approve the proposal to adopt the merger agreement, you should be aware that our directors and executive officers have interests in the merger that are different from, or in addition to, the interests of Echelon stockholders generally, as more fully described below. The Echelon Board was aware of and considered these interests to the extent that they existed at the time, among other matters, in approving the merger agreement and the merger and recommending that the merger agreement be adopted by Echelon’s stockholders.

Insurance and Indemnification of Directors and Executive Officers

For more information, see the section of this proxy statement captioned “The Merger Agreement—Indemnification and Insurance.”

Treatment of Equity-Based Awards

Treatment of Company Options

As of the record date, there were [●] outstanding company options held by our directors and executive officers, of which [●] have an exercise price below the per share merger consideration.

At the effective time of the merger, each company option outstanding and unexercised immediately prior to the effective time of the merger, whether vested or unvested, will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the option consideration. The payment of the option consideration will be subject to any applicable withholding taxes.

With respect to any company options for which the exercise price per share attributable to such company options is equal to or greater than the per share merger consideration, such company options will be cancelled without any cash payment being made in exchange for such cancellation.

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Treatment of Company RSUs

As of the record date, there were [●] outstanding RSUs (including performance-based RSUs) held by our directors and executive officers.

At the effective time of the merger, each company RSU outstanding as of immediately prior to the effective time of the merger, whether vested or unvested, will be cancelled and converted into a right to receive an amount in cash, without interest, equal to the RSU consideration. For the purposes of the previous sentence, the number of shares of Echelon common stock issuable pursuant to a company RSU will be deemed to be the number of shares issuable following full performance and satisfaction of the target (to the extent applicable). The payment of the RSU consideration will be subject to any applicable withholding taxes.

Equity Interests of Echelon’s Executive Officers and Non-Employee Directors

The following table sets forth for each Echelon executive officer and director, as of August 31, 2018, (1) the number of shares of common stock held assumed to be held based on information available to Echelon as of the date of this proxy statement; (2) the number of shares subject to outstanding company options with an exercise price less than $8.50 per share; and (3) the number of shares subject to company RSUs that will vest upon the merger, assuming that Echelon does not provide vesting terms for any executive officer that are different from those described in the section of this proxy statement captioned “The Merger—Treatment of Equity-Based Awards.” The table sets forth the values of these shares and equity awards based on the per share merger consideration (minus the applicable exercise price in the case of company options).

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Payments Upon Termination Following Change of Control

CEO Employment Agreement

We entered into an employment agreement with Mr. Sege effective August 19, 2010. Under Mr. Sege’s employment agreement, if he is subject to an Involuntary Termination (as defined in the employment agreement) within 3 months prior to or within 12 months following a Change in Control Merger (as defined in the employment agreement), then subject to his execution of a release of claims in favor of Echelon that subsequently becomes effective, he would be entitled to receive: (1) a lump sum payment, less applicable withholdings, equal to 18 months of his then-current base salary; (2) a lump sum payment, less applicable withholdings, equal to 150% of the greater of (i) the average annual bonus paid over the prior 24-month period or (ii) his then-current target annual bonus; (3) 100% vesting acceleration of outstanding and unvested service-based equity awards; (4) 100% vesting acceleration at on-target levels of all equity awards with performance-based vesting in which the performance period has not yet lapsed; (5) Echelon’s payment of premiums for continued health, dental and vision benefits for him (and any eligible dependents) under Echelon’s health, dental and vision plans for up to 18 months; and (6) any bonuses earned before his termination but deferred solely due to Echelon policy will be paid out at the earliest time that would not give rise to additional taxation under Section 409A of the Internal Revenue Code.

In addition, the employment agreement provides that, if any payment or benefits to Mr. Sege (including the payments and benefits under his employment agreement) would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code and would therefore be subject to an excise tax under Section 4999 of the Internal Revenue Code, then such payments and benefits will be either (1) reduced to the largest portion of the payments and benefits that would result in no portion of the payments and benefits being subject to the excise tax; or (2) not reduced, whichever, after taking into account all applicable federal, state, and local employment taxes, income taxes, and the excise tax (all computed at the highest marginal rate), results in his receipt, on an after-tax basis, of the greater payments and benefits.

The closing of the merger will constitute a “Change in Control Merger” under Mr. Sege’s employment agreement.

Under the employment agreement, the following definitions are used:

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Executive Change in Control and Severance Agreements with Other Named Executive Officers

Echelon entered into executive change in control and severance agreements (which we refer to as the “severance agreements”) with Alicia Jayne Moore, Senior Vice President, Chief Legal and Administration Officer and Secretary, and Christopher Jodoin, Senior Vice President Operations and Planning. Each of these agreements provides that if the named executive officer’s employment with Echelon terminates pursuant to a CIC Involuntary Termination (as defined in the severance agreement) and such termination occurs on or within 12 months after a Change in Control Merger (as defined in the applicable severance agreement), he or she would be entitled to receive: (1) a lump-sum payment, less applicable withholdings, equal to 12 months of his or her annual base salary as in effect immediately prior to his or her termination date or, if greater, at the highest level in effect during the one year period immediately before the Change in Control Merger; and (2) a taxable monthly payment, less applicable withholdings, equal to twice the monthly COBRA premium (based on the premium for the first month of COBRA coverage) that would be required to continue group health, dental and vision coverage (as in effect on the date of termination) for the applicable named executive officer and his or her spouse and covered dependents for 12 months.

In addition, each severance agreement provides that, if any payment or benefits to the applicable named executive officer (including the payments and benefits under his or her severance agreement) would constitute a “parachute payment” within the meaning of Section 280G of the Internal Revenue Code and would therefore be subject to an excise tax under Section 4999 of the Internal Revenue Code, then such payments and benefits will be either (1) reduced to the largest portion of the payments and benefits that would result in no portion of the payments and benefits being subject to the excise tax; or (2) not reduced, whichever, after taking into account all applicable federal, state, and local employment taxes, income taxes, and the excise tax (all computed at the highest marginal rate), results in his or her receipt, on an after-tax basis, of the greater payments and benefits.

The closing of the merger will constitute a “Change in Control Merger” under each severance agreement.

Under each severance agreement, the following definitions are used:

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Golden Parachute Compensation

The following table sets forth the information required by Item 402(t) of Regulation S-K published by the SEC regarding certain compensation that each of Echelon’s named executive officers may receive that is based on, or that otherwise relates to, the merger. Echelon’s “named executive officers” for purposes of the disclosure in this proxy statement are Messrs. Sege and Jodoin and Ms. Moore. For additional details regarding the terms of the payments quantified below, see the sections of this proxy statement captioned “The Merger—Treatment of Equity-Based Awards” and “The Merger—Interests of Echelon’s Directors and Executive Officers in the Merger—Payments Upon Termination Following Change of Control.”

The figures in the table are estimated based on (1) assumed compensation and benefit levels as of August 31, 2018; (2) an assumed effective date of August 31, 2018, for the merger; and (3) the assumed termination of the named executive officer’s employment without cause on the day immediately following such effective date for the merger. The amounts reported below are estimates based on multiple assumptions that may or may not actually occur or be accurate on the relevant date. Accordingly, the ultimate values to be received by a named executive officer in connection with the merger may differ from the amounts set below.

Echelon’s named executive officers will not receive pension, non-qualified deferred compensation, or tax reimbursement in connection with the merger.

As required by applicable SEC rules, all amounts below that are determined using the per share value of Echelon’s common stock have been calculated based on the per share merger consideration.

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Closing and Effective Time of the Merger

The closing of the merger will take place (1) on a date to be agreed upon by Adesto, Merger Sub and Echelon that is no later than the third business day after the satisfaction or waiver (to the extent permitted under the Merger Agreement) of the last to be satisfied or waived of the closing conditions of the merger (described in the section of this proxy statement captioned “The Merger Agreement—Conditions to the Closing of the Merger”), other than conditions that by their terms are to be satisfied at the closing of the merger, but subject to the satisfaction or waiver of each of such conditions; or (2) at such other time agreed to in writing by Echelon, Adesto and Merger Sub. On the closing date, the parties will file a certificate of merger with the Secretary of State of the State of Delaware as provided under the DGCL. The merger will become effective upon the filing and acceptance of such certificate of merger, or at a later time agreed to in writing by the parties and specified in such certificate of merger.

Appraisal Rights

If the merger is consummated, Echelon stockholders who do not vote in favor of the adoption of the merger agreement, who properly demand an appraisal of their shares, who continuously hold such shares through the effective time of the merger, who otherwise comply with the procedures of Section 262 of the DGCL and who do not withdraw their demands or otherwise lose their rights to appraisal will, subject to the conditions thereof, be entitled to seek appraisal of their shares in connection with the merger under Section 262 of the DGCL, which we refer to as “Section 262.” Unless the context requires otherwise, all references in Section 262 and in this summary to a “stockholder” are to a record holder of Echelon common stock.

The following discussion is not a complete statement of the law pertaining to appraisal rights under the DGCL and is qualified in its entirety by the full text of Section 262, which is attached to this proxy statement as Annex C and incorporated into this proxy statement by reference. The following summary does not constitute any legal or other advice and does not constitute a recommendation that Echelon stockholders exercise their appraisal rights under Section 262. Only a holder of record of shares of common stock is entitled to demand appraisal of the shares registered in that holder’s name. A person having a beneficial interest in shares of common stock held of record in the name of another person, such as a bank, broker or other nominee, must act promptly to cause the record holder to demand an appraisal of such holder’s shares. If you hold your shares of our common stock through a bank, broker or other nominee and you wish to exercise appraisal rights, you should consult with your bank, broker or the other nominee to ensure that appraisal rights are exercised.

Under Section 262, if the merger is completed, holders of record of shares of common stock who (1) submit a written demand for appraisal of such stockholder’s shares to Echelon prior to the vote on the adoption of the merger agreement; (2) do not vote in favor of the adoption of the merger agreement; (3) continuously are the record holders of such shares through the effective time of the merger; and (4) otherwise comply with the procedures and satisfy certain ownership thresholds set forth in Section 262 will be entitled to have their shares appraised by the Delaware Court of Chancery and to receive payment in cash of the “fair value” of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with (unless the Delaware Court of Chancery in its discretion determines otherwise for good cause shown) interest on the amount determined by the Delaware Court of Chancery to be fair value from the effective date of the merger through the date of payment of the judgment at a rate of 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation pays to each stockholder entitled to appraisal an amount in cash, interest will accrue thereafter only upon the sum of (i) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (ii) interest theretofore accrued, unless paid at that time). However, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine stockholders entitled to appraisal rights will dismiss appraisal proceedings as to all Echelon stockholders who asserted appraisal rights unless (1) the total number of shares of common stock entitled to

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appraisal exceeds 1% of the outstanding shares of Echelon’s common stock as measured in accordance with subsection (g) of Section 262 or (2) the value of the merger consideration in respect of such shares exceeds $1 million. We refer to these conditions as the “ownership thresholds.” Unless the Delaware Court of Chancery, in its discretion, determines otherwise for good cause shown, interest on an appraisal award will accrue and compound quarterly from the effective time of the merger through the date the judgment is paid at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during such period (except that, if at any time before the entry of judgment in the proceeding, the surviving corporation pays to each stockholder entitled to appraisal an amount in cash, interest will accrue thereafter only upon the sum of (i) the difference, if any, between the amount so paid and the fair value of the shares as determined by the Delaware Court of Chancery, and (ii) interest theretofore accrued, unless paid at that time). The surviving corporation is under no obligation to make such voluntary cash payment prior to such entry of judgment.

Under Section 262, where a merger agreement is to be submitted for adoption at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, must notify each of its stockholders of record as of the record date for notice of such meeting that appraisal rights are available and include in the notice a copy of Section 262. This proxy statement constitutes Echelon’s notice to stockholders that appraisal rights are available in connection with the merger, and the full text of Section 262 is attached to this proxy statement as Annex C. In connection with the merger, any holder of shares of common stock who wishes to exercise appraisal rights, or who wishes to preserve such holder’s right to do so, should review Annex C carefully. Failure to strictly comply with the requirements of Section 262 in a timely and proper manner may result in the loss of appraisal rights under the DGCL. A stockholder who loses his, her or its appraisal rights will be entitled to receive the merger consideration described in the merger agreement without interest. Moreover, because of the complexity of the procedures for exercising the right to seek appraisal of shares of common stock, Echelon believes that if a stockholder considers exercising such rights, that stockholder should seek the advice of legal counsel.

Stockholders wishing to exercise the right to seek an appraisal of their shares of common stock must do ALL of the following:

In addition, after an appraisal petition has been filed, the Delaware Court of Chancery, at a hearing to determine stockholders entitled to appraisal rights, will dismiss appraisal proceedings as to all Echelon stockholders who asserted appraisal rights unless one of the ownership thresholds is met.

Because a proxy that does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, an Echelon stockholder who votes by proxy and who wishes to exercise appraisal rights must vote against the adoption of the merger agreement, abstain or not vote his, her or its shares.

Filing Written Demand

A stockholder wishing to exercise appraisal rights must deliver to Echelon, before the vote on the adoption of the merger agreement at the special meeting at which the proposal to adopt the merger agreement will be

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submitted to the stockholders, a written demand for the appraisal of such stockholder’s shares, and that stockholder must not vote or submit a proxy in favor of the adoption of the merger agreement. A stockholder exercising appraisal rights must hold of record the shares on the date the written demand for appraisal is made and must continue to hold the shares of record through the effective time of the merger. A proxy that is submitted and does not contain voting instructions will, unless revoked, be voted in favor of the adoption of the merger agreement, and it will constitute a waiver of the stockholder’s right of appraisal and will nullify any previously delivered written demand for appraisal. Therefore, a stockholder who submits a proxy and who wishes to exercise appraisal rights must submit a proxy containing instructions to vote against the adoption of the merger agreement or abstain from voting on the adoption of the merger agreement. Neither voting against the adoption of the merger agreement nor abstaining from voting or failing to vote on the proposal to adopt the merger agreement will, in and of itself, constitute a written demand for appraisal satisfying the requirements of Section 262. The written demand for appraisal must be in addition to and separate from any proxy or vote on the adoption of the merger agreement. A proxy or vote against the adoption of the merger agreement will not constitute a demand. A stockholder’s failure to make the written demand prior to the taking of the vote on the adoption of the merger agreement at the special meeting will constitute a waiver of appraisal rights.

Only a holder of record of shares of common stock is entitled to demand appraisal rights for the shares registered in that holder’s name. A demand for appraisal in respect of shares of common stock should be executed by or on behalf of the holder of record, and must reasonably inform Echelon of the identity of the holder and that the stockholder intends thereby to demand an appraisal of such stockholder’s shares. If the shares are owned of record in a fiduciary or representative capacity, such as by a trustee, guardian or custodian, such demand must be executed by or on behalf of the record owner, and if such shares are owned of record by more than one person, as in a joint tenancy and tenancy in common, the demand should be executed by or on behalf of all joint owners. An authorized agent, including an authorized agent for two or more joint owners, may execute a demand for appraisal on behalf of a holder of record; however, the agent must identify the record owner or owners and expressly disclose that, in executing the demand, the agent is acting as agent for the record owner or owners.

STOCKHOLDERS WHO HOLD THEIR SHARES IN “STREET NAME” BY A BANK, BROKER, TRUST OR OTHER NOMINEE AND WHO WISH TO EXERCISE APPRAISAL RIGHTS SHOULD CONSULT WITH THEIR BANK, BROKER, TRUST OR OTHER NOMINEE, AS APPLICABLE, TO DETERMINE THE APPROPRIATE PROCEDURES FOR THE BANK, BROKER, TRUST OR OTHER NOMINEE TO MAKE A DEMAND FOR APPRAISAL OF THOSE SHARES. A PERSON HAVING A BENEFICIAL INTEREST IN SHARES HELD OF RECORD IN THE NAME OF ANOTHER PERSON, SUCH AS A BANK, BROKER, TRUST OR OTHER NOMINEE, MUST ACT PROMPTLY TO CAUSE THE RECORD HOLDER TO FOLLOW PROPERLY AND IN A TIMELY MANNER THE STEPS NECESSARY TO PERFECT APPRAISAL RIGHTS.

All written demands for appraisal pursuant to Section 262 should be mailed or delivered to:

Echelon Corporation

2901 Patrick Henry Drive

Santa Clara, CA 95054

Attention: Corporate Secretary

At any time within 60 days after the effective date of the Merger, any holder of shares of common stock may withdraw his, her or its demand for appraisal and accept the per share merger consideration offered pursuant to the merger agreement, without interest, by delivering to Echelon, as the surviving corporation, a written withdrawal of the demand for appraisal. However, any such attempt to withdraw the demand made more than 60 days after the effective time of the merger will require written approval of the surviving corporation. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Delaware Court of Chancery, and such approval may be

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conditioned upon such terms as the Delaware Court of Chancery deems just; provided, however, that this shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the merger consideration within 60 days after the effective time of the merger. If Echelon, as the surviving corporation, does not approve a request to withdraw a demand for appraisal when that approval is required, or, except with respect to any stockholder who withdraws such stockholder’s demand in accordance with the proviso in the immediately preceding sentence, if the Delaware Court of Chancery does not approve the dismissal of an appraisal proceeding with respect to a stockholder, the stockholder will be entitled to receive only the appraised value determined in any such appraisal proceeding, which value could be less than, equal to or more than the per share merger consideration being offered pursuant to the merger agreement.

Notice by the Surviving Corporation

If the merger is completed, within 10 days after the effective time of the merger, the surviving corporation will notify each record holder of shares of common stock who has properly made a written demand for appraisal pursuant to Section 262, and who has not voted in favor of the adoption of the merger agreement, that the merger has become effective and the effective date thereof.

Filing a Petition for Appraisal

Within 120 days after the effective time of the merger, but not thereafter, the surviving corporation or any holder of shares of common stock who has complied with Section 262 and is entitled to appraisal rights under Section 262 (or the beneficial owner of such shares) may commence an appraisal proceeding by filing a petition in the Delaware Court of Chancery, with a copy served on the surviving corporation in the case of a petition filed by a stockholder, demanding a determination of the fair value of the shares held by all dissenting stockholders entitled to appraisal. The surviving corporation is under no obligation, and has no present intention, to file a petition, and stockholders should not assume that the surviving corporation will file a petition or initiate any negotiations with respect to the fair value of the shares of common stock. Accordingly, any holders of shares of common stock who desire to have their shares appraised should initiate all necessary action to perfect their appraisal rights in respect of their shares of common stock within the time and in the manner prescribed in Section 262. The failure to file such a petition within the period specified in Section 262 could nullify a previous written demand for appraisal.

Within 120 days after the effective time of the merger, any holder of shares of common stock who has complied with the requirements for an appraisal of such holder’s shares pursuant to Section 262 will be entitled, upon written request, to receive from the surviving corporation a statement setting forth the aggregate number of shares not voted in favor of the adoption of the merger agreement and with respect to which Echelon has received demands for appraisal, and the aggregate number of holders of such shares. The surviving corporation must mail this statement to the requesting stockholder within 10 days after receipt by the surviving corporation of the written request for such a statement or within 10 days after the expiration of the period for delivery of demands for appraisal, whichever is later. A beneficial owner of shares of common stock held either in a voting trust or by a nominee on behalf of such person may, in such person’s own name, file a petition seeking appraisal or request from the surviving corporation the foregoing statements. As noted above, however, the demand for appraisal can only be made by a stockholder of record.

If a petition for an appraisal is duly filed by a holder of shares of common stock and a copy thereof is served upon the surviving corporation, the surviving corporation will then be obligated within 20 days after such service to file with the Delaware Register in Chancery a duly verified list containing the names and addresses of all stockholders who have demanded payment for their shares and with whom agreements as to the value of their shares have not been reached. The Delaware Court of Chancery may order that notice of the time and place fixed for the hearing of such petition be given to the surviving corporation, and all of the stockholders shown on the verified list at the addresses stated therein. Any such notice shall also be given by one or more publications at

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least one week before the day of the hearing in a newspaper of general circulation published in the City of Wilmington, Delaware or any other publication which the Delaware Court of Chancery deems advisable. The costs of any such notice are borne by the surviving corporation.

After notice to dissenting stockholders as required by the court, at the hearing on such petition, the Delaware Court of Chancery will determine the stockholders who have complied with Section 262 and who have become entitled to appraisal rights thereunder. The Delaware Court of Chancery may require the stockholders who demanded appraisal for their shares to submit their stock certificates to the Register in Chancery for notation thereon of the pendency of the appraisal proceedings; and if any stockholder fails to comply with the direction, the Delaware Court of Chancery may dismiss the proceedings as to such stockholder.

The Delaware Court of Chancery will dismiss appraisal proceedings as to all Echelon stockholders who assert appraisal rights unless (a) the total number of shares for which appraisal rights have been pursued and perfected exceeds 1% of the outstanding shares of Echelon’s common stock as measured in accordance with subsection (g) of Section 262 or (b) the value of the merger consideration in respect of the shares for which appraisal rights have been pursued and perfected exceeds $1 million.

Determination of Fair Value

After the Delaware Court of Chancery determines the holders of common stock entitled to appraisal, and that at least one of the ownership thresholds above has been satisfied in respect of the Echelon stockholders seeking appraisal rights, the appraisal proceeding will be conducted in accordance with the rules of the Delaware Court of Chancery, including any rules specifically governing appraisal proceedings. Through such proceeding, the Delaware Court of Chancery will determine the “fair value” of the shares of common stock, exclusive of any element of value arising from the accomplishment or expectation of the merger, together with interest, if any, to be paid upon the amount determined to be the fair value. In determining fair value, the Delaware Court of Chancery will take into account all relevant factors. Unless the court in its discretion determines otherwise for good cause shown, interest from the effective date of the merger through the date of payment of the judgment will be compounded quarterly and will accrue at 5% over the Federal Reserve discount rate (including any surcharge) as established from time to time during the period between the effective date of the merger and the date of payment of the judgment. The surviving corporation has the right, at any time prior to the Delaware Court of Chancery’s entry of judgment in the proceedings, to make a voluntary cash payment to each stockholder seeking appraisal. If the surviving corporation makes a voluntary cash payment pursuant to subsection (h) of Section 262, interest will accrue thereafter only on the sum of (i) the difference, if any, between the amount paid by the surviving corporation in such voluntary cash payment and the fair value of the shares as determined by the Delaware Court of Chancery and (ii) interest accrued before such voluntary cash payment, unless paid at that time. In Weinberger v UOP, Inc. , the Supreme Court of Delaware discussed the factors that could be considered in determining fair value in an appraisal proceeding, stating that “proof of value by any techniques or methods which are generally considered acceptable in the financial community and otherwise admissible in court” should be considered, and that “[f]air price obviously requires consideration of all relevant factors involving the value of a company.” The Delaware Supreme Court stated that, in making this determination of fair value, the court must consider market value, asset value, dividends, earnings prospects, the nature of the enterprise and any other facts that could be ascertained as of the date of the merger that throw any light on future prospects of the merged corporation. Section 262 provides that fair value is to be “exclusive of any element of value arising from the accomplishment or expectation of the merger.” In Cede & Co. v Technicolor, Inc. , the Delaware Supreme Court stated that such exclusion is a “narrow exclusion [that] does not encompass known elements of value,” but which rather applies only to the speculative elements of value arising from such accomplishment or expectation. In Weinberger , the Supreme Court of Delaware also stated that “elements of future value, including the nature of the enterprise, which are known or susceptible of proof as of the date of the merger and not the product of speculation, may be considered.”

Stockholders considering seeking appraisal should be aware that the fair value of their shares as so determined by the Delaware Court of Chancery could be more than, the same as or less than the consideration

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they would receive pursuant to the merger if they did not seek appraisal of their shares and that an opinion of an investment banking firm as to the fairness from a financial point of view of the consideration payable in a merger is not an opinion as to, and may not in any manner address, fair value under Section 262 of the DGCL. Although Echelon believes that the per share merger consideration is fair, no representation is made as to the outcome of the appraisal of fair value as determined by the Delaware Court of Chancery, and stockholders should recognize that such an appraisal could result in a determination of a value higher or lower than, or the same as, the per share merger consideration . Neither Echelon nor Adesto anticipates offering more than the per share merger consideration to any stockholder exercising appraisal rights, and each of Echelon and Adesto reserves the rights to make a voluntary cash payment pursuant to subsection (h) of Section 262 and to assert, in any appraisal proceeding, that for purposes of Section 262, the “fair value” of a share of common stock is less than the per share merger consideration. If a petition for appraisal is not timely filed, or if neither of the ownership thresholds above has been satisfied in respect of the Echelon stockholders seeking appraisal rights, then the right to an appraisal will cease. The costs of the appraisal proceedings (which do not include attorneys’ fees or the fees and expenses of experts) may be determined by the Delaware Court of Chancery and taxed upon the parties as the Delaware Court of Chancery deems equitable under the circumstances. Upon application of a stockholder, the Delaware Court of Chancery may also order that all or a portion of the expenses incurred by any stockholder in connection with the appraisal proceeding, including, without limitation, reasonable attorney’s fees and the fees and expenses of experts, be charged pro rata against the value of all the shares entitled to an appraisal.

If any stockholder who demands appraisal of his, her or its shares of common stock under Section 262 fails to perfect, or loses or validly withdraws, such holder’s right to appraisal, the stockholder’s shares of common stock will be deemed to have been converted at the effective time of the merger into the right to receive the per share merger consideration as provided in the merger agreement. A stockholder will fail to perfect, or effectively lose, such holder’s right to appraisal if no petition for appraisal is filed within 120 days after the effective time of the merger, if neither of the ownership thresholds above has been satisfied in respect of the Echelon stockholders seeking appraisal rights or if the stockholder delivers to the surviving corporation a written withdrawal of such holder’s demand for appraisal and an acceptance of the per share merger consideration as provided in the merger agreement in accordance with Section 262.

From and after the effective time of the merger, no stockholder who has demanded appraisal rights will be entitled to vote such shares of common stock for any purpose or to receive payment of dividends or other distributions on the stock (except dividends or other distributions payable to stockholders of record at a date which is prior to the effective date of the merger); provided, however, that if no petition for an appraisal is filed within the time provided in Section 262, or if such stockholder delivers to the surviving corporation a written withdrawal of such stockholder’s demand for an appraisal and an acceptance of the merger, either within 60 days after the effective date of the merger or thereafter with the written approval of the surviving corporation, then the right of such stockholder to an appraisal will cease. Notwithstanding the foregoing, no appraisal proceeding in the Delaware Court of Chancery will be dismissed as to any stockholder without the approval of the Court, and such approval may be conditioned upon such terms as the Court deems just; provided, however, that the foregoing shall not affect the right of any stockholder who has not commenced an appraisal proceeding or joined that proceeding as a named party to withdraw such stockholder’s demand for appraisal and to accept the terms offered upon the merger or consolidation within 60 days after the effective date of the merger.

Failure to comply strictly with all of the procedures set forth in Section 262 may result in the loss of a stockholder’s statutory appraisal rights. In that event, you will be entitled to receive the per share merger consideration for your dissenting shares in accordance with the merger agreement. Consequently, any stockholder wishing to exercise appraisal rights is encouraged to consult legal counsel before attempting to exercise those rights.

Accounting Treatment

The merger will be accounted for as a “purchase transaction” for financial accounting purposes.

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Material U.S. Federal Income Tax Consequences of the Merger

The following discussion is a summary of material U.S. federal income tax consequences of the merger that may be relevant to U.S. Holders and Non-U.S. Holders (each as defined below) of shares of common stock whose shares are converted into the right to receive cash pursuant to the merger. This discussion is based upon the Internal Revenue Code of 1986, as amended, which we refer to as the “Code,” Treasury Regulations promulgated under the Code, court decisions, published positions of the Internal Revenue Service, which we refer to as the “IRS,” and other applicable authorities, all as in effect on the date of this proxy statement and all of which are subject to change or differing interpretations, possibly with retroactive effect. This discussion is limited to holders who hold their shares of common stock as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment purposes).

This discussion is for general information only and does not address all of the tax consequences that may be relevant to holders in light of their particular circumstances. For example, this discussion does not address:

If a partnership (including an entity or arrangement, domestic or foreign, treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares of common stock, then the tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partner and the partnership. Partnerships holding shares of common stock and partners therein should consult their tax advisors regarding the consequences of the merger.

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No ruling has been or will be obtained from the IRS regarding the U.S. federal income tax consequences of the merger described below. If the IRS contests a conclusion set forth herein, no assurance can be given that a holder would ultimately prevail in a final determination by a court.

THIS DISCUSSION IS PROVIDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE LEGAL ADVICE TO ANY HOLDER. A HOLDER SHOULD CONSULT ITS OWN TAX ADVISORS CONCERNING THE U.S. FEDERAL INCOME TAX CONSEQUENCES RELATING TO THE MERGER IN LIGHT OF ITS PARTICULAR CIRCUMSTANCES AND ANY CONSEQUENCES ARISING UNDER FEDERAL NON-INCOME TAX LAWS OR THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION.

U.S. Holders

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of shares of common stock that is for U.S. federal income tax purposes:

The receipt of cash by a U.S. Holder in exchange for shares of common stock pursuant to the merger will be a taxable transaction for U.S. federal income tax purposes. In general, such U.S. Holder’s gain or loss will be equal to the difference, if any, between the amount of cash received and the U.S. Holder’s adjusted tax basis in the shares surrendered pursuant to the merger. A U.S. Holder’s adjusted tax basis generally will equal the amount that such U.S. Holder paid for the shares. Such gain or loss will be capital gain or loss and will be long-term capital gain or loss if such U.S. Holder’s holding period in such shares is more than one year at the time of the completion of the merger. A reduced tax rate on capital gain generally will apply to long-term capital gain of a non-corporate U.S. Holder (including individuals). The deductibility of capital losses is subject to limitations. If a U.S. holder acquired different blocks of shares of common stock at different times and different prices, such holder must determine its adjusted tax basis and holding period separately with respect to each block of our common stock.

Non-U.S. Holders

For purposes of this discussion, the term “Non-U.S. Holder” means a beneficial owner of shares of common stock that is neither a U.S. Holder nor a partnership for U.S. federal income tax purposes.

Any gain realized by a Non-U.S. Holder pursuant to the merger generally will not be subject to U.S. federal income tax unless:

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Information Reporting and Backup Withholding

Information reporting and backup withholding (at a current rate of 24%) may apply to the proceeds received by a holder pursuant to the merger. Backup withholding generally will not apply to (1) a U.S. Holder that furnishes a correct taxpayer identification number and certifies that such U.S. Holder is not subject to backup withholding on IRS Form W-9 (or a substitute or successor form); or (2) a Non-U.S. Holder that (1) provides a certification of such Non-U.S. Holder’s non-U.S. status on the appropriate series of IRS Form W-8 (or a substitute or successor form); or (2) otherwise establishes an exemption from backup withholding. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules will be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Regulatory Approvals Required for the Merger

No regulatory or governmental approvals or filings are required for consummating the merger, other than the filings or notices required under the federal securities laws and the rules of Nasdaq and the filing of a certificate of merger with the Secretary of State of the State of Delaware in accordance with the applicable provisions of the DGCL.

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