Document:

EMCORE CORP. FY'05 10-K EX-10.15 EXCHANGE AGREEMENT

    
      
        

      

    

    Exhibit
      10.15

     

     

    

      EXCHANGE
        AGREEMENT

      

      

      dated
        as of November 10, 2005

      

      

      by
        and between

      

      

      EMCORE
        CORPORATION

      

      

      and

      

      

      ALEXANDRA
        GLOBAL MASTER FUND LTD.

    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EMCORE
        CORPORATION

       

      EXCHANGE
        AGREEMENT

       

      TABLE
        OF CONTENTS

       

    

    

      1. Definitions.

      2. Agreement
        to Exchange; Exchange Value.

      (a) Agreement
        to Exchange.

      (b) Closing.

      3. Representations,
        Warranties, Covenants, Etc. of the Holder.

      (a) Ownership
        of Securities.

      (b) Authority.

      (c) Investment
        Representations.

      (1) The
        Holder Bears Economic Risk.

      (2) Acquisition
        for Own Account.

      (3) Qualified
        Institutional Buyer.

      (4) The
        Holder Can Protect Its Interest.

      (5) Company
        Information.

      (6) Residence.

      (7) Foreign
        Investors.

      (8) Transfer
        Restrictions.

      (d) Non−Affiliate
        Status.

      (e) Tax
        Advice.

      4. Representations,
        Warranties, Covenants, Etc. of the Company.

      (a) Organization
        and Authority.

      (b) Concerning
        the Conversion Shares.

      (c) Authorization
        and Binding Obligations of the Agreement.

      (d) Authorization
        and Binding Obligations of the New Note Indenture.

      (e) Authorization
        and Binding Obligations of the New Notes.

      (f) Non-contravention.

      (g) Approvals,
        Filings, Etc.

      (h) Absence
        of Certain Proceedings.

      (i) Absence
        of Brokers, Finders, Etc.

      (j) Certain
        Securities Law Matters.

      (k) Trust
        Indenture Act.

      (l) No
        Integrated Offering.

      (m) No
        Event
        of Default.

      5. Certain
        Covenants.

      (a) Covenants
        by the Company.

      (1) Exchange
        with Holders of Other Debentures.

      (2) Principal
        Market Listing; Reporting Status.

      (3) PORTAL
        Eligibility.

      (b) Settlement
        of Interest on the Existing Notes.

      6. Conditions
        to the Company’s Obligation to Exchange.

      7. Conditions
        to the Holder’s Obligations to Exchange.

      8. Indemnification
        and Contribution.

      (a) Indemnification.

      (b) Contribution.

      (c) Other
        Rights.

      9. Miscellaneous.

      (a) Governing
        Law.

      (b) Headings.

      (c) Severability.

      (d) Notices.

      (e) Counterparts.

      (f) Entire
        Agreement; Benefit.

      (g) Waiver.

      (h) Amendment.

      (i) Best
        Efforts.

      (j) Further
        Assurances.

      (k) Expenses.

      (l) Termination.

      (m) Survival.

      (n) Public
        Statements, Press Releases, Etc.

      (o) Construction.

    

    
       

      ANNEXES

       

      ANNEX
        I     
Form
        of
        Opinion of Holder Counsel to be Delivered on the Closing Date

      ANNEX
        II     Form
        of
        Opinion of Company Counsel to be Delivered on the Closing Date

      ANNEX
        III    Form
        of Opinion of
        General Counsel to be Delivered on the Closing Date

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      EXCHANGE
        AGREEMENT

       

      THIS
        EXCHANGE AGREEMENT,
        dated as
        of November 10, 2005 (this “Agreement”), by and between EMCORE
        CORPORATION,
        a New
        Jersey corporation (the “Company”), and ALEXANDRA
        GLOBAL MASTER FUND LTD., a
        British
        Virgin Islands international business company (the “Holder”).

       

      W I T N E S S E T H:

       

      WHEREAS,
        the
        Holder currently holds beneficial interests in an aggregate of $14,425,000
        principal amount of Existing Notes (such capitalized term and all other
        capitalized terms used in this Agreement having the meanings provided in
        Section
        1);

       

      WHEREAS,
        upon
        the terms and subject to the conditions of this Agreement, the Holder wishes
        to
        exchange the Existing Notes with the Company for New Notes, and the Company
        wishes to issue New Notes to the Holder in exchange for the Existing Notes;
        and

       

      WHEREAS,
        the
        parties hereto intend that the New Notes to be issued in exchange for the
        Existing Notes be exempt from registration pursuant to Section 4(2) of the
        1933
        Act and Rule 506 of Regulation D thereunder;

       

      NOW
        THEREFORE,
        in
        consideration of the premises and the mutual covenants contained herein and
        other good and valuable consideration, the receipt and sufficiency of which
        are
        hereby acknowledged, the parties hereto agree as follows:

       

      1.  Definitions.

       

      (a)  As
        used
        in this Agreement, the terms “Agreement”, “Company” and “Holder” shall have the
        respective meanings assigned to such terms in the introductory paragraph
        of this
        Agreement.

       

      (b)  All
        the
        agreements or instruments herein defined shall mean such agreements or
        instruments as the same may from time to time be supplemented or amended
        or the
        terms thereof waived or modified to the extent permitted by, and in accordance
        with, the terms thereof and of this Agreement.

       

      (c)  The
        following terms shall have the following meanings (such meanings to be equally
        applicable to both the singular and plural forms of the terms
        defined):

       

      “Claims”
        means any losses, claims, damages, liabilities or expenses (joint or several),
        incurred by a Person.

       

      “Closing
        Date” means 12:00 noon, New York City time, on November 16, 2005 or such other
        mutually agreed to time.

       

      “Common
        Stock” means the Common Stock, no par value per share, of the
        Company.

       

      “Common
        Stock Equivalents” means any warrant, option, subscription or purchase right
        with respect to shares of Common Stock, any security convertible into,
        exchangeable for, or otherwise entitling the holder thereof to acquire, shares
        of Common Stock or any warrant, option, subscription or purchase right with
        respect to any such convertible, exchangeable or other security.

       

      “Conversion
        Shares” means the shares of Common Stock issuable or issued upon conversion of
        the New Notes.

       

      “DTC”
        means The Depository Trust Company.

       

      “Excess
        Interest Payment” shall have the meaning provided in Section 5(b).

       

      “Existing
        Notes” means $14,425,000.00 aggregate principal amount of the Company’s 5%
        Convertible Subordinated Debentures due May 15, 2006, owned
        by
        the Holder and registered in the name of the Holder or its nominee.

       

      “Existing
        Note Indenture” means the Indenture, dated as of May 7, 2001, between the
        Company and Wilmington Trust Company, as Trustee, relating to the Company’s 5%
        Convertible Subordinated Debentures due May 15, 2006.

       

      “Indemnified
        Person” means the Holder and each of its affiliates
        and their respective officers, directors, stockholders and members and each
        Person who controls the Holder within the meaning of the 1933 Act or the
        1934
        Act.

       

      “Interest
        Payment” shall have the meaning provided in Section 5(b).

       

      “NASD”
        means the National Association of Securities Dealers, Inc.

       

      “New
        Note
        Indenture” means the Indenture, dated as of November 16, 2005, between the
        Company and Deutsche Bank Trust Company Americas, as Trustee, relating to
        the
        New Notes.

       

      “New
        Notes” means the $16,580,460 aggregate principal amount of the Company’s 5%
        Convertible Senior Subordinated Notes due 2011 in substantially the form
        set
        forth in the New Note Indenture.

       

      “1934
        Act” means the Securities Exchange Act of 1934, as amended.

       

      “1939
        Act” means the Trust Indenture Act of 1939, as amended.

       

      “1933
        Act” means the Securities Act of 1933, as amended.

       

      “Person”
        means any natural person, corporation, partnership, limited liability company,
        trust, incorporated organization, unincorporated association, or similar
        entity
        or any government, governmental agency or political subdivision.

       

      “PORTAL”
        means the Private Offerings, Resales and Trading through Automated Linkages
        system of the NASD.

       

      “Principal
        Market” means the Nasdaq National Market or such other U.S. market or exchange
        which is the principal market on which the Common Stock is then listed for
        trading.

       

      “Rule
        144” means Rule 144 under the 1933 Act or any other similar rule or regulation
        of the SEC that may at any time provide a “safe harbor” exemption from
        registration under the 1933 Act so as to permit a holder of any securities
        to
        sell securities of the Company to the public without registration under the
        1933
        Act.

       

      “Rule
        144A” means Rule 144A as promulgated under the 1933 Act.

       

      “SEC”
        means the Securities and Exchange Commission.

       

      “SEC
        Reports” means all annual reports, quarterly reports, proxy statements and other
        reports filed by the Company under the 1934 Act, in each case as filed with
        the
        SEC and including the information and documents (other than exhibits)
        incorporated therein by reference.

       

      “Subsidiary”
        means any corporation or other entity of which a majority of the capital
        stock
        or other ownership interests having ordinary voting power to elect a majority
        of
        the board of directors or other persons performing similar functions are
        at the
        time directly or indirectly owned by the Company.

       

      “Trading
        Day” means a day on which the Principal Market is open for the general trading
        of securities.

       

      “Transaction
        Documents” means this Agreement, the New Note Indenture and the New
        Notes.

       

      “Trustee”
        shall have the meaning provided in the New Note Indenture.

       

      “Violation”
        means

       

      any
        violation or alleged violation by the Company of the 1933 Act, the 1934 Act,
        any
        state securities law or any rule or regulation under the 1933 Act, the 1934
        Act
        or any state securities law, or

       

      any
        breach or alleged breach by any Person other than the Holder of any
        representation, warranty, covenant, agreement or other term of this
        Agreement.

       

      2.  Agreement
        to Exchange; Exchange Value.

       

      (a)  Agreement
        to Exchange.

       

      Upon
        the
        terms and subject to the conditions of this Agreement,

       

      (1)  the
        Holder agrees to sell, assign, transfer and deliver the Existing Notes to
        the
        Company in exchange for the issuance by the Company to the Holder of the
        New
        Notes; and

       

      (2)  the
        Company agrees to issue to the Holder the New Notes in exchange for the Existing
        Notes.

       

      The
        Company agrees to cancel the Existing Notes in full immediately after the
        closing.

       

      (b)  Closing.

       

      The
        closing of the exchange provided for in Section 2(a) shall occur on the Closing
        Date at the Law Offices of Brian W. Pusch, Penthouse Suite, 29 West 57th
        Street,
        New York, New York. At the closing, upon the terms and subject to the conditions
        of this Agreement, (1) the Company shall deliver to the Trustee, against
        evidence of cancellation of the Holders’ beneficial interest in the Existing
        Notes, one or more permanent global securities, registered in the name of
        Cede
& Co., as nominee for DTC, and (2) the Holder shall cancel its beneficial
        interest in the Existing Notes and deliver to the Company evidence that such
        beneficial interest has been cancelled on records maintained in book-entry
        form
        by DTC and its participants. The Holders’ beneficial interests in the New Notes
        will be shown on records maintained in book-entry form by DTC and its
        participants.

       

      3.  Representations,
        Warranties, Covenants, Etc. of the Holder.

       

      The
        Holder represents and warrants to, and covenants and agrees with, the Company
        as
        follows:

       

      (a)  Ownership
        of Securities.

       

      The
        Holder has all right, title and interest in its beneficial interest in the
        Existing Notes, and has not endorsed, assigned, sold, transferred or otherwise
        in any manner disposed of the Holder’s beneficial interest in the Existing Notes
        or any interest therein. No person or entity other than the Holder has any
        interest in the Holder’s beneficial interest in the Existing Notes.

       

      (b)  Authority.

       

      The
        execution, delivery and performance by the Holder of this Agreement are within
        the powers of the Holder and have been duly authorized by all necessary action
        on the part of the Holder. This Agreement constitutes a valid and binding
        agreement of the Holder, enforceable against the Holder in accordance with
        its
        terms, subject to the effect of any applicable bankruptcy, insolvency,
        reorganization, moratorium or other similar laws now or hereafter in effect
        relating to or affecting creditors’ rights generally and general principles of
        equity, regardless of whether such enforceability is considered in a proceeding
        in equity or at law.

       

      (c)  Investment
        Representations.

       

      The
        Holder understands that the New Notes and Conversion Shares have not been
        registered under the 1933 Act and that the Company has no intention of
        registering the New Notes or the Conversion Shares under the 1933 Act. The
        Holder also understands that the New Notes and Conversion Shares are being
        offered and sold pursuant to an exemption from registration contained in
        the
        1933 Act based in part upon the Holder’s representations contained in the
        Agreement. The Holder hereby represents and warrants as follows:

       

      (1)  The
        Holder Bears Economic Risk.

       

      The
        Holder has substantial experience in evaluating and investing in private
        placement transactions of securities in companies similar to the Company
        so that
        it is capable of evaluating the merits and risks of its investment in the
        Company and has the capacity to protect its own interests. The Holder must
        bear
        the economic risk of this investment indefinitely unless the New Notes and
        the
        Conversion Shares are registered pursuant to the Securities Act, or an exemption
        from registration is available. The Holder also understands that there is
        no
        assurance that any exemption from registration under the Securities Act will
        be
        available and that, even if available, such exemption may not allow the Holder
        to transfer all or any portion of the New Notes and the Conversion Shares
        under
        the circumstances, in the amounts or at the times the Holder might
        propose.

       

      (2)  Acquisition
        for Own Account.

       

      The
        Holder is acquiring the New Notes and Conversion Shares for the Holder’s own
        account.

       

      (3)  Qualified
        Institutional Buyer.

       

      The
        Holder represents that it is a qualified institutional buyer as defined in
        Rule
        144A.

       

      (4)  The
        Holder Can Protect Its Interest.

       

      The
        Holder represents that by reason of its, or of its management’s, business or
        financial experience, the Holder has the capacity to protect its own interests
        in connection with the transactions contemplated in this Agreement. Further,
        the
        Holder is aware of no publication of any advertisement in connection with
        the
        transactions contemplated in this Agreement.

       

      (5)  Company
        Information.

       

      The
        Holder has had an opportunity to discuss the Company’s business, management and
        financial affairs with directors, officers and management of the Company
        and has
        had the opportunity to review the Company’s operations and facilities. The
        Holder has also had the opportunity to ask questions of and receive answers
        from, the Company and its management regarding the terms and conditions of
        this
        investment.

       

      (6)  Residence.

       

      The
        office or offices of the Holder in which its investment decision was made
        is
        located at the address or addresses of the Holder set forth on the signature
        page.

       

      (7)  Foreign
        Investors.

       

      If
        the
        Holder is not a United States person (as defined by Section 7701(a)(30) of
        the
        Internal Revenue Code of 1986, as amended), the Holder hereby represents
        that it
        has satisfied itself as to the full observance of the laws of its jurisdiction
        in connection with any invitation to subscribe for the New Notes and Conversion
        Shares or any use of this Agreement, including (i) the legal requirements
        within
        its jurisdiction for the exchange of the New Notes and Conversion Shares
        for the
        Existing Notes, (ii) any foreign exchange restrictions applicable to such
        exchange, (iii) any government or other consents that may need to be obtained,
        and (iv) the income tax and other tax consequences, if any, that may be relevant
        to the purchase, holding, redemption, sale or transfer of the New Notes and
        Conversion Shares. The exchange of New Notes and Conversion Shares for the
        Existing Notes and the continued ownership by the Holder of the New Notes
        and
        Conversion Shares will not violate any applicable securities or other laws
        of
        the Holder’s jurisdiction.

       

      (8)  Transfer
        Restrictions.

       

      The
        Holder understands that the New Notes and Conversion Shares are being offered
        in
        a transaction not involving any public offering in the United States within
        the
        meaning of the 1933 Act, that the New Notes and Conversion Shares will not
        be
        registered under the 1933 Act and agrees that (A) if in the future it decides
        to
        offer, resell, pledge or otherwise transfer any of the New Notes and Conversion
        Shares, it shall offer, resell, pledge or otherwise transfer such New Notes
        and
        Conversion Shares only (i) in the United States to a person whom the seller
        reasonably believes is a qualified institutional buyer in a transaction meeting
        the requirements of Rule 144A, (ii) outside the United States in an offshore
        transaction complying with the provisions of Rule 904 under the 1933 Act,
        (iii)
        pursuant to an exemption from registration under the 1933 Act provided by
        Rule
        144 (if available), or (iv) pursuant to an effective registration statement
        under the 1933 Act, in each of cases (i) through (iv) in accordance with
        any
        applicable securities laws of any States of the United States, and (B) the
        Holder will notify any subsequent purchaser of the New Notes and Conversion
        Shares from it of the resale restrictions referred to in (A) above. The Holder
        acknowledges and agrees that the New Notes and Conversion Shares shall be
        subject to restrictions on transfer as set forth in the New Note Indenture.
        The
        Company acknowledges that a transfer in circumstances covered by the opinion
        contemplated in Section 6(c) will meet the requirements of clause (iii) of
        the
        second preceding sentence; provided,
        however,
        that the
        Company may require a confirmation of the opinion contemplated by Section
        6(c)
        at the time of a particular transfer which confirmation the Holder may provide
        from the counsel who rendered the opinion or the opinion of other counsel
        to the
        Holder reasonably acceptable to the Company.

       

      (d)  Non−Affiliate
        Status.

       

      The
        Holder is not an “affiliate” (as that term is defined under Rule 144(a) of the
        1933 Act and Rule 13e-3 of the 1934 Act of the Company. To the best of the
        Holder’s knowledge, the Holder did not acquire its beneficial interest in the
        Existing Notes from an “affiliate” of the Company.

       

      (e)  Tax
        Advice.

       

      The
        Holder has had the opportunity to review with its own tax advisors the U.S.
        Federal, state, local and foreign tax consequences of the transactions
        contemplated by this Agreement. With respect to such tax matters, the Holder
        has
        relied and relies solely on such advisors and not on any statements or
        representations of the Company or any of its agents, written or oral. The
        Holder
        understands that it (and not the Company or any of its agents) shall be
        responsible for its own tax liability that may arise as a result of the
        transactions contemplated by this Agreement.

       

      4.  Representations,
        Warranties, Covenants, Etc. of the Company.

       

      The
        Company represents and warrants to the Holder that the following matters
        are
        true and correct on the date of execution and delivery of this Agreement,
        will
        be true and correct on the Closing Date and the Company covenants and agrees
        with the Holder as follows:

       

      (a)  Organization
        and Authority.

       

      The
        Company is a corporation duly organized, validly existing and in good standing
        under the laws of the State of New Jersey and has all requisite corporate
        power
        and authority (i) to own, lease and operate its properties and to carry on
        its
        business as described in the SEC Reports and as currently conducted, and
        (ii) to
        execute, deliver and perform its obligations under the Transaction Documents
        and
        to consummate the transactions contemplated hereby and thereby.

       

      (b)  Concerning
        the Conversion Shares.

       

      The
        Conversion Shares have been duly and validly authorized and when issued upon
        conversion of the New Notes will be duly and validly issued, fully paid and
        non-assessable. The holders of outstanding shares of capital stock of the
        Company are not entitled to preemptive or other rights to subscribe for the
        Conversion Shares. The Common Stock is listed for trading on the Principal
        Market and (1) the Company and the Common Stock meet the criteria for continued
        listing and trading on the Principal Market; (2) the Company has not been
        notified since December 31, 2003 of any failure or potential failure to meet
        the
        criteria for continued listing and trading on the Principal Market; and (3)
        no
        suspension of trading in the Common Stock is in effect. The Company knows
        of no
        reason that the Conversion Shares will not be eligible for listing on the
        Principal Market.

       

      (c)  Authorization
        and Binding Obligations of the Agreement.

       

      This
        Agreement has been duly authorized, executed and delivered by the Company
        and
        (assuming due authorization, execution and delivery by the Holder) constitutes
        a
        legally valid and binding agreement of the Company enforceable against the
        Company in accordance with its terms, subject to the effect of any bankruptcy,
        insolvency, reorganization, moratorium or other similar laws now or hereafter
        in
        effect relating to or affecting creditors’ rights generally and general
        principles of equity, regardless of whether such enforceability is considered
        in
        a proceeding in equity or at law.

       

      (d)  Authorization
        and Binding Obligations of the New Note Indenture.

       

      The
        New
        Note Indenture has been duly authorized by the Company, and when the New
        Note
        Indenture is duly executed and delivered by the Company (assuming due
        authorization, execution and delivery of the New Note Indenture by the Trustee)
        will constitute a legally valid and binding agreement of the Company enforceable
        against the Company in accordance with its terms, subject to the effect of
        any
        bankruptcy, insolvency, reorganization, moratorium or other similar laws
        now or
        hereafter in effect relating to or affecting creditors’ rights generally and
        general principles of equity, regardless of whether such enforceability is
        considered in a proceeding in equity or at law.

       

      (e)  Authorization
        and Binding Obligations of the New Notes.

       

      The
        New
        Notes have been duly authorized by the Company, and when the New Notes are
        executed, authenticated and issued in accordance with the terms of the Indenture
        and subject to the terms and conditions set forth herein delivered pursuant
        to
        this Agreement at the Closing (assuming due authentication of the New Notes
        by
        the Trustee), such New Notes will constitute legally valid and binding
        obligations of the Company, entitled to the benefits of the Indenture and
        enforceable against the Company in accordance with their terms, subject to
        the
        effect of any bankruptcy, insolvency, reorganization, moratorium or other
        similar laws now or hereafter in effect relating to or affecting creditors’
rights generally and general principles of equity, regardless of whether
        such
        enforceability is considered in a proceeding in equity or at law.

       

      (f)  Non-contravention.

       

      The
        execution and delivery of the Transaction Documents by the Company and the
        consummation by the Company of the transactions contemplated herein and therein
        do not and will not, with or without the giving of notice or the lapse of
        time,
        or both, (i) result in any violation of any provision of the certificate
        of
        incorporation or by-laws or similar instruments of the Company or any
        Subsidiary, (ii) conflict with or result in a breach by the Company or any
        Subsidiary of any of the terms or provisions of, or constitute a default
        under,
        or result in the modification of, or result in the creation or imposition
        of any
        lien, security interest, charge or encumbrance upon any of the properties
        or
        assets of the Company pursuant to, any indenture, mortgage, deed of trust
        or
        other agreement or instrument to which the Company or any Subsidiary is a
        party
        or by which the Company or any Subsidiary or any of their respective properties
        or assets are bound or affected which would have a material adverse effect
        on
        the business, properties, or results of operations of the Company and the
        Subsidiaries, taken as a whole, (iii) violate or contravene any applicable
        law,
        rule or regulation or any applicable decree, judgment or order of any court,
        United States federal or state regulatory body, administrative agency or
        other
        governmental body having jurisdiction over the Company or any Subsidiary
        or any
        of their respective properties or assets which would have a material adverse
        effect on the business, properties, or results of operations of the Company
        and
        the Subsidiaries, taken as a whole, or (iv) have any material adverse effect
        on
        any permit, certification, registration, approval, consent, license or franchise
        necessary for the Company or any Subsidiary to own or lease and operate any
        of
        its properties and to conduct any of its business or the ability of the Company
        or any Subsidiary to make use thereof.

       

      (g)  Approvals,
        Filings, Etc.

       

      No
        authorization, approval or consent of, or filing with, any court, governmental
        body, regulatory agency, self-regulatory organization, or stock exchange
        or
        market or the stockholders of the Company is required to be obtained or made
        by
        the Company or any Subsidiary in connection with the execution, delivery
        and
        performance of this Agreement and the New Note Indenture and the issuance
        of the
        New Notes as contemplated by this Agreement and the issuance of the Conversion
        Shares upon conversion of the New Notes other than notification by the Company
        to the Principal Market with respect to the listing of the Conversion
        Shares.

       

      (h)  Absence
        of Certain Proceedings.

       

      Except
        as
        disclosed in the SEC Reports, there are no legal or governmental proceedings
        pending to which the Company or any of its Subsidiaries is a party or of
        which
        any of their respective properties or assets is the subject which, if determined
        adversely to the Company, might reasonably be expected to materially and
        adversely affect the consummation of the transactions contemplated by the
        Transaction Documents or the performance by the Company of its obligations
        under
        the Transaction Documents and, to the Company’s knowledge, no such proceedings
        are threatened or contemplated by governmental authorities or, except as
        set
        forth or contemplated in the SEC Reports, threatened by others.

       

      (i)  Absence
        of Brokers, Finders, Etc.

       

      No
        broker, finder, or similar Person is entitled to any commission, fee, or
        other
        compensation by reason of the transactions contemplated by this
        Agreement.

       

      (j)  Certain
        Securities Law Matters.

       

      Assuming
        the accuracy of the representations and warranties of the Holder contained
        in
        Section 3 hereto, the New Notes may be issued to the Holder pursuant to this
        Agreement without registration under the 1933 Act by virtue of Section 4(2)
        of
        the 1933 Act and Rule 506 of Regulation D thereunder. The Company acknowledges
        that, for purposes of Rule 144, the Holder will be entitled to tack the holding
        period of the Existing Notes determined in accordance with Rule 144, and
        “no-action letters” from the Division of Corporation Finance of the SEC relating
        thereto, to the holding period of the New Notes and the Conversion Shares
        and,
        so long as (x) the aggregate period during which the Existing Notes and the
        New
        Notes and the Conversion Shares as so determined are held is at least two
        years
        and (y) at the time of determination the Holder is not and has not for the
        preceding three months been an “affiliate” (as such term is defined in Rule 144)
        of the Company, the New Notes and the Conversion Shares may be sold pursuant
        to
        Rule 144(k). The Company agrees not to take a position contrary thereto in
        determining whether a transfer of the New Notes is permissible under Rule
        144
        unless the SEC or its staff by rule or interpretation changes its rules and
        interpretations thereof in effect on the date of this Agreement or such rules
        or
        interpretations are held invalid or incorrect by a court of competent
        jurisdiction or are altered as a result of legislative actions.

       

      (k)  Trust
        Indenture Act.

       

      The
        New
        Notes may be offered and issued to the Holder without the qualification of
        the
        New Note Indenture under the 1939 Act in reliance on the exemption contained
        in
        Section 304(b) of the 1939 Act.

       

      (l)  No
        Integrated Offering.

       

      Neither
        the Company nor any affiliate (as defined in Rule 501(b) of Regulation D
        under
        the 1933 Act) of the Company has taken or will take any action to sell, offer
        for sale, solicit offers to buy or otherwise negotiate in respect of, any
        security (as defined in the 1933 Act) which is or will be integrated with
        the
        exchange of the New Notes for the Existing Notes in a manner that would require
        the registration under the 1933 Act of the New Notes.

       

      (m)  No
        Event of Default.

       

      No
        event
        has occurred nor has any circumstance arisen which, had the New Notes been
        outstanding as of December 31, 2004, would constitute a default or an Event
        of
        Default (as such term is defined in the Indenture).

       

      5.  Certain
        Covenants.

       

      (a)  Covenants
        by the Company.

       

      (1)  Exchange
        with Holders of Other Debentures.

       

      For
        a
        period of 90 days after the Closing Date the Company will not enter into
        any
        agreement with any other holder of the Company’s 5% Convertible Subordinated
        Debentures due May 15, 2006 to exchange, repurchase, retire, repay or otherwise
        acquire any of such debentures (other than by payment when due at maturity)
        upon
        terms more favorable to such holder than the terms set forth in this Agreement,
        without the prior written consent of the Holder; provided, however that nothing
        in this Agreement shall restrict the Company’s ability to redeem such notes
        pursuant to the terms of the indenture by which they are governed.

       

      (2)  Principal
        Market Listing; Reporting Status.

       

      So
        long
        as the Holder beneficially owns any of the Conversion Shares, the Company
        shall
        (x) use its commercially reasonable best efforts to maintain the listing
        of the
        Common Stock on the Nasdaq National Market, and (y) timely file all reports
        required to be filed with the SEC pursuant to Section 13 or 15(d) of the
        1934
        Act, and the Company shall not terminate its status as an issuer required
        to
        file reports under the 1934 Act even if the 1934 Act or the rules and
        regulations thereunder would permit such termination.

       

      (3)  PORTAL
        Eligibility.

       

      In
        the
        event the New Notes are not eligible for trading on PORTAL at or prior to
        the
        Closing Date, the Company shall use its commercially reasonable best efforts
        to
        cause the New Notes to be eligible for trading on PORTAL as promptly as
        practicable following the Closing Date.

       

      (b)  Settlement
        of Interest on the Existing Notes.

       

       The
        parties hereby agree that the Holder shall receive a payment of unpaid and
        accrued interest with respect to the Existing Notes (the “Interest Payment”) at
        the Closing Date. The parties hereby agree that the payment of the Interest
        Payment shall be deemed to satisfy any and all obligations by the Company
        to pay
        accrued and unpaid interest on the Existing Notes. In the event that the
        Holder
        shall receive any payments at the closing on the Closing Date or thereafter
        which include the payment of interest accrued on or after the Closing Date
        (an
“Excess Interest Payment”), the Holder shall immediately remit to the Company in
        immediately available funds an amount equal to such Excess Interest
        Payment.

       

      6.  Conditions
        to the Company’s Obligation to Exchange.

       

      The
        Holder understands that the Company’s obligation to issue to the Holder the New
        Notes in exchange for the Existing Notes on the Closing Date is conditioned
        upon
        satisfaction of the following conditions precedent on or before the Closing
        Date
        (any or all of which may be waived by the Company in its sole
        discretion):

       

      (a)  On
        the
        Closing Date, no legal action, suit or proceeding shall be pending or threatened
        which seeks to restrain or prohibit the transactions contemplated by this
        Agreement;

       

      (b)  The
        representations and warranties of the Holder contained in this Agreement
        shall
        have been true and correct on the date of this Agreement and on the Closing
        Date
        as if made on the Closing Date and on or before the Closing Date the Holder
        shall have performed all covenants and agreements of the Holder required
        to be
        performed by the Holder on or before the Closing Date; and

       

      (c)  On
        the
        Closing Date, the Company shall have received the opinion of the Law Offices
        of
        Brian W. Pusch, dated the Closing Date, addressed to the Company, in form,
        scope
        and substance reasonably satisfactory to the Company, substantially in the
        form
        of Annex I
        to this
        Agreement, and

       

      (d)  The
        Trustee shall have executed the New Note Indenture and the New Note Indenture
        shall be in full force and effect.

       

      7.  Conditions
        to the Holder’s Obligations to Exchange.

       

      The
        Company understands that the Holder’s obligation to exchange Existing Notes for
        the New Notes on the Closing Date is conditioned upon satisfaction of the
        following conditions precedent on or before the Closing Date (any or all
        of
        which may be waived by the Holder in its sole discretion):

       

      (a)  On
        the
        Closing Date, no legal action, suit or proceeding shall be pending or threatened
        which seeks to restrain or prohibit the transactions contemplated by this
        Agreement;

       

      (b)  The
        representations and warranties of the Company contained in this Agreement
        shall
        have been true and correct on the date of this Agreement and shall be true
        and
        correct on the Closing Date as if given on and as of the Closing Date (except
        for representations given as of a specific date, which representations shall
        be
        true and correct as of such date), and on or before the Closing Date the
        Company
        shall have performed all covenants and agreements of the Company contained
        herein required to be performed by the Company on or before the Closing
        Date;

       

      (c)  No
        Event
        of Default under and as defined in the Existing Note Indenture or event which,
        with the giving of notice or the passage of time, or both, would constitute
        an
        Event of Default under and as defined in the Existing Notes shall have occurred
        and be continuing;

       

      (d)  The
        Company shall have delivered to the Holder a certificate, dated the Closing
        Date, duly executed by its Chief Executive Officer or Chief Financial Officer
        to
        the effect set forth in subparagraphs (a), (b), and (c) of this Section
        7;

       

      (e)  The
        Company shall have delivered to the Holder a certificate, dated the Closing
        Date, of the Secretary of the Company certifying (A) the Certificate of
        Incorporation and By-Laws of the Company as in effect on the Closing Date,
        (B)
        all resolutions of the Board of Directors (and committees thereof) of the
        Company relating to this Agreement and the transactions contemplated hereby
        and
        (C) such other matters as reasonably requested by the Holder;

       

      (f)  On
        the
        Closing Date, the Holder shall have received opinions of Jenner & Block LLP
        and Howard W. Brodie, Esq., dated the Closing Date, addressed to the Holder,
        in
        form, scope and substance reasonably satisfactory to the Holder, substantially
        in the form of Annex II
        and
Annex III,
        respectively, to this Agreement;

       

      (g)  The
        Company and the Trustee shall have executed the New Note Indenture and the
        New
        Note Indenture shall be in full force and effect and the New Notes shall
        have
        been duly authenticated by the Trustee;

       

      (h)  On
        the
        Closing Date (1) trading in securities on the Nasdaq National Market shall
        not
        have been suspended or materially limited and (2) a general moratorium on
        commercial banking activities in the State of New York shall not have been
        declared by either federal or state authorities; and

       

      (i)  The
        Company shall have used its commercially reasonable best efforts to cause
        the
        New Notes to be eligible for trading on PORTAL.

       

      8.  Indemnification
        and Contribution.

       

      (a)  Indemnification.

       

      (1)  To
        the
        extent not prohibited by applicable law, the Company will indemnify and hold
        harmless each Indemnified Person against any Claims to which any of them
        may
        become subject, insofar as such Claims (or actions or proceedings, whether
        commenced or threatened, in respect thereof) arise out of or are based upon
        any
        Violation or any of the transactions contemplated by this Agreement; provided
        that the Company shall not be liable under this provision to the extent that
        such Claims resulted from the gross negligence or willful misconduct of the
        Indemnified Person. The Company shall reimburse each such Indemnified Person,
        promptly as such expenses are incurred and are due and payable, for any
        documented reasonable legal fees or other documented and reasonable expenses
        incurred by them in connection with investigating or defending any such Claim.
        Notwithstanding anything to the contrary contained herein, the indemnification
        agreement contained in this Section 8(a) shall not apply to amounts paid
        in
        settlement of any Claim if such settlement is effected without the prior
        written
        consent of the Company, which consent shall not be unreasonably
        withheld.

       

      (2)  Promptly
        after receipt by an Indemnified Person under this Section 8(a) of notice
        of the
        commencement of any action (including any governmental action), such Indemnified
        Person shall, if a Claim in respect thereof is to be made against the Company
        under this Section 8(a), deliver to the Company a notice of the commencement
        thereof and the Company shall have the right to participate in, and, to the
        extent the Company so desires, to assume control of the defense thereof with
        counsel reasonably satisfactory to the Indemnified Person; provided,
        however,
        that an
        Indemnified Person shall have the right to retain its own counsel with the
        fees
        and expenses to be paid by the Company, if, in the reasonable opinion of
        counsel
        retained by the Company, the representation by such counsel of the Indemnified
        Person and the Company would be inappropriate due to actual or potential
        differing interests between such Indemnified Person and any other party
        represented by such counsel in such proceeding; provided
        further, however,
        that the
        Company shall not be responsible for the fees and expenses of more than one
        separate counsel for all Indemnified Persons hereunder and one separate counsel
        in each jurisdiction in which a Claim is pending or threatened. The failure
        to
        deliver notice to the Company within a reasonable time of the commencement
        of
        any such action shall not relieve the Company of any liability to the
        Indemnified Person under this Section 8(a), except to the extent that the
        Company is prejudiced in its ability to defend such action. The indemnification
        required by this Section 8(a) shall be made by periodic payments of the amount
        thereof during the course of the investigation or defense, as such expense,
        loss, damage or liability is incurred and is due and payable.

       

      (b)  Contribution.

       

      To
        the
        extent any indemnification by the Company as set forth in Section 8(a) above
        is
        applicable by its terms but is prohibited or limited by law, the Company
        agrees
        to make the maximum contribution with respect to any amounts for which it
        would
        otherwise be liable under Section 8(a) to the fullest extent permitted by
        law.
        In determining the amount of contribution to which the respective parties
        are
        entitled, there shall be considered the relative fault of each party, the
        parties’ relative knowledge of and access to information concerning the matter
        with respect to which the Claim was asserted, the opportunity to correct
        and
        prevent any statement or omission and any other equitable considerations
        appropriate under the circumstances; provided,
        however,
        that (a)
        no contribution shall be made under circumstances where the maker would not
        have
        been liable for indemnification under the fault standards set forth in Section
        8(a) and (b) no Person guilty of fraudulent misrepresentation (within the
        meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
        from
        any other Person who was not guilty of such fraudulent
        misrepresentation.

       

      (c)  Other
        Rights.

       

      The
        indemnification and contribution provided in this Section shall be in addition
        to any other rights and remedies available at law or in equity.

       

      9.  Miscellaneous.

       

      (a)  Governing
        Law.

       

      THIS
        AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS
        OF
        THE STATE OF NEW YORK.

       

      (b)  Headings.

       

      The
        headings, captions and footers of this Agreement are for convenience of
        reference and shall not form part of, or affect the interpretation of, this
        Agreement.

       

      (c)  Severability.

       

      If
        any
        provision of this Agreement shall be invalid or unenforceable in any
        jurisdiction, such invalidity or unenforceability shall not affect the validity
        or enforceability of the remainder of this Agreement or the validity or
        enforceability of this Agreement in any other jurisdiction.

       

      (d)  Notices.

       

      Any
        notices required or permitted to be given under the terms of this Agreement
        shall be in writing and shall be sent by mail, personal delivery, by telephone
        line facsimile transmission or courier and shall be effective five days after
        being placed in the mail, if mailed, or upon receipt, if delivered personally,
        by telephone line facsimile transmission or by courier, in each case addressed
        to a party at such party’s address (or telephone line facsimile transmission
        number) shown in the introductory paragraph or on the signature page of this
        Agreement or such other address (or telephone line facsimile transmission
        number) as a party shall have provided by notice to the other party in
        accordance with this provision. In the case of any notice to the Company,
        such
        notice shall be addressed to the Company at its address (or telephone line
        facsimile transmission number) shown on the signature page hereto, Attention:
        Chief Legal Officer, with a copy addressed to John E. Welch, Jenner & Block,
        LLP, 601 Thirteenth Street, NW, Suite 1200 South, Washington, DC 20005
        (facsimile transmission number (202) 661-4980), and in the case of any notice
        to
        the Holder, such notice shall be addressed to the Holder at its address (or
        telephone line facsimile transmission number) shown on the signature page
        hereto
        and a copy shall be given to: Law Offices of Brian W Pusch, Penthouse Suite,
        29
        West 57th Street, New York, New York 10019 (telephone line facsimile
        transmission number (212) 980-7055).

       

      (e)  Counterparts.

       

      This
        Agreement may be executed in counterparts and by the parties hereto on separate
        counterparts, each of which shall be deemed to be an original but all of
        which
        together shall constitute one and the same instrument. A telephone line
        facsimile transmission of this Agreement bearing a signature on behalf of
        a
        party hereto shall be legal and binding on such party. Although this Agreement
        is dated as of the date first set forth above, the actual date of execution
        and
        delivery of this Agreement by each party is the date set forth below such
        party’s signature on the signature page hereof. Any reference in this Agreement
        or in any of the documents executed and delivered by the parties hereto in
        connection herewith to (1) the date of execution and delivery of this Agreement
        by the Holder shall be deemed a reference to the date set forth below the
        Holder’s signature on the signature page hereof, (2) the date of execution and
        delivery of this Agreement by the Company shall be deemed a reference to
        the
        date set forth below the Company’s signature on the signature page hereof and
        (3) the date of execution and delivery of this Agreement, or the date of
        execution and delivery of this Agreement by the Holder and the Company, shall
        be
        deemed a reference to the later of the dates set forth below the signatures
        of
        the parties on the signature page hereof.

       

      (f)  Entire
        Agreement; Benefit.

       

      This
        Agreement, the New Note Indenture and the New Notes and the other documents
        contemplated hereby and thereby constitute the entire agreement between the
        parties hereto with respect to the subject matter hereof and thereof and
        supersede all prior agreements and understandings, whether written or oral,
        between the parties hereto with respect to the subject matter hereof and
        thereof. There are no restrictions, promises, warranties, or undertakings,
        other
        than those set forth or referred to herein and therein. This Agreement and
        the
        terms and provisions hereof are for the sole benefit of only the Company,
        the
        Holder and their respective successors and permitted assigns and in no event
        shall the Holder have any liability to any stockholder or creditor of the
        Company or any other Person (other than the Company) in any way relating
        to or
        arising from this Agreement or the transactions contemplated
        hereby.

       

      (g)  Waiver.

       

      Failure
        of any party to exercise any right or remedy under this Agreement or otherwise,
        or delay by a party in exercising such right or remedy, or course of dealing
        between the parties, shall not operate as a waiver thereof or an amendment
        hereof, nor shall any single or partial exercise of any such right or power,
        or
        any abandonment or discontinuance of steps to enforce such a right or power,
        preclude any other or further exercise thereof or exercise of any other right
        or
        power.

       

      (h)  Amendment.

       

      No
        amendment, modification, waiver, discharge or termination of any provision
        of
        this Agreement nor consent to any departure by the Holder or the Company
        therefrom shall in any event be effective unless the same shall be in writing
        and signed by the party to be charged with enforcement, and then shall be
        effective only in the specific instance and for the purpose for which given.
        No
        course of dealing between the parties hereto shall operate as an amendment
        of
        this Agreement.

       

      (i)  Best
        Efforts.

       

      Each
        of
        the parties shall use its best efforts timely to satisfy each of the conditions
        to the other party’s obligations set forth in Section 6 or 7, as the case may
        be, of this Agreement on or before the Closing Date.

       

      (j)  Further
        Assurances.

       

      Each
        party to this Agreement will perform any and all acts and execute any and
        all
        documents as may be necessary and proper under the circumstances in order
        to
        accomplish the intents and purposes of this Agreement and to carry out its
        provisions.

       

      (k)  Expenses.

       

      The
        Company and the Holder shall each be responsible for its own expenses
        (including, without limitation, the legal fees and expenses of its counsel)
        incurred by them in connection with the negotiation and execution of, and
        closing under, this Agreement and of the transactions contemplated
        hereby.

       

      (l)  Termination.

       

      This
        Agreement may be terminated:

       

      (1)  By
        the
        Holder at or after the Closing Date if any condition set forth in Section
        7 has
        not been satisfied by the Closing Date (other than as a result of any failure
        on
        the part of the Holder to comply with or perform any covenant or obligation
        of
        the Holder set forth in this Agreement);

       

      (2)  By
        the
        Company at or after the Closing Date if any condition set forth in Section
        6 has
        not been satisfied by the Closing Date (other than as a result of any failure
        on
        the part of the Company to comply with or perform any covenant or obligation
        of
        the Company set forth in this Agreement); 

       

      (3)  By
        the
        Holder if the closing shall not have occurred on a Closing Date on or before
        December 30, 2005, other than solely by reason of a breach of this Agreement
        by
        the Holder; or

       

      (4)  By
        mutual
        consent of the Holder and the Company.

       

      If
        the
        Holder wishes to terminate this Agreement pursuant to Section 9(l)(1) or
        (3),
        the Holder shall deliver to the Company a written notice stating that the
        Holder
        is terminating this Agreement and setting forth a brief description of the
        basis
        on which the Holder is termination this Agreement. If the Company wishes
        to
        terminate this Agreement pursuant to Section 9(l)(2), the Company shall deliver
        to the Holder a written notice stating that the Company is terminating this
        Agreement and setting forth a brief description of the basis on which the
        Company is terminating this Agreement.

       

      If
        this
        Agreement is terminated pursuant to Section 9(l), this Agreement shall be
        of no
        further force or effect (and, except as provided in this paragraph, there
        shall
        be no liability or obligation hereunder on the part of any of the parties
        hereto
        or their respective officers, directors, stockholders or affiliates); provided,
        however, that Section 9, including without limitation, this Section 9(l),
        shall
        survive the termination of this Agreement and shall remain in full force
        and
        effect, and the termination of this Agreement shall not relieve any party
        from
        any liability for any willful breach of any representation, warranty or covenant
        contained in this Agreement

       

      (m)  Survival.

       

      The
        respective representations, warranties, covenants and agreements of the Company
        and the Holder contained in this Agreement and the documents delivered in
        connection with this Agreement shall survive the execution and delivery of
        this
        Agreement and the closing hereunder, and shall remain operative and in full
        force and effect regardless of any investigation made by or on behalf of
        the
        Holder or any Person controlling or acting on behalf of the Holder or by
        the
        Company or any Person controlling or acting on behalf of the
        Company.

       

      (n)  Public
        Statements, Press Releases, Etc.

       

      The
        Company and the Holder shall have the right to approve before issuance any
        press
        releases or any other public statements with respect to the transactions
        contemplated hereby; provided, however, that the Company shall be entitled,
        without the prior approval of the Holder, to make any press release or other
        public disclosure with respect to such transactions as is required by applicable
        law and regulations, including the 1934 Act and the rules and regulations
        promulgated thereunder.

       

      (o)  Construction.

       

      The
        language used in this Agreement will be deemed to be the language chosen
        by the
        parties to express their mutual intent, and no rules of strict construction
        will
        be applied against any party.

       

      [Signature
        Page Follows]

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

         

      

    

    
      IN
        WITNESS WHEREOF,
        the
        parties have caused this Agreement to be duly executed by their respective
        officers or other representatives thereunto duly authorized as of the date
        first
        set forth above and on the dates set forth below their respective
        signatures.

       

      EMCORE
        CORPORATION

       

      By: 
        /s/ Howard Brodie    

      Name:
        Howard Brodie

      Title: 
        Executive Vice President

      

      Address:

      

      145
        Belmont Drive

      Somerset,
        New Jersey 08873

      

      Facsimile
        No.: (732) 271-9686

      

      Date:    November
        10,
        2005

      

      

      ALEXANDRA
        GLOBAL MASTER

      FUND
        LTD.

      

      
        	 	
                By:

              	
                ALEXANDRA
                  INVESTMENT MANAGEMENT,
                  LLC,

              

      

       

      as
        Investment Advisor

       

      By: 
        /s/ M. Filimonov    

          Mikhail
        Filimonov

          Chairman
        and
        Chief Executive Officer

      

      Address:

      

      c/o
        Alexandra Investment Management,

      LLC

      767
        Third
        Avenue

      39th
        Floor

      New
        York,
        New York 10017

      

      Facsimile
        No.: (212) 301-1810

      

      Date:    November
        11, 2005

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

      ANNEX
        I

       

      [LETTERHEAD
        - Law Offices of Brian W Pusch]

       

      November
        __, 2005

      

      Emcore
        Corporation

      145
        Belmont Drive

      Somerset,
        New Jersey 08873

      

      ALEXANDRA
        GLOBAL MASTER FUND LTD.

      Emcore
        Corporation  

      

       

      Ladies
        and Gentlemen:

      

      We
        are
        special counsel for Alexandra Global Master Fund Ltd., a British Virgin Islands
        international business company ("Alexandra"), in connection with the exchange
        of
        $14,425,000.00 aggregate principal amount of 5% Convertible Subordinate
        Debentures due May 15, 2006 (the “5% Debentures”) of Emcore Corporation, a New
        Jersey corporation (the “Company”), for $16,580,460.00 aggregate principal
        amount of 5% Senior Subordinated Convertible Notes due 2011 of the Company
        (the
“Notes”) pursuant to the terms of an Exchange Agreement, dated as of November
  ,
        2005,
        by and between the Company and Alexandra (the “Exchange Agreement”). The 5%
        Debentures are, and the Notes will be, convertible into shares of Common
        Stock,
        no par value per share, of the Company (the “Common Stock”).

       

      In
        connection with this opinion, we have examined the Exchange Agreement, the
        form
        of the 5% Debentures, the Indenture, dated as of May 7, 2001, between the
        Company and Wilmington Trust Company, as Trustee, relating to the 5% Debentures,
        the form of the Notes, the Indenture, dated as of November 14, 2005, between
        the
        Company and Deutsche Bank Trust Company, as Trustee, relating to the Notes
        (the
“Note Indenture”) and relied on originals or copies, certified or otherwise
        identified to our satisfaction, of such records, documents, agreements or
        other
        instruments of Alexandra, orders, rulings and certificates of public officials,
        officers and representatives of Alexandra and Alexandra Investment Management,
        LLC, a Delaware limited liability company (“AIM”) that serves as Alexandra’s
        investment adviser, and such other persons, have made such investigations
        of
        law, and have discussed with representatives of Alexandra and AIM such questions
        of fact, as we have deemed proper and necessary as a basis for the opinions
        hereinafter expressed. As to certain questions of fact we have relied, without
        independent verification, on information provided to us by Alexandra and
        AIM.

       

      We
        have
        assumed the genuineness of all signatures appearing on the documents furnished
        to or reviewed by us and we have also assumed that any person purporting
        to
        execute any document in a representative capacity is a duly authorized
        representative of the person for whom such person executed such document.
        We
        have also assumed, without verification, that the representations and warranties
        of Alexandra and the Company contained in the Exchange Agreement are true
        and
        correct.

       

      On
        the
        basis of the foregoing and in reliance thereon, we are of the opinion
        that:

       

      1.  For
        purposes of Rule 144 (“Rule 144”) under the Securities Act of 1933, as amended
        (the “1933 Act”), Alexandra’s holding period for the 5% Debentures began on the
        later of the date the 5% Debentures were (i) issued by the Company or (ii)
        sold
        by an “affiliate” of the Company, as the term “affiliate” is defined for
        purposes of Rule 144;

       

      2.  After
        Alexandra exchanges the 5% Debentures for the Notes pursuant to the Exchange
        Agreement, Alexandra may tack its holding period of the 5% Debentures to
        its
        holding period of the Notes for purposes of Rule 144;

       

      3.  After
        any
        conversion of any of the Notes into shares (the “Conversions Shares”) of Common
        Stock in accordance with the terms of the Notes and the Note Indenture,
        Alexandra may tack its holding period of the Notes, determined as stated
        in our
        opinion in the immediately preceding paragraph 2, to its holding period of
        such
        Conversion Shares for purposes of Rule 144;

       

      4.  After
        any
        sale of any of the Notes by Alexandra to a person (a “Transferee”) who is not an
“affiliate” of the Company, as the term “affiliate” is defined for purposes of
        Rule 144, in a transaction not involving a public offering, such Transferee
        may
        tack Alexandra’s holding period of such Notes, determined as stated in our
        opinion in the preceding paragraph 2, to such Transferee’s holding period of
        such Notes for purposes of Rule 144;

       

      5.  After
        any
        conversion of such Notes by such Transferee into Conversion Shares in accordance
        with the terms of the Notes and the Note Indenture following a sale by Alexandra
        of such Notes to such Transferee in a transaction not involving a public
        offering, such Transferee may tack its holding period of the Notes, determined
        as stated in our opinion in the immediately preceding paragraph 4, to its
        holding period of such Conversion Shares for purposes of Rule 144;
        and

       

      6.  Alexandra
        may sell the Notes and the Conversion Shares without registration of the
        Notes
        or the Conversion Shares under the 1933 Act.

       

      We
        are
        admitted to practice in the State of New York and no opinion is expressed
        herein
        on any laws other than the federal laws of the United States. This opinion
        is
        rendered solely for the benefit of the Company, Alexandra and AIM and may
        not be
        relied upon for any other purpose or by any other person. 

       

      

      Very
        truly yours,

      

      

      

      Brian
        W.
        Pusch

      

      BWP:to

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      II

     

    [LETTERHEAD
      - Jenner & Block LLP]

     

    
      
         

        November
          [__], 2005

         

      

      
        Alexandra
          Global Master Fund Ltd.

        c/o
          Alexandra Investment Management, LLC

        767
          Third
          Avenue, 39th Floor

        New
          York,
          New York 10017

        Ladies
          and Gentlemen:

      

       

      We
        are
        issuing this letter in our capacity as special counsel for EMCORE Corporation
        (the “Company”) in response to the requirement of Section 7(f) of the Exchange
        Agreement dated November [__], 2005 (the “Exchange Agreement”) by and between
        the Company and Alexandra Global Master Fund Ltd (the “Holder”) relating to the
        exchange of the $14,425,000 aggregate principal amount of the Company’s
        outstanding Convertible Subordinated Notes due 2006 (the “Existing 2006 Notes”)
        for $16,580,460 aggregate principal amount of the Company’s newly issued
        Convertible Senior Subordinated Notes due 2011 (the “New 2011 Notes”). Every
        term which is defined or given a special meaning in the Exchange Agreement
        and
        which is not given a different meaning in this letter has the same meaning
        whenever it is used in this letter as the meaning it is given in the Exchange
        Agreement.

       

      In
        connection with the preparation of this letter, we have among other things
        read:

       

      (a)  the
        Indenture dated as of May 7, 2001 by and between the Company and Wilmington
        Trust Company as trustee;

       

      (b)  the
        Indenture (the “New 2011 Notes Indenture”), dated as of [_______], 2005 by and
        between the Company and Deutsche Bank Trust Company Americas as trustee (the
        “Trustee”);

       

      (c)  the
        Exchange Agreement;

       

      (d)  a
        specimen of the Existing 2006 Notes;

       

      (e)  a
        specimen of the New 2011 Notes;

       

      (f)  copy
        of
        the resolutions of the Board of Directors of the Company adopted on October
        [__], 2005; 

       

      (g)  a
        certificate of the Secretary of the Company dated the date hereof and delivered
        to us in connection with this opinion; and

       

      (h)  copies
        of
        all certificates and other documents delivered today in connection with the
        consummation of the Exchange Offer.

       

      Subject
        to the assumptions, qualifications and limitations which are identified in
        this
        letter, and subject to compliance by the Holder with its representations
        and
        warranties set forth in Section 3(c) of the Exchange Agreement and by the
        Company with its representations and warranties set forth in Section 4(l)
        of the
        Exchange Agreement, it is not necessary in connection with the sale and delivery
        of the New 2011 Notes to the Holder in the manner contemplated by the Exchange
        Agreement to register the New 2011 Notes under the Securities Act of 1933,
        as
        amended, it being understood that no opinion is expressed as to any subsequent
        resales of the New 2011 Notes.

       

       

      **********

       

      Except
        for the activities described in the immediately preceding section of this
        letter, we have not undertaken any investigation to determine the facts upon
        which the advice in this letter is based.

       

      We
        have
        assumed for purposes of this letter: each document we have reviewed for purposes
        of this letter is accurate and complete, each such document that is an original
        is authentic, each such document that is a copy conforms to an authentic
        original, and all signatures on each such document are genuine; that the
        Exchange Agreement and every other agreement we have examined for purposes
        of
        this letter constitutes a valid and binding obligation of each party to that
        document and that each such party has satisfied all legal requirements that
        are
        applicable to such party to the extent necessary to entitle such party to
        enforce such agreement (except that we make no such assumption with respect
        to
        the Company); and that you have acted in good faith and without notice of
        any
        fact which has caused you to reach any conclusion contrary to any of the
        advice
        provided in this letter. We have also made other assumptions which we believe
        to
        be appropriate for purposes of this letter.

       

      In
        preparing this letter we have relied without independent verification upon:
        (i)
        factual information represented to be true in the Exchange Agreement, in
        the
        other documents specifically identified at the beginning of this letter as
        having been read by us and in the certificates and other documents executed
        by
        the Company and delivered to you or to the Trustee under the New 2011 Notes
        Indenture; (ii) factual information provided to us by the Company or its
        representatives; and (iii) factual information we have obtained from such
        other
        sources as we have deemed reasonable. We have assumed that there has been
        no
        relevant change or development between the dates as of which the information
        cited in the preceding sentence was given and the date of this letter and
        that
        the information upon which we have relied is accurate and does not omit
        disclosures necessary to prevent such information from being misleading.
        

       

      We
        confirm that we do not have knowledge that has caused us to conclude that
        our
        reliance and assumptions cited in the two immediately preceding paragraphs
        are
        unwarranted. Whenever this letter provides advice about (or based upon) our
        knowledge of any particular information or about any information which has
        or
        has not come to our attention such advice is based entirely on the conscious
        awareness at the time this letter is delivered on the date it bears by the
        lawyers with Jenner & Block LLP at that time who spent substantial time
        representing the Company in connection with the transactions contemplated
        by the
        Exchange Agreement.

       

      Our
        advice on every legal issue addressed in this letter is based exclusively
        on the
        federal laws of the United States that are, in our experience, generally
        applicable to transactions of the nature contemplated in the Exchange Agreement,
        and represents our opinion as to how that issue would be resolved were it
        to be
        considered by the highest court in the jurisdiction which enacted such law.
        Our
        opinions are limited to the specific issues addressed. None of the opinions
        or
        other advice contained in this letter considers or covers any foreign or
        state
        securities (or “blue sky”) laws or regulations. This letter does not cover any
        other laws, statutes, governmental rules or regulations or decisions which
        in
        our experience are not usually considered for or covered by opinions like
        those
        contained in this letter or are not generally applicable to transactions
        of the
        kind covered by the Exchange Agreement.

       

      This
        letter speaks as of the time of its delivery on the date it bears. We do
        not
        assume any obligation to provide you with any subsequent opinion or advice
        by
        reason of any fact about which we did not have knowledge at that time, by
        reason
        of any change subsequent to that time in any law, other governmental requirement
        or interpretation thereof covered by any of our opinions or advice, or for
        any
        other reason.

       

      This
        letter may be relied upon by the Holder only for the purpose served by the
        provision in the Exchange Agreement cited in the initial paragraph of this
        letter in response to which it has been delivered. Without our written consent:
        (i) no person other than the Holder may rely on this letter for any purpose;
        (ii) this letter may not be cited or quoted in any financial statement,
        prospectus, private placement memorandum or other similar document; (iii)
        this
        letter may not be cited or quoted in any other document or communication
        which
        could encourage reliance upon this letter by any person or for any purpose
        excluded by the restrictions in this paragraph; and (iv) copies of this letter
        may not be furnished to anyone for purposes of encouraging such reliance.
        

       

      Sincerely,

      

      

      Jenner
        & Block LLP

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    ANNEX
      III

    
       

      [EMCORE
        Corporation Letterhead]

       

      November
        [__], 2005

      

      Alexandra
        Global Master Fund Ltd.

      c/o
        Alexandra Investment Management, LLC

      767
        Third
        Avenue, 39th Floor

      New
        York,
        New York 10017

       

      Ladies
        and Gentlemen:

       

      I
        am
        issuing this letter in my capacity as Vice President and General Counsel
        of
        EMCORE Corporation (the “Company”) in response to the requirement of Section
        7(f) of the Exchange Agreement dated [__________], 2005 (the “Exchange
        Agreement”) by and between the Company and Alexandra Global Master Fund Ltd (the
“Holder”) relating to the exchange of the $14,425,000 aggregate principal amount
        of the Company’s outstanding Convertible Subordinated Notes due 2006 (the
“Existing 2006 Notes”) held by the Holder for $16,580,460 aggregate principal
        amount of the Company’s newly issued Convertible Senior Subordinated Notes due
        2011 (the “New 2011 Notes”). Every term which is defined or given a special
        meaning in the Exchange Agreement and which is not given a different meaning
        in
        this letter has the same meaning whenever it is used in this letter as the
        meaning it is given in the Exchange Agreement.

       

      In
        connection with the preparation of this letter, I or others under my supervision
        have among other things read:

       

      (a)  the
        Indenture (the “New2011 Notes Indenture”), dated as of [_______], 2005 by and
        between the Company and Deutsche Bank Trust Company Americas as trustee (the
        “Trustee”);

       

      (b)  the
        Exchange Agreement;

       

      (c)  a
        specimen of the New 2011 Notes;

       

      (d)  copy
        of
        the resolutions of the Board of Directors of the Company adopted on October
        [__], 2005; 

       

      (e)  a
        copy of
        the restated certificate of incorporation of the Company certified as of
        a
        recent date by the Secretary of State of New Jersey;

       

      (f)  a
        copy of
        the by-laws of the Company; and

       

      (g)  copies
        of
        all certificates and other documents delivered today in connection with the
        consummation of the Exchange Offer.

       

      Subject
        to the assumptions, qualifications and limitations which are identified in
        this
        letter, it is my opinion that:

       

       

      (i) The
        Company has been duly organized and is validly existing as a corporation
        in good
        standing under the laws of the State of New Jersey; 

       

      (ii) The
        Conversion Shares have been duly and validly authorized and reserved for
        issuance upon conversion of the New Notes by all necessary corporate action
        and
        are free of preemptive rights; all Conversion Shares, when so issued and
        delivered upon such conversion in accordance with the terms of the New 2011
        Notes Indenture, will be duly and validly authorized and issued, fully paid
        and
        nonassessable; 

       

      (iii) The
        execution, delivery and performance of the Exchange Agreement and the New
        2011
        Notes Indenture and the issuance of the New Notes and the Conversion Shares
        and
        the consummation of the transactions contemplated thereby do not result in
        any
        violation of the provisions of the certificate of incorporation or bylaws
        of the
        Company or any statute or any order, rule or regulation known to us of any
        court
        or governmental agency or body having jurisdiction over the Company or any
        of
        the properties or assets of the Company; and, except as may be required by
        the
        securities or “blue sky” laws of any state of the United States in connection
        with the issuance of the New Notes, no consent, approval, authorization or
        order
        of, or filing or registration with, any such court or governmental agency
        or
        body is required for the execution, delivery and performance of the Exchange
        Agreement and the New Note Indenture by the Company and the issuance of the
        New
        Notes and the Conversion Shares and the consummation of the transactions
        contemplated thereby; 

       

      (iv) The
        Company has all necessary corporate power and authority to execute and deliver
        each of the Transaction Documents to which it is a party and to perform its
        obligations thereunder and to issue and deliver the New Notes and the Conversion
        Shares to the Holder;

       

      (v) The
        Exchange Agreement has been duly authorized, executed and delivered by the
        Company;

       

      (vi) The
        New
        2011 Notes Indenture has been duly authorized, executed and delivered by
        the
        Company and, assuming due authorization, execution and delivery thereof by
        the
        Trustee, constitutes a legally valid and binding agreement of the Company
        enforceable against the Company in accordance with its terms, subject to
        the
        effect of any bankruptcy, insolvency, reorganization, moratorium or other
        similar laws now or hereafter in effect relating to or affecting creditors’
rights generally and general principles of equity, regardless of whether
        such
        enforceability is considered in a proceeding in equity or at law;
        and

       

      (vii) The
        New
        Notes have been duly authorized by the Company and when executed, issued
        and
        authenticated in accordance with terms of the New 2011 Notes Indenture and
        delivered to the Holder in exchange for the Existing Notes, will constitute
        legally valid and binding obligations of the Company, entitled to the benefits
        of the Indenture and enforceable against the Company in accordance with their
        terms, subject to the effect of any bankruptcy, insolvency, reorganization,
        moratorium or other similar laws now or hereafter in effect relating to or
        affecting creditors’ rights generally and general principles of equity,
        regardless of whether such enforceability is considered in a proceeding in
        equity or at law

       

      *********

       

      Except
        for the activities described in the immediately preceding section of this
        letter, I have not undertaken any investigation to determine the facts upon
        which the advice in this letter is based.

       

      I
        have
        assumed for purposes of this letter: each document I have reviewed for purposes
        of this letter is accurate and complete, each such document that is an original
        is authentic, each such document that is a copy conforms to an authentic
        original, and all signatures on each such document are genuine; and that
        you
        have acted in good faith and without notice of any fact which has caused
        you to
        reach any conclusion contrary to any of the advice provided in this letter.
        I
        have also made other assumptions which I believe to be appropriate for purposes
        of this letter.

       

      I
        confirm
        that I do not have knowledge that has caused me to conclude that my reliance
        and
        assumptions cited in the immediately preceding paragraph are unwarranted.
        Whenever this letter provides advice about (or based upon) my knowledge of
        any
        particular information or about any information which has or has not come
        to my
        attention such advice is based entirely on the conscious awareness at the
        time
        this letter is delivered on the date it bears.

       

      My
        advice
        on every legal issue addressed in this letter is based exclusively on the
        federal securities laws of the United States of America, and the laws of
        the
        State of New York and the New Jersey Business Corporation Act. My opinion
        is
        limited to the specific issues addressed. Neither the opinion nor other advice
        contained in this letter considers or covers any foreign or state securities
        (or
“blue sky”) laws or regulations. This letter does not cover any other laws,
        statutes, governmental rules or regulations or decisions which in my experience
        are not usually considered for or covered by opinions like those contained
        in
        this letter or are not generally applicable to transactions of the kind covered
        by the Exchange Agreement.

       

      This
        letter speaks as of the time of its delivery on the date it bears. I do not
        assume any obligation to provide you with any subsequent opinion or advice
        by
        reason of any fact about which I did not have knowledge at that time, by
        reason
        of any change subsequent to that time in any law, other governmental requirement
        or interpretation thereof covered by any of my opinions or advice, or for
        any
        other reason.

       

      This
        letter may be relied upon by the Holder only for the purpose served by the
        provision in the Exchange Agreement cited in the initial paragraph of this
        letter in response to which it has been delivered. Without my written consent:
        (i) no person other than the Holder may rely on this letter for any purpose;
        (ii) this letter may not be cited or quoted in any financial statement,
        prospectus, private placement memorandum or other similar document; (iii)
        this
        letter may not be cited or quoted in any other document or communication
        which
        could encourage reliance upon this letter by any person or for any purpose
        excluded by the restrictions in this paragraph; and (iv) copies of this letter
        may not be furnished to anyone for purposes of encouraging such reliance;
        provided, however, that this opinion may be relied upon by Deutsche Bank
        Trust
        Company Americas in its capacity as Trustee under the New 2011 Notes Indenture.
        

      
 

      Sincerely,

      

      

      Howard
        W.
        Brodie, Esq.Argyll Equities

Argyll Equities

Limited Liability Company

Private Collateralized Loan Agreement

PLEDGE AGREEMENT

This 17th day of November 2005 

NOW COMES:  Michael J. Skellern, whose address of record is Universal Guardian Holding, Inc., 4295 Mac Arthur Court, Suite 300, Newport Beach, CA 92660 (hereinafter the "Pledgor") and Argyll Equities, LLC, a limited liability company chartered in the State of Texas, having a principal place of business at 1580 South Main Street, Boerne, TX  78006 (hereinafter the "Lender").

WHEREAS: The Pledgor and the Lender are entering into a Loan Agreement (as it may be amended, supplemented, restated or otherwise modified from time to time) as of the date hereof providing for the making of a Loan to the Pledgor in the amount, and subject to the terms and conditions, specified in the Loan Agreement.

The Pledgor is the direct legal and beneficial owner of Eight Hundred and Thirty Sixty Thousand (836,000) shares of UNIVERSAL GUARDIAN HOLDINGS INC (OTC BB:UGHO.OB) common stock.

The execution and delivery of this Pledge Agreement and the pledge by the Pledgor to the Lender of his rights in the Collateral, as hereinafter defined, constitute conditions precedent to the obligation of the Lender to make a Loan to the Pledgor pursuant to the terms of the Loan Agreement.

NOW THEREFORE:  In consideration of the premises, and in order to induce the Lender to execute and deliver the Loan Agreement and to make and maintain a loan there under, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgor hereby agrees as follows:

SECTION 1.  DEFINITIONS:   Capitalized terms that are not defined herein have the respective meanings ascribed them in the Loan Agreement and, in addition, the following terms have the following meanings:

1.1

"Amount Realized" has the meaning specified in Section 10.

1.2

"Loan Agreement" has the meaning specified in Recital A.

1.3

"Loan" has the meaning specified in Recital A.

1.4

"Obligations" means all indebtedness and other liabilities and obligations of the Pledgor to the Lender of every kind, nature and description, present or future, direct or indirect, secured or unsecured, joint or several, absolute or contingent, matured or not, in any currency, due or to become due, now existing or hereafter arising, regardless of how they arise or by what agreement or instrument or whether evidenced by any agreement or instrument and whether as principal or surety, including, without limitation, (i) the payment in full when due of the Loan and all interest thereon, the payment of all amounts payable by the Pledgor to the Lender under the terms of the Loan Agreement, the Note or any other Loan Document and the payment and performance in full when due of all other liabilities and obligations of the Pledgor to the Lender under the Loan Agreement, the Note and the other Loan Documents and all notes and other evidences or indebtedness issued in exchange or substitution for the Note and (ii) the observance and performance by the Pledgor of the obligations to be observed and performed by it hereunder or under any related agreement, instrument or document.

1.5

"Pledge" has the meaning specified in Section 2.

1.6

"Pledged Collateral" has the meaning specified in Section 2.

1.7

"Pledged Shares" has the meaning specified in Section 2(a).

1.8

"Uniform Commercial Code" means the Uniform Commercial Code as adopted and in effect from time to time in the State of New York.

1.9

Gender and Number.  Words used herein, regardless of the number or gender specifically used, shall be deemed and construed to include any other number, singular or plural and any other gender, masculine, feminine, or neuter, as the context requires.

1.10

Headings:  The headings used in this Pledge are solely for the convenience of reference, and are not part of this Agreement, and are not to be considered in construing or interpreting this Agreement.

1.11

References: Unless otherwise specified, the words “hereof,” “herein,” “hereunder” and other similar words refer to this Pledge Agreement as a whole and not just to the Section, subsection or clause in which they are used; and the words "this Agreement" refer to this Pledge Agreement, as amended, modified or supplemented from time to time.

Unless otherwise specified, references to Sections, Recitals, Schedules and Exhibits are references to Sections of, and 

1

Recitals, Schedules and Exhibits to, this Agreement.

1.12

Statements as to Knowledge: Any statements, representations or warranties which are based upon the knowledge of the Borrower shall be deemed to have been made after due inquiry with respect to the matter in question.

SECTION 2.  PLEDGE.   The Pledgor hereby pledges, hypothecates and assigns to the Lender, and hereby grants to the Lender a security interest in and all right, title and interest in and to (the "Pledge"), the following described property, whether now owned by the Pledgor or hereafter acquired and whether now existing or hereafter created (hereinafter the "Pledged Collateral"):

(a)

all of the shares of capital stock of UNIVERSAL GUARDIAN HOLDINGS INC (OTC BB:UGHO.OB) [“Issuer”] described in Schedule I together with the certificates evidencing such shares (collectively, the "Pledged Shares");

(b)

all cash, instruments, securities or other property representing a dividend or other distribution on any of the Pledged Shares, or representing a distribution or return of capital upon or in respect of the Pledged Shares, or resulting from a split-up, revision, reclassification or other like change of the Pledged Shares or otherwise received in exchange therefore, and any warrants, rights or options issued to the holders of, or otherwise in respect of, the Pledged Shares;

(c)

all proceeds of any of the property of the Pledgor described in subsections (a) and (b) above of this Section 2 and, to the extent related to any property described in said clauses or such proceeds, all books, correspondence, records, and other documents.

SECTION 3.  PLEDGE ABSOLUTE.  The Pledgor hereby agrees that this Agreement shall be binding upon the Pledgor and that the Pledge hereunder shall be irrevocable and unconditional, irrespective of the validity, legality or enforceability of the Loan Agreement, the Note, any other Loan Document or any of the Obligations, the absence of any action to enforce the same, the waiver or consent by the Lender with respect to any provision thereof, the recovery of any judgment against the Pledgor, or any action to enforce the same or any other similar circumstances. The Pledgor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger or bankruptcy of the Pledgor, any notice to require a proceeding first against the Pledgor or any other Person, protest or notice with respect to the Note or any other promissory notes or evidences of indebtedness secured hereby or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Agreement will remain in full force and effect so long as any Obligations remain unpaid.

SECTION 4.  REPRESENTATIONS AND WARRANTIES.  The Pledgor hereby represents and warrants, to his knowledge, as follows:

 

4.1

The Pledgor is not in violation of any applicable United States federal or state, or any applicable law or regulation or in default with respect to any order, writ, injunction or decree of any court, or in default under any order, license, regulation or demand of any governmental agency, which violation or default could affect the validity or enforceability of this Agreement or any related document or prevent the Pledgor from performing any of his obligations hereunder or under any related documents.

4.2

The execution, delivery and performance of this Agreement by the Pledgor, the Pledge of the Pledged Collateral pursuant hereto and the incurrence and performance of the obligations provided for herein will not (1) violate any law or regulation applicable to the Pledgor or any of his assets, (2) violate or constitute (with due notice or lapse of time or both) a default under any provision of any indenture, agreement, license or other instrument to which the Pledgor is a party or by which he or any of his properties may be bound or affected, (3) violate any order of any court, tribunal or governmental agency binding upon the Pledgor or any of his properties or (4) result in the creation or imposition of any lien or encumbrance of any nature whatsoever upon any assets or revenues of the Pledgor (except liens in favor of the Lender hereunder).

4.3

No authorizations, approvals and consents of, and no filings and registrations with, any governmental or regulatory authority or agency or any other Person are necessary for the execution, delivery or performance by the Pledgor of this Agreement or for the validity or enforceability hereof.

4.4

This Agreement constitutes the legal, valid and binding obligation of the Pledgor, enforceable against the Pledgor in accordance with its terms.

4.5

The Pledgor is the sole record and beneficial owner of the Pledged Shares.  The Pledged Shares are not subject to any liens, security interests, charges or encumbrances of any kind or nature, other than the liens created hereunder.  The Pledgor has legal title to the Pledged Shares and the Pledgor has good and lawful authority to Pledge all of the Pledged Shares in the manner hereby done or contemplated. The Pledged Shares are not subject to any contractual or other restriction upon the transfer thereof, and no right, warrant or option to acquire any of the Pledged Shares exists in favor of any other Person. The Pledged Shares are freely tradable and transferable securities and do not bear any restrictive legend. The Pledgor has taken all necessary action to create and perfect a security interest in the Pledged Shares in favor of the Lender, and the Lender has acquired a first and prior perfected security interest therein.

4.6

When any item of Pledged Collateral other than the Pledged Shares is pledged hereunder, (i) the Pledgor will be the owner of such item of Pledged Collateral free and clear of any liens, security interests, charges or encumbrances of any kind or nature (other than those created hereunder) and (ii) the Pledgor will have legal title to such item of Pledged Collateral and the Pledgor will have good and lawful authority to Pledge and deliver such item of Pledged Collateral in the manner hereby 

2

contemplated.

4.7

Any information, schedules, exhibits and reports furnished by the Pledgor to the Lender in connection with the negotiation and preparation of this Agreement did not contain any omissions or misstatements of fact which would make the statements contained therein misleading or incomplete in any material respect.

SECTION 5.  COVENANTS.  The Pledgor hereby agrees that, unless the Lender shall otherwise agree in writing, until the payment in full of the Obligations:

5.1

 

The Pledgor (i) shall defend his title to the Pledged Collateral against all claims and demands whatsoever that are adverse 

to the Lender, (ii) shall not create, incur, assume or suffer to exist any liens, security interests, charges or encumbrances of any kind or nature (other than those created hereunder) in any Pledged Collateral and (iii) shall not sell, assign, transfer, exchange or otherwise dispose of, or grant any option or other right with respect to, any Pledged Shares.

5.2

 

The Pledgor shall, upon demand of the Lender, do the following: furnish further assurances of title, execute any written

agreement or do any other act(s) necessary to effectuate the purposes and provisions of this Pledge Agreement, execute any instrument, document or statement required by law or otherwise in order to perfect, continue or preserve the security interests of the Lender in the Pledged Collateral and pay all filing or other costs incurred in connection therewith.

5.3

 

Upon the Lender's request and from time to time thereafter, the Pledgor will make, execute, acknowledge and deliver, file

and record in the proper filing and recording places, all such instruments including, without limitation, appropriate financing statements and duly executed blank stock powers and other instruments of transfer or assignment satisfactory in form and substance to the Lender, and take all such action, as the Lender may reasonably deem necessary or advisable to carry out the intent and purpose of this Pledge Agreement and to establish and maintain in favor of the Lender a valid, enforceable and perfected security interest in the Pledged Collateral and the other rights contemplated hereby that are superior and prior to the rights and security interests of all other persons or entities.  Without limiting the generality of the foregoing sentence, (i) the Pledgor will, from time to time upon the Lender's request, cause all relevant books and records, if any, to be marked with such legends or segregated in such manner as the Lender may specify, and take or cause to be taken such other action and adopt such procedures as the Lender may specify, to give notice of, and to perfect, the security interests created hereby in the Pledged Collateral.

5.4

 

The Pledgor shall procure, pay for, affix to any and all documents and cancel any documentary tax stamps required by, and

in accordance with, applicable law and will indemnify the Lender, and hold the Lender harmless against, any liability (including interest and penalties) in respect of such documentary stamp taxes.

SECTION 6.  APPOINTMENT OF AGENTS: REGISTRATION IN NOMINEE NAME.  The Lender shall have the right to appoint one or more agents for the purpose of retaining physical possession of the certificates representing or evidencing the Pledged Collateral, which may be held (in the discretion of the Lender) in the name of the Pledgor, endorsed or assigned in blank or in favor of the Lender, or in the name of the Lender or any nominee or nominees of the Lender or any agent appointed by the Lender. In addition to all other rights possessed by the Lender, the Lender may, from time to time, at the Lender's sole discretion and without notice to the Pledgor, take any or all of the following actions: (a) transfer all or any part of the Pledged Collateral into the name of the Lender or its nominee, with or without disclosing that such Pledged Collateral is subject to the lien and security interest created hereby; (b) take control of any proceeds of any of the Pledged Collateral; and (c) exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations for any purpose consistent with its rights under this Pledge Agreement; provided that all powers of the Lender under this Section 6 shall be subject to the rights of the Pledgor under Section 9 hereof to the extent that the exercise of such powers represents a sale of an item of Pledged Collateral.  Pledgor further acknowledges and agrees that as long as any portion of the principal balance of the Loan remains due and outstanding,  Lender may take any and all action with respect to the Pledged Collateral as Lender, in its sole and absolute discretion, may deem to be advisable, including, without limitation, utilizing the Pledged Collateral as collateral for hedging transactions, transferring the Pledged Collateral within or among one or more Depository Accounts, creating and trading derivative instruments  that are backed, in whole or in part, by the Pledged Collateral, and altering or revising the owner of record of the beneficial interest or any other interest in the Pledged Collateral.  Lender is under no obligation to sequester the Pledged Collateral apart from any other assets of the Lender, and Lender may combine the Pledged Collateral, in whole or in part, with any other assets.

SECTION 7.  VOTING RIGHTS; DIVIDENDS, Etc.  

7.1

 

So long as no Event of Default has occurred and is continuing, the Pledgor shall be entitled to exercise any and all voting

rights and powers relating or pertaining to the Pledged Collateral or any part thereof for any purpose not inconsistent with the terms of this Pledge Agreement.

7.2

 

Any and all stock dividends, liquidating dividends, distribution of property, redemption or other distributions made on or in

respect of the Pledged Collateral, whether resulting from a subdivision, combination or reclassification of the outstanding capital stock of the issuer of the Pledged Collateral or received in exchange for Pledged Collateral or any part thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to which the Pledgor may be a party or otherwise, and any and all cash and other property received in payment of the principal of or in redemption of or in exchange for any Pledged Collateral (either at maturity, upon call for redemption or otherwise), shall become part of the Pledged Collateral and, if received by the Pledgor, shall be held in trust for the benefit of the Lender and shall forthwith be delivered to the Lender or its designated agent (accompanied by proper instruments of assignment and/or stock powers executed by the Pledgor in accordance with the Lender's instructions) to be held subject to the terms of this Pledge Agreement.

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7.3

 

Upon the occurrence of an Event of Default and so long as such Event of Default shall continue, at the option of the Lender

(subject to applicable law), all rights of the Pledgor to exercise the voting rights and powers which the Pledgor is entitled to exercise pursuant to Section 7.1 shall cease, and all such rights shall thereupon become vested in the Lender, and the Lender shall have the sole and exclusive right and authority to exercise such voting and/or consensual rights and powers. Any and all cash and other property paid over to or received by the Lender pursuant to the provisions of this Subsection 7.3 shall be retained by the Lender as part of the Pledged Collateral, and shall be applied in accordance with the provisions hereof.

7.4

 

Concurrently with his execution of this Agreement, the Pledgor shall execute and deliver to the Lender an irrevocable

proxy to vote the Pledged Shares, substantially in the form of Exhibit A.  After the occurrence and during the continuance of an Event of Default, the Pledgor shall deliver to the Lender such further evidence of such irrevocable proxy or such further irrevocable proxies to vote any shares of stock constituting part of the Pledged Collateral as the Lender may request.

7.5

 

The Lender at any time may extend or renew for one or more periods (whether or not longer than the original period) the

Obligations, and grant releases, compromises or indulgences with respect to the Obligations or any extension or renewal thereof or any security therefore or to any obligor hereunder or there under without impairing the Lender's rights, or releasing the Pledgor from its obligations, hereunder.

SECTION 8.  RIGHTS AND REMEDIES.

8.1

 

The Lender may, without being required to give any notice to the Pledgor, apply the cash (if any) then held by it pursuant

to Section 6 or 7 to the ratable payment in full of the Obligations and all other indebtedness referred to in Section 10 in the order and manner specified in Section 10. The Lender may sell the Pledged Collateral, or any part thereof, in accordance with Section 9 and shall apply the proceeds of such sale to the ratable payment in full of the Obligation and all other indebtedness referred to in Section 10 in the order and manner specified in Section 10.

8.2

  

The Pledgor agrees that, without notice to or further assent by the Pledgor, the liability of the Pledgor or any other Person

for or upon any of the Obligations may, from time to time, in whole or in part, be renewed, extended, modified, accelerated, compromised or released by the Lender, as the Lender may deem advisable, and that the Pledged Collateral or other collateral or liens securing any of the Obligations may, from time to time, in whole or in part (subject, in the case of the Pledged Collateral, to the provisions of this Agreement), be exchanged, sold or surrendered by the Lender, as the Lender may deem advisable, all without impairing, abridging, affecting or diminishing this Agreement or the rights of the Lender hereunder or with respect to the Pledged Collateral.

SECTION 9.  SALE OF PLEDGED COLLATERAL. 

9.1

 

As an alternative to exercising the power of sale herein conferred upon it, the Lender may proceed by a suit or suits at law

or in equity to foreclose this Pledge Agreement and to sell the Pledged Collateral, or any portion thereof, pursuant to a

judgment or decree of a court or courts of competent jurisdiction.

9.2

 

In connection with any disposition of the Pledged Collateral, in accordance herewith, any such sale or other disposition of

any Pledged Collateral in reliance on such advice shall be deemed to be commercially reasonable under the Uniform Commercial Code and otherwise proper.

9.3

 

The Lender shall be under no obligation to sell or otherwise dispose of any Pledged Collateral, or to cause any Pledged

Collateral to be sold or otherwise disposed of, by reason of any diminution in the fair market value thereof, and the failure of the Lender to do so shall under no circumstances be deemed a failure to exercise reasonable care in the custody or preservation of the Pledged Collateral.

9.4

 

In addition to the rights and remedies granted to the Lender in this Pledge Agreement and in any other instrument or

agreement securing, evidencing or relating to any of the Obligations, the Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code.  The Lender shall have the right in its sole discretion to determine which rights, security, liens, guaranties or remedies it shall retain, pursue, release, subordinate, modify or enforce, without in any way modifying or affecting any of the other of them or any of the Lender's rights hereunder.

SECTION 10.  APPLICATION OF PROCEEDS OF COLLATERAL SALE

10.1

The Lender shall apply all cash held by it pursuant to Section 6 or 7 with respect to the Pledged Collateral and the proceeds  of the sale of any Pledged Collateral (such cash and proceeds being referred to collectively as the "Amount Realized") as follows:

(a)

the payment to or reimbursement of Lender for any fees and expenses for which it is entitled to be paid or reimbursed pursuant to any of the provisions of the Loan Documents; then

(b)

the payment of any accrued and unpaid interest of the Note; and then

(c)

for such use of the Lender as it may elect.

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10.2

Anything herein to the contrary notwithstanding, (but except as provided below), the Lender agrees, for itself, its representatives, successors, endorsees and assigns, that: (i) neither the Pledgor, nor any representative, successor, assign or affiliate of the Pledgor, shall be personally liable for the Obligations; and (ii) in the event of default hereunder, the Lender (and any such representative, successor, endorsee or assignee) shall look to the property encumbered by this Agreement and/or the other instruments of security that secure the Obligations for payment of the Obligations, and will not make any claim or institute any action or proceeding against the Pledgor (or any representatives, successors, assigns or affiliates of the Pledgor) for any deficiency remaining after collection upon the Pledged Collateral. Provided however, and notwithstanding the foregoing, the Pledgor is and will remain personally liable for any deficiency remaining after collection of the Pledged Collateral to the extent of any loss suffered by Lender, or its representatives, successors, endorsees or assigns, if such loss is caused by Pledgor based in whole or in part upon:

(a)

Damages arising from any fraud, misrepresentations or the breach of any covenant or agreement; and/or;

(b)

Damage to the pledged collateral resulting from gross negligence or intentional acts; and/or

(c)

Failure to pay taxes or other property-related liens; and/or

(d)

Damages arising from the failure to comply with any and all laws.

SECTION 11.  COMPLIANCE WITH SECURITIES LAWS.

11.1

 

The Pledgor shall execute and deliver to the Lender concurrently with the Pledgor’s execution of this Agreement an

undertaking substantially in the form of Exhibit B.

11.2

 

The Pledgor further agrees to do or cause to be done all such other acts and things as may be necessary to make any sale or

the disposition of any portion or all of the Pledged Shares by the Lender hereunder valid and binding and in compliance with any and all applicable laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales or dispositions, all at the Pledgor's sole expense.  The Pledgor further agrees that a breach of any of the covenants contained in this Section 11 will cause irreparable injury to the Lender, that the Lender has no adequate remedy at law in respect of such breach and agrees that each and every covenant contained in this Section 11 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants, except for a defense that all of the Obligations have been paid in full or that the Lender has released the Pledged Shares.

SECTION 12.  INDEMINIFICATION.  The Pledgor hereby agrees to indemnify the Lender and each of its employees, officers, directors, attorneys and agents (each, an "Indemnity") for any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind and nature whatsoever which may be imposed on, incurred by or asserted against such Indemnities in any way relating to or arising out of this Agreement or any other documents contemplated by or referred to herein or the transactions contemplated hereby or the enforcement of any of the terms hereof; provided, however, that the Pledgor shall not be liable for any of the foregoing to the extent they arise from the gross negligence or willful misconduct of the Lender or failure by the Lender to exercise reasonable care in the custody and preservation of the Pledged Collateral as provided in Section 15.

SECTION 13.  LENDER APPOINTED ATTORNEY-IN-FACT.  The Pledgor hereby appoints the Lender as the Pledgor's attorney-in-fact, with full power of substitution, for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument that the Lender may deem necessary or advisable to accomplish the purposes hereof, which appointment is irrevocable and coupled with an interest.  Without limiting the generality of the foregoing, the Lender shall have the right and power to sign the name of the Pledgor to any financing statements, continuation statements or other documents under the Uniform Commercial Code relating to the Pledged Collateral, and, to the extent permitted under Section 7, shall have the right and power to receive, endorse and collect all checks and other orders for the payment of money made payable to the Pledgor representing any dividend, interest payment or other distribution payable or distributable in respect of the Pledged Collateral or any part thereof and to give full discharge therefore.

SECTION 14.  NO SUBROGATION.  Notwithstanding any payment or payments made by the Pledgor hereunder, the receipt of any amounts by the Lender with respect to the Pledged Collateral or any setoff or application of funds of the Pledgor by the Lender, the Pledgor shall not be entitled to subrogate to any rights of the Lender.

SECTION 15.  LIMITATIONS ON LENDERS DUTY IN RESPECT OF COLLATERAL.  Beyond the safe custody thereof, the Lender shall not have any duty as to any Pledged Collateral in its possession or control or in the possession or control of any agent or nominee of the Lender or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto.

SECTION 16.  NO WAIVER: CUMULATIVE REMEDIES.  No course of dealing between the Pledgor and the Lender, no failure on the part of the Lender to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any such right, power or remedy by the Lender preclude any other or further exercise thereof or the exercise of any other right, power or remedy.  All remedies hereunder are cumulative and not exclusive of any other remedies provided by law, including without limitation the rights and remedies of a secured party under the Uniform Commercial Code.

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SECTION 17.  TERMINATION.  This Agreement shall terminate when all of the Obligations have been paid in full, at which time the Lender shall reassign and redeliver to the Pledgor, without recourse or warranty and at the sole expense of the Pledgor, against receipt, the Pledged Collateral, together with appropriate instruments of reassignment and release; provided, however, that this Agreement shall be reinstated if any payment in respect of the Obligations is rescinded, invalidated, declared to be fraudulent or preferential or otherwise required to be restored or returned by the Lender for any reason, including without limitation by reason of the insolvency or bankruptcy of the Pledgor or any other Person.

SECTION 18.  ADDRESSES FOR NOTICE.  All notices, requests, demands, instructions, directions and other communications provided for hereunder shall be in writing and shall be mailed (by registered or certified mail, postage prepaid) or delivered to the applicable party at the address specified for such party on the first page of this Agreement or, as to any party, to such other address as such party shall specify by a notice in writing to the other party hereto.  Each notice, request, demand, instruction, direction or other communication provided for hereunder shall be deemed delivered (i) if by mail, five business days after being deposited in the mail, addressed to the applicable party at its address set forth above, (ii) if by hand or by overnight courier, when delivered to the applicable party at such address.

SECTION 19.  SEVERABILITY.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render such provision unenforceable in any other jurisdiction.

SECTION 20.  FURTHER ASSURANCES.  The Pledgor agrees to do such further reasonable acts and things, and to execute and deliver such additional conveyances, assignments, agreements and instruments, as the Lender may at any time request in connection with the administration or enforcement of this Pledge Agreement (including, without limitation, to aid the Lender in the sale of all or any part of the Pledged Collateral) or related to the Pledged Collateral or any part thereof or in order better to assure and confirm unto the Lender rights, powers and remedies hereunder.  The Pledgor hereby consents and agrees that any registrar or transfer agent for any of the Pledged Collateral shall be entitled to accept the provisions hereof as conclusive evidence of the right of the Lender to effect any transfer pursuant to Section 6, notwithstanding any other notice or direction to the contrary heretofore or hereafter given by the Pledgor or any other person to the Pledgor or to any such registrar to transfer agent.

SECTION 21.  BINDING AGREEMENT: ASSIGNMENT.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, except that the Pledgor shall not assign this Agreement or any interest herein or in the Pledged Collateral or any part thereof, or otherwise pledge, encumber or grant any option with respect to the Pledged Collateral or any part thereof, without the prior written consent of the Lender.  The Lender may assign this Agreement and its rights and remedies hereunder in whole or in part to any assignee of the Obligation or any portion thereof.

SECTION 22.  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, UNITED STATES OF AMERICA AS FURTHER DEFINED IN SECTION 23.

SECTION 23.  Consent to Jurisdiction: Venue; Jury Trial Waiver.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, United States of America applicable to the contracts between residents of Texas that are to be wholly performed within such state.  Borrower hereby consents to the exclusive jurisdiction of the courts sitting in Kendall County, Texas, United States of America, as well as to the jurisdiction of all courts from which an appeal may be taken from the aforesaid courts, for the purpose of any suit, action or other proceeding by any party to this Agreement, arising out of or related in any way to this Agreement.  Borrower hereby irrevocably and unconditionally waives any defense of an inconvenient forum to the maintenance of any action or proceeding in any such court, any objection to venue with respect to any such action or proceeding and any right of jurisdiction on account of the place of residence or domicile of any party thereto.  In addition, Borrower consents to the service of process by United States certified or registered mail, return receipt requested, or Federal Express or similar courier delivery addressed to Borrower at the address provided herein.  Borrower agrees that in the event this Loan Agreement shall be successfully enforced by suit or otherwise, Borrower will reimburse the Lender or holder or holders of the Obligations, upon demand, for all reasonable expenses incurred in connection therewith, including, without limitation, reasonable attorneys' fees and expenses.

SECTION 24.  WAIVER OF JURY TRIAL.  THE PARTIES HERETO HEREBY WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY OF ANY DISPUTE ARISING UNDER OR RELATING TO THIS AGREEMENT, ANY INSTRUMENT OR DOCUMENT REFERRED TO HEREIN OR RELATED HERETO, OR ANY ITEM OF PLEDGED COLLATERAL, AND AGREE THAT ANY SUCH DISPUTE SHALL BE TRIED BEFORE A JUDGE SITTING WITHOUT A JURY.

SECTION 25.  AMENDMENTS.  No provision of this Agreement may be amended, waived or modified, and (unless otherwise provided herein) no item of Pledged Collateral may be released, except in a writing signed by the Pledgor and the Lender.

SECTION 26.  EXPENSES.  The Pledgor hereby agrees to reimburse the Lender for the enforcement of the Lender's rights under this Agreement, the sale of the Pledged Collateral or any part thereof and the collection of payments due under or in respect of the Pledged Collateral and all amounts due under this Agreement.

SECTION 27.  WAIVER OF NOTICE OF ACCEPTANCE.  The Pledgor hereby waives notice of the making of any Loan or the issuance of the Note and notice from the Lender of its acceptance of and reliance upon this Agreement.

SECTION 28.  EXECUTION IN COUNTERPARTS.  This Agreement may be executed in any number of counterparts and by 

6

different parties on separate counterparts, all of which when taken together shall constitute but one and the same agreement.

IN WITNESS WHEREOF, the Pledgor has duly executed this Agreement as of the date first above written.

/s/ Michael J. Skellern

   Michael J. Skellern

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