EXHIBIT 10.10
Published on November 1, 2007
Exhibit
10.10
UNITED
STATES DISTRICT COURT
FOR
THE DISTRICT OF NEW JERSEY
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LEWIS EDELSTEIN,
Derivatively
on
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Behalf
of Nominal
Defendant
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No.
07-00596
(FLW)
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EMCORE
CORPORATION,
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Plaintiff,
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v.
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HOWARD W. BRODIE,
REUBEN F.
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RICHARDS,
JR.,
RICHARD A. STALL,
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THOMAS G. WERTHAN,
CRAIG
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)
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FARLEY,
THOMAS GMITTER,
SCOTT
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MASSIE,
THOMAS J. RUSSELL,
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ROBERT LOUIS-DREYFUS,
ROBERT
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BOGOMOLNY,
CHARLES SCOTT
and
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JOHN GILLEN,
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Defendants,
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and
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EMCORE
CORPORATION,
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Nominal
Defendant.
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MEMORANDUM
OF UNDERSTANDING
WHEREAS,
a derivative action captioned Edelstein v. Brodie, et al., Case No.
07-00596 (FLW) was filed on February 2, 2007 in the United States District
Court
for the District of New Jersey (the “Derivative Action”); and
WHEREAS,
the Derivative Action was brought by a shareholder (“Lead Plaintiff”) of EMCORE
Corporation (“EMCORE” or the “Company”) on behalf of Nominal Defendant EMCORE
and alleges that, from 1999 to 2006 (the “Relevant Period”), stock option grants
to officers and directors of the Company were improperly “backdated”;
and
WHEREAS,
the Company appointed a special committee of the Board of Directors (the
“Special Committee”) to review the Company’s historical stock option grant
procedures; and
WHEREAS,
on November 6, 2006, in the Company’s Form 8-K filing, EMCORE announced that the
Special Committee had concluded that it is likely that the measurement dates
for
certain EMCORE stock option grants differed from the recorded grant dates for
such awards; and
WHEREAS,
on November 15, 2006, EMCORE announced the results of its stock option grant
review and the expectation that it would record non-cash charges for a
stock-based compensation expense of approximately $24 million; and
WHEREAS,
the Special Committee recommended certain remedial measures to address these
issues, which the Company has implemented; and
WHEREAS,
EMCORE has produced certain nonpublic documents to counsel for Lead Plaintiff
in
the Derivative Action relating to the stock option granting practices of EMCORE
during the Relevant Period; and
WHEREAS,
counsel for Lead Plaintiff in the Derivative Action conferred with counsel
for
EMCORE on multiple occasions to discuss possible additional remedial measures
beyond those recommended by the Special Committee; and
WHEREAS,
EMCORE and Howard W. Brodie, Reuben F. Richards, Jr., Richard A. Stall, Thomas
G. Werthan, Craig Farley, Thomas Gmitter, Scott Massie, Thomas J. Russell,
Robert Louis-Dreyfus, Robert Bogomolny, Charles Scott and John Gillen
(collectively, the “Individual Defendants,” together, with EMCORE, the
“Defendants”) and Lead Plaintiff in the Derivative Action, by and through their
undersigned attorneys, have engaged in good faith, arms-length discussions
with
regard to the possible settlement of the Derivative Action (the Individual
Defendants having conducted those negotiations through counsel for EMCORE)
and
the parties have reached an agreement in principle providing for the proposed
settlement of the Derivative Action (the “Settlement”) on the terms and
conditions set forth in this memorandum of understanding (“MOU”);
and
2
WHEREAS,
Defendants do not admit and expressly deny all of Lead Plaintiff’s claims in the
Derivative Action; and
WHEREAS,
Lead Plaintiff acknowledges and agrees that the execution of this MOU by the
Defendants is not an admission on the part of any of the Defendants that they
have in any way committed or attempted to commit any violation of law or breach
of fiduciary duty, including a breach of any duty to EMCORE or its shareholders
or otherwise acted in any improper manner; and
WHEREAS,
both Lead Plaintiff and EMCORE believe that the proposed Settlement is in the
best interests of EMCORE and EMCORE’s shareholders;
NOW,
THEREFORE, IT IS HEREBY STIPULATED AND AGREED, subject to approval of the Court
and EMCORE’s Board, by and among the parties hereto, as follows:
1. Principal
Terms of Settlement.
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a.
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Stock
Option Grants
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(1)
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Stock
options granted to newly hired employees shall be granted to such
employees on their first day of employment with an exercise price
not less
than 100% of the fair market value of the Company's stock, as defined
by
the Company's applicable stock option plan. The Company’s
Compensation Committee, after consultation with counsel, has determined
that the historical practice of using the closing price on the grant
date
is consistent with the terms of the Plan and has memorialized that
practice in a formal amendment as reported on a Form 8-K dated April
19,
2007.1
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1“Fair
Market Value” of a share of Stock as of a given date shall be: (i)
if the Stock is listed or admitted to trading on an established stock exchange
(including, for this purpose, The Nasdaq Global Market that comprises part
of
The Nasdaq Stock Market), the closing sale price for a share of Stock on
the
composite tape or in Nasdaq Global Market trading as reported in The Wall
Street Journal (or, if not so reported, such other nationally recognized
reporting source as the Committee shall select) for such date, or, if no
such
price is reported for such date, the most recent day for which such price
is
available shall be used; (ii) if the Stock is not then listed or admitted
to
trading on such a stock exchange, the closing sale price for a share of Stock
on
such date as reported by The Nasdaq Capital Market or, if not so reported,
by
the OTC Bulletin Board (or any successor or similar quotation system regularly
reporting the market value of the Stock in the over-the-counter market),
or, if
no such price is reported for such date, the most recent day for which such
price is available shall be used; or (iii) in the event neither of the valuation
methods provided for in clauses (i) and (ii) above is practicable, the fair
market value of a share of Stock determined by such other reasonable valuation
method as the Committee shall, in its discretion, select and apply in good
faith
as of the given date; provided, however, that for purposes of
paragraphs (a) and (b) of Section 6 of EMCORE’s Amended and Restated 2000 Stock
Option Plan, such fair market value shall be determined subject to Section
422(c)(7) of the Internal Revenue Code of 1986.
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(2)
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The
Company shall not change the exercise prices of any stock options
after
Compensation Committee approval, nor exchange stock options for other
stock options with lower exercise
prices.
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(3)
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The
Company will prohibit any additions or modifications to the number
of
stock options granted to any employee after the Compensation Committee
has
approved the grants.
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(4)
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With
respect to any yearly retention grants to employees, the Company
will
maintain the practice of awarding any retention grants to senior
management on the same date and with the same exercise price as any
retention grants awarded to non-senior management employees.
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(5)
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The
exercise prices for all stock options granted to employees, except
new-hire grants, shall be set at the closing price of the Company's
common
stock on the date on which the Compensation Committee approves the
grants. Lead Plaintiff requires that the exercise prices of all
stock options shall be at least 100% of the fair market value of
the
Company's stock, as defined by the Company's applicable stock option
plan,
on the date on which the Compensation Committee approves the
grants.
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(6)
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Other
than new-hire grants, the Company’s CEO and Vice President of Human
Resources will recommend to the Compensation Committee the recipients
of
grants and amount of stock options to be awarded to each
grantee. The Compensation Committee may consider and approve
the CEO’s and Vice President of Human Resources’ recommendations in the
exercise of their own judgment. The Compensation Committee
shall make grant determinations only at duly convened meetings and
not
through unanimous written consents.
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(7)
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All
stock option grants will be communicated to employees as soon as
practicable after the grant date, as required by applicable accounting
rules. Lead Plaintiff requires written documentation
identifying grantees, amounts and prices of all stock options granted
on a
particular date shall be complete and final and approved by all members
of
the Compensation Committee on the date of
grant.2 Grant packages shall be distributed to
employees on or as soon as practicable following the grant
date. In the event such grant package is not available for
distribution as of the grant date, an electronic communication shall
be
sent to the respective employee within two business days of the grant
date. Additionally, Lead Plaintiff requires that this signed
documentation shall be transmitted to the Company's legal and accounting
departments within seven (7) days of the
grant.
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(8)
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The
Company will designate a member of its in-house legal and accounting
staffs to oversee documentation and accounting for all stock option
grants. Lead Plaintiff requires that the Compensation Committee
shall designate one Company legal officer and one Company accounting
officer who shall be responsible for ensuring compliance with applicable
laws and regulations by option grantees (e.g., timely and
accurate filing of SEC Forms 3, 4 and 5) and shall provide effective
monitoring mechanisms to ensure that such laws and regulations, and
the
Company's policies, procedures and stock option plans, are
followed.
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(9)
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The
Board of Directors will conduct a biannual review of all new-hire
grants
to ensure compliance with the Company's policies and
procedures. Lead Plaintiff requires that the Board shall
biannually conduct a review of all stock option grants to ensure
compliance with the Company's policies, procedures and stock option
plans.
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(10)
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The
Company will monitor industry and regulatory practices and revise
its
practices as developments occur. Lead Plaintiff requires that
management shall annually assess the adequacy of the Company's internal
controls with regard to stock option grants and shall report its
assessment in the Company's annual report on internal controls pursuant
to
section 404 of the Sarbanes-Oxley
Act.
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2
Approval of grants
will only occur at a duly convened meeting of the Compensation
Committee. However, many meetings are telephonic. It is
impractical to ask each member of the committee to sign the grant list at
the
time of the meeting as that presents the same potential problem as unanimous
written consents.
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(11)
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Grants
of stock options to new hires shall vest over a five-year period,
20%
vesting per year. Retention grants for existing employees shall
vest over a four-year period, 25% vesting per
year.
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(12)
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The
Company will comply with SEC disclosure rules regarding the grantees,
amounts, dates, prices and vesting schedules of stock
options.
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(13)
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The
Company shall maintain all documentation relating to all stock option
grants until at least seven (7) years after the expiration of the
pertinent stock option grants.
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b.
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Insider
Trading Policy
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(1)
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The
Company shall maintain an Insider Trading Policy that provides as
follows:
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(a)
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The
Insider Trading Policy shall specifically prohibit all Company directors,
officers and employees from trading in Company securities while in
possession of material nonpublic information regarding the Company,
including, but not limited to, (i) information regarding actual or
estimated results of operations and earnings; (ii) proposals or agreements
relating to mergers, acquisitions or divestitures; and (iii) information
regarding significant contracts, patents or new product
development.
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(b)
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The
Insider Trading Policy shall encourage all directors and Section
16
officers who wish to trade in Company securities to adopt a valid
trading
plan pursuant to SEC Rule 10b-5-1.
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(c)
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The
Insider Trading Policy shall require all Company employees who wish
to
trade in Company securities to do so only within prescribed "trading
windows." Each quarter there will be a Blackout Period
beginning on the last day of the quarter and running until the business
day after the earnings conference call of such quarter. For
example, with respect to the quarter ended March 31, if the earnings
call
is scheduled for Friday, May 3, the Blackout Period would run from
March
31 through May 6, and trading could resume on May 7. In
addition, from time to time as a result of material corporate
developments, the Company may impose additional Blackout Periods
during
which no trading may occur. All Executives will be notified of
the commencement and end of such Blackout Periods by the CFO or the
General Counsel.
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(2)
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The
Board shall appoint the Company's General Counsel or another senior
officer to serve as the Company's "Trading Compliance Officer."
The Trading
Compliance Officer shall be responsible for developing (along with
the
full Board); presenting to the Board for approval; and monitoring
and
updating a comprehensive program (the "Trading Compliance Program")
designed to ensure compliance with the foregoing insider trading
policies
and providing for appropriate sanctions for noncompliance. The
independent directors shall be responsible for direct oversight of
the
Trading Compliance Program and the Trading Compliance Officer and
shall
have regular access to the Trading Compliance Officer, including
the
opportunity to meet with the Trading Compliance Officer outside the
presence of any other senior
executives.
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c.
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Board
of Directors
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(1)
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The
Company shall revise its articles of incorporation and/or by-laws
to
require that at least a majority of the members of the Board be
independent, where independence is defined as
follows:
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(a)
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is
not, and in the past three years has not been, employed by the Company
or
any of its subsidiaries or
affiliates;
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(b)
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does
not receive, and in the past three years has not received, any
remuneration as an advisor, consultant or legal counsel to the Company
or
any of its subsidiaries, affiliates, executive officers or
directors;
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(c)
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does
not have, and in the past three years has not had, any contract or
agreement with the Company or any of its subsidiaries or affiliates
pursuant to which the director performed or agreed to perform any
personal
services for the Company;
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(d)
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does
not have, and in the past three years has not had, any business
relationship or engaged in any transaction with the Company or any
of its
subsidiaries or affiliates other than his or her service as a
director;
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(e)
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is
not, and in the past three years has not been, affiliated with or
employed
by any present or former independent auditor of the Company or any
of its
subsidiaries or affiliates;
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(f)
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is
not, and in the past three years has not been, a director or executive
officer of any company for which any executive officer of EMCORE
Corporation serves as a director;
and
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(g)
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is
not a member of the immediate family of a person who is not independent
pursuant to subsections a-f above.
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(2)
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Each
independent director shall certify in writing that he or she is
independent as defined above and shall immediately inform the Board
of any
change in his or her independent
status.
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(3)
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In
the event that the Chairman of the Board is not an independent director,
the independent directors shall annually elect or reaffirm by majority
vote a Lead Independent Director. The holder of the Lead
Independent Director position shall rotate at least once every two
years. In addition to the duties of all Board members, which
shall not be limited or diminished by the Lead Independent Director's
role, the specific responsibilities of the Lead Independent Director
shall
be to:
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(a)
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advise
the Chairman of the Board as to an appropriate schedule of Board
meetings,
seeking to ensure that the independent directors can perform their
duties
responsibly while not interfering with the flow of the Company's
operations;
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(b)
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provide
the Chairman of the Board with input as to the preparation of agendas
for
Board and Committee meetings;
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(c)
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advise
the Chairman of the Board as to the quality, quantity and timeliness
of
the flow of information from the Company's management that is necessary
for the independent directors to effectively and responsibly perform
their
duties; and although the Company's management
is responsible for the preparation of materials for
the Board, the Lead Independent Director may specifically request
the
inclusion of certain material;
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(d)
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recommend
to the Chairman of the Board the retention of consultants who report
directly to the Board;
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(e)
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coordinate,
develop the agenda and preside at executive sessions of the independent
directors, which shall be held at least
quarterly;
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(f)
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act
as principal liaison between the independent directors and the Chairman
of
the Board on sensitive issues; and
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(g)
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evaluate,
along with the members of the Compensation Committee (consistent
with the
Compensation Committee Charter) and the full Board, the CEO's performance
and meet with the CEO to discuss the Board's
evaluation.
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(4)
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The
Company shall revise its articles of incorporation and/or by-laws
to
provide a reasonable procedure whereby any shareholder or group of
shareholders who hold an aggregate of at least 20% of the Company's
outstanding shares may nominate a candidate for election to the Board
and
have the nominee included in the Company's annual proxy
materials.
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(5)
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The
Company shall revise its articles of incorporation and/or by-laws
to
provide that, starting as of June 1, 2007, independent directors
may serve
on the Board for no more than a total of 10 consecutive
years. After serving a ten-year term during any period after
June 1, 2007, an independent director must step down from the Board
for at
least one year before seeking re-election to the
Board.
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(6)
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Directors
shall participate in an initial orientation program upon election
to the
Board and, if required by the rules of the applicable listing exchange,
in
regular continuing education
thereafter.
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(7)
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Absent
extraordinary circumstances, each member of the Board shall attend
each
annual shareholder meeting in
person.
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d.
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Compensation
Committee
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(1)
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The
Compensation Committee shall circulate a comprehensive and responsible
set
of assumptions, policies and procedures for determining executive
compensation (e.g., company compensation levels should be
compared to similar-sized businesses in similar industries or with
similar
profitability), and shall establish objective measures for all cash
and
non-cash compensation, including bonuses, stock options, stock grants
and
benefits such as health care; use of company vehicles; memberships;
travel
for friends, relatives or personal trips; personal housing; and tax
or
legal services paid for or provided by the
Company.
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(2)
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At
least once every three years the Compensation Committee shall select
and
retain an independent consultant to conduct a comparative study of
the
Company's executive compensation policies, practices, and procedures
relative to other public companies and prepare and submit to the
Compensation Committee a report and
recommendations.
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(3)
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The
Compensation Committee shall set, in writing, annual and long-term
performance goals for each executive officer of the
Company. The Compensation Committee shall annually complete a
written evaluation of each executive officer's performance against
such
goals and recommend compensation (including cash bonuses, stock options,
restricted shares, performance shares or other performance-based
compensation) to be awarded based on whether the goals have been
achieved.
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e.
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Audit
Committee
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(1)
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At
least once every three years, the Audit Committee shall request that
its
independent auditing firm conduct a comprehensive review and assessment
of
the Company's internal controls and internal audit function, and
prepare
and submit to the Audit Committee a report and
recommendations.
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(2)
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At
least annually, the Audit Committee shall meet with the Company's
internal
auditors and independent auditors to review, discuss and approve
the
Company's accounting for stock-based
compensation.
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f. The
Company represents that three current or former Section 16 officers (the
"Section 16 Officers") voluntarily tendered money or unexercised options to
the
Company, or otherwise committed to surrender the financial benefit that they
may
have received as a result of their exercise of any mispriced stock options
that
they were awarded since the Company became a public company (the "Tendered
Payments"). The Company further represents that it has not repaid any of the
Section 16 Officers any portion of the Tendered Payments or taken any action
that has the effect of repaying the Section 16 Officers the Tendered Payments
or
otherwise compensating the Section 16 Officers for any surrendered mispriced
options. The Company further warrants that it shall not in the future make
any
payments or take any action that has the effect of compensating the Section
16
Officers for any improper financial benefit resulting from their receipt of
any
options that the Company, in consultation with its auditors, determines were
mispriced.
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g. EMCORE
agrees that the settlement of the Derivative Action
and the remedial measures specified herein provide a
substantial benefit to EMCORE and its shareholders.
2. Stipulation
of Settlement. This agreement is subject to the parties reaching
agreement on a stipulation of settlement (the “Stipulation”) and such other
documents (collectively, the “Settlement Documents”) as may be required in order
to obtain a final judgment approving the settlement and then dismissing with
prejudice the Derivative Action upon the terms set forth herein. The
parties to the Derivative Action shall work in good faith to agree upon and
execute an appropriate Stipulation and Settlement Documents. The
parties agree to use their best efforts to agree upon and execute the
Stipulation within 30 days after the date of signing this MOU. The
Stipulation will provide, among other things:
a. That
Lead Plaintiff, individually and derivatively on behalf of EMCORE and all of
EMCORE’s shareholders during the Relevant Period, and his respective heirs,
executors, administrators, representatives, agents, successors, transferees,
and
assigns will forever relinquish and release any and all claims, rights or causes
of action, or liabilities whatsoever, whether asserted directly, individually,
derivatively, or in a representative capacity, whether known or unknown or
suspected to exist, whether based on federal, state, local, statutory, common,
foreign, international, or any other law, rule, or regulation, and whether
fixed
or contingent, accrued or unaccrued, liquidated or unliquidated, or matured
or
unmatured, that have been or could have been asserted against the Individual
Defendants, nominal defendant EMCORE, and each of their respective parents,
subsidiaries, affiliates, predecessors, successors, agents, advisors or
consultants (including, without limitation, any of their present or former
officers, directors, the Board of Directors and any Committees of the Board
of
Directors, employees, agents, consultants, attorneys, stockholders, financial
advisors, accountants, commercial bank lenders, investment bankers,
representatives, affiliates, associates, parents, subsidiaries, general and
limited partners and partnerships, heirs, executors, administrators, successors,
and assigns), which arise out of or relate in any way to the allegations,
transactions, acts, facts, matters or occurrences, representations, or omissions
described, set forth, or referred to in the complaints in the Derivative Action
or any amendment thereof, including but not limited to (1) claims related to
options back-dating, forward-dating, spring-loading, bullet-dodging, or any
other options dating practice, procedure or policy, (2) claims for breach of
fiduciary duty, insider trading, misappropriation of information, failure to
disclose, abuse of control, breach of EMCORE’s policies or procedures, waste,
mismanagement, gross mismanagement, unjust enrichment, misrepresentation, fraud,
violations of law, money damages, or other relief and (3) claims that arise
out
of or relate in any way to any stock-option grants made since the inception
of
EMCORE through the effective date of this Settlement (collectively, the “Settled
Claims”);
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b. For
the complete discharge, dismissal with prejudice, settlement and release of,
and
an injunction barring, any and all claims, rights, and causes of action, whether
asserted directly, individually, derivatively, or in a representative capacity,
whether known or unknown or suspected to exist, and whether based on federal,
state, local, statutory, common, foreign, international, or any other law,
rule,
or regulation, whether fixed or contingent, accrued or unaccrued, liquidated
or
unliquidated, or matured or unmatured, that have been or could have been
asserted in the Derivative Action or any amendment thereof, in this or any
other
court or forum, by EMCORE or any EMCORE shareholder on EMCORE’s behalf against
the Individual Defendants, nominal defendant EMCORE, and/or each of their
respective parents, subsidiaries, affiliates, predecessors, successors, agents,
advisors, or consultants (including, without limitation, any of their present
or
former officers, directors, the Board of Directors and any Committees of the
Board of Directors, employees, agents, consultants, attorneys, stockholders,
financial advisors, accountants, commercial bank lenders, investment bankers,
representatives, affiliates, associates, parents, subsidiaries, general and
limited partners and partnerships, heirs, executors, administrators, successors,
and assigns in the Derivative Action), including any and all claims that arise
out of or relate in any way to the Settled Claims;
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c. That
EMCORE and each of the Individual Defendants have denied and continue to deny
all of the claims in the Derivative Action, and have denied and continue to
deny
having committed, aided, or attempted to commit any violations of law or breach
of any duty of any kind or otherwise having acted in any improper
manner;
d. That
Defendants are entering into the Stipulation because the proposed Settlement
would eliminate the expenses, burdens, and risks associated with further
litigation of the Derivative Action;
e. That
EMCORE is further entering into this Stipulation because it believes that the
proposed Settlement is in the best interests of EMCORE and all of its
shareholders;
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f. That
neither the Settlement nor any of its terms shall constitute an admission or
finding of wrongful conduct, acts or omissions; and
g. That,
subject to the order of the United States District Court for the District of
New
Jersey (the “Court”), pending entry of a final judgment based on the Settlement
provided for in the Stipulation, Lead Plaintiff, and any and all other
shareholders of EMCORE, are barred and enjoined from commencing, prosecuting,
instigating, or in any way participating in the commencement or prosecution
of
any action asserting any Settled Claims, either directly, representatively,
derivatively, or in any other capacity, against EMCORE or any Individual
Defendant, including any and all claims that have been or could have been
asserted in the complaint in the Derivative Action, or which arise out of or
relate in any way to any of the transactions or events described in that
complaint.
3. Subject
to prior Court approval of the form of the Settlement Documents and the approval
of EMCORE’s Board, the parties to the Derivative Action will present the
Settlement to the Court for hearing and approval as soon as practicable and
for
an Order dismissing the Derivative Action with prejudice and barring all claims
that have been or might have been brought in any court or forum by EMCORE or
any
EMCORE shareholder on EMCORE’s behalf (including without limitation Gabaldon
v. Brodie, et al., 07-03185 (D.N.J.), and Sackrison v. Brodie, et
al., 07-3186 (D.N.J.)) relating to or arising out of any matter that was
asserted or which could have been asserted against the Individual Defendants
or
nominal defendant EMCORE in the Derivative Action and without costs to any
party
(other than counsel fees and expenses as provided in paragraph 5
below). EMCORE or its successor(s) in interest shall disseminate
notice of the Settlement to its shareholders in such form as approved by the
Court and shall be solely responsible to pay the costs and expenses related
to
providing such notice.
14
4. Upon
execution and filing of the Stipulation, Lead Plaintiff shall promptly apply
to
the Court for preliminary approval of the settlement and the scheduling of
a
hearing for final approval of the settlement and the application by Lead
Plaintiff’s counsel for an award of attorneys’ fees and expenses. The
parties agree that the Stipulation will provide for the payment of attorneys’
fees, costs, and expenses to Lead Plaintiff’s counsel in an amount of $700,000,
subject to Court approval, to be paid by the Company’s insurer on behalf of the
Defendants into an interest bearing escrow account with a national banking
association and subject to the terms of an escrow agreement within 10 business
days of the Court’s order approving the Settlement. Said monies will
be paid out to Lead Plaintiff’s counsel immediately upon the Settlement becoming
effective as set forth in paragraph 5 below. Except as expressly
provided herein, Lead Plaintiff and Lead Plaintiff’s counsel shall bear their
own fees, costs, and expenses and no Defendant shall assert any claim for
expenses, costs, and fees against Lead Plaintiff.
5. The
Settlement shall not become effective until the first date on which all of
the
following conditions have been satisfied, unless one or more of the conditions
is expressly waived in writing by counsel for each of the parties:
a. Approval
by the EMCORE Board of the Stipulation;
b. The
entry of judgment by the Court in the Derivative Action approving the Settlement
and dismissing with prejudice the Derivative Action without awarding costs
to
any party, except as provided herein; and
c. The
judgment referred to in subparagraph (b) above shall have become final and
no
longer subject to review, either by the expiration of the time for appeals
therefrom with no appeals having been taken or, if an appeal is taken and not
dismissed, by the determination of the appeal by the highest court to which
such
appeal may be taken in such a manner as to permit the consummation of the
Settlement in accordance with the terms and conditions of the
Stipulation.
15
6. This
MOU shall be null and void and of no force and effect if any of the conditions
set forth in paragraph 5 are not met. In the event the Settlement is
not consummated for any reason: (a) the parties will revert to their litigation
positions immediately prior to the execution of this MOU; (b) the fact and
terms
of this Settlement shall not be admissible in any trial of this or any other
Action; (c) this MOU shall not be deemed to prejudice in any way the
positions of the parties with respect to the Derivative Action, or to constitute
an admission of fact by any party in any respect, and shall not entitle any
party to recover any costs or expenses incurred in connection with the
implementation of this MOU; and (d) none of the terms of this MOU shall be
effective or enforceable, except for this Paragraph.
7. This
MOU may be executed in counterparts, including by signature transmitted by
facsimile. Each counterpart when so executed shall be deemed to be an
original, and all such counterparts together shall constitute the same
instrument. The undersigned signatories represent that they have
authority from their clients to execute this MOU. The terms of this
MOU shall inure to and be binding upon the parties and their respective agents,
executors, heirs, successors and assigns, subject to the conditions set forth
herein.
8. This
MOU and the Settlement contemplated by it shall be governed by, and construed
in
accordance with, the laws of the State of New Jersey, without regard to conflict
of laws principles.
9. Lead
Plaintiff and his counsel represent and warrant that Lead Plaintiff has
continuously owned shares of EMCORE common stock throughout the Derivative
Action and none of the claims or causes of action asserted in the Derivative
Action, including any Settled Claims, has been assigned, encumbered or in any
manner transferred in whole or part.
16
10. Each
of the attorneys executing this MOU has been duly empowered and authorized
by
his/her respective client(s) to do so.
11. Except
as provided herein, neither EMCORE nor any Individual Defendant shall bear
any
expenses, costs, damages, or fees alleged or incurred by Lead Plaintiff or
any
other plaintiff in this action, or the attorneys, experts, advisors, agents
or
representatives of Lead Plaintiff or any other plaintiff in this
action.
12. This
MOU may be modified or amended only by a writing signed by the signatories
hereto.
13. Neither
the existence of this MOU nor the provisions contained herein shall be deemed
a
presumption, concession, or admission by EMCORE or any Individual Defendant
of
any breach of duty, liability, default, or wrongdoing as to any facts or claims
alleged or asserted in the Derivative Action, or in any other actions or
proceedings, and shall not be interpreted, construed, deemed, invoked, offered,
or received in evidence or otherwise used in the Derivative Action or any other
action or proceeding of any nature whatsoever. Provided, however,
that EMCORE and/or the Individual Defendants may file or offer into evidence
the
Stipulation, the Final Judgment, and/or the releases executed pursuant thereto
in any action or proceeding that may be brought against them in order to support
a defense or counterclaim based on principles of res judicata, collateral
estoppel, release, good-faith settlement, judgment bar, reduction, or any other
theory of claim preclusion or issue preclusion or defense or counterclaim
similar to claim or issue preclusion.
17
IT
IS
HEREBY AGREED by the undersigned as dated below.
|
DATED: September
26, 2007
|
SCHIFFRIN BARROWAY TOPAZ & KESSLER, LLP | ||
|
By:
|
/s/
Eric Zagar
|
||
|
Eric
Zagar
|
|||
|
Michael
Hynes
|
|||
|
Alison
Clark
|
|||
| 280 King of Prussia Road | |||
| Radnor, PA 19087 | |||
| Telephone: (610) 667-7706 | |||
| Facsimile: (610) 667-7056 | |||
| Lead Counsel for Lead Plaintiff in the Derivative Action | |||
| LITE DEPALMA GREENBERG & RIVAS, LLC | |||
| Joseph L. DePalma | |||
| Susan D. Pontonriero | |||
| Two Gateway Center, 12th Floor | |||
| Newark, NJ 07102 | |||
| Tel: (973) 623-6000 | |||
| Fax: (973) 623-0858 | |||
| Liaison Counsel for Lead Plaintiff in the Derivative Action | |||
18
|
DATED: September
24, 2007
|
JENNER & BLOCK LLP | ||
|
By:
|
/s/
Michael K. Lowman
|
||
|
Michael
K. Lowman
|
|||
|
Howard
S. Suskin
|
|||
| 330 North Wabash Avenue | |||
| Chicago, IL 60611 | |||
| Tel: (312) 923-2604 | |||
| Fax: (312) 840-7604 | |||
| Richard Ross | |||
| CARELLA, BYRNE, BAIN, GILFILLAN, CECCHI, STEWART & OLSTEIN | |||
| 5 Becker Farm Rd. | |||
| Roseland, NJ 07068 | |||
| Tel: (973) 994-1700 | |||
| Fax: (973) 994-1744 | |||
| Attorneys for EMCORE, Inc | |||
19
|
DATED: September
20, 2007
|
|||
| By: |
/s/
Jerry Isenberg
|
||
|
Jerry
Isenberg
|
|||
| ALSTON & BIRD LLP | |||
| The Atlantic Building | |||
| 950 F Street NW | |||
| Washington, D.C. 20004 | |||
| Tel: (202) 756-5596 | |||
| Fax: (202) 654-4886 | |||
| Attorney for Individual Defendants Dr. Richard A. Stall, Thomas Gmitter, and Craig Farley | |||
20
|
DATED: September
20, 2007
|
|||
|
By:
|
/s/
James R. Doty
|
||
|
James
R. Doty
|
|||
| BAKER BOTTS LLP | |||
| The Warner | |||
| 1299 Pennsylvania Ave, NW | |||
| Washington, D.C. 20004 | |||
| Tel: (202) 639-7792 | |||
| Fax: (202) 585-1018 | |||
| Attorney for Individual Defendant Reuben F. Richards, Jr. | |||
21
|
DATED: September
20, 2007
|
|||
|
By:
|
/s/
Seymour Glanzer
|
||
|
Seymour
Glanzer
|
|||
| DICKSTEIN & SHAPIRO LLP | |||
| 1825 Eye Street NW | |||
| Washington, D.C. 20006 | |||
| Tel: (202) 420-2210 | |||
| Fax: (202) 420-2201 | |||
| Attorney for Individual Defendant Robert Bogomolny | |||
22
|
DATED: September
24, 2007
|
|||
| By: |
/s/
David Kistenbroker
|
||
|
David
Kistenbroker
|
|||
| KATTEN MUCHIN ROSEMAN, LLP | |||
| The Warner | |||
| 525 West Monroe Street | |||
| Chicago, IL 60661 | |||
| Tel: (312) 902-5452 | |||
| Fax: (312) 577-4481 | |||
| Attorney for Individual Defendants Thomas Werthan and Scott Massie | |||
23
|
DATED: September
20, 2007
|
|||
|
By:
|
/s/
Robert Mahoney
|
||
|
Robert
Mahoney
|
|||
| NORRIS, MCLAUGHLIN & MARCUS, P.A. | |||
| P.O. Box 1018 | |||
| Somerville, NJ 08876 | |||
| Tel: (908) 722-0700 | |||
| Fax: (908) 722-0755 | |||
| Attorneys for Individual Defendant Howard W. Brodie | |||
24
|
DATED: September
21, 2007
|
|||
|
By:
|
/s/ Michael R. Young | ||
|
Michael
R. Young
|
|||
| WILLKIE FARR & GALLAGHER, LLP | |||
| 787 Seventh Avenue | |||
| New York, NY 10019 | |||
| Tel: (212) 728-8280 | |||
| Fax: (212) 728-9280 | |||
| Attorney for Individual Defendants John Gillen, Robert Louis-Dreyfus, Thomas J. Russell, and Charles Scott | |||
25