Document:

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                                                                   Exhibit 10.21

                                 NEW FOCUS, INC.

                              EMPLOYMENT AGREEMENT

     This Employment Agreement (the "Agreement") is made and entered into
effective as of October 10, 2001 (the "Effective Date"), by and between R. Clark
Harris (the "Employee") and New Focus, Inc., a Delaware corporation (the
"Company").

     1.   Duties and Scope of Employment.
          ------------------------------

          (a)  Position. The Company shall employ Employee in the position of
               --------
President and Chief Executive Officer. Employee shall have overall
responsibility for the day-to-day management of the Company and shall be
expected to perform such duties and exercise such powers as are customarily
associated with his positions, subject to direction from the Company's Board of
Directors. Employee agrees to devote his full time and attention to the business
and affairs of the Company and to use his best efforts to perform his
responsibilities faithfully and efficiently. Additionally, Employee shall
continue in his role as Chairman of the Company's Board of Directors (the
"Board") to serve until his successor is duly elected and qualified.

          (b)  Obligations.  Employee shall not be prohibited from engaging in
               -----------
such activities and services as do not interfere or conflict with his
responsibilities to the Company or from personally and on Employee's own account
investing in stocks, bonds, securities, commodities, real estate, or other forms
of investments which require no services from Employee. Employee will actively
and industriously pursue Employee's profession in the Company's interest, and
will carefully avoid any and all personal acts, habits and usages which might
injure in any way, directly or indirectly, Employee's professional reputation or
that of any other employee of the Company, or which might otherwise be
detrimental to any interest of the Company.

     2.   At-Will Employment.  The Company and Employee acknowledge that
          ------------------
Employee's employment with the Company is for an unspecified duration and
constitutes "at-will" employment. As such, either the Company or Employee may
terminate Employee's employment at any time, with or without notice and with or
without cause. Neither Employee's job performance, promotions, commendations,
bonuses, stock option grants or the like from the Company shall imply or create
an obligation on the part of either the Company or Employee to continue
employment. If Employee's employment terminates for any reason, Employee shall
not be entitled to any payments, benefits, severance, damages, awards or
compensation other than as provided by this Agreement.

     3.   Compensation and Benefits.
          -------------------------

          (a)  Salary. The Company shall pay Employee a salary of $30,000 per
               ------
month (annualized at $360,000), payable in accordance with the Company's
standard payroll practices and subject to customary deductions. Employee's
salary may be adjusted by the Board or a Compensation Committee of the Board.

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          (b)  Employee Benefits. Employee shall be eligible to receive the
               -----------------
standard benefits given to Company employees and any additional or other
benefits offered specifically to executives, subject in each case to the
generally applicable terms and conditions of the plan or program in question and
to the determination of any committee administering such plan or program. The
Company will include Employee under its policy for directors and officers
insurance coverage, and will present Employee with an Indemnification Agreement.

          (c)  Expenses. The Company shall reimburse Employee for reasonable
               --------
business-related expenses, including air travel costs from Connecticut to
California and reasonable housing expenses in California, after written request
made by Employee to the Company in a timely manner. The Company agrees to use
its best efforts to qualify such reimbursements as reimbursements for business
expenses and not as compensation for tax purposes. To the extent that such
reimbursements are taxable as income to Employee, the Company agrees to gross
Employee's compensation up to cover such taxes.

     4.   Severance Benefits. Nothing in this Section 4 changes or diminishes in
          ------------------
any way the at-will nature of Employee's employment.

          (a)  Termination by the Company Without Cause. In the event that,
               ----------------------------------------
during the term of this Agreement, Employee's employment is terminated by the
Company without Cause, Employee shall be entitled to the following: 1)
continuation of his then current salary until the next anniversary date of the
Effective Date, less applicable withholding, payable in accordance with the
normal payroll practices of the Company; and 2) the Option (as defined in
Section 6(a) below) shall become vested and immediately exercisable with respect
to that portion of unvested shares which, in addition to any shares that shall
have already vested, equal the number of shares in which Employee would have
vested had he continued his employment until the next anniversary date of the
Effective Date. Employee shall be required to sign a Separation Agreement and
Release of Claims in a form satisfactory to the Company as a condition precedent
to receiving the severance benefits from the Company.

          (b)  Termination by Employee or for Cause. In the event that
               ------------------------------------
Employee's employment is terminated during the term of this Agreement by
Employee, or by the Company for Cause, Employee shall be entitled only to any
unpaid base salary due for periods prior to the termination date, accrued and
unused vacation and, following submission of proper expense reports by Employee,
the Company shall reimburse Employee for all expenses reasonably and necessarily
incurred by Employee in connection with the business of the Company prior to the
termination date. Employee shall not be entitled to any further compensation or
benefits of any kind. The Company asks that Employee provide at least thirty
(30) days' prior written notice of his intent to resign.

          (c)  Cause. The term "Cause" is defined as Employee's: (i) willful act
               -----
of personal dishonesty, gross misconduct, fraud or misrepresentation, taken by
Employee in connection with his responsibilities as an employee of the Company,
that is seriously injurious to the Company; (ii) conviction of or plea of guilty
or nolo contendre to a felony; or (iii) willful and continued failure to
substantially perform his principal duties and/or obligations of employment
(other than such failure resulting from incapacity due to bonafide physical or
mental illness), which failure is not

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remedied within a period of forty-five (45) days after written notice from the
Company, specifically identifying the manner in which the Company believes that
Employee has not substantially performed his duties and/or obligations. For the
purposes of this Section 4(d), no act or failure to act shall be considered
"willful" unless done or omitted to be done in bad faith and without reasonable
belief that the act or omission was in or not opposed to the best interests of
the Company.

     5.   Limitation on Payments. In the event that the severance and other
          ----------------------
benefits provided for in this Agreement or otherwise payable to Employee: (i)
constitute "parachute payments" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"); and (ii) but for this
Section, would be subject to the excise tax imposed by Section 4999 of the Code,
then Employee's severance benefits under Section 4 and Section 6(b) shall be
payable either:

          (a)  in full, or

          (b)  as to such lesser amount which would result in no portion of such
severance benefits being subject to excise tax under Section 4999 of the Code,
whichever of the foregoing amounts, taking into account the applicable federal,
state and local income taxes and the excise tax imposed by Section 4999, results
in the receipt by Employee on an after-tax basis, of the greatest amount of
severance benefits under Section 4 and Section 6(b), notwithstanding that all or
some portion of such severance benefits may be taxable under Section 4999 of the
Code. Unless the Company and Employee otherwise agree in writing, any
determination required under this Section 5 shall be made in writing by the
Company's independent public accountants (the "Accountants"), whose
determination shall be conclusive and binding upon Employee and the Company for
all purposes. For purposes of making the calculations required by this Section
5, the Accountants may make reasonable assumptions and approximations concerning
applicable taxes and may rely on reasonable, good faith interpretations
concerning the application of Sections 280G and 4999 of the Code. The Company
and Employee shall furnish to the Accountants such information and documents as
the Accountants may reasonably request in order to make a determination under
this Section. The Company shall bear all costs the Accountants may reasonably
incur in connection with any calculations contemplated by this Section 5.

     6.   Stock Options.
          -------------

          (a)  Option Grant. The Company shall grant to Employee an option to
               ------------
purchase 1,500,000 shares of the Company's Common Stock at a price per share
equal to the fair market value per share of the Common Stock on the date of the
grant, which shall be the closing price of the Company's Common Stock on the
Nasdaq Stock Market on the date prior to the date of grant (the "Option").
Provided that Employee's status as a service provider has not terminated,
1/60th of the shares subject to the Option shall vest monthly so as to be one
hundred percent (100%) vested five (5) years after the Effective Date. The
Option shall be subject to the terms and conditions of the Stock Option
Agreement Employee shall be required to execute as a condition to receiving the
Option.

                                      -3-

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          (b)  Acceleration Upon a Change of Control. In the event of a Change
               -------------------------------------
of Control of the Company, 100% of any unvested shares subject to the Option
will accelerate and be deemed fully vested.

          (c)  Definition of Change of Control. For the purposes of Section
               -------------------------------
6(b), a "Change of Control" shall mean the occurrence of any of the following
events:

               (i)   the acquisition by any "person" (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) (other than the Company or a
person that directly or indirectly controls, is controlled by, or is under
common control with, the Company) of the "beneficial ownership" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the total voting power
represented by the Company's then outstanding voting securities; or

               (ii)  a merger or consolidation of the Company with any other
corporation, or the sale of all or substantially all the assets of the Company,
a result of which merger, consolidation or sale, the voting securities of the
Company outstanding immediately prior thereto do not continue to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity, including the parent corporation of such surviving entity)
more than fifty percent (50%) of the total voting power represented by the
voting securities of the Company or such surviving entity outstanding
immediately after such merger, consolidation or sale; or

               (iii) the approval of a plan of complete liquidation or
dissolution of the Company; or

               (iv)  a change in the composition of the Board occurring within
a 12-month period, as a result of which fewer than a majority of the directors
are Incumbent Directors. "Incumbent Directors" shall mean directors who either
(A) are members of the Board as of the date of this Agreement, or (B) are
elected, or nominated for election, to the Board with the affirmative votes of
at least a majority of directors whose election was neither in connection with
any transactions described in subsections (i) or (ii), nor in connection with an
actual or threatened proxy contest relating to the election of directors to the
Board.

          (d)  Acceleration Upon Certain Actions. If, during the term of the
               ---------------------------------
Agreement and following the Company's acquisition of another corporation or
entity, the Board takes any of the following "Actions," without Employee's
written consent and without Cause, then 100% of any unvested shares subject to
the Option shall accelerate and be deemed fully vested:

               (i)   a reduction of fifteen percent (15%) or more of Employee's
compensation (including base salary and any non-discretionary and objective
standard incentive payments or bonus awards, but excluding facilities, fringe
benefits and perquisites included in subsection (iii) below) in effect
immediately prior to such reduction;

               (ii)  a reduction of Employee's duties and/or responsibilities;
or

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               (iii) a substantial reduction, without good business reasons, of
the facilities, fringe benefits and perquisites available to Employee prior to
such Action; and

               (iv)  within thirty (30) days after any such Action, Employee
provides written notice to the Board describing in reasonable detail the Action;
and

               (v)   the Board does not cure such Action within thirty (30) days
after receipt of Employee's notice.

     7.   Confidentiality Agreement. As a condition of Employee's employment,
          -------------------------
Employee shall be required to sign and comply with the terms of an Employment,
Confidential Information, Invention Assignment and Arbitration Agreement, which
requires, among other provisions, the assignment of patent rights to any
invention made during Employee's employment at the Company, non-disclosure of
the Company's confidential and proprietary information, the non-solicitation of
the Company's employees for twelve (12) months following the termination of
Employee's employment with the Company under any circumstances, and the
resolution of any and all claims relating to or arising from Employee's
employment relationship with the Company through binding arbitration.

     8.   Notices. Notices and all other communications contemplated by this
          -------
Agreement shall be in writing and shall be deemed to have been duly given when
personally delivered or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of Employee, mailed notices
shall be addressed to him at the home address which he most recently
communicated to the Company in writing. In the case of the Company, mailed
notices shall be addressed to its corporate headquarters, and all notices shall
be directed to the attention of its Chief Financial Officer.

     9.   Arbitration. In consideration of Employee's employment with the
          -----------
Company, the Company's like promise to arbitrate disputes with Employee, and
Employee's receipt of the compensation and other benefits the Company has agreed
to pay Employee, at present and in the future, Employee agrees that any and all
disputes, claims or controversies with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company in their
capacity as such or otherwise) arising out of or relating to any interpretation,
construction, performance or breach of this Agreement or any agreements between
Employee and the Company relating to stock or stock options shall be settled by
binding arbitration to be held in Santa Clara, California, under the arbitration
rules set forth in California Code of Civil Procedure section 1280 through
1294.2, including section 1283.05 (the "Rules") and pursuant to California law.
The arbitrator may grant injunctions and other relief in such disputes. The
decision of the arbitrator shall be final, conclusive and binding on the parties
to the arbitration. The prevailing party in any arbitration shall be entitled to
injunctive relief in any court of competent jurisdiction to enforce the
arbitration award. The prevailing party in any arbitration shall be awarded its
reasonable attorneys' fees and costs. Employee understands that both he and the
Company waive their right to have any dispute between them arising out of or
relating to this Agreement or any agreements between Employee and the Company
relating to stock or stock options resolved in a court of law by a judge or
jury. This paragraph will not prevent the Company or Employee from seeking
injunctive relief

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(or any other provisional remedy) from any court having jurisdiction over the
parties and the subject matter of their dispute relating to Employee's
obligations under this Agreement.

     10.  Miscellaneous Provisions.
          ------------------------

          (a)  Term. The term of this Agreement shall be for one (1) year from
               ----
the Effective Date, renewable annually with the written consent of Employee and
an authorized officer of the Company (other than Employee). Nothing in this
Section 10(a) changes Employee's at-will status set forth in Section 2.

          (b)  Waiver. No provision of this Agreement shall be modified, waived
               ------
or discharged unless the modification, waiver or discharge is agreed to in
writing and signed by Employee and by an authorized officer of the Company
(other than Employee). No waiver by either party of any breach of, or of
compliance with, any condition or provision of this Agreement 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.

          (c)  Voluntary Nature of Agreement. Employee acknowledges and agrees
               -----------------------------
that he is executing this Agreement voluntarily and without any duress or undue
influence by the Company or anyone else.

          (d)  Entire Agreement.  No agreements, representations or
               ----------------
understandings (whether oral or written and whether express or implied) which
are not expressly set forth in this Agreement have been made or entered into by
either party with respect to the subject matter hereof. Any waiver, modification
or amendment of any provision of this Agreement will be effective only if in
writing and signed by Employee and an authorized officer of the Company (other
than Employee).

          (e)  Choice of Law. The validity, interpretation, construction and
               -------------
performance of this Agreement shall be governed by the laws of the State of
California.

          (f)  Severability. In the event that any provision or any portion of
               ------------
any provision hereof becomes or is declared by a court of competent jurisdiction
to be illegal, unenforceable or void, this Agreement shall continue in full
force and effect without said provision or portion of provision.

          (g)  No Representations. Employee represents that he has had the
               ------------------
opportunity to consult with an attorney of his choice, and has carefully read
and understands the scope and effect of the provisions of this Agreement.
Employee further represents that he has not relied upon any representations or
statements made by the Company or anyone else regarding his employment with the
Company which are not specifically set forth in this Agreement.

          (h)  Counterparts; Facsimile. This Agreement may be executed in
               -----------------------
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument. Facsimile copies of this
Agreement shall be deemed to be originals.

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.

COMPANY:                                 NEW FOCUS, INC.

                                         /s/ William L. Potts, Jr.
                                         --------------------------------
                                         By: William L. Potts, Jr.
                                         Title: Chief Financial Officer

EMPLOYEE:                                /s/ R. Clark Harris
                                         --------------------------------
                                         R. Clark Harris

                                      -7-<PAGE>

                                                                   Exhibit 10.22

                        SEPARATION AGREEMENT AND RELEASE

     This Separation Agreement and Release ("Agreement") is made by and between
New Focus, Inc. (the "Company") and Kenneth E. Westrick ("Employee").

     WHEREAS, Employee was employed by the Company as its President and Chief
Executive Officer, and was a member of the Company's Board of Directors and
served as an officer and as a member of the boards of other companies owned or
controlled by the Company;

     WHEREAS, Employee resigned his positions as President and Chief Executive
Officer effective October 10, 2001, and agreed to assume the position of
Director - Special Projects, a position without policy making or supervisory
authority, through December 31, 2001 (last day of employment referenced as the
"Termination Date");

     WHEREAS, Employee resigned the positions he held with the other companies
owned or controlled by the Company effective October 10, 2001;

     WHEREAS, Employee has decided to resign as a member of the Company's Board
of Directors and as a member of the boards of the other companies owned or
controlled by the Company;

     WHEREAS, Employee signed the New Focus, Inc. Proprietary Information
Agreement with the Company on December 2, 1997 (the "Proprietary Information
Agreement");

     WHEREAS, Employee signed the New Focus, Inc. Indemnification Agreement on
October 1, 2001 (the "Indemnification Agreement");

     WHEREAS, Employee signed two (2) full recourse promissory notes with the
Company in the amounts of $5,875,000 on July 12, 2001 (together with the Deed of
Trust and Assignment of Rents and all exhibits thereto referenced as "Loan No.
1") and $2,125,000 on July 12, 2001 (Loan and Security Agreement and all
exhibits thereto referenced as "Loan No. 2");

     WHEREAS, Employee was granted an option to purchase 2,000,000 shares of the
Company's common stock (as adjusted for stock splits) on September 30, 1997
("Option No. 1") pursuant to the New Focus, Inc. Nonstatutory Stock Option
Agreement dated September 30, 1997 and amended on January 12, 2000 (the "January
12, 2000 Stock Option Agreement") and subject to the terms and conditions
thereof and of the 1990 Incentive Stock Option Plan (as amended May 4, 1998)
and/or the 1999 Stock Option Plan (jointly referred to as the "Stock Option
Plan");

     WHEREAS, Employee exercised Option No. 1 to purchase 2,000,000 shares of
the Company's common stock on January 12, 2000 subject to the terms and
conditions of the Stock Option Plan, of which 1,133,333 shares were unvested and
also subject to the terms and conditions

                                       -1-

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of that certain Restricted Stock Purchase Agreement dated January 12, 2000 (the
"January 12, 2000 Restricted Stock Purchase Agreement");

     WHEREAS, as of the date hereof, 1,566,667 shares of the options subject to
Option 1 have vested and 433,333 shares remain subject to the Company's right of
repurchase in accordance with the terms and conditions of the January 12, 2000
Restricted Stock Purchase Agreement;

     WHEREAS, Employee was granted an option to purchase 300,000 shares of the
Company's common stock (as adjusted for stock splits) on February 9, 2000
("Option No. 2") pursuant to the Amendment to the New Focus, Inc. Nonstatutory
Stock Option Agreement dated February 9, 2000 (the "February 9, 2000 Stock
Option Agreement"), and subject to the terms and conditions thereof and of the
Stock Option Plan;

     WHEREAS, Employee exercised Option No. 2 to purchase 300,000 shares of the
Company's common stock, all of which shares were unvested, on February 9, 2000
pursuant to the New Focus, Inc. Restricted Stock Purchase Agreement dated
January 12, 2000 (the "February 9, 2000 Restricted Stock Purchase Agreement")
and subject to the terms and conditions thereof and of the Stock Option Plan;

     WHEREAS, as of the date hereof, 100,000 shares of the options subject to
Option 2 have vested and 200,000 shares remain subject to the Company's right of
repurchase, as provided for in the February 9, 2000 Restricted Stock Purchase
Agreement (together with the Company's right of repurchase pursuant to the
January 12, 2000 Restricted Stock Purchase Agreement, the "Repurchase Option");
and

     WHEREAS, in connection with the exercise of Option No. 1, Employee executed
a promissory note and security agreement in favor of the Company on January 12,
2000 in the principal amount of $1,044,208 of which $957,097.66 remains
outstanding and payable and, in connection with the exercise of Option No. 2,
Employee executed a promissory note and security agreement in favor of the
Company on February 9, 2000 in the principal amount of $375,000 of which
$374,700 remains outstanding and payable (promissory notes, security agreements
and all documents executed therewith referenced collectively as the "Notes").

     NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Employee (jointly referred to as "the Parties") hereby agree as
follows:

     1.   Consideration.
          -------------

          (a)  Salary. In addition to continuing Employee's base salary through
               ------
               December 31, 2001, the Company agrees to pay Employee the lump
               sum equivalent of eighteen months of Employee's base salary for a
               total of $375,000, less applicable withholding. This payment will
               be made to Employee within three (3) business days after the
               Effective Date of this Agreement.

                                       -2-

<PAGE>

          (b)  Bonus/Supplemental Release. Employee shall resign from his
               --------------------------
               employment with the Company effective December 31, 2001. The
               Company further agrees to pay Employee the lump sum equivalent of
               eighteen months of his annual bonus for a total of $225,000, less
               applicable withholding, provided that Employee executes the
               Supplemental Release attached hereto as Exhibit A and
               incorporated herein by this reference. This payment will be made
               to Employee within three (3) business days after the Effective
               Date of the Supplemental Release, and will not be made if
               Employee does not execute the Supplemental Release.

          (c)  COBRA. The Company further agrees to pay directly to the
               -----
               applicable carrier or provider COBRA payments for Employee and
               Employee's eligible family members for eighteen months beginning
               on January 1, 2002, provided Employee timely elects to continue
               his health insurance. Employee agrees to promptly notify the
               Company if he obtains alternative employment before the
               expiration of the eighteen-month period. The Company will cease
               making COBRA payments at that point.

          (d)  Stock.
               ------

                The Parties agree that for purposes of determining the
                    number of shares of the Company's common stock which have
                    been released from the Company's Repurchase Option, as
                    provided for in the January 12, 2000 and February 9, 2000
                    Restricted Stock Purchase Agreements and the January 12,
                    2000 and February 9, 2000 Stock Option Agreements, Employee
                    shall be vested and the Repurchase Option shall have ceased
                    as to the 633,333 unvested shares (the "Accelerated Shares")
                    subject to the Company's Right of Repurchase as of the
                    Effective Date. Employee acknowledges and agrees that
                    because of this acceleration, he will have vested in and the
                    Repurchase Option will have lapsed as to all 2,300,000
                    shares of the Company's common stock (as adjusted for stock
                    splits) (the "Vested Shares"). All of the Vested Shares
                    shall continue to be governed by the terms and conditions of
                    the January 12, 2000 and February 9, 2000 Restricted Stock
                    Purchase Agreements, the January 12, 2000 and February 9,
                    2000 Stock Option Agreements, and the Stock Option Plan. The
                    Company further agrees that notwithstanding any provision of
                    this Agreement or any other agreement to the contrary, at
                    any time on or prior to the Maturity Dates of the Notes,
                    Employee shall either (i) put an amount of Company shares he
                    has held for at least six months beyond the vesting date of
                    such shares to the Company to pay off the Notes or (ii) pay
                    the Notes off in cash. The shares put to the Company shall
                    be valued at the publicly traded price of the Company's
                    common stock based upon the market close on the date
                    preceding the put. Employee must execute the put by written
                    direction to the

                                       -3-

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                    Company's Chief Financial Officer. The Company shall retain
                    the Accelerated Shares and shall not deliver them to
                    Employee until such time as the Notes have been paid in
                    full. If Employee elects to put an amount of Company shares
                    he has held for at least six months beyond the vesting date
                    of such shares to the Company to pay off the Notes, then to
                    the extent that the number of shares put to the Company in
                    full payment of the Notes is less than the Accelerated
                    Shares Employee may sell, pledge or otherwise transfer or
                    assign such excess shares regardless of the restrictions
                    imposed by Loan No. 2.If Employee elects to pay off the
                    Notes with cash, Employee may sell, pledge or otherwise
                    transfer or assign regardless of the restrictions imposed by
                    Loan No. 2, a number of shares of the Company's common stock
                    equal to the Accelerated Shares minus the number of shares
                    that Employee would have had to put to the Company had
                    Employee elected option (i) above on the date the Notes are
                    paid in full. All other shares of the Company's common stock
                    held by Employee shall continue to be subject to the
                    conditions of Loan No. 2.
               (1)  So long as the Notes have been paid in full and so long as
                    Employee has terminated his trading plan, and
                    notwithstanding the terms of Loan No. 2, Employee may sell
                    any shares of the Company's common stock held by Employee
                    and which serves as collateral under Loan No. 2
                    ("Collateral"), provided, however, that the proceeds of any
                    such sale shall be applied to the unpaid principal, interest
                    and any other amounts payable under Loan No. 2 as follows:
                    (a) fifty percent (50%) of the gross proceeds at a price per
                    share of $5 or less; and (b) twenty-five percent (25%) of
                    the gross proceeds at a price per share of more than $5.
                    Employee shall issue to Employee's securities broker a
                    payment authorization letter (the "Payment Authorization
                    Letter"), in form and substance approved by the Company,
                    which instructs such broker to pay to the Company, upon the
                    sale of any Collateral, the applicable percentage of the
                    gross proceeds. The Payment Authorization Letter shall also
                    provide that the instructions in such letter may be
                    rescinded only in a writing executed by Employee and the
                    Company. Amounts shall be applied first to accrued interest
                    and then to principal. Except as set forth herein, all the
                    terms and conditions of Loan No. 2 shall remain in full
                    force and effect and nothing in this Agreement shall have
                    the effect of modifying or terminating any term of Loan No.
                    2.

          (e)  Extension of Maturity Event. The Company further agrees to extend
               ---------------------------
               the Maturity Event as defined in Loan No. 1 until June 30, 2004.
               The interest rate shall remain as stated in Loan No. 1 unless
               Employee provides a written quote acceptable to the Company and
               its accountants by December 30, 2001 based on his financial
               condition as of the date of the quote for an interest rate lower
               than that specified in Loan No. 1, in which case the Company
               shall adjust the interest

                                       -4-

<PAGE>

               rate on Loan No. 1 to the lower rate. In addition, after December
               30, 2001, if Employee provides a bona fide written quote from one
               or more institutional lending sources, the Company agrees to
               adjust the interest rate as stated in Loan No. 1 to the quoted
               rate provided by Employee; provided, however, that the Company
               and its accountants in their sole and absolute discretion have
               determined that reducing the interest rate as stated in Loan No.
               1 to the quoted rate provided by Employee will have no adverse
               accounting consequences to the Company; and provided further,
               that the Company shall only be obligated to adjust such interest
               rate once every six months. All costs associated with providing
               and verifying the quotes, including appraisal costs, shall be
               borne by Employee. If the Employee desires to pay off all or a
               portion of Loan No. 1 with funds borrowed from another
               institution or institutions in one or more transactions (the
               "Refinancings"), the Company agrees to pay up to an aggregate of
               $50,000, excluding points, of Employee's transaction costs
               associated with all such Refinancings. The June 30, 2002 Maturity
               Event as defined in Loan No. 2 will remain unchanged, as will the
               interest rate.

           (f) Outplacement Assistance. The Company further agrees to pay
               -----------------------
               Employee $20,000 to be used by Employee in his discretion for
               executive outplacement assistance , attorneys fees, investment
               counselors or the like.

           (g) Equipment. The Company will allow Employee to retain the current
               ---------
               laptop computer, monitor and PDA provided to him by the Company;
               provided, however, that Employee shall provide the laptop
               computer and PDA to the Company within three business days of the
               Effective Date of this Agreement so that all Company-related
               information can be permanently removed or deleted by the Company.
               Employee agrees not to copy, delete or remove any Company-related
               information from the laptop computer or PDA prior to the
               Company's inspection.

           (h) Transition. Employee agrees to cooperate with and provide his
               ----------
               good faith assistance to the Company in connection with the
               transition of his responsibilities and departure from the
               Company.

     2.    Payment of Salary. The Company shall pay Employee his accrued paid
           -----------------
time off at his current salary rate, and shall reimburse Employee for any
business expenses incurred and submitted by Employee in accordance with Company
policy. Employee acknowledges and represents that, with such payment and
reimbursement, the Company has paid all salary, wages, bonuses, stock and stock
options, accrued vacation, expenses, severance, commissions and any and all
other benefits, reimbursements and compensation due to Employee.

     3.   Release of Claims.
          -----------------

                                       -5-

<PAGE>

          (a)  Employee's Release.  Employee agrees that the foregoing
               ------------------
consideration represents settlement in full of all outstanding obligations owed
to Employee by the Company and its officers, managers, supervisors, agents,
employees, affiliates, divisions, subsidiaries, and predecessor and successor
corporations. Employee hereby and forever releases the Company and its officers,
directors, employees, managers, supervisors, agents, investors, shareholders,
administrators, affiliates, divisions, subsidiaries, predecessor and successor
corporations, and assigns ("the Releasees") from, and agrees not to sue
concerning, or in any manner to institute, prosecute or pursue, any claim,
complaint, charge, duty, obligation or cause of action relating to any matters
of any kind, whether presently known or unknown, suspected or unsuspected, that
Employee may possess against any of the Releasees arising from any omissions,
acts or facts that have occurred up until and including the Effective Date of
this Agreement including, without limitation,

               (1) any and all claims relating to or arising out of Employee's
employment relationship with the Company and the termination of that
relationship;

               (2) any and all claims relating to, or arising from, Employee's
right to purchase, or actual purchase of shares of stock of the Company,
including, without limitation, any claims for fraud, misrepresentation, breach
of fiduciary duty, breach of duty under applicable state corporate law, and
securities fraud under any state or federal law;

               (3) any and all claims for wrongful discharge of employment;
termination in violation of public policy; discrimination; harassment;
retaliation; breach of any contract, agreement, or term sheet, both express and
implied; breach of a covenant of good faith and fair dealing, both express and
implied; failure of consideration; promissory estoppel; negligent or intentional
infliction of emotional distress; negligent or intentional misrepresentation;
negligent or intentional interference with contract or prospective economic
advantage; unfair business practices; defamation; libel; slander; negligence;
personal injury; assault; battery; invasion of privacy; false imprisonment;
conversion; workers' compensation and disability benefits;

               (4) any and all claims for violation of any federal, state or
municipal statute, including, but not limited to, Title VII of the Civil Rights
Act of 1964; the Civil Rights Act of 1991; the Americans with Disabilities Act
of 1990; the Fair Labor Standards Act; the Age Discrimination in Employment Act
of 1967; the Employee Retirement Income Security Act of 1974; the Worker
Adjustment and Restraining Notification Act; the California Fair Employment and
Housing Act; and the California Labor Code;

               (5) any and all claims for violation of the federal, or any
state, constitution;

               (6) any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

               (7) any and all claims for attorneys' fees and costs; and

                                       -6-

<PAGE>

               (8) any and all claims relating to or arising under any loan or
                   promissory note.

           (b) Company's Release. The Company agrees that in consideration of
Employee's compliance with the terms of this Agreement, it does forever release
Employee from and agrees not to sue concerning, or in any manner to institute,
prosecute or pursue, any claim, complaint, charge, duty, obligation or cause of
action relating to any matters of any kind, whether presently known or unknown,
suspected or unsuspected, that the Company may possess against Employee arising
from any omissions, acts or facts that have occurred up until and including the
Effective Date of this Agreement. The Company's release and covenant not to sue
do not extend to any obligations Employee has pursuant to Loan Nos. 1 or 2, the
Notes or the Proprietary Information Agreement. Employee represents that he has
not engaged in any intentional acts of misconduct or wrongdoing which could lead
to legal liability to the Company or which would amount to acts of financial
dishonesty for which the Company would be entitled to restitution.

The Company and Employee agree that the release set forth in this paragraph 3
shall be and remain in effect in all respects as a complete general release as
to the matters released. This release does not extend to any obligations
incurred under this Agreement or to any right Employee has to indemnity under
the Indemnification Agreement or applicable law.

     4.    Acknowledgment of Waiver of Claims under ADEA. Employee acknowledges
           ---------------------------------------------
that he is waiving and releasing any rights he may have under the Age
Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Employee agrees that this waiver and release
does not apply to any rights or claims that may arise under the ADEA after the
Effective Date of this Agreement. Employee acknowledges that the consideration
given for this waiver and release is in addition to anything of value to which
Employee was already entitled. Employee further acknowledges that he has been
advised by this writing that: (a) he should consult with an attorney prior to
                                                                     -----
executing this Agreement; (b) he has twenty-one (21) days within which to
consider this Agreement; (c) he has seven (7) days following the execution of
this Agreement by the parties to revoke the Agreement; (d) this Agreement shall
not be effective until after the revocation period has expired; and (e) nothing
in this Agreement prevents or precludes Employee from challenging or seeking a
determination in good faith of the validity of this waiver under the ADEA, nor
does it impose any condition precedent, penalties or costs from doing so, unless
specifically authorized by federal law.

     5.    California Civil Code Section 1542. The Parties represents that they
           ----------------------------------
are not aware of any claims by either of them other than the claims that are
released by this Agreement. The Parties acknowledges that they have been advised
to consult with legal counsel and are familiar with the provisions of California
Civil Code Section 1542, which provides as follows:

           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

                                       -7-

<PAGE>

               MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

     The Parties, being aware of said code section, agree to expressly waive any
rights they may have thereunder, as well as under any other statute or common
law principles of similar effect.

     6.    No Future Lawsuits. The Parties represent that they do not intend to
           ------------------
bring any claims on behalf of themselves or on behalf of any other person or
entity against the other party or any other person or entity referred to herein.

     7.    Company Information/Trading Windows. Employee agrees to abide by his
           -----------------------------------
continuing obligations under the Proprietary Information Agreement. Employee
hereby grants consent to notification by the Company to any new employer about
Employee's obligations under the Proprietary Information Agreement. Employee
will continue to be subject to the Company's Insider Trading Policy until the
Termination Date; provided, however, that the trading blackout windows set forth
in the Company's Insider Trading Policy will not apply to Employee starting on
the third trading day after the Company announces its third quarter 2001
results.

     8.    Confidentiality. The Parties agree to maintain in complete confidence
           ---------------
the existence of this Agreement, the contents and terms of this Agreement and
the consideration for this Agreement (hereinafter collectively referred to as
"Separation Information"). Except as required by law, the parties agree to
disclose Separation Information only to those Company employees and Board
members determined by the Company, attorneys, accountants, immediate family
members, tribunals and governmental entities who have a reasonable need to know
of such Separation Information, and to prevent disclosure of any Separation
Information to other third parties. In addition, the Company may disclose
Separation Information as required by the rules of the Securities and Exchange
Commission and any other government agency. The Parties agree that there will be
no publicity, directly or indirectly, concerning any Separation Information.
Employee acknowledges and agrees that the confidentiality of the Separation
Information is of the essence. Any individual breach of this provision or
               --------------
disclosure shall not excuse Employee from his obligations hereunder, nor permit
him to make additional unauthorized remarks.

     9.    Cooperation/Insurance. Employee agrees that he will not knowingly
           ---------------------
counsel or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against any of the Releasees, unless under a
subpoena or other court order to do so. Employee also agrees both to immediately
notify the Company upon receipt of any such subpoena or court order, and to
furnish, within three (3) business days of its receipt, a copy of such subpoena
or court order to the Company. Employee further agrees to provide his prompt and
good faith assistance in response to any requests by the Company for information
or assistance in connection with any disputes, differences, grievances, claims,
charges, or complaints involving any of the Releasees. The Company agrees to
compensate Employee at the rate of $1,500 per full day for his time providing
such assistance, with the exception of cooperation he is required to provide to
the Company under the Indemnification Agreement. This

                                       -8-

<PAGE>

Agreement is not intended to affect any right to coverage Employee has under the
Company's director and officer insurance policy.

     10.   Non-Disparagement. Employee agrees to refrain from any defamation,
           -----------------
libel or slander of any of the Releasees, or tortious interference with the
contracts and relationships of the Releasees. Employee further agrees he will
not act in any manner that might damage the business of the Company or its
employees or Board members. The Company agrees to refrain from any defamation,
libel or slander of Employee, or tortious interference with the contracts and
relationships of Employee. The Company's obligations shall extend only to its
directors and executive staff.

     11.   No Admission of Liability. Employee understands and acknowledges that
           -------------------------
this Agreement constitutes a compromise and settlement of any and all potential
disputed claims. No action taken by the Company hereto, either previously or in
connection with this Agreement, shall be deemed or construed to be: (a) an
admission of the truth or falsity of any potential claims; or (b) an
acknowledgment or admission by the Company of any fault or liability whatsoever
to Employee or to any third party.

     12.   Tax Consequences. The Company makes no representations or warranties
           ----------------
with respect to the tax consequences of the payment of any sums or other
consideration provided to Employee under the terms of this Agreement. Employee
agrees and understands that he is responsible for payment, if any, of local,
state and/or federal taxes on the sums paid hereunder by the Company and any
penalties or assessments thereon. Employee further agrees to indemnify and hold
the Company harmless from any claims, demands, deficiencies, penalties,
assessments, executions, judgments, or recoveries by any government agency
against the Company for any amounts claimed due on account of Employee's failure
to pay federal or state taxes or damages sustained by the Company by reason of
any such claims, including reasonable attorneys' fees.

     13.   Breach. Employee acknowledges and agrees that any breach by Employee
           ------
of his release of claims and covenant not to sue (except as permitted by
paragraph 4(e) herein), his obligations under paragraphs 9, 10 or 12 hereof, any
provision of the Proprietary Information Agreement (not including the hiring by
Employee's employer of a Company employee without Employee's involvement), , or
paragraph 12 of the Loan and Security Agreement (except as permitted pursuant to
paragraph 1(d)(2) above) , shall constitute a material breach of this Agreement
and shall entitle the Company immediately to recover the consideration provided
to Employee under this Agreement and to cease providing any additional
consideration to Employee. Employee shall also be responsible to the Company for
all costs, attorneys' fees and any and all damages incurred by the Company in:
(a) enforcing Employee's obligations under this Agreement, including the
bringing of any suit to recover the monetary consideration, so long as the
Company is the prevailing party, and (b) defending against a claim or suit
brought or pursued by Employee in violation of this Agreement. Nothing in this
paragraph implies that a breach by Employee of any other provision of this
Agreement or any other document or agreement referenced herein is not a material
breach.

     14.   Costs. The Parties shall each bear their own costs, expert fees ,
           -----
attorneys' fees and other fees incurred in connection with this Agreement,
except as otherwise provided herein.

                                       -9-

<PAGE>

     15.  ARBITRATION.  THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT
          -----------
OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS
HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN SANTA CLARA COUNTY, BEFORE
THE AMERICAN ARBITRATION ASSOCIATION UNDER ITS CALIFORNIA EMPLOYMENT DISPUTE
RESOLUTION RULES, OR BY A JUDGE TO BE MUTUALLY AGREED UPON. THE ARBITRATOR MAY
GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES. THE DECISION OF THE
ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE
ARBITRATION. THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION
SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO
ENFORCE THE ARBITRATION AWARD. THE PARTIES AGREE THAT THE PREVAILING PARTY IN
ANY ARBITRATION SHALL BE AWARDED ITS REASONABLE ATTORNEY'S FEES AND COSTS. THE
PARTIES EXPRESSLY ACKNOWLEDGE THAT THEY ARE WAIVING ANY RIGHT TO A JURY TRIAL
FOR ANY AND ALL CLAIMS COVERED BY THIS AGREEMENT.

     16.  Authority. The Company represents and warrants that the undersigned
          ---------
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement.
Employee represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each Party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.

     17.  No Representations. Employee represents that he has had the
          ------------------
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement. Employee has not
relied upon any representations or statements made by the Company which are not
specifically set forth in this Agreement.

     18.  Severability. In the event that any provision or any portion of any
          ------------
provision hereof becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Agreement shall continue in full force
and effect without said provision or portion of provision.

     19.  Entire Agreement. This Agreement, including Exhibit A, represents the
          ----------------
entire agreement and understanding between the Company and Employee concerning
Employee's employment with and separation from the Company and the events
leading thereto and associated therewith, and supersedes and replaces any and
all prior agreements and understandings concerning Employee's relationship with
the Company, with the exception of the Proprietary Information Agreement, the
January 12, 2000 and February 9, 2000 Restricted Stock Purchase Agreements, the
January 12, 2000 and February 9, 2000 Stock Option Agreements, the Stock Option
Plan, the Notes, Loan Nos. 1 and 2 and the Indemnification Agreement, all of
which remain in full force and effect to the extent not inconsistent with the
terms of this Agreement.

                                      -10-

<PAGE>

     20.   No Oral Modification. This Agreement may only be amended in writing
           --------------------
signed by Employee and the Company's Chairman of the Board.

     21.   Governing Law. This Agreement shall be governed by the laws of the
           -------------
State of California.

     22.   Effective Date. This Agreement will become effective on the eighth
           --------------
day after its execution by all of the Parties, provided that Employee has not
revoked the Agreement and that he has tendered his written resignation to the
Company from the Company's Board of Directors and the boards of all other
companies owned or controlled by the Company of which he is a member.

     23.   Counterparts. This Agreement may be executed in counterparts and by
           ------------
facsimile, and each counterpart and facsimile shall have the same force and
effect as an original and shall constitute an effective, binding agreement on
the part of each of the undersigned.

     24.   Voluntary Execution of Agreement. This Agreement is executed
           --------------------------------
voluntarily and without any duress or undue influence on the part or behalf of
the Parties hereto, with the full intent of releasing all claims. The Parties
acknowledge that:

                  (a)      They have read this Agreement;

                  (b)      They have been represented in the preparation,
                           negotiation, and execution of this Agreement by legal
                           counsel of their own choice or that they have
                           voluntarily declined to seek such counsel;

                                      -11-

<PAGE>

              (c)    They understand the terms and consequences of this
                     Agreement and of the releases it contains;

              (d)    They are fully aware of the legal and binding effect of
                     this Agreement.

       IN WITNESS WHEREOF, the Parties have executed this Agreement on the
respective dates set forth below.

                                    NEW FOCUS, INC.

Dated: 10 Oct, 2001                 By /s/ R. Clark Harris
       -------                      ----------------------------------------
                                       R. Clark Harris, Chairman of the Board

                                    Kenneth E. Westrick, an individual

Dated: 10 Oct, 2001                   /s/ Kenneth E. Westrick
       -------                      --------------------------------------------
                                       Kenneth E. Westrick

Approved As To Form:

                                    WILSON SONSINI GOODRICH & ROSATI
                                    Professional Corporation

Dated:  10/15/01                    By /s/ Marina C. Tsatalis
        _____________                 __________________________________________
                                       Marina C. Tsatalis
                                       Attorneys for New Focus, Inc.

                                    FENWICK & WEST

Dated:  10/23/01                    By /s/ P. Garth Gartrell
        _____________                 __________________________________________
                                      P. Garth Gartrell
                                      Attorneys for Kenneth E. Westr

                                      -12-

<PAGE>

                                    EXHIBIT A

                              SUPPLEMENTAL RELEASE
                              --------------------

       This Supplemental Release ("Supplemental Release") is made by and between
New Focus, Inc. (the "Company") and Kenneth E. Westrick or the executor on
behalf of Mr. Westrick's estate ("Mr. Westrick").

       NOW THEREFORE, in consideration of the mutual promises made herein, the
Company and Mr. Westrick (jointly referred to as "the Parties") hereby agree as
follows:

       1.     Consideration. The Company agrees to pay Mr. Westrick $225,000,
              -------------
less applicable withholding, within three (3) business days of the Effective
Date of this Supplemental Release.

       2.     Payment of Salary. The Company shall pay Mr. Westrick his accrued
              -----------------
paid time off at his current salary rate, and shall reimburse Mr. Westrick for
any business expenses incurred and submitted by Mr. Westrick in accordance with
Company policy. Mr. Westrick acknowledges and represents that, with such payment
and reimbursement, the Company has paid all salary, wages, bonuses, stock and
stock options, accrued vacation, expenses, severance, commissions and any and
all other benefits, reimbursements and compensation due to Mr. Westrick.

       3.     Release of Claims. Mr. Westrick agrees that the foregoing
              -----------------
consideration represents settlement in full of all outstanding obligations owed
to Mr. Westrick by the Company and its officers, managers, supervisors, agents,
employees, affiliates, divisions, subsidiaries, and predecessor and successor
corporations. Mr. Westrick hereby and forever releases the Company and its
officers, directors, employees, managers, supervisors, agents, investors,
shareholders, administrators, affiliates, divisions, subsidiaries, predecessor
and successor corporations, and assigns ("the Releasees") from, and agrees not
to sue concerning, or in any manner to institute, prosecute or pursue, any
claim, complaint, charge, duty, obligation or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Mr. Westrick may possess against any of the Releasees arising
from any omissions, acts or facts that have occurred up until and including the
Effective Date of this Supplemental Release including, without limitation,

                     (a)    any and all claims relating to or arising out of Mr.
Westrick's employment relationship with the Company and the termination of that
relationship;

                     (b)    any and all claims relating to, or arising from, Mr.
Westrick's right to purchase, or actual purchase of shares of stock of the
Company, including, without limitation, any claims for fraud, misrepresentation,
breach of fiduciary duty, breach of duty under applicable state corporate law,
and securities fraud under any state or federal law;

                                      -13-

<PAGE>

                     (c)    any and all claims for wrongful discharge of
employment; termination in violation of public policy; discrimination;
harassment; retaliation; breach of any contract, agreement, or term sheet, both
express and implied; breach of a covenant of good faith and fair dealing, both
express and implied; failure of consideration; promissory estoppel; negligent or
intentional infliction of emotional distress; negligent or intentional
misrepresentation; negligent or intentional interference with contract or
prospective economic advantage; unfair business practices; defamation; libel;
slander; negligence; personal injury; assault; battery; invasion of privacy;
false imprisonment; conversion; workers' compensation and disability benefits;

                     (d)    any and all claims for violation of any federal,
state or municipal statute, including, but not limited to, Title VII of the
Civil Rights Act of 1964; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990; the Fair Labor Standards Act; the Age Discrimination
in Employment Act of 1967; the Employee Retirement Income Security Act of 1974;
the Worker Adjustment and Restraining Notification Act; the California Fair
Employment and Housing Act; and the California Labor Code;

                     (e)    any and all claims for violation of the federal, or
any state, constitution;

                     (f)    any and all claims arising out of any other laws and
regulations relating to employment or employment discrimination;

                     (g)    any and all claims for attorneys' fees and costs;
and

                     (h)    any and all claims relating to or arising under any
loan or promissory note.

       Mr. Westrick agrees that the release set forth in this paragraph 3 shall
be and remain in effect in all respects as a complete general release as to the
matters released. This release does not extend to any obligations incurred under
this Supplemental Release or to any right Mr. Westrick has to indemnity under
the Indemnification Agreement or applicable law.

       4.     Acknowledgment of Waiver of Claims under ADEA. Mr. Westrick
              ---------------------------------------------
acknowledges that he is waiving and releasing any rights he may have under the
Age Discrimination in Employment Act of 1967 ("ADEA") and that this waiver and
release is knowing and voluntary. Mr. Westrick agrees that this waiver and
release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Supplemental Release. Mr. Westrick acknowledges
that the consideration given for this waiver and release is in addition to
anything of value to which Mr. Westrick was already entitled. Mr. Westrick
further acknowledges that he has been advised by this writing that: (a) he
should consult with an attorney prior to executing this Supplemental Release;
(b) he has twenty-one (21) days within which to consider this Supplemental
Release; (c) he has seven (7) days following the execution of this Supplemental
Release by the parties to revoke the Supplemental Release; (d) this Supplemental
Release shall not be effective until after the revocation period has

                                      -14-

<PAGE>

expired; and (e) nothing in this Supplemental Release prevents or precludes Mr.
Westrick from challenging or seeking a determination in good faith of the
validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties or costs from doing so, unless specifically authorized by
federal law.

     5.   California Civil Code Section 1542. Mr. Westrick represents that he is
          ----------------------------------
not aware of any claims other than the claims that are released by this
Supplemental Release. Mr. Westrick acknowledges that he has been advised by
legal counsel and is familiar with the provisions of California Civil Code
Section 1542, which provides as follows:

          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.

     Mr. Westrick, being aware of said code section, agrees to expressly waive
any rights he may have thereunder, as well as under any other statute or common
law principles of similar effect.

     6.   No Future Lawsuits. Mr. Westrick represents that he does not intend to
          ------------------
bring any claims on behalf of himself or on behalf of any other person or entity
against the Company or any other person or entity referred to herein.

     7.   No Admission of Liability. Mr. Westrick understands and acknowledges
          -------------------------
that this Supplemental Release constitutes a compromise and settlement of any
and all potential disputed claims. No action taken by the Company hereto, either
previously or in connection with this Supplemental Release, shall be deemed or
construed to be: (a) an admission of the truth or falsity of any potential
claims; or (b) an acknowledgment or admission by the Company of any fault or
liability whatsoever to Mr. Westrick or to any third party.

     8.   Breach. Mr. Westrick acknowledges and agrees that any breach by Mr.
          ------
Westrick of his release of claims and covenant not to sue (except as permitted
by paragraph 4(e) herein), shall constitute a material breach of this
Supplemental Release and shall entitle the Company immediately to recover the
consideration provided to Mr. Westrick under this Supplemental Release. Employee
shall also be responsible to the Company for all costs, attorneys' fees and any
and all damages incurred by the Company in: (a) enforcing Mr. Westrick's
obligations under this Supplemental Release, including the bringing of any suit
to recover the monetary consideration, so long as the Company is the prevailing
party, and (b) defending against a claim or suit brought or pursued by Mr.
Westrick in violation of this Supplemental Release. Nothing in this paragraph
implies that a breach by Mr. Westrick of any other provision of this
Supplemental Release is not a material breach.

                                      -15-

<PAGE>

     9.   Authority. The Company represents and warrants that the undersigned
          ---------
has the authority to act on behalf of the Company and to bind the Company and
all who may claim through it to the terms and conditions of this Agreement. Mr.
Westrick represents and warrants that he has the capacity to act on his own
behalf and on behalf of all who might claim through him to bind them to the
terms and conditions of this Agreement. Each Party warrants and represents that
there are no liens or claims of lien or assignments in law or equity or
otherwise of or against any of the claims or causes of action released herein.

     10.  No Representations. Mr. Westrick represents that he has consulted with
          ------------------
an attorney, and has carefully read and understands the scope and effect of the
provisions of this Supplemental Release. Mr. Westrick has not relied upon any
representations or statements made by the Company which are not specifically set
forth in this Supplemental Release.

     11.  Severability. In the event that any provision or any portion of any
          ------------
provision hereof becomes or is declared by a court of competent jurisdiction to
be illegal, unenforceable or void, this Supplemental Release shall continue in
full force and effect without said provision or portion of provision.

     12.  No Oral Modification. This Supplemental Release may only be amended in
          --------------------
writing signed by Mr. Westrick and the Company's Chairman of the Board.

     13.  Governing Law. This Supplemental Release shall be governed by the laws
          -------------
of the State of California.

     14.  Effective Date. This Supplemental Release will become effective on the
          --------------
eighth day after its execution by Mr. Westrick; provided that in no event will
this Supplemental Release become effective prior to January 1, 2002; and
provided that Mr. Westrick has not revoked the Supplemental Release.

     15.  Counterparts. This Supplemental Release may be executed in
          ------------
counterparts and by facsimile, and each counterpart and facsimile shall have the
same force and effect as an original and shall constitute an effective, binding
agreement on the part of each of the undersigned.

     16.  Voluntary Execution of Supplemental Release. This Supplemental Release
          -------------------------------------------
is executed voluntarily and without any duress or undue influence on the part or
behalf of the Parties hereto, with the full intent of releasing all claims. The
Parties acknowledge that:

          (a)  They have read this Agreement;

          (b)  They have been represented in the preparation, negotiation, and
     execution of this Agreement by legal counsel of their own choice;

                                      -16-

<PAGE>

          (c) They understand the terms and consequences of this Supplemental
     Release and of the releases it contains;

          (d) They are fully aware of the legal and binding effect of this
     Supplemental Release.

     IN WITNESS WHEREOF, the Parties have executed this Supplemental Release on
the respective dates set forth below.

                                      NEW FOCUS, INC.

Dated:  December 31, 2001             By /s/ R. Clark Harris
                                         ---------------------------------------
                                         R. Clark Harris, Chairman of the Board

                                      Kenneth E. Westrick, an individual

Dated:  December 31, 2001             /s/ Kenneth E. Westrick
                                      __________________________________________
                                      Kenneth E. Westrick

Approved As To Form:

                                      WILSON SONSINI GOODRICH & ROSATI
                                      Professional Corporation

Dated:  October 15, 2001              By  /s/ Marina C Tsatalis
       -----------------                 ---------------------------------------
                                         Marina C. Tsatalis
                                         Attorneys for New Focus, Inc.

                                      FENWICK & WEST

Dated:  10/23/01                      By /s/ P.Garth Gartrell
       ----------                        ---------------------------------------
                                          P. Garth Gartrell
                                          Attorneys for Kenneth E. Westrick

                                      -17-

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