Document:

exv10w3

Exhibit 10.3

EXECUTION VERSION

5.0% Convertible Senior Notes due 2029

FINISAR CORPORATION

PURCHASE AGREEMENT

October 8, 2009

PIPER JAFFRAY & CO.

345 California Street, Suite 2400

San Francisco, CA 94104

Ladies and Gentlemen:

     Finisar Corporation, a Delaware corporation (the “Company”), proposes to issue and sell to
Piper Jaffray & Co. (the “Initial Purchaser”) an aggregate of $90,000,000 principal amount of its
5.0% Convertible Senior Notes due 2029 (the “Firm Securities”). In addition, the Company has
granted to the Initial Purchaser an option to purchase up to an additional aggregate of $10,000,000
principal amount of its 5.0% Convertible Senior Notes due 2029 (the “Option Securities”) as
provided in Section 3 hereof. The Firm Securities and, if and to the extent such option is
exercised, the Option Securities, are collectively called the “Securities.” The Securities will be
convertible into shares (the “Underlying Securities”) of common stock of the Company, $0.001 par
value (the “Common Stock”). The Securities will be issued pursuant to an Indenture (the
“Indenture”), to be dated as of October 14, 2009, between the Company and Wells Fargo Bank, N.A.,
as trustee (the “Trustee”).

     The Securities and the Underlying Securities will be offered without being registered under
the Securities Act of 1933, as amended, in reliance on exemptions therefrom provided by the Act and
the rules and regulations thereunder (collectively, the “Securities Act”).

     You and your direct and indirect transferees will be entitled to the benefits of a
Registration Rights Agreement dated the First Closing Date (as defined in Section 3(a) hereof)
between you and the Company (the “Registration Rights Agreement”).

     Section 1. Offering Memorandum. In connection with the offer and sale of the Securities, the
Company (a) has prepared and delivered to you copies of (i) a preliminary offering memorandum dated
October 7, 2009 (the “Preliminary Offering Memorandum”) and (ii) a pricing term sheet attached
hereto as Schedule A, which includes the pricing terms and other information with respect
to the Securities and other matters not included in the Preliminary Offering Memorandum (the
“Pricing Term Sheet”) and (b) will prepare and deliver to you on the date hereof or the next
succeeding day, copies of a final offering memorandum dated October 8, 2009 (the “Final Offering
Memorandum”), each for use by you in connection with your solicitation of purchases of, or offering
of, the Securities. “Offering Memorandum” means, with respect to any date or time referred to in
this Agreement, the most recent Offering Memorandum (whether the Preliminary Offering Memorandum or
Final Offering Memorandum, or any amendment or supplement to either document), including exhibits
thereto, which has been

 

 

prepared and delivered by the Company to you in connection with your solicitation of purchases
of, or offering of, the Securities. The Offering Memorandum includes or incorporates certain
information concerning, among other things, the Company, the Securities and the Underlying
Securities. The Offering Memorandum also incorporates by reference each document or report filed
by the Company with the Securities and Exchange Commission (the “Commission”) pursuant to Sections
13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the
date thereof and prior to the termination of the distribution of the Securities as set forth in the
Offering Memorandum, except for reports on Form 8-K which contain only information furnished under
Items 2.02 or 7.01 of Form 8-K. As used herein, the term “Offering Memorandum” shall include in
each case the documents incorporated by reference therein (the “Incorporated Documents”), and any
and all supplements and amendments to such documents incorporated by reference therein and any and
all amendments and supplements to the Offering Memorandum. The terms “supplement,” “amendment” and
“amend” as used herein shall include all documents deemed to be incorporated by reference in the
Offering Memorandum that are filed subsequent to the date of such Offering Memorandum with the
Commission pursuant to the Exchange Act.

     Section 2. Representations and Warranties of the Company. The Company hereby represents,
warrants and agrees with the Initial Purchaser as follows:

          (a) Each Incorporated Document filed by the Company with the Commission pursuant to the
Exchange Act complied or will comply as to form, as the case may be, when so filed in all material
respects with the Exchange Act and the applicable rules and regulations of the Commission
thereunder; and the Offering Memorandum, as amended or supplemented, as of its date, at all
subsequent times until the expiration of the Offering Memorandum Delivery Period (as defined in
Section 4(a) hereof), and at the First Closing Date and Second Closing Date, did not and will not
contain any untrue statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances under which they were made, not
misleading. The preceding sentence does not apply to statements in or omissions from the Offering
Memorandum, or any amendments or supplements thereto, made in reliance upon and in conformity with
written information relating to you furnished to the Company by you, specifically for use in the
preparation thereof it being understood and agreed that the only such information furnished by you
consists of the information described as such in Section 7(f) hereof.

          (b) The Preliminary Offering Memorandum, as of its date, did not include any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from any Offering Memorandum or any Pricing
Term Sheet based upon and in conformity with written information relating to you furnished to the
Company by you, specifically for use in the preparation thereof, it being understood and agreed
that the only such information furnished by you consists of the information described as such in
Section 7(f) hereof.

          (c) Neither (A) the Pricing Term Sheet issued at or prior to the Time of Sale and the
Preliminary Offering Memorandum, all considered together (collectively, “Time of Sale Disclosure
Package”), nor (B) any individual Supplemental Offering Materials (as

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defined below), when considered together with the Time of Sale Disclosure Package, includes or
included as of the Time of Sale any untrue statement of a material fact or omits or omitted as of
the Time of Sale to state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The preceding sentence does
not apply to statements in or omissions from any Offering Memorandum or any Pricing Term Sheet
based upon and in conformity with written information relating to you furnished to the Company by
you, specifically for use in the preparation thereof, it being understood and agreed that the only
such information furnished by you consists of the information described as such in Section 7(f)
hereof. As used in this paragraph and elsewhere in this Agreement:

               (1) “Time of Sale” means 10:00 p.m., Pacific time, on October 8, 2009.

               (2) “Supplemental Offering Materials” means any “written communication” (within the meaning of
the Securities Act) prepared by or on behalf of the Company, or used or referred to by the Company,
that constitutes an offer to sell or a solicitation of an offer to buy the Securities other than
the Offering Memorandum or amendments or supplements thereto (including the Pricing Term Sheet),
including, without limitation, any roadshow relating to the Securities that constitutes such a
written communication.

          (d) The financial statements of the Company and its consolidated subsidiaries, together with
the related notes thereto, set forth or incorporated by reference in the Time of Sale Disclosure
Package and the Offering Memorandum comply as to form in all material respects with the
requirements of Regulation S-X under the Securities Act and fairly present the financial condition
of the Company and its consolidated subsidiaries as of the dates indicated and the results of
operations and changes in cash flows for the periods therein specified in conformity with generally
accepted accounting principles in the United States (“GAAP”) consistently applied throughout the
periods involved; and the other financial information included or incorporated by reference into
the Time of Sale Disclosure Package and the Offering Memorandum has been derived from the
accounting records of the Company and its consolidated subsidiaries and present fairly the
information shown thereby. Ernst & Young LLP, which has expressed its opinion with respect to
certain of the financial statements and schedules incorporated by reference into the Time of Sale
Disclosure Package and the Offering Memorandum, is an independent public accounting firm with
respect to the Company within the meaning of the Securities Act and the rules and regulations of
the Commission thereunder and the Public Company Accounting Oversight Board (United States) and
such accountants are not in violation of the auditor independence requirements of the
Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).

          (e) The Company has been duly organized, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the corporate power and authority to
own its property and to conduct its business as described in the Time of Sale Disclosure Package
and the Offering Memorandum and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the condition (financial or otherwise),
results of operations, stockholders’ equity, properties,

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management, business or prospects of Finisar Malaysia Sdn Bhd (“Finisar Malaysia”) or of the
Company and its subsidiaries, taken as a whole, or adversely effect the power or ability of the
Company to perform its obligations under this Agreement, the Indenture, the Registration Rights
Agreement or the Securities or to consummate the transactions contemplated by the Time of Sale
Disclosure Package and the Offering Memorandum (a “Material Adverse Effect”).

          (f) All of the direct and indirect subsidiaries (each, a “Subsidiary”) of the Company are set
forth on the Company’s most recently filed Annual Report on Form 10-K. The Company owns, directly
or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear
of any liens, and all the issued and outstanding shares of capital stock of each Subsidiary are
validly issued and are fully paid, non-assessable and free of preemptive and similar rights to
subscribe for or purchase securities. Each Subsidiary has been duly organized, is validly existing
as a corporation, partnership or limited liability company in good standing under the laws of the
jurisdiction of its organization, has the corporate or other power and authority to own its
property and to conduct its business as described in the Time of Sale Disclosure Package and the
Offering Memorandum and is duly qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or leasing of property requires
such qualification, except to the extent that the failure to be so qualified or be in good standing
would not have, individually or in the aggregate, a Material Adverse Effect. No Subsidiary is
currently prohibited, directly or indirectly, from paying any dividends to the Company, from making
any other distribution on such Subsidiary’s capital stock, from repaying to the Company any loans
or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s
property or assets to the Company or any other Subsidiary of the Company, except that the terms of
loan agreements between Finisar Malaysia and HSBC Bank Malaysia Berhad (“HSBC”) prohibit the
transfer of certain assets, the declaration or payment of dividends or the repayment of loans to
the Company without the prior written consent of HSBC.

          (g) The Company has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement. This Agreement has been duly authorized, executed
and delivered by the Company.

          (h) The Company has an authorized capitalization as set forth in the Time of Sale Disclosure
Package and the Offering Memorandum; and all of the outstanding Common Stock has been duly
authorized and is validly issued, fully paid and non-assessable, was issued in compliance with all
United States federal and state and foreign securities laws and not in violation of any preemptive
right, resale right, right of first refusal or similar right and conforms to the description
thereof contained in the Time of Sale Disclosure Package and the Offering Memorandum. All of the
Company’s options, warrants and other rights to purchase or exchange any securities for the
Company’s Common Stock have been duly authorized and validly issued, conform to the description
thereof contained in the Time of Sale Disclosure Package and the Offering Memorandum and, although
the Company has been named as defendant in pending stock option derivative litigation proceedings,
the Company reasonably believes all such options, warrants and other rights to purchase or exchange
any securities for the Company’s Common Stock were issued in compliance with all United States
federal and state and foreign securities laws. The issuance and sale of the Securities will not
obligate the Company to issue shares of Common Stock or other securities to any person (other than
the

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persons purchasing the Securities) and will not result in a right of any holder of Company
securities to adjust the exercise, conversion, exchange or reset price under any of such
securities. No further approval or authorization of any stockholder, the Board of Directors of the
Company or others is required for the issuance of the Securities. There are no stockholders
agreements, voting agreements or other similar agreements with respect to the Company’s capital
stock to which the Company is a party or, to the knowledge of the Company, between or among any of
the Company’s stockholders. No Person has any right to cause the Company to effect the
registration under the Securities Act of any securities of the Company, which rights are currently
not satisfied.

          (i) With respect to the stock options (the “Stock Options”) granted pursuant to the
stock-based compensation plans of the Company and the Subsidiaries (the “Company Stock Plans”), (A)
each grant of a Stock Option was duly authorized no later than the date on which the grant of such
Stock Option was by its terms to be effective (the “Grant Date”) by all necessary corporate action,
including, as applicable, approval by the board of directors of the Company (or a duly constituted
and authorized committee thereof) and any required stockholder approval by the necessary number of
votes or written consents, and the award agreement governing such grant (if any) was duly executed
and delivered by each party thereto, (B) each such grant was made in accordance with the terms of
the Company Stock Plans, (C) the per share exercise price of each Stock Option was equal to the
fair market value of a share of Common Stock on the applicable Grant Date and (D) each such grant
was properly accounted for in accordance with GAAP in the financial statements (including the
related notes) of the Company and disclosed in the Company’s filings with the Commission in
accordance with the Exchange Act and all other applicable laws. The Company’s general policy is to
grant Stock Options at regular quarterly meetings of the compensation committee of its board of
directors with Grant Dates which are the later of the third trading day following the public
announcement of the Company’s financial results for the previous quarter or the date of such
meeting. Except pursuant to such policy, the Company has not knowingly granted, and there is no
and has been no policy or practice of the Company of granting, Stock Options prior to, or otherwise
coordinate the grant of Stock Options with, the release or other public announcement of material
information regarding the Company or its subsidiaries or their results of operations or prospects.

          (j) The Securities have been duly authorized by the Company and, when executed and
authenticated in accordance with the provisions of the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of this Agreement, will be duly and validly
issued and outstanding and will constitute valid and binding obligations of the Company,
enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors’ rights generally and equitable
principles of general applicability, and will be entitled to the benefits of the Indenture pursuant
to which such Securities are to be issued and the Registration Rights Agreement. The issuance of
the Securities is not subject to any preemptive rights, rights of first refusal or similar rights.

          (k) The Underlying Securities reserved for issuance upon conversion of the Securities have
been duly authorized and reserved and, when issued upon conversion of the Securities in accordance
with the terms of the Securities, will be validly issued, fully paid and non-assessable, will be
issued in compliance with all United States federal and state and foreign

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securities laws and the issuance of the Underlying Securities will not be subject to any
preemptive rights, rights of first refusal or similar rights.

          (l) The Indenture has been duly authorized by the Company, and when executed and delivered by
the Company and the Trustee (assuming due authorization by the Trustee), will be a valid and
binding agreement of, the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and equitable principles of general applicability.

          (m) The Registration Rights Agreement has been duly authorized by the Company, and when
executed and delivered by the Company, will be a valid and binding agreement of, the Company,
enforceable against the Company in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors’ rights generally and equitable principles of
general applicability and except as rights to indemnification and contribution under the
Registration Rights Agreement may be limited under applicable law.

          (n) Each of this Agreement, the Indenture, the Registration Rights Agreement and the
Securities conforms in all material respects to the description thereof in the Time of Sale
Disclosure Package and the Offering Memorandum.

          (o) The execution and delivery by the Company of, and the performance by the Company of its
obligations under, this Agreement, the Indenture, the Registration Rights Agreement and the
Securities does not and will not contravene or result in a breach or violation of any of the terms
or provisions of, the imposition of any lien, charge or encumbrance on any property or assets of
the Company or any Subsidiary or constitute a default under, any provision of the articles or
by-laws (or similar organizational documents) of the Company or any Subsidiary or any indenture,
mortgage, deed of trust, loan agreement, license or other material agreement or instrument binding
upon the Company or any Subsidiary, or any law or statute or any judgment, order, rule, regulation
or decree of any governmental body, agency or court having jurisdiction over the Company or any
Subsidiary or any of their properties, and no consent, approval, authorization or order of, or
qualification or filing with, any governmental body or agency or any court or regulatory authority
having jurisdiction over the Company or any Subsidiary is required for the performance by the
Company of its obligations under this Agreement, the Indenture, the Registration Rights Agreement
or the Securities or the issuance and sale of the Securities, except (i) such as may be required by
the securities or Blue Sky laws of the various states in connection with the offer and sale of the
Securities and (ii) by United States federal and state securities laws with respect to the
Company’s obligations under the Registration Rights Agreement.

          (p) Subsequent to the dates as of which information is given in the Time of Sale Disclosure
Package and the Offering Memorandum, there has not occurred any change in the capital stock (other
than grants by the Company or exercises by holders pursuant to existing employee benefit plans,
stock option plans or other employee compensation plans) or long-term borrowings of the Company or
any Subsidiary or any material adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), or in the results of operations,
stockholders’ equity, management, properties, business or prospects of Finisar Malaysia or of the
Company and its subsidiaries, taken as a

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whole, from that set forth in the Time of Sale Disclosure Package and the Offering Memorandum
provided to prospective purchasers of the Securities.

          (q) Subsequent to the dates as of which information is given in the Time of Sale Disclosure
Package and the Offering Memorandum, the Company has not (i) incurred any material liability or
obligation, direct or contingent, (ii) entered into any material transaction not in the ordinary
course of business or (iii) declared or paid any dividend on its capital stock.

          (r) The Company and each Subsidiary has good and marketable title to all real property and
good and marketable title to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects, except such as are described in the Time of Sale Disclosure
Package and the Offering Memorandum or such as do not materially affect the value of such property
and do not materially interfere with the use made and proposed to be made of such property by the
Company or any Subsidiary; and all assets held under lease by the Company and each Subsidiary are
held by them under valid, subsisting and enforceable leases, with such exceptions as do not
materially interfere with the use made and proposed to be made of such assets by the Company and
each Subsidiary.

          (s) Except as described in the Time of Sale Disclosure Package and the Offering Memorandum,
the Company and each Subsidiary carries, or are covered by, insurance in such amounts and covering
such risks as is adequate for the conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in similar businesses in similar
industries. All policies of insurance of the Company and each Subsidiary are in full force and
effect; the Company and each Subsidiary are in compliance with the terms of such policies in all
material respects; and neither the Company nor any Subsidiary has received notice from any insurer
or agent of such insurer that capital improvements or other expenditures are required or necessary
to be made in order to continue such insurance; there are no claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause; and neither the Company nor any such
Subsidiary has any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from similar insurers as
may be necessary to continue its business at a cost that could not reasonably be expected to have a
Material Adverse Effect.

          (t) There are no legal, governmental or regulatory proceedings pending or threatened to which
the Company or any Subsidiary is a party or to which any of the properties of the Company or any
Subsidiary is subject other than proceedings accurately described in all material respects in the
Time of Sale Disclosure Package and the Offering Memorandum and proceedings that if determined
adversely to the Company or any Subsidiary would not, individually or in the aggregate, reasonably
expected to have a Material Adverse Effect; and, to the Company’s knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened by others.

          (u) There are no legal or governmental proceedings or contracts or other documents of a
character required to be described in the Time of Sale Disclosure Package

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and the Offering Memorandum or, in the case of documents, to be filed as exhibits to the
Company’s Annual Report on Form 10-K, that are not described and filed as required. Neither the
Company nor any Subsidiary has knowledge that any other party to any such contract, agreement or
arrangement has any intention not to render full performance as contemplated by the terms thereof;
and the statements made under the captions “Offering Memorandum Summary,” “The Offering,” “Risk
Factors,” “Business” and “Plan of Distribution” in the Time of Sale Disclosure Package and the
Offering Memorandum and under the captions “Item 1A. Risk Factors,” “Item 3. Legal Proceedings,”
“Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation,”
“Item 10. Directors, Executive Officers and Corporate Governance” and “Item 13. Certain
Relationships and Related Transactions, and Director Independence” in the Company’s most recent
Annual Report on Form 10-K, as such disclosure has been amended by reports subsequently filed by
the Company pursuant to the Exchange Act, insofar as they purport to constitute summaries of the
terms of statutes, rules or regulations, legal or governmental proceedings or contracts and other
documents, constitute accurate summaries of the terms of such statutes, rules and regulations,
legal and governmental proceedings and contracts and other documents in all material respects.

          (v) No governmental authority has issued any order preventing or suspending the trading of the
Company’s securities or the distribution of the Securities, and no investigation, order, inquiry or
proceeding has been commenced or is pending or, to the knowledge of the Company or any Subsidiary,
is contemplated or threatened by any such authority.

          (w) No consent, approval, authorization or filing with or order of any U.S. federal, New York,
Delaware or California court or governmental agency or body having jurisdiction over the Company is
required for the consummation by the Company of the transactions contemplated by this Agreement,
the Indenture, the Registration Rights Agreement and the Securities or the issuance and sale of the
Securities (including the Underlying Securities issuable upon conversion thereof), except such as
may be required under the blue sky laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Initial Purchaser in the manner contemplated by this
Agreement and in the Offering Memorandum, by United States federal and state securities laws with
respect to the Company’s obligations under the Registration Rights Agreement or under the bylaws,
rules and regulations of the Financial Industry Regulatory Authority, Inc. (the “FINRA”).

          (x) No relationship, direct or indirect, exists between or among the Company, on the one hand,
and the directors, officers, stockholders, customers or suppliers of the Company, on the other
hand, that is required by the Securities Act to be described pursuant to Section 404 of Regulation
S-K in a registration statement to be filed with the Commission that is not so described in the
Time of Sale Disclosure Package and the Offering Memorandum.

          (y) The Company and each Subsidiary are in compliance with all U.S. federal, state, local and
foreign laws and regulations relating to employment and employment practices, terms and conditions
of employment and wages and hours, except where the failure to be in compliance could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

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          (z) No labor disturbance by or dispute with the employees of the Company or any Subsidiary
exists or, to the knowledge of the Company, is imminent that could reasonably be expected to have a
Material Adverse Effect.

          (aa) Except as described in the Time of Sale Disclosure Package and the Offering Memorandum,
the Company has no obligation to provide any material retirement, death or disability benefits to
any of the present or past employees of the Company or any Subsidiary, or any other person.

          (bb) The Company and each Subsidiary has filed all federal, state and local and foreign
income, franchise and other tax returns required to be filed through the date hereof, subject to
permitted extensions, and have paid all taxes due thereon, except where such failure to pay or file
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect; and no tax deficiency has been or reasonably could be expected to be asserted or determined
adversely to the Company or any Subsidiary, nor does the Company have any knowledge of any tax
deficiencies, that could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

          (cc) Neither the Company nor any Subsidiary (i) is in violation of its charter or by-laws (or
similar organizational documents), (ii) is in default, and no event has occurred that, with notice
or lapse of time or both, would constitute such a default, in the due performance or observance of
any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan
agreement, license or other agreement or instrument to which it is a party or by which it is bound
or to which any of its properties or assets is subject or (iii) is in violation of any statute or
any order, rule or regulation of any court or governmental agency or body having jurisdiction over
it or its property or assets or has failed to obtain any license, permit, certificate, franchise or
other governmental authorization or permit necessary to the ownership of its property or to the
conduct of its business, except in the case of clauses (ii) and (iii), to the extent any such
conflict, breach, violation or default could not, in the aggregate, reasonably be expected to have
a Material Adverse Effect.

          (dd) The Company and each Subsidiary (i) are in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of
them under applicable Environmental Laws to conduct their respective businesses, (iii) are in
compliance with all terms and conditions of any such permit, license or approval and (iv) have not
received notice of any actual or alleged violation of Environmental Laws, or of any potential
liability for or other obligation concerning the presence, disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a Material Adverse Effect. Except as described in the Time of Sale Disclosure
Package and the Offering Memorandum, (A) there are no proceedings that are pending, or known to be
contemplated, against the Company or any Subsidiary under Environmental Laws in which a
governmental authority is also a party, (B) the Company and each Subsidiary are not aware of any
issues regarding compliance with

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Environmental Laws, or liabilities or other obligations under Environmental Laws or concerning
hazardous or toxic substances or wastes, pollutants or contaminants, that could reasonably be
expected to have a material effect on the capital expenditures, earnings or competitive position of
Finisar Malaysia or of the Company and its subsidiaries, taken as a whole, and (C) none of the
Company or any Subsidiary anticipates material capital expenditures relating to Environmental Laws.

          (ee) Neither the Company nor any Subsidiary has ever treated, stored, transported, disposed
of, arranged for or permitted the disposal of, handled, released, or exposed any person to, any
kind of toxic wastes or hazardous substances, including, but not limited to, any naturally
occurring radioactive materials, brine, drilling mud, crude oil, natural gas liquids and other
petroleum materials, in violation of any Environmental Laws or in a manner or to a location that
could reasonably be expected to give rise to any liability under the Environmental Laws, except for
any violation or liability which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.

          (ff) There are no costs or liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval, any related constraints on
operating activities and any potential liabilities to third parties) which would, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.

          (gg) Neither the Company nor any Subsidiary, nor to the knowledge of the Company, any
director, officer, agent, employee or other person acting on behalf of the Company or any
Subsidiary has (i) directly or indirectly, used any funds for unlawful contributions, gifts,
entertainment or other unlawful expenses related to foreign or domestic political activity, (ii)
made any unlawful payment to foreign or domestic government officials or employees or to any
foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose
fully any contribution made by the Company (or made by any person acting on its behalf of which the
Company is aware) which is in violation of law, or (iv) violated in any material respect any
provision of the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”).

          (hh) The Company, each Subsidiary, their affiliates, any of their respective officers and
directors and, to the knowledge of the Company, any of their respective supervisors, managers,
agents, or employees, has not violated and the Company has instituted and maintains policies and
procedures designed to ensure continued compliance with, each of the following laws: (a)
anti-bribery laws, including but not limited to, any applicable law, rule, or regulation of any
locality, including but not limited to any law, rule, or regulation promulgated to implement the
OECD Convention on Combating Bribery of Foreign Public Officials in International Business
Transactions, signed December 17, 1997, including the FCPA, or any other law, rule or regulation of
similar purposes and scope, (b) anti-money laundering laws, including but not limited to,
applicable federal, state, international, foreign or other laws, regulations or government guidance
regarding anti-money laundering, including, without limitation, Title 18 US. Code section 1956 and
1957, the Patriot Act, the Bank Secrecy Act, and international anti-money laundering principles or
procedures by an intergovernmental group or

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organization, such as the Financial Action Task Force on Money Laundering, of which the United
States is a member and with which designation the United States representative to the group or
organization continues to concur, all as amended, and any Executive order, directive, or regulation
pursuant to the authority of any of the foregoing, or any orders or licenses issued thereunder, or
(c) laws and regulations imposing U.S. economic sanctions measures, including, but not limited to,
the International Emergency Economic Powers Act, the Trading with the Enemy Act, the United Nations
Participation Act and the Syria Accountability and Lebanese Sovereignty Act, all as amended, and
any Executive Order, directive, or regulation pursuant to the authority of any of the foregoing,
including the regulations of the United States Treasury Department set forth under 31 CFR, Subtitle
B, Chapter V, as amended, or any orders or licenses issued thereunder.

          (ii) Neither the Company nor any Subsidiary nor, to the knowledge of the Company, any
director, officer or employee of the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the
Treasury (“OFAC”); and the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint
venture partner or other person or entity, for the purpose of financing the activities of any
person currently subject to any U.S. sanctions administered by OFAC.

          (jj) The Company is not, and as of each Closing Date and, after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof as described in the Time of
Sale Disclosure Package and the Offering Memorandum, will not be, an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.

          (kk) No stamp, issue, registration, documentary, transfer or other similar taxes and duties,
including interest and penalties, are payable on or in connection with the issuance and sale of the
Securities by the Company or the execution and delivery of this Agreement.

          (ll) Except as disclosed in the Time of Sale Disclosure Package and the Offering Memorandum,
there are no outstanding guarantees or other contingent obligations of the Company or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect.

          (mm) Neither the Company nor any affiliate (as defined in Rule 501(b) of Regulation D under
the Securities Act, an “Affiliate”) of the Company has directly, or through any agent (except that
the Company makes no representation or warranty as to any activity of the Initial Purchaser), (i)
sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security
(as defined in the Securities Act) which is or will be integrated with the sale of the Securities
in a manner that would require the registration under the Securities Act of the Securities or (ii)
offered, solicited offers to buy or sold the Securities by any form of general solicitation or
general advertising (as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the Securities Act.

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          (nn) Assuming the accuracy of the Initial Purchaser’s statements in Section 5 hereof, and
compliance with the “Transfer Restrictions” described in the Time of Sale Disclosure Package and
the Offering Memorandum, it is not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchaser in the manner contemplated by this Agreement to register the
Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act of
1939, as amended.

          (oo) The Securities satisfy the requirements set forth in Rule 144A(d)(3) under the Securities
Act.

          (pp) Neither the issuance, sale and delivery of the Securities nor the application of the
proceeds thereof by the Company as described in the Time of Sale Disclosure Package and the
Offering Memorandum will violate Regulation T, U or X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board of Governors.

          (qq) Except as disclosed in the Time of Sale Disclosure Package and the Offering Memorandum,
to the Company’s knowledge, the Company and the Subsidiaries own or possess, or have the right to
use or can acquire on reasonable terms, all patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or unpatentable proprietary
or confidential information, systems or procedures), trademarks, service marks and trade names
(collectively, “Intellectual Property”) currently employed by them in commerce, in connection with
the business now operated by them, except where the failure to own or possess or otherwise be able
to acquire such Intellectual Property would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect; and, except as otherwise described in the Time of Sale
Disclosure Package and the Offering Memorandum, to the Company’s knowledge, the Company is not
infringing or conflicting with asserted rights of others with respect to any of such Intellectual
Property which, individually or in the aggregate, if the subject of an unfavorable decision, ruling
or finding, would reasonably be expected to have a Material Adverse Effect.

          (rr) The Company and each Subsidiary has such permits, licenses, consents, exemptions,
franchises, authorizations, certificates and other approvals (each, an “Authorization”) of, and has
made all filings with and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals, including, without limitation,
under any applicable foreign laws, as are necessary to operate its respective properties and to
conduct its business, except to the extent the failure to have any such Authorization or to make
any such filing or notice would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Each such Authorization is valid and in full force and effect and
the Company and each Subsidiary is in compliance, in all material respects, with all the terms and
conditions thereof and with the rules and regulations of the authorities and governing bodies
having jurisdiction with respect thereto; and no event has occurred (including, without limitation,
the receipt of any notice from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or termination of any such Authorization
or results or, after notice or lapse of time or both, would result in any other material impairment
of the rights of the holder of any such Authorization, except to the extent such failure to be
valid and in full force and effect or to be in compliance, the occurrence

-12-

 

of any such event or the presence of any such restriction would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

          (ss) Except as disclosed in the Time of Sale Disclosure Package and in the Offering
Memorandum, and except for the restrictions applicable to Finisar Malaysia described in Section
2(f) hereof, none of the Company or any Subsidiary is currently prohibited, directly or indirectly,
from paying any dividends or other distributions, or from making any other distribution on its
equity interest; all dividends and other distributions declared and payable upon the equity
interests in the Company and each Subsidiary may be converted into foreign currency that may be
freely transferred out of any applicable foreign jurisdiction, and all such dividends and other
distributions are not and, will not be, subject to withholding or other taxes under the laws and
regulations of any applicable foreign jurisdiction and, are otherwise free and clear of any other
tax, withholding or deduction in such foreign jurisdiction, in each case without the necessity of
obtaining any consent in any foreign jurisdiction, except such as have been obtained.

          (tt) The Company and the Subsidiaries (i) make and keep accurate books and records and (ii)
maintain and have maintained effective internal control over financial reporting (as defined in
Rule 13a-15 under the Exchange Act) and a system of internal accounting controls sufficient to
provide reasonable assurances that (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting principles in the United
States and to maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the recorded accountability
for assets is compared with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.

          (uu) The Company and the Subsidiaries (i) have established and maintain disclosure controls
and procedures (as defined in Rules 13a-15 under the Exchange Act), (ii) such disclosure controls
and procedures are designed to ensure that the information required to be disclosed by the Company
in the reports filed or submitted under the Exchange Act is accumulated and communicated to
management of the Company, including its principal executive officers and principal financial
officers, as appropriate, to allow timely decisions regarding disclosure to be made and (iii) such
disclosure controls and procedures are effective to a reasonable level of assurance to perform the
functions for which they were established. The Company has utilized such disclosure controls and
procedures in preparing and evaluating the disclosures in the Time of Sale Disclosure Package and
in the Offering Memorandum.

          (vv) Except as disclosed in the Time of Sale Disclosure Package and in the Offering
Memorandum, (i) since the most recent balance sheet of the Company and its consolidated
subsidiaries audited by Ernst & Young LLP, there have been no “significant deficiencies” or
“material weaknesses” (each as defined by the Public Company Accounting Oversight Board) in its
internal control over financial reporting, or any fraud, whether or not material, that involves
management or other employees of the Company who have a significant role in the Company’s internal
controls; and (ii) since the end of the latest audited fiscal year, there has been no change in the
Company’s internal control over financial reporting (whether or not remediated) that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.

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          (ww) The financial statements included in the Time of Sale Disclosure Package and in the
Offering Memorandum present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash flows for the periods
shown, and such financial statements have been prepared in conformity with GAAP applied on a
consistent basis; and the assumptions used in preparing the pro forma financial statements included
in the Time of Sale Disclosure Package and in the Offering Memorandum provide a reasonable basis
for presenting the significant effects directly attributable to the transactions or events
described therein, the related pro forma adjustments give appropriate effect to those assumptions,
and the pro forma columns therein reflect the proper application of those adjustments to the
corresponding historical financial statement amounts.

          (xx) As of the date of this Agreement, there is no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities as such, to comply with the provisions
of the Sarbanes-Oxley Act and the rules and regulations of the Commission promulgated thereunder.

          (yy) The section entitled “Item 7. Management’s Discussion and Analysis of Financial Condition
and Results of Operation — Critical Accounting Policies” in the Company’s most recent Annual
Report on Form 10-K, as amended by reports subsequently filed by the Company pursuant to the
Exchange Act, accurately and fully describes (A) the accounting policies that the Company believes
are the most important in the portrayal of the Company’s financial condition and results of
operations and that require management’s most difficult, subjective or complex judgments “Critical
Accounting Policies”); (B) the judgments and uncertainties affecting the application of the
Critical Accounting Policies; and (C) the likelihood that materially different amounts would be
reported under different conditions or using different assumptions and an explanation thereof. The
Company’s board of directors and senior management have reviewed and agreed with the selection,
application and disclosure of the Critical Accounting Policies and have consulted with the
Company’s independent accountants with regard to such disclosure.

          (zz) There are no securities or preferred stock of or guaranteed by the Company or any
Subsidiary that are rated by a “nationally recognized statistical rating organization,” as such
term is defined by the Commission for purposes of Rule 436(g)(2) under the Securities Act.

          (aaa) Any third-party statistical and market-related data included in the Time of Sale
Disclosure Package and the Offering Memorandum are based on or derived from sources that the
Company believes to be reliable and accurate in all material respects; and the selected operating
data of the Company included in the Time of Sale Disclosure Package and the Offering Memorandum are
based on or derived from the Company’s internal records and are reliable and accurate in all
material respects.

          (bbb) Attached hereto as Exhibit C are selected historical consolidated financial data
of Optium Corporation as of and for the years ended August 2, 2003 and July 31, 2004 (collectively,
the “Optium Financial Statement Data”) which are contained in Amendment No. 1 to the Company’s
registration statement on Form S-4/A (No. 331-152231) declared effective by the SEC on July 23,
2008. The Optium Financial Statement Data was audited by

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Deloitte & Touche LLP, the independent auditors of Optium Corporation, pursuant to their
report, dated September 23, 2004, delivered to the Board of Directors and Stockholders of Optium
Corporation. To the knowledge of the Company and each Subsidiary, Deloitte & Touche LLP conducted
their audits of the Optium Financial Statement Data in accordance with the standards of the Public
Company Accounting Oversight Board (United States).

          (ccc) The Optium Financial Statement Data presents fairly, in all material respects, the
financial position of Optium Corporation as of the dates stated therein, and the results of its
operations and its cash flows for the periods stated therein, in conformity with accounting
principles generally accepted in the United States of America, consistently applied throughout the
periods involved. The Optium Financial Statement Data (A) were derived from the internal accounting
records of Optium Corporation and (B) were prepared on a basis substantially consistent with the
financial statements of the Company set forth or incorporated by reference in the Time of Sale
Disclosure Package and the Offering Memorandum.

     Any certificate signed by any officer of the Company and delivered to the Initial Purchaser or
counsel for the Initial Purchaser in connection with the offering of the Securities shall be deemed
a representation and warranty by the Company, as to the matters covered thereby, to the Initial
Purchaser.

     Section 3. Purchase, Sale and Delivery of Securities.

          (a) On the basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to issue and sell the Firm
Securities to the Initial Purchaser, and the Initial Purchaser agrees to purchase from the Company,
$90,000,000 aggregate principal amount of Firm Securities at a purchase price for each Firm
Security equal to 98.75% of the principal amount of the Firm Security plus accrued interest, if
any, from October 14, 2009 to the date of the payment and delivery (the “Purchase Price”).

          The Firm Securities will be delivered by the Company to the account of the Initial Purchaser
against payment of the purchase price therefor by wire transfer of same day funds, to an account
specified by the Company, with such closing to take place at the offices of Piper Jaffray & Co.,
345 California Street, Suite 2400, San Francisco, California, or such other location as may be
mutually acceptable, at 7:00 a.m., Pacific time, on October 14, 2009, or at such other time and
date as you and the Company determine pursuant to Rule 15c6-1(a) under the Exchange Act, such time
and date of delivery being herein referred to as the “First Closing Date.” Delivery of the Firm
Securities shall be made by credit through full fast transfer to the accounts at The Depository
Trust Company designated by the Initial Purchaser. Certificates representing the Firm Securities,
will be made available for checking and packaging not later than 8:30 a.m., Pacific time, on the
business day preceding the First Closing Date at the offices of Piper Jaffray & Co., 345 California
Street, Suite 2400, San Francisco, California, or such other location as may be mutually
acceptable.

          (b) On the basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company, with respect to $10,000,000
aggregate principal amount of Option Securities, hereby grant to the

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Initial Purchaser an option to purchase all or any portion of the Option Securities at the
same Purchase Price as the Firm Securities. The option granted hereunder may be exercised in whole
or in part at any time within 30 days after the effective date of this Agreement upon notice
(confirmed in writing) by the Initial Purchaser to the Company setting forth the aggregate number
of Option Securities as to which the Initial Purchaser is exercising the option, the names and
denominations in which the certificates for the Option Securities are to be registered and the date
and time, as determined by you, when the Option Securities are to be delivered, such time and date
being herein referred to as the “Second Closing” and “Second Closing Date”, respectively, and the
Initial Closing Date and the Second Closing Date each sometimes being herein referred to as a
“Closing Date”; provided, however, that the Second Closing Date shall not be earlier than the First
Closing Date nor, unless waived by the Company and the Initial Purchaser, earlier than the second
business day after the date on which the option shall have been exercised. No Option Securities
shall be sold and delivered unless the Firm Securities previously have been, or simultaneously are,
sold and delivered.

          The Option Securities will be delivered by the Company to the account of the Initial Purchaser
against payment of the purchase price therefor by wire transfer of same day funds payable to an
account specified by the Company, with such closing to take place at the offices of Piper Jaffray &
Co., 345 California Street, Suite 2400, San Francisco, California, or such other location as may be
mutually acceptable at 7:00 a.m., Pacific time, on the Second Closing Date. If the Initial
Purchaser so elects, delivery of the Option Securities may be made by credit through full fast
transfer to the account at The Depository Trust Company designated by the Initial Purchaser.
Certificates representing the Option Securities, will be made available for checking and packaging
not later than 8:30 a.m., Pacific time, on the business day preceding the Second Closing Date at
the office of Piper Jaffray & Co., 345 California Street, Suite 2400, San Francisco, California, or
such other location as may be mutually acceptable.

     Section 4. Covenants of the Company. The Company further covenants and agrees with you as
follows:

          (a) During the period beginning on the date hereof and ending on the later of the Second
Closing Date or such date as the Offering Memorandum is no longer required by law to be delivered
in connection with sales by a purchaser or dealer (the “Offering Memorandum Delivery Period”),
prior to amending or supplementing the Time of Sale Disclosure Package or the Offering Memorandum,
the Company shall furnish to the Initial Purchaser for review a copy of each such proposed
amendment or supplement, and the Company shall not use any such proposed amendment or supplement to
which the Initial Purchaser or counsel to the Initial Purchaser reasonably objects.

          (b) After the date of this Agreement, the Company shall promptly advise the Initial Purchaser
in writing of any amendment or supplement to the Time of Sale Disclosure Package or the Offering
Memorandum or of any order preventing the use of the Time of Sale Disclosure Package or the
Offering Memorandum, or of any proceedings to remove, suspend or terminate from listing or
quotation the Common Stock from any securities exchange upon which it is listed for trading or
included or designated for quotation, or of the threatening or initiation of any proceedings for
any of such purposes.

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          (c) Until the completion of the distribution of the Securities as contemplated in this
Agreement and by the Offering Memorandum, the Company will comply as far as it is able with all
requirements imposed upon it by the Securities Act, as now and hereafter amended, and by the rules
and regulations thereunder, as from time to time in force, and by the Exchange Act so far as
necessary to permit the continuance of sales of or dealings in the Securities as contemplated by
the provisions hereof, the Time of Sale Disclosure Package and the Offering Memorandum. If at any
time prior to the completion of the distribution of the Securities as contemplated in this
Agreement and by the Offering Memorandum, any event shall occur as a result of which, in the
judgment of the Company or the Initial Purchaser, it becomes necessary to amend or supplement the
Offering Memorandum (or, if the Offering Memorandum is not yet available to prospective purchasers,
the Time of Sale Disclosure Package) in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, or, if it is necessary at any time to
amend or supplement the Offering Memorandum (or, if the Offering Memorandum is not yet available to
prospective purchasers, the Time of Sale Disclosure Package) to comply with applicable law, the
Company promptly will prepare an appropriate amendment or supplement to the Offering Memorandum
(or, if the Offering Memorandum is not yet available to prospective purchasers, the Time of Sale
Disclosure Package) so that the Offering Memorandum (or, if the Offering Memorandum is not yet
available to prospective purchasers, the Time of Sale Disclosure Package) as so amended or
supplemented will not contain statements that, in light of the circumstances under which they were
made, are misleading, or so that the Offering Memorandum (or, if the Offering Memorandum is not yet
available to prospective purchasers, the Time of Sale Disclosure Package) will comply with
applicable law.

          (d) The Company shall take or cause to be taken all necessary action to qualify the Securities
for sale under the securities laws of such jurisdictions as you reasonably designate and to
continue such qualifications in effect so long as required for the distribution of the Securities,
except that the Company shall not be required in connection therewith to (i) qualify as a foreign
corporation in any jurisdiction in which it would not otherwise be required to so qualify, (ii) to
execute a general consent to service of process in any jurisdiction or (iii) to subject itself to
taxation in any jurisdiction in which it would not otherwise be subject.

          (e) The Company will furnish to the Initial Purchaser and counsel for the Initial Purchaser
copies of each Preliminary Offering Memorandum, the Time of Sale Disclosure Package, the Offering
Memorandum, the Pricing Term Sheet, and all amendments and supplements to such documents, in each
case as soon as available and in such quantities as you may from time to time reasonably request.

          (f) During a period of one year commencing with the date hereof, the Company will furnish to
the Initial Purchaser, and to each purchaser who may so request in writing, copies of all periodic
and special reports furnished to the stockholders of the Company and all public information,
documents and reports filed with the Commission, the FINRA, The Nasdaq Global Select Market or any
securities exchange (other than any such information, documents and reports that are filed with the
Commission electronically via EDGAR or any successor system).

-17-

 

          (g) The Company, whether or not the transactions contemplated hereunder are consummated or
this Agreement is terminated, will pay or cause to be paid (A) all expenses incurred in connection
with the delivery to the Initial Purchaser of the Securities, (B) all expenses and fees (including,
without limitation, fees and expenses of the Company’s accountants and counsel but, except as
otherwise provided below, not including fees of the Initial Purchaser’s counsel) in connection with
the preparation, printing, filing, delivery, and shipping of the Securities, each Preliminary
Offering Memorandum, the Time of Sale Disclosure Package, the Final Offering Memorandum and any
amendment thereof or supplement thereto, and the printing, delivery, and shipping of this Agreement
and other offering documents, including any Blue Sky Memoranda (covering the states and other
applicable jurisdictions), (C) all filing fees and fees and disbursements of the Initial
Purchaser’s counsel incurred in connection with the qualification of the Securities for offering
and sale by the Initial Purchaser or by dealers under the securities or blue sky laws of the
states, provinces and other jurisdictions which you shall designate, (D) all filing fees and fees
and disbursements incurred with respect to any requirements of the FINRA, (E) the fees and expenses
of any transfer agent, trustee or registrar, (F) listing fees, if any, with respect to any filing
of an additional share listing application for the Underlying Securities with The Nasdaq Global
Select Market, and (G) all other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for herein. If this Agreement is terminated
by the Initial Purchaser pursuant to Section 9 hereof or if the sale of the Securities provided for
herein is not consummated by reason of any failure, refusal or inability on the part of the Company
to perform any agreement on its part to be performed, or because any other condition of the Initial
Purchaser’s obligations hereunder required to be fulfilled by the Company is not fulfilled, the
Company will reimburse the Initial Purchaser for all out-of-pocket disbursements (including but not
limited to reasonable fees and disbursements of counsel, printing expenses, travel expenses,
postage, facsimile and telephone charges) incurred by the Initial Purchaser in connection with its
investigation, preparing to market and marketing the Securities or in contemplation of performing
their obligations hereunder.

          (h) The Company will apply the net proceeds from the sale of the Securities to be sold by it
hereunder for the purposes set forth in the Time of Sale Disclosure Package and in the Offering
Memorandum.

          (i) The Company will not, without the prior written consent of the Initial Purchaser, from the
date of execution of this Agreement and continuing to and including the date 90 days after the date
of the Offering Memorandum (the “Lock-Up Period”) (A) issue, offer, pledge, announce the intention
to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant for the sale of, or lend or otherwise dispose
of or transfer any Common Stock or any securities convertible into or exchangeable or exercisable
for or repayable with Common Stock, or file any registration statement under the Securities Act
with respect to any of the foregoing, or (B) enter into any swap, derivative or any other agreement
or any transaction that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of Common Stock or any securities convertible into or exchangeable for or
repayable with Common Stock, whether any such transaction described in clause (A) or (B) above is
to be settled by delivery of Common Stock or such other securities, in cash or otherwise, except
that the Company may, without such consent, (i) issue and sell the Securities offered hereby or the
Common Stock to be issued upon

-18-

 

conversion thereof, (ii) file the resale registration statement relating to the resale of the
Securities and the Underlying Securities, and (iii) grant options or issue and sell Common Stock
pursuant to existing or, to the extent described in the Time of Sale Disclosure Package or the
Offering Memorandum, contemplated employee benefit plans, stock option plans or other employee
compensation benefit plans or pursuant to currently outstanding options, warrants or rights
existing on the date hereof and referred to in the Time of Sale Disclosure Package and the Offering
Memorandum. Without the prior written consent of the Initial Purchaser, the Company agrees not to
accelerate the vesting of any option or warrant or the lapse of any repurchase right prior to the
expiration of the Lock-Up Period. If (1) during the period that begins on the date that is 18
calendar days before the last day of the Lock-Up Period and ends on the last day of the Lock-Up
Period, (a) the Company issues an earnings release, (b) the Company publicly announces material
news or (c) a material event relating to the Company occurs; or (2) prior to the expiration of the
Lock-Up Period, the Company announces that it will release earnings results during the 16-day
period beginning on the last day of the Lock-Up Period, then the restrictions in this Agreement,
unless otherwise waived by the Initial Purchaser in writing, shall continue to apply until the
expiration of the date that is 18 calendar days after the date on which (a) the Company issues the
earnings release, (b) the Company publicly announces material news or (c) a material event relating
to the Company occurs. The Company will provide the Initial Purchaser and each shareholder subject
to the Lock-Up Agreement (as defined below) with prior notice of any such announcement that may
give rise to the extension of the Lock-Up Period.

          (j) The Company has caused to be delivered to you prior to the date of this Agreement a letter
from each of the Company’s directors and officers stating that such person agrees that, subject to
certain conditions, he or she will not, without your prior written consent, offer for sale, sell,
contract to sell or otherwise dispose of, as set forth in such letter, any Common Stock or rights
to purchase Common Stock, for a period of 45 days after the date of this Agreement, subject to
extension in certain circumstances (the “Lock-Up Agreement”). The Company will use its reasonable
best efforts to assist the Initial Purchaser in enforcing the terms of each Lock-Up Agreement and
will issue stop-transfer instructions to the transfer agent for the Common Stock with respect to
any transaction or contemplated transaction that would constitute a breach of or default under the
applicable Lock-Up Agreement.

          (k) The Company has not taken and will not take, directly or indirectly, any action designed
to or which might reasonably be expected to cause or result in, or which has constituted, the
stabilization or manipulation of the price of any security of the Company to facilitate the sale or
resale of the Securities.

          (l) The Company will not incur any liability for any finder’s or broker’s fee or agent’s
commission in connection with the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.

          (m) Until the expiration of one year after the completion of the distribution of the
Securities by the Initial Purchaser as contemplated in this Agreement and the Offering Memorandum,
the Company and the Subsidiaries will maintain such controls and other procedures, including
without limitation those required by Sections 302 and 906 of the Sarbanes-Oxley Act and the
applicable regulations thereunder, that are designed to ensure that information required to be
disclosed by the Company in the reports that it files or submits under the

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Exchange Act is recorded, processed, summarized and reported within the time periods specified
in the Commission’s rules and forms, including without limitation, controls and procedures designed
to ensure that information required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the Company’s management,
including its principal executive officer and its principal financial officer, or persons
performing similar functions, as appropriate to allow timely decisions regarding required
disclosure, to ensure that material information relating to Company, including its subsidiaries, is
made known to them by others within those entities.

          (n) Until the expiration of one year after the completion of the distribution of the
Securities by the Initial Purchaser as contemplated in this Agreement and the Offering Memorandum,
the Company and the Subsidiaries will comply in all material respects with the effective applicable
provisions of the Sarbanes-Oxley Act.

          (o) The Company will use its reasonable best efforts to assure that the Option Securities
shall have the same CUSIP number as the CUSIP number assigned to the Firm Securities.

          (p) The Company shall submit an additional share listing application for the Underlying
Securities with the Nasdaq Global Select Market prior to the First Closing Date and will use its
reasonable best efforts to promptly have the Underlying Securities approved by the Nasdaq Global
Select Market for listing following the First Closing Date.

          (q) During the Offering Memorandum Delivery Period, the Company will file on a timely basis
with the Commission such periodic and special reports as required by the Exchange Act and the rules
and regulations thereunder. The Company shall use its reasonable best efforts to take all steps
necessary or appropriate to facilitate the distribution of the Securities by the Initial Purchaser
pursuant to Rule 144A as shall be reasonably requested by the Initial Purchaser, including, without
limitation, participation by the Company’s executive officers in the preparation of materials for
investor presentations and participation in investor meetings and roadshow presentations reasonably
requested by the Initial Purchaser.

          (r) The Company shall issue a press release announcing the pricing of the offering of the
Securities in the form reasonably satisfactory to the Initial Purchaser and its counsel and in
compliance with Rule 135(c) no later that 4:30 a.m., Pacific time, on October 9, 2009.

          (s) The Company will at all times reserve and keep available, free of any preemptive rights,
co-sale rights, registration rights, rights of first refusal, other rights to subscribe for or
purchase securities or other rights of security holders similar to any of the foregoing, out of its
authorized but unissued Common Stock, for the purpose of effecting the conversion of the Securities
into the Underlying Securities, the full number of shares of Underlying Securities issuable upon
the conversion of all outstanding Securities.

          (t) The Company shall take all actions necessary to cause the Securities to be eligible for
clearance and settlement and “book-entry” transfer through DTC and the Company agrees to comply
with all agreements set forth in the representation letters of the Company to DTC relating to the
approval of the Securities by DTC for “book-entry” transfer.

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          (u) The Company will indemnify and hold the Initial Purchaser harmless against any
documentary, stamp or similar issuance or transfer taxes, duties or fees and any transaction
levies, commissions or brokerage charges, including any interest and penalties, which are or may be
required to be paid in connection with the creation, allotment, issuance, offer and distribution of
the Securities and the execution and delivery of this Agreement, the Indenture, the Registration
Rights Agreement and the Securities; provided, however, that the Company shall not be responsible
for any such taxes, duties, fees, levies or charges that arise as a result of the distribution of
the Securities by the Initial Purchaser in a manner other than that as is customary in such
transactions.

     Section 5. Subsequent Offers and Resales of the Securities.

          (a) The Initial Purchaser and the Company each hereby agree with respect to itself in
connection with the offer and sale of the Securities:

               (1) Offers and sales of the Securities shall be made to such persons and in such manner as is
contemplated by the Offering Memorandum.

               (2) No general solicitation or general advertising (within the meaning of Rule 502(c) under
the Securities Act) will be used in the United States in connection with the offering or sale of
the Securities.

               (3) The transfer restrictions and the other provisions set forth in the Offering Memorandum
under the caption “Transfer Restrictions,” including the legend required thereby, shall apply to
the Securities except as otherwise agreed by the Company and the Initial Purchaser.

          (b) The Company covenants with the Initial Purchaser as follows:

               (1) The Company agrees that it will not, and will cause its Affiliates not to, directly or
indirectly, solicit any offer to buy, sell or make any offer or sale of, or otherwise negotiate in
respect of, securities of the Company of any class if, as a result of the doctrine of “integration”
referred to in Rule 502 under the Securities Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the offered Securities by the Company to the Initial Purchaser, (ii) the
resale of the offered Securities by the Initial Purchaser to subsequent purchasers or (iii) the
resale of the offered Securities by such subsequent purchasers to others) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof or by Rule 144A
thereunder or otherwise.

               (2) Until the expiration of one year after the original issuance of the offered Securities,
the Company will not, and will cause its Affiliates not to, resell any offered Securities which are
“restricted securities” (as such term is defined under Rule 144(a)(3) under the Securities Act),
whether as beneficial owner or otherwise (except as agent acting as a securities broker on behalf
of and for the account of customers in the ordinary course of business in unsolicited broker’s
transactions).

               (3) To the extent that any Securities or Underlying Securities remain outstanding and are
“restricted securities” within the meaning of Rule 144 under the

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Securities Act, during the one year period following the First Closing Date (or, if later, the
Second Closing Date) and during the one-year period following the sale of any such Security or
Underlying Security, as the case may be, by an Affiliate of the Company (for purposes of this
Section 5 only, as such term is defined in Rule 144(a)(1) under the Securities Act), the Company
will make available, upon request, to any seller of such Securities or Underlying Securities, as
the case may be, the information specified in Rule 144A(d)(4) under the Securities Act, unless the
Company is then subject to and in compliance with Section 13 or 15(d) of the Exchange Act.

          (c) The Initial Purchaser covenants with the Company as follows:

               (1) The Initial Purchaser represents and warrants to, and agrees with, the Company that it is
a Qualified Institutional Buyer within the meaning of Rule 144A under the Securities Act (a
“Qualified Institutional Buyer”) and an “accredited investor” within the meaning of Rule 501(a)
under the Securities Act (an “Accredited Investor”).

               (2) The Initial Purchaser represents and warrants to, and agrees with, the Company that it
will only sell the Securities to persons whom the Initial Purchaser reasonably believes are
Qualified Institutional Buyers.

               (3) The Initial Purchaser will take reasonable steps to inform, and cause each of its U.S.
Affiliates to take reasonable steps to inform, persons acquiring Securities from the Initial
Purchaser or such affiliate, as the case may be, that the Securities (A) have not been and will not
be registered under the Securities Act, (B) are being sold to them without registration under the
Securities Act in reliance on Rule 144A or in accordance with another exemption from registration
under the Securities Act, as the case may be, and (C) may not be offered, sold or otherwise
transferred except (1) to the Company, (2) outside the United States in accordance with Regulation
S under the Securities Act and in compliance with the securities laws of such non-United States
jurisdiction, or (3) inside the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is purchasing such Securities
for its own account or for the account of a Qualified Institutional Buyer to whom notice is given
that the offer, sale or transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the Securities Act.

     Section 6. Conditions of Initial Purchaser’s Obligations. The obligations of the Initial
Purchaser hereunder to purchase the Securities is subject to the accuracy, as of the date hereof
and at each of the First Closing Date and the Second Closing Date (as if made at such Closing
Date), of and compliance with all representations, warranties and agreements of the Company
contained herein, to the performance by the Company of its obligations hereunder and to the
following additional conditions:

          (a) The Initial Purchaser shall not have advised the Company that the Time of Sale Disclosure
Package or the Offering Memorandum, or any amendment thereof or supplement thereto, or any
Supplemental Offering Material, contains an untrue statement of fact which, in your opinion, is
material, or omits to state a fact which, in your opinion, is material and is required to be stated
therein or necessary to make the statements therein not misleading.

-22-

 

          (b) Except as contemplated in the Time of Sale Disclosure Package and in the Offering
Memorandum, subsequent to the respective dates as of which information is given in the Time of Sale
Disclosure Package, neither the Company nor any Subsidiary shall have incurred any material
liabilities or obligations, direct or contingent, or entered into any material transactions, or
declared or paid any dividends or made any distribution of any kind with respect to its capital
stock; and there shall not have been any change in the capital stock (other than a change in the
number of outstanding shares of Common Stock due to the grant of options or the issuance of shares
under the Company’s employee stock plans or upon the exercise of outstanding options, warrants or
the conversion of outstanding convertible securities), or any material change in the short-term or
long-term debt of the Company, or any issuance of options, warrants, convertible securities or
other rights to purchase the capital stock of the Company or any Subsidiary (other than pursuant to
existing employee benefit plans, stock option plans or other employee compensation plans), or any
material adverse change or any development involving a prospective material adverse change (whether
or not arising in the ordinary course of business), or any material loss by strike, fire, flood,
earthquake, accident or other calamity, whether or not covered by insurance, incurred by the
Company or any Subsidiary, the effect of which, in any such case described above, in your judgment,
makes it impractical or inadvisable to offer or deliver the Securities on the terms and in the
manner contemplated in the Time of Sale Disclosure Package and in the Offering Memorandum.

          (c) On each Closing Date, there shall have been furnished to you, as the Initial Purchaser,
the opinions of each of:

               (1) DLA Piper LLP (US), counsel for the Company, dated such Closing Date and addressed to you,
to the effect set forth on Exhibit A hereto; and

               (2) Shearn Delamore & Co., Malaysian counsel for the Company, dated such Closing Date and
addressed to you, to the effect set forth on Exhibit B hereto.

          (d) On each Closing Date, there shall have been furnished to you, as the Initial Purchaser,
such opinions from Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel for the
Initial Purchaser, dated such Closing Date and addressed to you, with respect to such matters as
you reasonably may request, and such counsel shall have received such papers and information as
they request to enable them to pass upon such matters.

          (e) On the date hereof, Ernst & Young LLP shall have furnished to you, as the Initial
Purchaser, a letter dated as of the date hereof in form and substance reasonably satisfactory to
the Initial Purchaser. On each Closing Date you, as the Initial Purchaser, shall have received a
letter of Ernst & Young LLP, independent registered public accounting firm, dated such Closing Date
and addressed to you, confirming that they are an independent registered public accounting firm
within the meaning of the Securities Act and the rules and regulations thereunder and are in
compliance with the applicable requirements relating to the qualifications of accountants under
Rule 2-01 of Regulation S-X of the Commission, and stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the respective dates as of which
specified financial information is given in the Time of Sale Disclosure Package, as of a date not
prior to the date hereof or more than five days prior to the

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date of such letter), the conclusions and findings of said firm with respect to the financial
information and other matters covered by its letter delivered to you concurrently with the
execution of this Agreement, and the effect of the letter so to be delivered on such Closing Date
shall be to confirm the conclusions and findings set forth in such prior letter.

          (f) On each Closing Date, there shall have been furnished to you, as the Initial Purchaser, a
certificate dated such Closing Date and addressed to you, signed by the chairman of the board or
the chief executive officer of the Company and by the chief financial officer of the Company, to
the effect that:

               (1) The representations and warranties of the Company in this Agreement are true and correct,
in all material respects, as if made at and as of such Closing Date, and the Company has complied
with all the agreements and satisfied all the conditions on its part to be performed or satisfied
at or prior to such Closing Date.

               (2) The signers of said certificate have carefully examined the Time of Sale Disclosure
Package and the Offering Memorandum, and any amendments thereof or supplements thereto (including
any documents filed under the Exchange Act and deemed to be incorporated by reference into the Time
of Sale Disclosure Package and the Offering Memorandum), and:

                    (A) the Offering Memorandum, as amended or supplemented, does not include and did not include
as of its date, or such Closing Date, any untrue statement of a material fact or omit to state and
did not omit to state as of its date, or such Closing Date, a material fact necessary to make the
statements therein, in light of the circumstances under which they were made;

                    (B) neither (1) the Time of Sale Disclosure Package nor (2) Supplemental Offering Materials,
when considered together with the Time of Sale Disclosure Package, include, nor included as of the
Time of Sale any untrue statement of a material fact or omits, or omitted as of the Time of Sale,
to state any material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

                    (C) since the Time of Sale, there has occurred no event required to be set forth in an amended
or supplemented offering memorandum which has not been so set forth, and there has been no document
required to be filed under the Exchange Act that upon such filing would be deemed to be
incorporated by reference into the Time of Sale Disclosure Package or into the Offering Memorandum
that has not been so filed;

                    (D) subsequent to the respective dates as of which information is given in the Time of Sale
Disclosure Package, neither the Company nor any Subsidiary has incurred any material liabilities or
obligations, direct or contingent, or entered into any material transactions, not in the ordinary
course of business, or declared or paid any dividends or made any distribution of any kind with
respect to its capital stock, and except as disclosed in the Time of Sale Disclosure Package and in
the Offering Memorandum, there has not been any change in the capital stock (other than a change in
the number of outstanding Common Stock due to the issuance of shares upon the exercise of
outstanding options or

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warrants), or any material change in the short term or long term debt, or any issuance of
options, warrants, convertible securities or other rights to purchase the capital stock, of the
Company, or any Subsidiary, or any material adverse change or any development involving a
prospective material adverse change (whether or not arising in the ordinary course of business), or
any loss by strike, fire, flood, earthquake, accident or other calamity, whether or not covered by
insurance, incurred by the Company or any Subsidiary; and

                    (E) except as stated in the Time of Sale Disclosure Package and in the Offering Memorandum,
there is not pending, or, to the knowledge of the Company, threatened or contemplated, any action,
suit or proceeding to which the Company or any Subsidiary is a party before or by any court or
governmental agency, authority or body, or any arbitrator, which would reasonably be expected to
have a Material Adverse Effect.

          (g) On the date hereof, the Company shall have furnished to you an executed copy of the
Consent, by and among Silicon Valley Bank, the Company and Optium Corporation with respect to the
offer, sale and issuance of the Securities.

          (h) On the date hereof, the Company shall have furnished to you an executed copy of the
certificate of Wells Fargo Foothill, LLC pursuant to the Credit Agreement, entered into as of
October 2, 2009, by and among the lenders identified therein, Wells Fargo Foothill, LLC, as agent,
the Company and Optium Corporation (the “WFF Agreement”) that the indebtedness evidenced by the
Indenture and the Securities is Permitted Convertible Note Debt (as defined in the WFF Agreement).

          (i) The Company shall have furnished to you and counsel for the Initial Purchaser such
additional documents, certificates and evidence as you or they may have reasonably requested.

     All such opinions, certificates, letters and other documents will be in compliance with the
provisions hereof only if they are satisfactory in form and substance to you and counsel for the
Initial Purchaser. The Company will furnish you with such conformed copies of such opinions,
certificates, letters and other documents as you shall reasonably request.

     Section 7. Indemnification and Contribution.

          (a) The Company agrees to indemnify and hold harmless the Initial Purchaser against any
losses, claims, damages or liabilities to which the Initial Purchaser may become subject, under the
Securities Act or otherwise (including in settlement of any litigation if such settlement is
effected with the written consent of the Company), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i) an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary Offering Memorandum,
the Time of Sale Disclosure Package, the Offering Memorandum, or any amendment or supplement
thereto (including any documents filed under the Exchange Act and deemed to be incorporated by
reference into the Offering Memorandum), any Pricing Term Sheet or Supplemental Offering Materials
or in any materials or information provided to investors by, or with the approval of, the Company
in connection with the marketing of the offering of the Securities (“Marketing Materials”),
including any roadshow or investor

-25-

 

presentations made to investors by the Company (whether in person or electronically) or arise
out of or are based upon the 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
the Initial Purchaser for any legal or other expenses reasonably incurred by it in connection with
investigating or defending against such loss, claim, damage, liability or action as such expenses
are incurred; or (ii) in whole or in part upon any inaccuracy in the representations and warranties
of the Company contained herein; or (iii) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage, liability or action arises
out of or is based upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Offering Memorandum, the Time of Sale Disclosure Package, the
Offering Memorandum, or any such amendment or supplement, any Pricing Term Sheet or Supplemental
Offering Materials or in any Marketing Materials, in reliance upon and in conformity with written
information furnished to the Company by you specifically for use in the preparation thereof; it
being understood and agreed that the only such information furnished by you consists of the
information described as such in Section 7(f) hereof.

          (b) The Initial Purchaser will indemnify and hold harmless the Company against any losses,
claims, damages or liabilities to which the Company may become subject, under the Securities Act or
otherwise (including in settlement of any litigation, if such settlement is effected with the
written consent of the Initial Purchaser, such consent not to be unreasonably withheld), insofar as
such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Memorandum, the Time of Sale Disclosure Package, the Offering Memorandum, or
any amendment or supplement thereto or any Pricing Term Sheet, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission or alleged omission
was made in any Preliminary Offering Memorandum, the Time of Sale Disclosure Package, the Offering
Memorandum, or any amendment or supplement thereto, or any Pricing Term Sheet in reliance upon and
in conformity with written information furnished to the Company by you, specifically for use in the
preparation thereof (it being understood and agreed that the only such information furnished by you
consists of the information described as such in Section 7(f) hereof), and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim, damage, liability or action.

          (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice
of the commencement of any action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the indemnifying party shall not
relieve the indemnifying party from any liability that it may have to any indemnified party except
to the extent such indemnifying party has been materially prejudiced by such failure (through the
forfeiture of substantive rights or defenses). In case any such action shall be brought against
any indemnified party, and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to

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participate in, and, to the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such indemnified party of the
indemnifying party’s election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other than reasonable
costs of investigation.

          The indemnifying party under this Section 7 shall not be liable for any settlement of any
proceeding effected without its written consent, but if settled with such consent or if there be a
final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of counsel as
contemplated by this Section 7, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such settlement is entered
into more than 30 days after receipt by such indemnifying party of the aforesaid request and (ii)
such indemnifying party shall not have reimbursed the indemnified party in accordance with such
request prior to the date of such settlement. No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement, compromise or consent to the entry
of judgment in any pending or threatened action, suit or proceeding in respect of which any
indemnified party is or could have been a party and indemnity was or could have been sought
hereunder by such indemnified party, unless such settlement, compromise or consent (a) includes an
unconditional release of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding and (b) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

          (d) If the indemnification provided for in this Section 7 is unavailable or insufficient to
hold harmless an indemnified party under subsection (a) or (b) above, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities referred to in subsection (a) or (b) above, (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on the one hand and the
Initial Purchaser on the other from the offering of the Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and the Initial Purchaser on the other in connection
with the statements or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits received by the Company
on the one hand and the Initial Purchaser on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses) received by the Company
bear to the total discounts and commissions received by the Initial Purchaser, in each case as set
forth in the Offering Memorandum or in this Agreement. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to information supplied by the
Company or the Initial Purchaser and the parties’ relevant intent, knowledge, access to information
and opportunity to correct or prevent such

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untrue statement or omission. The Company and the Initial Purchaser agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were to be determined by pro
rata allocation or by any other method of allocation which does not take account of the equitable
considerations referred to in the first sentence of this subsection (d). The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities referred to in the
first sentence of this subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating or defending against
any action or claim which is the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), the Initial Purchaser shall not be required to contribute any amount in excess
of the amount by which the total price at which the Securities were offered exceeds the amount of
any damages that the Initial Purchaser has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation.

          (e) The obligations of the Company under this Section 7 shall be in addition to any liability
which the Company may otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls the Initial Purchaser within the meaning of the Securities Act; and
the obligations of the Initial Purchaser under this Section 7 shall be in addition to any liability
that the Initial Purchaser may otherwise have and shall extend, upon the same terms and conditions,
to each director of the Company, to each officer of the Company and to each person, if any, who
controls the Company within the meaning of the Securities Act.

          (f) The Initial Purchaser confirms and the Company acknowledges that the statements with
respect to the offering of the Securities by the Initial Purchaser set forth in the first sentence
of the second paragraph under the heading “No Prior Market” and in the first paragraph under the
heading “Stabilization” under the section entitled “Plan of Distribution” in the Time of Sale
Disclosure Package and in the Offering Memorandum are correct and constitute the only information
concerning such Initial Purchaser furnished in writing to the Company by or on behalf of the
Initial Purchaser specifically for inclusion in any Preliminary Offering Memorandum, the Time of
Sale Disclosure Package, the Offering Memorandum or any Pricing Term Sheet.

     Section 8. Representations and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Initial Purchaser and the Company herein or in certificates
delivered pursuant hereto, including but not limited to the agreements of the Initial Purchaser and
the Company contained in Section 7 hereof, shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial Purchaser or any controlling
person thereof, or the Company or any of its officers, directors, or controlling persons, and shall
survive delivery of, and payment for, the Securities to and by the Initial Purchaser hereunder.

     Section 9. Termination of this Agreement.

          (a) You, as the Initial Purchaser, shall have the right to terminate this Agreement by giving
notice to the Company as hereinafter specified at any time at or prior to the

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First Closing Date, and the option referred to in Section 3(b) hereof, if exercised, may be
cancelled at any time prior to the Second Closing Date, if (i) the Company shall have failed,
refused or been unable, at or prior to such Closing Date, to perform any agreement on its part to
be performed hereunder, (ii) any condition of the Initial Purchaser’s obligations hereunder is not
fulfilled, (iii) trading in the Company’s Common Stock shall have been suspended by the Commission
or the Nasdaq Global Select Market or trading in securities generally on the Nasdaq Stock Market,
New York Stock Exchange or the American Stock Exchange shall have been suspended, (iv) minimum or
maximum prices for trading shall have been fixed, or maximum ranges for prices for securities shall
have been required, on the Nasdaq Stock Market, New York Stock Exchange or the American Stock
Exchange, by such exchange or by order of the Commission or any other governmental authority having
jurisdiction, (v) a banking moratorium shall have been declared by federal or state or local
authorities in the United States or Malaysia, (vi) there shall have occurred any attack on,
outbreak or escalation of hostilities or act of terrorism involving the United States or Malaysia,
any declaration by the United States or Malaysia of a national emergency or war, any change in
financial markets, any substantial change or development involving a prospective substantial change
in United States or international political, financial or economic conditions, or any other
calamity or crisis that, in your judgment, is material and adverse and makes it impractical or
inadvisable to proceed with the completion of the sale of and payment for the Securities. Any such
termination shall be without liability of any party to any other party except that the provisions
of Section 4(g) and Section 7 hereof shall at all times be effective and shall survive such
termination.

          (b) If you elect to terminate this Agreement as provided in this Section 9, the Company shall
be notified promptly by you by telephone, confirmed by letter.

     Section 10. Default by the Company.

          (a) If the Company shall fail at the First Closing Date to sell and deliver the aggregate
principal amount of Securities which it is obligated to sell hereunder, this Agreement shall
terminate without any liability on the part of the Initial Purchaser.

          (b) No action taken pursuant to this Section 10 shall relieve the Company so defaulting from
liability, if any, in respect of such default.

     Section 11. Notices. Except as otherwise provided herein, all communications hereunder shall
be in writing and, if to the Initial Purchaser, shall be mailed, delivered or telecopied to the
Initial Purchaser at 345 California Street, Suite 2400, San Francisco, California 94104, Attention:
Martin Alvarez (telecopy no. (415) 984-5121), with a copy to Wilson Sonsini Goodrich & Rosati,
Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, Attention: John A. Fore,
Esq. (telecopy no. (650) 493-6811), if to the Company, shall be mailed, delivered or telecopied to
it at 1389 Moffett Park Drive, Sunnyvale, California 94089, Attention: Chief Financial Officer
(telecopy no. (408) 541-4154, with a copy to DLA Piper LLP (US), 2000 University Avenue, East Palo
Alto, California 94303, Attention: Dennis C. Sullivan, Esq. (telecopy no. (650) 687-1200). Any
party to this Agreement may change such address for notices by sending to the parties to this
Agreement written notice of a new address for such purpose.

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     Section 12. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and assigns and
the controlling persons, officers and directors referred to in Section 7. Nothing in this
Agreement is intended or shall be construed to give to any other person, firm or corporation any
legal or equitable remedy or claim under or in respect of this Agreement or any provision herein
contained. The term “successors and assigns” as herein used shall not include any purchaser, as
such purchaser, of any of the Securities from the Initial Purchaser.

     Section 13. Research Analyst Independence. The Company acknowledges that the Initial
Purchaser’s research analysts and research departments are required to be independent from their
investment banking divisions and are subject to certain regulations and internal policies, and that
the Initial Purchaser’s research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company and/or the offering
that differ from the views of their investment banking divisions. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that the Company may have against the
Initial Purchaser with respect to any conflict of interest that may arise from the fact that the
views expressed by their independent research analysts and research departments may be different
from or inconsistent with the views or advice communicated to the Company by the Initial
Purchaser’s investment banking divisions. The Company acknowledges that the Initial Purchaser is a
full service securities firm and as such from time to time, subject to applicable securities laws,
may effect transactions for its own account or the account of its customers and hold long or short
positions in debt or equity securities of the companies that may be the subject of the transactions
contemplated by this Agreement.

     Section 14. Absence of Fiduciary Relationship. The Company acknowledges and agrees that: (a)
the Initial Purchaser has been retained solely to act as an initial purchaser in connection with
the sale of the Securities and that no fiduciary, advisory or agency relationship between the
Company and the Initial Purchaser has been created in respect of any of the transactions
contemplated by this Agreement, irrespective of whether the Initial Purchaser has advised or is
advising the Company on other matters; (b) the price and other terms of the Securities set forth in
this Agreement were established by the Company following discussions and arms-length negotiations
with the Initial Purchaser and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (c) it has been advised that the Initial Purchaser and its affiliates are engaged in a
broad range of transactions which may involve interests that differ from those of the Company and
that the Initial Purchaser has no obligation to disclose such interest and transactions to the
Company by virtue of any fiduciary, advisory or agency relationship; (d) it has been advised that
the Initial Purchaser is acting, in respect of the transactions contemplated by this Agreement,
solely for the benefit of the Initial Purchaser and not on behalf of the Company; (e) it waives, to
the fullest extent permitted by law, any claims it may have against the Initial Purchaser for
breach of fiduciary duty or alleged breach of fiduciary duty in respect of any of the transactions
contemplated by this Agreement and agrees, to the fullest extent permitted by law, that the Initial
Purchaser shall have no liability (whether direct or indirect) to the Company in respect of such a
fiduciary duty claim on behalf of or in right of the Company, including stockholders, employees or
creditors of the Company.

-30-

 

     Section 15. Headings. The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of, this Agreement.

     Section 16. General Provisions. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The Section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.

     Section 17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

     Section 18. Time. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT AS OTHERWISE SET
FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

     Section 19. Counterparts. This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be deemed to be an
original and all such counterparts shall together constitute one and the same instrument.

[Signature Page Follows]

-31-

 

     Please sign and return to the Company the enclosed duplicates of this letter whereupon this
letter will become a binding agreement between the Company and the Initial Purchaser in accordance
with its terms.

	 	 	 	 	 
	 	Very truly yours,

Finisar Corporation

 	 
	 	By:  	/s/ Stephen K. Workman
 	 
	 	 	Name:  	Stephen K. Workman 	 
	 	 	Title:  	Senior Vice President, Finance 

and Chief Financial Officer 	 
	 

	 	 	 	 	 
	Confirmed as of the date first above

mentioned, on behalf of themselves.

Piper Jaffray & Co.

 	 	 
	By:  	/s/ Martin C. Alvarez
 	 	 
	 	Managing Director 	 	 
	 	 	 	 

 

 

	 	 	 	 	 

SCHEDULE A

Pricing Term Sheet

 

 

EXHIBIT A

OPINION OF DLA PIPER LLP (US),

COUNSEL FOR THE COMPANY

     The opinion of DLA Piper LLP (US), counsel for the Company, to be delivered pursuant to
Section 6(c)(1) of the Agreement shall be to the effect that:

     A. The Company has been duly incorporated and is an existing corporation in good standing
under the laws of the State of Delaware and is duly qualified to do business as a foreign
corporation, and is in good standing, in the States of California, New Jersey, Pennsylvania and
Texas; and has the corporate power to own and lease the properties it purports to own and lease and
to conduct the business in which it is engaged as described in the Time of Sale Disclosure Package,
the Offering Memorandum and the Incorporated Documents.

     B. Each Subsidiary of the Company listed on Schedule I hereto has been duly incorporated and
is an existing corporation in good standing under the laws of the jurisdiction of its incorporation
and is duly qualified to do business as a foreign corporation, and is in good standing, in the
states listed on Schedule I hereto; and has the corporate power to own and lease the properties it
purports to own and lease and to conduct the business in which it is engaged as described in the
Time of Sale Disclosure Package, the Offering Memorandum and the Incorporated Documents

     C. The Company has all necessary corporate power and authority to execute and deliver the
Agreement, the Indenture, the Registration Rights Agreement and the Securities and to perform its
obligations thereunder.

     D. The execution and delivery of the Agreement, the Indenture, the Registration Rights
Agreement and the Securities by the Company and the performance of its obligations thereunder have
been duly authorized by all necessary corporate action on the part of the Company.

     E. The Agreement has been duly executed and delivered by the Company.

     F. The Securities have been duly authorized and executed by the Company and, when
authenticated by the Trustee in accordance with the Indenture and paid for as provided in the
Agreement, will constitute valid and legally binding obligations of the Company enforceable against
the Company in accordance with their terms and will be entitled to the benefits of the Indenture
and the Registration Rights Agreement.

     G. The shares of Common Stock initially issuable upon conversion of the Securities being
delivered on the date hereof have been duly authorized and reserved for issuance upon such
conversion and, when issued and delivered upon conversion of the Securities in accordance with the
provisions of the Securities and the Indenture, will be duly and validly issued, fully paid and
non-assessable; and such issuance would not be subject to any preemptive or other similar rights to
acquire Common Stock under the certificate of incorporation or by-laws of the Company or the
Delaware General Corporation Law (the “DGCL”).

 

 

     H. Each of the Registration Rights Agreement and the Indenture has been duly executed and
delivered by the Company and constitute valid and legally binding obligations of the Company,
enforceable against the Company in accordance with its respective terms, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ rights
generally and to general principles of equity.

     I. The execution and delivery of, and the performance by the Company of its obligations under,
the Agreement, the Registration Rights Agreement, the Indenture and the Securities (including the
obligation of the Company to issue Common Stock upon the conversion of the Securities) do not and
will not violate or conflict with, result in a breach of, or constitute a default under, (a) the
certificate of incorporation or by-laws of the Company; (b) any agreement or instrument listed on
Schedule II to such opinion, (c) any U.S. federal or New York, California state statute or the DGCL
or (d) to the knowledge of such counsel, any rule, order, decision, judgment or decree of any court
or governmental body or agency of the United States, Delaware (under the DGCL), New York or
California that may be applicable to the Company or any Subsidiary or any of their respective
properties.

     J. The filing of a registration statement with the Commission pursuant to the Registration
Rights Agreement has been duly authorized by and on behalf of the Company.

     K. Except for compliance with the securities or Blue Sky laws and the filing of a
Notification: Listing of Additional Shares with The Nasdaq Stock Market LLC, no consents,
approvals, orders or authorizations to be obtained by the Company from, or any registrations,
declarations or filings to be made by the Company with, any governmental authority under any United
States federal or New York, Delaware, California statute, rule or regulation applicable to the
Company or the DGCL are required to have been obtained that have not been obtained or made by the
Company for (a) the valid execution and delivery by the Company of the Agreement, the Registration
Rights Agreement, the Indenture and the Securities, (b) the sale by the Company of the Securities
under the Agreement, (c) the issuance by the Company of the Securities under the Indenture and the
payment by the Company of the Securities, with interest, in accordance with their terms or (d) the
issuance by the Company of Common Stock upon the conversion of the Securities in accordance with
the Indenture.

     L. The documents incorporated by reference in the Time of Sale Disclosure Package and the
Offering Memorandum (other than the financial statements and notes thereto and related financial
statement schedules and the financial data based on or derived from such financial statements or
schedules included therein or omitted therefrom, as to which such counsel need express no opinion),
when they were filed (or, if an amendment with respect to any such document was filed, when such
amendment was filed) with the Commission, complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission thereunder.

     M. The Company has the authorized capital stock as set forth in the Time of Sale Disclosure
Package and the Offering Memorandum under the caption “Description of Capital Stock”; The
statements set forth in the Time of Sale Disclosure Package and the Offering Memorandum under the
captions “Description of Notes,” “Description of Capital Stock,” “Plan of Distribution” and
“Transfer Restrictions” insofar as they purport to constitute a summary of

-2-

 

the terms of the Notes, the capital stock of the Company or legal matters or provisions of the
Purchase Agreement, Indenture, Registration Rights Agreement or the certification of incorporation
or by-laws of the Company, fairly summarize, in all material respects, such terms.

     N. The statements set forth in the Time of Sale Disclosure Package and the Offering Memorandum
under the caption “Certain U.S. Federal Income Tax Considerations,” insofar as they purport to
describe provisions of the United States federal tax laws referred to therein, fairly summarize, in
all material respects, the matters referred to therein.

     O. The Company is not, and after giving effect to the offering and sale of the Securities and
the application of the proceeds thereof as described in the Time of Sale Disclosure Package and the
Offering Memorandum will not be, required to register as an “investment company” as such term is
defined in the Investment Company Act of 1940, as amended.

     P. To such counsel’s knowledge except as disclosed in the Time of Sale Disclosure Package and
the Offering Memorandum, (a) no legal or governmental actions, suits or proceedings are pending to
which the Company or any Subsidiary is or may be a party, or to which the property of the Company
or any Subsidiary is or may be subject, except in each case for proceedings that, if the subject of
an unfavorable decision, rule or finding would not, individually or in the aggregate, reasonably be
expect to have a Material Adverse Effect and (b) no such proceedings have been threatened in
writing against the Company or any Subsidiary or with respect to their respective properties.

     Q. Assuming the accuracy of the Initial Purchaser’s representation and warranties, and the
Initial Purchaser’s compliance with the covenants, contained in the Agreement, no registration of
the Securities or the Underlying Securities under the Securities Act or qualification of the
Indenture under the Trust Indenture Act of 1939, as amended, is required in connection with the
offer, sale and delivery of the Securities by the Company to the Initial Purchaser or the initial
resale of the Securities by the Initial Purchaser in the manner contemplated by the Agreement, the
Time of Sale Disclosure Package and the Offering Memorandum (it being understood that, such counsel
need express no opinion as to any subsequent resale of the Securities).

     Such counsel shall also state that they have participated in conferences with representatives
of the Company and with representatives of the Company’s independent accountants and counsel at
which conferences the contents of the Time of Sale Disclosure Package and the Offering Memorandum
and any amendment and supplement thereto and related matters were discussed and, although such
counsel assume no responsibility for the accuracy, completeness or fairness of the Time of Sale
Disclosure Package, the Offering Memorandum and any amendment or supplement thereto (except as
expressly provided above), no facts have come to the attention of such counsel to cause such
counsel to believe that the Time of Sale Disclosure Package, at the Time of Sale, contained any
untrue statement of a material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were made, not misleading or
that the Offering Memorandum or any amendment or supplement thereto, as of its date and as of the
Closing Date, contained or contains any untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading

-3-

 

(in each case, other than the financial statements and notes thereto and related financial
statement schedules and the financial data based on or derived from such financial statements or
schedules included therein or omitted therefrom, as to which such counsel need express no opinion).

-4-

 

SCHEDULE I

	 	 	 	 	 
	Subsidiary	 	Jurisdiction of Incorporation	 	Qualified to do Business
	Optium Corporation

	 	Delaware
	 	California
	 

	 	 	 	Florida
	 

	 	 	 	New Hampshire
	 

	 	 	 	Pennsylvania
	 

	 	 	 	Massachusetts
	AZNA, LLC

	 	Delaware
	 	Massachusetts
	Kailight Photonics, Inc.

	 	Delaware
	 	N/A
	Finisar Sales, Inc.

	 	Delaware
	 	N/A

-5-

 

SCHEDULE II

-6-

 

EXHIBIT B

OPINION OF SHEARN DELAMORE & CO.,

MALAYSIAN COUNSEL FOR THE COMPANY

     The opinion of Shearn Delamore & Co., Malaysian counsel for the Company, to be delivered
pursuant to Section 6(c)(2) of the Agreement shall be to the effect that:

     FINISAR MALAYSIA SDN BHD (Company No.538677-A) (the “Company”)

     We understand that Finisar Corporation (the “Issuer”), a corporation established in Delaware,
USA, proposes to issue and sell to Piper Jaffray & Co. (the “Initial Purchaser”), a corporation
established in Delaware, USA, convertible senior notes due 2029, pursuant to a purchase agreement
dated October 8, 2009 (the “Purchase Agreement”) entered into between both parties (collectively,
the “Transaction”).

	1.	 	For the purposes of the Transaction above, we have acted as Malaysian legal counsel for
Finisar Malaysia Sdn Bhd (Company No. 538677-A), a wholly owned subsidiary of the Issuer, in
connection with the matters set out under paragraph 5 below, under the laws of Malaysia.
	 
	2.	 	This opinion is limited to the laws of Malaysia of general application published and in
effect on the date of this opinion, as currently applied by the courts of Malaysia, and is
given on the basis that it will be governed by and construed (including all terms used in it)
in accordance with the laws of Malaysia. We have made no investigation of, and do not express
or imply any views on, the laws of any country other than Malaysia.
	 
	3.	 	For the purpose of rendering this opinion, we have examined:-

	 	(a)	 	A certified true copy of the Memorandum and Articles of Association of the
Company (the “M&A”) (a copy of which is enclosed herewith as Appendix I);
	 
	 	(b)	 	A certified true copy of the Certificate of Incorporation of Private Company
(Form 9) of the Company dated 8 February 2001 (a copy of which is enclosed herewith as
Appendix II);
	 
	 	(c)	 	A certified true copy of each Return of Allotment of Shares (Form 24) dated 13
February 2001, 22 June 2001, 11 February 2003 and 9 September 2004, respectively
(collectively, the “Forms 24”) (copies of which are enclosed herewith as Appendix III);
	 
	 	(d)	 	A certified true extract of the Members’ Register of the Company setting out
each acquisition by the Issuer of shares in the Company (the “Members’ Register”) (a
copy of which is enclosed herewith as Appendix IV);
	 
	 	(e)	 	A certified true copy of a Notice of Situation of Registered Office and Office
Hours and Particulars of Change (Form 44) dated 16 March 2007 (a copy of which is
enclosed herewith as Appendix V);
	 
	 	(f)	 	A certified true copy of a Return Giving Particulars in Register of Directors,
Managers & Secretaries and Changes of Particulars (Form 49) dated 7 September 2007 (a
copy of which is enclosed herewith as Appendix VI);
	 
	 	(g)	 	A certified true copy of the Annual Return of the Company dated 8 October 2008
(the “Annual Return”) (a copy of which is enclosed herewith as Appendix VII);

 

 

	 	(h)	 	An original letter dated October [   ], 2009 from the Company addressed to the
Initial Purchaser, confirming that its issued share capital is fully paid-up
(“Confirmation on Share Capital”) (a copy of which is enclosed herewith as Appendix
VIII);
	 
	 	(i)	 	An original certificate dated October [   ], 2009 signed by 2 directors of the
Company confirming inter alia that no legal proceedings have been commenced against it,
no action threatened for its liquidation nor have any of its business licences been
suspended or cancelled (the “Certificate”) (a copy of which is enclosed herewith as
Appendix IX);
	 
	 	(j)	 	A certified true copy of the minutes of each shareholders’ meeting held on 21
June 2001, 10 February 2003 and 8 September 2004, respectively (collectively, the
“Shareholders’ Resolutions”) (copies of each of which are enclosed herewith as Appendix
X);
	 
	 	(k)	 	A certified true copy of each circular Board resolution dated [   ], 22 June
2001, 10 February 2003 and 8 September 2004, respectively (collectively, the “Board
Resolutions”) (copies of each of which are enclosed herewith as Appendix XI);
	 
	 	(l)	 	the results of a company search on the Company at the Companies Commission of
Malaysia dated 12 October 2009 based on documents registered with the Companies
Commission as at 10 October 2008 (a copy of which is enclosed herewith as Appendix
XII); and
	 
	 	(m)	 	the results of a winding-up search on the Company made with the Director
General of Insolvency on 7 October 2009 (a copy of which is enclosed as Appendix XIII).

	 	 	     The Shareholders’ Resolutions and the Board Resolutions shall hereinafter collectively,
be referred to as the “Resolutions”. We have no knowledge of the day-to-day operations of
the Company and, except to the extent expressly set forth herein, have not undertaken any
independent investigation or inquiry into the Company’s affairs or business. Except as
stated in this paragraph 3, we have not examined any other documents and have not made any
other enquiries concerning the Company. The documents as set out in this paragraph 3 are
documents of a type which we would ordinarily request and rely on, in giving our opinion
under paragraph 5 below.

Assumptions

	4.	 	For the purpose of this opinion, we have assumed:

	 	(a)	 	that each of the Confirmation on Share Capital and the Certificate has been
duly authorized, executed and delivered by or on behalf of the Company.
	 
	 	(b)	 	the correctness of all facts stated in the Confirmation on Share Capital and
the Certificate.
	 
	 	(c)	 	that none of the Company’s signatories to each of the Confirmation on Share
Capital and the Certificate has signed the said documents by reason or in consequence
(whether wholly or in part) of fraud, mistake, duress, undue influence,
misrepresentation or any other similar act, matter or thing which would or might
vitiate or prejudicially affect the Purchase Agreement or otherwise entitle any party
to avoid, rescind or have rectified the Purchase Agreement or any of its obligations
under the Purchase Agreement and/or in connection with the Transaction.
	 
	 	(d)	 	the genuineness of all seals and signatures on all documents and the
completeness, and the conformity to original documents, of all copies and specimens
submitted to us and that any document submitted to us and any authorisation referred to
in this opinion continues in full force and effect.
	 
	 	(e)	 	that the copy of the Company’s M&A, submitted to us is up to date and
incorporates all amendments made thereto.

-2-

 

	 	(f)	 	that neither the Initial Purchaser nor any of its officers or employees has
notice (or would, on making reasonable enquiry, become aware) of any matter which would
adversely affect the validity or regularity of the documents set out under paragraph 3.
above.
	 
	 	(g)	 	that all other documents or agreements referred to in the documents set out
under paragraph 3. above, and which may affect the legality, validity and
enforceability of the latter, are themselves legal, valid and enforceable.

	 	 	Opinion
	 
	5.	 	Based on the documents referred to in paragraph 3 and the assumptions in paragraph 4 above
and subject to the qualification in paragraph 6 below and to any matters not disclosed to us,
we are of the opinion that:

	 	(a)	 	based on the company search conducted on the Company at the Companies
Commission of Malaysia on 12 October 2009, the Company is duly incorporated under the
Companies Act, 1965 of Malaysia and is validly existing as a private company with
limited liability under the laws of Malaysia.
	 
	 	(b)	 	based on the M&A, the Forms 24, the Members’ Register, the Confirmation on
Share Capital, the results of the company search conducted on 12 October 2009 (referred
to in paragraph 5(a) above), the Annual Return and the Resolutions, respectively:

	 	(i)	 	the Company has a total issued share capital of
RM133,000,000-00;
	 
	 	(ii)	 	the issued share capital is comprised of 133,000,000 ordinary shares of RM1.00 each in the Company (the “Issued Shares”);
	 
	 	(iii)	 	the Issued Shares are fully paid-up;
	 
	 	(iv)	 	the issuance of the Issued Shares by the Company on:

	 	a.	 	8 February 2001 was duly authorized by a Board
resolution passed on [ ], the relevant Form 24 dated 13 February 2001
was duly lodged with the Companies Commission on [   ] in accordance
with Section 54 of the Companies Act 1965 and the corresponding entry
made on the Members’ Register;
	 
	 	b.	 	22 June 2001 was duly authorized by a
shareholders’ resolution passed on 21 June 2001 and a circular Board
resolution dated 22 June 2001, the relevant Form 24 dated 22 June 2001
was duly lodged with the Companies Commission on [   ] in accordance
with Section 54 of the Companies Act 1965 and the corresponding entry
made on the Members’ Register;
	 
	 	c.	 	10 February 2003 was duly authorized by a
shareholders’ resolution passed on 10 February 2003 and a circular
Board resolution dated 10 February 2003, the relevant Form 24 dated 11
February 2003 was duly lodged with the Companies Commission on [   ] in
accordance with Section 54 of the Companies Act 1965 and the
corresponding entry made on the Members’ Register; and
	 
	 	d.	 	8 September 2004 was duly authorized by a
shareholders’ resolution passed on 8 September 2004 and a circular
Board resolution dated 8 September 2004, the relevant Form 24 dated 9
September 2004 was duly lodged with the Companies Commission on [   ] in
accordance with

-3-

 

	 	 	 	Section 54 of the Companies Act 1965 and the corresponding entry made
on the Members’ Register,

	 	 	 	and based on the documents enumerated at paragraphs 5(b)a. to 5(b)d. above,
the Issued Shares were validly issued.
	 
	 	(v)	 	Finisar Corporation holds all the Issued Shares and is the sole
shareholder of the Company.

	 	(c)	 	based on the winding up search dated 7 October 2009 conducted with the Director
General of Insolvency, no winding-up order has been made against the Company as at the
date of the search. Based on such winding-up search and the Certificate, the Company
has not taken any action nor have any steps been taken or legal or administrative
proceedings been commenced or threatened for the winding-up, dissolution or liquidation
of the Company or for the suspension, withdrawal, revocation or cancellation of any of
its business licences.

	 	 	Qualification
	 
	6.	 	In addition, this opinion is subject to the following qualification:

	 	(a)	 	that there may be a significant delay between the lodging of documents and the
subsequent entry of information from those documents, on the registers maintained with
the Companies Commission. The official searches will also not reveal whether or not a
winding-up petition has been presented. Notice of a winding-up order made or
resolution passed or receiver or manager appointed may not be filed with the Companies
Commission immediately and there may be a significant delay between the filing of such
notice and its subsequent entry on the register at the Companies Commission.

Reliance

	7.	 	This opinion is given for the sole benefit of the Initial Purchaser.
	 
	8.	 	This opinion may not be disclosed to anyone else, except that it may be disclosed as required
by law or regulation or to any professional adviser, but only on the express basis that they
may not rely on it.
	 
	9.	 	This opinion is not to be quoted or referred to in any public document or filed with anyone
without our written consent.

-4-

 

EXHIBIT C

OPTIUM CORPORATION FINANCIAL STATEMENT DATA

 

October 12, 2009

PIPER JAFFRAY & CO.

345 California Street, Suite 2400

San Francisco, CA 94104

Ladies and Gentlemen:

          This letter agreement will amend and clarify certain provisions of the Purchase Agreement,
dated as of October 8, 2009 (the “Purchase Agreement”), by and among Finisar Corporation (the
“Company”) and Piper Jaffray & Co. (the “Initial Purchaser”). Capitalized terms used herein
without definition shall have the meanings assigned to them in the Purchase Agreement.

          In connection with the consummation of the transactions contemplated by the Purchase Agreement
and in consideration for the mutual agreements set forth herein, the Company and the Initial
Purchaser wish to document their mutual agreement and understanding with respect to the matters set
forth in this letter agreement.

          1. The Company and the Initial Purchaser hereby agree and clarify that (i) the First Closing
Date (as defined in Section 3(a) of the Purchase Agreement) shall be at 7:00 a.m., Pacific time, on
October 15, 2009, (ii) the Purchase Price (as defined in Section 3(a) of the Purchase Agreement)
for each Firm Security shall be equal to 98.75% of the principal amount of the Firm Security plus
accrued interest, if any, from October 15, 2009 to the date of the payment and delivery and (iii)
the Indenture (as defined in the first paragraph of the Purchase Agreement) shall be dated as of
October 15, 2009.

          2. Notwithstanding anything in the Purchase Agreement to the contrary, the Company and the
Initial Purchaser hereby further agree that all references to October 14, 2009 in the Purchase
Agreement and in the Pricing Term Sheet attached as Schedule A thereto are hereby amended and
modified to refer instead to October 15, 2009.

          3. Except as expressly provided above, nothing in this letter agreement shall serve to modify
the terms set forth in the Purchase Agreement.

          4. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

          5. This letter agreement may be executed in one or more counterparts and, if executed in more
than one counterpart, the executed counterparts shall each be deemed to be an original and all such
counterparts shall together constitute one and the same instrument.

[Signature Page Follows]

 

 

          Please sign and return to the Company the enclosed duplicates of this letter whereupon this
letter will become a binding agreement between the Company and the Initial Purchaser in accordance
with its terms.

	 	 	 	 	 
	 	Very truly yours,

Finisar Corporation

 	 
	 	By:  	/s/ S.K. Workman
 	 
	 	 	Name:  	S.K. Workman 	 
	 	 	Title:  	CFO 	 
	 

	 	 	 	 
	Confirmed as of the date first above

mentioned, on behalf of themselves.

Piper Jaffray & Co.

 	 
	By:  	Christie L. Christina
 	 
	 	Managing Director 	 
	 	 	 
	 

[Letter Agreement]exv10w1

Exhibit 10.1

Digi International Inc.

2000 Omnibus Stock Plan

as Amended and Restated as of

December 4, 2009

(effective as of December 4, 2009)

     1. Purpose.   The purpose of the Digi International Inc. 2000 Omnibus Stock Plan (the
“Plan”) is to promote the interests of the Company and its stockholders by providing key personnel
of the Company and its Affiliates and Outside Directors with an opportunity to acquire a
proprietary interest in the Company and reward them for achieving a high level of corporate
performance and thereby develop a stronger incentive to put forth maximum effort for the continued
success and growth of the Company and its Affiliates. In addition, the opportunity to acquire a
proprietary interest in the Company will aid in attracting and retaining key personnel and Outside
Directors of outstanding ability.

     2. Definitions.  

     2.1  The capitalized terms used elsewhere in the Plan have the meanings set forth below.

     (a) “Affiliate” means any corporation that is a “parent corporation” or “subsidiary
corporation” of the Company, as those terms are defined in Code Sections 424(e) and (f), or any
successor provisions, and, for purposes other than the grant of Incentive Stock Options, any joint
venture in which the Company or any such “parent corporation” or “subsidiary corporation” owns an
equity interest.

     (b) “Agreement” means a written contract (i) consistent with the terms of the Plan entered
into between the Company or an Affiliate and a Participant and (ii) containing the terms and
conditions of an Award in such form and not inconsistent with the Plan as the Committee shall
approve from time to time, together with all amendments thereto, which amendments may be
unilaterally made by the Company (with the approval of the Committee) unless such amendments are
deemed by the Committee to be materially adverse to the Participant and not required as a matter of
law.

     (c) “Award” or “Awards” means a grant made under the Plan in the form of Restricted Stock,
Options, Stock Appreciation Rights, Performance Units, Stock or any other stock-based award.

     (d) “Board” means the Board of Directors of the Company.

     (e) “Code” means the Internal Revenue Code of 1986, as amended and in effect from time to time
or any successor statute.

     (f) “Committee” means two or more Non-Employee Directors designated by the Board to administer
the Plan under Plan Section 3.1 and constituted so as to permit grants thereby to comply with
Exchange Act Rule 16b-3 and Code Section 162(m).

     (g) “Company” means Digi International Inc., a Delaware corporation, or any successor to all
or substantially all of its businesses by merger, consolidation, purchase of assets or otherwise.

     (h) “Effective Date” means the date specified in Plan Section 12.1.

     (i) “Employee” means an employee (including an officer or director who is also an employee) of
the Company or an Affiliate.

     (j) “Exchange Act” means the Securities Exchange Act of 1934, as amended and in effect from
time to time or any successor statute.

     (k) “Exchange Act Rule 16b-3” means Rule 16b-3 promulgated by the Securities and Exchange
Commission under the Exchange Act, as now in force and in effect from time to time or any successor
regulation.

1

 

     (l) “Fair Market Value” as of any date means, unless otherwise expressly provided in the Plan:

     (i) the closing sale price of a Share on such date, or, if no sale of Shares shall have
occurred on that date, on the next preceding day on which a sale of Shares occurred

     (A) on the composite tape for NASDAQ-listed shares, or

     (B) if the Shares are not quoted on the composite tape for NASDAQ-listed shares, on the
principal United States Securities Exchange registered under the Exchange Act on which the Shares
are listed, or

     (ii) if clause (i) is inapplicable, the mean between the closing “bid” and the closing “asked”
quotation of a Share on that date, or, if no closing bid or asked quotation is made on that date,
on the next preceding day on which a closing bid and asked quotation is made, on the National
Association of Securities Dealers, Inc. Automated Quotations System or any system then in use, or

     (iii) if clauses (i) and (ii) are inapplicable, what the Committee determines in good faith to
be 100% of the fair market value of a Share on that date, using such criteria as it shall
determine, in its sole discretion, to be appropriate for valuation.

     In the case of an Incentive Stock Option, if this determination of Fair Market Value is not
consistent with the then current regulations of the Secretary of the Treasury, Fair Market Value
shall be determined in accordance with those regulations. The determination of Fair Market Value
shall be subject to adjustment as provided in Plan Section 16.

     (m) “Full Value Award” means any Award other than an Option or Stock Appreciation Right.

     (n) “Fundamental Change” means a dissolution or liquidation of the Company, a sale of
substantially all of the assets of the Company, a merger or consolidation of the Company with or
into any other corporation, regardless of whether the Company is the surviving corporation, or a
statutory share exchange involving capital stock of the Company.

     (o) “Incentive Stock Option” means any Option designated as such and granted in accordance
with the requirements of Code Section 422 or any successor provision.

     (p) “Insider” as of a particular date means any person who, as of that date is an officer of
the Company as defined under Exchange Act Rule 16a-1(f) or its successor provision.

     (q) “Non-Employee Director” means a member of the Board who is considered a non-employee
director within the meaning of Exchange Act Rule 16b-3(b)(3) or its successor provision and an
outside director for purposes of Code Section 162(m).

     (r) “Non-Statutory Stock Option” means an Option other than an Incentive Stock Option.

     (s) “Option” means a right to purchase Stock, including both Non-Statutory Stock Options and
Incentive Stock Options.

     (t) “Outside Director” means a director who is not an Employee.

     (u) “Participant” means a person or entity to whom an Award is or has been made in accordance
with the Plan.

     (v) “Performance Cycle” means the period of time as specified in an Agreement over which
Performance Units are to be earned.

     (w) “Performance Units” means an Award made pursuant to Plan Section 11.

     (x) “Plan” means this Digi International Inc. 2000 Omnibus Stock Plan, as may be amended and
in effect from time to time.

2

 

     (y) “Restricted Stock” means Stock granted under Plan Section 7 so long as such Stock remains
subject to one or more restrictions.

     (z) “Section 16” or “Section 16(b)” means Section 16 or Section 16(b), respectively, of the
Exchange Act or any successor statute and the rules and regulations promulgated thereunder as in
effect and as amended from time to time.

     (aa) “Share” means a share of Stock.

     (bb) “Stock” means the common stock, par value $.01 per share, of the Company.

     (cc) “Stock Appreciation Right” means a right, the value of which is determined in relation to
the appreciation in value of Shares pursuant to an Award granted under Plan Section 10.

     (dd) “Subsidiary” means a “subsidiary corporation,” as that term is defined in Code
Section 424(f) or any successor provision.

     (ee) “Successor” with respect to a Participant means the legal representative of an
incompetent Participant, and if the Participant is deceased the estate of the Participant or the
person or persons who may, by bequest or inheritance, or pursuant to the terms of an Award, acquire
the right to exercise an Option or Stock Appreciation Right or to receive cash and/or Shares
issuable in satisfaction of an Award in the event of the Participant’s death.

     (ff) “Term” means the period during which an Option or Stock Appreciation Right may be
exercised or the period during which the restrictions or terms and conditions placed on Restricted
Stock or any other Award are in effect.

     (gg) “Transferee” means any member of the Participant’s immediate family (i.e., his or her
children, step-children, grandchildren and spouse) or one or more trusts for the benefit of such
family members or partnerships in which such family members are the only partners.

     2.2  Gender and Number.   Except when otherwise indicated by the context, reference to
the masculine gender shall include, when used, the feminine gender and any term used in the
singular shall also include the plural.

     3. Administration and Indemnification.  

     3.1  Administration.  

     (a) The Committee shall administer the Plan. The Committee shall have exclusive power to
(i) make Awards, (ii) determine when and to whom Awards will be granted, the form of each Award,
the amount of each Award, and any other terms or conditions of each Award consistent with the Plan,
and (iii) determine whether, to what extent and under what circumstances, Awards may be settled,
paid or exercised in cash, Shares or other Awards, or other property or canceled, forfeited or
suspended. Each Award shall be subject to an Agreement authorized by the Committee. A majority of
the members of the Committee shall constitute a quorum for any meeting of the Committee, and acts
of a majority of the members present at any meeting at which a quorum is present or the acts
unanimously approved in writing by all members of the Committee shall be the acts of the Committee.
Notwithstanding the foregoing, the Board shall have the sole and exclusive power to administer the
Plan with respect to Awards granted to Outside Directors.

     (b) Solely for purposes of determining and administering Awards to Participants who are not
Insiders, the Committee may delegate all or any portion of its authority under the Plan to one or
more persons who are not Non-Employee Directors.

     (c) To the extent within its discretion and subject to Plan Sections 15 and 16, other than
price, the Committee may amend the terms and conditions of any outstanding Award.

3

 

     (d) It is the intent that the Plan and all Awards granted pursuant to it shall be administered
by the Committee so as to permit the Plan and Awards to comply with Exchange Act Rule 16b-3, except
in such instances as the Committee, in its discretion, may so provide. If any provision of the Plan
or of any Award would otherwise frustrate or conflict with the intent expressed in this
Section 3.1(d), that provision to the extent possible shall be interpreted and deemed amended in
the manner determined by the Committee so as to avoid the conflict. To the extent of any remaining
irreconcilable conflict with this intent, the provision shall be deemed void as applicable to
Insiders to the extent permitted by law and in the manner deemed advisable by the Committee.

     (e) The Committee’s interpretation of the Plan and of any Award or Agreement made under the
Plan and all related decisions or resolutions of the Board or Committee shall be final and binding
on all parties with an interest therein. Consistent with its terms, the Committee shall have the
power to establish, amend or waive regulations to administer the Plan. In carrying out any of its
responsibilities, the Committee shall have discretionary authority to construe the terms of the
Plan and any Award or Agreement made under the Plan.

     3.2  Indemnification.   Each person who is or shall have been a member of the
Committee, or of the Board, and any other person to whom the Committee delegates authority under
the Plan, shall be indemnified and held harmless by the Company, to the extent permitted by law,
against and from any loss, cost, liability or expense that may be imposed upon or reasonably
incurred by such person in connection with or resulting from any claim, action, suit or proceeding
to which such person may be a party or in which such person may be involved by reason of any action
taken or failure to act, made in good faith, under the Plan and against and from any and all
amounts paid by such person in settlement thereof, with the Company’s approval, or paid by such
person in satisfaction of any judgment in any such action, suit or proceeding against such person,
provided such person shall give the Company an opportunity, at the Company’s expense, to handle and
defend the same before such person undertakes to handle and defend it on such person’s own behalf.
The foregoing right of indemnification shall not be exclusive of any other rights of
indemnification to which such person or persons may be entitled under the Company’s Certificate of
Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have
to indemnify them or hold them harmless.

     4. Shares Available Under the Plan and Maximum Awards.  

     4.1 Number of Shares Available for Grants. Subject to adjustment as provided in
Sections 4.1(a) and 16 herein, the number of Shares hereby reserved for issuance to Participants
under the Plan shall be 3,250,000. Any Shares that are subject to Awards of Options shall be
counted against the maximum Share limitation as one Share for every one Share granted, and Awards
of Stock Appreciation Rights shall be counted against this maximum Share limitation as equal to the
number of Shares to which such Stock Appreciation Rights relate. Any Shares that are subject to
Full Value Awards shall be counted against this maximum Share limitation as 1.30 Shares for every
one Share granted. The Shares to be delivered under the Plan will be made available from
authorized but unissued Shares or issued Shares that are held in the Company’s treasury.

     (a) Any Shares subject to an Award under this Plan that expires, is forfeited, cancelled, or
returned to the Company for failure to satisfy vesting requirements, or otherwise terminates
without payment being made thereunder shall, to the extent of such expiration, forfeiture,
cancellation, return or termination, again be available for grant under the Plan. Each Share that
again becomes available for grant pursuant to the preceding sentence shall increase the total
number of Shares remaining available for Awards by (i) one Share if such Share was subject to an
Option or Stock Appreciation Right granted under the Plan, and (ii) 1.30 Shares if such Share was
subject to a Full Value Award. The following Shares will, however, continue to be charged against
the foregoing maximum Share limitations and will not again become available for grant: (i) Shares
tendered by the Participant or withheld by the Company in payment of the purchase price of an
Option, (ii) Shares tendered by the Participant or withheld by the Company to satisfy

4

 

any tax withholding obligation with respect to an Award, and (iii) Shares subject to a Stock
Appreciation Right that are not issued in connection with the settlement of the Stock Appreciation
Right upon its exercise.

     (b) Where two or more types of Awards (all of which are payable in Shares) are granted to a
Participant in tandem with each other, such that the exercise of one type of Award with respect to
a number of Shares cancels at least an equal number of Shares of the other, each such joint Award
shall be deemed to be the equivalent of the maximum number of Shares available under the largest
single Award.

     Additional rules for determining the number of Shares granted under the Plan may be made by
the Committee as it deems necessary or desirable.

     (c) No fractional Shares may be issued under the Plan; however, cash shall be paid in lieu of
any fractional Share in settlement of an Award.

     4.2 Individual Award Limitations. Subject to adjustment pursuant to Plan Section 16,
the maximum number of Shares that may be awarded to a Participant in any calendar year in the form
of Options is 250,000, the maximum number of Shares that may be awarded to a Participant in any
calendar year in the form of Restricted Stock is 100,000, and the maximum number of Shares that may
be awarded to a Participant in any calendar year in the form of Stock Appreciation Rights is
100,000.

     5. Eligibility.   Participation in the Plan shall be limited to Employees and to
individuals or entities who are not Employees but who provide services to the Company or an
Affiliate, including services provided in the capacity of a consultant, advisor or director. The
granting of Awards is solely at the discretion of the Committee, except that Incentive Stock
Options may only be granted to Employees. References herein to “employed,” “employment” or similar
terms (except “Employee”) shall include the providing of services in any capacity or as a director.
Neither the transfer of employment of a Participant between any of the Company or its Affiliates,
nor a leave of absence granted to such Participant and approved by the Committee, shall be deemed a
termination of employment for purposes of the Plan.

     6. General Terms of Awards.  

     6.1  Amount of Award.   Each Agreement shall set forth the number of Shares of
Restricted Stock, Stock or Performance Units subject to the Agreement, or the number of Shares to
which the Option subject to the Agreement applies or with respect to which payment upon the
exercise of the Stock Appreciation Right subject to the Agreement is to be determined, as the case
may be, together with such other terms and conditions applicable to the Award as determined by the
Committee acting in its sole discretion.

     6.2  Term.   Each Agreement, other than those relating solely to Awards of Shares
without restrictions, shall set forth the Term of the Option, Stock Appreciation Right, Restricted
Stock or other Award or the Performance Cycle for the Performance Units, as the case may be.
Acceleration of the expiration of the applicable Term is permitted, upon such terms and conditions
as shall be set forth in the Agreement, which may, but need not, include, without limitation,
acceleration in the event of the Participant’s death or retirement. Acceleration of the Performance
Cycle of Performance Units shall be subject to Plan Section 11.2. Each award granted to a
Participant shall have such Term as the Committee shall determine at the time of grant; provided,
however, that any such Term shall not exceed 10 years.

     6.3  Transferability.   Except as provided in this Section, during the lifetime of a
Participant to whom an Award is granted, only that Participant (or that Participant’s legal
representative) may exercise an Option or Stock Appreciation Right, or receive payment with respect
to Performance Units or any other Award. No Award of Restricted Stock (before the expiration of the
restrictions), Options, Stock Appreciation Rights or Performance Units or other Award may be sold,
assigned, transferred, exchanged or otherwise encumbered other than to a Successor in the event of
a Participant’s death or pursuant to a qualified domestic relations order as defined in the Code or
Title 1 of the Employee

5

 

Retirement Income Security Act of 1974, as amended (“ERISA”), or the rules thereunder; any
attempted transfer in violation of this Section 6.3 shall be of no effect. Notwithstanding the
immediately preceding sentence, the Committee, in an Agreement or otherwise at its discretion, may
provide that the Award (other than Incentive Stock Options) may be transferable to a Transferee if
the Participant does not receive any consideration for the transfer. Any Award held by a Transferee
shall continue to be subject to the same terms and conditions that were applicable to that Award
immediately before the transfer thereof to the Transferee. For purposes of any provision of the
Plan relating to notice to a Participant or to acceleration or termination of an Award upon the
death, disability or termination of employment of a Participant the references to “Participant”
shall mean the original grantee of an Award and not any Transferee.

     6.4  Termination of Employment.   Except as otherwise determined by the Committee or
provided by the Committee in an Agreement, in case of a Participant’s termination of employment,
the following provisions shall apply:

     (a) Options and Stock Appreciation Rights.  

     (i) If a Participant’s employment or other relationship with the Company and its Affiliates
terminates because of the Participant’s death, then any Option or Stock Appreciation Right that has
not expired or been terminated shall become exercisable in full if the Participant’s employment or
other relationship with the Company and its Affiliates has been continuous between the date the
Option or Stock Appreciation Right was granted and a date not more than three months prior to such
death, and may be exercised by the Participant’s Successor at any time, or from time to time,
within one year after the date of the Participant’s death.

     (ii) If a Participant’s employment or other relationship with the Company and its Affiliates
terminates because the Participant is disabled (within the meaning of Section 22(e)(3) of the
Code), then any Option or Stock Appreciation Right that has not expired or been terminated shall
become exercisable in full if the Participant’s employment or other relationship with the Company
and its Affiliates has been continuous between the date the Option or Stock Appreciation Right was
granted and the date of such disability, and the Participant or the Participant’s Successor may
exercise such Option or Stock Appreciation Right at any time, or from time to time, within one year
after the date of the Participant’s disability.

     (iii) If a Participant’s employment terminates for any reason other than death or disability,
then any Option or Stock Appreciation Right that has not expired or been terminated shall remain
exercisable for three months after termination of the Participant’s employment, but, unless
otherwise provided in the Agreement, only to the extent that such Option or Stock Appreciation
Right was exercisable immediately prior to such Participant’s termination of employment; provided,
however, that if the Participant is an Outside Director, the Option or Stock Appreciation Right
shall remain exercisable until the expiration of the Term after such Outside Director ceases to be
a director of the Company but, unless otherwise provided in the Agreement, only to the extent that
such Option or Stock Appreciation Right was exercisable immediately prior to such Outside Director
ceasing to be a director.

     (iv) Notwithstanding the foregoing Plan Sections 6.4(a)(i), (ii) and (iii), in no event shall
an Option or a Stock Appreciation Right be exercisable after the expiration of the Term of such
Award. Any Option or Stock Appreciation Right that is not exercised within the periods set forth in
Plan Sections 6.4 (i), (ii) and (iii), except as otherwise provided by the Committee in the
Agreement, shall terminate as of the end of the periods described in such Sections.

     (b) Performance Units.   If a Participant’s employment or other relationship with the
Company and its Affiliates terminates during a Performance Cycle because of death or disability, or
under other circumstances provided by the Committee in its discretion in the Agreement or
otherwise, the Participant, unless the Committee shall otherwise provide in the Agreement, shall be
entitled to a payment with

6

 

respect to Performance Units at the end of the Performance Cycle based upon the extent to
which achievement of performance targets was satisfied at the end of such period (as determined at
the end of the Performance Cycle) and prorated for the portion of the Performance Cycle during
which the Participant was employed by the Company or its Affiliates. Except as provided in this
Section 6.4(b) or in the Agreement, if a Participant’s employment or other relationship with the
Company and its Affiliates terminates during a Performance Cycle, then such Participant shall not
be entitled to any payment with respect to that Performance Cycle.

     (c) Restricted Stock Awards.   Unless otherwise provided in the Agreement, in case of
a Participant’s death or disability, the Participant shall be entitled to receive a number of
Shares of Restricted Stock under outstanding Awards that has been prorated for the portion of the
Term of the Awards during which the Participant was employed by the Company and its Affiliates,
and, with respect to such Shares, all restrictions shall lapse. Any Shares of Restricted Stock as
to which restrictions do not lapse under the preceding sentence shall terminate at the date of the
Participant’s termination of employment and such Shares of Restricted Stock shall be forfeited to
the Company.

     6.5  Rights as Stockholder.   Each Agreement shall provide that a Participant shall
have no rights as a stockholder with respect to any securities covered by an Award unless and until
the date the Participant becomes the holder of record of the Stock, if any, to which the Award
relates.

     7. Restricted Stock Awards.  

     (a) An Award of Restricted Stock under the Plan shall consist of Shares subject to
restrictions on transfer and conditions of forfeiture, which restrictions and conditions shall be
included in the applicable Agreement. The Committee may provide for the lapse or waiver of any such
restriction or condition based on such factors or criteria as the Committee, in its sole
discretion, may determine.

     (b) Except as otherwise provided in the applicable Agreement, each Stock certificate issued
with respect to an Award of Restricted Stock shall either be deposited with the Company or its
designee, together with an assignment separate from the certificate, in blank, signed by the
Participant, or bear such legends with respect to the restricted nature of the Restricted Stock
evidenced thereby as shall be provided for in the applicable Agreement.

     (c) The Agreement shall describe the terms and conditions by which the restrictions and
conditions of forfeiture upon awarded Restricted Stock shall lapse. Upon the lapse of the
restrictions and conditions, Shares free of restrictive legends, if any, relating to such
restrictions shall be issued to the Participant or a Successor or Transferee.

     (d) A Participant or a Transferee with a Restricted Stock Award shall have all the other
rights of a stockholder including, but not limited to, the right to receive dividends and the right
to vote the Shares of Restricted Stock.

     (e) No more than 1,000,000 of the total number of Shares available for Awards under the Plan
shall be issued during the term of the Plan as Restricted Stock. This limitation shall be
calculated pursuant to the applicable provisions of Plan Sections 4 and 16.

     8. Other Awards.   The Committee may from time to time grant Stock and other Awards
under the Plan including, without limitation, those Awards pursuant to which Shares are or may in
the future be acquired, Awards denominated in Stock units, securities convertible into Stock and
phantom securities. The Committee, in its sole discretion, shall determine the terms and conditions
of such Awards provided that such Awards shall not be inconsistent with the terms and purposes of
the Plan. The Committee may, at its sole discretion, direct the Company to issue Shares subject to
restrictive legends and/or stop transfer instructions that are consistent with the terms and
conditions of the Award to which the Shares relate. No more than 50,000 of the total number of
Shares available for Awards under the Plan shall be issued during

7

 

the term of the Plan in the form of Stock without restrictions. This limitation shall be
calculated pursuant to the applicable provisions of Plan Sections 4 and 16.

     9. Stock Options.

     9.1  Terms of All Options.

     (a) An Option shall be granted pursuant to an Agreement as either an Incentive Stock Option or
a Non-Statutory Stock Option. The purchase price of each Share subject to an Option shall be
determined by the Committee and set forth in the Agreement, but shall not be less than the Fair
Market Value of a Share as of the date the Option is granted (except as provided in Plan
Sections 9.2 and 19).

     (b) The purchase price of the Shares with respect to which an Option is exercised shall be
payable in full at the time of exercise, provided that to the extent permitted by law, the
Agreement may permit some or all Participants to simultaneously exercise Options and sell the
Shares thereby acquired pursuant to a brokerage or similar relationship and use the proceeds from
the sale as payment of the purchase price of the Shares. The purchase price may be payable in cash,
by delivery or tender of Shares having a Fair Market Value as of the date the Option is exercised
equal to the purchase price of the Shares being purchased pursuant to the Option, or a combination
thereof, as determined by the Committee, but no fractional Shares will be issued or accepted.
Provided, however, that a Participant exercising a stock option shall not be permitted to pay any
portion of the purchase price with Shares if, in the opinion of the Committee, payment in such
manner could have adverse financial accounting consequences for the Company.

     (c) Each Option shall be exercisable in whole or in part on the terms provided in the
Agreement. In no event shall any Option be exercisable at any time after the expiration of its
Term. When an Option is no longer exercisable, it shall be deemed to have lapsed or terminated.

     (d) Each Option granted to a Participant shall expire at such time as the Committee shall
determine at the time of grant; provided, however, that no Option shall be exercisable later than
the 10th anniversary date of its grant.

     9.2  Incentive Stock Options.  In addition to the other terms and conditions
applicable to all Options:

     (i) the purchase price of each Share subject to an Incentive Stock Option shall not be less
than 100% of the Fair Market Value of a Share as of the date the Incentive Stock Option is granted
if this limitation is necessary to qualify the Option as an Incentive Stock Option (except as
provided in Plan Section 20);

     (ii) the aggregate Fair Market Value (determined as of the date the Option is granted) of the
Shares with respect to which Incentive Stock Options held by an individual first become exercisable
in any calendar year (under the Plan and all other incentive stock option plans of the Company and
its Affiliates) shall not exceed $100,000 (or such other limit as may be required by the Code) if
this limitation is necessary to qualify the Option as an Incentive Stock Option and to the extent
an Option or Options granted to a Participant exceed this limit the Option or Options shall be
treated as a Non-Statutory Stock Option;  

     (iii) the Agreement covering an Incentive Stock Option shall contain such other terms and
provisions that the Committee determines necessary to qualify this Option as an Incentive Stock
Option; and

     (iv) notwithstanding any other provision of the Plan to the contrary, no Participant may
receive an Incentive Stock Option under the Plan if, at the time the Award is granted, the
Participant owns (after application of the rules contained in Code Section 424(d), or its successor
provision), Shares possessing more than 10% of the total combined voting power of all classes of
stock of the Company or its Subsidiaries, unless (i) the exercise price for that Incentive Stock
Option is at least 110% of the Fair Market Value of the Shares subject to that Incentive Stock
Option on the date of grant and (ii) that Option is not exercisable after the date five years from
the date that Incentive Stock Option is granted.

8

 

     10. Stock Appreciation Rights.  An Award of a Stock Appreciation Right shall entitle
the Participant (or a Successor or Transferee), subject to terms and conditions determined by the
Committee, to receive upon exercise of the Stock Appreciation Right all or a portion of the excess
of (i) the Fair Market Value of a specified number of Shares as of the date of exercise of the
Stock Appreciation Right over (ii) a specified price that shall not be less than 100% of the Fair
Market Value of such Shares as of the date of grant of the Stock Appreciation Right. A Stock
Appreciation Right may be granted in connection with part or all of, in addition to, or completely
independent of an Option or any other Award under the Plan. If issued in connection with a
previously or contemporaneously granted Option, the Committee may impose a condition that exercise
of a Stock Appreciation Right cancels a pro rata portion of the Option with which it is connected
and vice versa. Each Stock Appreciation Right may be exercisable in whole or in part on the terms
provided in the Agreement. No Stock Appreciation Right shall be exercisable at any time after the
expiration of its Term. When a Stock Appreciation Right is no longer exercisable, it shall be
deemed to have lapsed or terminated. Upon exercise of a Stock Appreciation Right, payment to the
Participant or a Successor or Transferee shall be made at such time or times as shall be provided
in the Agreement in the form of cash, Shares or a combination of cash and Shares as determined by
the Committee. The Agreement may provide for a limitation upon the amount or percentage of the
total appreciation on which payment (whether in cash and/or Shares) may be made in the event of the
exercise of a Stock Appreciation Right. The Term of a Stock Appreciation Right granted under the
Plan shall be determined by the Committee, in its sole discretion; provided, however, that such
Term shall not exceed 10 years.

     11. Performance Units.

     11.1  Initial Award.

     (a) An Award of Performance Units under the Plan shall entitle the Participant or a Successor
or Transferee to future payments of cash, Shares or a combination of cash and Shares, as determined
by the Committee, based upon the achievement of pre-established performance targets. These
performance targets may, but need not, include, without limitation, targets relating to one or more
of the Company’s or a group’s, unit’s, Affiliate’s or an individual’s performance. The Agreement
may establish that a portion of a Participant’s Award will be paid for performance that exceeds the
minimum target but falls below the maximum target applicable to the Award. The Agreement shall also
provide for the timing of the payment.

     (b) Following the conclusion or acceleration of each Performance Cycle, the Committee shall
determine the extent to which (i) performance targets have been attained, (ii) any other terms and
conditions with respect to an Award relating to the Performance Cycle have been satisfied and
(iii) payment is due with respect to an Award of Performance Units.

     11.2  Acceleration and Adjustment.  The Agreement may permit an acceleration of the
Performance Cycle and an adjustment of performance targets and payments with respect to some or all
of the Performance Units awarded to a Participant, upon the occurrence of certain events, which
may, but need not include, without limitation, a Fundamental Change, a recapitalization, a change
in the accounting practices of the Company, a change in the Participant’s title or employment
responsibilities, the Participant’s death or retirement or, with respect to payments in Shares with
respect to Performance Units, a reclassification, stock dividend, stock split or stock combination
as provided in Plan Section 16. The Agreement also may provide for a limitation on the value of an
Award of Performance Units that a Participant may receive.

     12. Effective Date and Duration of the Plan.

     12.1  Effective Date.  The Plan is effective as of November 6, 2000.

     12.2  Duration of the Plan.  The Plan shall remain in effect until all Stock subject
to it shall be distributed, all Awards have expired or lapsed, the Plan is terminated pursuant to
Plan Section 15, or

9

 

November 27, 2016 (the “Termination Date”); provided, however, that Awards made before the
Termination Date may be exercised, vested or otherwise effectuated beyond the Termination Date
unless limited in the Agreement or otherwise. No Award of an Incentive Stock Option shall be made
more than 10 years after the Effective Date (or such other limit as may be required by the Code) if
this limitation is necessary to qualify the Option as an Incentive Stock Option. The date and time
of approval by the Committee of the granting of an Award shall be considered the date and time at
which the Award is made or granted.

     13. Plan Does Not Affect Employment Status.

     (a) Status as an eligible Employee shall not be construed as a commitment that any Award will
be made under the Plan to that eligible Employee or to eligible Employees generally.

     (b) Nothing in the Plan or in any Agreement or related documents shall confer upon any
Employee or Participant any right to continue in the employment of the Company or any Affiliate or
constitute any contract of employment or affect any right that the Company or any Affiliate may
have to change such person’s compensation, other benefits, job responsibilities, or title, or to
terminate the employment of such person with or without cause.

     14. Tax Withholding.  The Company shall have the right to withhold from any cash
payment under the Plan to a Participant or other person (including a Successor or a Transferee) an
amount sufficient to cover any required withholding taxes. The Company shall have the right to
require a Participant or other person receiving Shares under the Plan to pay the Company a cash
amount sufficient to cover any required withholding taxes before actual receipt of those Shares. In
lieu of all or any part of a cash payment from a person receiving Shares under the Plan, the
Committee may permit the individual to cover all or any part of the required withholdings through a
reduction of the number of Shares delivered or delivery or tender return to the Company of Shares
held by the Participant or other person, in each case valued in the same manner as used in
computing the withholding taxes under the applicable laws.

     15. Amendment, Modification and Termination of the Plan.

     (a) The Board may at any time and from time to time terminate, suspend or modify the Plan.
Except as limited in (b) below, the Committee may at any time alter or amend any or all Agreements
under the Plan to the extent permitted by law.

     (b) No termination, suspension, or modification of the Plan will materially and adversely
affect any right acquired by any Participant or Successor or Transferee under an Award granted
before the date of termination, suspension, or modification, unless otherwise agreed to by the
Participant in the Agreement or otherwise, or required as a matter of law; but it will be
conclusively presumed that any adjustment for changes in capitalization provided for in Plan
Sections 11.2 or 16 does not adversely affect these rights.

     16. Adjustment for Changes in Capitalization.  In the event of any equity
restructuring (within the meaning of authoritative guidance issued by the Financial Accounting
Standards Board relating to stock-based compensation) that causes the per Share value of Shares to
change, such as a stock dividend, stock split, spin off, rights offering, or recapitalization
through a large, nonrecurring cash dividend, the Committee shall cause there to be made an
equitable adjustment to (i) the number and kind of Shares that may be issued under the Plan,
(ii) the limitations on the number of Shares that may be issued to an individual Participant as an
Option or a Stock Appreciation Right or in the form of Restricted Stock in any calendar year or
that may be issued in the form of Restricted Stock or Shares without restrictions and (iii) the
number and kind of Shares or, subject to Plan Section 11.2, Performance Units, subject to and the
exercise price (if applicable) of any then outstanding Awards of Options, Stock Appreciation
Rights, Restricted Stock, Performance Units or any other Awards related to shares of Stock (to the
extent such other Awards would not otherwise automatically adjust in the equity restructuring);
provided, in each case, that with respect to Incentive Stock Options, no such adjustment shall be
authorized to the extent that such adjustment would cause such options to violate Section 422(b) of
the Code or any successor

10

 

provision; provided further, with respect to all Awards, no such adjustment shall be
authorized to the extent that such adjustment would cause the Awards to be subject to adverse tax
consequences under Section 409A of the Code. In the event of any other change in corporate
capitalization, such as a merger, consolidation, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the Code), including a
Fundamental Change (subject to Plan Section 17), or any partial or complete liquidation of the
Company, such equitable adjustments described in the foregoing sentence may be made as determined
to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights. In
either case, any such adjustment shall be conclusive and binding for all purposes of the Plan.
Unless otherwise determined by the Committee, the number of Shares subject to an Award shall always
be a whole number. In no event shall an outstanding Option or Stock Appreciation Right be amended
for the sole purpose of reducing the exercise price or grant price thereof.

     17. Fundamental Change.  In the event of a proposed Fundamental Change, the Committee
may, but shall not be obligated to:

     (a) if the Fundamental Change is a merger or consolidation or statutory share exchange, make
appropriate provision for the protection of the outstanding Options and Stock Appreciation Rights
by the substitution of options, stock appreciation rights and appropriate voting common stock of
the corporation surviving any merger or consolidation or, if appropriate, the parent corporation of
the Company or such surviving corporation; or

     (b) at least ten days before the occurrence of the Fundamental Change, declare, and provide
written notice to each holder of an Option or Stock Appreciation Right of the declaration, that
each outstanding Option and Stock Appreciation Right, whether or not then exercisable, shall be
canceled at the time of, or immediately before the occurrence of the Fundamental Change in exchange
for payment to each holder of an Option or Stock Appreciation Right, within ten days after the
Fundamental Change, of cash equal to (i) for each Share covered by the canceled Option, the amount,
if any, by which the Fair Market Value (as defined in this Section) per Share exceeds the exercise
price per Share covered by such Option or (ii) for each Stock Appreciation Right, the price
determined pursuant to Section 10, except that Fair Market Value of the Shares as of the date of
exercise of the Stock Appreciation Right, as used in clause (i) of Plan Section 10, shall be deemed
to mean Fair Market Value for each Share with respect to which the Stock Appreciation Right is
calculated determined in the manner hereinafter referred to in this Section. At the time of the
declaration provided for in the immediately preceding sentence, each Stock Appreciation Right and
each Option shall immediately become exercisable in full and each person holding an Option or a
Stock Appreciation Right shall have the right, during the period preceding the time of cancellation
of the Option or Stock Appreciation Right, to exercise the Option as to all or any part of the
Shares covered thereby or the Stock Appreciation Right in whole or in part, as the case may be. In
the event of a declaration pursuant to Plan Section 17(b), each outstanding Option and Stock
Appreciation Right granted pursuant to the Plan that shall not have been exercised before the
Fundamental Change shall be canceled at the time of, or immediately before, the Fundamental Change,
as provided in the declaration.

     Notwithstanding the foregoing, no person holding an Option or a Stock Appreciation Right shall
be entitled to the payment provided for in this Section 17(b) if such Option or Stock Appreciation
Right shall have terminated, expired or been cancelled. For purposes of this Section only, “Fair
Market Value” per Share means the cash plus the fair market value, as determined in good faith by
the Committee, of the non-cash consideration to be received per Share by the stockholders of the
Company upon the occurrence of the Fundamental Change.

     18. Prohibition on Repricing.  Without the approval of the Company’s stockholders, the
Committee will not reprice, adjust or amend the exercise price of any Option or the grant price of
any Stock Appreciation Right previously awarded, whether through amendment, cancellation and
replacement grant or any other means, except pursuant to Section 16 of the Plan in connection with
an equity restructuring,

11

 

or pursuant to Section 17 of the Plan in connection with a Fundamental Change, in order to
prevent dilution or enlargement of the benefits, or potential benefits intended to be provided
under the Plan.

     19. Forfeitures

     (a) Forfeiture for Cause.  With respect to Awards made on or after December 4, 2009,
notwithstanding any other provision of the Plan or an Agreement, if the Committee finds by a
majority vote that a Participant, before or after his termination of employment with the Company
and its Affiliates: (i) committed a felony or a crime involving moral turpitude or committed any
other act or omission involving fraud, embezzlement or any other act of dishonesty in the course of
his employment by the Company or an Affiliate which conduct damaged the Company or an Affiliate;
(ii) substantially and repeatedly failed to perform duties of the office held by the Participant as
reasonably directed by the Company or an Affiliate; (iii) committed gross negligence or willful
misconduct with respect to the Company or an Affiliate; (iv) committed a material breach of any
employment agreement between the Participant and the Company or an Affiliate that is not cured
within ten (10) days after receipt of written notice thereof from the Company or the Affiliate, as
applicable; (v) failed, within ten (10) days after receipt by the Participant of written notice
thereof from the Company or an Affiliate, to correct, cease or otherwise alter any failure to
comply with instructions or other action or omission which the Board reasonably believes does or
may materially or adversely affect the Company’s or an Affiliate’s business or operations;
(vi) committed misconduct which is of such a serious or substantial nature that a reasonable
likelihood exists that such misconduct will materially injure the reputation of the Company or an
Affiliate; (vii) harassed or discriminated against the Company’s or an Affiliate’s employees,
customers or vendors in violation of the Company’s policies with respect to such matters;
(viii) misappropriated funds or assets of the Company or an Affiliate for personal use or willfully
violated the Company policies or standards of business conduct as determined in good faith by the
Board; (ix) failed, due to some action or inaction on the part of the Participant, to have
immigration status that permits the Participant to maintain full-time employment with the Company
or an Affiliate in the United States in compliance with all applicable immigration law;
(x) disclosed trade secrets of the Company or an Affiliate, then as of the date the Committee makes
its finding, any Awards awarded to the Participant that have not been exercised by the Participant
(including all Awards that have not yet vested) will be forfeited to the Company.  The findings and
decision of the Committee or the Board, if applicable, with respect to such matter, including those
regarding the acts of the Participant and the damage done to the Company, will be final for all
purposes.  No decision of the Committee, however, will affect the finality of the discharge of the
individual by the Company or an Affiliate.

     (b) Forfeiture Events.  With respect to Awards made on or after December 4, 2009, the
Committee may specify in an Agreement that the Participant’s rights, payments, and benefits with
respect to an Award shall be subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable vesting or
performance conditions of an Award.  Such events may include, but shall not be limited to,
termination of employment for cause, termination of employment for any other reason, violation of
material policies of the Company and its Affiliates, breach of noncompetition, confidentiality, or
other restrictive covenants that may apply to the Participant, or other conduct by the Participant
that is detrimental to the business or reputation of the Company and its Affiliates.

     20. Corporate Mergers, Acquisitions, Etc.  The Committee may also grant Options, Stock
Appreciation Rights, Restricted Stock or other Awards under the Plan in substitution for, or in
connection with the assumption of, existing options, stock appreciation rights, restricted stock or
other award granted, awarded or issued by another corporation and assumed or otherwise agreed to be
provided for by the Company pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or liquidation to which
the Company or a Subsidiary is a party. The terms and conditions of the substitute Awards may vary
from the terms and

12

 

conditions set forth in the Plan to the extent as the Board at the time of the grant may deem
appropriate to conform, in whole or in part, to the provisions of the awards in substitution for
which they are granted.

     21. Unfunded Plan.  The Plan shall be unfunded and the Company shall not be required
to segregate any assets that may at any time be represented by Awards under the Plan. Neither the
Company, its Affiliates, the Committee, nor the Board of Directors shall be deemed to be a trustee
of any amounts to be paid under the Plan nor shall anything contained in the Plan or any action
taken pursuant to its provisions create or be construed to create a fiduciary relationship between
the Company and/or its Affiliates, and a Participant or Successor or Transferee. To the extent any
person acquires a right to receive an Award under the Plan, this right shall be no greater than the
right of an unsecured general creditor of the Company.

     22. Limits of Liability.

     (a) Any liability of the Company to any Participant with respect to an Award shall be based
solely upon contractual obligations created by the Plan and the Award Agreement.

     (b) Except as may be required by law, neither the Company nor any member of the Board of
Directors or of the Committee, nor any other person participating in any determination of any
question under the Plan, or in the interpretation, administration or application of the Plan, shall
have any liability to any party for any action taken, or not taken, in good faith under the Plan.

     23. Compliance with Applicable Legal Requirements.  No certificate for Shares
distributable pursuant to the Plan shall be issued and delivered unless the issuance of the
certificate complies with all applicable legal requirements including, without limitation,
compliance with the provisions of applicable state securities laws, the Securities Act of 1933, as
amended and in effect from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which the Company’s Shares may, at the time, be listed.

     24. Deferrals and Settlements.  The Committee may require or permit Participants to
elect to defer the issuance of Shares or the settlement of Awards in cash under such rules and
procedures as it may establish under the Plan. It may also provide that deferred settlements
include the payment or crediting of interest on the deferral amounts.

     25. Other Benefit and Compensation Programs.  Payments and other benefits received by
a Participant under an Award made pursuant to the Plan shall not be deemed a part of a
Participant’s regular, recurring compensation for purposes of the termination, indemnity or
severance pay laws of any country and shall not be included in, nor have any effect on, the
determination of benefits under any other employee benefit plan, contract or similar arrangement
provided by the Company or an Affiliate unless expressly so provided by such other plan, contract
or arrangement, or unless the Committee expressly determines that an Award or portion of an Award
should be included to accurately reflect competitive compensation practices or to recognize that an
Award has been made in lieu of a portion of competitive cash compensation.

     26. Beneficiary Upon Participant’s Death.  To the extent that the transfer of a
Participant’s Award at his or her death is permitted under an Agreement, a Participant’s Award
shall be transferable at death to the estate or to the person who acquires the right to succeed to
the Award by bequest or inheritance.

     27. Requirements of Law.

     (a) To the extent that federal laws do not otherwise control, the Plan and all determinations
made and actions taken pursuant to the Plan shall be governed by the laws of the State of Minnesota
without regard to its conflicts-of-law principles and shall be construed accordingly.

     (b) If any provision of the Plan shall be held illegal or invalid for any reason, the
illegality or invalidity shall not effect the remaining parts of the Plan, and the Plan shall be
construed and enforced as if the illegal or invalid provision had not been included.

13

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