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Sample Business Contracts

1999 Employee Stock Purchase Plan - Finisar Corp.

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                               FINISAR CORPORATION
                        1999 EMPLOYEE STOCK PURCHASE PLAN

1.       ESTABLISHMENT, PURPOSE AND TERM OF PLAN.

1.1      ESTABLISHMENT. The Finisar Corporation 1999 Employee Stock Purchase
         Plan (the "PLAN") is hereby established effective as of the
         effective date of the initial registration by the Company of its
         Stock under Section 12 of the Securities Exchange Act of 1934, as
         amended (the "EFFECTIVE DATE").

1.2      PURPOSE. The purpose of the Plan is to advance the interests of
         Company and its stockholders by providing an incentive to attract,
         retain and reward Eligible Employees of the Participating Company
         Group and by motivating such persons to contribute to the growth and
         profitability of the Participating Company Group. The Plan provides
         such Eligible Employees with an opportunity to acquire a proprietary
         interest in the Company through the purchase of Stock. The Company
         intends that the Plan qualify as an "employee stock purchase plan"
         under Section 423 of the Code (including any amendments or
         replacements of such section), and the Plan shall be so construed.

1.3      TERM OF PLAN. The Plan shall continue in effect until the earlier of
         its termination by the Board or the date on which all of the shares
         of Stock available for issuance under the Plan have been issued.

2.       DEFINITIONS AND CONSTRUCTION.

2.1      DEFINITIONS. Any term not expressly defined in the Plan but defined
         for purposes of Section 423 of the Code shall have the same
         definition herein. Whenever used herein, the following terms shall
         have their respective meanings set forth below:

     (A) "BOARD" means the Board of Directors of the Company. If one or more
         Committees have been appointed by the Board to administer the Plan,
         "Board" also means such Committee(s).

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

     (C) "COMMITTEE" means a committee of the Board duly appointed to
         administer the Plan and having such powers as specified by the
         Board. Unless the powers of the Committee have been specifically
         limited, the Committee shall have all of the powers of the Board
         granted herein, including, without limitation, the power to amend or
         terminate the Plan at any time, subject to the terms of the Plan and
         any applicable limitations imposed by law.

     (D) "COMPANY" means Finisar Corporation, a Delaware corporation, or any
         successor corporation thereto.

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     (E) "COMPENSATION" means, with respect to any Offering Period, base
         wages or salary, overtime pay, bonuses, commissions, shift
         differentials, payments for paid time off, payments in lieu of
         notice, and any of such compensation deferred under any program or
         plan established by a Participating Company, including, without
         limitation, pursuant to Section 401(k) or Section 125 of the Code.
         Compensation shall be limited to amounts actually payable in cash
         directly to the Participant or deferred by the Participant during
         the Offering Period. However, notwithstanding the foregoing,
         Compensation shall not include sign-on bonuses, profit sharing,
         payments pursuant to a severance agreement, termination pay, moving
         allowances, relocation payments, expense reimbursements, the cost of
         employee benefits paid by a Participating Company, tuition
         reimbursements, imputed income arising under any benefit program,
         contributions made by a Participating Company under any employee
         benefit plan, income directly or indirectly received pursuant to the
         Plan or any other stock purchase or stock option plan, or any other
         compensation not included above.

     (F) "ELIGIBLE EMPLOYEE" means an Employee who meets the requirements set
         forth in Section 5 for eligibility to participate in the Plan.

     (G) "EMPLOYEE" means a person treated as an employee of a Participating
         Company for purposes of Section 423 of the Code. A Participant shall
         be deemed to have ceased to be an Employee either upon an actual
         termination of employment or upon the corporation employing the
         Participant ceasing to be a Participating Company. For purposes of
         the Plan, an individual shall not be deemed to have ceased to be an
         Employee while on any military leave, sick leave, or other bona fide
         leave of absence approved by the Company of ninety (90) days or
         less. If an individual's leave of absence exceeds ninety (90) days,
         the individual shall be deemed to have ceased to be an Employee on
         the ninety-first (91st) day of such leave unless the individual's
         right to reemployment with the Participating Company Group is
         guaranteed either by statute or by contract. The Company shall
         determine in good faith and in the exercise of its discretion
         whether an individual has become or has ceased to be an Employee and
         the effective date of such individual's employment or termination of
         employment, as the case may be. For purposes of an individual's
         participation in or other rights, if any, under the Plan as of the
         time of the Company's determination, all such determinations by the
         Company shall be final, binding and conclusive, notwithstanding that
         the Company or any governmental agency subsequently makes a contrary
         determination.

     (H) "FAIR MARKET VALUE" means, as of any date:

         (i) If the Stock is then listed on a national or regional securities
         exchange or market system or is regularly quoted by a recognized
         securities dealer, the closing sale price of a share of Stock (or
         the mean of the closing bid and asked prices if the Stock is so
         quoted instead) as quoted on the Nasdaq National Market, the Nasdaq
         SmallCap Market or such other national or regional securities
         exchange or market system constituting the primary market for the
         Stock, or by such recognized securities dealer, as reported in THE
         WALL STREET JOURNAL or such other source as the Company deems
         reliable. If the relevant date does not fall on a day on which the
         Stock has traded on such securities exchange or market system or has
         been quoted by such securities dealer, the date on which the Fair
         Market Value is established shall be the last day on which the

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         Stock was so traded or quoted prior to the relevant date, or such
         other appropriate day as determined by the Board, in its discretion.

         (ii) If, on the relevant date, the Stock is not then listed on a
         national or regional securities exchange or market system or
         regularly quoted by a recognized securities dealer, the Fair Market
         Value of a share of Stock shall be as determined in good faith by
         the Board.

         (iii) Notwithstanding the foregoing, the Fair Market Value of a
         share of Stock on the Effective Date shall be deemed to be the
         public offering price set forth in the final prospectus filed with
         the Securities and Exchange Commission in connection with the
         Company's initial public offering of the Stock.

     (I) "OFFERING" means an offering of Stock as provided in Section 6.

     (J) "OFFERING DATE" means, for any Offering, the first day of the
         Offering Period.

     (K) "OFFERING PERIOD" means a period established in accordance with
         Section 6.1.

     (L) "PARENT CORPORATION" means any present or future "parent
         corporation" of the Company, as defined in Section 424(e) of the
         Code.

     (M) "PARTICIPANT" means an Eligible Employee who has become a
         participant in an Offering Period in accordance with Section 7 and
         remains a participant in accordance with the Plan.

     (N) "PARTICIPATING COMPANY" means the Company or any Parent Corporation
         or Subsidiary Corporation designated by the Board as a corporation
         the Employees of which may, if Eligible Employees, participate in
         the Plan. The Board shall have the sole and absolute discretion to
         determine from time to time which Parent Corporations or Subsidiary
         Corporations shall be Participating Companies.

     (O) "PARTICIPATING COMPANY GROUP" means, at any point in time, the
         Company and all other corporations collectively which are then
         Participating Companies.

     (P) "PURCHASE DATE" means, for any Purchase Period, the last day of such
         period.

     (Q) "PURCHASE PERIOD" means a period established in accordance with
         Section 6.2.

     (R) "PURCHASE PRICE" means the price at which a share of Stock may be
         purchased under the Plan, as determined in accordance with Section 9.

     (S) "PURCHASE RIGHT" means an option granted to a Participant pursuant
         to the Plan to purchase such shares of Stock as provided in Section
         8, which the Participant may or may not exercise during the Offering
         Period in which such option is outstanding. Such option arises from
         the right of a Participant to withdraw any accumulated payroll
         deductions of the Participant not previously applied to the purchase
         of Stock under the Plan and to terminate participation in the Plan
         at any

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         time during an Offering Period.

     (T) "STOCK" means the common stock of the Company, as adjusted from time
         to time in accordance with Section 4.2.

     (U) "SUBSCRIPTION AGREEMENT" means a written agreement in such form as
         specified by the Company, stating an Employee's election to
         participate in the Plan and authorizing payroll deductions under the
         Plan from the Employee's Compensation.

     (V) "SUBSCRIPTION DATE" means the last business day prior to the
         Offering Date of an Offering Period or such earlier date as the
         Company shall establish.

     (W) "SUBSIDIARY CORPORATION" means any present or future "subsidiary
         corporation" of the Company, as defined in Section 424(f) of the
         Code.

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.       ADMINISTRATION.

3.1      ADMINISTRATION BY THE BOARD. The Plan shall be administered by the
         Board. All questions of interpretation of the Plan, of any form of
         agreement or other document employed by the Company in the
         administration of the Plan, or of any Purchase Right shall be
         determined by the Board and shall be final and binding upon all
         persons having an interest in the Plan or the Purchase Right.
         Subject to the provisions of the Plan, the Board shall determine all
         of the relevant terms and conditions of Purchase Rights; provided,
         however, that all Participants granted Purchase Rights pursuant to
         an Offering shall have the same rights and privileges within the
         meaning of Section 423(b)(5) of the Code. All expenses incurred in
         connection with the administration of the Plan shall be paid by the
         Company.

3.2      AUTHORITY OF OFFICERS. Any officer of the Company shall have the
         authority to act on behalf of the Company with respect to any
         matter, right, obligation, determination or election that is the
         responsibility of or that is allocated to the Company herein,
         provided that the officer has apparent authority with respect to
         such matter, right, obligation, determination or election.

3.3      POLICIES AND PROCEDURES ESTABLISHED BY THE COMPANY. The Company may,
         from time to time, consistent with the Plan and the requirements of
         Section 423 of the Code, establish, change or terminate such rules,
         guidelines, policies, procedures, limitations, or adjustments as
         deemed advisable by the Company, in its discretion, for the proper
         administration of the Plan, including, without limitation, (a) a
         minimum payroll deduction amount required for participation in an
         Offering, (b) a limitation on the frequency or number of changes
         permitted in the rate of payroll deduction during an Offering, (c)
         an exchange ratio applicable to amounts withheld in a currency other
         than United States dollars, (d) a payroll deduction greater than or
         less than the amount

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         designated by a Participant in order to adjust for the Company's
         delay or mistake in processing a Subscription Agreement or in
         otherwise effecting a Participant's election under the Plan or as
         advisable to comply with the requirements of Section 423 of the
         Code, and (e) determination of the date and manner by which the Fair
         Market Value of a share of Stock is determined for purposes of
         administration of the Plan.

3.4      INDEMNIFICATION. In addition to such other rights of indemnification
         as they may have as members of the Board or officers or employees of
         the Participating Company Group, members of the Board and any
         officers or employees of the Participating Company Group to whom
         authority to act for the Board or the Company is delegated shall be
         indemnified by the Company against all reasonable expenses,
         including attorneys' fees, actually and necessarily incurred in
         connection with the defense of any action, suit or proceeding, or in
         connection with any appeal therein, to which they or any of them may
         be a party by reason of any action taken or failure to act under or
         in connection with the Plan, or any right granted hereunder, and
         against all amounts paid by them in settlement thereof (provided
         such settlement is approved by independent legal counsel selected by
         the Company) or paid by them in satisfaction of a judgment in any
         such action, suit or proceeding, except in relation to matters as to
         which it shall be adjudged in such action, suit or proceeding that
         such person is liable for gross negligence, bad faith or intentional
         misconduct in duties; provided, however, that within sixty (60) days
         after the institution of such action, suit or proceeding, such
         person shall offer to the Company, in writing, the opportunity at
         its own expense to handle and defend the same.

4.       SHARES SUBJECT TO PLAN.

4.1      MAXIMUM NUMBER OF SHARES ISSUABLE. Subject to adjustment as provided
         in Section 4.2, the maximum aggregate number of shares of Stock that
         may be issued under the Plan shall be two hundred fifty thousand
         (250,000), cumulatively increased on May 1, 2001 and each May 1
         thereafter until and including May 1, 2010 by two hundred fifty
         thousand (250,000) shares (the "ANNUAL INCREASE"), and shall consist
         of authorized but unissued or reacquired shares of Stock, or any
         combination thereof. If an outstanding Purchase Right for any reason
         expires or is terminated or canceled, the shares of Stock allocable
         to the unexercised portion of that Purchase Right shall again be
         available for issuance under the Plan.

4.2      ADJUSTMENTS FOR CHANGES IN CAPITAL STRUCTURE. In the event of any
         stock dividend, stock split, reverse stock split, recapitalization,
         combination, reclassification or similar change in the capital
         structure of the Company, or in the event of any merger (including a
         merger effected for the purpose of changing the Company's domicile),
         sale of assets or other reorganization in which the Company is a
         party, appropriate adjustments shall be made in the number and class
         of shares subject to the Plan, the Annual Increase and each Purchase
         Right, and in the Purchase Price. If a majority of the shares of the
         same class as the shares subject to outstanding Purchase Rights are
         exchanged for, converted into, or otherwise become (whether or not
         pursuant to an Ownership Change Event) shares of another corporation
         (the "NEW SHARES"), the Board may unilaterally amend the outstanding
         Purchase Rights to provide that such Purchase Rights are exercisable
         for New Shares. In the event of any such amendment, the number of
         shares subject to, and the Purchase Price of, the outstanding
         Purchase Rights shall be adjusted in a fair and equitable

<PAGE>

         manner, as determined by the Board, in its discretion.
         Notwithstanding the foregoing, any fractional share resulting from
         an adjustment pursuant to this Section 4.2 shall be rounded down to
         the nearest whole number, and in no event may the Purchase Price be
         decreased to an amount less than the par value, if any, of the stock
         subject to the Purchase Right. The adjustments determined by the
         Board pursuant to this Section 4.2 shall be final, binding and
         conclusive.

5.       ELIGIBILITY.

5.1      EMPLOYEES ELIGIBLE TO PARTICIPATE. Each Employee of a Participating
         Company is eligible to participate in the Plan and shall be deemed
         an Eligible Employee, except any Employee who is either: (a)
         customarily employed by the Participating Company Group for twenty
         (20) hours or less per week or (b) customarily employed by the
         Participating Company Group for not more than five (5) months in any
         calendar year.

5.2      EXCLUSION OF CERTAIN STOCKHOLDERS. Notwithstanding any provision of
         the Plan to the contrary, no Employee shall be granted a Purchase
         Right under the Plan if, immediately after such grant, the Employee
         would own or hold options to purchase stock of the Company or of any
         Parent Corporation or Subsidiary Corporation possessing five percent
         (5%) or more of the total combined voting power or value of all
         classes of stock of such corporation, as determined in accordance
         with Section 423(b)(3) of the Code. For purposes of this Section
         5.2, the attribution rules of Section 424(d) of the Code shall apply
         in determining the stock ownership of such Employee.

6.       OFFERINGS.

6.1      OFFERING PERIODS. Except as otherwise set forth below, the Plan
         shall be implemented by two series of Offerings. One series shall be
         of sequential Offerings of approximately twelve (12) months duration
         or such other duration as the Board shall determine (an "ANNUAL
         OFFERING PERIOD"). The second series shall be of Offerings of
         approximately six (6) months duration or such other duration as the
         Board shall determine (a "HALF-YEAR OFFERING PERIOD"). Annual
         Offering Periods shall commence on or about December 1 of each year
         and end on or about the first November 30 occurring thereafter.
         Half-Year Offering Periods shall commence on or about June 1 of each
         year and end on or about the first November 30 occurring thereafter.
         However, an initial Offering (the "INITIAL OFFERING PERIOD") shall
         commence on the Effective Date and end on or about November 30,
         2000. Notwithstanding the foregoing, the Board may establish a
         different duration for one or more Offering Periods or different
         commencing or ending dates for such Offering Periods; provided,
         however, that no Offering Period may have a duration exceeding
         twenty-seven (27) months. If the first or last day of an Offering
         Period is not a day on which the national securities exchanges or
         Nasdaq Stock Market are open for trading, the Company shall specify
         the trading day that will be deemed the first or last day, as the
         case may be, of the Offering Period.

6.2      PURCHASE PERIODS. Each Annual Offering Period shall consist of two
         (2) consecutive Purchase Periods of approximately six (6) months
         duration, or such other number or duration as the Board determines.
         A Purchase Period commencing on or about December 1 shall end on or
         about the

<PAGE>

         next May 31. A Purchase Period commencing on or about June 1 shall
         end on or about the next November 30. Each Half-Year Offering Period
         shall consist of a single Purchase Period of approximately six (6)
         months duration coterminous with such Offering Period. However, the
         Initial Offering Period shall consist of two (2) consecutive
         Purchase Periods ending on or about May 31, 2000 and November 30,
         2000, respectively. Notwithstanding the foregoing, the Board may
         establish a different duration for one or more Purchase Periods or
         different commencing or ending dates for such Purchase Periods. If
         the first or last day of a Purchase Period is not a day on which the
         national securities exchanges or Nasdaq Stock Market are open for
         trading, the Company shall specify the trading day that will be
         deemed the first or last day, as the case may be, of the Purchase
         Period.

7.       PARTICIPATION IN THE PLAN.

7.1      INITIAL PARTICIPATION. An Eligible Employee may become a Participant
         in an Offering Period by delivering a properly completed
         Subscription Agreement to the office designated by the Company not
         later than the close of business for such office on the Subscription
         Date established by the Company for that Offering Period. An
         Eligible Employee who does not deliver a properly completed
         Subscription Agreement to the Company's designated office on or
         before the Subscription Date for an Offering Period shall not
         participate in the Plan for that Offering Period or for any
         subsequent Offering Period unless the Eligible Employee subsequently
         delivers a properly completed Subscription Agreement to the
         appropriate office of the Company on or before the Subscription Date
         for such subsequent Offering Period. An Employee who becomes an
         Eligible Employee after the Offering Date of an Offering Period
         shall not be eligible to participate in that Offering Period but may
         participate in any subsequent Offering Period provided the Employee
         is still an Eligible Employee as of the Offering Date of such
         subsequent Offering Period.

7.2      CONTINUED PARTICIPATION. A Participant shall automatically
         participate in the next Offering Period commencing immediately after
         the final Purchase Date of each Offering Period in which the
         Participant participates provided that the Participant remains an
         Eligible Employee on the Offering Date of the new Offering Period
         and has not either (a) withdrawn from the Plan pursuant to Section
         12.1 or (b) terminated employment as provided in Section 13. A
         Participant who may automatically participate in a subsequent
         Offering Period, as provided in this Section, is not required to
         deliver any additional Subscription Agreement for the subsequent
         Offering Period in order to continue participation in the Plan.
         However, a Participant may deliver a new Subscription Agreement for
         a subsequent Offering Period in accordance with the procedures set
         forth in Section 7.1 if the Participant desires to change any of the
         elections contained in the Participant's then effective Subscription
         Agreement.

8.       RIGHT TO PURCHASE SHARES.

8.1      GRANT OF PURCHASE RIGHT. Except as set forth below, on the Offering
         Date of each Offering Period, each Participant in that Offering
         Period shall be granted automatically a Purchase Right determined as
         follows:

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     (A) ANNUAL OFFERING PERIOD. Each Purchase Right granted on the Offering
         Date of an Annual Offering Period shall consisting of an option to
         purchase that number of whole shares of Stock determined by dividing
         Twenty-Five Thousand Dollars ($25,000) by the Fair Market Value of a
         share of Stock on the Offering Date.

     (B) HALF-YEAR OFFERING PERIOD. Each Purchase Right granted on the
         Offering Date of a Half-Year Offering Period shall consist of an
         option to purchase that number of whole shares of Stock determined
         by dividing Twelve Thousand Five Hundred Dollars ($12,500) by the
         Fair Market Value of a share of Stock on the Offering Date.

8.2      PRO RATA ADJUSTMENT OF PURCHASE RIGHT. If the Board establishes an
         Offering Period of any duration other than twelve months or six
         months, then the number of shares of Stock subject to each Purchase
         Right granted on the Offering Date of such Offering Period shall be
         determined as provided in Section 8.1, except that the applicable
         dollar amount shall be determined by multiplying $2,083.33 by the
         number of months (rounded to the nearest whole month) in the
         Offering Period and rounding to the nearest whole dollar.

8.3      CALENDAR YEAR PURCHASE LIMITATION. Notwithstanding any provision of
         the Plan to the contrary, no Participant shall be granted a Purchase
         Right which permits his or her right to purchase shares of Stock
         under the Plan to accrue at a rate which, when aggregated with such
         Participant's rights to purchase shares under all other employee
         stock purchase plans of a Participating Company intended to meet the
         requirements of Section 423 of the Code, exceeds Twenty-Five
         Thousand Dollars ($25,000) in Fair Market Value (or such other
         limit, if any, as may be imposed by the Code) for each calendar year
         in which such Purchase Right is outstanding at any time. For
         purposes of the preceding sentence, the Fair Market Value of shares
         purchased during a given Offering Period shall be determined as of
         the Offering Date for such Offering Period. The limitation described
         in this Section shall be applied in conformance with applicable
         regulations under Section 423(b)(8) of the Code.

9.       PURCHASE PRICE.

                  The Purchase Price at which each share of Stock may be
         acquired in an Offering Period upon the exercise of all or any
         portion of a Purchase Right shall be established by the Board;
         provided, however, that the Purchase Price on each Purchase Date
         shall not be less than eighty-five percent (85%) of the lesser of
         (a) the Fair Market Value of a share of Stock on the Offering Date
         of the Offering Period or (b) the Fair Market Value of a share of
         Stock on the Purchase Date. Unless otherwise provided by the Board
         prior to the commencement of an Offering Period, the Purchase Price
         on each Purchase Date during that Offering Period shall be
         eighty-five percent (85%) of the lesser of (a) the Fair Market Value
         of a share of Stock on the Offering Date of the Offering Period, or
         (b) the Fair Market Value of a share of Stock on the Purchase Date.

10.      ACCUMULATION OF PURCHASE PRICE THROUGH PAYROLL DEDUCTION.

                  Shares of Stock acquired pursuant to the exercise of all or
         any portion of a

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         Purchase Right may be paid for only by means of payroll deductions
         from the Participant's Compensation accumulated during the Offering
         Period for which such Purchase Right was granted, subject to the
         following:

10.1     AMOUNT OF PAYROLL DEDUCTIONS. Except as otherwise provided herein,
         the amount to be deducted under the Plan from a Participant's
         Compensation on each payday during an Offering Period shall be
         determined by the Participant's Subscription Agreement. The
         Subscription Agreement shall set forth the percentage of the
         Participant's Compensation to be deducted on each payday during an
         Offering Period in whole percentages of not less than one percent
         (1%) (except as a result of an election pursuant to Section 10.3 to
         stop payroll deductions) or more than twenty percent (20%);
         provided, however, that in no event may a Participant's payroll
         deductions on any payday for the purchase of shares under the Plan
         and all other employee stock purchase plans of a Participating
         Company intended to meet the requirements of Section 423 of the Code
         exceed twenty percent (20%) of the Participant's Compensation on
         such payday. The Board may change the foregoing limits on payroll
         deductions effective as of any Offering Date.

10.2     COMMENCEMENT OF PAYROLL DEDUCTIONS. Payroll deductions shall
         commence on the first payday following the Offering Date and shall
         continue to the end of the Offering Period unless sooner altered or
         terminated as provided herein.

10.3     ELECTION TO CHANGE OR STOP PAYROLL DEDUCTIONS. During an Offering
         Period, a Participant may elect to increase or decrease the rate of
         or to stop deductions from his or her Compensation by delivering to
         the Company's designated office an amended Subscription Agreement
         authorizing such change on or before the Change Notice Date, as
         defined below. A Participant who elects, effective following the
         first payday of an Offering Period, to decrease the rate of his or
         her payroll deductions to zero percent (0%) shall nevertheless
         remain a Participant in the current Offering Period unless such
         Participant withdraws from the Plan as provided in Section 12.1. The
         "CHANGE NOTICE DATE" shall be the day immediately prior to the
         beginning of the first pay period for which such election is to be
         effective, unless a different date is established by the Company and
         announced to the Participants.

10.4     ADMINISTRATIVE SUSPENSION OF PAYROLL DEDUCTIONS. The Company may, in
         its sole discretion, suspend a Participant's payroll deductions
         under the Plan as the Company deems advisable to avoid accumulating
         payroll deductions in excess of the amount that could reasonably be
         anticipated to purchase the maximum number of shares of Stock
         permitted (a) under the Participant's Purchase Right or (b) during a
         calendar year under the limit set forth in Section 8.3. Payroll
         deductions shall be resumed at the rate specified in the
         Participant's then effective Subscription Agreement at the
         beginning, respectively, of (a) the next Offering Period, provided
         that the individual is a Participant in such Offering Period or (b)
         the next Purchase Period the Purchase Date of which falls in the
         following calendar year, unless the Participant has either withdrawn
         from the Plan as provided in Section 12.1 or has ceased to be an
         Eligible Employee.

10.5     PARTICIPANT ACCOUNTS. Individual bookkeeping accounts shall be
         maintained for each Participant. All payroll deductions from a
         Participant's Compensation shall be credited to such Participant's
         Plan account and shall be deposited with the general funds of the
         Company. All

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         payroll deductions received or held by the Company may be used by
         the Company for any corporate purpose.

10.6     NO INTEREST PAID. Interest shall not be paid on sums deducted from a
         Participant's Compensation pursuant to the Plan.

10.7     VOLUNTARY WITHDRAWAL FROM PLAN ACCOUNT. A Participant may withdraw
         all or any portion of the payroll deductions credited to his or her
         Plan account and not previously applied toward the purchase of Stock
         by delivering to the Company's designated office a written notice on
         a form provided by the Company for such purpose. A Participant who
         withdraws the entire remaining balance credited to his or her Plan
         account shall be deemed to have withdrawn from the Plan in
         accordance with Section 12.1. Amounts withdrawn shall be returned to
         the Participant as soon as practicable after the Company's receipt
         of the notice of withdrawal and may not be applied to the purchase
         of shares in any Offering under the Plan. The Company may from time
         to time establish or change limitations on the frequency of
         withdrawals permitted under this Section, establish a minimum dollar
         amount that must be retained in the Participant's Plan account, or
         terminate the withdrawal right provided by this Section.

11.      PURCHASE OF SHARES.

11.1     EXERCISE OF PURCHASE RIGHT. On each Purchase Date of an Offering
         Period, each Participant who has not withdrawn from the Plan and
         whose participation in the Offering has not otherwise terminated
         before such Purchase Date shall automatically acquire pursuant to
         the exercise of the Participant's Purchase Right the number of whole
         shares of Stock determined by dividing (a) the total amount of the
         Participant's payroll deductions accumulated in the Participant's
         Plan account during the Offering Period and not previously applied
         toward the purchase of Stock by (b) the Purchase Price. However, in
         no event shall the number of shares purchased by the Participant
         during an Offering Period exceed the number of shares subject to the
         Participant's Purchase Right. No shares of Stock shall be purchased
         on a Purchase Date on behalf of a Participant whose participation in
         the Offering or the Plan has terminated before such Purchase Date.

11.2     PRO RATA ALLOCATION OF SHARES. If the number of shares of Stock
         which might be purchased by all Participants in the Plan on a
         Purchase Date exceeds the number of shares of Stock available in the
         Plan as provided in Section 4.1, the Company shall make a pro rata
         allocation of the remaining shares in as uniform a manner as
         practicable and as the Company determines to be equitable. Any
         fractional share resulting from such pro rata allocation to any
         Participant shall be disregarded.

11.3     DELIVERY OF CERTIFICATES. As soon as practicable after each Purchase
         Date, the Company shall arrange the delivery to each Participant of
         a certificate representing the shares acquired by the Participant on
         such Purchase Date; provided that the Company may deliver such
         shares to a broker designated by the Company that will hold such
         shares for the benefit of the Participant. Shares to be delivered to
         a Participant under the Plan shall be registered in the name of the
         Participant, or, if requested by the Participant, in the name of the
         Participant and his or her

<PAGE>

         spouse, or, if applicable, in the names of the heirs of the
         Participant.

11.4     RETURN OF CASH BALANCE. Any cash balance remaining in a
         Participant's Plan account following any Purchase Date shall be
         refunded to the Participant as soon as practicable after such
         Purchase Date. However, if the cash balance to be returned to a
         Participant pursuant to the preceding sentence is less than the
         amount that would have been necessary to purchase an additional
         whole share of Stock on such Purchase Date, the Company may retain
         the cash balance in the Participant's Plan account to be applied
         toward the purchase of shares of Stock in the subsequent Purchase
         Period or Offering Period, as the case may be.

11.5     TAX WITHHOLDING. At the time a Participant's Purchase Right is
         exercised, in whole or in part, or at the time a Participant
         disposes of some or all of the shares of Stock he or she acquires
         under the Plan, the Participant shall make adequate provision for
         the federal, state, local and foreign tax withholding obligations,
         if any, of the Participating Company Group which arise upon exercise
         of the Purchase Right or upon such disposition of shares,
         respectively. The Participating Company Group may, but shall not be
         obligated to, withhold from the Participant's compensation the
         amount necessary to meet such withholding obligations.

11.6     EXPIRATION OF PURCHASE RIGHT. Any portion of a Participant's
         Purchase Right remaining unexercised after the end of the Offering
         Period to which the Purchase Right relates shall expire immediately
         upon the end of the Offering Period.

11.7     PROVISION OF REPORTS AND STOCKHOLDER INFORMATION TO PARTICIPANTS.
         Each Participant who has exercised all or part of his or her
         Purchase Right shall receive, as soon as practicable after the
         Purchase Date, a report of such Participant's Plan account setting
         forth the total payroll deductions accumulated prior to such
         exercise, the number of shares of Stock purchased, the Purchase
         Price for such shares, the date of purchase and the cash balance, if
         any, remaining immediately after such purchase that is to be
         refunded or retained in the Participant's Plan account pursuant to
         Section 11.4. The report required by this Section may be delivered
         in such form and by such means, including by electronic
         transmission, as the Company may determine. In addition, each
         Participant shall be provided information concerning the Company
         equivalent to that information provided generally to the Company's
         common stockholders.

12.      WITHDRAWAL FROM OFFERING OR PLAN.

12.1     VOLUNTARY WITHDRAWAL. A Participant may withdraw from the Plan or
         any Offering by signing and delivering to the Company's designated
         office a written notice of withdrawal on a form provided by the
         Company for this purpose. Such withdrawal may be elected at any time
         prior to the end of an Offering Period; provided, however, that if a
         Participant withdraws from the Plan or an Offering after a Purchase
         Date, the withdrawal shall not affect shares of Stock acquired by
         the Participant on such Purchase Date. A Participant who voluntarily
         withdraws from the Plan or an Offering is prohibited from resuming
         participation in the Plan in the same Offering from which he or she
         withdrew, but may participate in any subsequent Offering by again
         satisfying the requirements of Sections 5 and 7.1. The Company may
         impose, from time to time, a requirement that the notice of
         withdrawal be on file with the Company's designated office for a
         reasonable

<PAGE>

         period prior to the effectiveness of the Participant's withdrawal.

12.2     RETURN OF PAYROLL DEDUCTIONS. Upon a Participant's voluntary
         withdrawal from the Plan or an Offering pursuant to Section 12.1,
         the Participant's accumulated payroll deductions which have not been
         applied toward the purchase of shares shall be refunded to the
         Participant as soon as practicable after the withdrawal, without the
         payment of any interest, and the Participant's interest in the Plan
         or the Offering, as applicable, shall terminate. Such accumulated
         payroll deductions to be refunded in accordance with this Section
         may not be applied to any other Offering under the Plan.

13.      TERMINATION OF EMPLOYMENT OR ELIGIBILITY.

                  Upon a Participant's ceasing, prior to a Purchase Date, to
         be an Employee of the Participating Company Group for any reason,
         including retirement, disability or death, or upon the failure of a
         Participant to remain an Eligible Employee, the Participant's
         participation in the Plan shall terminate immediately. In such
         event, the Participant's accumulated payroll deductions which have
         not been applied toward the purchase of shares shall, as soon as
         practicable, be returned to the Participant or, in the case of the
         Participant's death, to the Participant's beneficiary designated in
         accordance with Section 20, if any, or legal representative, and all
         of the Participant's rights under the Plan shall terminate. Interest
         shall not be paid on sums returned pursuant to this Section 13. A
         Participant whose participation has been so terminated may again
         become eligible to participate in the Plan by satisfying the
         requirements of Sections 5 and 7.1.

14.      CHANGE IN CONTROL.

14.1     DEFINITIONS.

         (a) An "OWNERSHIP CHANGE EVENT" shall be deemed to have occurred if
         any of the following occurs with respect to the Company: (i) the
         direct or indirect sale or exchange in a single or series of related
         transactions by the stockholders of the Company of more than fifty
         percent (50%) of the voting stock of the Company; (ii) a merger or
         consolidation in which the Company is a party; (iii) the sale,
         exchange, or transfer of all or substantially all of the assets of
         the Company; or (iv) a liquidation or dissolution of the Company.

         (b) A "CHANGE IN CONTROL" shall mean an Ownership Change Event or a
         series of related Ownership Change Events (collectively, the
         "TRANSACTION") wherein the stockholders of the Company immediately
         before the Transaction do not retain immediately after the
         Transaction, in substantially the same proportions as their
         ownership of shares of the Company's voting stock immediately before
         the Transaction, direct or indirect beneficial ownership of more
         than fifty percent (50%) of the total combined voting power of the
         outstanding voting stock of the Company or the corporation or
         corporations to which the assets of the Company were transferred
         (the "TRANSFEREE CORPORATION(S)"), as the case may be. For purposes
         of the preceding sentence, indirect beneficial ownership shall
         include, without limitation, an interest resulting from ownership of
         the voting stock of one or more corporations which, as a result of
         the Transaction,

<PAGE>

         own the Company or the Transferee Corporation(s), as the case may
         be, either directly or through one or more subsidiary corporations.
         The Board shall have the right to determine whether multiple sales
         or exchanges of the voting stock of the Company or multiple
         Ownership Change Events are related, and its determination shall be
         final, binding and conclusive.

14.2     EFFECT OF CHANGE IN CONTROL ON PURCHASE RIGHTS. In the event of a
         Change in Control, the surviving, continuing, successor, or
         purchasing corporation or parent corporation thereof, as the case
         may be (the "ACQUIRING CORPORATION"), may assume the Company's
         rights and obligations under the Plan. If the Acquiring Corporation
         elects not to assume the Company's rights and obligations under
         outstanding Purchase Rights, the Purchase Date of the then current
         Purchase Period shall be accelerated to a date before the date of
         the Change in Control specified by the Board, but the number of
         shares of Stock subject to outstanding Purchase Rights shall not be
         adjusted. All Purchase Rights which are neither assumed by the
         Acquiring Corporation in connection with the Change in Control nor
         exercised as of the date of the Change in Control shall terminate
         and cease to be outstanding effective as of the date of the Change
         in Control.

15.      NONTRANSFERABILITY OF PURCHASE RIGHTS.

                  Neither payroll deductions credited to a Participant's Plan
         account nor a Participant's Purchase Right may be assigned,
         transferred, pledged or otherwise disposed of in any manner other
         than as provided by the Plan or by will or the laws of descent and
         distribution. (A beneficiary designation pursuant to Section 20
         shall not be treated as a disposition for this purpose.) Any such
         attempted assignment, transfer, pledge or other disposition shall be
         without effect, except that the Company may treat such act as an
         election to withdraw from the Plan as provided in Section 12.1. A
         Purchase Right shall be exercisable during the lifetime of the
         Participant only by the Participant.

16.      COMPLIANCE WITH SECURITIES LAW.

                  The issuance of shares under the Plan shall be subject to
         compliance with all applicable requirements of federal, state and
         foreign law with respect to such securities. A Purchase Right may
         not be exercised if the issuance of shares upon such exercise would
         constitute a violation of any applicable federal, state or foreign
         securities laws or other law or regulations or the requirements of
         any securities exchange or market system upon which the Stock may
         then be listed. In addition, no Purchase Right may be exercised
         unless (a) a registration statement under the Securities Act of
         1933, as amended, shall at the time of exercise of the Purchase
         Right be in effect with respect to the shares issuable upon exercise
         of the Purchase Right, or (b) in the opinion of legal counsel to the
         Company, the shares issuable upon exercise of the Purchase Right may
         be issued in accordance with the terms of an applicable exemption
         from the registration requirements of said Act. The inability of the
         Company to obtain from any regulatory body having jurisdiction the
         authority, if any, deemed by the Company's legal counsel to be
         necessary to the lawful issuance and sale of any shares under the
         Plan shall relieve the Company of any liability in respect of the
         failure to issue or sell such shares as to which such requisite
         authority shall not have been obtained. As a condition to the
         exercise of a Purchase Right, the Company may require the
         Participant to satisfy any qualifications that

<PAGE>

         may be necessary or appropriate, to evidence compliance with any
         applicable law or regulation, and to make any representation or
         warranty with respect thereto as may be requested by the Company.

17.      RIGHTS AS A STOCKHOLDER AND EMPLOYEE.

                  A Participant shall have no rights as a stockholder by
         virtue of the Participant's participation in the Plan until the date
         of the issuance of a certificate for the shares purchased pursuant
         to the exercise of the Participant's Purchase Right (as evidenced by
         the appropriate entry on the books of the Company or of a duly
         authorized transfer agent of the Company). No adjustment shall be
         made for dividends, distributions or other rights for which the
         record date is prior to the date such certificate is issued, except
         as provided in Section 4.2. Nothing herein shall confer upon a
         Participant any right to continue in the employ of the Participating
         Company Group or interfere in any way with any right of the
         Participating Company Group to terminate the Participant's
         employment at any time.

18.      LEGENDS.

                  The Company may at any time place legends or other
         identifying symbols referencing any applicable federal, state or
         foreign securities law restrictions or any provision convenient in
         the administration of the Plan on some or all of the certificates
         representing shares of Stock issued under the Plan. The Participant
         shall, at the request of the Company, promptly present to the
         Company any and all certificates representing shares acquired
         pursuant to a Purchase Right in the possession of the Participant in
         order to carry out the provisions of this Section. Unless otherwise
         specified by the Company, legends placed on such certificates may
         include but shall not be limited to the following:

                  "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY
         THE CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES
         UNDER AN EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF
         THE INTERNAL REVENUE CODE OF 1986, AS AMENDED. THE TRANSFER AGENT
         FOR THE SHARES EVIDENCED HEREBY SHALL NOTIFY THE CORPORATION
         IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE REGISTERED HOLDER
         HEREOF. THE REGISTERED HOLDER SHALL HOLD ALL SHARES PURCHASED UNDER
         THE PLAN IN THE REGISTERED HOLDER'S NAME (AND NOT IN THE NAME OF ANY
         NOMINEE)."

19.      NOTIFICATION OF DISPOSITION OF SHARES.

                  The Company may require the Participant to give the Company
         prompt notice of any disposition of shares acquired by exercise of a
         Purchase Right. The Company may require that until such time as a
         Participant disposes of shares acquired upon exercise of a Purchase
         Right, the Participant shall hold all such shares in the
         Participant's name (or, if elected by the Participant, in the name
         of the Participant and his or her spouse but not in the name of any
         nominee) until the later of two years after the date of grant of
         such Purchase Right or one year

<PAGE>

         after the date of exercise of such Purchase Right. The Company may
         direct that the certificates evidencing shares acquired by exercise
         of a Purchase Right refer to such requirement to give prompt notice
         of disposition.

20.      DESIGNATION OF BENEFICIARY.

20.1     DESIGNATION PROCEDURE. A Participant may file a written designation
         of a beneficiary who is to receive (a) shares and cash, if any, from
         the Participant's Plan account if the Participant dies subsequent to
         a Purchase Date but prior to delivery to the Participant of such
         shares and cash or (b) cash, if any, from the Participant's Plan
         account if the Participant dies prior to the exercise of the
         Participant's Purchase Right. If a married Participant designates a
         beneficiary other than the Participant's spouse, the effectiveness
         of such designation shall be subject to the consent of the
         Participant's spouse. A Participant may change his or her
         beneficiary designation at any time by written notice to the Company.

20.2     ABSENCE OF BENEFICIARY DESIGNATION. If a Participant dies without an
         effective designation pursuant to Section 20.1 of a beneficiary who
         is living at the time of the Participant's death, the Company shall
         deliver any shares or cash credited to the Participant's Plan
         account to the Participant's legal representative.

21.      NOTICES.

                  All notices or other communications by a Participant to the
         Company under or in connection with the Plan shall be deemed to have
         been duly given when received in the form specified by the Company
         at the location, or by the person, designated by the Company for the
         receipt thereof.

22.      AMENDMENT OR TERMINATION OF THE PLAN.

                  The Board may at any time amend or terminate the Plan,
         except that (a) no such amendment or termination shall affect
         Purchase Rights previously granted under the Plan unless expressly
         provided by the Board and (b) no such amendment or termination may
         adversely affect a Purchase Right previously granted under the Plan
         without the consent of the Participant, except to the extent
         permitted by the Plan or as may be necessary to qualify the Plan as
         an employee stock purchase plan pursuant to Section 423 of the Code
         or to comply with any applicable law, regulation or rule. In
         addition, an amendment to the Plan must be approved by the
         stockholders of the Company within twelve (12) months of the
         adoption of such amendment if such amendment would authorize the
         sale of more shares than are then authorized for issuance under the
         Plan or would change the definition of the corporations that may be
         designated by the Board as Participating Companies.

         IN WITNESS WHEREOF, the undersigned Secretary of the Company
         certifies that the foregoing Finisar Corporation 1999 Employee Stock
         Purchase Plan was duly adopted by the Board of Directors of the
         Company on September 9, 1999.




                                        /s/ Stephen Workman
                                        ------------------------------------
                                        Secretary