<PAGE>
                                                                    EXHIBIT 10.2



                          LOAN AND SECURITY AGREEMENT

        This Loan and Security Agreement ("Loan Agreement") is made as of July
12, 2001 by and between New Focus, Inc., a Delaware corporation ("Company"), and
KENNETH E. WESTRICK ("Employee") and his wife KIRSTEN V. WESTRICK (Employee and
his wife jointly and severally, ("Borrowers").

                                    Recitals

        A. Employee is employed by the Company in the capacity of President and
Chief Executive Officer.

        B. The Board of Directors of the Company has agreed to loan to the
Borrowers the principal sum of $2.125 million on the terms set forth herein.

        C. The Borrowers desire to incur payment and other obligations to the
Company pursuant to this Loan Agreement and a promissory note, in the form
attached hereto as Exhibit A (the "Note"), to be issued by the Borrowers to the
Company.

        NOW, THEREFORE, in consideration of the foregoing promises and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

        1. Loan. The Company will lend to Borrowers the amount of Two Million
One Hundred Twenty-Five Thousand Dollars ($2,125,000) (the "Loan") pursuant to
the Note, and on the terms and conditions set forth herein.

        2. Conditions Precedent. The Company's obligation to extend the loan to
Borrowers pursuant to this Agreement is expressly conditioned upon the
satisfaction of or waiver by the Company of the following conditions precedent:

               (a) Borrowers shall have delivered to the Company one fully
executed original promissory note in the amount of Two Million One Hundred
Twenty-Five Thousand Dollars ($2,125,000) in the form attached hereto as Exhibit
A (the "Note").

               (b) Borrowers shall have executed and delivered to the Company a
Pledged Collateral Account Control Agreement attached (the "Account Control
Agreement"), which apply to all of the shares of capital stock of the Company
currently owned by Borrowers and Employee, including any shares of capital stock
of the Company acquired by Employee at any time prior to the full repayment of
the Note.

        3. Creation and Description of Security Interest. In consideration of
the loan of money pursuant to this Loan Agreement and the Note between the
Borrowers and the Company, the

<PAGE>
Borrowers, pursuant to the California Commercial Code, hereby pledge all of
their right, title, and interest in (i) all of the shares of Common Stock of the
Company held legally or beneficially by Borrowers and all shares of capital
stock of the Company which Employee acquires prior to the full repayment of the
Note, whether certificated or uncertificated, of the Company now owned or
hereafter acquired held in any securities account or otherwise, wherever located
(the "Shares"), and including any proceeds resulting from the sale or
disposition of the Shares; and (ii) all now existing and hereafter arising
securities accounts in which the Shares are held, but only to the extent of the
Shares held in the account (collectively, the "Collateral").

        4. Collateral. The Collateral is either represented by share
certificates which Borrowers have duly endorsed in blank or with executed Stock
Assignments, or is held in a securities account subject to an Account Control
Agreement. The Borrowers have delivered to the Company any stock certificates
together with the executed Stock Assignments and Account Control Agreement. The
Collateral shall be held as security for the Note and any extensions or renewals
thereof.

        5. Borrowers' Representations and Warranties. Borrowers hereby severally
make the following representations and warranties to the Company, which
representations and warranties shall be true and correct as of the date hereof,
and Borrowers acknowledge that the Company is relying on such representations in
entering into this Agreement and making the loan:

               (a) To Borrowers' knowledge there are no material actions,
proceedings, claims or disputes pending or, to Borrowers' knowledge, threatened
against or affecting Borrowers other than putative securities class actions
filed against the Company and several of its officers and directors, including
Employee, and a shareholder derivative action filed purportedly on behalf of the
Company against several of its officers and directors, including Employee.

               (b) As of the date hereof, the consent of no other person or
entity is required to grant the security interest in the Collateral to the
Company evidenced by this Loan Agreement.

               (c) The Collateral is free of all encumbrances, defenses and
liens (except for this Agreement and a Security Agreement between Company and
Employee dated January 12, 2000, including amendments thereto), and Borrowers
will not further encumber the Collateral without the prior written consent of
the Company.

               (d) Borrowers understand and acknowledge that this Agreement does
not modify Employee's at-will status at the Company and does not constitute an
employment agreement or a promise by the Company to continue Employee's
employment. Either the Company or Employee may terminate such employment
relationship at any time, with or without cause.

               (e) Borrowers hereby acknowledge that the Company has made no
representation or warranty to Borrowers concerning the income tax consequences
of the loan to Borrowers and Borrowers shall be solely responsible for
ascertaining and bearing such tax consequences.

        6. Repayment of Loan and Maturity Event. Borrowers shall repay all
amounts due under the Note at the times and in accordance with the terms
specified in the Note. The Note shall



                                      -2-
<PAGE>
immediately become due and payable, without notice or demand, upon the
occurrence of any "Maturity Event" as defined in the Note.

        7. Voting Rights. During the term of this pledge and so long as all
payments of principal and interest are made as they become due under the terms
of the Note, Employee shall have the right to vote all of the shares of Company
capital stock comprising the Collateral.

        8. Stock Adjustments. In the event that during the term of the pledge
any stock dividend, reclassification, readjustment or other changes are declared
or made in the capital structure of Company, all new, substituted and additional
shares or other securities issued by reason of any such change shall be
delivered to and held by the Company under the terms of this Loan Agreement or
placed in a securities account with respect to which an Account Control
Agreement has been executed. In the event of substitution of such securities,
the Borrowers and the Company shall cooperate and execute such documents as are
reasonable so as to provide for the substitution of such Collateral and, upon
such substitution, references to "Collateral" in this Loan Agreement shall
include the substituted shares of capital stock of the Borrowers as a result
thereof.

        9. Options and Rights. In the event that, during the term of this
pledge, subscription options or other rights or options shall be issued in
connection with the Collateral, such rights and options shall be the property of
the Borrowers and, if exercised by the Borrowers, all new stock or other
securities so acquired by the Borrowers as it relates to the Collateral shall be
immediately delivered to the Company, to be held under the terms of this Loan
Agreement in the same manner as the Collateral.

        10. Default. Borrowers shall be deemed to be in default of the Note and
of this Agreement in the event Borrowers or Employee fails to perform any of the
covenants or obligations contained in this Agreement (a "Default") for a period
of thirty (30) days after written notice thereof from Company. Notwithstanding
the foregoing, no notice is required to be given by Company in the event of a
Default pursuant to Section 6 or Section 12 hereof, and a Default shall be
deemed to have occurred upon Borrowers' or Employee's failure to perform any of
the covenants or obligations contained in Section 6 or Section 12 of this
Agreement; provided that for purposes of Section 6, Borrowers shall have ten
(10) days from the applicable due date of the Note to cure (to the extent
curable) any failure to pay any amount of the principal or interest on the Note
when due. In the case of a Default, Company shall have the right to accelerate
payment of the Note upon notice to Borrowers, and Company shall thereafter be
entitled to pursue its remedies under the California Commercial Code.

        11. Term and Release of Collateral. No Collateral shall be released
except as set forth in this Section 11, until Borrowers have repaid all
principal and accrued interest on the Note. Prior to Borrowers repayment of all
principal and accrued interest on the Note, Borrowers may sell Collateral in
accordance with Employee's trading plan, provided, however, that the proceeds of
any such sale shall be applied to the unpaid principal, interest and any other
amounts payable under the Note as follows: (a) twenty-five percent (25%) of the
gross proceeds at a price per share of $25 or less; (b) forty percent (40%) of
the gross proceeds at a price per share of more than $25 but less than or equal
to $50 per share; and (c) sixty percent (60%) of the gross proceeds at a price
per share of more than $50 . Borrowers shall issue to Borrowers' securities
broker a payment authorization letter



                                      -3-
<PAGE>
(the "Payment Authorization Letter"), in form and substance approved by the
Company, which instructs such broker to pay to the Company, upon the sale of any
Collateral, the applicable percentage of the gross proceeds. The Payment
Authorization Letter shall also provide that the instructions in such letter may
be rescinded only in a writing executed by both Borrowers and the Company.
Amounts shall be applied first to accrued interest and then to principal. The
within pledge of Collateral shall continue until the payment and/or forgiveness
of all indebtedness secured hereby, at which time the Collateral shall be
promptly delivered to Employee.

        12. Transfer of Collateral by Borrowers. Except as set forth in Section
11 above, without the prior written consent of the Company, Borrowers shall not
sell, transfer, withdraw, pledge, substitute or otherwise dispose of or encumber
all or any part of the Collateral.

        13. Term. The pledge of Collateral set forth herein shall continue until
the payment of all indebtedness secured hereby.

        14. Insolvency. The Borrowers agree that if a bankruptcy or insolvency
proceeding is instituted by or against either one of them, or if a receiver is
appointed for the property of the Borrowers, or if the Borrowers make an
assignment for the benefit of creditors, the entire amount unpaid on the Note
shall become immediately due and payable, and Company may proceed as provided in
the case of default.

        15. Invalidity of Particular Provisions. The Borrowers and Company agree
that the enforceability or invalidity of any provision or provisions of this
Loan Agreement shall not render any other provision or provisions herein
contained unenforceable or invalid.

        16. Successors or Assigns. The Borrowers and Company agree that all of
the terms of this Loan Agreement shall be binding on their respective successors
and assigns, and that the term "Borrowers" and the term "Company" as used herein
shall be deemed to include, for all purposes, the respective designees,
successors, assigns, heirs, executors and administrators.

        17. Governing Law. This Loan Agreement shall be interpreted and governed
under the internal substantive laws, but not the choice of law rules, of
California.

        18. Counterparts. This Loan Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same instrument.

        19. Attorney's Fees. If any action or proceeding is brought to construe
or enforce this Loan Agreement, the prevailing party shall be entitled to
collect from the losing party all costs and expenses incurred, including
reasonable attorney's fees.

        20. Notices. Any requests, demand, or notices required or permitted
under this Loan Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery or by facsimile or forty-eight (48)
hours after deposit in the United States mail (postage prepaid), by certified
mail, return receipt requested, addressed to the receiving party at the address
set forth on the last page hereof or at such other address as such party may
specify by written notice to the other party hereto.



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<PAGE>
        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

"BORROWERS"


                                            /s/ KENNETH E. WESTRICK
                                            ------------------------------------
                                            Kenneth E. Westrick

                                            /s/ KIRSTEN V. WESTRICK
                                            ------------------------------------
                                            Kirsten V. Westrick


"COMPANY"                                   NEW FOCUS, INC.
                                            a Delaware corporation


                                            /s/ WILLIAM L. POTTS, JR.
                                            ------------------------------------
                                            Signature


                                            /s/ WILLIAM L. POTTS, JR.
                                            ------------------------------------
                                            Print Name


                                            CFO
                                            ------------------------------------
                                            Title



                        SIGNATURE PAGE OF LOAN AGREEMENT



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<PAGE>
                                    EXHIBIT A

                                 PROMISSORY NOTE

$2,125,000

                                                                 July 12, 2001


        FOR VALUE RECEIVED, Kenneth E. Westrick and Kirsten V. Westrick
("Borrowers") jointly and severally promise to pay to New Focus, Inc., a
Delaware corporation (the "Company"), the principal sum of Two Million One
Hundred Twenty-Five Thousand Dollars ($2,125,000), together with interest on the
unpaid principal hereof from the date hereof at the per annum rate of interest
(based on a year of 360 days) during each calendar quarter equal to (a) the
three-month LIBOR rate as quoted in The Wall Street Journal on the first
business day of such calendar quarter, plus (b) 100 basis points, compounded
annually.

        This Note is entered into in connection with a Loan and Security
Agreement between the Borrowers and the Company of even date hereof ("Loan
Agreement"). This Note is subject to all of the terms of the Loan Agreement. Any
defined terms not defined in this Note shall have the meaning set forth in the
Loan Agreement.

        1. Maturity Event: Upon the occurrence of a Maturity Event (as
hereinafter defined), the entire principal amount of the Note, all accrued but
unpaid interest and any other sums due hereunder, shall become immediately due
and payable without further demand or notice to Borrowers. To the extent
permitted by law, any of the following events shall be a "Maturity Event" under
this Note and the Loan and Security Agreement:

        (a) 180 days after the date of termination or cessation of Employee's
employment with the Company for any reason, whether voluntary or involuntary,
and whether with cause or without cause; provided, however, that if Employee's
employment is terminated prior to December 31, 2001, the unpaid principal and
accrued interest thereon shall be due and payable on June 30, 2002.

        (b) There shall occur any default in the performance of any obligation
of Borrowers contained in the Loan Agreement, or any other deed of trust,
security agreement or other agreement (including any amendment, modification or
extension thereof) which may hereafter be executed by Borrowers for the purpose
of securing this Note.

        (c) Borrowers, without the prior written consent of the Company,
voluntarily or by operation of law, sell, convey, assign or otherwise transfer
or agree to sell, convey or otherwise transfer, all or any portion of, or any
interest in the Collateral, except as expressly provided for herein or in the
Loan Agreement.

        (d) Borrowers (i) admit in writing their inability to pay debts, (ii)
make an assignment for the benefit of creditors, (iii) file a voluntary petition
in bankruptcy, effect a plan or other




<PAGE>
arrangement with creditors, liquidate their assets under arrangement with
creditors, or liquidate their assets under court supervision, (iv) have an
involuntary petition in bankruptcy filed against them that is not discharged
within sixty (60) days after such petition is filed, or (v) apply for or permit
the appointment of a receiver or trustee or custodian for any of their property
or assets which shall not have been discharged within sixty (60) days after the
date of appointment.

        (e) Borrowers breach any representation or warranty contained herein or
in the Loan Agreement, or any agreement or instrument executed in connection
with this loan proves to have been false or misleading.

        (f) One hundred eighty (180) days after Employee's death.

        (g) July 11, 2004.

        (h) Borrowers fail to execute, acknowledge and deliver the Loan and
Security Agreement concurrently with this Note.

        2. Interest: Upon the failure of Borrowers to pay the outstanding
principal balance within thirty (30) days after a Maturity Event, interest on
the outstanding principal balance shall thereafter accrue at the rate of six
percent (6%) per annum, or if lower, the highest rate permitted by applicable
law.

        3. Borrowers' Representations: Borrowers hereby make the following
representations and warranties to the Company and acknowledge that the Company
is relying on such representations in making the loan:

               (a) To Borrowers' knowledge there are no material actions,
proceedings, claims or disputes pending or, to Borrowers' knowledge, threatened
against or affecting Borrowers other than putative securities class actions
filed against the Company and several of its officers and directors, including
Employee, and a shareholder derivative action filed purportedly on behalf of the
Company against several of its officers and directors, including Employee.

               (b) As of the date hereof, the consent of no other person or
entity is required to grant the security interest in the Collateral to the
Company evidenced by this Loan Agreement.

               (c) The Collateral is free of all encumbrances, defenses and
liens (except for this Agreement and a Security Agreement between Company and
Employee dated January 2000), and Borrowers will not further encumber the
Collateral without the prior written consent of the Company.

               (d) Borrowers understand and acknowledge that this Agreement does
not modify Employee's at-will status at the Company and does not constitute an
employment agreement or a promise by the Company to continue Employee's
employment. Either the Company or Employee may terminate such employment
relationship at any time, with or without cause.



                                      -2-
<PAGE>
               (e) Borrowers hereby acknowledge that the Company has made no
representation or warranty to Borrowers concerning the income tax consequences
of the loan to Borrowers and Borrowers shall be solely responsible for
ascertaining and bearing such tax consequences.

        4. Borrowers' Additional Obligations: Borrowers shall take any and all
further actions that may from time to time be required to ensure that the Loan
Agreement creates a valid lien on the Collateral in favor of the Borrower, which
shall secure the Note. If it should be hereafter determined that there are
defects against title or matters which could result in defects against title to
the Collateral, or that the consent of another person or entity is required to
grant to and perfect in the Company a valid lien on the Collateral, Borrowers
shall promptly take all action necessary to remove such defects and to obtain
such consent and grant (or cause to be granted) and perfect such lien on the
Property. Failure of Borrowers to comply with this provision shall be deemed a
default under the Note and the Loan Agreement.

        5. Payments: Payments due under this Note shall be made in lawful money
of the United States of America. The undersigned may at any time prepay all or
any portion of the amounts due under this Note by giving five (5) days prior
written notice of his intent to make payment to the Company.

        6. Security: This Note is secured by the Loan Agreement pursuant to
which Borrowers pledge all securities, whether certificated or uncertificated,
of the Company now owned or hereafter acquired and held in any securities
account or otherwise, wherever located.

        7. Full Recourse: The undersigned shall be liable for all obligations
arising under this Note. The holder of this Note shall have full recourse
against the undersigned.

        8. Attorneys Fees: Should any action be instituted for the collection of
this Note, the reasonable costs and attorneys' fees therein of the holder shall
be paid by the undersigned.



                                                   BORROWERS:


                                                   -----------------------------
                                                   Kenneth E. Westrick


                                                   -----------------------------
                                                   Kirsten V. Westrick


                                      -3-

<PAGE>
                                    EXHIBIT B

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED We, Kenneth E. Westrick and Kirsten V. Westrick hereby sell,
assign and transfer unto ______________________________________ (__________) our
interest in the capital of New Focus, Inc. and any economic or beneficial
interest therein (collectively, "Interest") standing in our name or in the name
of either one of us on the books of said corporation or otherwise registered
with _____________ and do hereby irrevocably constitute and appoint (transfer
agent), attorney, to transfer the said any Interest on the books of the within
named corporation with full power of substitution in the premises.

        This Assignment may be used only in accordance with the Loan and
Security Agreement between New Focus, Inc. and the undersigned dated as of
___________, 2001.



                                                   -----------------------------
                                                   Kenneth E. Westrick


                                                   -----------------------------
                                                   Kirsten V. Westrick





INSTRUCTION: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE. The
purpose of this assignment is to enable New Focus, Inc. to exercise its rights
with respect to the Loan and Security Agreement without requiring additional
signatures on the part of Kenneth Westrick or Kirsten Westrick.



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