ex10_10.htm


    
      
        

      

    

    Exhibit
      10.10

     

    UNITED
      STATES DISTRICT COURT

    FOR
      THE DISTRICT OF NEW JERSEY

    


    
      	
              LEWIS EDELSTEIN,
                Derivatively
                on

            	
              )

            	 
	
              Behalf
                of Nominal
                Defendant

            	
              )

            	
              No.
07-00596
                (FLW)

            
	
              EMCORE
                CORPORATION,

            	
              )

            	 
	 	
              )

            	 
	
              Plaintiff,

            	
              )

            	 
	 	
              )

            	 
	
              v.

            	
              )

            	 
	 	
              )

            	 
	
              HOWARD W. BRODIE,
REUBEN F.

            	
              )

            	 
	
              RICHARDS,
JR.,
RICHARD A. STALL,

            	
              )

            	 
	
              THOMAS G. WERTHAN,
CRAIG

            	
              )

            	 
	
              FARLEY,
THOMAS GMITTER,
SCOTT

            	
              )

            	 
	
              MASSIE,
THOMAS J. RUSSELL,

            	
              )

            	 
	
              ROBERT LOUIS-DREYFUS,
ROBERT

            	
              )

            	 
	
              BOGOMOLNY,
CHARLES SCOTT
                and

            	
              )

            	 
	
              JOHN GILLEN,

            	
              )

            	 
	 	
              )

            	 
	
              Defendants,

            	
              )

            	 
	 	
              )

            	 
	
              and

            	
              )

            	 
	 	
              )

            	 
	
              EMCORE
                CORPORATION,

            	
              )

            	 
	 	
              )

            	 
	
              Nominal
                Defendant.

            	
              )

            	 
	 	
              )

            	 


    

    


    


    MEMORANDUM
      OF UNDERSTANDING

     

    WHEREAS,
      a derivative action captioned Edelstein v. Brodie, et al., Case No.
      07-00596 (FLW) was filed on February 2, 2007 in the United States District
      Court
      for the District of New Jersey (the “Derivative Action”); and

     

    WHEREAS,
      the Derivative Action was brought by a shareholder (“Lead Plaintiff”) of EMCORE
      Corporation (“EMCORE” or the “Company”) on behalf of Nominal Defendant EMCORE
      and alleges that, from 1999 to 2006 (the “Relevant Period”), stock option grants
      to officers and directors of the Company were improperly “backdated”;
      and

    


    
      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

    


    WHEREAS,
      the Company appointed a special committee of the Board of Directors (the
“Special Committee”) to review the Company’s historical stock option grant
      procedures; and

     

    WHEREAS,
      on November 6, 2006, in the Company’s Form 8-K filing, EMCORE announced that the
      Special Committee had concluded that it is likely that the measurement dates
      for
      certain EMCORE stock option grants differed from the recorded grant dates for
      such awards; and

     

    WHEREAS,
      on November 15, 2006, EMCORE announced the results of its stock option grant
      review and the expectation that it would record non-cash charges for a
      stock-based compensation expense of approximately $24 million; and

    WHEREAS,
      the Special Committee recommended certain remedial measures to address these
      issues, which the Company has implemented; and

     

    WHEREAS,
      EMCORE has produced certain nonpublic documents to counsel for Lead Plaintiff
      in
      the Derivative Action relating to the stock option granting practices of EMCORE
      during the Relevant Period; and

     

    WHEREAS,
      counsel for Lead Plaintiff in the Derivative Action conferred with counsel
      for
      EMCORE on multiple occasions to discuss possible additional remedial measures
      beyond those recommended by the Special Committee; and

     

    WHEREAS,
      EMCORE and Howard W. Brodie, Reuben F. Richards, Jr., Richard A. Stall, Thomas
      G. Werthan, Craig Farley, Thomas Gmitter, Scott Massie, Thomas J. Russell,
      Robert Louis-Dreyfus, Robert Bogomolny, Charles Scott and John Gillen
      (collectively, the “Individual Defendants,” together, with EMCORE, the
“Defendants”) and Lead Plaintiff in the Derivative Action, by and through their
      undersigned attorneys, have engaged in good faith, arms-length discussions
      with
      regard to the possible settlement of the Derivative Action (the Individual
      Defendants having conducted those negotiations through counsel for EMCORE)
      and
      the parties have reached an agreement in principle providing for the proposed
      settlement of the Derivative Action (the “Settlement”) on the terms and
      conditions set forth in this memorandum of understanding (“MOU”);
      and

    


    
      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

     

    WHEREAS,
      Defendants do not admit and expressly deny all of Lead Plaintiff’s claims in the
      Derivative Action; and

     

    WHEREAS,
      Lead Plaintiff acknowledges and agrees that the execution of this MOU by the
      Defendants is not an admission on the part of any of the Defendants that they
      have in any way committed or attempted to commit any violation of law or breach
      of fiduciary duty, including a breach of any duty to EMCORE or its shareholders
      or otherwise acted in any improper manner; and

     

    WHEREAS,
      both Lead Plaintiff and EMCORE believe that the proposed Settlement is in the
      best interests of EMCORE and EMCORE’s shareholders;

     

    NOW,
      THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to approval of the Court
      and EMCORE’s Board, by and among the parties hereto, as follows:

     

    1.           Principal
      Terms of Settlement.

     

    
      	
               

            	
              a.

            	
              Stock
                Option Grants

            


    

     

    
      	
               

            	
              (1)

            	
              Stock
                options granted to newly hired employees shall be granted to such
                employees on their first day of employment with an exercise price
                not less
                than 100% of the fair market value of the Company's stock, as defined
                by
                the Company's applicable stock option plan.  The Company’s
                Compensation Committee, after consultation with counsel, has determined
                that the historical practice of using the closing price on the grant
                date
                is consistent with the terms of the Plan and has memorialized that
                practice in a formal amendment as reported on a Form 8-K dated April
                19,
                2007.1

            


    

    

      

    

    
      1“Fair
        Market Value” of a share of Stock as of a given date shall be: (i)
        if the Stock is listed or admitted to trading on an established stock exchange
        (including, for this purpose, The Nasdaq Global Market that comprises part
        of
        The Nasdaq Stock Market), the closing sale price for a share of Stock on
        the
        composite tape or in Nasdaq Global Market trading as reported in The Wall
        Street Journal (or, if not so reported, such other nationally recognized
        reporting source as the Committee shall select) for such date, or, if no
        such
        price is reported for such date, the most recent day for which such price
        is
        available shall be used; (ii) if the Stock is not then listed or admitted
        to
        trading on such a stock exchange, the closing sale price for a share of Stock
        on
        such date as reported by The Nasdaq Capital Market or, if not so reported,
        by
        the OTC Bulletin Board (or any successor or similar quotation system regularly
        reporting the market value of the Stock in the over-the-counter market),
        or, if
        no such price is reported for such date, the most recent day for which such
        price is available shall be used; or (iii) in the event neither of the valuation
        methods provided for in clauses (i) and (ii) above is practicable, the fair
        market value of a share of Stock determined by such other reasonable valuation
        method as the Committee shall, in its discretion, select and apply in good
        faith
        as of the given date; provided, however, that for purposes of
        paragraphs (a) and (b) of Section 6 of EMCORE’s Amended and Restated 2000 Stock
        Option Plan, such fair market value shall be determined subject to Section
        422(c)(7) of the Internal Revenue Code of 1986.

      

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

      

       

    

    
      	
               

            	
              (2)

            	
              The
                Company shall not change the exercise prices of any stock options
                after
                Compensation Committee approval, nor exchange stock options for other
                stock options with lower exercise
                prices.

            


    

     

    
      	
               

            	
              (3)

            	
              The
                Company will prohibit any additions or modifications to the number
                of
                stock options granted to any employee after the Compensation Committee
                has
                approved the grants.

            


    

     

    
      	
               

            	
              (4)

            	
              With
                respect to any yearly retention grants to employees, the Company
                will
                maintain the practice of awarding any retention grants to senior
                management on the same date and with the same exercise price as any
                retention grants awarded to non-senior management employees.
                

            


    

     

    
      	
               

            	
              (5)

            	
              The
                exercise prices for all stock options granted to employees, except
                new-hire grants, shall be set at the closing price of the Company's
                common
                stock on the date on which the Compensation Committee approves the
                grants.  Lead Plaintiff requires that the exercise prices of all
                stock options shall be at least 100% of the fair market value of
                the
                Company's stock, as defined by the Company's applicable stock option
                plan,
                on the date on which the Compensation Committee approves the
                grants.

            


    

     

    
      	
               

            	
              (6)

            	
              Other
                than new-hire grants, the Company’s CEO and Vice President of Human
                Resources will recommend to the Compensation Committee the recipients
                of
                grants and amount of stock options to be awarded to each
                grantee.  The Compensation Committee may consider and approve
                the CEO’s and Vice President of Human Resources’ recommendations in the
                exercise of their own judgment.  The Compensation Committee
                shall make grant determinations only at duly convened meetings and
                not
                through unanimous written consents.

            


    

    


    
      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    


    
      	
               

            	
              (7)

            	
              All
                stock option grants will be communicated to employees as soon as
                practicable after the grant date, as required by applicable accounting
                rules.  Lead Plaintiff requires written documentation
                identifying grantees, amounts and prices of all stock options granted
                on a
                particular date shall be complete and final and approved by all members
                of
                the Compensation Committee on the date of
                grant.2  Grant packages shall be distributed to
                employees on or as soon as practicable following the grant
                date.  In the event such grant package is not available for
                distribution as of the grant date, an electronic communication shall
                be
                sent to the respective employee within two business days of the grant
                date.  Additionally, Lead Plaintiff requires that this signed
                documentation shall be transmitted to the Company's legal and accounting
                departments within seven (7) days of the
                grant.

            


    

     

    
      	
               

            	
              (8)

            	
              The
                Company will designate a member of its in-house legal and accounting
                staffs to oversee documentation and accounting for all stock option
                grants.  Lead Plaintiff requires that the Compensation Committee
                shall designate one Company legal officer and one Company accounting
                officer who shall be responsible for ensuring compliance with applicable
                laws and regulations by option grantees (e.g., timely and
                accurate filing of SEC Forms 3, 4 and 5) and shall provide effective
                monitoring mechanisms to ensure that such laws and regulations, and
                the
                Company's policies, procedures and stock option plans, are
                followed.

            


    

     

    
      	
               

            	
              (9)

            	
              The
                Board of Directors will conduct a biannual review of all new-hire
                grants
                to ensure compliance with the Company's policies and
                procedures.  Lead Plaintiff requires that the Board shall
                biannually conduct a review of all stock option grants to ensure
                compliance with the Company's policies, procedures and stock option
                plans.

            


    

     

    
      	
               

            	
              (10)

            	
              The
                Company will monitor industry and regulatory practices and revise
                its
                practices as developments occur.  Lead Plaintiff requires that
                management shall annually assess the adequacy of the Company's internal
                controls with regard to stock option grants and shall report its
                assessment in the Company's annual report on internal controls pursuant
                to
                section 404 of the Sarbanes-Oxley
                Act.

            


    

    

      

    

    
      2
        Approval of grants
        will only occur at a duly convened meeting of the Compensation
        Committee.  However, many meetings are telephonic.  It is
        impractical to ask each member of the committee to sign the grant list at
        the
        time of the meeting as that presents the same potential problem as unanimous
        written consents.

      

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

      

       

    

    
      	
               

            	
              (11)

            	
              Grants
                of stock options to new hires shall vest over a five-year period,
                20%
                vesting per year.  Retention grants for existing employees shall
                vest over a four-year period, 25% vesting per
                year.

            


    

     

    
      	
               

            	
              (12)

            	
              The
                Company will comply with SEC disclosure rules regarding the grantees,
                amounts, dates, prices and vesting schedules of stock
                options.

            


    

     

    
      	
               

            	
              (13)

            	
              The
                Company shall maintain all documentation relating to all stock option
                grants until at least seven (7) years after the expiration of the
                pertinent stock option grants.

            


    

     

    
      	
               

            	
              b.

            	
              Insider
                Trading Policy

            


    

    


    
      	
               

            	
              (1)

            	
              The
                Company shall maintain an Insider Trading Policy that provides as
                follows:

            


    

    


    
      	
               

            	
              (a)

            	
              The
                Insider Trading Policy shall specifically prohibit all Company directors,
                officers and employees from trading in Company securities while in
                possession of material nonpublic information regarding the Company,
                including, but not limited to, (i) information regarding actual or
                estimated results of operations and earnings; (ii) proposals or agreements
                relating to mergers, acquisitions or divestitures; and (iii) information
                regarding significant contracts, patents or new product
                development.

            


    

     

    
      	
               

            	
              (b)

            	
              The
                Insider Trading Policy shall encourage all directors and Section
                16
                officers who wish to trade in Company securities to adopt a valid
                trading
                plan pursuant to SEC Rule 10b-5-1.

            


    

     

    
      	
               

            	
              (c)

            	
              The
                Insider Trading Policy shall require all Company employees who wish
                to
                trade in Company securities to do so only within prescribed "trading
                windows."  Each quarter there will be a Blackout Period
                beginning on the last day of the quarter and running until the business
                day after the earnings conference call of such quarter.  For
                example, with respect to the quarter ended March 31, if the earnings
                call
                is scheduled for Friday, May 3, the Blackout Period would run from
                March
                31 through May 6, and trading could resume on May 7.  In
                addition, from time to time as a result of material corporate
                developments, the Company may impose additional Blackout Periods
                during
                which no trading may occur.  All Executives will be notified of
                the commencement and end of such Blackout Periods by the CFO or the
                General Counsel.

            


    

    


    
      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

    

    


    
      	
               

            	
              (2)

            	
              The
                Board shall appoint the Company's General Counsel or another senior
                officer to serve as the Company's "Trading Compliance Officer."
                The Trading
                Compliance Officer shall be responsible for developing (along with
                the
                full Board); presenting to the Board for approval; and monitoring
                and
                updating a comprehensive program (the "Trading Compliance Program")
                designed to ensure compliance with the foregoing insider trading
                policies
                and providing for appropriate sanctions for noncompliance.  The
                independent directors shall be responsible for direct oversight of
                the
                Trading Compliance Program and the Trading Compliance Officer and
                shall
                have regular access to the Trading Compliance Officer, including
                the
                opportunity to meet with the Trading Compliance Officer outside the
                presence of any other senior
                executives.

            


    

     

    
      	
               

            	
              c.

            	
              Board
                of Directors

            


    

     

    
      	
               

            	
              (1)

            	
              The
                Company shall revise its articles of incorporation and/or by-laws
                to
                require that at least a majority of the members of the Board be
                independent, where independence is defined as
                follows:

            


    

     

    
      	
            	
              (a)

            	
              is
                not, and in the past three years has not been, employed by the Company
                or
                any of its subsidiaries or
                affiliates;

            


    

     

    
      	
            	
              (b)

            	
              does
                not receive, and in the past three years has not received, any
                remuneration as an advisor, consultant or legal counsel to the Company
                or
                any of its subsidiaries, affiliates, executive officers or
                directors;

            


    

     

    
      	
            	
              (c)

            	
              does
                not have, and in the past three years has not had, any contract or
                agreement with the Company or any of its subsidiaries or affiliates
                pursuant to which the director performed or agreed to perform any
                personal
                services for the Company;

            


    

     

    
      	
            	
              (d)

            	
              does
                not have, and in the past three years has not had, any business
                relationship or engaged in any transaction with the Company or any
                of its
                subsidiaries or affiliates other than his or her service as a
                director;

            


    

     

    
      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

    

    


    
      	
            	
              (e)

            	
              is
                not, and in the past three years has not been, affiliated with or
                employed
                by any present or former independent auditor of the Company or any
                of its
                subsidiaries or affiliates;

            


    

     

    
      	
            	
              (f)

            	
              is
                not, and in the past three years has not been, a director or executive
                officer of any company for which any executive officer of EMCORE
                Corporation serves as a director;
                and

            


    

     

    
      	
            	
              (g)

            	
              is
                not a member of the immediate family of a person who is not independent
                pursuant to subsections a-f above.

            


    

     

    
      	
               

            	
              (2)

            	
              Each
                independent director shall certify in writing that he or she is
                independent as defined above and shall immediately inform the Board
                of any
                change in his or her independent
                status.

            


    

     

    
      	
               

            	
              (3)

            	
              In
                the event that the Chairman of the Board is not an independent director,
                the independent directors shall annually elect or reaffirm by majority
                vote a Lead Independent Director.  The holder of the Lead
                Independent Director position shall rotate at least once every two
                years.  In addition to the duties of all Board members, which
                shall not be limited or diminished by the Lead Independent Director's
                role, the specific responsibilities of the Lead Independent Director
                shall
                be to:

            


    

     

    
      	
            	
              (a)

            	
              advise
                the Chairman of the Board as to an appropriate schedule of Board
                meetings,
                seeking to ensure that the independent directors can perform their
                duties
                responsibly while not interfering with the flow of the Company's
                operations;

            


    

     

    
      	
            	
              (b)

            	
              provide
                the Chairman of the Board with input as to the preparation of agendas
                for
                Board and Committee meetings;

            


    

     

    
      	
            	
              (c)

            	
              advise
                the Chairman of the Board as to the quality, quantity and timeliness
                of
                the flow of information from the Company's management that is necessary
                for the independent directors to effectively and responsibly perform
                their
                duties; and although the Company's management
                is responsible for the preparation of materials for
                the Board, the Lead Independent Director may specifically request
                the
                inclusion of certain material;

            


    

    


    
      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

    

    


    
      	
               

            	
              (d)

            	
              recommend
                to the Chairman of the Board the retention of consultants who report
                directly to the Board;

            


    

     

    
      	
               

            	
              (e)

            	
              coordinate,
                develop the agenda and preside at executive sessions of the independent
                directors, which shall be held at least
                quarterly;

            


    

     

    
      	
               

            	
              (f)

            	
              act
                as principal liaison between the independent directors and the Chairman
                of
                the Board on sensitive issues; and

            


    

     

    
      	
               

            	
              (g)

            	
              evaluate,
                along with the members of the Compensation Committee (consistent
                with the
                Compensation Committee Charter) and the full Board, the CEO's performance
                and meet with the CEO to discuss the Board's
                evaluation.

            


    

     

    
      	
               

            	
              (4)

            	
              The
                Company shall revise its articles of incorporation and/or by-laws
                to
                provide a reasonable procedure whereby any shareholder or group of
                shareholders who hold an aggregate of at least 20% of the Company's
                outstanding shares may nominate a candidate for election to the Board
                and
                have the nominee included in the Company's annual proxy
                materials.

            


    

     

    
      	
               

            	
              (5)

            	
              The
                Company shall revise its articles of incorporation and/or by-laws
                to
                provide that, starting as of June 1, 2007, independent directors
                may serve
                on the Board for no more than a total of 10 consecutive
                years.  After serving a ten-year term during any period after
                June 1, 2007, an independent director must step down from the Board
                for at
                least one year before seeking re-election to the
                Board.

            


    

     

    
      	
               

            	
              (6)

            	
              Directors
                shall participate in an initial orientation program upon election
                to the
                Board and, if required by the rules of the applicable listing exchange,
                in
                regular continuing education
                thereafter.

            


    

     

    
      	
               

            	
              (7)

            	
              Absent
                extraordinary circumstances, each member of the Board shall attend
                each
                annual shareholder meeting in
                person.

            


    

     

    
      	
               

            	
              d.

            	
              Compensation
                Committee

            


    

     

    
      	
               

            	
              (1)

            	
              The
                Compensation Committee shall circulate a comprehensive and responsible
                set
                of assumptions, policies and procedures for determining executive
                compensation (e.g., company compensation levels should be
                compared to similar-sized businesses in similar industries or with
                similar
                profitability), and shall establish objective measures for all cash
                and
                non-cash compensation, including bonuses, stock options, stock grants
                and
                benefits such as health care; use of company vehicles; memberships;
                travel
                for friends, relatives or personal trips; personal housing; and tax
                or
                legal services paid for or provided by the
                Company.

            


    

    


    
      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

    

     

    
      	
               

            	
              (2)

            	
              At
                least once every three years the Compensation Committee shall select
                and
                retain an independent consultant to conduct a comparative study of
                the
                Company's executive compensation policies, practices, and procedures
                relative to other public companies and prepare and submit to the
                Compensation Committee a report and
                recommendations.

            


    

     

    
      	
               

            	
              (3)

            	
              The
                Compensation Committee shall set, in writing, annual and long-term
                performance goals for each executive officer of the
                Company.  The Compensation Committee shall annually complete a
                written evaluation of each executive officer's performance against
                such
                goals and recommend compensation (including cash bonuses, stock options,
                restricted shares, performance shares or other performance-based
                compensation) to be awarded based on whether the goals have been
                achieved.

            


    

     

    
      	
               

            	
              e.

            	
              Audit
                Committee

            


    

     

    
      	
               

            	
              (1)

            	
              At
                least once every three years, the Audit Committee shall request that
                its
                independent auditing firm conduct a comprehensive review and assessment
                of
                the Company's internal controls and internal audit function, and
                prepare
                and submit to the Audit Committee a report and
                recommendations.

            


    

     

    
      	
               

            	
              (2)

            	
              At
                least annually, the Audit Committee shall meet with the Company's
                internal
                auditors and independent auditors to review, discuss and approve
                the
                Company's accounting for stock-based
                compensation.

            


    

     

    f.           The
      Company represents that three current or former Section 16 officers (the
      "Section 16 Officers") voluntarily tendered money or unexercised options to
      the
      Company, or otherwise committed to surrender the financial benefit that they
      may
      have received as a result of their exercise of any mispriced stock options
      that
      they were awarded since the Company became a public company (the "Tendered
      Payments"). The Company further represents that it has not repaid any of the
      Section 16 Officers any portion of the Tendered Payments or taken any action
      that has the effect of repaying the Section 16 Officers the Tendered Payments
      or
      otherwise compensating the Section 16 Officers for any surrendered mispriced
      options. The Company further warrants that it shall not in the future make
      any
      payments or take any action that has the effect of compensating the Section
      16
      Officers for any improper financial benefit resulting from their receipt of
      any
      options that the Company, in consultation with its auditors, determines were
      mispriced.

    


    
      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

    

     

    g.           EMCORE
      agrees that the settlement of the Derivative Action
      and the remedial measures specified herein provide a
      substantial benefit to EMCORE and its shareholders.

     

    2.           Stipulation
      of Settlement.  This agreement is subject to the parties reaching
      agreement on a stipulation of settlement (the “Stipulation”) and such other
      documents (collectively, the “Settlement Documents”) as may be required in order
      to obtain a final judgment approving the settlement and then dismissing with
      prejudice the Derivative Action upon the terms set forth herein.  The
      parties to the Derivative Action shall work in good faith to agree upon and
      execute an appropriate Stipulation and Settlement Documents.  The
      parties agree to use their best efforts to agree upon and execute the
      Stipulation within 30 days after the date of signing this MOU.  The
      Stipulation will provide, among other things:

     

    a.           That
      Lead Plaintiff, individually and derivatively on behalf of EMCORE and all of
      EMCORE’s shareholders during the Relevant Period, and his respective heirs,
      executors, administrators, representatives, agents, successors, transferees,
      and
      assigns will forever relinquish and release any and all claims, rights or causes
      of action, or liabilities whatsoever, whether asserted directly, individually,
      derivatively, or in a representative capacity, whether known or unknown or
      suspected to exist, whether based on federal, state, local, statutory, common,
      foreign, international, or any other law, rule, or regulation, and whether
      fixed
      or contingent, accrued or unaccrued, liquidated or unliquidated, or matured
      or
      unmatured, that have been or could have been asserted against the Individual
      Defendants, nominal defendant EMCORE, and each of their respective parents,
      subsidiaries, affiliates, predecessors, successors, agents, advisors or
      consultants (including, without limitation, any of their present or former
      officers, directors, the Board of Directors and any Committees of the Board
      of
      Directors, employees, agents, consultants, attorneys, stockholders, financial
      advisors, accountants, commercial bank lenders, investment bankers,
      representatives, affiliates, associates, parents, subsidiaries, general and
      limited partners and partnerships, heirs, executors, administrators, successors,
      and assigns), which arise out of or relate in any way to the allegations,
      transactions, acts, facts, matters or occurrences, representations, or omissions
      described, set forth, or referred to in the complaints in the Derivative Action
      or any amendment thereof, including but not limited to (1) claims related to
      options back-dating, forward-dating, spring-loading, bullet-dodging, or any
      other options dating practice, procedure or policy, (2) claims for breach of
      fiduciary duty, insider trading, misappropriation of information, failure to
      disclose, abuse of control, breach of EMCORE’s policies or procedures, waste,
      mismanagement, gross mismanagement, unjust enrichment, misrepresentation, fraud,
      violations of law, money damages, or other relief and (3) claims that arise
      out
      of or relate in any way to any stock-option grants made since the inception
      of
      EMCORE through the effective date of this Settlement (collectively, the “Settled
      Claims”);

    


    
      
        
          
          

        

        
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    b.           For
      the complete discharge, dismissal with prejudice, settlement and release of,
      and
      an injunction barring, any and all claims, rights, and causes of action, whether
      asserted directly, individually, derivatively, or in a representative capacity,
      whether known or unknown or suspected to exist, and whether based on federal,
      state, local, statutory, common, foreign, international, or any other law,
      rule,
      or regulation, whether fixed or contingent, accrued or unaccrued, liquidated
      or
      unliquidated, or matured or unmatured, that have been or could have been
      asserted in the Derivative Action or any amendment thereof, in this or any
      other
      court or forum, by EMCORE or any EMCORE shareholder on EMCORE’s behalf against
      the Individual Defendants, nominal defendant EMCORE, and/or each of their
      respective parents, subsidiaries, affiliates, predecessors, successors, agents,
      advisors, or consultants (including, without limitation, any of their present
      or
      former officers, directors, the Board of Directors and any Committees of the
      Board of Directors, employees, agents, consultants, attorneys, stockholders,
      financial advisors, accountants, commercial bank lenders, investment bankers,
      representatives, affiliates, associates, parents, subsidiaries, general and
      limited partners and partnerships, heirs, executors, administrators, successors,
      and assigns in the Derivative Action), including any and all claims that arise
      out of or relate in any way to the Settled Claims;

    


    
      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

    

     

    c.           That
      EMCORE and each of the Individual Defendants have denied and continue to deny
      all of the claims in the Derivative Action, and have denied and continue to
      deny
      having committed, aided, or attempted to commit any violations of law or breach
      of any duty of any kind or otherwise having acted in any improper
      manner;

     

    d.           That
      Defendants are entering into the Stipulation because the proposed Settlement
      would eliminate the expenses, burdens, and risks associated with further
      litigation of the Derivative Action;

     

    e.           That
      EMCORE is further entering into this Stipulation because it believes that the
      proposed Settlement is in the best interests of EMCORE and all of its
      shareholders;

    


    
      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

    

     

    f.           That
      neither the Settlement nor any of its terms shall constitute an admission or
      finding of wrongful conduct, acts or omissions; and

     

    g.          That,
      subject to the order of the United States District Court for the District of
      New
      Jersey (the “Court”), pending entry of a final judgment based on the Settlement
      provided for in the Stipulation, Lead Plaintiff, and any and all other
      shareholders of EMCORE, are barred and enjoined from commencing, prosecuting,
      instigating, or in any way participating in the commencement or prosecution
      of
      any action asserting any Settled Claims, either directly, representatively,
      derivatively, or in any other capacity, against EMCORE or any Individual
      Defendant, including any and all claims that have been or could have been
      asserted in the complaint in the Derivative Action, or which arise out of or
      relate in any way to any of the transactions or events described in that
      complaint.

     

    3.           Subject
      to prior Court approval of the form of the Settlement Documents and the approval
      of EMCORE’s Board, the parties to the Derivative Action will present the
      Settlement to the Court for hearing and approval as soon as practicable and
      for
      an Order dismissing the Derivative Action with prejudice and barring all claims
      that have been or might have been brought in any court or forum by EMCORE or
      any
      EMCORE shareholder on EMCORE’s behalf (including without limitation Gabaldon
      v. Brodie, et al., 07-03185 (D.N.J.), and Sackrison v. Brodie, et
      al., 07-3186 (D.N.J.)) relating to or arising out of any matter that was
      asserted or which could have been asserted against the Individual Defendants
      or
      nominal defendant EMCORE in the Derivative Action and without costs to any
      party
      (other than counsel fees and expenses as provided in paragraph 5
      below).  EMCORE or its successor(s) in interest shall disseminate
      notice of the Settlement to its shareholders in such form as approved by the
      Court and shall be solely responsible to pay the costs and expenses related
      to
      providing such notice.

    


    
      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

    

    


    4.           Upon
      execution and filing of the Stipulation, Lead Plaintiff shall promptly apply
      to
      the Court for preliminary approval of the settlement and the scheduling of
      a
      hearing for final approval of the settlement and the application by Lead
      Plaintiff’s counsel for an award of attorneys’ fees and expenses.  The
      parties agree that the Stipulation will provide for the payment of attorneys’
fees, costs, and expenses to Lead Plaintiff’s counsel in an amount of $700,000,
      subject to Court approval, to be paid by the Company’s insurer on behalf of the
      Defendants into an interest bearing escrow account with a national banking
      association and subject to the terms of an escrow agreement within 10 business
      days of the Court’s order approving the Settlement.  Said monies will
      be paid out to Lead Plaintiff’s counsel immediately upon the Settlement becoming
      effective as set forth in paragraph 5 below.  Except as expressly
      provided herein, Lead Plaintiff and Lead Plaintiff’s counsel shall bear their
      own fees, costs, and expenses and no Defendant shall assert any claim for
      expenses, costs, and fees against Lead Plaintiff.

     

    5.           The
      Settlement shall not become effective until the first date on which all of
      the
      following conditions have been satisfied, unless one or more of the conditions
      is expressly waived in writing by counsel for each of the parties:

     

    a.           Approval
      by the EMCORE Board of the Stipulation;

     

    b.           The
      entry of judgment by the Court in the Derivative Action approving the Settlement
      and dismissing with prejudice the Derivative Action without awarding costs
      to
      any party, except as provided herein; and

     

    c.           The
      judgment referred to in subparagraph (b) above shall have become final and
      no
      longer subject to review, either by the expiration of the time for appeals
      therefrom with no appeals having been taken or, if an appeal is taken and not
      dismissed, by the determination of the appeal by the highest court to which
      such
      appeal may be taken in such a manner as to permit the consummation of the
      Settlement in accordance with the terms and conditions of the
      Stipulation.

    


    
      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

    

     

    6.           This
      MOU shall be null and void and of no force and effect if any of the conditions
      set forth in paragraph 5 are not met.  In the event the Settlement is
      not consummated for any reason: (a) the parties will revert to their litigation
      positions immediately prior to the execution of this MOU; (b) the fact and
      terms
      of this Settlement shall not be admissible in any trial of this or any other
      Action;  (c) this MOU shall not be deemed to prejudice in any way the
      positions of the parties with respect to the Derivative Action, or to constitute
      an admission of fact by any party in any respect, and shall not entitle any
      party to recover any costs or expenses incurred in connection with the
      implementation of this MOU; and (d) none of the terms of this MOU shall be
      effective or enforceable, except for this Paragraph.

     

    7.           This
      MOU may be executed in counterparts, including by signature transmitted by
      facsimile.  Each counterpart when so executed shall be deemed to be an
      original, and all such counterparts together shall constitute the same
      instrument.  The undersigned signatories represent that they have
      authority from their clients to execute this MOU.  The terms of this
      MOU shall inure to and be binding upon the parties and their respective agents,
      executors, heirs, successors and assigns, subject to the conditions set forth
      herein.

     

    8.           This
      MOU and the Settlement contemplated by it shall be governed by, and construed
      in
      accordance with, the laws of the State of New Jersey, without regard to conflict
      of laws principles.

     

    9.           Lead
      Plaintiff and his counsel represent and warrant that Lead Plaintiff has
      continuously owned shares of EMCORE common stock throughout the Derivative
      Action and none of the claims or causes of action asserted in the Derivative
      Action, including any Settled Claims, has been assigned, encumbered or in any
      manner transferred in whole or part.

    


    
      
        
          
          

        

        
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    10.           Each
      of the attorneys executing this MOU has been duly empowered and authorized
      by
      his/her respective client(s) to do so.

     

    11.           Except
      as provided herein, neither EMCORE nor any Individual Defendant shall bear
      any
      expenses, costs, damages, or fees alleged or incurred by Lead Plaintiff or
      any
      other plaintiff in this action, or the attorneys, experts, advisors, agents
      or
      representatives of Lead Plaintiff or any other plaintiff in this
      action.

     

    12.           This
      MOU may be modified or amended only by a writing signed by the signatories
      hereto.

     

    13.           Neither
      the existence of this MOU nor the provisions contained herein shall be deemed
      a
      presumption, concession, or admission by EMCORE or any Individual Defendant
      of
      any breach of duty, liability, default, or wrongdoing as to any facts or claims
      alleged or asserted in the Derivative Action, or in any other actions or
      proceedings, and shall not be interpreted, construed, deemed, invoked, offered,
      or received in evidence or otherwise used in the Derivative Action or any other
      action or proceeding of any nature whatsoever.  Provided, however,
      that EMCORE and/or the Individual Defendants may file or offer into evidence
      the
      Stipulation, the Final Judgment, and/or the releases executed pursuant thereto
      in any action or proceeding that may be brought against them in order to support
      a defense or counterclaim based on principles of res judicata, collateral
      estoppel, release, good-faith settlement, judgment bar, reduction, or any other
      theory of claim preclusion or issue preclusion or defense or counterclaim
      similar to claim or issue preclusion.

    


    
      
        
          
          

        

        
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    IT
      IS
      HEREBY AGREED by the undersigned as dated below.

    


    
      	
              DATED:  September
                26, 2007

            	 	 SCHIFFRIN
              BARROWAY TOPAZ & KESSLER, LLP
	 	 	 	 
	 	 	
              By:

            	
              /s/
                Eric Zagar

            
	 	 	
               Eric
                Zagar

            
	 	 	
               Michael
                Hynes

            
	 	 	
               Alison
                Clark

            
	 	 	  
	 	 	280
              King of Prussia Road
	 	 	Radnor,
              PA  19087
	 	 	Telephone:  (610)
              667-7706
	 	 	Facsimile:  (610)
              667-7056
	 	 	  
	 	 	Lead
              Counsel for Lead Plaintiff in the Derivative
              Action
	 	 	 
	 	 	LITE
              DEPALMA GREENBERG & RIVAS, LLC
	 	 	Joseph
              L. DePalma
	 	 	Susan
              D. Pontonriero
	 	 	Two
              Gateway Center, 12th
              Floor
	 	 	Newark,
              NJ 07102
	 	 	Tel:
              (973) 623-6000
	 	 	Fax:
              (973) 623-0858
	 	 	  
	 	 	Liaison
              Counsel for Lead Plaintiff in the Derivative
              Action


    

    


    
      
        
        

      

      
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              DATED:  September
                24, 2007

            	 	 JENNER
              & BLOCK LLP
	 	 	  
	 	 	
              By:

            	
              /s/
                Michael K. Lowman

            
	 	 	
               Michael
                K. Lowman

            
	 	 	
               Howard
                S. Suskin

            
	 	 	  
	 	 	330
              North Wabash Avenue
	 	 	Chicago,
              IL 60611
	 	 	Tel:  (312)
              923-2604
	 	 	Fax:  (312)
              840-7604
	 	 	  
	 	 	Richard
              Ross
	 	 	CARELLA,
              BYRNE, BAIN, GILFILLAN, CECCHI, STEWART & OLSTEIN
	 	 	5
              Becker Farm Rd.
	 	 	Roseland,
              NJ 07068
	 	 	Tel:  (973)
              994-1700
	 	 	Fax:  (973)
              994-1744
	 	 	  
	 	 	Attorneys
              for EMCORE, Inc


    

     

    
      
        
        

      

      
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              DATED:  September
                20, 2007

            	 	 	 
	 	 	By:	
              /s/
                Jerry Isenberg

            
	 	 	
              Jerry
                Isenberg

            
	 	 	 
	 	 	ALSTON
              & BIRD LLP
	 	 	The
              Atlantic Building
	 	 	950
              F Street NW
	 	 	Washington,
              D.C. 20004
	 	 	Tel:  (202)
              756-5596
	 	 	Fax:  (202)
              654-4886
	 	 	  
	 	 	Attorney
              for Individual Defendants Dr. Richard A. Stall, Thomas Gmitter, and
              Craig
              Farley


    

     

    
      
        
        

      

      
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              DATED:  September
                20, 2007

            	 	 	 
	 	 	
              By:

            	
              /s/
                James R. Doty

            
	 	 	
               James
                R. Doty

            
	 	 	 
	 	 	BAKER
              BOTTS LLP
	 	 	The
              Warner
	 	 	1299
              Pennsylvania Ave, NW
	 	 	Washington,
              D.C.  20004
	 	 	Tel:  (202)
              639-7792
	 	 	Fax:  (202)
              585-1018
	 	 	  
	 	 	Attorney
              for Individual Defendant Reuben F. Richards,
              Jr.


    

     

    
      
        
        

      

      
        21

        
          

        

      

      
        
        

      

    

     

    
      	
              DATED:  September
                20, 2007

            	 	 	 
	 	 	
              By:

            	
              /s/
                Seymour Glanzer

            
	 	 	
               Seymour
                Glanzer

            
	 	 	 
	 	 	DICKSTEIN
              & SHAPIRO LLP
	 	 	1825
              Eye Street NW
	 	 	Washington,
              D.C.  20006
	 	 	Tel:  (202)
              420-2210
	 	 	Fax:  (202)
              420-2201
	 	 	  
	 	 	Attorney
              for Individual Defendant Robert Bogomolny


    

     

    
      
        
        

      

      
        22

        
          

        

      

      
        
        

      

    

     

    
      	
              DATED:  September
                24, 2007

            	 	 	 
	 	 	 By:	
              /s/
                David Kistenbroker

            
	 	 	
               David
                Kistenbroker

            
	 	 	 
	 	 	KATTEN
              MUCHIN ROSEMAN, LLP
	 	 	The
              Warner
	 	 	525
              West Monroe Street
	 	 	Chicago,
              IL  60661
	 	 	Tel:  (312)
              902-5452
	 	 	Fax:  (312)
              577-4481
	 	 	  
	 	 	Attorney
              for Individual Defendants Thomas Werthan and Scott
              Massie


    

     

    
      
        
        

      

      
        23

        
          

        

      

      
        
        

      

    

     

    
      	
              DATED:  September
                20, 2007

            	 	 	 
	 	 	
              By:

            	
              /s/
                Robert Mahoney

            
	 	 	
               Robert
                Mahoney

            
	 	 	 
	 	 	NORRIS,
              MCLAUGHLIN & MARCUS, P.A.
	 	 	P.O.
              Box 1018
	 	 	Somerville,
              NJ  08876
	 	 	Tel:  (908)
              722-0700
	 	 	Fax:  (908)
              722-0755
	 	 	  
	 	 	Attorneys
              for Individual Defendant Howard W. Brodie


    

     

    
      
        
        

      

      
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                DATED:  September
                  21, 2007

              	 	 	 
	 	 	
                By:

              	/s/
                Michael R. Young
	 	 	
                 Michael
                  R. Young

              
	 	 	 
	 	 	WILLKIE
                FARR & GALLAGHER, LLP
	 	 	787
                Seventh Avenue
	 	 	New
                York, NY  10019
	 	 	Tel:  (212)
                728-8280
	 	 	Fax:  (212)
                728-9280
	 	 	  
	 	 	Attorney
                for Individual Defendants John Gillen, Robert Louis-Dreyfus, Thomas
                J.
                Russell, and Charles Scott


      

    

    


     

    25