Document:

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                                                                   Exhibit 10.21

                               FINISAR CORPORATION
                     EXECUTIVE RETENTION AND SEVERANCE PLAN
                            ADOPTED FEBRUARY 25, 2003

     1.   ESTABLISHMENT AND PURPOSE

          1.1 ESTABLISHMENT. The Finisar Corporation Executive Retention and
Severance Plan (the "PLAN") is hereby established by the Compensation Committee
of the Board of Directors of Finisar Corporation, effective February 25, 2003
(the "EFFECTIVE DATE").

          1.2 PURPOSE. The Company draws upon the knowledge, experience and
advice of its Officers and Key Employees in order to manage its business for the
benefit of the Company's stockholders. Due to the widespread awareness of the
possibility of mergers, acquisitions and other strategic alliances in the
Company's industry, the topic of compensation and other employee benefits in the
event of a Change in Control is an issue in competitive recruitment and
retention efforts. The Committee recognizes that the possibility or pending
occurrence of a Change in Control could lead to uncertainty regarding the
consequences of such an event and could adversely affect the Company's ability
to attract, retain and motivate its Officers and Key Employees. The Committee
has therefore determined that it is in the best interests of the Company and its
stockholders to provide for the continued dedication of its Officers and Key
Employees notwithstanding the possibility or occurrence of a Change in Control
by establishing this Plan to provide designated Officers and Key Employees with
enhanced financial security in the event of a Change in Control. The purpose of
this Plan is to provide its Participants with specified compensation and
benefits in the event of termination of employment under circumstances specified
herein upon or following a Change in Control.

     2.   DEFINITIONS AND CONSTRUCTION

          2.1 DEFINITIONS. Whenever used in this Plan, the following terms shall
have the meanings set forth below:

               (a) "BASE SALARY RATE" means a Participant's monthly base salary
determined at the greater of (1) the Participant's monthly base salary rate in
effect immediately prior to the Participant's Termination Upon a Change in
Control or (2) the Participant's monthly base salary rate in effect immediately
prior to the applicable Change in Control. For this purpose, base salary does
not include any bonuses, commissions, fringe benefits, car allowances, other
irregular payments or any other compensation except base salary.

               (b) "BENEFIT PERIOD" means (1) with respect to a Participant who
is an Executive Officer a period of twenty-four (24) months and (2) with respect
to a Participant who is a Key Employee, a period of months determined by the
Committee and set forth in the Participant's Participation Agreement.

               (c) "BOARD" means the Board of Directors of the Company.

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               (d) "CAUSE" means the occurrence of any of the following, as
determined in good faith by a vote of not less than two-thirds of the entire
membership of the Board at a meeting of the Board called and held for such
purpose (after reasonable notice to the Participant and an opportunity for the
Participant, together with the Participant's counsel, to be heard before the
Board):

                    (1) the Participant's commission of any act of fraud,
embezzlement or dishonesty;

                    (2) the Participant's unauthorized use or disclosure of
confidential information or trade secrets of any member of the Company Group; or

                    (3) the Participant's intentional misconduct adversely
affecting the business or affairs of any member of the Company Group.

               (e) "CHANGE IN CONTROL" means, except as otherwise provided in
the Participation Agreement applicable to a given Participant, the occurrence of
any of the following:

                    (1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT")),
other than a trustee or other fiduciary holding securities of the Company under
an employee benefit plan of the Company, becomes the "beneficial owner" (as
defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of (i) the outstanding shares of common stock of the Company or (ii) the
total combined voting power of the Company's then-outstanding securities
entitled to vote generally in the election of directors;

                    (2) the Company is party to a merger, consolidation or
similar corporate transaction, or series of related transactions, which results
in the holders of the voting securities of the Company outstanding immediately
prior to such transaction(s) failing to retain immediately after such
transaction(s) direct or indirect beneficial ownership of more than fifty
percent (50%) of the total combined voting power of the securities entitled to
vote generally in the election of directors of the Company or the surviving
entity outstanding immediately after such transaction(s);

                    (3) the sale or disposition of all or substantially all of
the Company's assets or consummation of any transaction, or series of related
transactions, having similar effect (other than a sale or disposition to one or
more subsidiaries of the Company); or

                    (4) a change in the composition of the Board within any
consecutive two-year period as a result of which fewer than a majority of the
directors are Incumbent Directors.

               (f) "CHANGE IN CONTROL PERIOD" means a period commencing upon the
date of the consummation of a Change in Control and ending on the date occurring
eighteen (18) months thereafter.

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               (g) "COBRA" means the group health plan continuation coverage
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985 and any
applicable regulations promulgated thereunder.

               (h) "CODE" means the Internal Revenue Code of 1986, as amended,
or any successor thereto and any applicable regulations promulgated thereunder.

               (i) "COMMITTEE" means the Compensation Committee of the Board.

               (j) "COMPANY" means Finisar Corporation, a Delaware corporation,
and, following a Change in Control, a Successor that agrees to assume all of the
terms and provisions of this Plan or a Successor which otherwise becomes bound
by operation of law to this Plan.

               (k) "COMPANY GROUP" means the group consisting of the Company and
each present or future parent and subsidiary corporation or other business
entity thereof.

               (l) "DISABILITY" means a Participant's permanent and total
disability within the meaning of Section 22(e)(3) of the Code.

               (m) "EXECUTIVE OFFICER" means an individual appointed by the
Board as an executive officer of the Company and serving in such capacity both
upon becoming a Participant (unless then serving as a Key Employee) and
immediately prior to the consummation of a Change in Control.

               (n) "GOOD REASON" means the occurrence of any of the following
conditions upon or following a Change in Control, without the Participant's
informed written consent, which condition(s) remain(s) in effect ten (10) days
after written notice to the Company from the Participant of such condition(s):

                    (1) assignment of the Participant to a position that is not
a Substantive Functional Equivalent of the position which the Participant
occupied immediately prior to the Change in Control;

                    (2) a decrease in the Participant's Base Salary Rate or a
decrease in the Participant's target bonus amount (subject to applicable
performance requirements with respect to the actual amount of bonus compensation
earned by the Participant);

                    (3) any failure by the Company Group to (i) continue to
provide the Participant with the opportunity to participate, on terms no less
favorable than those in effect for the benefit of any employee group which
customarily includes a person holding the employment position or a comparable
position with the Company Group then held by the Participant, in any benefit or
compensation plans and programs, including, but not limited to, the Company
Group's life, disability, health, dental, medical, savings, profit sharing,
stock purchase and retirement plans, if any, in which the Participant was
participating immediately prior to the date of the Change in Control, or their
equivalent, or (ii) provide the Participant with all other fringe benefits (or
their equivalent) from time to time in effect for the benefit of any employee

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group which customarily includes a person holding the employment position or a
comparable position with the Company Group then held by the Participant;

                    (4) the relocation of the Participant's work place for the
Company Group to a location that increases the regular commute distance between
the Participant's residence and work place by more than thirty (30) miles
(one-way), or the imposition of travel requirements substantially more demanding
of the Participant than such travel requirements existing immediately prior to
the Change in Control; or

                    (5) any material breach of this Plan by the Company with
respect to the Participant.

The existence of Good Reason shall not be affected by the Participant's
temporary incapacity due to physical or mental illness not constituting a
Disability. The Participant's continued employment shall not constitute consent
to, or a waiver of rights with respect to, any condition constituting Good
Reason hereunder. For the purposes of any determination regarding the existence
of Good Reason hereunder, any claim by the Participant that Good Reason exists
shall be presumed to be correct unless the Company establishes to the Board that
Good Reason does not exist, and the Board, acting in good faith, affirms such
determination by a vote of not less than two-thirds of its entire membership
(excluding the Participant if the Participant is a member of the Board).

               (o) "INCUMBENT DIRECTOR" means a director who either (1) is a
member of the Board as of the Effective Date, or (2) is elected, or nominated
for election, to the Board with the affirmative votes of at least a majority of
the Incumbent Directors at the time of such election or nomination, but (3) was
not elected or nominated in connection with an actual or threatened proxy
contest relating to the election of directors of the Company.

               (p) "KEY EMPLOYEE" means an individual, other than an Executive
Officer, who has been designated by the Committee as eligible to participate in
the Plan, and who, immediately prior to the consummation of a Change in Control,
is employed by the Company Group.

               (q) "OPTION" means any option to purchase shares of the capital
stock of the Company or of any other member of the Company Group granted to a
Participant by the Company or any other Company Group member, whether granted
before or after a Change in Control, including any such option which is assumed
by, or for which a replacement option is substituted by, the Successor or any
other member of the Company Group in connection with the Change in Control.

               (r) "PARTICIPANT" means each Executive Officer and Key Employee
designated by the Committee to participate in the Plan, provided such individual
has executed a Participation Agreement.

               (s) "PARTICIPATION AGREEMENT" means an Agreement to Participate
in the Finisar Corporation Executive Retention and Severance Plan in the form
attached hereto as Exhibit A or in such other form as the Committee may approve
from time to time; provided, however, that, after a Participation Agreement has
been entered into between a Participant

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and the Company, it may be modified only by a supplemental written agreement
executed by both the Participant and the Company. The terms of such forms of
Participation Agreement need not be identical with respect to each Participant.
For example, a Participation Agreement may limit the duration of a Participant's
participation in the Plan or may modify the definition of "Change in Control"
with respect to a Participant, or, in the case of a Key Employee, may specify a
Benefit Period that is not identical to the Benefit Period specified for other
Participants.

               (t) "RELEASE" means a general release of all known and unknown
claims against the Company and its affiliates and their stockholders, directors,
officers, employees, agents, successors and assigns substantially in the form
attached hereto as Exhibit B ("General Release of Claims, Age 40 and Over") or
Exhibit C ("General Release of Claims, Under Age 40"), whichever is applicable,
with any modifications thereto determined by legal counsel to the Company to be
necessary or advisable to comply with applicable law or to accomplish the intent
of Section 8 (Exclusive Remedy) hereof.

               (u) "RESTRICTED STOCK" means any shares of the capital stock of
the Company or of any other member of the Company Group granted to a Participant
by the Company or any other Company Group member or acquired upon the exercise
of an Option, whether such shares are granted or acquired before or after a
Change in Control, including any shares issued in exchange for any such shares
by a Successor or any other member of the Company Group in connection with a
Change in Control.

               (v) "SUBSTANTIVE FUNCTIONAL EQUIVALENT" means an employment
position occupied by a Participant after a Change in Control that:

                    (1) is in a substantive area of competence (such as,
accounting, executive management, finance, human resources, marketing, sales and
service, or operations, etc.) that is consistent with the Participant's
experience and not materially different from the position occupied by the
Participant immediately prior to the Change in Control;

                    (2) allows the Participant to serve in a role and perform
duties that are functionally equivalent to those performed immediately prior to
the Change in Control (such as business unit executive with profit and loss
responsibility, product line manager, marketing strategist, geographic sales
manager, executive officer, etc.); and

                    (3) does not otherwise constitute a material, adverse change
in the Participant's responsibilities or duties, as measured against the
Participant's responsibilities or duties prior to the Change in Control, causing
it to be of materially lesser rank or responsibility within the Company or an
equivalent business unit of its parent.

               (w) "SUCCESSOR" means any successor in interest to substantially
all of the business and/or assets of the Company.

               (x) "TERMINATION UPON A CHANGE IN CONTROL" means the occurrence
of any of the following events:

                    (1) termination by the Company Group of the Participant's
employment for any reason other than Cause during a Change in Control Period; or

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                    (2) the Participant's resignation for Good Reason from
employment with the Company Group during a the Change in Control Period;

provided, however, that Termination Upon a Change in Control shall not include
any termination of the Participant's employment which is (i) for Cause, (ii) a
result of the Participant's death or Disability, or (iii) a result of the
Participant's voluntary termination of employment other than for Good Reason.

          2.2 CONSTRUCTION. Captions and titles contained herein are for
convenience only and shall not affect the meaning or interpretation of any
provision of the Plan. Except when otherwise indicated by the context, the
singular shall include the plural and the plural shall include the singular. Use
of the term "or" is not intended to be exclusive, unless the context clearly
requires otherwise.

     3.   ELIGIBILITY AND PARTICIPATION

          The Committee shall designate those Executive Officers and Key
Employees who shall be eligible to become Participants in the Plan. To become a
Participant, an Executive Officer or Key Employee must execute a Participation
Agreement.

     4.   TREATMENT OF EQUITY AWARDS UPON A CHANGE IN CONTROL

          4.1 OPTIONS AND RESTRICTED STOCK. Notwithstanding any provision to the
contrary contained in any plan or agreement evidencing an Option granted to a
Participant, the Participant shall be credited effective immediately prior to,
but conditioned upon, the consummation of a Change in Control and thereafter,
for purposes of determining the extent of the vesting and exercisability of each
outstanding Option then held by the Participant and the vesting of any shares of
Restricted Stock acquired by the Participant upon the exercise of an Option,
with one (1) additional year of employment or service with the Company Group.
Furthermore, in the event of a Change in Control in which the surviving,
continuing, successor, or purchasing corporation or other business entity or
parent thereof, as the case may be (the "ACQUIROR"), does not assume the
Company's rights and obligations under the then-outstanding Options held by the
Participant or substitute for such Options substantially equivalent options for
the Acquiror's stock, then the vesting and exercisability of each such Option
shall be accelerated in full effective immediately prior to, but conditioned
upon, the consummation of the Change in Control.

          4.2 OTHER EQUITY AWARDS. Except as set forth in Section 4.1 above, the
treatment of stock-based compensation upon the consummation of a Change in
Control shall be determined in accordance with the terms of the plans or
agreements providing for such awards.

     5.   BENEFITS UPON TERMINATION UPON A CHANGE IN CONTROL

          In the event of a Participant's Termination Upon a Change in Control,
the Participant shall be entitled to receive the compensation and benefits
described in this Section 5.

     5.1  ACCRUED OBLIGATIONS. The Participant shall be entitled to receive:

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               (a) all salary, bonuses, commissions and accrued but unused
vacation earned through the date of the Participant's termination of employment;

               (b) reimbursement within ten (10) business days of submission of
proper expense reports of all expenses reasonably and necessarily incurred by
the Participant in connection with the business of the Company Group prior to
his or her termination of employment; and

               (c) the benefits, if any, under any Company Group retirement
plan, nonqualified deferred compensation plan, stock purchase or other
stock-based compensation plan or agreement (other than any such plan or
agreement pertaining to Options, Restricted Stock or other stock-based
compensation whose treatment is prescribed by Section 5.2(c) below), health
benefits plan or other Company Group benefit plan to which the Participant may
be entitled pursuant to the terms of such plans or agreements.

          5.2 SEVERANCE BENEFITS. Provided that the Participant executes and
does not revoke the Release applicable to such Participant at or following the
time of the Participant's Termination Upon a Change in Control and subject to
the provisions of Section 6, the Participant shall be entitled to receive the
following severance payments and benefits:

               (a) CASH SEVERANCE PAYMENT. Within ten (10) business days
following the later of the Participant's termination of employment or the last
day on which the Participant may revoke the Release in accordance with its
terms, the Company shall pay to the Participant in a lump sum cash payment an
amount equal to the product of (a) the Participant's Base Salary Rate and (b)
the number of months in the Benefit Period applicable to the Participant.

               (b) HEALTH AND LIFE INSURANCE BENEFITS. For the period commencing
immediately following the Participant's termination of employment and continuing
for the duration of the Benefit Period applicable to the Participant, the
Company shall arrange to provide the Participant and his or her dependents with
health (including medical and dental) and life insurance benefits substantially
similar to those provided to the Participant and his or her dependents
immediately prior to the date of such termination of employment (without giving
effect to any reduction in such benefits constituting Good Reason). Such
benefits shall be provided to the Participant at the same premium cost to the
Participant and at the same coverage level as in effect as of the Participant's
termination of employment (without giving effect to any reduction in such
benefits constituting Good Reason); provided, however, that the Participant
shall be subject to any change in the premium cost and/or level of coverage
applicable generally to all employees holding the position or comparable
position with the Company which the Participant held immediately prior to the
Change in Control. The Company may satisfy its obligation to provide a
continuation of health insurance benefits by paying that portion of the
Participant's premiums required under COBRA that exceed the amount of premiums
that the Participant would have been required to pay for continuing coverage had
he or she continued in employment. If the Company is not reasonably able to
continue such health and/or life insurance coverage under the Company's benefit
plans, the Company shall provide substantially equivalent coverage under other
sources or will reimburse the Participant for premiums (in excess of the
Participant's premium cost described above) incurred by the Participant to
obtain his or her own

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such coverage. If the Participant and/or the Participant's dependents become
eligible to receive any such coverage under another employer's benefit plans
during the applicable Benefit Period, the Participant shall report such
eligibility to the Company, and the Company's obligations under this subsection
shall be secondary to the coverage provided by such other employer's plans. For
the balance of any period in excess of the applicable Benefit Period during
which the Participant is entitled to continuation coverage under COBRA, the
Participant shall be entitled to maintain coverage for himself or herself and
the Participant's eligible dependents at the Participant's own expense.

               (c) ACCELERATION OF VESTING OF OPTIONS, RESTRICTED STOCK AND
OTHER STOCK-BASED COMPENSATION; EXTENSION OF OPTION EXERCISE PERIOD.
Notwithstanding any provision to the contrary contained in any agreement
evidencing an Option, Restricted Stock or other stock-based compensation award
granted to a Participant, the vesting and/or exercisability of each of the
Participant's outstanding Options, Restricted Stock and other stock-based
compensation awards shall be accelerated in full effective as of the date of the
Participant's termination of employment so that each Option, share of Restricted
Stock and other stock-based compensation award held by the Participant shall be
immediately exercisable and/or fully vested as of such date; provided, however,
that such acceleration of vesting and/or exercisability shall not apply to any
stock-based compensation award where such acceleration would result in plan
disqualification or would otherwise be contrary to applicable law (e.g., an
employee stock purchase plan intended to qualify under Section 423 of the Code).
Furthermore, each such Option, to the extent unexercised on the date on which
the Participant's employment terminated, may be exercised by the Participant (or
the Participant's guardian or legal representative) at any time prior to the
later of the date specified in the agreement evidencing such Option or the
expiration of one (1) year after the date on which the Participant's employment
terminated, but in any event no later than the date of expiration of the
Option's term as set forth in the agreement evidencing such Option.

          5.3 INDEMNIFICATION; INSURANCE.

               (a) In addition to any rights a Participant may have under any
indemnification agreement previously entered into between the Company and such
Participant (a "PRIOR INDEMNITY AGREEMENT"), from and after the date of the
Participant's termination of employment, the Company shall indemnify and hold
harmless the Participant against any costs or expenses (including attorneys'
fees), judgments, fines, losses, claims, damages or liabilities incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, by reason of the fact that the
Participant is or was a director, officer, employee or agent of the Company
Group, or is or was serving at the request of the Company Group as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, whether asserted or claimed prior to, at or after the
date of the Participant's termination of employment, to the fullest extent
permitted under applicable law, and the Company shall also advance fees and
expenses (including attorneys' fees) as incurred by the Participant to the
fullest extent permitted under applicable law. In the event of a conflict
between the provisions of a Prior Indemnity Agreement and the provisions of this
Plan, the Participant may elect which provisions shall govern.

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               (b) For a period of six (6) years from and after the date of
termination of employment of a Participant who was an officer and/or director of
the Company at any time prior to such termination of employment, the Company
shall maintain a policy of directors' and officers' liability insurance for the
benefit of such Participant which provides him or her with coverage no less
favorable than that provided for the Company's continuing officers and
directors.

     6.   FEDERAL EXCISE TAX UNDER SECTION 4999 OF THE CODE

          6.1 EXCESS PARACHUTE PAYMENT. In the event that any payment or benefit
received or to be received by the Participant pursuant to this Plan or otherwise
(collectively, the "PAYMENTS") would subject the Participant to any excise tax
pursuant to Section 4999 of the Code (the "EXCISE TAX") due to the
characterization of such Payments as an excess parachute payment under Section
280G of the Code, then, notwithstanding the other provisions of this Plan, the
amount of such Payments will not exceed the amount which produces the greatest
after-tax benefit to the Participant.

          6.2 DETERMINATION BY ACCOUNTANTS. Upon the occurrence of any event
(the "EVENT") that would give rise to any Payments pursuant to this Plan, the
Company shall promptly request a determination in writing by independent public
accountants (the "ACCOUNTANTS") selected by the Company and reasonably
acceptable to the Participant of the amount and type of such Payments which
would produce the greatest after-tax benefit to the Participant. For the
purposes of such determination, the Accountants may rely on reasonable, good
faith interpretations concerning the application of Sections 280G and 4999 of
the Code. The Company and the Participant shall furnish to the Accountants such
information and documents as the Accountants may reasonably request in order to
make their required determination. The Company shall bear all fees and expenses
charged by the Accountants in connection with their services contemplated by
this Section.

     7.   CONFLICT IN BENEFITS; NONCUMULATION OF BENEFITS

          7.1 EFFECT OF PLAN. The terms of this Plan, when accepted by a
Participant pursuant to an executed Participation Agreement, shall supersede all
prior arrangements, whether written or oral, and understandings regarding the
subject matter of this Plan and shall be the exclusive agreement for the
determination of any payments and benefits due to the Participant upon the
events described in Sections 4, 5 and 6.

          7.2 NONCUMULATION OF BENEFITS. Except as expressly provided in a
written agreement between a Participant and the Company entered into after the
date of such Participant's Participation Agreement and which expressly disclaims
this Section 7.2 and is approved by the Board or the Committee, the total amount
of payments and benefits that may be received by the Participant as a result of
the events described in Sections 4, 5 and 6 pursuant to (a) this Plan, (b) any
agreement between the Participant and the Company or (c) any other plan,
practice or statutory obligation of the Company, shall not exceed the amount of
payments and benefits provided by this Plan upon such events (plus any payments
and benefits provided pursuant to a Prior Indemnity Agreement, as described in
Section 5.3(a)), and the aggregate

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amounts payable under this Plan shall be reduced to the extent of any excess
(but not below zero).

     8.   EXCLUSIVE REMEDY

          The payments and benefits provided by Section 5 and Section 6 (plus
any payments and benefits provided pursuant to a Prior Indemnity Agreement, as
described in Section 5.3(a)), if applicable, shall constitute the Participant's
sole and exclusive remedy for any alleged injury or other damages arising out of
the cessation of the employment relationship between the Participant and the
Company in the event of the Participant's Termination Upon a Change in Control.
The Participant shall be entitled to no other compensation, benefits, or other
payments from the Company as a result of any Termination Upon a Change in
Control with respect to which the payments and benefits described in Section 5
and Section 6 (plus any payments and benefits provided pursuant to a Prior
Indemnity Agreement, as described in Section 5.3(a)), if applicable, have been
provided to the Participant, except as expressly set forth in this Plan or,
subject to the provisions of Sections 7.2, in a duly executed employment
agreement between Company and the Participant.

     9.   PROPRIETARY AND CONFIDENTIAL INFORMATION

          The Participant agrees to continue to abide by the terms and
conditions of the confidentiality and/or proprietary rights agreement between
the Participant and the Company or any other member of the Company Group.

     10.  NONSOLICITATION

          If the Company performs its obligations to deliver the payments and
benefits set forth in Section 5 and Section 6 (plus any payments and benefits
provided pursuant to a Prior Indemnity Agreement, as described in Section
5.3(a)), then for a period equal to the Benefit Period applicable to a
Participant following the Participant's Termination Upon a Change in Control,
the Participant shall not, directly or indirectly, recruit, solicit or invite
the solicitation of any employees of the Company to terminate their employment
relationship with the Company.

     11.  NO CONTRACT OF EMPLOYMENT

          Neither the establishment of the Plan, nor any amendment thereto, nor
the payment of any benefits shall be construed as giving any person the right to
be retained by the Company, a Successor or any other member of the Company
Group. Except as otherwise established in an employment agreement between the
Company and a Participant, the employment relationship between the Participant
and the Company is an "at-will" relationship. Accordingly, either the
Participant or the Company may terminate the relationship at any time, with or
without cause, and with or without notice except as otherwise provided by
Section 15. In addition, nothing in this Plan shall in any manner obligate any
Successor or other member of the Company Group to offer employment to any
Participant or to continue the employment of any Participant which it does hire
for any specific duration of time.

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     12.  CLAIMS FOR BENEFITS

          12.1 ERISA PLAN. This Plan is intended to be (a) an employee welfare
plan as defined in Section 3(1) of Employee Retirement Income Security Act of
1974 ("ERISA") and (b) a "top-hat" plan maintained for the benefit of a select
group of management or highly compensated employees of the Company Group.

          12.2 APPLICATION FOR BENEFITS. All applications for payments and/or
benefits under the Plan ("BENEFITS") shall be submitted to the Company's General
Counsel (the "CLAIMS ADMINISTRATOR"). Applications for Benefits must be in
writing on forms acceptable to the Claims Administrator and must be signed by
the Participant or beneficiary. The Claims Administrator reserves the right to
require the Participant or beneficiary to furnish such other proof of the
Participant's expenses, including without limitation, receipts, canceled checks,
bills, and invoices as may be required by the Claims Administrator.

          12.3 APPEAL OF DENIAL OF CLAIM.

               (a) If a claimant's claim for Benefits is denied, the Claims
Administrator shall provide notice to the claimant in writing of the denial
within ninety (90) days after its submission. The notice shall be written in a
manner calculated to be understood by the claimant and shall include:

                    (1) The specific reason or reasons for the denial;

                    (2) Specific references to the Plan provisions on which the
denial is based;

                    (3) A description of any additional material or information
necessary for the applicant to perfect the claim and an explanation of why such
material or information is necessary; and

                    (4) An explanation of the Plan's claims review procedures
and a statement of claimant's right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination.

               (b) If special circumstances require an extension of time for
processing the initial claim, a written notice of the extension and the reason
therefor shall be furnished to the claimant before the end of the initial ninety
(90) day period. In no event shall such extension exceed ninety (90) days.

               (c) If a claim for Benefits is denied, the claimant, at the
claimant's sole expense, may appeal the denial to the Committee (the "APPEALS
ADMINISTRATOR") within sixty (60) days of the receipt of written notice of the
denial. In pursuing such appeal the applicant or his duly authorized
representative:

                    (1) may request in writing that the Appeals Administrator
review the denial;

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                    (2) may review pertinent documents; and

                    (3) may submit issues and comments in writing.

               (d) The decision on review shall be made within sixty (60) days
of receipt of the request for review, unless special circumstances require an
extension of time for processing, in which case a decision shall be rendered as
soon as possible, but not later than one hundred twenty (120) days after receipt
of the request for review. If such an extension of time is required, written
notice of the extension shall be furnished to the claimant before the end of the
original sixty (60) day period. The decision on review shall be made in writing,
shall be written in a manner calculated to be understood by the claimant, and,
if the decision on review is a denial of the claim for Benefits, shall include:

                    (1) The specific reason or reasons for the denial;

                    (2) Specific references to the Plan provisions on which the
denial is based;

                    (3) A description of any additional material or information
necessary for the applicant to perfect the claim and an explanation of why such
material or information is necessary; and

                    (4) An explanation of the Plan's claims review procedures
and a statement of claimant's right to bring a civil action under ERISA Section
502(a) following an adverse benefit determination.

     13.  DISPUTE RESOLUTION

          13.1 WAIVER OF JURY TRIAL. In the event of any dispute or claim
relating to or arising out of this Plan that is not resolved in accordance with
procedure described in Section 12, the Company and the Participant, each by
executing a Participation Agreement, agree that all such disputes or claims
shall be resolved by means of a court trial conducted by the superior or
district court in Santa Clara County, California or as otherwise required by
ERISA. The Company and the Participant, each by executing a Participation
Agreement, irrevocably waive their respective rights to have any such disputes
or claims tried by a jury, and agree that such courts will have personal and
subject matter jurisdiction over all such claims or disputes. Notwithstanding
the foregoing, in the event of any such dispute, the Company and the Participant
may agree to mediate or arbitrate the dispute on such terms and conditions as
may they may agree in writing.

          13.2 ATTORNEYS' FEES. The prevailing party shall be entitled to
recover from the losing party its attorneys' fees and costs incurred in any
action brought to enforce any right arising out of this Plan.

     14.  SUCCESSORS AND ASSIGNS

          14.1 SUCCESSORS OF THE COMPANY. The Company shall require any
successor or assign (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or

                                      -12-
<PAGE>

substantially all of the business and/or assets of the Company, expressly,
absolutely and unconditionally to assume and agree to perform this Plan in the
same manner and to the same extent that the Company would be required to perform
it if no such succession or assignment had taken place.

          14.2 ACKNOWLEDGMENT BY COMPANY. If, after a Change in Control, the
Company fails to reasonably confirm that it has performed the obligation
described in Section 13.1 within thirty (30) days after written notice from the
Participant, such failure shall be a material breach of this Plan and shall
entitle the Participant to resign for Good Reason and to receive the benefits
provided under this Plan in the event of Termination Upon a Change in Control.

          14.3 HEIRS AND REPRESENTATIVES OF PARTICIPANT. This Plan shall inure
to the benefit of and be enforceable by the Participant's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devises, legatees or other beneficiaries. If the Participant should die while
any amount would still be payable to the Participant hereunder (other than
amounts which, by their terms, terminate upon the death of the Participant) if
the Participant had continued to live, then all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Plan to the
executors, personal representatives or administrators of the Participant's
estate.

     15.  NOTICES

          15.1 GENERAL. For purposes of this Plan, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when personally delivered or when mailed by United States
certified mail, return receipt requested, or by overnight courier, postage
prepaid, as follows:

               (a) if to the Company:

                           Finisar Corporation
                           1308 Moffett Park Drive
                           Sunnyvale, California 94089
                      Attention: President

               (b) if to the Participant, at the home address which the
Participant most recently communicated to the Company in writing.

Either party may provide the other with notices of change of address, which
shall be effective upon receipt.

          15.2 NOTICE OF TERMINATION. Any termination by the Company of the
Participant's employment during the Change in Control Period or any resignation
by the Participant during the Change in Control Period shall be communicated by
a notice of termination or resignation to the other party hereto given in
accordance with Section 15.1. Such notice shall indicate the specific
termination provision in this Plan relied upon, shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated, and shall specify the termination date.

                                      -13-
<PAGE>

     16.  TERMINATION AND AMENDMENT OF PLAN

          This Plan and/or any Participation Agreement executed by a Participant
may not be terminated with respect to such Participant without the written
consent of the Participant and the approval of the Board or the Committee. The
Plan and/or any Participation Agreement executed by a Participant may be
modified, amended or superseded with respect to such Participant only by a
supplemental written agreement between the Participant and the Company approved
by the Board or the Committee.

     17.  MISCELLANEOUS PROVISIONS

          17.1 UNFUNDED OBLIGATION. Any amounts payable to Participants pursuant
to the Plan are unfunded obligations. The Company shall not be required to
segregate any monies from its general funds, or to create any trusts, or
establish any special accounts with respect to such obligations. The Company
shall retain at all times beneficial ownership of any investments, including
trust investments, which the Company may make to fulfill its payment obligations
hereunder. Any investments or the creation or maintenance of any trust or any
Participant account shall not create or constitute a trust or fiduciary
relationship between the Board or the Company and a Participant, or otherwise
create any vested or beneficial interest in any Participant or the Participant's
creditors in any assets of the Company.

          17.2 NO DUTY TO MITIGATE; OBLIGATIONS OF COMPANY. A Participant shall
not be required to mitigate the amount of any payment or benefit contemplated by
this Plan by seeking employment with a new employer or otherwise, nor shall any
such payment or benefit (except for benefits to the extent described in Section
5.2(b)) be reduced by any compensation or benefits that the Participant may
receive from employment by another employer. Except as otherwise provided by
this Plan, the obligations of the Company to make payments to the Participant
and to make the arrangements provided for herein are absolute and unconditional
and may not be reduced by any circumstances, including without limitation any
set-off, counterclaim, recoupment, defense or other right which the Company may
have against the Participant or any third party at any time.

          17.3 NO REPRESENTATIONS. By executing a Participation Agreement, the
Participant acknowledges that in becoming a Participant in the Plan, the
Participant is not relying and has not relied on any promise, representation or
statement made by or on behalf of the Company which is not set forth in this
Plan.

          17.4 WAIVER. No waiver by the Participant or the Company of any breach
of, or of any lack of compliance with, any condition or provision of this Plan
by the other party shall be considered a waiver of any other condition or
provision or of the same condition or provision at another time.

          17.5 CHOICE OF LAW. The validity, interpretation, construction and
performance of this Plan shall be governed by the substantive laws of the State
of California, without regard to its conflict of law provisions.

                                      -14-
<PAGE>

          17.6 VALIDITY. The invalidity or unenforceability of any provision of
this Plan shall not affect the validity or enforceability of any other provision
of this Plan, which shall remain in full force and effect.

          17.7 BENEFITS NOT ASSIGNABLE. Except as otherwise provided herein or
by law, no right or interest of any Participant under the Plan shall be
assignable or transferable, in whole or in part, either directly or by operation
of law or otherwise, including, without limitation, by execution, levy,
garnishment, attachment, pledge or in any other manner, and no attempted
transfer or assignment thereof shall be effective. No right or interest of any
Participant under the Plan shall be liable for, or subject to, any obligation or
liability of such Participant.

          17.8 TAX WITHHOLDING. All payments made pursuant to this Plan will be
subject to withholding of applicable income and employment taxes.

          17.9 CONSULTATION WITH LEGAL AND FINANCIAL ADVISORS. By executing a
Participation Agreement, the Participant acknowledges that this Plan confers
significant legal rights, and may also involve the waiver of rights under other
agreements; that the Company has encouraged the Participant to consult with the
Participant's personal legal and financial advisors; and that the Participant
has had adequate time to consult with the Participant's advisors before
executing the Participation Agreement.

          17.10 FURTHER ASSURANCES. From time to time, at the Company's request
and without further consideration, the Participant shall execute and deliver
such additional documents and take all such further action as reasonably
requested by the Company to be necessary or desirable to make effective, in the
most expeditious manner possible, the terms of the Plan and the Participant's
Participation Agreement, Release and Restrictive Covenants Agreement, and to
provide adequate assurance of the Participant's due performance thereunder.

     18.  AGREEMENT

          By executing a Participation Agreement, the Participant acknowledges
that the Participant has received a copy of this Plan and has read, understands
and is familiar with the terms and provisions of this Plan. This Plan shall
constitute an agreement between the Company and the Participant executing a
Participation Agreement.

     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing Plan was duly adopted by the Committee on February 25, 2003.

                                        ----------------------------------------

                                      -15-
<PAGE>

                                    EXHIBIT A

                                     FORM OF

                         AGREEMENT TO PARTICIPATE IN THE

                               FINISAR CORPORATION

                     EXECUTIVE RETENTION AND SEVERANCE PLAN

<PAGE>

                         AGREEMENT TO PARTICIPATE IN THE
                               FINISAR CORPORATION
                     EXECUTIVE RETENTION AND SEVERANCE PLAN
                            ADOPTED FEBRUARY 25, 2003

     In consideration of the benefits provided by the Maxtor Corporation
Executive Retention and Severance Plan (the "PLAN"), the undersigned employee of
Finisar Corporation (the "COMPANY") and the Company agree that, as of the date
written below, the undersigned shall become a Participant in the Plan and shall
be fully bound by and subject to all of its provisions. All references to a
"Participant" in the Plan shall be deemed to refer to the undersigned.

     [THE UNDERSIGNED IS A "KEY EMPLOYEE" (AS DEFINED BY THE PLAN) AS OF THE
DATE OF THIS AGREEMENT. IF THE UNDERSIGNED REMAINS A KEY EMPLOYEE, BUT NOT AN
"EXECUTIVE OFFICER," FOR THE PURPOSE OF DETERMINING ANY SEVERANCE PAYMENTS OR
BENEFITS TO WHICH THE UNDERSIGNED MAY BECOME ENTITLED UNDER THE PLAN, THEN THE
"BENEFIT PERIOD" APPLICABLE TO THE UNDERSIGNED UNDER THE PLAN SHALL BE PERIODS
OF ________ MONTHS.]

     The undersigned employee acknowledges that the Plan confers significant
legal rights and may also constitute a waiver of rights under other agreements
with the Company; that the Company has encouraged the undersigned to consult
with the undersigned's personal legal and financial advisors; and that the
undersigned has had adequate time to consult with the undersigned's advisors
before executing this agreement.

     The undersigned employee acknowledges that he or she has received a copy of
the Plan and has read, understands and is familiar with the terms and provisions
of the Plan. The undersigned employee further acknowledges that (1) the
undersigned is waiving any right to a jury trial in the event of any dispute
arising out of or related to the Plan and (2) except as otherwise established in
an employment agreement between the Company and the undersigned, the employment
relationship between the undersigned and the Company is an "at-will"
relationship.

     Executed on _________________________.

PARTICIPANT                             FINISAR CORPORATION

                                        By:
---------------------------------          -------------------------------------
Signature

                                        Title:
---------------------------------             ----------------------------------
Name Printed

---------------------------------
Address

---------------------------------

<PAGE>

                                    EXHIBIT B

                                    FORMS OF
                            GENERAL RELEASE OF CLAIMS
                                [Age 40 and Over]

<PAGE>

                            GENERAL RELEASE OF CLAIMS
                                [AGE 40 AND OVER]

         This Agreement is by and between [EMPLOYEE NAME] ("Employee") and
[FINISAR CORPORATION OR SUCCESSOR THAT AGREES TO ASSUME THE EXECUTIVE RETENTION
AND SEVERANCE PLAN FOLLOWING A CHANGE IN CONTROL] (the "Company"). This
Agreement will become effective on the eighth (8th) day after it is signed by
Employee (the "Effective Date"), provided that the Company has signed this
Agreement and Employee has not revoked this Agreement (by written notice to
[COMPANY CONTACT NAME] at the Company) prior to that date.

                                    RECITALS

     A. Employee was employed by the Company as of ___________, ____.

     B. Employee and the Company entered into an Agreement to Participate in the
Finisar Corporation Executive Retention and Severance Plan (such agreement and
plan being referred to herein as the "Plan") effective as of __________, ____
wherein Employee is entitled to receive certain benefits in the event of a
Termination Upon a Change in Control (as defined by the Plan), provided Employee
signs and does not revoke a Release (as defined by the Plan).

     C. A Change in Control (as defined by the Plan) has occurred as a result of
[BRIEFLY DESCRIBE CHANGE IN CONTROL]

     D. Employee's employment is being terminated as a result of a Termination
Upon a Change in Control. Employee's last day of work and termination are
effective as of _______________, ____. Employee desires to receive the payments
and benefits provided by the Plan by executing this Release.

     NOW, THEREFORE, the parties agree as follows:

     1. Commencing on the Effective Date, the Company shall provide Employee
with the applicable payments and benefits set forth in the Plan in accordance
with the terms of the Plan. Employee acknowledges that the payments and benefits
made pursuant to this paragraph are made in full satisfaction of the Company's
obligations under the Plan. Employee further acknowledges that Employee has been
paid all wages and accrued, unused vacation that Employee earned during his or
her employment with the Company.

     2. Employee and Employee's successors release the Company, its respective
subsidiaries, stockholders, investors, directors, officers, employees, agents,
attorneys, insurers, legal successors and assigns of and from any and all
claims, actions and causes of action, whether now known or unknown, which
Employee now has, or at any other time had, or shall or may have against those
released parties based upon or arising out of any matter, cause, fact, thing,
act or omission whatsoever directly related to Employee's employment by the
Company or the termination of such employment and occurring or existing at any
time up to and including the Effective Date, including, but not limited to, any
claims of breach of written contract, wrongful termination, retaliation, fraud,
defamation, infliction of emotional distress, or national origin, race, age,
sex, sexual orientation, disability or other discrimination or harassment under
the Civil

<PAGE>

Rights Act of 1964, the Age Discrimination In Employment Act of 1967, the
Americans with Disabilities Act, the Fair Employment and Housing Act or any
other applicable law. Notwithstanding the foregoing, this release shall not
apply to any right of the Employee pursuant to Section 5.4 of the Plan or
pursuant to a Prior Indemnity Agreement (as such term is defined by the Plan).

     3. Employee acknowledges that he or she has read Section 1542 of the Civil
Code of the State of California, which states in full:

     A general release does not extend to claims which the creditor does not
     know or suspect to exist in his favor at the time of executing the release,
     which if known by him must have materially affected his settlement with the
     debtor.

Employee waives any rights that Employee has or may have under Section 1542 and
comparable or similar provisions of the laws of other states in the United
States to the full extent that he or she may lawfully waive such rights
pertaining to this general release of claims, and affirms that Employee is
releasing all known and unknown claims that he or she has or may have against
the parties listed above.

     4. Employee and the Company acknowledge and agree that they shall continue
to be bound by and comply with the terms and obligations under the following
agreements: (i) any proprietary rights or confidentiality agreements between the
Company and Employee, (ii) the Plan, (iii) any Prior Indemnity Agreement (as
such term is defined by the Plan) to which Employee is a party, and (iv) any
stock option, stock grant or stock purchase agreements between the Company and
Employee.

     5. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties and their respective successors, assigns, heirs and personal
representatives.

     6. The parties agree that any and all disputes that both (i) arise out of
the Plan, the interpretation, validity or enforceability of the Plan or the
alleged breach thereof and (ii) relate to the enforceability of this Agreement
or the interpretation of the terms of this Agreement shall be subject to the
provisions of Section 12 and Section 13 of the Plan.

     7. The parties agree that any and all disputes that (i) do not arise out of
the Plan, the interpretation, validity or enforceability of the Plan or the
alleged breach thereof and (ii) relate to the enforceability of this Agreement,
the interpretation of the terms of this Agreement or any of the matters herein
released or herein described shall be resolved by means of a court trial
conducted by the superior or district court in Santa Clara County, California.
The parties hereby irrevocably waive their respective rights to have any such
disputes tried to a jury, and the parties hereby agree that such courts will
have personal and subject matter jurisdiction over all such disputes.
Notwithstanding the foregoing, in the event of any such dispute, the parties may
agree to mediate or arbitrate the dispute on such terms and conditions as may be
agreed in writing by the parties. The prevailing party shall be entitled to
recover from the losing party its attorneys' fees and costs incurred in any
action brought to resolve any such dispute.

                                      -2-
<PAGE>

     8. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior negotiations and
agreements, whether written or oral, with the exception of any agreements
described in paragraph 4 of this Agreement. This Agreement may not be modified
or amended except by a document signed by an authorized officer of the Company
and Employee. If any provision of this Agreement is deemed invalid, illegal or
unenforceable, such provision shall be modified so as to make it valid, legal
and enforceable, and the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected.

EMPLOYEE UNDERSTANDS THAT EMPLOYEE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS AGREEMENT AND THAT EMPLOYEE IS GIVING UP ANY LEGAL CLAIMS EMPLOYEE
HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT. EMPLOYEE
FURTHER UNDERSTANDS THAT EMPLOYEE MAY HAVE UP TO 45 DAYS TO CONSIDER THIS
AGREEMENT, THAT EMPLOYEE MAY REVOKE IT AT ANY TIME DURING THE 7 DAYS AFTER
EMPLOYEE SIGNS IT, AND THAT IT SHALL NOT BECOME EFFECTIVE UNTIL THAT 7-DAY
PERIOD HAS PASSED. EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE IS SIGNING THIS AGREEMENT
KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR THE COMPENSATION AND
BENEFITS DESCRIBED IN PARAGRAPH 1.

Dated:
      ----------------------------      ----------------------------------------
                                        [Employee Name]

                                        [Company]

Dated:                                  By:
      ----------------------------         -------------------------------------

                                      -3-
<PAGE>

                                    EXHIBIT C

                                    FORMS OF
                            GENERAL RELEASE OF CLAIMS
                                 [Under Age 40]

<PAGE>

                            GENERAL RELEASE OF CLAIMS
                                 [UNDER AGE 40]

     This Agreement is by and between [EMPLOYEE NAME] ("Employee") and [FINISAR
CORPORATION OR SUCCESSOR THAT AGREES TO ASSUME THE EXECUTIVE RETENTION AND
SEVERANCE PLAN FOLLOWING A CHANGE IN CONTROL] (the "Company"). This Agreement is
effective on the day it is signed by Employee (the "Effective Date").

                                    RECITALS

     A. Employee was employed by the Company as of ____________, ____.

     B. Employee and the Company entered into an Agreement to Participate in the
Finisar Corporation Executive Retention and Severance Plan (such agreement and
plan being referred to herein as the "Plan") effective as of ___________, ____
wherein Employee is entitled to receive certain benefits in the event of a
Termination Upon a Change in Control (as defined by the Plan), provided Employee
signs a Release (as defined by the Plan).

     C. A Change in Control (as defined by the Plan) has occurred as a result of
[BRIEFLY DESCRIBE CHANGE IN CONTROL]

     D. Employee's employment is being terminated as a result of a Termination
Upon a Change in Control. Employee's last day of work and termination are
effective as of ______________, ____ (the "Termination Date"). Employee desires
to receive the payments and benefits provided by the Plan by executing this
Release.

     NOW, THEREFORE, the parties agree as follows:

     1. Commencing on the Effective Date, the Company shall provide Employee
with the applicable payments and benefits set forth in the Plan in accordance
with the terms of the Plan. Employee acknowledges that the payments and benefits
made pursuant to this paragraph are made in full satisfaction of the Company's
obligations under the Plan. Employee further acknowledges that Employee has been
paid all wages and accrued, unused vacation that Employee earned during his or
her employment with the Company.

     2. Employee and Employee's successors release the Company, its respective
subsidiaries, stockholders, investors, directors, officers, employees, agents,
attorneys, insurers, legal successors and assigns of and from any and all
claims, actions and causes of action, whether now known or unknown, which
Employee now has, or at any other time had, or shall or may have against those
released parties based upon or arising out of any matter, cause, fact, thing,
act or omission whatsoever directly related to Employee's employment by the
Company or the termination of such employment and occurring or existing at any
time up to and including the Termination Date, including, but not limited to,
any claims of breach of written contract, wrongful termination, retaliation,
fraud, defamation, infliction of emotional distress, or national origin, race,
age, sex, sexual orientation, disability or other discrimination or harassment
under the Civil Rights Act of 1964, the Age Discrimination In Employment Act of
1967, the Americans with Disabilities Act, the Fair Employment and Housing Act
or any other applicable

<PAGE>

law. Notwithstanding the foregoing, this release shall not apply to any right of
the Employee pursuant to Sections 5.4 of the Plan or pursuant to a Prior
Indemnity Agreement (as such terms are defined by the Plan).

     3. Employee acknowledges that he or she has read Section 1542 of the Civil
Code of the State of California, which states in full:

          A general release does not extend to claims which the creditor does
          not know or suspect to exist in his favor at the time of executing the
          release, which if known by him must have materially affected his
          settlement with the debtor.

Employee waives any rights that Employee has or may have under Section 1542 and
comparable or similar provisions of the laws of other states in the United
States to the full extent that he or she may lawfully waive such rights
pertaining to this general release of claims, and affirms that Employee is
releasing all known and unknown claims that he or she has or may have against
the parties listed above.

     4. Employee and the Company acknowledge and agree that they shall continue
to be bound by and comply with the terms and his obligations under the following
agreements: (i) any proprietary rights or confidentiality agreements between the
Company and Employee, (ii) the Plan, (iii) any Prior Indemnity Agreement (as
such term is defined by the Plan) to which Employee is a party, and (iv) any
stock option, stock grant or stock purchase agreements between the Company and
Employee.

     5. This Agreement shall be binding upon, and shall inure to the benefit of,
the parties and their respective successors, assigns, heirs and personal
representatives.

     6. The parties agree that any and all disputes that both (i) arise out of
the Plan, the interpretation, validity or enforceability of the Plan or the
alleged breach thereof and (ii) relate to the enforceability of this Agreement
or the interpretation of the terms of this Agreement shall be subject to the
provisions of Section 12 and Section 13 of the Plan.

     7. The parties agree that any and all disputes that (i) do not arise out of
the Plan, the interpretation, validity or enforceability of the Plan or the
alleged breach thereof and (ii) relate to the enforceability of this Agreement,
the interpretation of the terms of this Agreement or any of the matters herein
released or herein described shall be resolved by means of a court trial
conducted by the superior or district court in Santa Clara County, California.
The parties hereby irrevocably waive their respective rights to have any such
disputes tried to a jury, and the parties hereby agree that such courts will
have personal and subject matter jurisdiction over all such disputes.
Notwithstanding the foregoing, in the event of any such dispute, the parties may
agree to mediate or arbitrate the dispute on such terms and conditions as may be
agreed in writing by the parties. The prevailing party shall be entitled to
recover from the losing party its attorneys' fees and costs incurred in any
action brought to resolve any such dispute.

     8. This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior negotiations and
agreements, whether

                                      -2-
<PAGE>

written or oral, with the exception of any agreements described in paragraph 4
of this Agreement. This Agreement may not be modified or amended except by a
document signed by an authorized officer of the Company and Employee. If any
provision of this Agreement is deemed invalid, illegal or unenforceable, such
provision shall be modified so as to make it valid, legal and enforceable, and
the validity, legality and enforceability of the remaining provisions of this
Agreement shall not in any way be affected.

EMPLOYEE UNDERSTANDS THAT EMPLOYEE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO
SIGNING THIS AGREEMENT AND THAT EMPLOYEE IS GIVING UP ANY LEGAL CLAIMS EMPLOYEE
HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT. EMPLOYEE
ACKNOWLEDGES THAT EMPLOEE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND
VOLUNTARILY IN EXCHANGE FOR THE COMPENSATION AND BENEFITS DESCRIBED IN
PARAGRAPH 1.

Dated:
      ----------------------------      ----------------------------------------
                                        [Employee Name]

                                        [Company]

Dated:                                  By:
      ----------------------------         -------------------------------------

                                      -3-exv10w1

 

Exhibit 10.1

PURCHASE AGREEMENT

          This Purchase Agreement is made as of the 4th day of February, 2005, by
and between FSI International, Inc., a Minnesota corporation (“Seller”), and Finisar Corporation, a
Delaware corporation (“Purchaser”).

          Purchaser desires to purchase certain property owned by Seller, and Seller desires to sell
such property to Purchaser, pursuant to the terms and conditions set forth in this Agreement.

          Accordingly, Seller and Purchaser agree as follows:

          1. Definitions. The following terms shall have the meanings set forth below:

          Agreement. This Agreement, including the following exhibits attached hereto and
hereby made a part hereof:

	 	 	 	 	 
	

	 	 Exhibit A:
 
	 	Legal Description of Original Parcel
	

	 	 Exhibit B:
 
	 	Pro Forma
	

	 	Exhibit C:
 
	 	Personal Property
	

	 	Exhibit D:
 
	 	Drawing Showing Approximate Location of Excluded Parcel and Driveway
	

	 	Exhibit E:
 
	 	FSI Sublease
	

	 	Exhibit F:
 
	 	Termination Agreement
	

	 	Exhibit G:
 
	 	Estoppel Certificate
	

	 	Exhibit H:
 
	 	Survey Requirements
	

	 	Exhibit I:
 
	 	Net Lease
	

	 	Schedule 1:
 
	 	Licenses
	

	 	Schedule 2:
 
	 	Warranties
	

	 	Schedule 3:
 
	 	Form of Deed
	

	 	Schedule 4:
	 	Excluded Personal Property

 

 

Schedule 5: Form of Bill of Sale

          Association. Allen Central Business Park Property Owners Association.

          Closing. Concurrently, the transfer of title to the Property to Purchaser, the
payment to Seller of the Purchase Price, and the performance by each party of the other obligations
on its part then to be performed, all in accordance with Section 4.

          Closing Date. The date on which the Closing shall occur as provided in Section 4.1,
subject to Section 5.3 and any other provision of this Agreement that provides for postponement or
extension of the Closing Date.

          Commissions. All leasing commissions with respect to any leases or other occupancy
agreements with respect to any of the Property.

          Commitment. The Commitment for Title Insurance for the Real Property issued by the
Title Company, covering the Land and Improvements, setting forth the current status of the title to
the Real Property.

          Contingency Period. The period between the mutual execution and delivery of this
Agreement and the Closing Date.

          Driveway. The driveway located on the Excluded Parcel and approximately shown in
Exhibit D.

          Earnest Money. The earnest money deposit, together with any interest earned thereon,
made by Purchaser and held by Title Company as described in Section 3.2.

          EDC. The Allen Economic Development Corporation.

          Excluded Parcel. The parcel of land approximately shown in Exhibit D.

          Excluded Personal Property. The items of personal property described on Schedule 4.

          Executory Period. The period between the mutual execution and delivery of this
Agreement and the Closing.

          FSI Sublease. Sublease to be entered into by Purchaser, as sublandlord, and Seller,
as subtenant, concurrently with the execution of this Agreement, attached as Exhibit E.

          Improvements. All buildings, structures, fixtures and improvements located on the
Land, including, without limitation, the building containing approximately one hundred sixty
thousand one hundred twenty (160,120) square feet, together with the parking areas and other
improvements presently located upon the Land.

-2-

 

          Land. The real property situated at 600 Millennium Drive, in the City of Allen,
County of Collin, State of Texas, said original parcel of real property being legally described on
Exhibit A, EXCLUDING the Excluded Parcel.

          Net Lease. Lease Agreement, dated as of the Closing Date, to be entered into between
Proposed Assignee, as landlord, and Purchaser, as tenant, with respect to the Property, in the form
attached hereto as Exhibit I, and all amendments thereto.

          Option Consideration. The sum of One Hundred Dollars ($100).

          Permitted Exceptions. The easements, restrictions, reservations and other matters
affecting title to the Real Property identified as “Exceptions From Coverage” on Exhibit B,
together with such other matters as may be determined to be Permitted Exceptions pursuant to
Section 5.3.

          Personal Property. The equipment and other items of personal property described on
Exhibit C.

          Property. The Real Property and the Personal Property, collectively.

          Proposed Assignee. A third party triple-net landlord to be selected by Purchaser.

          Purchase Price. The purchase price for the Property described in Section 3.

          Purchaser’s Broker. John Gates, Jeffrey S. Ellerman and Brant Landry of The Staubach
Company.

          Real Property. The Land and the Improvements, collectively.

          Seller’s Broker. Tom McCarthy of The Staubach Company.

          Survey. The updated as-built ALTA/ACSM survey for the Property and the Excluded
Parcel and certified by a professional land surveyor licensed in Texas, which shall comply with the
requirements set forth on Exhibit H attached hereto and include a certification in the form
attached hereto as Exhibit H.

          Title Company. Republic Title of Texas, Inc. (as agent for First American Title
Insurance Company).

          Title Policy. An ALTA Extended Owner’s Policy of Title Insurance (Form 1970B) for the
Property issued in favor of Purchaser in the form attached hereto as Exhibit B and in the
full amount of the Purchase Price.

          2. Purchase and Sale. Seller hereby agrees to sell, and Purchaser hereby agrees to
purchase, upon and subject to the terms and conditions hereinafter set forth, the Property.

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          3. Purchase Price.

          3.1 Amount. Purchaser shall pay to Seller as and for the Purchase Price for the
Property the sum of Fourteen Million Nine Hundred Thirty-Five Thousand No/100 Dollars
($14,935,000.00).

          3.2 Manner of Payment. The Purchase Price shall be payable as follows:

3.2.1 Fifty Thousand Dollars ($50,000) as Earnest Money, which shall be paid by
Purchaser to Title Company on or before the date that is five (5) business days after the
mutual execution and delivery of this Agreement, such Earnest Money to be held and disbursed
pursuant to the terms of this Agreement. If the Earnest Money is not so delivered to the
Title Company within the aforementioned period, this Agreement shall be void and without
further force or effect.

3.2.2 The balance of the Purchase Price by cashier’s check or wire transfer of
immediately available funds on the Closing Date.

          4. Closing.

          4.1 Closing Date. Subject to the contingencies set out in Sections 6.1 and 6.2 and
the other provisions of this Agreement, the Closing shall occur on February 4, 2005. Purchaser
shall have the option to extend the Closing Date for a period of ten (10) business days. The
Closing shall be held at 10:00 a.m. on the Closing Date, at the offices of Title Company or at such
other place, date and time as Seller and Purchaser may agree. Purchaser shall have the right to
accelerate the Closing Date, upon written notice to Seller, to a date that is no earlier than five
(5) business days after the receipt of such notice.

          4.2 Seller’s Closing Documents. At Closing, Seller shall execute, acknowledge (where
appropriate), and deliver to Purchaser the following, each dated as of the Closing Date:

4.2.1 A special warranty deed conveying to Purchaser the Real Property in the form
attached here to as Schedule 3, duly executed and acknowledged, and subject only to
Permitted Exceptions.

4.2.2 A bill of sale, in the form attached hereto as Schedule 5, conveying to
Purchaser the Personal Property free and clear of any liens, claims and encumbrances.

4.2.3 Such affidavit(s) or certificate(s) of Seller, in form reasonably acceptable to
Purchaser and the Title Company, regarding due authorization, execution and delivery,
evidence of corporate authority, liens, judgments, residence, tax liens, bankruptcies,
parties in possession, survey and mechanics’ or materialmen’s liens and other matters
affecting title to the Real Property.

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     4.2.4 A transferor’s certification stating from Seller, in form and substance
acceptable to Purchaser and the Title Company, that Seller is not a “foreign person,”
“foreign partnership,” “foreign trust,” “foreign estate” or “disregarded entity” as those
terms are defined in Section 1445 of the Internal Revenue Code.

     4.2.5 All documents and instruments that may be required of Seller under applicable
law, including any revenue or tax certificates or statements, or any affidavits,
certifications or statements relating to the environmental condition of any of the Real
Property, the presence (or absence) of wells about the Real Property, the presence (or
absence) of storage tanks about the Real Property, or the extent of compliance of any of the
Property with applicable law.

     4.2.6 A settlement statement consistent with this Agreement executed by Seller.

     4.2.7 The FSI Sublease executed by Seller.

     4.2.8 Lease termination agreements, in a form reasonably acceptable to the Purchaser
and in recordable form, if required, pursuant to which any existing leases at the Property
shall be terminated.

     4.2.9 Evidence, reasonably acceptable to the Title Company, that the transactions
contemplated by this Agreement have been duly authorized by Seller.

     4.2.10 A waiver and a release executed by EDC, in the form attached hereto as
Exhibit F, with respect to EDC’s right of first refusal, if any, pursuant to that
certain Option and Right of First Refusal Agreement by and between Seller and EDC dated as
of May 17, 1996.

     4.2.11 An estoppel executed by the Association, in the form attached hereto as
Exhibit G, with respect to that certain Allen Central Business Park Declaration of
Protective Covenants dated as of August 10, 1994.

     4.2.12 A bill of sale, in form reasonably acceptable to Purchaser, conveying to
Purchaser (regardless of whether Purchaser’s rights under this Agreement have been assigned
to Proposed Assignee) the Excluded Personal Property free and clear of any liens, claims and
encumbrances.

     4.2.13 A set of access cards (which cards shall be properly tagged for identification),
all Plans and Specs in the possession and control of Seller.

     4.2.14 An assignment, in form reasonably acceptable to Purchaser, conveying to
Purchaser the Licenses, the Warranties, the Plans and Specs and the Records, free and clear
of any liens, claims and encumbrances.

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     4.2.15 A termination of agreement, in the form attached hereto as Exhibit F,
executed by the City of Allen, County of Collin, and Collin County Community College
District, with respect to that certain Ad Valorem Tax Abatement Agreement last executed on
May 16, 1996.

     4.3 Purchaser’s Closing Deliveries. At Closing, Purchaser shall cause the
following to be delivered to Seller:

     4.3.1 The portion of the Purchase Price payable pursuant to Section 3.2.2, as adjusted
pursuant to Section 4.5, by cashier’s check or by wire transfer of immediately available
funds. The Earnest Money shall be applied to and credited against the Purchase Price and
shall be disbursed to Seller by Title Company at Closing.

     4.3.2 All documents and instruments, each executed and acknowledged (where appropriate)
by Purchaser, that may be required of Purchaser under applicable law, including any
purchaser’s affidavits or revenue or tax certificates or statements.

     4.3.3 A settlement statement consistent with this Agreement executed by Purchaser.

     4.3.4 The FSI Sublease executed by Purchaser.

     4.3.5 Such other documents and instruments as may be reasonably required by Seller to
consummate the transaction contemplated by this Agreement

           4.4 Closing Escrow. Purchaser and/or Seller at their option may deposit the
respective Closing deliveries described in Sections 4.2 and 4.3 with Title Company (and/or with
First American Title Insurance Company) with appropriate instructions for recording and
disbursement consistent with this Agreement. Upon the deposit of funds or documents into escrow,
anything herein to the contrary notwithstanding, the party so depositing such funds or documents
may require that such funds and/or documents be released only pursuant to escrow instructions from
the party that deposited the same.

          4.5 Closing Adjustments. The following adjustments shall be made at Closing, subject
to the provisions of the FSI Sublease:

   4.5.1 All real estate taxes applicable to any of the Real Property due and payable in
the year of Closing, together with all special assessments payable therewith, shall be
prorated between Seller and Purchaser on a daily basis as of May 1, 2005 based upon a
calendar fiscal year, with Seller paying those allocable to the period prior to May 1, 2005,
and Purchaser being responsible for those allocable for the period from and after May 1,
2005. Purchaser shall receive a credit from Seller at closing for the estimated amount of
real estate taxes due for the period prior to May 1, 2005. Such calculation shall be made
on the basis of the prior year’s taxes and shall be deemed final as between Seller and
Purchaser. Notwithstanding the foregoing,

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Seller shall be responsible for any supplemental taxes assessed on or after the Closing
Date relating back to the period prior to the Closing Date. The provision described in the
immediately preceding sentence shall survive the Closing.

     4.5.2 Personal property taxes, if any, applicable to any of the Personal Property and
Excluded Personal Property due and payable in the year of Closing shall be prorated between
Seller and Purchaser on a daily basis as of the Closing Date based upon a calendar fiscal
year, with Seller paying those allocable to the period prior to the Closing Date and
Purchaser being responsible for those allocable to the Closing Date and thereafter. Seller
shall be responsible for personal property taxes, if any, applicable to any personal
property retained by Seller.

     4.5.3 Purchaser shall assume all special assessments (and charges in the nature of or
in lieu of such assessments) levied, pending or constituting a lien with respect to any of
the Real Property as of the Closing Date.

     4.5.4 Seller shall pay all sales tax due regarding this transaction, if any.

     4.5.5 Seller shall pay all state deed tax regarding the deed to be delivered by Seller
to Purchaser. Purchaser shall pay any mortgage registry tax regarding any mortgage given by
Purchaser on the Real Property in connection with this transaction.

     4.5.6 Seller shall pay the cost of recording all documents, including the deed to be
delivered by Seller to Purchaser.

     4.5.7 Purchaser shall pay all service charges for and costs of the Commitment.

     4.5.8 Purchaser shall pay all premiums required for any owner’s or mortgagee’s title
insurance policy issued in connection with this transaction.

     4.5.9 Seller shall pay any Closing fee payable to Title Company with respect to the
transaction contemplated by this Agreement.

     4.5.10 All utility expenses, including water, fuel, gas, electricity, telephone, sewer,
trash removal, heat and other services furnished to or provided for the Property, and all
other operating costs of the Property (including, without limitation, dues payable to the
Association and all dues or associations fees attributable to any declarations of covenants,
conditions and restrictions or similar agreements that run with the land relating to the
Property to which Seller is a party or by which Seller or the Property or any portion
thereof may be bound), shall be paid by Seller, pursuant to the provisions of the FSI
Sublease.

     4.5.11 Except as provided in Section 13, Seller and Purchaser shall each pay their own
attorneys’ fees incurred in connection with this transaction.

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     4.5.12 At Closing, (i) Seller shall pay to Seller’s Broker a fee equal to One Hundred
Forty-Nine Thousand Three Hundred Fifty No/100 Dollars ($149,350.00); (ii) Seller shall pay
to Purchaser’s Broker a fee equal to Two Hundred Seventeen Thousand No/100 Dollars
($217,000.00); and (iii) Purchaser shall pay to Purchaser’s Broker a fee equal to
Twenty-Nine Thousand Two Hundred Fifty No/100 Dollars ($29,250.00).

If any of the amounts allocated under this Section 4.5 cannot be calculated with complete precision
at Closing because the amount or amounts of one or more items included in such calculation are not
then known, then such calculation shall be made on the basis of the reasonable estimates of Seller
and Purchaser, subject to prompt adjustment (by additional payment or refund, as necessary) when
the amount of any such item or items become known (the foregoing covenant to survive the Closing).

          4.6 Possession. Seller shall deliver possession of the Property to Purchaser on the
Closing Date, subject to the FSI Sublease. Purchaser shall consummate a sale-leaseback transaction
between Purchaser and Proposed Assignee in accordance with the terms of the Net Lease, and
Purchaser shall enter into the FSI Sublease at Closing. The parties agree that the FSI Sublease
shall be subject and subordinate to the terms of the Net Lease to be executed by Purchaser and
Proposed Assignee at Closing.

          5. Third Party Report Deliveries; Due Diligence Materials; Examination.

          5.1 Commitment. Promptly and in any event no later than ten (10) days after the
mutual execution and delivery of this Agreement, Purchaser shall obtain, and cause to be delivered
to Seller, Proposed Assignee and the surveyor preparing the Survey, the Commitment. Purchaser
shall deliver, or instruct Title Company to deliver, to such parties copies of all instruments
referenced in Schedule B-2 of the Commitment, except any mortgages, security agreements, liens or
other encumbrances to be discharged at Closing.

          5.2 Survey. Promptly and in any event no later than twenty (20) days after the mutual
execution and delivery of this Agreement, Purchaser shall use commercially reasonable efforts to
obtain the Survey.

          5.3 Review Period. Purchaser shall have until the end of the Contingency Period to
notify Seller in writing of any objections the Purchaser may have to matters reflected in or
concerning the Commitment or the Survey (each of the foregoing notices being hereafter referred to
as the “Objections Notice”); provided, however, Purchaser shall not be required to object to any
matters shown on Schedule B-1 to the Commitment and Purchaser shall not be required to object to
any mortgage lien, construction lien or other lien or encumbrance which may be discharged by
payment of a specified or ascertainable amount of money, and all such liens or encumbrances shall
not be or become Permitted Exceptions and shall be discharged by Seller at or before Closing.
Purchaser shall not object to any of the Permitted Exceptions identified as of the date hereof on
Exhibit B attached hereto. If the Purchaser shall deliver the Objections Notice, Seller
may elect to cure such objections within thirty (30) days from the date on which Seller receives
the Objections Notice. If the

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Purchaser is not satisfied with the results of any cure efforts by Seller, the Purchaser may
terminate this Agreement by giving written notice of termination to Seller within ten (10) days
after the end of Seller’s thirty (30) day cure period in which event the Earnest Money shall be
returned to and retained by Purchaser and neither party hereto shall have any further rights or
obligations hereunder other than those which are expressly provided to survive the termination
hereof. Any title or survey exceptions to which the Purchaser does not object in accordance with
this Section 5.3 and any title or survey exceptions to which the Purchaser objects that are not
cured and which the Purchaser is deemed to have accepted and approved in accordance with this
Section 5.3 shall be herein referred to as Permitted Exceptions.

          5.4 Real Estate Documents. Within five (5) days after the mutual execution and
delivery of this Agreement, Seller, at Seller’s sole cost and expense, will simultaneously deliver
to Purchaser and Proposed Assignee true, correct and complete copies (or where specifically
indicated, original counterparts) of the following (collectively, the “Due Diligence Materials”)
together with all amendments, modifications, renewals or extensions thereof, to the extent such
copies, if any, are in the possession or control of Seller:

     5.4.1 All Warranties which are still in effect.

     5.4.2 All Licenses.

     5.4.3 All agreements relating to the operation of the Improvements (including leases of
adjacent land or facilities).

     5.4.4 All of the Plans and Specs.

     5.4.5 All existing leases.

     5.4.6 All agreements for Commissions, brokerage fees, finder’s fees or other
compensation payable by Seller in connection therewith.

     5.4.7 All notices received from governmental authorities related to the Property that
relate to any purported or potential violations of any laws, rules, or regulations.

     5.4.8 All existing environmental studies, surveys, and reports with respect to the
physical condition, use or operation of the Property. All other non-confidential additional
information as reasonably requested by Purchaser and related to the operation of the
Property to the extent such documents are in the physical possession or control of Seller.

Seller shall advise Purchaser and Proposed Assignee in writing of any material changes, additions,
deletions or modifications in or to any of the Due Diligence Materials within five (5) days after
Seller has notice thereof, and furnish Purchaser and Proposed Assignee with copies thereof.

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          5.5 Due Diligence Review. During the Contingency Period, Purchaser shall have the
right to make such examinations and inspections (including, without limitation, environmental
assessments, engineering and conditions reports, zoning reports and an appraisal) of the Property,
to examine all Due Diligence Materials and to inspect and review all other matters relating to the
Property. Purchaser shall be entitled to make such applications, inquiries and searches of utility
companies, governmental records and governmental agencies as it shall deem appropriate in
connection with its investigation of the Property, and Seller shall provide reasonable cooperation
to Purchaser in connection with these efforts, at the sole cost and expense of Purchaser.

          5.6 Automatic Termination. This Agreement shall automatically terminate and the
Earnest Money shall be returned to Purchaser at the expiration of the Contingency Period unless
prior to the expiration of the Contingency Period Purchaser shall, in its sole and absolute
discretion, deliver to Seller a written notice rescinding the termination of this Agreement
pursuant to this Section 5.6. In the event of such termination, neither party hereto shall have
any further rights or obligations hereunder other than those which are expressly provided to
survive the termination hereof.

          6. Conditions Precedent.

          6.1 Conditions in Favor of Purchaser. The obligations of Purchaser under this
Agreement are contingent upon each of the following:

     6.1.1 Before the end of the Contingency Period, Purchaser shall have determined that
the matters and conditions disclosed by the reports, investigations and tests received or
performed by Purchaser pursuant to Section 5 are satisfactory to Purchaser in its sole
discretion.

     6.1.2 On the Closing Date, each of the representations and warranties of Seller in
Section 7.1 shall be true and correct as if the same were made on the Closing Date.

     6.1.3 On the Closing Date, Seller shall have performed all of the obligations required
to be performed by Seller under this Agreement as and when required under this Agreement.

     6.1.4 Purchaser shall have received or have an irrevocable right to receive the Title
Policy and such other endorsements as are requested by Purchaser and available in the State
of Texas issued by the Title Company insuring good and indefeasible fee simple title to the
Property, subject only to the Permitted Exceptions.

     6.1.5 The Seller shall have made all deliveries under Section 4.2.

     6.1.6 There is no third party injunction, judgment, order, action or proceeding which
would prevent or limit the consummation of this transaction.

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          6.1.7 The Excluded Parcel shall be a separate legal parcel. In connection with the foregoing
condition, Seller covenants and agrees to use commercially reasonable efforts to effect the
creation of the Excluded Parcel as a separate legal parcel. If the Excluded Parcel is not a
separate legal parcel as of the Closing Date, the Closing Date shall be extended for a period not
to exceed fifteen (15) business days until such time as the Excluded Parcel becomes a separate
legal parcel.

If any conditions in this Section 6.1 have not been satisfied on or before the applicable date set
forth in this Section 6.1 with respect to each condition, then Purchaser may terminate this
Agreement by notice to Seller on or before the applicable date in which event the Earnest Money
shall be returned to and retained by Purchaser and neither party shall have any further rights or
obligations hereunder other than those which are expressly provided to survive the termination
hereof; provided that Purchaser shall preserve all rights and remedies contained in Section 13 and
14 hereof. To the extent that any of the conditions in this Section 6.1 require the satisfaction
of Purchaser, such satisfaction shall be determined by Purchaser in its reasonable discretion. The
conditions in this Section 6.1 are specifically stated and for the sole benefit of Purchaser.
Purchaser in its discretion may unilaterally waive (conditionally or absolutely) the fulfillment of
any one or more of the conditions, or any part thereof, by notice to Seller.

          6.2 Conditions in Favor of Seller. The obligations of Seller under this Agreement are
contingent upon each of the following:

     6.2.1 On the Closing Date, each of the representations and warranties of Purchaser in
Section 7.2 shall be true and correct as if the same were made on the Closing Date.

     6.2.2 On the Closing Date, Purchaser shall have performed all of the obligations
required to be performed by Purchaser under this Agreement as and when required under this
Agreement.

     6.2.3 The Excluded Parcel shall be a separate legal parcel.

     6.2.4 All parties required to sign any closing delivery described in Sections 4.2.10, 4.2.11,
and 4.2.15 have signed and delivered such documents to Seller, and Seller shall have delivered the
same to Purchaser and Title Company.

If any of the conditions in this Section have not been satisfied on or before the applicable date
set forth in this Section 6.2 with respect to each condition, then Seller may terminate this
Agreement by notice to Purchaser on or before the applicable date, subject however to Section 14.
To the extent that any of the conditions in this Section 6.2 require the satisfaction of Seller,
such satisfaction shall be determined by Seller in its reasonable discretion. The conditions in
this Section 6.2 are specifically stated and for the sole benefit of Seller. Seller in its
discretion may unilaterally waive any one or more of the conditions, or any part thereof, by notice
to Purchaser.

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          6.3 Concurrent Transactions. All documents or other deliveries required to be made by
the Seller and the Purchaser, at or prior to Closing, and all transactions required to be
consummated concurrently with Closing shall be deemed to have been delivered and to have been
consummated simultaneously with all other transactions and all other deliveries, and no delivery
shall be deemed to have been made, and no transaction shall be deemed to have been consummated,
until all deliveries required by the Seller and the Purchaser shall have been made, and all
concurrent or other transactions shall have been consummated.

          7. Representations and Warranties.

          7.1 Seller’s Representations and Warranties. Seller represents and warrants to
Purchaser as of the date of this Agreement as follows:

     7.1.1 Seller has been duly incorporated under the laws of the State of Minnesota and is
in good standing under the laws of the State of Texas, is duly qualified to transact
business in the State of Texas, and has the requisite power and authority to enter into and
perform this Agreement and the documents and instruments required to be executed and
delivered by Seller pursuant hereto. This Agreement has been duly executed and delivered by
Seller and is a valid and binding obligation of Seller enforceable in accordance with its
terms. This Agreement and the documents and instruments required to be executed and
delivered by Seller pursuant hereto have each been duly authorized by all necessary
corporate action on the part of Seller and that such execution, delivery and performance
does and will not conflict with or result in a violation of Seller’s articles of
incorporation or by-laws or any judgment, order or decree of any court or arbiter to which
Seller is a party, or any agreement to which Seller and/or any of the Property is bound or
subject.

     7.1.2 Seller is not a “foreign person,” “foreign partnership,” “foreign trust,”
“foreign estate” or “disregarded entity” as those terms are defined in Section 1445 of the
Internal Revenue Code.

     7.1.3 Neither the entry into nor the performance of, or compliance with, this Agreement
by Seller will result in any violation of, or default under, or result in the acceleration
of, any obligation under the partnership agreements or articles of incorporation, as
applicable, of Seller, or any existing mortgage indenture, lien agreement, note, contract,
permit, judgment, decree, order, restrictive covenant, statute, rule or regulation
applicable to Seller or the Property.

     7.1.4 No party, other than Purchaser and EDC, has any right or option to acquire the
Property.

     7.1.5 Seller (i) is not in liquidation or dissolution, (ii) has not made an assignment
for the benefit of creditors or admitted in writing its inability to pay its debts as they
mature, or (iii) has been adjudicated a bankrupt or filed a petition in voluntary bankruptcy
or a petition or answer seeking reorganization or an arrangement with creditors under the
federal bankruptcy laws or any other similar law

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or statue of the United States or any jurisdiction and, to knowledge of the Seller, no
such petition has been filed against Seller.

     7.1.6 To Seller’s knowledge, there are no pending arbitration proceedings or
unsatisfied arbitration awards, or judicial orders respecting awards, with respect to the
Property.

     7.1.7 No notice has been received by Seller from the insurance company that issued the
casualty insurance policy covering the Property stating that any of such policy is not in
full force and effect, will not be renewed or will be renewed only at a materially higher
premium rate than is presently payable therefor.

     7.1.8 No service contract will be binding upon Purchaser or the Property and all
service contracts can be terminated upon thirty (30) days notice.

     7.1.9 A list of the Licenses is annexed hereto as Schedule 1. To Seller’s
knowledge, all Licenses are in full force and effect, and Seller has not received any
written notices of revocation of any Licenses.

     7.1.10 There are no pending or, to Seller’s knowledge, threatened condemnation
affecting the Property or any improvement liens or special assessments to be made against
the Property by any governmental authority.

     7.1.11 Seller has not received any written notice of any violation from any
governmental authority concerning the condition, use or occupancy of the Property or with
respect to any encumbrance upon any Property which has not been corrected.

     7.1.12 To Seller’s knowledge, the only Warranties in effect for any of the Property are
described on Schedule 2.

     7.1.13 For the purpose of this Section, the term “Hazardous Substances” shall mean
substances defined as a “hazardous waste”, “hazardous substance”, “toxic substance” or any
word of similar import under any Environmental Laws, including, without limitation, oil,
petroleum, or any petroleum derived substance or waste, asbestos or asbestos-containing
materials, PCBs, explosives, radioactive materials, dioxins, or urea formaldehyde
insulation. As used herein, “Environmental Laws” shall include, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C.
§ 9601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., the
Clean Air Act, 42 U.S.C. § 7401, et seq., the Clean Water Act, 33 U.S.C. § 1251, et seq.,
the Toxic Substance Control Act, 15 U.S.C. § 2601, et seq., and the Occupational Safety and
Health Act, 29 U.S.C. § 651, et seq., as any of the preceding have been amended prior to the
date hereof, and any other federal, state, or local law, ordinance, regulation, rule, order,
decision or permit relating to the protection of the environment or of human health from
environmental effects of Hazardous Substances and which are

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applicable to any of the Property. To the knowledge of Seller, and except for those
conditions specifically described in the Environmental Report, (i) Seller has not spilled or
released any Hazardous Substances in, on or under any of the Property so as to impose
liability or require remediation under any Environmental Law; (ii) Seller has no knowledge
of any spill or release of Hazardous Substances in, on or under any of the Property; (iii)
Seller has no material unpaid liability under, and Seller has caused no material violation
of, any Environmental Laws; and (iv) Seller has no knowledge of any liability under or
violation of any Environmental Laws or condition that could give rise to such liability or
violation with respect to any of the Property.

     7.1.14 There are no existing leases of any portion of the Property and there are no
Commissions payable in connection with the use or occupancy of the Property.

     7.1.15 The are no prepaid rents or deposits, including but not limited to, security
deposits, tax and insurance and any other escrow accounts for the Property.

     7.1.16 Each employee of Seller in connection with the use, operation or maintenance of
the Property either (i) is terminable at the will of Seller, or (ii) has an employment
contract that would not be binding on, or create liability for, Purchaser.

The provisions of this Section 7.1 shall survive the Closing or the earlier termination of this
Agreement for a period of twelve (12) months. Seller shall have no liability with respect to any
breach of a particular representation and warranty if Purchaser shall fail to (a) notify Seller
thereof within a reasonable time after discovery thereof, or (b) commence an action against Seller
with respect to the breach in question within twelve (12) months after discovery thereof by
Purchaser.

          7.2 Purchaser’s Representations and Warranties. Purchaser represents and warrants to
Seller as of the date of this Agreement as follows:

     7.2.1 Purchaser has been duly incorporated under the laws of the State of Delaware and
is in good standing under the laws of the State of Delaware, is duly qualified to transact
business in the State of Texas, and has the requisite power and authority to enter into and
perform this Agreement and the documents and instruments required to be executed and
delivered by Purchaser pursuant hereto. This Agreement has been duly executed and delivered
by Purchaser and is a valid and binding obligation of Purchaser enforceable in accordance
with its terms, except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance or similar laws affecting the
enforcement thereof or relating to creditors’ rights generally. This Agreement and the
documents and instruments required to be executed and delivered by Purchaser pursuant hereto
have each been duly authorized by all necessary corporate action on the part of Purchaser
and that such execution, delivery and performance does and will not conflict with or result
in a violation of Purchaser’s articles of incorporation or by-laws or any judgment, order or
decree of any court or arbiter to which Purchaser is

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a party, or any agreement to which Purchaser and/or any of the Property is bound or
subject.

     7.2.2 Purchaser has not (i) made a general assignment for the benefit of creditors,
(ii) filed any involuntary petition in bankruptcy or suffered the filing of any involuntary
petition by Purchaser’s creditors, (iii) suffered the appointment of a receiver to take
possession of all or substantially all of Purchaser’s assets, (iv) suffered the attachment
or other judicial seizure of all, or substantially all, of Purchaser’s assets, (v) admitted
in writing its inability to pay its debts as they come due, or (vi) made an offer of
settlement, extension or composition to its creditors generally.

Purchaser shall have no liability with respect to any breach of a particular representation and
warranty if Seller shall fail to (a) notify Purchaser thereof within a reasonable time after
discovery thereof, or (b) commence an action against Purchaser with respect to the breach in
question within twelve (12) months after discovery thereof by Seller.

     8. Inspection; Condition of Property at Closing.

     8.1 Inspections, Environmental Matters and Release.

     8.1.1 During the Contingency Period and in connection with obtaining the items
indicated in Section 5.5, Purchaser, its agents, contractors and employees shall have the
right to enter upon the Property for the purpose of physically inspecting the Property and
conducting soil tests and other inspections, including, without limitation, inspections of
and testing of the Improvements, at Purchaser’s sole risk, cost and expense. Before any
such entry, Purchaser shall provide Seller with a certificate of insurance naming Seller as
an additional insured and with an insurer and insurance limits and coverage reasonably
satisfactory to Seller. All of such entries upon the Property shall be at reasonable times
during normal business hours and after at least 24 hours prior notice to Seller or Seller’s
agent, and Seller or Seller’s agent shall have the right to accompany Purchaser during any
activities performed by Purchaser on the Property. At Seller’s request, Purchaser shall
provide Seller with a copy of the results of any tests and inspections made by Purchaser,
excluding only market and economic feasibility studies. If any inspection or test disturbs
the Property, Purchaser will restore the Property to the same condition as existed before
the inspection or test. Purchaser shall indemnify, defend and hold Seller, Seller’s
trustees, officers, tenants, agents, contractors and employees and the Property harmless
from and against any and all losses, costs, damages, claims or liabilities, including but
not limited to, mechanic’s and materialmen’s liens and Seller’s reasonable attorneys fees,
arising out of or in connection with Purchaser’s inspection of the Property as allowed
pursuant to Section 5.5, this Section 8.1.1 or Section 8.1.2 below. The provisions of this
Section 8.1.1 shall survive the Closing or the earlier termination of this Agreement.

     8.1.2 If either (i) Purchaser has reasonably determined that the inspections under
Section 5.5 and Section 8.1.1 above should include any Phase II environmental

-15-

 

inspection or other invasive inspection or sampling of soil or other substances or
materials, or (ii) any Phase I environmental inspection of the Property prepared for, or on
the behalf of, Purchaser and Proposed Assignee recommends such inspection, then such
inspection shall be permitted provided the prior written consent of Seller shall be obtained
(not to be unreasonably withheld or, delayed or conditioned). If either (a) the Seller
shall not permit Purchaser to conduct such inspection, or (b) Seller shall fail to give its
decision to Purchaser regarding such inspection within five (5) business days after written
notice from Purchaser, Purchaser may terminate this Agreement by giving written notice of
termination to Seller in which event the Earnest Money shall be returned to and retained by
Purchaser and neither party hereto shall have any further rights or obligations hereunder
other than those which are expressly provided to survive the termination hereof. In the
event of such inspection, the Contingency Period shall be extended for an additional
reasonable period of time (not to exceed thirty (30) days) to permit completion and review
of such inspection by Purchaser. At Seller’s request, Purchaser shall deliver to Seller
copies of any Phase II or other environmental report to which Seller consents as provided
above. The provisions of this Section 8.1.2 shall survive the Closing or any earlier
termination of this Agreement.

     8.1.3 Purchaser, for itself and any entity affiliated with Purchaser, waives and
releases Seller from and against any liability or claim related to the Property arising
under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the
Superfund Amendments and Reauthorization Act of 1986, the Resource Conservation and Recovery
Act, and the Toxic Substance Control Act, all as amended, or any other cause of action based
on any other state, local or federal environmental law, rule or regulation, provided
however, the foregoing release shall not operate to release any claim by Purchaser against
any person or entity other than Seller and shall not operate to discharge any
representations made by Seller in this Agreement. The provisions of this Section 8.1.3
shall survive the Closing or any earlier termination of this Agreement.

          8.2 Condition of Property at Closing. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW AND EXCEPT FOR SELLER’S REPRESENTATIONS AND WARRANTIES IN SECTION 7.1 (“SELLER’S
WARRANTIES”), THIS SALE IS MADE AND WILL BE MADE WITHOUT REPRESENTATION, COVENANT, OR WARRANTY
OF ANY KIND (WHETHER EXPRESS, IMPLIED, OR, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
STATUTORY) BY SELLER. AS A MATERIAL PART OF THE CONSIDERATION FOR THIS AGREEMENT, PURCHASER AGREES
TO ACCEPT THE PROPERTY ON AN “AS IS” AND “WHERE IS” BASIS, WITH ALL FAULTS, AND WITHOUT ANY
REPRESENTATION OR WARRANTY, ALL OF WHICH SELLER HEREBY DISCLAIMS, EXCEPT FOR SELLER’S WARRANTIES.
EXCEPT FOR SELLER’S WARRANTIES, NO WARRANTY OR REPRESENTATION IS MADE BY SELLER AS TO FITNESS FOR
ANY PARTICULAR PURPOSE, MERCHANTABILITY, DESIGN, QUALITY, CONDITION, OPERATION OR INCOME,

-16-

 

COMPLIANCE WITH DRAWINGS OR SPECIFICATIONS, ABSENCE OF DEFECTS, ABSENCE OF HAZARDOUS OR TOXIC
SUBSTANCES, ABSENCE OF FAULTS, FLOODING, OR COMPLIANCE WITH LAWS AND REGULATIONS INCLUDING, WITHOUT
LIMITATION, THOSE RELATING TO HEALTH, SAFETY, AND THE ENVIRONMENT. PURCHASER ACKNOWLEDGES THAT
PURCHASER HAS ENTERED INTO THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN
INVESTIGATION OF THE PHYSICAL, ENVIRONMENTAL, ECONOMIC USE, COMPLIANCE, AND LEGAL CONDITION OF THE
PROPERTY AND THAT PURCHASER IS NOT NOW RELYING, AND WILL NOT LATER RELY, UPON ANY REPRESENTATIONS
AND WARRANTIES MADE BY SELLER OR ANYONE ACTING OR CLAIMING TO ACT, BY, THROUGH OR UNDER OR ON
SELLER’S BEHALF CONCERNING THE PROPERTY, EXCEPT FOR SELLER’S WARRANTIES. THE PROVISIONS OF THIS
SECTION 8.2 SHALL SURVIVE INDEFINITELY ANY CLOSING OR TERMINATION OF THIS AGREEMENT AND SHALL NOT
BE MERGED INTO THE CLOSING DOCUMENTS.

          9. Operation Pending Closing. During the Executory Period, Seller hereby covenants
and agrees that Seller shall:

          9.1 Keep and maintain the Property in a good state of repair and condition and consistent with
commercially reasonable practices;

          9.2 Keep, observe, and perform all its obligations under any existing leases and any other
contractual arrangements relating to the Property;

          9.3 Advise Purchaser within five (5) days of any material litigation, arbitration, or
administrative hearing before any court or governmental agency concerning or affecting any of the
Property or any existing leases which is instituted or threatened after the date of this Agreement
or if any representation or warranty contained in this Agreement shall become false or if a default
shall occur under any existing leases;

          9.4 Not take, or omit to take, any action that would have the effect of causing a material
breach of any of the representations, warranties, covenants or agreements of Seller contained in
this Agreement;

          9.5 Comply in all material respects with all federal, state, and municipal laws, ordinances,
regulations, and orders relating to the Property;

          9.6 Not (i) sell or assign, (ii) enter into any agreement to sell or assign, (iii) enter into
any lease or other occupancy agreement, (iv) create or permit to exist any lien or encumbrance on,
or (v) enter into or grant any party any right or option to purchase, lease or occupy, the Property
or any portion thereof;

          9.7 Pay or cause to be paid all taxes, assessments and other impositions levied or assessed on
the Property or any part thereof prior to the date on which the payment thereof would become
delinquent or accrue any interest or penalties;

          9.8 Maintain or cause to be maintained in full force and effect the present policies and level
of insurance with respect to the Property; and

          9.9 Not allow any government permit, receipt, license, or right currently in existence with
respect to the operation, use, occupancy or maintenance of the Property to expire, be cancelled or
otherwise terminated.

-17-

 

          10. Damage or Destruction. If prior to Closing any material portion of the Property
is damaged or destroyed by fire or other casualty, Seller shall immediately give notice thereof to
Purchaser together with a good faith estimate of the costs of repair or replacement of such
casualty. If any material portion of the Property is damaged or destroyed by such casualty or such
casualty shall be to any structural elements of the improvements on the Property, Purchaser at its
option (to be exercised within thirty (30) days after Seller’s notice) may either (a) terminate
this Agreement, in which event the Earnest Money shall be returned to Purchaser and neither party
hereto shall have any further rights or obligations hereunder other than those which are expressly
provided to survive the termination hereof, or (b) proceed to Closing, in which event Seller agrees
to pay to Purchaser at the Closing all insurance proceeds which Seller has received as a result of
the same plus an amount equal to the insurance deductible, if any, and assign to Purchaser all
insurance proceeds payable as a result of the same without Seller replacing or repairing such
damage. If such casualty shall not be to any material portion of the Property and shall not be to
any structural elements of the improvements on the Property, Purchaser shall proceed to Closing, in
which event Seller agrees to pay to Purchaser at the Closing all insurance proceeds which Seller
has received as a result of the same plus an amount equal to the insurance deductible, if any, and
assign to Purchaser all insurance proceeds payable as a result of the same without Seller replacing
or repairing such damage. As used in this Section 10, the term “material portion of the Property”
shall mean damage to the Property that would cost in excess of Fifty Thousand and no/100s Dollars
($50,000.00) to repair based upon a good faith estimate prepared with respect to such casualty.

          11. Condemnation. If prior to Closing eminent domain proceedings are commenced
against any portion of the Property, Seller shall immediately give notice thereof to Purchaser, and
Purchaser at its option (to be exercised within thirty (30) days after Seller’s notice) may either
(a) terminate this Agreement, in which event the Earnest Money shall be returned to Purchaser and
neither party hereto shall have any further rights or obligations hereunder other than those which
are expressly provided to survive the termination hereof, or (b) proceed to Closing, in which event
Seller agrees to pay to Purchaser at the Closing all condemnation awards which Seller has received
as a result of the same, and assign to Purchaser all condemnation awards payable as a result of the
same without Seller replacing or repairing such damage.

          12. Brokers. Except for the commissions payable by Seller to Seller’s Broker and
Purchaser’s Broker, each of the parties represents to the other that such party has not incurred
any brokerage commission or finder’s fee as a result of this transaction, and each party agrees to
hold the other harmless from all liabilities incurred by the other relating to any brokerage
commission or finder’s fee payable by such party. The provisions of this Section 12 shall survive
termination of this Agreement.

          13. Default. If either party shall default in any of their respective obligations
under this Agreement, the other party, by written notice to such defaulting party specifying the
nature of the default and the date on which this Agreement shall terminate (which date shall be not
less than thirty (30) days after the giving of such notice), may terminate this

-18-

 

Agreement, and upon such date, unless the default so specified shall have been cured, this
Agreement shall terminate. In the event that Purchaser should fail to consummate this Agreement
for any reason, except Seller’s default or the termination of this Agreement by Purchaser pursuant
to a right to do so under the terms and provisions hereof, then Seller, as its sole and exclusive
remedy, may terminate this Agreement by notifying Purchaser thereof in writing and receive and
retain the Earnest Money as liquidated damages. The parties agree that Seller will suffer damages
in the event of Purchaser’s default on it obligations. Although the amount of such damages is
difficult or impossible to determine, the parties agree that the amount of the Earnest Money is a
fair and reasonable estimate of Seller’s loss in the event of Purchaser’s default. Seller shall
accept and retain the Earnest Money as liquidated damages but not as a penalty. In the event
Seller is entitled to the Earnest Money as liquidated damages, and to the extent Seller has not
already received the Earnest Money, the Earnest Money shall be immediately paid to Seller by the
Title Company upon receipt of written notice from Seller that Purchaser has defaulted under this
Agreement, and Purchaser agrees to take all such actions and execute and deliver all such documents
necessary or appropriate to effect such payment. If Seller defaults under this Agreement or fails
to consummate Closing as required hereby, Purchaser shall have the right in its sole and absolute
discretion (i) to seek specific performance of this Agreement within six (6) months after such
right arises, or (ii) to terminate this Agreement and receive a return of the Earnest Money,
provided that, in any case, if Seller willfully defaults or refuses to consummate the transaction
contemplated hereby, Seller shall also be liable for a claim for damages and for all costs and
expenses, including without limitation, due diligence costs and reasonable attorneys’ fees and
expenses, incurred or payable by Purchaser, including amounts payable to Proposed Assignee, in
connection therewith, up to a maximum amount of One Hundred Fifty Thousand Dollars ($150,000.00).
In any action or proceeding to enforce this Agreement or any term hereof, the prevailing party
shall be entitled to recover its reasonable costs and attorneys’ fees. Seller and Purchaser hereby
waive any and all rights to damages or other legal or equitable remedies not set forth in this
Section 13.

          14. Termination; Confirmation. Except as expressly provided in this Agreement to the
contrary, if this Agreement is terminated pursuant to the terms hereof, the Earnest Money shall be
returned to Purchaser and upon such return the respective rights of Seller and Purchaser arising
out of this Agreement shall immediately cease. In such event, Purchaser agrees to execute,
acknowledge, and deliver to Seller within ten (10) days after written request, a quit claim deed
and/or a termination of this Agreement in recordable form in order to remove the cloud of this
Agreement from the Property, but failure to give such deed or termination shall not affect the
termination of this Agreement.

-19-

 

          15. Assignability. Purchaser may not assign its rights under this Agreement without
the consent of Seller, which consent may be given or withheld by Seller in its discretion.
Notwithstanding the foregoing, Seller hereby consents to Purchaser’s assignment of its rights under
this Agreement to Proposed Assignee and/or one of its affiliates or assigns, provided that such
assignment shall not release Purchaser from its obligations hereunder.

          16. Notices. Any notice, consent, waiver, request or other communication required or
provided to be given under this Agreement shall be in writing and shall be sufficiently given and
shall be deemed given when delivered personally or when mailed by certified or registered mail,
return receipt requested, postage prepaid, or when dispatched by nationally recognized overnight
delivery service, in any event, addressed to the party’s address as follows:

	 	 	 	 	 
	

	 	If to Seller:
	 	FSI International, Inc.

3455 Lyman Boulevard

Chaska, MN 55318-3052

Phone: (952) 448-5440

Fax: (952) 448-2825

Attention: Benno Sand
	 
	 	 	 	 
	

	 	If to Purchaser:
	 	Finisar Corporation

1308 Moffett Park Drive

Sunnyvale, CA 94089-1133

Attention: Mr. Steve Workman
	 
	 	 	 	 
	

	 	With a copy to:
	 	Gray Cary Ware & Freidenrich LLP

2000 University Avenue

East Palo Alto, California 94303

Attention: Jeffrey A. Trant, Esq.
	 
	 	 	 	 
	

	 	With a copy to:
	 	Reed Smith LLP

599 Lexington Avenue, 29th Floor

New York, New York 10020

Attention: Joseph M. Marger, Esq.

or to such party at such other address as such party, by prior written notice given as herein
provided, shall designate. Any notice given in any other manner shall be effective only upon
receipt by the addressee.

          17. Right of First Refusal on Excluded Parcel.

          17.1 Right of First Refusal. Seller is the current owner of the Excluded Parcel. If
at any time on or before December 31, 2009, Seller or its successor and/or its assigns shall enter
into a contract for the sale of the Excluded Parcel with any third party (and which may include
other property owned by Seller so long as a specific purchase price is allocated to the Property),
which contract for the sale of the Excluded Parcel shall be

-20-

 

conditioned upon Purchaser’s failure to exercise its right under this Section 17, Seller shall give
written notice to Purchaser of the contract for the sale of the Excluded Parcel, together with an
executed copy of such contract and the name and business address of the third party. Purchaser
shall have twenty (20) days after receipt of such notice within which to notify Seller in writing
of Purchaser’s intention to purchase the Excluded Parcel upon all the terms and conditions set
forth in such contract. If Purchaser fails to exercise such option within twenty (20) days after
receipt of such notice, then Seller may sell the Excluded Parcel to such third party upon the terms
set forth in such contract. Notwithstanding the foregoing, if Purchaser shall have failed to
exercise the aforesaid option by written notice to Seller and the sale to such third party is not
consummated within one hundred twenty (120) days after the notice is delivered to Purchaser, then
Seller shall be obligated to again offer Purchaser the right to purchase the Excluded Parcel in
accordance with the procedure described above. The provisions of this Section 17.1 shall survive
the Closing.

          17.2 Applicability. The parties agree that any transfer of ownership interests,
direct or indirect, in the owner of the Excluded Parcel or any entity that controls directly or
indirectly the owner of the Excluded Parcel shall be considered a “sale” under this Section 17
unless (i) such transfer is in connection with the sale of all or substantially all of Seller’s
business (stock or assets), or (ii) such transfer is the sale of the outstanding capital stock of
the owner of the Excluded Parcel by persons or parties through the “over-the-counter market” or
through a recognized stock exchange, other than by those deemed to be a “control-person” within the
meaning of the Securities Exchange Act of 1934. In addition, any sale or transfer to an Affiliate
shall not be considered a “sale” under this Section 17. “Affiliate” means any person or entity
directly or indirectly controlling or controlled by or under direct or indirect common control with
Seller or any person or entity that purchases all or substantially all of the collective assets of
Seller and its Affiliates. For the purposes of this definition, “control” when used with respect
to any specified person means the power to direct the management and policies of such person,
directly or indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
Any transfer to an Affiliate shall be subject to such Affiliate agreeing in writing to be bound by
the terms of this Section 17. The provisions of this Section 17.2 shall survive the Closing.

          18. Driveway Located on Excluded Parcel.

          18.1 Term of Use. From and after Closing, Seller shall grant to Purchaser and its
successors and assigns a license in connection with Purchaser’s nonexclusive right to use of the
Driveway at no cost to Purchaser. Seller shall maintain the Driveway in accordance with all
applicable laws and shall do so at Seller’s sole risk, cost and expense. The license shall
terminate (i) upon Seller’s sale, conveyance or other transfer of title to the Excluded Parcel;
(ii) upon the initiation of construction of any improvements to the Excluded Parcel, or (iii) upon
sixty (60) days written notice from Seller to Purchaser.

          18.2 Indemnity and Waiver. Purchaser shall defend, indemnify Seller and hold Seller,
Seller’s trustees, officers, tenants, agents, contractors and employees and the

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Excluded Parcel harmless from and against any and all losses, costs, damages, claims or liabilities
arising out of the use of the Driveway by Purchaser or Purchaser’s employees, guests, or invitees,
or the inability of Purchaser or any party claiming by or through Purchaser to use the Driveway
upon expiration or termination of the license described in Section 18.1. In addition, Purchaser,
on behalf of itself and its employees, guests, and invitees, waives any claim related to the
condition of the Driveway or the maintenance of the Driveway. The provisions of this Section 18.2
shall survive the Closing.

          19. Public Announcement. On the date of the mutual execution and delivery of this
Agreement, Seller may issue a public announcement of the transaction between Seller and Purchaser
contemplated in this Agreement. Seller shall not identify any Proposed Assignee in such
announcement. Purchaser shall have the right to review and approve the content of the proposed
public announcement prior to such public announcement.

          20. Miscellaneous.

          20.1 Entire Agreement; Modification. This Agreement embodies the entire agreement and
understanding between Seller and Purchaser, and supersedes any prior oral or written agreements,
relating to this transaction. This Agreement may not be amended, modified or supplemented except
in a writing executed by both Seller and Purchaser. No term of this Agreement shall be waived
unless done so in writing by the party benefited by such term.

          20.2 Survival; No Merger. Unless specifically provided for herein, the terms of this
Agreement shall not survive or be enforceable after the Closing and shall be merged with the deed
given at closing.

          20.3 Governing Law. This Agreement shall be construed under and governed by the laws
of the State or Commonwealth in which the Real Property is located.

          20.4 Severability. If any term of this Agreement or any application thereof shall be
invalid or unenforceable, the remainder of this Agreement and any other application of such term
shall not be affected thereby.

          20.5 Construction. The rule of strict construction shall not apply to this Agreement.
This Agreement shall not be interpreted in favor of or against either Seller or Purchaser merely
because of their respective efforts in preparing it.

          20.6 Captions, Gender, Number and Language of Inclusion. The section and section
headings in this Agreement are for convenience of reference only and shall not define, limit or
prescribe the scope or intent of any term of this Agreement. As used in this Agreement, the
singular shall include the plural and vice versa, the masculine, feminine and neuter adjectives
shall include one another, and the following words and phrases shall have the following meanings:
(i) “including” shall mean “including but not limited to,” (ii) “terms” shall mean “terms,
provisions, duties, covenants, conditions, representations,

-22-

 

warranties and indemnities,” (iii) “any of the Property” or “any of the Real Property” shall
mean “the Property or any part thereof or interest therein” or “the Real Property or any part
thereof or interest therein,” as the case may be, (iv) “rights” shall mean “rights, duties and
obligations,” (v) “liabilities” shall mean “liabilities, obligations, damages, fines, penalties,
claims, demands, costs, charges, judgments and expenses, including reasonable attorneys’ fees,”
(vi) “incurred by” shall mean “imposed upon or suffered or incurred or paid by or asserted
against,” (vii) ”applicable law” shall mean “all applicable Federal, state, county, municipal,
local or other laws, statutes, codes, ordinances, rules and regulations,” (viii) “about the
Property” or “about the Real Property” shall mean “in, on, under or about the Property” or “in, on
under or about the Real Property,” as the case may be, (ix) “operation” shall mean “use, non-use,
possession, occupancy, condition, operation, maintenance or management,” and (x) “this transaction”
shall mean “the purchase, sale and related transactions contemplated by this Agreement.”

          20.7 Binding Effect. This Agreement shall inure to the benefit of and shall bind the
respective heirs, executors, administrators, successors and assigns of Seller and Purchaser.

          20.8 Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be an original, but all of which together shall constitute one instrument.

          20.9 Time Periods. The terms “day” or “days” used herein shall include all days in a
week, including Saturday, Sunday or legal holiday, provided, however, if the final day of any time
period or limitation set out in any provision of this Agreement falls on a Saturday, Sunday or
legal holiday under the laws of the State of Texas or the federal government, then and in such
event the time of such period shall be extended to the next day which is not a Saturday, Sunday or
legal holiday.

          20.10 Nonrefundable Consideration. Contemporaneously with the execution and delivery
of this Agreement, Purchaser has delivered to Seller, and Seller hereby acknowledges the receipt
of, the Option Consideration, which amount the parties bargained for and agreed to as consideration
for Purchaser’s exclusive right to inspect and purchase, or decline to purchase, in Purchaser’s
sole discretion, the Property pursuant to this Agreement and for Seller’s execution, delivery and
performance of this Agreement. The Option Consideration is in addition to and independent of any
other consideration or payment provided in this Agreement, is nonrefundable, and it is fully earned
and shall be retained by Seller notwithstanding any other provision of this Agreement.

END OF SECTION

-23-

 

          IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to be executed and
delivered as of the date first above written.

	 	 	 	 	 	 	 
	

	 	SELLER:	 	 	 
	 
	 	 	 	 	 	 
	

	 	FSI INTERNATIONAL, INC.,

a Minnesota corporation	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Benno Sand	 	 
	

	 	 	 	 	 	 
	

	 	Name:

Title:
	 	Benno Sand

EVP	 	 
	 
	 	 	 	 	 	 
	 	 	PURCHASER:

FINISAR CORPORATION,

a Delaware corporation
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ S.K. Workman	 	 
	

	 	 	 	 	 	 
	

	 	Name:

Title:
	 	S.K. Workman

CFO	 	 

-24-

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