exv10w27



 






Exhibit 10.27










AGREEMENT AND PLAN OF MERGER




by and among




FINISAR CORPORATION,

a Delaware corporation

(“Finisar”),




I-ROBOT ACQUISITION CORP.,

a Minnesota corporation and wholly-owned

subsidiary of Finisar (“Sub”),




I-TECH CORP.,

a Minnesota corporation

(“I-TECH”)




and




Steven Bucher

(“I-TECH Shareholder”)




Dated: April 7, 2005









 









 





TABLE OF CONTENTS



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Page
	Article I	 	THE MERGER	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	  Effective Time of the Merger	 	 	1	 
	 
	 	1.2	 	  Closing	 	 	1	 
	 
	 	1.3	 	  Effects of the Merger	 	 	1	 
	 
	 	1.4	 	  Directors and Officers	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	Article II	 	CONVERSION OF SECURITIES	 	 	2	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	  Certain Definitions	 	 	2	 
	 
	 	2.2	 	  Conversion of Capital Stock	 	 	3	 
	 
	 	2.3	 	  Exchange of Certificates	 	 	3	 
	 
	 	2.4	 	  Escrow	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	Article III	 	REPRESENTATIONS AND WARRANTIES OF I-ROBOT	 	 	4	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	  Organization, Standing and Power	 	 	4	 
	 
	 	3.2	 	  I-TECH Capital Structure	 	 	5	 
	 
	 	3.3	 	  Authority; Required Filings and Consents	 	 	5	 
	 
	 	3.4	 	  Financial Statements	 	 	6	 
	 
	 	3.5	 	  Absence of Undisclosed Liabilities; Inventory	 	 	7	 
	 
	 	3.6	 	  Absence of Certain Changes or Events	 	 	7	 
	 
	 	3.7	 	  Taxes	 	 	8	 
	 
	 	3.8	 	  Tangible Assets and Real Property	 	 	10	 
	 
	 	3.9	 	  Intellectual Property	 	 	11	 
	 
	 	3.10	 	  Bank Accounts	 	 	13	 
	 
	 	3.11	 	  Contracts	 	 	14	 
	 
	 	3.12	 	  Labor Difficulties	 	 	15	 
	 
	 	3.13	 	  Trade Regulation	 	 	15	 
	 
	 	3.14	 	  Environmental Matters	 	 	15	 
	 
	 	3.15	 	  Employee Benefit Plans	 	 	17	 
	 
	 	3.16	 	  Compliance with Laws	 	 	19	 
	 
	 	3.17	 	  Employees and Consultants	 	 	19	 
	 
	 	3.18	 	  Litigation	 	 	19	 
	 
	 	3.19	 	  Restrictions on Business Activities	 	 	19	 
	 
	 	3.20	 	  Governmental Authorization	 	 	20	 
	 
	 	3.21	 	  Insurance	 	 	20	 
	 
	 	3.22	 	  Interested Party Transactions	 	 	20	 
	 
	 	3.23	 	  No Existing Discussions	 	 	20	 
	 
	 	3.24	 	  Real Property Holding Corporation	 	 	21	 
	 
	 	3.25	 	  Corporate Documents	 	 	21	 
	 
	 	3.26	 	  No Misrepresentation	 	 	21	 
	 
	 	3.27	 	  Indemnification Obligations	 	 	21	 
	 
	 	3.28	 	  Disclaimer Regarding Estimates and Projections	 	 	21	 






-i-









 






	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Page
	Article IV	 	REPRESENTATIONS AND WARRANTIES OF FINISAR AND SUB	 	 	22	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	  Organization	 	 	22	 
	 
	 	4.2	 	  Finisar Capital Structure	 	 	22	 
	 
	 	4.3	 	  Authority; No Conflict; Required Filings and Consents	 	 	23	 
	 
	 	4.4	 	  SEC Filings; Financial Statements	 	 	24	 
	 
	 	4.5	 	  Absence of Undisclosed Liabilities	 	 	24	 
	 
	 	4.6	 	  Absence of Certain Changes or Events	 	 	25	 
	 
	 	4.7	 	  Litigation	 	 	25	 
	 
	 	4.8	 	  No Misrepresentation	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	Article V	 	CONDUCT OF BUSINESS	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	  Covenants of I-TECH	 	 	25	 
	 
	 	5.2	 	  Cooperation	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	Article VI	 	ADDITIONAL AGREEMENTS	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	  No Solicitation	 	 	28	 
	 
	 	6.2	 	  Consents	 	 	28	 
	 
	 	6.3	 	  Access to Information	 	 	28	 
	 
	 	6.4	 	  Legal Conditions to Merger	 	 	29	 
	 
	 	6.5	 	  Public Disclosure	 	 	29	 
	 
	 	6.6	 	  Nasdaq Quotation	 	 	29	 
	 
	 	6.7	 	  Securities Law Matters	 	 	29	 
	 
	 	6.8	 	  Employment Matters	 	 	33	 
	 
	 	6.9	 	  Employee Benefits	 	 	33	 
	 
	 	6.10	 	  Termination of 401(k) Plan	 	 	34	 
	 
	 	6.11	 	  Brokers or Finders	 	 	34	 
	 
	 	6.12	 	  Additional Agreements; Reasonable Efforts	 	 	34	 
	 
	 	6.13	 	  Expenses	 	 	34	 
	 
	 	6.14	 	  Waiver Agreements by Disqualified Individuals	 	 	35	 
	 
	 	6.15	 	  Maintenance of I-TECH Indemnification Obligations	 	 	35	 
	 
	 	6.16	 	  Loan to I-TECH Shareholder	 	 	36	 
	 
	 	6.17	 	  Payment of Bank Debt; Release of Guarantees	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	Article VII	 	CONDITIONS TO MERGER	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	  Conditions to Each Party’s Obligation to Effect the Merger	 	 	36	 
	 
	 	7.2	 	  Additional Conditions to Obligations of Finisar and Sub	 	 	37	 
	 
	 	7.3	 	  Additional Conditions to Obligations of I-TECH and the I-TECH Shareholder	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	Article VIII	 	TERMINATION AND AMENDMENT	 	 	39	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	  Termination	 	 	39	 
	 
	 	8.2	 	  Effect of Termination	 	 	40	 
	 
	 	8.3	 	  Amendment	 	 	40	 






-ii-









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	Page
	 
	 	8.4	 	  Extension; Waiver	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	Article IX	 	INDEMNIFICATION	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	  Survival of Representations and Warranties	 	 	40	 
	 
	 	9.2	 	  Indemnification of Finisar Group	 	 	41	 
	 
	 	9.3	 	  Manner of Finisar Group Indemnification	 	 	41	 
	 
	 	9.4	 	  Indemnification of I-TECH Group	 	 	42	 
	 
	 	9.5	 	  Procedures for Indemnification	 	 	42	 
	 
	 	9.6	 	  Defense of Third Party Claims	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	Article X	 	GENERAL PROVISIONS	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	  Notices	 	 	43	 
	 
	 	10.2	 	  Interpretation	 	 	45	 
	 
	 	10.3	 	  Counterparts	 	 	46	 
	 
	 	10.4	 	  Severability	 	 	46	 
	 
	 	10.5	 	  Entire Agreement	 	 	46	 
	 
	 	10.6	 	  Governing Law	 	 	47	 
	 
	 	10.7	 	  Assignment	 	 	47	 
	 
	 	10.8	 	  Third Party Beneficiaries	 	 	47	 






	 	 	 
	EXHIBITS
	 	 
	 
	 	 
	Exhibit A

	 	Form of Articles of Merger
	Exhibit A-1

	 	Form of Amended and Restated Articles of Incorporation of I-TECH, Inc.
	Exhibit B-1

	 	Form of Merger Consideration Note
	Exhibit B-2

	 	Form of Escrow Note
	Exhibit C

	 	Form of Escrow Agreement
	Exhibit D

	 	Form of Secured Promissory Note and Stock Pledge Agreement
	Exhibit E

	 	Form of Noncompetition Agreement
	Exhibit F

	 	Form of Opinion of Lapp, Libra, Thomson, Stoebner & Pusch Chtd.
	Exhibit G

	 	Form of Opinion of DLA Piper Rudnick Gray Cary US LLP
	 
	 	 
	SCHEDULES
	 	 
	 
	 	 
	Schedule 6.8

	 	I-TECH Employees to be Offered Employment
	Schedule 6.17

	 	Bank Debt and Bank Guarantees
	Schedule 7.2(e)

	 	Schedule of Third Party Consents







-iii-









 








AGREEMENT AND PLAN OF MERGER




     THIS AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of
April 7, 2005, by and among Finisar Corporation, a Delaware corporation (“Finisar”),
I-Robot Acquisition Corp., a Minnesota corporation and wholly-owned subsidiary of Finisar
(“Sub”), I-TECH CORP., a Minnesota corporation (“I-TECH”) and Steven Bucher
(“I-TECH Shareholder”).



RECITALS




     WHEREAS, the Boards of Directors of Finisar, Sub and I-TECH deem it advisable and in the best
interests of each corporation and its respective stockholders that Finisar and I-TECH combine in
order to advance the long-term business interests of Finisar and I-TECH;



     WHEREAS, the combination of Finisar and I-TECH shall be effected by the terms of this
Agreement through a transaction (the “Merger”) in which Sub will merge with and into
I-TECH, I-TECH will become a wholly-owned subsidiary of Finisar and the shareholders of I-TECH will
become stockholders of Finisar; and



     NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth below, the parties agree as follows:



ARTICLE I




THE MERGER




     1.1 Effective Time of the Merger. Subject to the provisions of this Agreement, the
Articles of Merger (the “Articles of Merger”) in substantially the form attached hereto as
Exhibit A as required by the relevant provisions of the Minnesota Business Corporation Act
(the “MBCA”) shall be duly executed and acknowledged by Sub and by I-TECH as the Surviving
Corporation (as defined in Section 1.3(a)) and delivered to the Minnesota Secretary of State for
filing on the Closing Date (as defined in Section 1.2). The Merger shall become effective upon the
filing of the Articles of Merger with the Minnesota Secretary of State (the “Effective
Time”).



     1.2 Closing. The closing of the Merger (the “Closing”) will take place at
10:00 a.m., Pacific Time, on a date to be specified by Finisar and I-TECH (the “Closing
Date”), which shall be no later than the second business day after satisfaction of the latest
to occur of the conditions set forth in Article VII (other than those conditions which by their
nature will be satisfied on the Closing Date), at the offices of DLA Piper Rudnick Gray Cary US
LLP, 2000 University Avenue, East Palo Alto, CA 94303-2248 unless another date or place is agreed
to in writing by Finisar and I-TECH.



     1.3 Effects of the Merger.



          (a) At the Effective Time (i) Sub shall be merged with and into I-TECH (the “Surviving
Corporation”) and the separate existence of Sub shall cease, (ii) the Articles of



1









 





Incorporation of I-TECH, as the Surviving Corporation, shall be amended and restated at and as
of the Effective Time to read as set forth in that document entitled “Amended and Restated Articles
of Incorporation of I-TECH, CORP.” attached hereto as Exhibit A-1 and (iii) the Bylaws of
I-TECH, as the Surviving Corporation, shall be amended and restated to read the same as the Bylaws
of Sub as in effect immediately prior to the Effective Time, except that all references in such
bylaws to Sub shall be changed to refer to I-TECH, Inc. Sub and I-TECH are sometimes referred to
herein as the “Constituent Corporations.”




          (b) At and after the Effective Time, the Surviving Corporation shall possess all the assets,
property, rights, privileges, powers and franchises of a public as well as of a private nature, and
be subject to all the liabilities, obligations, restrictions, disabilities and duties of each of
the Constituent Corporations; and all and singular rights, privileges, powers and franchises of
each of the Constituent Corporations, and all property, real, personal and mixed, and all
liabilities, obligations and debts due to either of the Constituent Corporations on whatever
account, as well as for stock subscriptions and all other things in action or belonging to each of
the Constituent Corporations, shall be vested in the Surviving Corporation, and all assets,
property, rights, privileges, powers and franchises, and all and every other interest shall be
thereafter as effectually the property of the Surviving Corporation as they were of the Constituent
Corporations, and the title to any real estate vested by deed or otherwise, in either of the
Constituent Corporations, shall not revert or be in any way impaired, but all rights of creditors
and all Liens (as hereinafter defined) upon any property of either of the Constituent Corporations
shall be preserved unimpaired, and all obligations, debts, liabilities and duties of the
Constituent Corporations shall thereafter attach to the Surviving Corporation and may be enforced
against it to the same extent as if such obligations, debts, liabilities and duties had been
incurred by it.



     1.4 Directors and Officers. The directors and officers of Sub immediately prior to
the Effective Time shall be the directors and officers of the Surviving Corporation at the
Effective Time, each of whom will hold office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation, in each case until their respective successors are duly
elected or appointed.



ARTICLE II




CONVERSION OF SECURITIES




     2.1 Certain Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:



          (a) “Escrow Fund” shall have the meaning ascribed to said term in the Escrow
Agreement.



          (b) “I-TECH Common Stock” shall mean the Common Shares, par value $0.01, of I-TECH.



          (c) “I-TECH Options” shall mean any outstanding options to purchase shares of I-TECH
Common Stock.



2









 





          (d) “I-TECH Shareholder” shall mean Steven Bucher.



          (e) “I-TECH Transaction Expenses” shall have the meaning set forth in Section 6.13.



          (f) “I-TECH Warrants” shall mean any outstanding warrant to purchase shares of I-TECH
Common Stock.



          (g) “Merger Consideration” means $12,061,000.



          (h) “Finisar Common Stock” shall mean the Common Stock, $0.001 par value, of Finisar.



     2.2 Conversion of Capital Stock. As of the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of capital stock of I-TECH or
capital stock of Sub, the following shall occur:



          (a) Capital Stock of Sub. Each issued and outstanding share of the capital stock of
Sub shall be converted into and become one fully paid and nonassessable share of Common Stock, par
value $0.001, of the Surviving Corporation.



          (b) Promissory Notes for I-TECH Common Stock. Subject to Sections 2.3 and 2.4, all
issued and outstanding shares of I-TECH Common Stock shall be exchanged for: (i) a convertible
promissory note in the form attached hereto as Exhibit B-1 with a principal amount equal to
the difference between the Merger Consideration and $1 million (the “Merger Consideration
Note”), and (ii) a convertible promissory note in the form attached hereto as Exhibit
B-2 with a principal amount equal to $1 million (the “Escrow Note”). All shares of
I-TECH Common Stock, when so exchanged, shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate representing any
such shares shall cease to have any rights with respect thereto, except rights as a holder of the
Merger Consideration Note and the Escrow Note. Each of the Merger Consideration Note and the
Escrow Note shall bear interest at the Applicable Federal Rate under Section 1274(d) of the
Internal Revenue Code of 1986, as amended (the “Code”), in effect on the Closing Date.



          (c) I-TECH Stock Options and Warrants. At the Effective Time, all then outstanding
I-TECH Options and all then outstanding I-TECH Warrants which are not exercised as of the Effective
Time will be cancelled.



     2.3 Exchange of Certificates. The procedures for exchanging outstanding shares of
I-TECH Common Stock for the Merger Consideration Note and the Escrow Note pursuant to the Merger
are as follows:



          (a) Exchange Procedures. At the Closing, the I-TECH Shareholder shall deliver to
Finisar the certificate which immediately prior to the Effective Time represented all outstanding
shares of I-TECH Common Stock (the “Certificate”) together with (i) a duly executed letter
of transmittal in such form as Finisar and I-TECH may reasonably specify, and (ii) instructions for
use in effecting the surrender of the Certificate in exchange for the Merger



3









 





Consideration Note. Upon receipt of the Certificate, Finisar shall execute the Merger
Consideration Note and the Escrow Note. The Merger Consideration Note shall be delivered to the
I-TECH Shareholder at the Effective Time and the Escrow Note shall be delivered to the Escrow Agent
pursuant to Section 2.4.




          (b) No Further Ownership Rights in I-TECH Common Stock. The Merger Consideration Note
and the Escrow Note delivered in exchange for the shares of I-TECH Common Stock in accordance with
the terms hereof shall be deemed to have been delivered in full satisfaction of all rights
pertaining to such shares of I-TECH Common Stock, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares of I-TECH Common
Stock which were outstanding immediately prior to the Effective Time.



          (c) No Liability. Neither Finisar nor I-TECH shall be liable to any holder of shares
of I-TECH Common Stock for such shares (or dividends or distributions with respect thereto)
delivered to a public official pursuant to any applicable abandoned property, escheat or similar
law.



     2.4 Escrow.



          (a) At the Closing, or as soon as practicable after the Effective Time, Finisar will cause to
be deposited into escrow (the “Escrow”) the Escrow Note. The Escrow Note shall be held by
U.S. Bank Trust National Association or such other financial institution as Finisar and the I-TECH
Shareholder shall mutually determine (the “Escrow Agent”) in accordance with and subject to
the provisions of an Escrow Agreement substantially in the form of Exhibit C hereto (the
“Escrow Agreement”). The Escrow Note shall be deemed to have been contributed by the
I-TECH Shareholder.



          (b) The Escrow Fund shall be subject to claims of indemnification under Article IX and the
procedures specified in the Escrow Agreement. Subject to the provisions of Section 9.2(d), the
sole recourse for all claims by Finisar under this Agreement shall be against the Escrow Fund.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF I-ROBOT




     Except as disclosed in the disclosure schedule provided to Finisar on or before the date of
this Agreement (the “I-TECH Disclosure Schedule”), I-TECH and the I-TECH Shareholder
represent and warrant to Finisar as follows:



     3.1 Organization, Standing and Power. I-TECH is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota, has all requisite corporate
power to own, lease and operate its properties and to carry on its business as currently being
conducted and as currently proposed to be conducted, and is duly qualified to transact business and
is in good standing in each jurisdiction in which the failure to be so qualified would have a
Material Adverse Effect on I-TECH. I-TECH has delivered true and correct copies of the Articles of
Incorporation and Bylaws of I-TECH, each as amended to date, to Finisar. I-TECH is



4









 





not in violation of any of the provisions of its Articles of Incorporation or Bylaws. I-TECH
does not directly or indirectly own any equity or similar interest in, or any interest convertible
or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership,
joint venture or other business association or entity.




     3.2 I-TECH Capital Structure.



          (a) The authorized capital stock of I-TECH consists of 100,000 shares of I-TECH Common Stock.
As of the date hereof, 50,000 shares of I-TECH Common Stock are issued and outstanding and held of
record by the I-TECH Shareholder. All such outstanding shares of I-TECH Capital Stock have been
duly authorized and validly issued, are fully paid and nonassessable, and are not subject to any
preemptive rights or rights of first refusal created by statute, the charter documents of I-TECH or
any agreement to which I-TECH is a party or by which it is bound. As of the date hereof, there are
no shares of I-TECH Common Stock reserved for issuance and no outstanding I-TECH Options or I-TECH
Warrants.



          (b) Except as set forth in this Section 3.2, there are (i) no equity securities of any class
of I-TECH, or any securities exchangeable into or exercisable for such equity securities, issued,
reserved for issuance, or outstanding and (ii) except as provided in Section 6.16, no outstanding
subscriptions, options, warrants, puts, calls, rights, or other commitments or agreements of any
character to which I-TECH is a party or by which it is bound obligating I-TECH to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
equity securities of I-TECH or obligating I-TECH to grant, extend, accelerate the vesting of,
change the exercise price of, or otherwise amend or enter into any such option, warrant, call,
right, commitment or agreement. Except as contemplated by this Agreement, there are no contracts,
commitments or agreements relating to voting, purchase or sale of I-TECH Capital Stock between
I-TECH and the I-TECH Shareholder.



          (c) All outstanding shares of I-TECH Capital Stock have been issued and granted in compliance
with (i) all applicable federal and state securities laws and regulations and (ii) all requirements
set forth in any contracts or agreements providing for the issuance or grant of such securities.



     3.3 Authority; Required Filings and Consents.



          (a) I-TECH has all requisite corporate power and authority to execute and deliver this
Agreement, the Articles of Merger and all other Transaction Documents (as defined in Section 10.2)
required to be executed and delivered by I-TECH hereunder and, subject to the approval of the
Merger by I-TECH’s shareholders as required under its Articles of Incorporation and by the MBCA, to
consummate the transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Transaction Documents to which I-TECH is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of I-TECH, subject only to the approval of the Merger by
I-TECH’s shareholders as required under its Articles of Incorporation and by the MBCA. This
Agreement and the other Transaction Documents to which I-TECH is or will be a party have been or
will be duly executed and delivered by I-TECH, assuming their due execution and delivery by Finisar
and Sub, and



5









 





constitute or will constitute the legal, valid and binding obligations of I-TECH, enforceable
against I-TECH in accordance with their respective terms, except as such enforceability may be
limited by (i) bankruptcy, insolvency, moratorium or other similar laws affecting or relating to
creditors’ rights generally and (ii) general principles of equity.




          (b) The execution and delivery by I-TECH of this Agreement and the other Transaction Documents
to which it is or will be a party do not, and the consummation of the transactions contemplated
hereby and thereby will not, (i) conflict with, or result in any violation or breach of any
provision of, the Articles of Incorporation or Bylaws of I-TECH, (ii) conflict with, or result in
any violation or breach of, or constitute (with or without notice or lapse of time, or both) a
default under, or give rise to a right of termination, cancellation or acceleration of any material
obligation or loss of any material benefit under, any note, mortgage, indenture, lease, contract or
other agreement or obligation to which I-TECH is a party or by which I-TECH or any of its
properties or assets may be bound, (iii) conflict with, or result in a violation of, or give any
Governmental Entity (as defined below) or other person the right to exercise any remedy or obtain
any relief under, any statute, law, ordinance, rule or regulation or any order, writ, injunction,
judgment or decree to which I-TECH, or any of the assets owned or used by I-TECH, is subject, (iv)
conflict with, or result in a violation of any of the terms or requirements of, or give any
Governmental Entity the right to revoke, withdraw, suspend, cancel, terminate or modify, any I-TECH
Authorization (as such term is defined in Section 3.20 below) that is held by I-TECH or that
otherwise relates to the business of or to any of the assets owned or used by I-TECH, (v) result in
the imposition or creation of any Lien (as such term is defined in Section 3.7(q) below) upon or
with respect to any asset owned or used by any of I-TECH (except for Permitted Encumbrances (as
defined in Section 10.2)), or (vi) result in, or would reasonably be expected to result in, the
disclosure or delivery to any escrowholder or other person of any source code included in the
I-TECH Intellectual Property Rights, or the transfer of any asset of I-TECH to any person.



          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any court, administrative agency or commission or other governmental authority or
instrumentality (“Governmental Entity”) is required by or with respect to I-TECH or its
shareholders in connection with the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby, except for (i) the filing of the Articles of Merger with the
Minnesota Secretary of State in accordance with the MBCA, (ii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under applicable federal
and state securities laws, and (iii) such other consents, authorizations, filings, approvals and
registrations which, if not obtained or made, would not have a Material Adverse Effect on I-TECH
and would not prevent or materially alter or delay any of the transactions contemplated by this
Agreement.



     3.4 Financial Statements. I-TECH has delivered to Finisar its audited financial
statements, including statements of operations and cash flows, for the years ended December 31,
2003 and December 31, 2004 (collectively, the “I-TECH Financial Statements”). The I-TECH
Financial Statements were prepared in accordance with accounting principles applied on a consistent
basis throughout the periods involved. The I-TECH Financial Statements present fairly in all
material respects the financial position of I-TECH as of the respective dates, and the



6









 





results of its operations and cash flows for the periods indicated. I-TECH’s cash balance as
of March 31, 2005 is set forth in Section 3.4 of the I-TECH Disclosure Schedule.




     3.5 Absence of Undisclosed Liabilities; Inventory.



          (a) I-TECH does not have any liabilities, either accrued or contingent, and whether due or to
become due, other than (i) liabilities reflected or provided for on the balance sheet (the
“I-TECH Balance Sheet”) as of December 31, 2004 (the “Balance Sheet Date”)
contained in the I-TECH Financial Statements, (ii) liabilities contemplated by this Agreement or
described in the I-TECH Disclosure Schedule, and (iii) normal or recurring liabilities incurred
since the Balance Sheet Date in the ordinary course of business consistent with past practices.



          (b) The inventories shown on the I-TECH Balance Sheet or thereafter acquired by I-TECH consist
of items of a quantity and quality usable or salable in the ordinary course of I-TECH’s business as
heretofore conducted and consistent with past practices.



     3.6 Absence of Certain Changes or Events. Since the Balance Sheet Date, I-TECH has
conducted its business in the ordinary course and in a manner consistent with past practices and,
since such date, I-TECH has not:



          (a) suffered any event or occurrence that has had a Material Adverse Effect on I-TECH;



          (b) suffered any damage, destruction or loss, whether covered by insurance or not, having a
Material Adverse Effect on I-TECH;



          (c) granted any material increase in the compensation payable or to become payable by I-TECH
to its officers or employees;



          (d) declared, set aside or paid any dividend or made any other distribution on or in respect
of the shares of its capital stock or declared any direct or indirect redemption, retirement,
purchase or other acquisition of such shares;



          (e) issued any shares of its capital stock or any warrants, rights, or options for, or entered
into any commitment relating to such capital stock;



          (f) made any change in the accounting methods or practices it follows, whether for general
financial or tax purposes, or any change in depreciation or amortization policies or rates;



          (g) sold, leased, abandoned or otherwise disposed of any real property, machinery, equipment
or other operating property other than in the ordinary course of business;



          (h) sold, assigned, transferred, licensed or otherwise disposed of any patent, trademark,
trade name, brand name, copyright (or pending application for any patent, trademark or copyright),
invention, work of authorship, process, know-how, formula or trade secret or interest thereunder or
other material intangible asset;



7









 





          (i) entered into any commitment or transaction (including, without limitation, any borrowing
or capital expenditure) other than in the ordinary course of business;



          (j) incurred any material liability, except in the ordinary course of business and consistent
with past practice;



          (k) permitted or allowed any of its property or assets to be subjected to any mortgage, deed
of trust, pledge, lien, security interest or other encumbrance of any kind, except for liens for
current taxes not yet due, purchase money security interests incurred in the ordinary course of
business and security interests or encumbrances existing on the Balance Sheet Date;



          (l) made any capital expenditure or commitment for additions to property, plant or equipment
individually in excess of $15,000, or, in the aggregate, in excess of $35,000;



          (m) paid, loaned or advanced any amount to, or sold, transferred or leased any properties or
assets to, or entered into any agreement or arrangement with, any of its officers, directors or
shareholders or any affiliate of any of the foregoing, other than employee compensation and
benefits and reimbursement of employment related business expenses incurred in the ordinary course
of business;



          (n) agreed to take any action described in this Section 3.6 or which would constitute a breach
of any of the representations or warranties of I-TECH contained in this Agreement, other than
entering into this Agreement and the Standstill Agreement dated January 14, 2005 between Finisar
and I-TECH; or



          (o) taken any other action that would have required the consent of Finisar pursuant to Section
5.1 of this Agreement (and which has not been obtained) had such action occurred after the date of
this Agreement.



     3.7 Taxes.



          (a) For purposes of this Agreement, a “Tax” or, collectively, “Taxes,” means any and all
federal, state and local taxes of any country, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including any liability for
taxes of a predecessor entity.



          (b) I-TECH has prepared and timely filed all material returns, estimates, information
statements and reports required to be filed by it with any taxing authority (“Returns”)
relating to any and all Taxes concerning or attributable to I-TECH or its operations. Such Returns
are true and correct in all material respects and have been completed in all material respects in
accordance with applicable law.



8









 





          (c) I-TECH, as of the Closing Date, (i) will have paid all Taxes it is required to pay prior
to the Closing Date and (ii) will have withheld with respect to its employees all Taxes required to
be withheld.



          (d) I-TECH has not been delinquent in the payment of any Tax. There is no Tax deficiency
outstanding or assessed or, to the knowledge of I-TECH, proposed against I-TECH that is not
reflected as a liability on the I-TECH Balance Sheet or set forth on the I-TECH Disclosure
Schedule, nor has I-TECH executed any agreements or waivers extending any statute of limitations on
or extending the period for the assessment or collection of any Tax.



          (e) The amount of I-TECH’s liability for unpaid Taxes (whether actual or contingent) for all
periods through the date hereof and the Closing Date does not and will not, in the aggregate,
exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred
Taxes that reflect differences between financial accounting income and taxable income) reflected on
the I-TECH Balance Sheet (other than Taxes which have accrued or will accrue after the date of such
I-TECH Balance Sheet).



          (f) I-TECH is not a party to any tax-sharing agreement or similar arrangement with any other
party, and I-TECH has not assumed or agreed to pay any Tax obligations of, or with respect to any
transaction relating to, any other person or agreed to indemnify any other person with respect to
any Tax.



          (g) I-TECH’s Returns have never been audited by a government or taxing authority, nor is any
such audit in process or pending, and I-TECH has not been notified by a government or taxing
authority, orally or in writing, of any request for such an audit or other examination.



          (h) I-TECH has never been a member of an affiliated group of corporations filing a
consolidated federal income tax return.



          (i) I-TECH has made available to Finisar copies of all Minnesota and United States income tax
Returns filed for all periods since its inception.



          (j) I-TECH has never filed any consent agreement under Section 341(f) of the Code or agreed to
have Section 341(f)(4) apply to any disposition of assets owned by I-TECH.



          (k) I-TECH is not a party to any contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or former employee of I-TECH
that, individually or collectively, could give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G, 404 or 162(m) of the Code by I-TECH or Sub as an expense
under applicable law.



          (l) I-TECH has not constituted either a “distributing corporation” or a “controlled
corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the
Code (i) in the two years prior to the date of this Agreement or (ii) in a distribution which could
otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of
Section 355(e) of the Code) in conjunction with the Merger.



9









 





          (m) I-TECH has not agreed to make, nor is it required to make, any adjustment under Section
481 of the Code by reason of any change in accounting method.



          (n) None of I-TECH’s assets is treated as “tax-exempt use property,” within the meaning of
Section 168(h) of the Code.



          (o) I-TECH is not, nor has it been, a “reporting corporation” subject to the information
reporting and record maintenance requirements of Section 6038A of the Code and the regulations
thereunder.



          (p) I-TECH has never been a party to any joint venture, partnership or other agreement that
could be treated as a partnership for Tax purposes.



          (q) There are (and immediately following the Effective Time there will be) no liens, pledges,
charges, claims, restrictions on transfer, mortgages, security interests or other encumbrances of
any sort (collectively, “Liens”) on the assets of I-TECH relating to or attributable to
Taxes, other than Liens for Taxes not yet due and payable.



     3.8 Tangible Assets and Real Property.



          (a) I-TECH owns or leases all tangible assets and properties which are material to the conduct
of its business as currently conducted or which are reflected on the I-TECH Balance Sheet or
acquired since the Balance Sheet Date (the “Material Tangible Assets”). The Material
Tangible Assets are in good operating condition and repair, ordinary wear, tear and calibration
excluded. I-TECH has good and valid title to all Material Tangible Assets that it owns (except
properties, interests in properties and assets sold or otherwise disposed of since the I-TECH
Balance Sheet Date in the ordinary course of business), free and clear of all Liens other than
Permitted Encumbrances. I-TECH is not in default under or in breach or violation of, nor is there
any basis for any claim of default by I-TECH under, or breach or violation by I-TECH of, any lease
of Material Tangible Assets to which I-TECH is a party. To I-TECH’s knowledge, no other party is
in default under or in breach or violation of, nor is there any valid basis for any claim of
default by any such party under, or breach or violation by any such party of, any such lease. All
leases of Material Tangible Assets to which I-TECH is a party are in full force and effect and
valid, binding and enforceable in accordance with their respective terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to creditors’ rights generally, and (ii) general principles of equity.



          (b) I-TECH owns no real property. The I-TECH Disclosure Schedule sets forth a true and
complete list of all real property leased or occupied by I-TECH during the previous five (5) years
(collectively, the “Facilities”). To the knowledge of I-TECH, the Facilities are not
subject to any encumbrances, encroachments, building or use restrictions, exceptions, reservations
or limitations, except those which, individually or in the aggregate, would not prevent any
continued use of any of the Facilities in the usual and normal conduct of I-TECH business. To the
knowledge of I-TECH, there are no governmental or other restrictions which would prevent Finisar or
I-TECH from conducting business operations in Facilities currently leased by I-TECH in the manner
currently conducted by I-TECH. I-TECH has not received notice of any pending or threatened
condemnation proceedings relating to any of the Facilities.



10









 





I-TECH is not in default under or in breach or violation of, nor is there any
basis for any claim of default by I-TECH under, or breach or violation by I-TECH of, any such
lease. To I-TECH’s knowledge, no other party is in default under or in breach or violation of, nor
is there any valid basis for any claim of default by any such party under, or breach or violation
by any such party of, any such lease. All such real property leases for Facilities currently
occupied by I-TECH are in full force and effect and valid, binding and enforceable in accordance
with their respective terms, except as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to creditors’ rights generally,
and (ii) general principles of equity. The I-TECH Disclosure Schedule sets forth a list of all
such leases.




     3.9 Intellectual Property.



          (a) I-TECH owns, or is licensed or otherwise possesses legally enforceable rights to use,
without future payment to any person, all patents, trademarks, trade names, service marks,
copyrights and mask works, and any applications for and registrations of such patents, trademarks,
trade names, service marks, copyrights and mask works and all processes, formulas, methods,
schematics, technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are necessary to conduct the business of I-TECH
as currently being conducted and the research and development activities of I-TECH currently being
conducted (all of which are referred to as the “I-TECH Intellectual Property Rights”), free
and clear of all Liens other than Permitted Encumbrances and non-exclusive licenses granted by
I-TECH in connection with sales of its products in the ordinary course of business. The foregoing
representation as it relates to Licensed Intellectual Property (as defined below), is limited to
I-TECH’s interest pursuant to licenses from third parties, each of which is in full force and
effect, is valid, binding and enforceable and grants I-TECH such rights to such intellectual
property as are necessary to the business of I-TECH as currently conducted and the research and
development activities currently being conducted.



          (b) The I-TECH Disclosure Schedule contains an accurate and complete list of (i) all patents,
patent applications, registered trademarks, registered trade names, registered service marks,
unregistered trademarks, trade names and service marks currently in use by I-TECH, and registered
copyrights and applications therefor included in the I-TECH Intellectual Property Rights owned by
I-TECH, including the jurisdictions in which each such I-TECH Intellectual Property Right owned by
I-TECH has been issued or registered or in which any such application for such issuance or
registration has been filed, (ii) all licenses, sublicenses, distribution agreements, options,
rights (including marketing rights), and other agreements to which I-TECH is a party and pursuant
to which any person is authorized to use any I-TECH Intellectual Property Rights owned by I-TECH or
has the right to manufacture, reproduce, market or exploit any product of I-TECH (a “I-TECH
Product”) or any adaptation, translation or derivative work based on any I-TECH Product or any
portion thereof, (iii) all licenses, sublicenses and other agreements to which I-TECH is a party
and pursuant to which I-TECH is authorized to use any third party technology, trade secret,
know-how, process, patent, trademark or copyright, including software (“Licensed Intellectual
Property”), which is used in the manufacture of, incorporated in or forms a part of any I-TECH
Product (other than licenses for standard off-the-shelf software used in the conduct of I-TECH’s
business), (iv) all joint development agreements to which I-TECH is a party, and (v) all agreements
with Governmental



11









 





Entities or other third parties pursuant to which I-TECH has obtained funding for research and
development activities.




          (c) The execution and delivery of this Agreement, compliance with its terms and the
consummation of the transactions contemplated hereby do not and will not conflict with, or result
in any violation or breach of, or default (with or without notice or lapse of time or both) or give
rise to any right, license or Lien relating to any I-TECH Intellectual Property Rights, or right of
termination, cancellation or acceleration of any I-TECH Intellectual Property Rights, or the loss
or encumbrance of any I-TECH Intellectual Property Rights or benefit related thereto, or result in
or require the creation, imposition or extension of any Lien upon any I-TECH Intellectual Property
Rights or otherwise impair the right of I-TECH or its customers to use the I-TECH Intellectual
Property Rights in the same manner as such I-TECH Intellectual Property Rights are currently being
used by I-TECH or the customers of I-TECH, except to the extent as may be provided in commercially
available software licenses.



          (d) All registered copyrights and, to the knowledge of I-TECH, all patents, unregistered
copyrights and registered trademarks and service marks issued to I-TECH which relate to any I-TECH
Product are valid and subsisting. None of the I-TECH Intellectual Property Rights infringes,
misappropriates or conflicts with any patent, trademark, trade name, service mark, copyright, mask
work right, trade secret or other proprietary right of any third party and the manufacturing,
marketing, licensing or sale of any I-TECH Product does not infringe any patent, trademark, trade
name, service mark, copyright, mask work right, trade secret or other proprietary right of any
third party. I-TECH (i) has not received notice that it has been sued in any suit, action or
proceeding which involves a claim of infringement of any patent, trademark, trade name, service
mark, copyright, mask work right, trade secret or other proprietary right of any third party and
(ii) has no knowledge of any claim challenging or questioning the validity or effectiveness of any
license or agreement relating to any I-TECH Intellectual Property Rights or Licensed Intellectual
Property. There is no outstanding order, writ, injunction, decree, judgment or stipulation by or
with any court, administrative agency or arbitration panel regarding patent, copyright, trade
secret, trademark, trade name, mask work right or other claims relating to the I-TECH Intellectual
Property Rights to which I-TECH is a party or by which it is bound.



          (e) All designs, drawings, specifications, source code, object code, documentation, flow
charts and diagrams incorporated, embodied or reflected in any I-TECH Product at any stage of its
development were written, developed and created solely and exclusively by (i) employees of I-TECH
without the assistance of any third party or (ii) third parties who assigned ownership of their
rights with respect thereto to I-TECH by means of valid and enforceable agreements, which are
listed and described in the I-TECH Disclosure Schedule and copies of which have been provided to
Finisar.



          (f) I-TECH is not, and, to the knowledge of I-TECH, no other party to any licensing,
sublicensing, distributorship or other similar arrangements with I-TECH relating to the I-TECH
Intellectual Property Rights is, in breach of or default under any material obligations under such
arrangements.



          (g) To the knowledge of I-TECH, no person is infringing on or otherwise violating any right of
I-TECH with respect to any I-TECH Intellectual Property Rights.



12









 





          (h) I-TECH has not assigned, sold or otherwise transferred ownership of, or granted an
exclusive license or right to use, any patent, patent application, trademark, mask work right,
service mark or copyright.



          (i) Neither I-TECH nor any of its current or former officers, employees or consultants has any
patents issued or patent applications pending for any device, process, method, design or invention
of any kind now used or needed by I-TECH in the furtherance of its business operations as currently
being conducted or as currently proposed to be conducted by I-TECH, which patents or applications
have not been assigned to I-TECH with such assignment duly recorded in the United States Patent
Office or with the applicable foreign Governmental Entity.



          (j) I-TECH has taken reasonable measures and precautions to protect and maintain the
confidentiality, secrecy and value of all I-TECH Intellectual Property Rights (except I-TECH
Intellectual Property Rights whose value would not be impaired by disclosure and except for
Licensed Intellectual Property with respect to which I-TECH is not under any obligation to maintain
the confidentiality, secrecy or value thereof). Without limiting the generality of the foregoing,
(i) all current and former employees of I-TECH who are or were involved in, or who have contributed
to, the creation or development of any material I-TECH Intellectual Property Rights have executed
and delivered to I-TECH an agreement that is substantially identical to either of the two different
forms of employment agreement which relate to, among other things, confidential information and
invention assignment, previously delivered by I-TECH to Finisar (containing no modifications to the
provisions of such forms relating to confidential information or invention assignment), and (ii)
all current and former consultants and independent contractors to I-TECH who are or were involved
in, or who have contributed to, the creation or development of any material I-TECH Intellectual
Property Rights have executed and delivered to I-TECH an agreement, that is substantially identical
to I-TECH’s standard form of independent contractor agreement relating to, among other things,
confidential information and invention assignment, previously delivered by I-TECH to Finisar
(containing no modifications to the provisions of such forms relating to confidential information
or invention assignment). No current or former employee, officer, director, stockholder,
consultant or independent contractor has any right, claim or interest in or with respect to any
I-TECH Intellectual Property Rights. Neither the execution or delivery of any such agreement by
any such person, nor the carrying on by any such person, as an employee, consultant or independent
contractor, of I-TECH’s business as currently conducted and as currently proposed to be conducted,
has or will conflict with or result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, covenant or instrument under which any of such persons is
obligated.



     3.10 Bank Accounts. The I-TECH Disclosure Schedule sets forth the names and locations
of all banks and other financial institutions at which I-TECH maintains accounts of any nature, the
type of accounts maintained at each such institution and the names of all persons authorized to
draw thereon or make withdrawals therefrom.



13









 





     3.11 Contracts.



          (a) To the extent not listed in other sections of the I-TECH Disclosure Schedule, Section 3.11
of the I-TECH Disclosure Schedule identifies each agreement, obligation or commitment, written or
oral, to which I-TECH is a party (each a “Material Contract”):



               (i) that calls for any fixed or contingent payment or expenditure or any related series of
fixed or contingent payments or expenditures by or to I-TECH totaling more than $20,000 in any
twelve-month period beginning after the Balance Sheet Date;



               (ii) with agents, advisors, salesmen, sales representatives, independent contractors or
consultants that is not cancelable by I-TECH on no more than thirty (30) days’ notice and without
liability, penalty or premium;



               (iii) that restricts I-TECH from carrying on anywhere in the world its business or any portion
thereof as currently conducted;



               (iv) to provide funds to or to make any investment in any other person or entity (in the form
of a loan, capital contribution or otherwise);



               (v) with respect to obligations as guarantor, surety, co-signer, endorser, co-maker,
indemnitor or otherwise in respect of the obligation of any other person or entity;



               (vi) for any line of credit, standby financing, revolving credit or other similar financing
arrangement;



               (vii) with any distributor, original equipment manufacturer, value added remarketer or other
person for the distribution of any of the I-TECH Products;



               (viii) with any Governmental Entity or involving the provision of products or services to a
Governmental Entity; or



               (ix) that is otherwise material to the business of I-TECH as currently being conducted, or as
currently proposed to be conducted.



          (b) No party to any such contract, agreement or instrument has notified I-TECH that it intends
to cancel, withdraw, modify or amend such contract, agreement or instrument.



          (c) I-TECH is not in default under or in breach or violation of, nor is there any valid basis
for any claim of default by I-TECH under, or breach or violation by I-TECH of, any Material
Contract. To I-TECH’s knowledge, no other party is in default under or in breach or violation of,
nor is there any valid basis for any claim of default by any other party under, or breach or
violation by any other party of, any Material Contract. All of the Material Contracts are in full
force and effect and valid, binding and enforceable in accordance with their respective terms,
except as such enforceability may be limited by (x) bankruptcy, insolvency, moratorium



14









 





or other similar laws affecting or relating to creditors’ rights generally, and (y) general
principles of equity.




     3.12 Labor Difficulties. I-TECH is not engaged in any unfair labor practice and there
is no unfair labor practice complaint against I-TECH pending or, to I-TECH’s knowledge, threatened
before any Governmental Entity. There is no strike, labor dispute, slowdown, or stoppage pending
or, to I-TECH’s knowledge, threatened against I-TECH. I-TECH has not experienced any work stoppage
or other labor difficulty. I-TECH has no knowledge of any facts indicating that the consummation
of the transactions contemplated by this Agreement will have a Material Adverse Effect on I-TECH’s
relations with its employees.



     3.13 Trade Regulation. I-TECH has not, since January 1, 2003, terminated its
relationship with or refused to ship I-TECH Products to any dealer, distributor, third party
marketing entity or customer which had theretofore paid or been obligated to pay I-TECH in excess
of $10,000 over any consecutive twelve (12) month period. All of the prices charged by I-TECH in
connection with the marketing or sale of any of its products or services have been in compliance,
in all material respects, with all applicable laws and regulations. No claims are pending or, to
I-TECH’s knowledge, threatened against I-TECH with respect to the wrongful termination of any
dealer, distributor or any other marketing entity, discriminatory pricing, price fixing, unfair
competition, false advertising, or any other material violation of any laws or regulations relating
to anti-competitive practices or unfair trade practices of any kind, and, to I-TECH’s knowledge, no
specific situation, set of facts or occurrence provides any basis for any such claim.



     3.14 Environmental Matters.



          (a) As used in this Agreement:



               (i) “Environmental Claim” means any and all administrative, regulatory or judicial
actions, suits, demands, demand letters, directives, claims, liens, investigations, proceedings or
notices of noncompliance or violation by any person or entity (including any Governmental Entity)
alleging liability or potential liability (including, without limitation, potential responsibility
for or liability for enforcement costs, investigatory costs, cleanup costs, governmental response
costs, removal costs, remedial costs, natural resources damages, property damages, personal
injuries, fines or penalties) arising out of, based on or resulting from (A) the presence, or
Release or threatened Release into the environment, of any Hazardous Materials at any location,
whether or not owned, operated, leased or managed by I-TECH; or (B) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law; or (C) any and all claims by any
third party seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous Materials.



               (ii) “Environmental Laws” means all federal, state, local and foreign laws, rules,
regulations and requirements of common law relating to pollution, the environment (including,
without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or
protection of human health as it relates to protection of the environment including, without
limitation, laws and regulations relating to Releases or threatened Releases of



15









 





Hazardous Materials, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials.




               (iii) “Hazardous Material” means any pollutant, contaminant, toxic, hazardous or
noxious substance or waste which is regulated by the laws of any state, local, federal or other
governmental authority or jurisdiction, including but not limited to the United States and the
State of California, and includes but is not limited to (a) any oil or petroleum compounds,
flammable substances, explosives, radioactive materials, or any other materials or pollutants which
pose a hazard to persons or cause any real property to be in violation of any Environmental Laws,
(b) to the extent so regulated, asbestos or any asbestos-containing material of any kind or
character, (c) polychlorinated biphenyls, as regulated by the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq., (d) any materials or substances designated as
“hazardous substances” pursuant to (1) Section 311 of the Clean Water Act, 33 U.S.C. Section 1251
et seq., or (2) Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq., (e) “chemical
substance,” “new chemical substance,” or “hazardous chemical substance or mixture” pursuant to
Sections 3, 6 and 7 of the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., and (f) any “hazardous waste” pursuant to Section 1004 of the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901 et seq.



               (iv) “Release” means any release, spill, emission, leaking, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the atmosphere, soil, surface water,
groundwater or property.



          (b) As of the date hereof, no Hazardous Material is present, as a result of the actions or
omissions of I-TECH or to the knowledge of I-TECH any third party or otherwise, in, on or under any
property, including the land and the improvements, ground water and surface water, that I-TECH has
at any time owned, operated, occupied or leased. To the knowledge of I-TECH, no underground
storage tanks are or were present under any property that I-TECH has at any time owned, operated,
occupied or leased at such time as I-TECH owned, operated, occupied or leased such property.
Notwithstanding the foregoing, I-TECH makes no representation as to anything that occurred after
the time when I-TECH ceased to operate, occupy, or lease such property. I-TECH has never notified
any Governmental Entity or third party, nor has I-TECH been required under any law, rule,
regulation, order or agreement to notify any Governmental Entity or third party, of any Release of
any Hazardous Material.



          (c) At all times, I-TECH has transported, stored, used, manufactured, disposed of, released or
exposed its employees or others to Hazardous Materials (collectively, “Hazardous Materials
Activities”) in material compliance with all Environmental Laws.



          (d) I-TECH currently holds all environmental approvals, permits, licenses, clearances and
consents (the “Environmental Permits”) necessary for the conduct of its business as such
business is currently being conducted and is in material compliance with all such Environmental
Permits. I-TECH has made available to Finisar all environmental reports, audits, assessments or
studies performed or prepared for or on behalf of I-TECH within the last five (5) years within the
possession of I-TECH with respect to the Facilities. No environmental report, closure activity,
investigation or assessment, and no notification to or approval, consent or



16









 





authorization from, any Governmental Entity with jurisdiction regarding environmental matters
or Hazardous Materials is required to be obtained, either before or after the Effective Time, in
connection with any of the transactions contemplated by this Agreement.




          (e) No Environmental Claim against I-TECH is pending or, to the knowledge of I-TECH,
threatened. I-TECH is not aware of any act or omission by I-TECH which could reasonably be
expected to involve I-TECH in any Environmental Claim or impose upon I-TECH any liability
concerning Hazardous Materials Activities.



     3.15 Employee Benefit Plans.



          (a) The I-TECH Disclosure Schedule contains a complete and accurate list of each plan,
program, policy, practice, contract, agreement or other arrangement providing for employment,
compensation, retirement, deferred compensation, loans, severance, separation, relocation,
repatriation, expatriation, visas, work permits, termination pay, performance awards, bonus,
incentive, stock option, stock purchase, stock bonus, phantom stock, stock appreciation right,
supplemental retirement, fringe benefits, cafeteria benefits, voluntary employee benefit
association, or other benefits, whether written or unwritten, including, without limitation, each
“employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”) which is, as of the date hereof, sponsored,
maintained, contributed to, or required to be contributed to by I-TECH, any subsidiary of I-TECH or
for which I-TECH has any continuing liability under the terms of the plan, program, policy,
practice, contract, agreement or other arrangement or under applicable federal or state law; and,
with respect to any such plans which are subject to Code Section 401(a), any trade or business
(whether or not incorporated) which is or, at any relevant time, was treated as a single employer
with I-TECH within the meaning of Section 414(b), (c),(m) or (o) of the Code (an “ERISA
Affiliate”) for the benefit of any person who performs or who has performed services for I-TECH
or with respect to which I-TECH, or any ERISA Affiliate has or may have any liability (including,
without limitation, contingent liability) or obligation (collectively, the “I-TECH Employee
Plans”); provided, however, that the I-TECH Disclosure Schedule shall contain a complete and
accurate list of any “multiemployer plan” (as defined in Section 3(37) of ERISA) or any “pension
plan” (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code
which is or has at any time been maintained, established, sponsored, participated in, or
contributed to by I-TECH or an ERISA Affiliate or to which I-TECH or an ERISA Affiliate is
obligated to contribute or has otherwise incurred any obligation or liability (including, without
limitation, any contingent liability). All of the employees of I-TECH are legally permitted to be
employed by I-TECH in the United States in their current job capacities.



          (b) I-TECH has furnished or made available to Finisar true and complete copies of documents
embodying each of the I-TECH Employee Plans and related plan documents, including (without
limitation) the most recent determination or opinion letter, trust documents, group annuity
contracts, plan amendments, insurance policies or contracts, form of participant agreements,
employee booklets, administrative service agreements, summary plan descriptions, summary of
material modifications, compliance and nondiscrimination tests for the last three plan years, Form
5500 reports required to be filed for the last three plan years, standard COBRA forms and related
notices, and registration statements and prospectuses.



17









 





          (c) Each I-TECH Employee Plan has been administered in all material respects in accordance
with its terms and is in material compliance with the requirements prescribed by any and all
statutes, rules and regulations (including ERISA and the Code); (ii) any I-TECH Employee Plan
intended to be qualified under Section 401(a) of the Code has either obtained from the Internal
Revenue Service a favorable determination or opinion letter as to its qualified status under the
Code, including all amendments to the Code which are currently effective, or has time remaining to
apply under applicable regulations or pronouncements for a determination or opinion letter and to
make any amendments necessary to obtain a favorable determination or opinion letter; (iii) none of
the I-TECH Employee Plans promises or provides retiree medical or other retiree welfare benefits to
any person; (iv) there has been no “prohibited transaction,” as such term is defined in Section 406
of ERISA or Section 4975 of the Code and not otherwise exempt under Section 408 of ERISA or Section
4975 of the Code (or any administrative class exemption issued thereunder), with respect to any
I-TECH Employee Plan; (v) none of I-TECH, any subsidiary or any ERISA Affiliate is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of ERISA; (vi) all
contributions required to be made by I-TECH, any subsidiary or ERISA Affiliate to any I-TECH
Employee Plan have been timely paid or accrued; (vii) with respect to each I-TECH Employee Plan, no
“reportable event” within the meaning of Section 4043 of ERISA (excluding any such event for which
the thirty (30) day notice requirement has been waived) nor any event described in Sections 4062,
4063 or 4041 of ERISA has occurred; (viii) each I-TECH Employee Plan subject to ERISA, has timely
filed all requisite governmental reports (which were true and correct as of the date filed) and has
properly and timely filed and distributed or posted all required material notices and reports to
employees; (ix) no suit, administrative proceeding, action or other litigation has been brought
within the past three (3) years, or, to the knowledge of I-TECH, is threatened, against or with
respect to any such I-TECH Employee Plan, including any audit or inquiry by the IRS or United
States Department of Labor; and (x) there has been no amendment to, written interpretation or
announcement by I-TECH, or any ERISA Affiliate which would materially increase the expense of
maintaining any I-TECH Employee Plan above the level of expense incurred with respect to that Plan
for the most recent fiscal year included in I-TECH’s financial statements.



          (d) Neither I-TECH nor any ERISA Affiliate has ever maintained, established, sponsored,
participated in, contributed to, or is obligated to contribute to, or otherwise incurred any
obligation or liability (including, without limitation, any contingent liability) under any
“multiemployer plan” (as defined in Section 3(37) of ERISA) or to any “pension plan” (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA or Section 412 of the Code. Neither I-TECH nor
any ERISA Affiliate has any actual or potential withdrawal liability (including, without
limitation, any contingent liability) for any complete or partial withdrawal (as defined in
Sections 4203 and 4205 of ERISA) from any multiemployer plan.



          (e) With respect to each I-TECH Employee Plan, I-TECH has complied in all material respects
with and has no unsatisfied obligations under (i) the applicable health care continuation and
notice provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)
and the regulations thereunder or any state law governing health care coverage extension or
continuation; (ii) the applicable requirements of the Family and Medical Leave Act of 1993 and the
regulations thereunder; (iii) the applicable requirements of the Health Insurance



18









 





Portability and Accountability Act of 1996 (“HIPAA”); and (iv) the applicable
requirements of the Cancer Rights Act of 1998.




          (f) The consummation of the transactions contemplated by this Agreement will not, (i) entitle
any current or former employee or other service provider of I-TECH or any ERISA Affiliate to
severance benefits or any other payment (including, without limitation, unemployment compensation,
golden parachute, bonus or benefits under any I-TECH Employee Plan), except as expressly provided
in this Agreement or (ii) accelerate the time of payment or vesting of any such benefits or
increase the amount of compensation due any such employee or service provider. No benefit payable
or which may become payable by I-TECH pursuant to any I-TECH Employee Plan or as a result of or
arising under this Agreement shall constitute an “excess parachute payment” (as defined in Section
280G(b)(1) of the Code) which is subject to the imposition of an excise Tax under Section 4999 of
the Code or the deduction for which would be disallowed by reason of Section 280G of the Code.
Each I-TECH Employee Plan can be amended, terminated or otherwise discontinued after the Effective
Time in accordance with its terms.



     3.16 Compliance with Laws. I-TECH has complied with, is not in violation of, and has
not received any notices of violation with respect to, any statute, law or regulation applicable to
the ownership or operation of its business except for such violations as would not have a Material
Adverse Effect on I-TECH.



     3.17 Employees and Consultants. The I-TECH Disclosure Schedule contains a list of the
names of all employees and consultants of I-TECH as of the date of this Agreement and correctly
reflects, in all material respects, their current base salaries or wages, any other compensation
payable to them (including compensation payable pursuant to bonus, deferred compensation or
commission arrangements), dates of employment and positions. I-TECH is not a party to any
collective bargaining agreement or other contract with a labor union involving any of its
employees. All of the employees of I-TECH are “at will” employees. I-TECH is in compliance in all
material respects with all applicable laws and regulations and contracts or other agreements
relating to employment, employment practices, wages, bonuses and terms and conditions of
employment.



     3.18 Litigation. There is no action, suit, proceeding, claim, arbitration or
investigation pending before any agency, court or tribunal or threatened against I-TECH or any of
its properties or officers or directors (in their capacities as such). There is no judgment,
decree or order against I-TECH or, to its knowledge, any of its directors or officers (in their
capacities as such) that could prevent, enjoin or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse
Effect on I-TECH.



     3.19 Restrictions on Business Activities. There is no agreement, judgment,
injunction, order or decree binding upon I-TECH which has or could reasonably be expected to have
the effect of prohibiting or materially impairing any current or future business practice of
I-TECH, any acquisition of property by I-TECH or the conduct of business by I-TECH as currently
being conducted or as currently proposed to be conducted.



19









 





     3.20 Governmental Authorization. I-TECH has obtained each governmental consent,
license, permit, grant or other authorization of a Governmental Entity that is required for the
operation of the business of I-TECH (collectively, the “I-TECH Authorizations”), and all of
such I-TECH Authorizations are in full force and effect. I-TECH is in material compliance with the
terms and requirements of such I-TECH Authorizations. I-TECH has not received any notice or other
communication from any Governmental Entity regarding (i) any actual or possible violation of or
failure to comply with any term or requirement of any material I-TECH Authorization, or (ii) any
actual or possible revocation, withdrawal, suspension, cancellation, termination or modification of
any material I-TECH Authorization.



     3.21 Insurance. The I-TECH Disclosure Schedule contains a list of all insurance
policies of I-TECH including the type and amount of such policies. There is no material claim
pending under any of such policies as to which coverage has been questioned, denied or disputed by
the underwriters of such policies. All premiums due and payable under all such policies have been
paid, and I-TECH is otherwise in compliance with the terms of such policies. I-TECH has no
knowledge of any threatened termination of, or material premium increase with respect to, any of
such policies.



     3.22 Interested Party Transactions.



          (a) No director, officer or shareholder of I-TECH has any interest in (i) any material
equipment or other material property or asset, real or personal, tangible or intangible, including,
without limitation, any of the I-TECH Intellectual Property Rights, used in connection with or
pertaining to the business of I-TECH, (ii) any creditor, supplier, customer, manufacturer, agent,
representative, or distributor of any of the I-TECH Products, (iii) any entity that competes with
I-TECH, or with which I-TECH is affiliated or has a business relationship, or (iv) any material
agreement, obligation or commitment, written or oral, to which I-TECH is a party other than
agreements, obligations or commitments to pay normal compensation to employees and fees to outside
members of the board of directors; provided, however, that no such person shall be deemed to have
such an interest solely by virtue of ownership of less than one percent (1%) of the outstanding
stock or debt securities of any company whose stock or debt securities are traded or quoted on a
recognized stock exchange.



          (b) Except as contemplated by the Transaction Documents, I-TECH is not a party to any (i)
agreement with any officer or other employee of I-TECH the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction involving I-TECH in the
nature of any of the transactions contemplated by this Agreement, or (ii) agreement or plan,
including, without limitation, any stock option plan, stock appreciation right plan or stock
purchase plan, any of the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement.



     3.23 No Existing Discussions. As of the date hereof, I-TECH is not engaged, directly
or indirectly, in any discussions or negotiations with any party other than Finisar with respect to
an I-TECH Acquisition Proposal (as defined in Section 6.1).



20









 





     3.24 Real Property Holding Corporation. I-TECH is not a “United States real property
holding corporation” within the meaning of Section 897(c)(2) of the Code.



     3.25 Corporate Documents. I-TECH has furnished to Finisar, or its representatives,
for its examination (i) its minute book containing all records required to be set forth of all
proceedings, consents, actions, and meetings of the shareholders, the Board of Directors and any
committees thereof and (ii) all permits, orders, and consents issued by any Governmental Entity
with respect to I-TECH. The corporate minute books and other corporate records of I-TECH are
complete and accurate in all material respects, and the signatures appearing on all documents
contained therein are the true signatures of the persons purporting to have signed the same. All
actions reflected in such books and records were duly and validly taken in material compliance with
the laws of the applicable jurisdiction. I-TECH has delivered or made available to Finisar or its
representatives true and complete copies of all documents which are identified in the I-TECH
Disclosure Schedule.



     3.26 No Misrepresentation. No representation or warranty by I-TECH in this Agreement,
or any exhibit or schedule hereto, or any certificate or instrument furnished or to be furnished by
or on behalf of I-TECH pursuant to this Agreement, when taken together, contains or shall contain
any untrue statement of a material fact or omits or shall omit to state a material fact required to
be stated therein or necessary in order to make such statements, in light of the circumstances
under which they were made, not misleading.



     3.27 Indemnification Obligations. To the knowledge of I-TECH, there are no actions,
proceedings or other events pending or threatened against any officer, director, employee or agent
of I-TECH which could reasonably be expected to give rise to any indemnification obligation of
I-TECH of the type referred to in Section 6.15 to its officers, directors, employees or agents
under its Articles of Incorporation, Bylaws or any agreement between I-TECH and any of its
officers, directors, employees or agents.



     3.28 Disclaimer Regarding Estimates and Projections. In connection with Finisar’s
investigation of I-TECH and its business, Finisar may have received from or on behalf of I-TECH
certain estimates, forecasts, plans and financial projections. Finisar acknowledges that there are
uncertainties inherent in attempting to make such estimates, forecasts, plans and projections, that
Finisar is familiar with such uncertainties, that Finisar is taking full responsibility for making
its own evaluation of the adequacy and accuracy of all estimates, forecasts, plans and projections
so furnished to it (including the reasonableness of the assumptions underlying such estimates,
forecasts, plans and projections), and that Finisar shall have no claim against I-TECH with respect
thereto. Accordingly, I-TECH makes no representation or warranty with respect to such estimates,
forecasts, plans and projections (including any underlying assumptions).



21









 





ARTICLE IV




REPRESENTATIONS AND WARRANTIES OF FINISAR AND SUB




     Except as set forth in the disclosure schedule delivered by Finisar to I-TECH on or before the
date of this Agreement (the “Finisar Disclosure Schedule”), each of Finisar and Sub
represent and warrant to I-TECH as follows:



     4.1 Organization. Each of Finisar and Sub is a corporation duly organized, validly
existing and in good standing under the laws of Delaware, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being conducted and as proposed
to be conducted, and is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified could reasonably be
expected to have a Material Adverse Effect on Finisar or Sub.



     4.2 Finisar Capital Structure.



          (a) The authorized capital stock of Finisar consists of 500,000,000 shares of Finisar Common
Stock and 5,000,000 shares of Preferred Stock, $0.001 par value, 500,000 of which are designated
Series RP Preferred Stock (“Finisar Preferred Stock”). The shares of Series RP Preferred
Stock are issuable upon exercise of rights attached to shares of Finisar Common Stock pursuant to
the Rights Agreement dated as of September 25, 2002 between Finisar and American Stock Transfer &
Trust Company. As of April 1, 2005, 258,885,997 shares of Finisar Common Stock were issued and
outstanding, all of which had been duly authorized and validly issued and were fully paid and
nonassessable, and no shares of Finisar Preferred Stock were issued and outstanding; As of April
1, 2005, 61,614,736 shares of Finisar Common stock were reserved for issuance pursuant to Finisar’s
stock option plans and employee stock purchase plan, 58,647,060 shares of Finisar Common Stock were
reserved for issuance upon the conversion of Finisar’s 5 1/4% convertible subordinated notes due 2008
and 2 1/2% convertible subordinated notes due 2010 and 964,117 shares of Finisar Common Stock were
reserved for issuance upon exercise of outstanding warrants. No material change in such
capitalization has occurred between April 1, 2005 and the date of this Agreement. All of the
outstanding shares of capital stock of Sub have been duly authorized and validly issued and are
fully paid and nonassessable, and all such shares are owned by Finisar, free and clear of all
Liens, agreements, limitations on voting rights, charges or other encumbrances of any nature.



          (b) Except as set forth in this Section 4.2 or as reserved for future grants of options under
Finisar’s stock option plans or Finisar’s employee stock purchase plan, there are (i) no equity
securities of any class of Finisar, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding and (ii) no outstanding
subscriptions, options, warrants, puts, calls, rights or other commitments or agreements of any
character to which Finisar is a party or by which it is bound obligating Finisar to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
equity securities of Finisar.



22









 





          (c) The shares of Finisar Common Stock to be issued pursuant to the Merger, when issued in
accordance with the terms of this Agreement, will be duly authorized, validly issued, fully paid
and nonassessable.



     4.3 Authority; No Conflict; Required Filings and Consents.



          (a) Each of Finisar and Sub have all requisite corporate power and authority to execute and
deliver this Agreement and the other Transaction Documents to which they are or will be parties and
to consummate the transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the other Transaction Documents to which Finisar or Sub is or will be a party and the
consummation of the transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Finisar and Sub, respectively. This Agreement and the
other Transaction Documents to which Finisar and/or Sub are parties have been or will be duly
executed and delivered by Finisar and/or Sub and constitute or will constitute the valid and
binding obligations of Finisar and/or Sub, enforceable against Finisar and/or Sub, as the case may
be, in accordance with their respective terms, except as such enforceability may be limited by (i)
bankruptcy laws and other similar laws affecting creditors’ rights generally and (ii) general
principles of equity.



          (b) The execution and delivery by Finisar and Sub of this Agreement and the other Transaction
Documents to which they are or will be parties do not, and the consummation of the transactions
contemplated hereby and thereby will not, (i) conflict with, or result in any violation or breach
of any provision of the Certificate of Incorporation or Bylaws of Finisar or Sub, (ii) result in
any violation or breach of, or constitute (with or without notice or lapse of time, or both) a
default under, or give rise to a right of termination, cancellation or acceleration of any material
obligation or loss of any material benefit under, any note, mortgage, indenture, lease, contract or
other agreement, instrument or obligation to which Finisar or Sub is a party or by which either of
them or any of their properties or assets may be bound, (iii) conflict with, or result in a
violation of, or give any Governmental Entity or other person the right to exercise any remedy or
obtain any relief under, any statute, law, ordinance, rule or regulation or any order, writ
injunction, judgment or decree to which Finisar or Sub, or any of the assets owned or used by
Finisar or Sub, is subject, (iv) conflict with, or result in a violation of any of the terms or
requirements of, or give any Governmental Entity the right to revoke, withdraw, suspend, cancel,
terminate or modify, any governmental consent, license, permit, grant or other authorization that
is held by Finisar or that otherwise relates to the business of or to any of the assets owned or
used by Finisar or Sub, or (v) result in the imposition or creation of any Lien upon or with
respect to any asset owned or used by any of Finisar or Sub (except for Liens for Taxes,
assessments or other charges by Governmental Entities which are not yet due and payable or are due
but not delinquent or are being contested in good faith by appropriate proceedings, (ii) purchase
money security interests incurred in the ordinary course of business and (iii) minor Liens that
will not, in any case or in the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of Finisar), except in the case of clauses (ii) through
(v) for any such conflicts, violations, defaults, terminations, cancellations or accelerations
which would not be reasonably likely to have a Material Adverse Effect on Finisar.



          (c) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Finisar or any of its



23









 





Subsidiaries in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby, except for (i) the filing of a registration
statement on Form S-3 pursuant to the Securities Act of 1933, as amended (the “Securities
Act”) with the Securities and Exchange Commission (the “SEC”) to register the Finisar
Common Stock issuable upon conversion of the Merger Consideration Note and the Escrow Note, (ii)
the filing of the Articles of Merger with the Minnesota Secretary of State in accordance with the
MBCA, (iii) if required, the filing of a report on Form 8-K with the SEC, (iv) such consents,
approvals, orders, authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws, and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not prevent or materially alter
or delay any of the transactions contemplated by this Agreement or be reasonably likely to have a
Material Adverse Effect on Finisar or Sub.




     4.4 SEC Filings; Financial Statements.



          (a) Finisar has timely filed and made available to I-TECH all forms, reports and documents
required to be filed by Finisar with the SEC since April 30, 2004, other than registration
statements on Form S-8 (collectively, the “Finisar SEC Reports”). Each of the Finisar SEC
Reports (i) at the time it was filed, complied in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), as the case may be, and
(ii) did not at the time it was filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Finisar SEC Report or necessary in
order to make the statements in such Finisar SEC Report, in the light of the circumstances under
which they were made, not misleading.



          (b) Each of the consolidated financial statements (including, in each case, any related notes)
contained in the Finisar SEC Reports, including any Finisar SEC Reports filed after the date of
this Agreement until the Closing, complied or will comply as to form in all material respects with
the applicable published rules and regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes to such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q promulgated by the SEC) and presented fairly or will present
fairly, in all material respects, the consolidated financial position of Finisar and its
Subsidiaries as of the respective dates, and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not expected to be
material in amount. The unaudited consolidated balance sheet of Finisar as of January 31, 2005,
contained in Finisar’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2005, filed
with the SEC, is referred to herein as the “Finisar Balance Sheet.”



     4.5 Absence of Undisclosed Liabilities. Finisar and its Subsidiaries do not have any
liabilities, either accrued or contingent (whether or not required to be reflected in financial
statements in accordance with GAAP), and whether due or to become due, which individually or in the
aggregate would be reasonably likely to have a Material Adverse Effect on Finisar, other



24









 





than (i) liabilities reflected or provided for on the Finisar Balance Sheet, (ii) liabilities
specifically contemplated by this Agreement, or described in the Finisar Disclosure Schedule or
Finisar SEC Reports, and (iii) normal or recurring liabilities incurred since January 31, 2005 in
the ordinary course of business consistent with past practices.




     4.6 Absence of Certain Changes or Events. Since January 31, 2005, Finisar has not
suffered any event or occurrence that has had a Material Adverse Effect on Finisar.



     4.7 Litigation. Except as described in the Finisar SEC Reports, there is no action,
suit or proceeding, claim, arbitration or investigation pending before any agency, court or
tribunal or threatened against Finisar or Sub or any of its or their properties or officers or
directors (in their capacities as such). There is no judgment, decree or order against Finisar or
Sub or, to its knowledge, any of its directors or officers (in their capacities as such) that could
prevent, enjoin or materially alter or delay any of the transactions contemplated by this
Agreement, or, except as disclosed in the Finisar SEC Reports, that could reasonably be expected to
have a Material Adverse Effect on Finisar or Sub.



     4.8 No Misrepresentation. No representation or warranty by Finisar or Sub in this
Agreement, or any exhibit or schedule hereto, or any certificate or instrument furnished or to be
furnished by or on behalf of Finisar or Sub pursuant to this Agreement, when taken together,
contains or shall contain any untrue statement of a material fact or omits or shall omit to state a
material fact required to be stated therein or necessary in order to make such statements, in light
of the circumstances under which they were made, not misleading.



ARTICLE V




CONDUCT OF BUSINESS




     5.1 Covenants of I-TECH. During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Effective Time, I-TECH
agrees (except to the extent that Finisar shall otherwise consent in writing), to carry on its
business in the usual, regular and ordinary course in substantially the same manner as previously
conducted, to pay its debts and Taxes when due, to pay or perform its other obligations when due
(subject to good faith disputes with respect to such obligations), and, to the extent consistent
with such business, to use commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep available the services
of its present officers and key employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business dealings with it. I-TECH
shall promptly notify Finisar of any event or occurrence not in the ordinary course of business of
I-TECH where such event or occurrence would result in a breach of any covenant of I-TECH set forth
in this Agreement or cause any representation or warranty of I-TECH set forth in this Agreement to
be untrue in any material respect as of the date of, or giving effect to, such event or occurrence,
and I-TECH shall promptly thereafter amend or supplement the I-TECH Disclosure Schedule to reflect
such event. Any such disclosure after the date hereof and prior to the Closing Date shall not be
deemed to amend or supplement the Disclosure unless such disclosure is delivered to Finisar in
writing promptly, but in no event later than three business days prior to the Closing except with
respect to events occurring less than three days prior to Closing in which



25









 





case the amendment or supplement to the Disclosure Schedule shall be delivered at or prior to
the Closing; provided, however, any such disclosures shall be for informational purposes only and
shall not affect or in any way qualify or limit the representations in Article III for purposes of
the indemnification provisions in Section 9.2 of this Agreement. Except as expressly contemplated
by this Agreement, or set forth on the I-TECH Disclosure Schedule, I-TECH shall not, without the
prior written consent of Finisar:




          (a) Grant or accelerate, amend or change the period of vesting or exercisability of options,
stock appreciation rights, stock purchase rights or restricted stock granted under any employee
stock plan of I-TECH or authorize cash payments in exchange for, or in settlement of, any options
or other rights granted under any of such plans, except as required by the terms of such plans or
any related agreements in effect as of the date of this Agreement;



          (b) Transfer or license to any person or entity or otherwise extend, amend or modify any
rights to the I-TECH Intellectual Property Rights other than in the ordinary course of business
consistent with past practices;



          (c) Declare or pay any dividends on or make any other distributions (whether in cash, stock or
property) in respect of any of its capital stock, or split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees, directors and consultants
in accordance with agreements providing for the repurchase of shares in connection with any
termination of service by such party;



          (d) Issue, deliver or sell or authorize or propose the issuance, delivery or sale of, any
shares of its capital stock or securities convertible into shares of its capital stock, or
subscriptions, rights, warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible securities, other than the
issuance of shares of I-TECH Common Stock upon the exercise or conversion of I-TECH Options
outstanding as of the date of this Agreement;



          (e) Acquire or agree to acquire by merging or consolidating with, or by purchasing a
substantial equity interest in or substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership or other business organization or division, or, except as
otherwise permitted by this Section 5.1, otherwise acquire or agree to acquire any assets other
than acquisitions involving aggregate consideration of not more than $35,000;



          (f) Acquire or agree to acquire inventory in excess of $150,000 in the aggregate;



          (g) Sell, lease, license or otherwise dispose of any of its properties or assets which are
material, individually or in the aggregate, to the business of I-TECH, except for transactions
entered into in the ordinary course of business;



          (h) Take any action to (i) increase or agree to increase the compensation payable or to become
payable to its officers or employees (except for annual salary increases




26









 






occurring in the ordinary course of business for amounts less than five percent of an officer
or employee’s base pay) (ii) grant any additional severance or termination pay to, or enter into
any employment or severance agreements with, any officers, (iii) grant any severance or termination
pay to, or enter into any employment or severance agreement, with any non-officer employee, except
in accordance with past practices, (iv) enter into any collective bargaining agreement, or (v)
establish, adopt, enter into or amend in any material respect any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, stock appreciation right, pension, retirement,
deferred compensation, employment, termination, severance or other plan, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees;




          (i) Revalue any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable, other than in the ordinary course of business;




          (j) Incur any indebtedness for borrowed money in excess of $10,000 in the aggregate or
guarantee any such indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities or guarantee any debt securities of others, other than indebtedness
incurred under outstanding lines of credit consistent with past practice;




          (k) Amend or propose to amend its Articles of Incorporation or Bylaws, except as contemplated
by this Agreement;




          (l) Incur or commit to incur any individual capital expenditure in excess of $15,000 or
aggregate capital expenditures in excess of $35,000, in addition to the existing commitments set
forth in the I-TECH Disclosure Schedule;




          (m) Enter into or amend any agreements or amendments to existing agreements pursuant to which
any third party is granted exclusive marketing or distribution rights with respect to any I-TECH
Product;




          (n) Amend or terminate any real property lease;




          (o) Amend or terminate any other Material Contract;




          (p) Waive or release any material right or claim, except in the ordinary course of business;




          (q) Make, change or revoke any other material election with respect to Taxes, or enter into or
amend any material agreement or settlement with any taxing authority;




          (r) Initiate any litigation or arbitration proceeding; or




          (s) Agree, in writing or otherwise, to take any of the actions described in paragraphs (a)
through (r) above, or any action which is reasonably likely to make any of I-TECH’s representations
or warranties contained in this Agreement untrue or incorrect in any material respect on the date
made (to the extent so limited) or as of the Effective Time.




     5.2 Cooperation. Subject to compliance with applicable law, from the date hereof
until the Effective Time, each of Finisar and I-TECH shall confer on a regular and frequent basis



27









 





with one or more representatives of the other party to report operational matters of
materiality and the general status of ongoing operations and shall promptly provide the other party
or its counsel with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated hereby.




ARTICLE VI




ADDITIONAL AGREEMENTS




     6.1 No Solicitation.



          (a) During the period from the date of this Agreement until the earlier of the termination of
this Agreement or the Effective Time, I-TECH shall not, directly or indirectly, through any
officer, director, employee, representative or agent (each a “Representative”), (i) take
any action to solicit, initiate, encourage, induce, facilitate or support any inquiries or
proposals that constitute, or could reasonably be expected to lead to, a proposal or offer for a
merger, consolidation, business combination, sale of assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transaction involving I-TECH,
other than the transactions contemplated or expressly permitted by this Agreement (any of the
foregoing inquiries or proposals being referred to in this Agreement as an “Acquisition
Proposal”), (ii) furnish any information regarding I-TECH to any person or entity in connection
with or in response to an Acquisition Proposal or an inquiry or indication of interest that could
reasonably be expected to lead to an Acquisition Proposal, (iii) engage in negotiations or
discussions with any person or entity with respect to an Acquisition Proposal, or (iv) agree to,
approve or recommend any Acquisition Proposal.




          (b) I-TECH shall promptly (and in no event later than one (1) business day after receipt by
I-TECH or its Representatives of any Acquisition Proposal or any request for nonpublic information
in connection with an Acquisition Proposal or for access to the properties, books or records of
I-TECH by any person or entity that informs I-TECH that it is considering making, or has made, an
Acquisition Proposal) notify Finisar of such Acquisition Proposal or request for such information
or for access to I-TECH’s properties, books or records. Such notice shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror and the terms and
conditions of such proposal, inquiry or contact, subject to the terms of any confidentiality
agreement in effect as of the date of this Agreement. I-TECH shall keep Finisar informed with
respect to any material changes in the status of any such Acquisition Proposal, inquiry, indication
of interest or request and any modification or proposed modification thereto.




     6.2 Consents. Each of Finisar and I-TECH shall use all reasonable efforts to obtain
all necessary consents, waivers and approvals under any of Finisar’s or I-TECH’s material
agreements, contracts, licenses or leases as may be necessary or advisable to consummate the Merger
and the other transactions contemplated by this Agreement.



     6.3 Access to Information. Upon reasonable notice, I-TECH shall afford to the
officers, employees, accountants, counsel and other representatives of Finisar, reasonable access,
during normal business hours during the period prior to the Effective Time, to all its properties,



28









 





books, contracts, commitments and records and, during such period, I-TECH shall promptly
furnish or make available to Finisar or its representatives all other information concerning its
business, properties and personnel as such other party may reasonably request. Unless otherwise
required by law, the parties will treat any such information which is nonpublic in confidence in
accordance with the Confidentiality Agreement dated November 16, 2004 (the “Confidentiality
Agreement”) between Finisar and I-TECH, which Confidentiality Agreement shall continue in full
force and effect in accordance with its terms. No information or knowledge obtained in any
investigation pursuant to this Section 6.3 shall affect or be deemed to modify any representation
or warranty contained in this Agreement or the conditions to the obligations of the parties to
consummate the Merger.




     6.4 Legal Conditions to Merger. Each of Finisar and I-TECH will take all reasonable
actions necessary to comply promptly with all legal requirements which may be imposed on itself
with respect to the Merger (which actions shall include, without limitation, furnishing all
information reasonably necessary in connection with approvals of or filings with any Governmental
Entity) and will promptly cooperate with and furnish information to each other in connection with
any such requirements imposed upon either of them or any of their Subsidiaries in connection with
the Merger. Each of Finisar and I-TECH will take all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity required to be obtained or made by I-TECH, Finisar or any
of their Subsidiaries in connection with the Merger or the taking of any action contemplated
thereby or by this Agreement and to enable the Closing to occur as promptly as practicable.



     6.5 Public Disclosure. Finisar and I-TECH shall consult with each other before
issuing any press release or otherwise making any public statement with respect to the Merger or
this Agreement and shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law or by the rules or regulations of the SEC or
the NNM.



     6.6 Nasdaq Quotation. Finisar agrees to continue the quotation of Finisar Common
Stock on the NNM until one month after the conversion of the last shares of Finisar Common Stock
held in the Escrow Fund. Finisar shall make such filings as are necessary, if any, with the Nasdaq
stock market regarding the transactions contemplated by this Agreement.



     6.7 Securities Law Matters.



          (a) Finisar shall use all reasonable efforts to cause the shares of Finisar Common Stock
issuable upon conversion of the Merger Consideration Note and the Escrow Note (collectively, the
“Registrable Securities”) to be registered under the Securities Act so as to permit the
resale thereof, and in connection therewith shall use its reasonable efforts to prepare and file
with the SEC within fifteen (15) days following the Closing Date, and shall use all reasonable
efforts to cause to become effective no later than ninety (90) after the Closing Date, a
registration statement (the “Registration Statement”) on Form S-3 or on such successor form
as is then available under the Securities Act covering the Registrable Securities; provided,
however, that each holder of Registrable Securities (“Holder”) shall provide all such
information and materials and take all such action as may reasonably be requested by Finisar in
order to permit





29









 








Finisar to comply with all applicable requirements of the SEC and to obtain any desired
acceleration of the effective date of such Registration Statement. Such provision of information
and materials is a condition precedent to the obligations of Finisar pursuant to this Section
6.7(a). Except as provided in Section 7.6(g), Finisar shall not be required to effect more than
one (1) registration under this Section 6.7. The offering made pursuant to such registration shall
not be underwritten.




          (b) Notwithstanding the foregoing, Finisar shall be entitled to postpone the filing or
declaration of effectiveness of the Registration Statement for a reasonable period of time not to
exceed thirty (30) calendar days after the deadlines therefore set forth in this Section 6.7, if
Finisar determines that there exists material nonpublic information about Finisar which would be
required by the Securities Act to be disclosed in the Registration Statement, the disclosure of
which, in the good faith determination of the Board of Directors of Finisar, would be detrimental
to Finisar.




          (c) Subject to the limitations of Section 6.7(b), Finisar shall: (i) prepare and file the
Registration Statement with the SEC in accordance with Section 6.7(a) with respect to the
Registrable Securities and shall use all reasonable efforts to cause the Registration Statement to
become effective as promptly as practicable after filing and to keep the Registration Statement
effective until two (2) months after the conversion of the last shares of Finisar Common Stock held
in the Escrow Fund, or until such date as all Registrable Securities then held by any Holder could
be sold under Rule 144(k) (the “Registration Period”); (ii) prepare and file with the SEC
such amendments and supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary, and to comply with the provisions of the Securities Act with respect
to the sale or other disposition of all securities proposed to be registered in the Registration
Statement during the Registration Period; and (iii) furnish to each Holder such number of copies of
any prospectus (including any preliminary prospectus and any amended or supplemented prospectus) in
conformity with the requirements of the Securities Act, and such other documents, as each Holder
may reasonably request in order to effect the offering and sale of the Registrable Securities to be
offered and sold. Prior to the filing with the SEC of any Registration Statement (including any
amendments thereto) or any prospectus (including any supplements thereto), Finisar will provide
draft copies thereof to the Holder and discuss such documents with the Holder, and his counsel.
Finisar shall give to the Holder at least four (4) business days advance written notice of the date
on which Finisar has requested that the Registration Statement be declared effective and shall give
written notice of the SEC’s consent to or, approval of, the requested effective date or any
determination of any other effective date on the same date such consent, approval or determination
is communicated to Finisar or its legal counsel.




          (d) Finisar shall use its best efforts to (i) register and qualify the Registrable Securities
covered by the Registration Statement under the securities laws of such states as the Holder
reasonably requests, (ii) prepare and file in those states, such amendments (including
post-effective amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and qualifications in effect at
all times during the Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such states. Finisar shall promptly




30









 








notify the Holder of the receipt by Finisar of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for sale under the
securities laws of any states or its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.




          (e) As promptly as practicable after becoming aware of such event or development, Finisar
shall notify the Holder in writing of the happening of any event as a result of which the
prospectus included in the Registration Statement, as then in effect, includes an untrue statement
of a material fact or omission to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any material, nonpublic
information), and promptly prepare a supplement or amendment to the Registration Statement to
correct such untrue statement or omission, and deliver ten (10) copies of such supplement or
amendment to the Holder. Finisar shall also promptly notify the Holder in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been filed, and when the
Registration Statement or any post-effective amendment has become effective (notification of such
effectiveness shall be delivered to the Holder by facsimile on the same day of such effectiveness),
(ii) of any request by the SEC for amendments or supplements to the Registration Statement or
related prospectus or related information, and (iii) of Finisar’s reasonable determination that a
post-effective amendment to the Registration Statement would be appropriate.




          (f) In the event the number of shares available under the Registration Statement is
insufficient to cover all of the Registrable Securities, Finisar shall amend the Registration
Statement, or file a new Registration Statement, or both, so as to cover all of such Registrable
Securities as soon as practicable, but in any event not later than fifteen (15) days after the
necessity therefore arises. Finisar shall use its best efforts to cause such amendment and/or new
Registration Statement to become effective as soon as practicable following the filing thereof.
For purposes of the foregoing provision, the number of shares available under the Registration
Statement shall be deemed “insufficient to cover all of the Registrable Securities” if at any time
the number of Registrable Securities issuable during the Registration Period is greater than the
number of shares available for resale under such Registration Statement.




          (g) Notwithstanding any other provision of this Section 6.7, Finisar shall have the right at
any time to require that all Holders suspend further open market offers and sales of Registrable
Securities pursuant to the Registration Statement whenever, and for so long as, in the reasonable
judgment of Finisar in good faith after consultation with counsel, there is or may be in existence
material undisclosed information or events with respect to Finisar (the “Suspension
Right”). In the event Finisar exercises the Suspension Right, such suspension will continue
only for the period of time reasonably necessary for disclosure to occur at a time that is not
materially detrimental to Finisar and its stockholders or until such time as the information or
event is no longer material, each as determined in good faith by Finisar after consultation with
counsel. Finisar will use all reasonable efforts to limit the length of the suspension to thirty
(30) calendar days or less. Finisar agrees to notify the Holders promptly upon termination of the
suspension. To compensate Holder for any loss in the value of Holder’s shares of Finisar Common
Stock resulting from Finisar’s exercise of a Suspension Right, Finisar shall either, at Finisar’s
option: (i) issue to Holder additional shares of Finisar Common Stock, or (ii) pay Holder cash, in
either





31









 








case, with a value equal to the difference, if any, between (A) the number of shares of
Finisar Common Stock held by Holder on the day the Suspension Right is exercised multiplied by the
closing trading price of Finisar Common Stock on the date the Suspension Right is exercised, and
(B) the number of shares of Finisar Common Stock held by Holder on the day the Suspension Right is
exercised multiplied by the closing trading price of Finisar Common Stock on the date the
suspension is terminated. Notwithstanding any other provision of this Section 6.7, in no event
shall the Suspension Right be exercised (i) more than two (2) times in any 12-month period or (ii)
for a total of more than ninety (90) days in any 12-month period.




          (h) Finisar will indemnify each Holder, each of its officers and directors and partners, and
each person controlling such Holder within the meaning of Section 15 of the Securities Act against
all expenses, claims, losses, damages or liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, preliminary prospectus, offering circular or other document, or
any amendment or supplement thereto, incident to any registration, qualification or compliance
effected pursuant to this Section 6.7, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, or any violation or any
alleged violation by Finisar of any rule or regulation promulgated under the Securities Act or the
Exchange Act in connection with any such registration, qualification or compliance, and Finisar
will reimburse each such Holder, each of its officers and directors, and each person controlling
such Holder, each such underwriter and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating, preparing or defending
any such claim, loss, damage, liability or action, as such expenses are incurred, provided that
Finisar will not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with written information
furnished to Finisar by such Holder or controlling person and specifically for use therein.




          (i) It shall be a condition to Finisar’s obligations hereunder to register the Registrable
Securities of any Holder that such Holder agrees to indemnify Finisar, each of Finisar’s directors
and officers, each person who controls Finisar within the meaning of Section 15 of the Securities
Act, and each other such Holder, each of its officers and directors and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Finisar, such other Holders, directors, officers,
persons or control persons for any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, liability or action, as such expenses
are incurred, in each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in





32









 








conformity with written information furnished to Finisar by such Holder specifically for use
therein.




          (j) Each party entitled to indemnification under this Section 6.7 (the “Indemnified
Party”) shall give notice to the party required to provide indemnification (the
“Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any
claim as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the
defense of any such claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be withheld), and the Indemnified
Party may participate in such defense at such party’s expense; provided, however, that an
Indemnified Party (together with all other Indemnified Parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel, with the fees and
expenses to be paid by the Indemnifying Party, if representation of such Indemnified Party by the
counsel retained by the Indemnifying Party would be inappropriate due to differing or potentially
differing interests between such Indemnified Party and any other party represented by such counsel
in such proceeding. The failure of any Indemnified Party to give notice as provided herein shall
not relieve the Indemnifying Party of its obligations under this Section 6.7 unless the failure to
give such notice is materially prejudicial to an Indemnifying Party’s ability to defend such
action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with
the consent of each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect to such claim or
litigation.




          (k) All expenses incurred in connection with the registration of the Registrable Securities
pursuant to this Section 6.7, including without limitation, all registration, filing and
qualification fees, printing expenses, fees and disbursements of legal counsel for Finisar and the
Holder, if any, and expenses of any special audits incidental to or required by such registration,
shall be paid by Finisar, except Finisar shall not be required to pay underwriters’ fees, discounts
or commissions relating to the Registrable Securities.




     6.8 Employment Matters. Prior to the Closing Date, Finisar will make offers of “at
will” employment to the employees of I-TECH set forth on Schedule 6.8 hereto, such offers
to be conditioned upon the consummation of the Merger. After the Effective Time, all I-TECH
employees will continue to be employed by the Surviving Corporation, subject to the Surviving
Corporation’s right to terminate such employment at any time after the Effective Time. Finisar
will cause the Surviving Corporation to pay each I-TECH employee who is terminated after the
Effective Time severance pay in accordance with the I-TECH Severance Guidelines in effect on the
date hereof and set forth in a schedule delivered to Finisar.



     6.9 Employee Benefits. All I-TECH employees who accept Finisar’s offers of “at will”
employment following the Effective Time (“Continuing Employees”) shall be eligible to
receive the benefits and payments set forth in Finisar’s offer letters. As temporary employees,
the Continuing Employees will not be eligible to participate in Finisar’s employee benefit plans
and programs.



33









 





     6.10 Termination of 401(k) Plan. Effective as of the end of the payroll period
immediately preceding the payroll period in which the Closing Date occurs, I-TECH shall terminate
any and all I-TECH Employee Plans that are subject to the requirements of Code Section 401(k)
(collectively, the “401(k) Plan”). Prior to the Effective Time, I-TECH shall provide to
Finisar executed resolutions by I-TECH’s Board of Directors authorizing the termination of the
401(k) Plan. The form and substance of such resolutions shall be subject to the prior review and
approval of Finisar.



     6.11 Brokers or Finders. Each of Finisar and I-TECH represents, as to itself, its
Subsidiaries and its Affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled to any broker’s or finder’s fee or any other commission
or similar fee in connection with any of the transactions contemplated by this Agreement, except
SVB Alliant (“SVB Alliant”), financial advisor to I-TECH, to which I-TECH has agreed to pay
fees and expenses pursuant to a letter agreement dated as of December 3, 2004 (the “SVB Alliant
Fees”). Except for the SVB Alliant Fees, each of Finisar and I-TECH agrees to indemnify and
hold the other harmless from and against any and all liability for any broker’s or finder’s fee or
any other commission or similar fee in connection with any of the transactions contemplated by this
Agreement.



     6.12 Additional Agreements; Reasonable Efforts. Subject to the terms and conditions
of this Agreement, each of the parties agrees to use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the transactions contemplated by
this Agreement, including cooperating fully with the other party, including by provision of
information. Without limiting the generality of the foregoing, I-TECH will provide to Finisar all
financial and accounting records that shall be reasonably requested by Finisar for the purpose of
preparing financial statements of I-TECH for any period, or as of any date, prior to the Effective
Time to the extent such financial statements are required by GAAP or the applicable rules and
regulations of the SEC. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement or to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals, immunities and franchises
of either of the Constituent Corporations, the proper officers and directors of each party to this
Agreement shall take all such necessary action.



     6.13 Expenses. Except as provided below, the parties shall each pay their own legal,
accounting, financial advisory and consulting fees and other out-of-pocket expenses related to the
negotiation, preparation and carrying out of this Agreement and the transactions herein
contemplated. In the event the Merger is consummated, Finisar shall cause the Surviving
Corporation to pay in full, immediately after the Effective Time, all legal, accounting, financial
advisory and consulting fees and expenses incurred by I-TECH (whether paid or accrued) relating to
the negotiation, preparation and carrying out of this Agreement and the transactions contemplated
hereby, and obtaining all authorizations, consents, orders or approvals of, or declarations or
filings with, all Governmental Entities in connection with such transactions (the “I-TECH
Transaction Expenses”). If the Surviving Corporation’s cash on hand at the Closing is
insufficient to pay the I-TECH Transaction Expenses in full, Finisar shall pay the balance of such
I-TECH Transaction Expenses directly or provide sufficient funds to I-TECH to do so as promptly as
practical but in no event less than one (1) business day after the Effective Time. I-



34









 





TECH shall provide a schedule of estimated I-TECH Transaction Expenses not later than two (2)
business days prior to the Closing. At the Closing, I-TECH shall provide a final schedule of the
I-TECH Transaction Expenses to Finisar (the “Closing I-TECH Transaction Expense Schedule”).
In the event any I-TECH expenses are not included on the Closing I-TECH Transaction Expense
Schedule, such expenses shall not be treated as I-TECH Transaction Expenses for purposes hereof and
Finisar shall be entitled to assert a claim against the Escrow Fund pursuant to Section 9.2 hereof
in order to recover all expenses not included in the Closing I-TECH Transaction Expense Schedule;
provided however, Finisar shall make no claim against the Escrow Fund with respect to any I-TECH
expenses that are omitted from the Closing I-TECH Transaction Expense Schedule to the extent, but
only to the extent, the omitted expenses are paid or otherwise satisfied by the I-TECH Shareholder.
The provisions of this Section 6.13 shall not, however, apply to any costs, expenses or fees
specified in Section 6.7(k) which shall be paid as provided in said Section 6.7(k).




     6.14 Waiver Agreements by Disqualified Individuals. Prior to the Effective Time and,
in any event, prior to the earliest time following the date of this Agreement at which any payment
or benefit which would constitute an “excess parachute payment” within the meaning of Section 280G
of the Code as a consequence of any transaction or event contemplated by this Agreement (each such
payment or benefit being hereinafter referred to as a “Potential Excess Parachute Payment”)
in the absence of satisfaction of the shareholder approval requirements described in Section
280G(b)(5) of the Code (the “Shareholder Approval Requirements”) is paid or provided to or
for the benefit of any person who, with respect to I-TECH, is a “disqualified individual” within
the meaning of Section 280G(c) of the Code, I-TECH shall require such person to agree in writing,
in a form reasonably acceptable to Finisar (a “Waiver Agreement”), to forfeit such person’s
right to receive each and every Potential Excess Parachute Payment unless, subsequent to the date
of such Waiver Agreement, the shareholders of I-TECH approve such Potential Excess Parachute
Payment in compliance with the Shareholder Approval Requirements.



     6.15 Maintenance of I-TECH Indemnification Obligations.



          (a) Subject to and following the Effective Time, the Surviving Corporation shall, and Finisar
shall cause the Surviving Corporation to, indemnify and hold harmless the Indemnified I-TECH
Parties (as defined below) to the extent provided in the Bylaws of I-TECH in effect as of the date
of this Agreement. The Surviving Corporation shall, and Finisar shall cause the Surviving
Corporation to, keep in effect such Bylaw provisions, which shall not be amended except as required
by applicable law or to make changes permitted by Minnesota law that would enlarge the rights to
indemnification available to the Indemnified I-TECH Parties and changes to provide for exculpation
of director and officer liability to the fullest extent permitted by Minnesota law. For purposes of
this Section 6.15, “Indemnified I-TECH Parties” shall mean the individuals who were
officers, directors, employees and agents of I-TECH on or immediately prior to the Effective Time.




          (b) Subject to and following the Effective Time, Finisar and the Surviving Corporation shall
be jointly and severally obligated to pay the reasonable expenses, including reasonable attorneys’
fees, that may be incurred by any Indemnified I-TECH Party in enforcing the rights provided in this
Section 6.15 and shall make any advances of such expenses to the





35









 








Indemnified I-TECH Party that would be available under the Bylaws of I-TECH (as in effect as
of the date of this Agreement) with regard to the advancement of indemnifiable expenses, subject to
the undertaking of such party to repay such advances in the event that it is ultimately determined
that such party is not entitled to indemnification.




          (c) The provisions of this Section 6.15 shall be in addition to any other rights available to
the Indemnified I-TECH Parties, shall survive the Effective Time and are expressly intended for the
benefit of the Indemnified I-TECH Parties.




     6.16 Loan to I-TECH Shareholder. Not later than one (1) business day prior to the
Closing Date, Finisar shall make a loan (the “Finisar Loan”) to the I-TECH Shareholder in
the principal amount of $2,000,000, the terms and conditions of which shall be set forth in a
secured promissory note and related stock pledge agreement substantially in the form attached
hereto as Exhibit D which shall be executed and delivered at the time the Finisar Loan is
made. As soon as practical after the receipt of the proceeds of the Finisar Loan (but in no event
later than one (1) business day after the Finisar Loan is made and the funds have cleared the
I-TECH Shareholder’s Bank) the I-TECH Shareholder shall make a contribution to the capital of
I-TECH in the amount of $2,000,000 in exchange for 9,940 Shares of I-TECH Common Stock
(the “Additional Capital Contribution”).



     6.17 Payment of Bank Debt; Release of Guarantees. I-TECH, with reasonable cooperation
of Finisar if needed, shall make arrangements satisfactory to Finisar and I-TECH for repayment on
the Closing Date of the indebtedness of I-TECH to Wells Fargo Bank, National Association set forth
on Schedule 6.17 (the “Bank Debt”) and to obtain the release on or before the Closing Date
of the guarantees made by certain of I-TECH’s officer(s) set forth on Schedule 6.17 (the “Bank
Guarantees”).



ARTICLE VII




CONDITIONS TO MERGER




     7.1 Conditions to Each Party’s Obligation to Effect the Merger. The respective
obligations of each party to this Agreement to effect the Merger shall be subject to the
satisfaction on or prior to the Closing Date of the following conditions:



          (a) This Agreement and the Merger shall have been approved and adopted by the affirmative vote
of the holders of the requisite number of outstanding shares of I-TECH Common Stock.




          (b) All other authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity the failure of which to
obtain or comply with would be reasonably likely to have a Material Adverse Effect on Finisar or
I-TECH or a material adverse effect on the consummation of the transactions contemplated hereby
shall have been filed, occurred or been obtained.




          (c) No temporary restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction or other legal or regulatory restraint or prohibition
preventing the consummation of the Merger or limiting or restricting Finisar’s





36









 








conduct or operation of the business of Finisar or I-TECH in any material respect as a result
of the Merger shall have been issued, nor shall any proceeding brought by any Governmental Entity
seeking any of the foregoing be pending; nor shall there be any action taken, or any statute, rule,
regulation or order enacted, entered, enforced or deemed applicable to the Merger which makes the
consummation of the Merger illegal.




     7.2 Additional Conditions to Obligations of Finisar and Sub. The obligations of
Finisar and Sub to effect the Merger are subject to the satisfaction of each of the following
conditions, any of which may be waived in writing exclusively by Finisar:



          (a) The representations and warranties of I-TECH set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date as though made on and as of the
Closing Date, except (i) for changes contemplated by this Agreement, (ii) that representations and
warranties which specifically relate to a particular date or period shall be true and correct as of
such date or for such period and (iii) where the failure of any such representation or warranty to
be true and correct on and as of the Closing Date, individually and in the aggregate, would not be
reasonably likely to have a Material Adverse Effect on I-TECH, or a material adverse effect upon
the consummation of the transactions contemplated hereby; and Finisar shall have received a
certificate to such effect signed on behalf of I-TECH by the chief executive officer of I-TECH.
For purposes of this subsection 7.2(a), the following events or occurrences shall not be deemed to
be events or occurrences having a Material Adverse Effect on I-TECH: (i) any event, occurrence or
condition resulting from or relating to the announcement, disclosure or pendency of the Merger or
other transactions contemplated by this Agreement, or (ii) any event, occurrence or condition
resulting from or relating to the taking of any action contemplated by this Agreement.




          (b) I-TECH shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Finisar shall have
received a certificate to such effect signed on behalf of I-TECH by the chief executive officer of
I-TECH.




          (c) Finisar shall have received a certificate from the chief executive officer of I-TECH
certifying that the execution, delivery and performance of I-TECH’s obligations under this
Agreement have been duly and validly approved and authorized by the Board of Directors and the
I-TECH Shareholder.




          (d) Finisar shall have received all permits and other authorizations required to be received
prior to the Merger under applicable state blue sky laws for the issuance of shares of Finisar
Common Stock pursuant to the Merger.




          (e) Finisar shall have been furnished with evidence reasonably satisfactory to it of the
consent or approval of those persons whose consent or approval shall be required in connection with
the Merger under the Material Contracts of I-TECH, as set forth on Schedule 7.2(e) hereto.




37









 








          (f) The I-TECH Shareholder shall have executed and delivered a Noncompetition Agreement in the
form of Exhibit E hereto (the “Noncompetition Agreement”) and Finisar’s standard
form of confidential information agreement.




          (g) The Merger shall have been approved by the affirmative vote or written action of the
I-TECH Shareholder.




          (h) Finisar shall have received a legal opinion from Lapp, Libra, Thomson, Stoebner & Pusch
Chtd., counsel to I-TECH, substantially in the form of Exhibit F hereto.




          (i) The Escrow Agreement shall have been executed and delivered by the I-TECH Shareholder and
the Escrow Agent.




          (j) Each of the directors and officers of I-TECH shall have resigned as a director and/or
officer, as applicable.




          (k) The I-TECH Shareholder shall have made the Additional Capital Contribution and shall have
provided a copy of the related subscription agreement to Finisar.




          (l) The Bank Debt shall have been paid in full.




     7.3 Additional Conditions to Obligations of I-TECH and the I-TECH Shareholder. The
obligations of I-TECH and the I-TECH Shareholder to effect the Merger is subject to the
satisfaction of each of the following conditions, any of which may be waived, in writing,
exclusively by I-TECH:



          (a) The representations and warranties of Finisar and Sub set forth in this Agreement shall be
true and correct as of the date of this Agreement and as of the Closing Date as though made on and
as of the Closing Date, except (i) for changes contemplated by this Agreement, (ii) that
representations and warranties which specifically relate to a particular date or period shall be
true and correct as of such date or for such period, and (iii) where the failure of any such
representation or warranty to be true and correct on and as of the Closing Date, individually or in
the aggregate, would not be reasonably likely to have a Material Adverse Effect on Finisar, or a
material adverse effect upon the consummation of the transactions contemplated hereby; and I-TECH
shall have received a certificate to such effect signed on behalf of Finisar by the chief financial
officer of Finisar. For the purposes of the foregoing condition, the following events or
occurrences shall not be deemed to be events or occurrences having a Material Adverse Effect on
Finisar: (i) a reduction in the trading price of Finisar Common Stock, as reported on the NNM,
occurring at any time or from time to time between the date hereof and the Closing Date; (ii) any
event, occurrence or condition resulting from or relating to the announcement, disclosure or
pendency of the Merger or other transactions contemplated by this Agreement; (iii) any event,
occurrence or condition resulting from or relating to the taking of any action contemplated by this
Agreement; or (iv) any event, occurrence or occurrences resulting directly from the general
economy, the electronic communication industries generally, or the segments of the electronics and
communications industry in which Finisar participates.




38









 








          (b) Finisar and Sub shall have performed in all material respects all obligations required to
be performed by them under this Agreement at or prior to the Closing Date, and I-TECH shall have
received a certificate to such effect signed on behalf of Finisar by the chief financial officer of
Finisar.




          (c) I-TECH shall have received a certificate from an officer of Finisar certifying that the
execution, delivery and performance of Finisar’s and Sub’s obligations under this Agreement have
been duly and validly approved and authorized by the Boards of Directors of Finisar and Sub.




          (d) Finisar shall have executed and delivered the Noncompetition Agreement.




          (e) The Escrow Agreement shall have been executed and delivered by Finisar and the Escrow
Agent.




          (f) Finisar shall have made the Finisar Loan to the I-TECH Shareholder not less than one (1)
business day prior to the Closing Date.




          (g) The Bank Debt shall have been paid in full and the Bank Guarantees shall have been
released.




          (h) I-TECH shall have received a legal opinion from DLA Piper Rudnick Gray Cary US LLP,
counsel to Finisar, substantially in the form of Exhibit G hereto.




ARTICLE VIII




TERMINATION AND AMENDMENT




     8.1 Termination. This Agreement may be terminated at any time prior to the Effective
Time (with respect to Sections 8.1(b) through 8.1(f), by written notice by the terminating party to
the other party):



          (a) by the mutual written consent of Finisar and I-TECH;




          (b) by either Finisar or I-TECH if the Merger shall not have been consummated by April 11,
2005; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall
not be available to any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such date;




          (c) by either Finisar or I-TECH if a court of competent jurisdiction or other Governmental
Entity shall have issued a nonappealable final order, decree or ruling or taken any other action,
in each case having the effect of permanently restraining, enjoining or otherwise prohibiting the
Merger, except, if the party relying on such order, decree or ruling or other action has not
complied with its obligations under Section 6.4 of this Agreement;




          (d) by Finisar if the Board of Directors of I-TECH shall have withdrawn or modified its
recommendation of this Agreement or the Merger for approval by the I-TECH





39









 








Shareholder in a manner adverse to Finisar or shall have publicly announced or disclosed to
any third party its intention to do any of the foregoing;




          (e) by I-TECH if all the conditions set forth in Sections 7.1 and 7.3 (other than those
conditions which by their nature would be satisfied on the Closing Date) have not been satisfied
(or if permitted, waived in writing); or




          (f) by Finisar or I-TECH, if there has been a material breach of any representation, warranty,
covenant or agreement on the part of the other party set forth in this Agreement, which breach (i)
causes the conditions set forth in Section 7.2(a) or (b) (in the case of termination by Finisar) or
7.3(a) or (b) (in the case of termination by I-TECH) not to be satisfied and (ii) shall not have
been cured within ten (10) business days following receipt by the breaching party of written notice
of such breach from the other party.




     8.2 Effect of Termination. In the event of termination of this Agreement as provided
in Section 8.1, there shall be no liability or obligation on the part of Finisar, I-TECH, Sub or
their respective officers, directors, stockholders or Affiliates; provided, however, that
notwithstanding anything in this Agreement to the contrary neither Finisar nor I-TECH shall be
relieved from any obligation or liability arising from the willful breach by such party of any of
its representations, warranties or covenants set forth in this Agreement; and provided further,
that the provisions of Sections 6.11 and 6.13 of this Agreement and the confidentiality provisions
set forth herein and in the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.



     8.3 Amendment. This Agreement may be amended by the parties hereto, by action taken
or authorized by their respective Boards of Directors, at any time before or after approval of the
matters presented in connection with the Merger by the shareholders of I-TECH, but, after any such
approval, no amendment shall be made which by law requires further approval by such stockholders
without such further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.



     8.4 Extension; Waiver. At any time prior to the Effective Time, the parties hereto,
by action taken or authorized by their respective Boards of Directors, may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument signed on behalf of
such party.



ARTICLE IX




INDEMNIFICATION




     9.1 Survival of Representations and Warranties. If the Merger occurs, all of the
representations and warranties contained in this Agreement shall survive the Closing Date, for a
period of twelve (12) months following the Closing Date (the “Termination Date”).



40









 





     9.2 Indemnification of Finisar Group.



          (a) If the Merger occurs, subject to the terms and conditions contained in this Article IX,
Finisar, its officers, directors, employees, agents and attorneys, all Subsidiaries and Affiliates
of Finisar, and the respective officers, directors, employees, agents and attorneys of such
entities (all such persons and entities being collectively referred to as the “Finisar
Group”) shall be entitled to recover from the Escrow any and all losses, damages, costs and
expenses (including reasonable legal fees and expenses) which any member of the Finisar Group may
sustain or incur which are caused by or arise out of (i) any inaccuracy in or breach of any of the
representations, warranties or covenants made by I-TECH in this Agreement, including the I-TECH
Disclosure Schedule, (ii) any I-TECH Transaction Expenses that are not set forth on the Closing
I-TECH Transaction Expense Schedule, (iii) the grant or alleged grant of any options to purchase
I-TECH Common Stock, or (iv) any breach by the I-TECH Shareholder of Article IX or the Escrow
Agreement (collectively, “Finisar Losses”).




          (b) No member of the Finisar Group shall be entitled to recover any Finisar Losses unless and
only to the extent that the aggregate amount of all Finisar Losses under all claims are equal to or
greater than $100,000 and no individual Indemnification Claim shall be made for amounts of less
than $20,000; provided, however, that Finisar Losses under Sections 9.2(a)(ii) and (iii) shall be
recoverable in full without regard to the threshold amount. The aggregate amount which may be
recovered by the Finisar Group for all Finisar Losses shall not exceed the Escrow Fund, except as
otherwise provided in Section 9.2(d) below.




          (c) The right of a member of the Finisar Group to recover a Finisar Loss under this Article IX
is subject to the condition that the I-TECH Shareholder shall have received written notice of an
Indemnification Claim (as defined in Section 9.5) for such Finisar Loss on or before the
Termination Date.




          (d) The provisions of Sections 9.2(b) and 9.3 below shall not limit, in any manner, any remedy
at law or in equity to which any member of the Finisar Group shall be entitled against I-TECH or
the I-TECH Shareholder as a result of willful fraud or intentional misrepresentation by I-TECH, the
I-TECH Shareholder or any of their respective representatives.




          (e) The amount of Finisar Losses shall be computed after giving effect to the receipt of any
insurance proceeds and tax benefits with respect thereto.




     9.3 Manner of Finisar Group Indemnification.



          (a) The Escrow Fund deposited into Escrow pursuant to the Escrow Agreement in accordance with
the provisions of Section 2.4 and the Escrow Agreement shall provide a fund against which members
of the Finisar Group may assert claims of indemnification under Section 9.2. Except as
specifically provided in Section 9.2(d), the sole recourse of the members of the Finisar Group for
all claims with respect to this Agreement or the transactions contemplated by this Agreement is to
the Escrow Fund.




          (b) Each claim asserted against the I-TECH Shareholder pursuant to Section 9.2 shall be made
only in accordance with the procedures set forth herein and in the Escrow Agreement, subject to the
provisions of Section 9.2(d) hereof.




41









 








     9.4 Indemnification of I-TECH Group.



          (a) If the Merger occurs, subject to the terms and conditions contained in this Article IX,
the I-TECH Shareholder (such person being referred to as the “I-TECH Group”) shall be
entitled to recover from Finisar any and all losses, damages, costs and expenses (including
reasonable legal fees and expenses) which any member of the I-TECH Group may sustain or incur which
are caused by or arise out of any inaccuracy in or breach of any of the representations, warranties
or covenants made by Finisar or Sub in this Agreement, including the Finisar SEC Reports
(collectively, “I-TECH Losses”).




          (b) No member of the I-TECH Group shall be entitled to recover any I-TECH Losses unless and
only to the extent that the aggregate amount of all I-TECH Losses under all claims are equal to or
greater than $50,000 and no individual Indemnification Claim shall be made for amounts of less than
$10,000.




          (c) Notwithstanding anything to the contrary in this Article IX (except Section 9.4(e) below),
the aggregate liability of Finisar to the I-TECH Group hereunder shall not exceed $1,000,000.




          (d) The right of a member of the I-TECH Group to recover an I-TECH Loss under this Article IX
is subject to the condition that Finisar shall have received written notice of an Indemnification
Claim (as defined in Section 9.5) for such I-TECH Loss on or before the Termination Date.




          (e) The provisions of Sections 9.4(b) and 9.4(c) above shall not limit, in any manner, any
remedy at law or in equity to which any member of the I-TECH Group shall be entitled against
Finisar as a result of willful fraud or intentional misrepresentation by Finisar, Sub, or any of
their respective representatives, or any breach by Finisar of Sections 2.3(a) or 6.7(g) hereof or
any breach of the Merger Consideration Note or the Escrow Note.




          (f) The amount of I-TECH Losses shall be computed after giving effect to the receipt of any
insurance proceeds and tax benefits with respect thereto.




     9.5 Procedures for Indemnification.



          (a) As used in this Article IX, (i) the term “Indemnitee” means the member or members
of the Finisar Group asserting an Indemnification Claim (as defined below) against the I-TECH
Shareholder for Finisar Losses, or the member or members of the I-TECH Group asserting an
Indemnification Claim against Finisar, for I-TECH Losses, as the case may be, and (ii) the term
“Indemnitor” means the party against whom an Indemnification Claim is asserted under Section 9.2 or
9.4.




          (b) A claim for indemnification hereunder (an “Indemnification Claim”) shall be made
by an Indemnitee by delivery of a written notice signed by the Indemnitee to the Indemnitor,
requesting indemnification and specifying in reasonable detail the basis on which indemnification
is sought (and shall include relevant documentation related to the Indemnification Claim), the
amount of the asserted Finisar Losses or I-TECH Losses, as the case may be, and in the case of a
Third Party Claim (as defined in Section 9.6), containing (by





42









 








attachment or otherwise) such other information as Indemnitee shall have concerning such Third
Party Claim.




          (c) If the Indemnification Claim involves a Third Party Claim, the procedures set forth in
Section 9.6 hereof shall be observed by Indemnitee and the Indemnitor.




     9.6 Defense of Third Party Claims. Should any claim be made or suit or proceeding be
instituted against an Indemnitee which, if prosecuted successfully, would be a matter for which
such Indemnitee is entitled to indemnification under this Article IX (a “Third Party
Claim”), the obligations and liabilities of the Indemnitor and Indemnitee with respect to such
Third Party Claim shall be subject to the following terms and conditions:



          (a) An Indemnitee shall give the Indemnitor written notice of any such Third Party Claim
promptly after receipt by the Indemnitee of notice thereof, and the Indemnitor may undertake
control of the defense thereof by counsel of its own choosing, which counsel shall be reasonably
acceptable to the Indemnitee. In such event, the Indemnitee may participate in the defense through
its own counsel at its own expense. If, however, the Indemnitor fails or refuses to undertake the
defense of such Third Party Claim within fifteen (15) days after written notice of such claim has
been delivered to the Indemnitor by Indemnitee, Indemnitee shall have the right to undertake the
defense, compromise and, settlement of such Third Party Claim with counsel of its own choosing.
Failure of the Indemnitee to furnish written notice to the Indemnitor of a Third Party Claim shall
not release the Indemnitor from its obligations hereunder, except to the extent it is prejudiced by
such failure.




          (b) The Indemnitee and the Indemnitor shall cooperate with each other in all reasonable
respects in connection with the defense of any Third Party Claim, including making available
records relating to such claim and furnishing employees of Indemnitee as may be reasonably
necessary for the preparation of the defense of any such Third Party Claim or for testimony as a
witness in any proceeding relating to such claim.




          (c) Unless the Indemnitor has failed to fulfill its obligations under this Article IX, no
settlement by Indemnitee of a Third Party Claim shall be made without the prior written consent by
or on behalf of the Indemnitor, which consent shall not be unreasonably withheld or delayed. If
the Indemnitor has assumed the defense of a Third Party Claim as contemplated by this Section 9.6,
no settlement of such Third Party Claim may be made by the Indemnitor without the prior written
consent by or on behalf of Indemnitee, which consent shall not be unreasonably withheld or delayed.




ARTICLE X




GENERAL PROVISIONS




     10.1 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed given (i) upon receipt if delivered personally (or if mailed by registered or
certified mail), (ii) the next business day after dispatch if sent by overnight delivery service,
or (iii) the next business day after dispatch if transmitted by facsimile transmission (and
confirmed



43









 





by a copy delivered in accordance with clause (i) or (ii)), addressed to the parties at the
following addresses (or at such other address for a party as shall be specified by like notice):




          (a) if to Finisar, to:



Finisar Corporation

1308 Moffett Park Drive

Sunnyvale, CA 94089-1113

Attention: Chief Executive Officer

Fax:       (408) 541-9579

Tel:       (408) 548-1000


with a copy to:


DLA Piper Rudnick Gray Cary US LLP

2000 University Avenue

East Palo Alto, CA 94303-2248

Attention: Dennis C. Sullivan, Esq.

Fax:       (650) 833-2001

Tel:       (650) 833-2000



          (b) if to I-TECH, to



I-TECH CORP.

10300 Valley View Road

Eden Prairie, MN 55344

Attention: Chief Executive Officer

Fax:       (952) 941-5364

Tel:       (952) 828-0111


with a copy to:


Lapp, Libra, Thomson,

Stoebner & Pusch, Chtd.

One Financial Plaza, Suite 2500

120 South Sixth Street

Minneapolis, MN 55402

Attention: Gregory D. Pusch, Esq.

Fax:       (612) 338-6651

Tel:       (612) 343-4963



          (c) if to the I-TECH Shareholder, to



Steven Bucher

3935 Plymouth Road

Minnetonka, MN 55305

Tel:       (952) 935-6647




44









 







with a copy to:


Lapp, Libra, Thomson,

Stoebner & Pusch, Chtd.

One Financial Plaza, Suite 2500

120 South Sixth Street

Minneapolis, MN 55402

Attention: Gregory D. Pusch, Esq.

Fax:       (612) 338-6651

Tel:       (612) 343-4963



     10.2 Interpretation.



          (a) For purposes of this Agreement




               (i) When reference is made to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated;



               (ii) The words “include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation;”



               (iii) The phrase “made available” in this Agreement shall mean that the information referred
to has been provided to or made accessible to the party to whom such information is to be made
available;



               (iv) The phrases “the date of this Agreement,” “the date hereof,” and terms of similar import,
unless the context otherwise requires, shall be deemed to refer to April 7, 2005;



               (v) Any reference to a “Material Adverse Effect” with respect to any entity or group of
entities means a material adverse effect on the business, assets (including intangible assets),
financial condition, prospects, or results of operations of such entity and its Subsidiaries, taken
as a whole; provided, however, that any adverse change in the condition of the industry sector of
protocol analyzers and protocol testers shall not be deemed to constitute and shall not be taken
into account in determining whether there has been a Material Adverse Effect;



               (vi) Any reference to a party’s “knowledge” means such party’s actual knowledge after
reasonable inquiry of its directors, officers and other management level employees that have
responsibility for the referenced matters;



               (vii) Any reference to the “prospects” of I-TECH or its business, or to I-TECH’s business “as
currently proposed to be conducted,” means such prospects or business without taking into account
the effects of the Merger or any changes to I-TECH’s business that are initiated by Finisar
thereafter;



45









 





               (viii) The term “Permitted Encumbrances” means (i) Liens for Taxes, assessments or other
charges by Governmental Entities which are not yet due and payable or are due but not delinquent or
are being contested in good faith by appropriate proceedings, (ii) purchase money security
interests and equipment leases incurred in the ordinary course of business and (iii) minor Liens
that will not, in any case or in the aggregate, materially detract from the value of the assets
subject thereto or materially impair the operations of I-TECH;



               (ix) The word “Subsidiary” means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the general partnership
interests of which held by such party or any Subsidiary of such party do not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the securities or other
interests having ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries;



               (x) The term “Transaction Documents” means this Agreement, the Articles of Merger and all
other documents to be executed and/or delivered hereunder by any party hereto;



               (xi) The term “GAAP” means United States generally accepted accounting principles as in effect
from time to time; and



               (xii) The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of this Agreement.



          (b) This Agreement has been negotiated by the respective parties hereto and their attorneys
and the language hereof shall not be construed for or against any party.




     10.3 Counterparts. This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original as against any party whose signature appears on such
counterpart and all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties and delivered to
the other parties, it being understood that all parties need not sign the same counterpart.



     10.4 Severability. In the event that any provision of this Agreement, or the
application thereof, becomes or is declared by a court of competent jurisdiction to be illegal,
void or unenforceable, the remainder of this Agreement will continue in full force and effect and
the application of such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree to replace such
void or unenforceable provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of such void or
unenforceable provision.



     10.5 Entire Agreement. This Agreement (including the schedules and exhibits hereto
and the other Transaction Documents delivered pursuant hereto) constitutes the entire agreement



46









 





among the parties concerning the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof,
other than the Confidentiality Agreement.




     10.6 Governing Law. This Agreement shall be governed and construed in accordance with
the laws of the State of California without regard to any applicable conflicts of law principles.



     10.7 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.



     10.8 Third Party Beneficiaries. Nothing contained in this Agreement is intended to
confer upon any person other than the parties hereto and their respective successors and permitted
assigns, any rights, remedies or obligations under, or by reason of this Agreement except (i)
Section 9.2 which is intended to be for the benefit of the members of the Finisar Group, and (ii)
Section 9.4 which is intended to be for the benefit of the members of the I-TECH Group.



[SIGNATURE PAGE FOLLOWS]




47









 





     IN WITNESS WHEREOF, Finisar, Sub and I-TECH have caused this Agreement to be signed by their
respective officers thereunto duly authorized, as of the date first written above.



	 	 	 	 	 	 	 
	I-TECH CORP.	 	FINISAR CORPORATION
	 
	 	 	 	 	 	 
	By:

	 	/s/ Steven Bucher
	 	By:
	 	/s/ Jerry S. Rawls
	

	 	 
	 	 	 	 
	

	 	Steven Bucher
	 	 	 	Jerry S. Rawls
	

	 	Chief Executive Officer
	 	 	 	President and Chief Executive Officer
	 
	 	 	 	 	 	 
	I-TECH SHAREHOLDER	 	I-ROBOT ACQUISITION CORP.
	 
	 	 	 	 	 	 
	/s/ Steven Bucher	 	By:	 	/s/ Jerry S. Rawls
	 	 	 	 	 
	Steven Bucher	 	 	 	Jerry S. Rawls
	

	 	 	 	 	 	President and Chief Executive Officer