Document:

EXHIBIT 10.14

                        ENVIRONMENTAL INDEMNITY AGREEMENT

            ENVIRONMENTAL INDEMNITY AGREEMENT (this "Agreement") made as of the
31st day of December, 2001, by FIBERCORE USA, INC., a Delaware corporation
having an office at __________________________________ ("Guarantor"), in favor
of the Employees' Retirement System of Alabama, an instrumentality of the State
of Alabama established as a public corporation pursuant to Code of Alabama 1975,
Section 36-27-2 et seq. ("ERSA"), and the Teachers' Retirement System of Alabama
("TRSA"), an instrumentality of the State of Alabama established as a public
corporation pursuant to Code of Alabama 1975, Section 16-25-2 et seq., having an
office at 135 South Union Street, Montgomery, Alabama 36130, individually and as
co-Lenders (ERSA AND TRSA hereinafter referred to individually and collectively
as the context requires, as "Indemnitee") and other Indemnified Parties (defined
below).

                                    RECITALS:

            A. Guarantor is the owner of certain real property more particularly
described in Exhibit A attached hereto (said real property being referred to as
the "Land"; the Land, together with all structures, buildings and improvements
now or hereafter located on the Land, being collectively referred to as the
"Property").

            B. lndemnitee is prepared to make a loan (the "Loan") to Guarantor
in the principal amount of TWENTY TWO MILLION AND NO/100 DOLLARS
($22,000,000.00) pursuant to a Loan Agreement of even date herewith between
Guarantor and Indemnitee (as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time, the "Loan Agreement"),
which Loan shall be evidenced by the Note (as defined in the Loan Agreement) and
secured by, among other things, the Security Instrument (as defined in the Loan
Agreement).

            C. Indemnitee is unwilling to make the Loan unless Guarantor agrees
to provide the indemnification, representations, warranties, covenants and other
matters described in this Agreement for the benefit of the Indemnified Parties.

            D. Guarantor is entering into this Agreement to induce Indemnitee to
make the Loan.

                                    AGREEMENT

            In order to induce the Indemnitee to make the Loan to Guarantor, and
in consideration of the substantial benefit each and every Guarantor will derive
from the Loan:

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<PAGE>

                              ARTICLE 1 DEFINITIONS

            Capitalized terms used herein and not specifically defined herein
shall have the respective meanings ascribed to such terms in the Loan Agreement.
As used in this Agreement, the following terms shall have the following
meanings:

            The term "Environmental Law" means any present and future federal,
state and local laws, statutes, ordinances, rules, regulations, standards,
policies and other governmental directives or requirements, as well as common
law, that apply to Guarantor or the Property and relate to Hazardous Materials,
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act and the Resource Conservation and Recovery Act.

            The term "Hazardous Materials" means petroleum and petroleum
products and compounds containing them, including gasoline, diesel fuel and oil;
explosives, flammable materials; radioactive materials; polychlorinated
biphenyls and compounds containing them; lead and lead-based paint; asbestos or
asbestos-containing materials in any form that is or could become friable;
underground or above-ground storage tanks, whether empty or containing any
substance; any substance the presence of which on the Property is prohibited by
any federal, state or local authority; and any other material or substance now
or in the future defined as a "hazardous substance," "hazardous material,"
"hazardous waste," "toxic substance," "toxic pollutant," "contaminant,"
"pollutant" or other words of similar import within the meaning of any
Environmental Law.

            The term "Indemnified Parties" means Indemnitee, any person or
entity who is or will have been involved in the origination of the Loan, any
person or entity who is or will have been involved in the servicing of the Loan,
any person or entity in whose name the encumbrance created by the Security
Documents is or will have been recorded, persons and entities who may hold or
acquire or will have held a full or partial interest in the Loan, as well as
custodians, trustees and other fiduciaries who hold or have held a full or
partial interest in the Loan for the benefit of third parties) as well as the
respective directors, officers, shareholders, partners, members, employees,
agents, servants, representatives, attorneys, contractors, subcontractors,
affiliates, subsidiaries, participants, successors and assigns of any and all of
the foregoing (including but not limited to any other person or entity who holds
or acquires or will have held a participation or other full or partial interest
in the Loan or the Property, whether during the term of the Loan or as a part of
or following a foreclosure of the Loan and including, but not limited to, any
successors by merger, consolidation or acquisition of all or a substantial
portion of lndemnitee's assets and business).

            The term "Legal Action" means any claim, suit or proceeding, whether
administrative or judicial in nature.

            The term "Losses" means any and all claims, suits, liabilities
(including, without limitation, strict liabilities), actions, proceedings,
obligations, debts, damages,

                                                                    Page 2 of 11
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losses, costs, expenses, fines, penalties, charges, fees, expenses, judgments,
awards, amounts paid in settlement of whatever kind or nature (including but not
limited to reasonable attorneys' fees and other costs of defense).

            The term "Release" with respect to any Hazardous Substance means any
release, deposit, discharge, emission, leaking, leaching, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Materials.

                            ARTICLE 2 INDEMNIFICATION

            2.1 INDEMNIFICATION, Guarantor covenants and agrees at its sole cost
and expense, to protect, defend, indemnify, release and hold Indemnified Parties
harmless from and against any and all Losses imposed upon or incurred by or
asserted against any Indemnified Parties and directly or indirectly arising out
of or in any way relating to any one or more of the following: (a) any presence
of any Hazardous Materials in, on, above, or under the Property, except to the
extent arising from the active intentional conduct of the Indemnified Party; (b)
any past, present or threatened Release of Hazardous Materials in, on, above,
under or from the Property; (c) any activity by any Guarantor, any person or
entity affiliated with any Guarantor, and any tenant or other user of the
Property in connection with any actual, proposed or threatened use, treatment,
storage, holding, existence, disposition or other Release, generation,
production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from the Property of any
Hazardous Materials at any time located in, under, on or above the Property or
any actual or proposed remediation of any Hazardous Materials at any time
located in, under, on or above the Property, whether or not such remediation is
voluntary or pursuant to court or administrative order, including but not
limited to any removal, remedial or corrective action; (d) any past, present or
threatened non-compliance or violations of any Environmental Laws (or permits
issued pursuant to any Environmental Law) in connection with the Property or
operations thereon, including but not limited to any failure by any Guarantor,
any person or entity affiliated with any Guarantor, and any tenant or other user
of the Property to comply with any order of any governmental authority in
connection with any Environmental Laws; (e) the imposition, recording or filing
or the threatened imposition, recording or filing of any environmental lien
encumbering the Property; (f) any acts of any Guarantor, any person or entity
affiliated with any Guarantor, and any tenant or other user of the Property in
(i) arranging for disposal or treatment, or arranging with a transporter for
transport for disposal or treatment, of Hazardous Materials at any facility or
incineration vessel containing such or similar Hazardous Materials or (ii)
accepting any Hazardous Materials for transport to disposal or treatment
facilities, incineration vessels or sites from which there is a Release, or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for remediation; and (g) any material misrepresentation or inaccuracy in
any representation or warranty or material breach or failure to perform any

                                                                    Page 3 of 11
<PAGE>

covenants or other obligations pursuant to this Agreement, the Loan Agreement or
the Security Instrument relating to environmental matters.

            2.2 DUTY TO DEFEND AND ATTORNEYS AND OTHER FEES AND EXPENSES.

            Upon written request by any Indemnified Party, Guarantor shall
defend such Indemnified Party (if requested by any Indemnified Party, in the
name of the Indemnified Party) by attorneys and other professionals reasonably
approved by the Indemnified Parties. Notwithstanding the foregoing, any
Indemnified Parties may, in their sole discretion, engage their own attorneys
and other professionals to defend or assist them, and, at the option of
Indemnified Parties, their attorneys shall control the resolution of any claim
or proceeding. Upon demand, Guarantor shall pay or, in the sole discretion of
the Indemnified Parties, reimburse, the Indemnified Parties for the payment of
reasonable fees and disbursements of attorneys, engineers, environmental
consultants, laboratories and other professionals in connection therewith.

            2.3 SUBROGATION. Guarantor shall take any and all reasonable
actions, including institution of legal action against third-parties, necessary
or appropriate to obtain reimbursement, payment or compensation from such
persons responsible for the presence of any Hazardous Materials at, in, on,
under or near the Property or otherwise obligated by law to bear the cost.
Indemnified Parties shall be and hereby are subrogated to all of Guarantor's
rights now or hereafter in such claims.

            2.4 INTEREST. Any amounts payable to any Indemnified Parties under
this Agreement shall become immediately due and payable on demand therefor and,
if not paid within thirty (30) days of such demand therefor, shall bear interest
at a per annum rate equal to the lesser of (a) three percent (3%) plus the
Default Interest Rate (as defined in the Loan Agreement) or (b) the maximum
interest rate which Guarantor or any other Guarantor may by law pay or
Indemnified Parties may charge and collect, from the date payment was due,

            2.5 SURVIVAL. The obligations and liabilities of Guarantor under
this Agreement shall fully survive indefinitely notwithstanding any termination,
satisfaction, assignment, entry of a judgment of foreclosure, exercise of any
power of sale, or delivery of a deed in lieu of foreclosure of the Security
Documents; provided, however, the obligations of Guarantor shall not apply to
any Losses which Guarantor can establish arose as a result of the active
intentional conduct of the Indemnified Party. Notwithstanding the above,
Guarantor shall be released from its responsibility and obligations under this
Agreement if the Project is sold with the consent of Lenders, and a substitute
guarantor, approved by, and, in their sole discretion, acceptable to Lenders has
assumed all of the terms conditions, covenants and obligations in this
Agreement.

            2.6 NOTICE OF LEGAL ACTIONS. Each party hereto shall, within five
(5) Business Days of receipt thereof, give written notice to the other party
hereto of (i) any notice, advice or other communication from any governmental
entity or any

                                                                    Page 4 of 11
<PAGE>

source whatsoever with respect to Hazardous Materials on, from or affecting the
Property, and (ii) any Legal Action brought against such party or related to the
Property, with respect to which any Guarantor may have liability under this
Agreement. Such notice shall comply with the provisions of Section 5.1 hereof,

            ARTICLE 3 - REPRESENTATIONS AND WARRANTIES AND COVENANTS

            3.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. Guarantor hereby
makes the corporate authority representations and warranties and the
environmental representations, warranties and covenants contained in Sections
2.1 of the Loan Agreement and agrees that the same are hereby made a part of
this Agreement to the same extent and with the same force as if fully set forth
herein.

                               ARTICLE 4 - GENERAL

            4.1 UNIMPAIRED LIABILITY. Except as provided in Section 2.5 hereof,
the liability of Guarantor under this Agreement shall in no way be limited or
impaired by, and Guarantor hereby consent to and agree to be bound by, any
amendment or modification of the provisions of the Note, the Security Instrument
or any other Loan Document to or with lndemnitee by any Guarantor or any person
who succeeds any Guarantor or any person as owner of the Property. In addition,
the liability of Guarantor under this Agreement shall in no way be limited or
impaired by (i) any extensions of time for performance required by the Note, the
Loan Agreement, the Security Instrument or any of the other Loan Documents, (ii)
any sale or transfer of all or part of the Property, (iii) except as provided
herein, any exculpatory provision in the Note, the Loan Agreement, the Security
Instrument, or any of the other Loan Documents limiting Indemnitee' s recourse
to the Property or to any other security for the Note, or limiting Indemnitee' s
rights to a deficiency judgment against Guarantor, (iv) the accuracy or
inaccuracy of the representations and warranties made by Guarantor under the
Note, the Loan Agreement, the Security Instrument or any of the other Loan
Documents or herein, (v) the release of Guarantor or any other person from
performance or observance of any of the agreements, covenants, terms or
condition contained in any of the other Loan Documents by operation of law,
lndemnitee's voluntary act, or otherwise, (vi) the release or substitution in
whole or in part of any security for the Note, or (vii) Indemnitee's failure to
record the Security Documents or file any UCC financing statements (or
Indemnitee's improper recording or filing of any thereof) or to otherwise
perfect, protect, secure or insure any security interest or lien given as
security for the Note; and, in any such case, whether with or without notice to
Guarantor and with or without consideration,

            4.2 ENFORCEMENT. Indemnified Parties may enforce the obligations of
Guarantor without first resorting to or exhausting any security or collateral or
without first having recourse to the Note, the Loan Agreement, the Security
Instrument, or any other Loan Documents or any of the Property, through
foreclosure proceedings or otherwise, provided, however, that nothing herein
shall inhibit or prevent Indemnitee

                                                                    Page 5 of 11
<PAGE>

from suing on the Note, foreclosing, or exercising any power of sale under, the
Security Instrument, or exercising any other rights and remedies thereunder.
This Agreement is not collateral or security for the debt of Guarantor pursuant
to the Loan, unless Indemnitee expressly elects in writing to make this
Agreement additional collateral or security for the debt of Guarantor pursuant
to the Loan, which Indemnitee is entitled to do in its sole discretion. It is
not necessary for an Event of Default to have occurred pursuant to and as
defined in the Security Instrument for Indemnified Parties to exercise their
rights pursuant to this Agreement. Notwithstanding any provision of the Security
Instrument, the obligations pursuant to this Agreement are exceptions to any
non-recourse or exculpation provision of the Security Instrument; Guarantor is
fully and personally liable for such obligations, and its liability is not
limited to the original or amortized principal balance of the Loan or the value
of the Property.

            4.3 WAIVERS. (a) Guarantor hereby waives (i) any right or claim of
right to cause a marshalling of any Guarantor's assets or to cause Indemnitee or
other Indemnified Parties to proceed against any of the security for the Loan
before proceeding under this Agreement against Guarantor; (ii) and relinquish
all rights and remedies accorded by applicable law to indemnitors or Guarantor,
except any rights of subrogation which Guarantor may have, provided that the
indemnity provided for hereunder shall neither be contingent upon the existence
of any such rights of subrogation nor subject to any claims or defenses
whatsoever which may be asserted in connection with the enforcement or attempted
enforcement of such subrogation rights including, without limitation, any claim
that such subrogation rights were abrogated by any acts of lndemnitee or other
Indemnified Parties; (iii) the right to assert a counterclaim, other than a
mandatory or compulsory counterclaim, in any action or proceeding brought
against or by Indemnitee or other Indemnified Parties; (iv) notice of acceptance
hereof and of any action taken or omitted in reliance hereon; (v) presentment
for payment, demand of payment, protest or notice of nonpayment or failure to
perform or observe, or other proof, or notice or demand; and (vi) all homestead
exemption rights against the obligations hereunder and the benefits of any
statutes of limitations or repose. Notwithstanding anything to the contrary
contained herein, Guarantor hereby agrees to postpone the exercise of any rights
of subrogation with respect to any collateral securing the Loan until the Loan
shall have been paid in full. No delay by any Indemnified Party in exercising
any right, power or privilege under this Agreement shall operate as a waiver of
any such privilege, power or right.

            (b) GUARANTOR HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW,
THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN
CONTRACT, TORT OR OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN
EVIDENCED BY THE NOTE, THE APPLICATION FOR THE LOAN EVIDENCED BY THE NOTE, THE
NOTE, THE SECURITY DOCUMENTS, THIS AGREEMENT OR THE OTHER SECURITY DOCUMENTS OR
ANY ACTS OR OMISSIONS OF ANY INDEMNIFIED PARTIES IN CONNECTION THEREWITH.

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<PAGE>

                            ARTICLE 5 - MISCELLANEOUS

            5.1 NOTICES. All notices required or permitted hereunder shall be
given and shall become effective as provided in the Loan Agreement. Notices to
GUARANTOR shall be addressed as follows:

                  FiberCore USA, Inc.
                  708 Third Avenue
                  New York, NY 10017

            with a copy to:

                  Malcom Wattman, Esq.
                  Cadwalader, Wickersham & Taft
                  100 Maiden Lane
                  New York, NY 10038

            5.2 NO THIRD-PARTY BENEFICIARY. The terms of this Agreement are for
the sole and exclusive protection and use of Indemnified Parties. No party shall
be a third-party beneficiary hereunder, and no provision hereof shall operate or
inure to the use and benefit of any such third party. It is agreed that those
persons and entities included in the definition of Indemnified Parties are not
such excluded third party beneficiaries.

            5.3 DUPLICATE ORIGINALS - COUNTERPARTS. This Agreement may be
executed in any number of duplicate originals and each duplicate original shall
be deemed to be an original. This Agreement may be executed in several
counterparts, each of which counterparts shall be deemed an original instrument
and all of which together shall constitute a single Agreement. The failure of
any party hereto to execute this Agreement, or any counterpart hereof, shall not
relieve the other signatories from their obligations hereunder,

            5.4 NO ORAL CHANGE. This Agreement, and any provisions hereof, may
not be modified, amended, waived, extended, changed, discharged or terminated
orally or by any act or failure to act on the part of any Guarantor or any
Indemnified Party, but only by an agreement in writing signed by the party
against whom enforcement of any modification, amendment, waiver, extension,
change, discharge or termination is sought.

            5.5 HEADINGS. ETC. The headings and captions of various paragraphs
of this Agreement are for convenience of reference only and are not to be
construed as defining or limiting, in any way, the scope or intent of the
provisions hereof,

            5.6 NUMBER AND GENDER; SUCCESSORS AND ASSIGNS. All pronouns and any
variations thereof shall be deemed to refer to the masculine,

                                                                    Page 7 of 11
<PAGE>

feminine, neuter, singular or plural as the identity of the person or persons
referred to may require. Without limiting the effect of specific references in
any provision of this Agreement, the term "Guarantor" shall be deemed to refer
to each and every person or entity comprising an Guarantor from time to time, as
the sense of a particular provision may require, and to include the heirs,
executors, administrators, legal representatives, successors and assigns of
Guarantor, all of whom shall be bound by the provisions of this Agreement,
provided that no obligation of any Guarantor may be assigned except with the
written consent of lndemnitee. Each reference herein to Indemnitee shall be
deemed to include its successors and assigns. This Agreement shall inure to the
benefit of Indemnified Parties and their respective successors and assigns
forever,

            5.7 JOINT AND SEVERAL LIABILITY. If Guarantor consists of more than
one person or entity, the obligations and liabilities of each such person and
entity hereunder are joint and several.

            5.8 RELEASE OF LIABILITY. Any one or more parties liable upon or in
respect of this Agreement may be released without affecting the liability of any
party not so released.

            5.9 RIGHTS CUMULATIVE. The rights and remedies herein provided are
cumulative and not exclusive of any rights or remedies which lndemnitee has
under the Note, the Loan Agreement, the Security Instrument or the other Loan
Documents or would otherwise have at law or in equity.

            5.10 INAPPLICABLE PROVISIONS. If any term, condition or covenant of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such provision.

            5.11 GOVERNING LAW. This Agreement shall be deemed to be a contract
entered into pursuant to the laws of the State of Alabama and shall in all
respects be governed, construed, applied and enforced in accordance with the
laws of the State of Alabama.

            5.12 SUBMISSION TO JURISDICTION. With respect to any claim or action
arising hereunder, Guarantor (a) irrevocably submit to the nonexclusive
jurisdiction of the courts of the State of Alabama and the United States
District Court for the Middle District of Alabama located in Montgomery,
Alabama, and appellate courts from any thereof, and (b) irrevocably waive any
objection which it may have at any time to the laying on venue of any suit,
action or proceeding arising out of or relating to this Agreement brought in any
such court, irrevocably waive any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum

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<PAGE>

                                       [GUARANTOR - BORROWER]

                                       FIBERCORE USA, INC.
                                       a Delaware corporation

                                       By:
                                           ------------------------------------

                                       Its:
                                           ------------------------------------

                                                                    Page 9 of 11
<PAGE>

            IN WITNESS WHEREOF, this Agreement has been executed by Guarantor
and is effective as of the day and year first above written.

                                       [GUARANTOR - BORROWER]

                                       FIBERCORE USA, INC.
                                       a Delaware corporation

                                       By: /s/ Robert Lobban
                                           ------------------------------------
                                           Robert Lobban
                                           Its: Chief Financial Officer

                                                                   Page 10 of 11
<PAGE>

                                    EXHIBIT A

                     TO ENVIRONMENTAL INDEMNITY AGREEMENT BY
                       FIBERCORE USA, INC (as "Guarantor")
                                   In Favor of
                   EMPLOYEES' RETIREMENT SYSTEM OF ALABAMA and
                     TEACHERS' RETIREMENT SYSTEM OF ALABAMA
                               (As "Indemnitees")

                                   ----------

                        [Real Property Legal Description]

            LOT 1 OF THE AUBURN TECHNOLOGY PARK NORTH, AS SAME APPEARS IN THE
RECORDS OF THE OFFICE OF THE JUDGE OF PROBATE FOR LEE COUNTY, ALABAMA
AT:_______________________________________________________________.

                                                                   Page 11 of 11EXHIBIT 10.15

                               OPTION AGREEMENT

            THIS OPTION AGREEMENT (this "AGREEMENT") dated as of December
31,2001 between the INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF AUBURN ("OWNER")
and FIBERCORE USA, INC., a Delaware corporation ("OPTIONEE").

                              W I T N E S S E T H:

            WHEREAS, Optionee and Employees' Retirement System of Alabama and
Teacher's Retirement System of Alabama ("LENDERS") entered into a Loan Agreement
dated as of December 31, 2001 ("LOAN') wherein Optionee agreed to develop, build
and equip a plant located on the Premises (as such term is defined herein) for
fiber optic manufacturing; more particularly identified, upon the terms and
conditions set forth in the Loan Agreement; and

            WHEREAS, Owner has offered and Optionee has accepted certain
business development assistance and benefits (collectively, the "AIBD
AGREEMENTS") a copy of which is attached hereto as Exhibit A; and

            WHEREAS, Owner and Optionee are desirous of entering into this
Agreement for the purpose of setting forth the agreements of the parties with
respect to the conveyance of the Premises from Owner to Optionee.

            NOW, THEREFORE, for good and valuable consideration Owner and
Optionee agree as follows:

            Section 1. Premises. Owner hereby grants, bargains and sells to
Optionee an exclusive option, irrevocable on the part of Owner until September
30, 2002 (the "OPTION EXPIRATION DATE") to purchase:

            (a) the land more particularly described in Exhibit B attached
hereto (the "LAND");

            (b) all right, title and interest of Owner, if any, in and to the
land lying in the bed of any street in front of or adjoining the Land to the
center line thereof and to any unpaid award or any taking by condemnation for
any damage to the Land by reason of a change of grade of any street or highway;

            (c) the appurtenances and all the estate and rights of Owner in and
to the Land and Buildings; and

            (d) all right, title and interest of Owner, if any, in and to the
fixtures, equipment and other personal property attached or appurtenant to the
Land (all of the foregoing being collectively called the "PREMISES").

<PAGE>

            Section 2. Purchase Price. The purchase price is Twenty-Five
Thousand and No/100 Dollars ($25,000.00) and shall be payable in full as soon as
possible after the Closing (as such term is hereinafter defined) in cash or by
bank or certified check to the order of Owner, which shall be returned to
Optionee upon the exercise of the Option.

            Section 3. Intentionally Omitted.

            Section 4. Title. The Premises are to be conveyed subject to the
matters set forth in Exhibit C attached hereto.

            Section 5. Exercise of Option and Closing Date. Notice of the
election of Optionee to purchase the Premises (the "ELECTION NOTICE") shall be
given to Owner at least fifteen (15) days prior to the Option Expiration Date.
The closing (the "CLOSING") shall take place on or before the Option Expiration
Date on the date designated by Optionee in the Election Notice (the "CLOSING
DATE") at the offices of Lender's attorneys, Messrs., Pappanastos, Wilson &
Associates, P.C., at 25 South Court Street, Montgomery, Alabama 36104.

            Section 6. Deed and Taxes. At the Closing:

            (a) Owner shall deliver to Optionee a statutory warranty deed with
covenant against grantor's acts so as to convey fee simple title to the Premises
free of all encumbrances, except as stated in Section 4 hereof;

            (b) Optionee shall pay the purchase price.

            Section 7. Intentionally Omitted.

            Section 8. Representations and Warranties. Owner represents and
warrants to Optionee that:

            (a) Owner shall not mortgage or otherwise encumber the Premises
without the prior written consent of Optionee.

            Section 9. Apportionments at Closing. The real estate taxes are to
be apportioned as of midnight on the day preceding the Closing.

            Section 10. Environmental Hazards. (a) Environmental Representations
and Warranties. Except as otherwise disclosed by that certain Phase I
environmental report (or Phase II environmental report, if required) delivered
to Optionee by Owner in connection with this Agreement (such report is referred
to below as the "ENVIRONMENTAL REPORT"), (i) there are no Hazardous Substances
(defined below) or underground storage tanks in, on, or under the Premises,
except those that are both (A) in compliance with Environmental Laws (defined
below) and with permits issued pursuant thereto and (B) fully disclosed to
Optionee in writing pursuant the Environmental Report; (ii) there are no past,
present or threatened Releases (defined remediated in accordance with
Environmental Law; (iii) there is no threat of any Release of Hazardous
Substances migrating to the Premises; (iv) there is no past or present
non-compliance with Environmental Laws, or with permits issued pursuant thereto,
in connection with the Premises which has not been fully remediated in
accordance with Environmental Law;

                                      -2-
<PAGE>

(v) Owner does not know of, and has not received, any written or oral notice or
other communication from any person (including, but not limited to, a
governmental authority) re1ating to Hazardous Substances or Remediation (defined
below) thereof of possible liability of any person pursuant to any Environmental
Law other environmental conditions in connection with the Premises, or any
actual or potential administrative or judicial proceedings in connection with
any of the foregoing and (vi) Owner has truthfully and fully provided to
Optionee, in writing, any and all information relating to conditions in, on,
under or from the Premises that is known to Owner and all information that is
contained in Owner's files and records, including, but not limited to, any
reports relating to Hazardous Substances in, on, under or from the Premises
and/or to the environmental condition of the Premises.

            "ENVIRONMENTAL LAW" means any present and future federal, state and
local laws, statutes, ordinances, rules, regulations and the like, as well as
common law, relating to protection of human health or the environment, relating
to Hazardous Substances, relating to liability for or costs of Remediation or
prevention of Releases of Hazardous Substances or relating to liability for or
costs of other actual or threatened danger to human health or the environment.
Environmental Law includes, but is not limited to, the following statutes, as
amended, any successor thereto, and any regulations promulgated pursuant
thereto, and any state or local statutes, ordinances, rules, regulations and the
like addressing similar issues: the Comprehensive Environmental Response,
Compensation and Liability Act; the Emergency Planning and Community
Right-to-Know Act; the Hazardous Substances Transportation Act; the Resource
Conservation and Recovery Act (including but not limited to Subtitle I relating
to underground storage tanks); the Solid Waste Disposal Act; the Clean Water
Act; the Clean Air Act; the Toxic Substances Control Act; the Safe Drinking
Water Act; the Occupational Safety and Health Act; the Federal Water Pollution
Control Act; the Federal Insecticide, Fungicide and Rodenticide Act; the
Endangered Species Act; the National Environmental Policy Act; and the River and
Harbors Appropriation Act. Environmental Law also includes, but is not limited
to, any present and future federal, state and local laws, statutes, ordinances,
rules, regulations and the like, as well as common law: conditioning transfer of
Premises upon a negative declaration or other approval of a governmental
authority of the environmental condition of the Premises; requiring notification
or disclosure of Releases of Hazardous Substances or other environmental
condition of the Premises to any governmental authority or other Person, whether
or not in connection with transfer of title to or interest in Premises; imposing
conditions or requirements in connection with permits or other authorization for
lawful activity; relating to nuisance, trespass or other causes of action
related to the Premises; or relating to wrongful death, personal injury, or
Premises or other damage in connection with any physical condition or use of the
Premises.

            "HAZARDOUS SUBSTANCES" include, but are not limited to any and all
substances (whether solid, liquid or gas) defined, listed, or otherwise
classified as pollutants, hazardous wastes, hazardous substances, hazardous
materials, extremely hazardous wastes, or words of similar meaning or regulatory
effect under any present or future Environmental Laws or that may have a
negative impact on human health or the environment, including but not limited to
petroleum and petroleum products, asbestos and asbestos-containing materials,
polychlorinated biphenyls, lead, radon, radioactive materials, flammables and
explosives, but excluding substances of kinds and in amounts ordinarily and
customarily used or stored in similar

                                      -3-
<PAGE>

properties for the purpose of cleaning or other maintenance or operations and
otherwise in compliance with all Environmental Laws.

            "RELEASE" of any Hazardous Substance includes, but is not limited
to, any release, deposit, discharge, emission, leaking, spilling, seeping,
migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing
or other movement of Hazardous Substances.

            "REMEDIATION" includes, but is not limited to, any response,
remedial, removal, or corrective action, any activity to cleanup, detoxify,
decontaminate, contain or otherwise remediate any Hazardous Substance, any
actions to prevent, cure or mitigate any Release of any Hazardous Substance, any
action to comply with any Environmental Laws or with any permits issued pursuant
thereto, any inspection, investigation, study, monitoring, assessment, audit,
sampling and testing, laboratory or other analysis, or evaluation relating to
any Hazardous Substances or to anything referred to in this Section.

            (b) Environmental Covenants. During the period that this Agreement
is in effect, owner covenants and agrees that: (i) all uses and operations on or
of the Premises, whether by Owner or any other person shall be in compliance
with all Environmental Laws and permits issued pursuant thereto; (ii) there
shall be no Releases of Hazardous Substances in, on, under or from the Premises;
(iii) there shall be no Hazardous Substances in, on, or under the Premises,
except those that are both (A) in compliance with all Environmental Laws and
with permits issued pursuant thereto and (B) fully disclosed to Optionee in
writing; (iv) Owner shall keep the Premises free and clear of all liens and
other encumbrances imposed pursuant to any Environmental Law, whether due to any
act or omission of Owner or any other person (the "ENVIRONMENTAL LIENS"); (v)
Owner shall, at its sole cost and expense, fully and expeditiously cooperate in
all activities pursuant to Section 10(c) below, including, but not limited to,
providing all relevant information and making knowledgeable persons available
for interviews; (vi) Owner shall, at its sole cost and expense, perform any
environmental site assessment or other investigation of environmental conditions
in connection with the Premises, pursuant to any reasonable written request of
Optionee made in the event that Optionee has reason to believe that an
environmental hazard exists on the Premises (including, but not limited to,
sampling, testing and analysis of soil, water, air, building materials and other
materials and substances whether solid, liquid or gas), and share with Optionee
the reports and other results thereof, and Optionee and other Indemnified
Parties shall be entitled to rely on such reports and other results thereof;
(vii) Owner shall, at its sole cost and expense, comply with all reasonable
written requests of Optionee made in the event that Optionee has reason to
believe that an environmental hazard exists on the Premises (A) reasonably
effectuate Remediation of any condition (including, but not limited to, a
Release of a Hazardous Substance) in, on, under or from the Premises; (B) comply
with any Environmental Law; (C) comply with any directive from any governmental
authority and (D) take any other reasonable action necessary or appropriate for
protection of human health or the environment; (viii) Owner shall not do or
allow any user of the Premises to do any act that materially increases the
dangers to human health or the environment, poses an unreasonable risk of harm
to any person (whether on or off the Premises,, impairs or may impair the value
of the Premises, is contrary to any requirement of any insurer, constitutes a
public or private nuisance, constitutes waste, or violates any covenant,
condition, agreement or easement applicable to the Premises and (ix) Owner shall
immediately notify Optionee in writing of (A) any presence or Releases or
threatened Releases of Hazardous Substances in on, under from

                                      -4-
<PAGE>

or migrating towards the Premises; (B) any non-compliance with any Environmental
Laws related in any way to the Premises; (C) any actual or potential
Environmental Lien; (D) any required or proposed Remediation of environmental
conditions relating to the Premises and (E) any written or oral notice or other
communication of which Owner becomes aware from any source whatsoever
(including, but not limited to, a governmental entity) relating in any way to
Hazardous Substances or Remediation thereof, possible liability of any Person
pursuant to any Environmental Law, other environmental conditions in connection
with the Premises, or any actual or potential administrative or judicial
proceedings in connection with anything referred to in this Section 10.

            (c) Optionee's Rights. In the event that Optionee has reason to
believe that an environmental hazard exists on the Premises that does not, in
Optionee's sole discretion, endanger any tenants or other occupants of the
Premises or their guests or the general public or materially and adversely
affect the value of the Premises, upon reasonable notice from Optionee Owner
shall, at Owner's expense, promptly cause an engineer or consultant,
satisfactory to Optionee, to conduct any environmental assessment or audit (the
scope of which shall be determined in Optionee's sole and absolute discretion)
and take any samples of soil, groundwater or other water, air, or building
materials or any other invasive testing requested by Optionee and promptly
deliver the results of any such assessment, audit sampling or other testing;
provided, however if such results are not delivered to Optionee within a
reasonable period or if Optionee has reason to believe that an environmental
hazard exists on the Premises that, in Optionee's sole judgment, endangers any
tenant or other occupant of the Premises or their guests or the general public
or may materially and adversely affect the value of the Premises, upon
reasonable notice to Owner, Optionee and any other Person designated by
Optionee, including, but not limited to, any receiver, any representative of a
governmental entity, and any environmental consultant, shall have the right, but
not the obligation to enter upon the Premises at all reasonable times to assess
any and all aspects of the environmental condition of the Premises and its use,
including, but not limited, to conducting any environmental assessment or audit
(the scope of which shall be determined in Optionee's sole and absolute
discretion) and taking samples of soil, ground water or other water, air, or
building materials, and reasonably conducting other invasive testing. Owner
shall cooperate with and provide Optionee and any such Person designated by
Optionee with access to the Premises.

            (d) Environmental Indemnification. Owner shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless Optionee from and
against any and losses and costs of Remediation (whether or not performed
voluntarily), engineers' fees, environmental consultants' fees, and costs of
investigation (including, but not limited to, sampling, testing, and analysis of
soil, water, air, building materials and other materials and substances whether
solid, liquid or gas) imposed upon or incurred by or asserted against any
Optionee, and directly or indirectly arising out of or in any way relating to
any one (1) or more of the following: (i) any presence of any Hazardous
Substances in, on, above, or under the Premises; (ii) any past, present or
threatened Release of Hazardous Substances in, on, above under or from the
Premises; (iii) any activity by Owner, any person affiliated with Owner or any
tenant or other user of the Premises in connection with any actual, proposed or
threatened use, treatment, storage, holding, existence, disposition or other
Release, generation, production, manufacturing, processing, refining, control,
management, abatement, removal, handling, transfer or transportation to or from
the Premises of any Hazardous Substances at any time located in, under, on or
above the

                                      -5-
<PAGE>

Premises; (iv) any activity by Owner, any Person affiliated with Owner or any
tenant or other user of the Premises in connection with any actual or proposed
Remediation of any Hazardous Substances at any time located in, under, on or
above the Premises, whether or not such Remediation is voluntary or pursuant to
court or administrative order, including, but not limited to, any removal,
remedial or corrective action; (v) any past or present non-compliance or
violations of any Environmental Laws (or permits issued pursuant to any
Environmental Law) in connection with the Premises or operations thereon,
including, but not limited to, any failure by Owner, any affiliate of Owner or
any tenant or other user of the Premises to comply with any order of any
governmental authority in connection with any Environmental Laws; (vi) the
imposition, recording or filing of any Environmental Lien encumbering the
Premises; (vii) any administrative processes or proceedings or judicial
proceedings in any way connected with any matter addressed in this Section 10;
(viii) any past, present or threatened injury to, destruction of or loss of
natural resources in any way connected with the Premises, including, but not
limit to, costs to investigate and assess such injury, destruction or loss; (ix)
any acts of Owner or other users of the Premises in arranging for disposal or
treatment, or arranging with a transporter for transport for disposal or
treatment, of Hazardous Substances owned or possessed by such Owner or other
users, at any facility or incineration vessel owned or operated by another
person and containing such or any similar Hazardous Substance; (x) any acts of
Owner or other users of the Premises, in accepting any Hazardous Substances for
transport to disposal or treatment facilities, incineration vessels or sites
selected by Owner or such other users, from which there is a Release, or a
threatened Release of any Hazardous Substance which causes the incurrence of
costs for Remediation; (xi) any personal injury, wrongful death, or Premises
damage arising under any statutory or common law or tort law theory, including,
but not limited to, damages assessed for the maintenance of a private or public
nuisance or for the conducting of an abnormally dangerous activity on or near
the Premises and (xii) any misrepresentation or inaccuracy in any representation
or warranty or material breach or failure to perform any covenants or other
obligation pursuant to Section 10(b) hereof. This indemnity shall survive any
termination of this Agreement.

            (e) Duty to Defend; Attorneys' Fees and Other Fees and Expenses.
Upon written request by Optionee, Owner shall defend Optionee (if requested by
Optionee, in the name of Optionee) by attorneys and other professionals approved
by Optionee. Notwithstanding the foregoing, if the defendants in any such claim
or proceeding include both Owner and Optionee and Owner and Optionee shall have
reasonably concluded that there are any legal defenses available to it that are
different from or additional to those available to Owner, Optionee shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of Optionee,
provided that no compromise or settlement shall be entered without Owner's
consent, which consent shall not be unreasonably withheld. Upon demand, Owner
shall pay or, in the sole and absolute discretion of Optionee, reimburse
Optionee for the payment of reasonable fees and disbursements of attorneys,
engineers, environmental consultants, laboratories and other professionals in
connection therewith.

            (f) Notwithstanding the representations, covenants and agreements
contained in Section 10, Environmental Hazards, the obligations and
responsibilities of the Owner, shall be limited to events and occurrences from
after the time of delivery of the Phase One Environmental Report duly addressed
to Optionee in a form satisfactory to Optionee.

                                      -6-
<PAGE>

            Section 11. Damage to Premises. In the event the Premises shall be
destroyed or damaged by fire or other cause prior to Closing, Owner shall have
no obligation to repair, restore or replace the same and this Agreement shall
continue in full force and effect without any reduction or abatement in, or
credit against, the purchase price, but Owner shall assign and turn over at the
Closing and Optionee shall be entitled to receive and keep, all insurance
proceeds paid or to be paid with respect to such destruction or damage which
remain after payment or reimbursement has been made for any work theretofore
performed by Owner in connection with the repair and restoration of such
destruction or damage to the Premises.

            Section 12. Termination of Agreement. Notwithstanding anything
contained herein, to the contrary this Agreement shall terminate and be of no
further force or effect at such time as Owner shall convey the Premises to
Optionee.

            Section 13. Default by Owner. In the event Owner defaults hereunder
Optionee shall have the right, in addition to such rights as Optionee may have
at law or in equity, to apply a portion of the purchase price to satisfy any
liens or encumbrances which Owner is obligated to pay and discharge hereunder.
For the purposes hereof a breach by Owner of any of the representations or
warranties contained in Section 8 hereof shall constitute a default hereunder.

            Section 14. Broker. The parties warrant and represent that they have
dealt with no brokers in connection with this transaction. Optionee shall
indemnify and hold Owner harmless from and against any claims asserted by any
broker claiming to have dealt with Optionee in connection with this transaction
and Owner shall indemnify and hold Optionee harmless from and against any claims
asserted by any broker claiming to have dealt with Owner in connection with this
transaction. This paragraph shall survive the Closing.

            Section 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Alabama.

            Section 16. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original, but all of which together
shall constitute one (1) and the same instrument.

            Section 17. Notices. Any notice, request, consent or other
communication under this Agreement (a "NOTICE") shall be in writing and shall be
given by mailing the same by registered or certified mail, return receipt
requested, addressed to the parties at the addresses hereinabove set forth.
Either party may by notice to the other change the address to which notices to
such party shall thereafter be given.

            Section 18. Optionee Takes "As Is". Optionee shall accept the
Premises on the Closing "as is" and, except as otherwise expressly provided
herein Owner has made no warranty, representation or agreement with respect to
the condition or the repair of the Premises.

            Section 19. Assignment. Optionee shall have the right to assign this
Agreement to a wholly owned subsidiary of Optionee.

                                      -7-
<PAGE>

            Section 20. Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns.

            Section 21. Entire Agreement. All understandings and agreements
heretofore had between the parties are merged in this Agreement, which alone
fully and completely expresses their agreement, and it is entered into after
full investigation, neither party relying upon any statement or representation,
not embodied in this Agreement, made by the other.

                         [NO FURTHER TEXT ON THIS PAGE]

                                      -8-
<PAGE>

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

                                         OWNER:

Attest:                                  INDUSTRIAL DEVELOPMENT BOARD
                                            OF THE CITY OF AUBURN

/s/ Philip Dunlap                        By: /s/ Norman L. Caldwell
------------------------------------         ----------------------------------
Philip Dunlap, Secretary                     Name:  Norman L. Caldwell
                                             Title: Chairman of the Board

                                         OPTIONEE:

                                         FIBERCORE USA, INC., a Delaware
                                            corporation

                                         By: Robert Lobban
                                             ----------------------------------
                                             Name:  Robert Lobban
                                             Title: Chief Financial Officer

<PAGE>

STATE OF ALABAMA
COUNTY OF LEE

            I, the undersigned authority, a Notary Public and for said County
and State, hereby certify that Norman L. Caldwell, whose name as Chairman of the
Board of the Industrial Development Board of the City of Auburn is signed to the
foregoing Option Agreement and who is known to me, acknowledged before me that
he, acting in his capacity as such officer, executed the same for and as the act
of the corporation.

            Given under my hand and official seal this 28th day of December,
2001

                                             /s/ (ILLEGIBLE)
(NOTARY SEAL)                                -----------------------------------
                                                        Notary Public

<PAGE>

                                 City of Auburn
                            Home of Auburn University

July 24, 2001

Mr. Steven Phillips
Chief Financial Officer,
Treasurer and Director
FiberCore, Inc.
253 Worcester Road
Charlton, Massachusetts 01507

Dear Mr. Phillips:

Please accept this letter as a written confirmation of the City of Auburn and
its Industrial Development Board to provide the following incentives to
FiberCore should you select Auburn, Alabama for your new manufacturing facility.
Specifically, Auburn will provide you with the following incentives:

      1.    Provide to the Company, at no cost, Lot 1 Auburn Technology Park,
            North. This lot is approximately 35.04 +/- acres. This site already
            has a finished pad of approximately 250,000 square feet (98%
            compaction) and is ready for construction. The new Auburn Technology
            Park, North will be served by all utilities. The Board has placed a
            value on this lot of approximately $1,100,000 (drawing attached).
      2.    The Board will ensure that all utility connections are brought to
            designated locations no greater than five (5) feet from your
            building to facilitate connections. This incentive is valued at
            $50,000.
      3.    The City will provide the Company with all available tax abatements
            for property and sales and use taxes in connection with land,
            building improvements, and capital equipment. The anticipated
            millage rate to be abated shall be 23 mils out of a total of 54 mils
            applicable in Auburn, Alabama. The millage not abated reflects
            school taxes, hospital and children's home. Property tax abatement
            is for ten (10) years and sales and use tax abatement are one time
            only. We have used total project costs of $46.5 million for
            computation purposes. The estimated abatement to the Company has a
            value of $3,603,350 (computation attached).
      4.    The Board will provide assistance to the Company to ensure that all
            State of Alabama incentives are obtained. These include the
            following:
            o     Alabama Industrial Development Training -- letter of
                  commitment attached.
            o     Capital Investment Tax Credit -- letter of commitment
                  attached.

              144 Tichenor Avenue, Suite 1 o Auburn, Alabama 36830
          (334) 501-7260 o FAX: (334) 501-7299 o www.auburnalabama.org

<PAGE>

Mr. Steve Phillips
Page two
July 24, 2001

The City of Auburn and its Industrial Development Board are extremely pleased
that FiberCore, Inc. is considering our community for a new manufacturing
facility. We look forward to working with you to make this project a reality.
Please do not hesitate to call us if we may provide you with additional
information.

Industrial Development Board              City of Auburn

---------------------------------------   --------------------------------------
Normal L. Caldwell, Chairman              Bill Ham, Jr., Mayor

<PAGE>

                                FIBERCORE INC.

Estimated Amounts of Taxes to be Abated:

I.    Non-Educational Ad Valorem Taxes:

      1.)   Proposed new building in Auburn Technology Park North:

            Value: $7,500,000 x 20% Assessment
            23 mils Abated (non-educational taxes*) =         $ 34,500 annually

      2.)   Land (including site work):

            Value: $1,100,000 x 20% Assessment
            23 mils Abated (non-educational taxes*) =         $5,060 annually

      3.)   New Mfg. Equipment to be purchased and used in Auburn:

            Value: $39,000,000 x 20% Assessment
            23 mils Abated (non-educational taxes*) =         $ 179,400 annually

      Estimated Total Ad Valorem Taxes Abated =               $ 218,960 annually
                                                                      x10
                                                              ------------------

                                            Ten Year Total =      $2,189,600

(*31 Mils are not abated which included: 4.0 Mils for Hospital and Children's
Home)

II.   Sales and Use Taxes:

      Abatement for Sales Taxes = 6.5% (1.0% County-wide Schools not abated)
      Abatement for Machinery in Mfg. = 3.0%

      1.)   Building materials used in construction:

            Materials estimated at $3,750,000 x 6.5% =        $ 243,750

      2.)   New capital equipment purchased for use in
            manufacturing in Auburn:

            $39,000,000 x 3.0% =                              $ 1,170,000

      Estimated Total Sales and Use Tax Abatement:
           (*One Time Only)                                   $ 1,413,750*
                                                              ------------------

      ESTIMATED TOTAL VALUE OF ABATEMENTS =                   $ 3,603,350
                                                              ------------------

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