Opnext, Inc. Nonqualified Stock Option Agreement
Exhibit 10.4a
Sr. Executives
Opnext, Inc.
THIS AGREEMENT (the “Agreement”), dated as of , between Opnext, Inc., a
Delaware corporation (hereinafter called the “Company”), and (hereinafter called the
“Participant”):
R E C I T A L S:
WHEREAS, the Company has adopted the Opnext, Inc. 2001 Long-Term Stock Incentive Plan (the
“Plan”), which Plan is incorporated herein by reference and made a part of this Agreement.
Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and
WHEREAS, the Committee has determined that it would be in the best interests of the Company
and its stockholders to grant the option provided for herein (the “Option”) to the Participant
pursuant to the Plan and the terms set forth herein, and did so grant such Option on
(the “Date of Grant”) to the Participant.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:
1. Grant of the Option. The Company hereby grants to the Participant the right and
option (the “Option”) to purchase, on the terms and conditions hereinafter set forth, all or any
part of an aggregate of Shares, subject to adjustment as set forth in the Plan. The
purchase price of the Shares subject to the Option shall be
$____ per Share (the “Exercise
Price”). The Option is intended to be a non-qualified stock option, and is not intended to be
treated as an option that complies with Section 422 of the Internal Revenue Code of 1986, as
amended.
2. Vesting.
(a) The vesting schedule of the Option as of the Date of Grant provided that, subject to the
Participant’s continued employment with the Company, the Option would vest and become exercisable
with respect to one-fourth of the Shares initially covered by the Option on each of
20___, 20___, 20___and 20___. As of the date of this Agreement, three-fourths of the Shares initially
covered by the Option are vested and exercisable. Subject to the Participant’s continued
employment with the Company, the Option shall vest and become exercisable with respect to the
remaining one-fourth of the Shares initially covered by the Option on , 20___.
At any time, the portion of the Option that has become vested and exercisable as described
above (or pursuant to Section 2(c) below) is hereinafter referred to as the “Vested Portion”.
(b) If the Participant’s employment with the Company is terminated by the Company without
Cause (as defined in Section 3), by the Participant for Good Reason (as defined in Section 3) or
upon expiration of the Initial Term (as defined in the Participant’s employment agreement with the
Company) due to the Company providing written notice to the Participant of non-renewal (as
described in the Participant’s employment agreement with the Company), the Option (i) shall vest
with respect to the portion of the Option that otherwise would have become vested within the 12
months immediately succeeding such termination of employment, and (ii) to the extent not then
vested, shall be canceled by the Company without consideration and the Vested Portion of the Option
shall remain exercisable for the period set forth in Section 3(a).
(c) If the Participant’s employment with the Company is terminated by reason of the
Participant’s death or Disability (as defined in Section 3), the Option shall, to the extent not
then vested, become fully vested and such Vested Portion shall remain outstanding for the period
set forth in Section 3(a).
(d) If the Participant’s employment with the Company is terminated for any reason not
described in Sections 2(b) or 2(c), the Option shall, to the extent not then vested, be canceled by
the Company without consideration and the Vested Portion of the Option shall remain exercisable for
the period set forth in Section 3(a).
(e) Notwithstanding any other provisions of this Agreement to the contrary, in the event that
the Participant’s employment is terminated by the Company and its Subsidiaries without Cause or by
the Participant for Good Reason during the six-month period immediately following a Change of
Control (as defined below), the Option shall, to the extent not then vested and not previously
canceled, immediately become fully vested and exercisable. For purposes of this Agreement, “Change
of Control” shall mean the occurrence of any of the following: (i) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Company to any “person” or “group” (as such terms are used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act (as defined in the Plan)) other than the
Permitted Holders (as defined below), (ii) any person or group, other than the Permitted Holders,
is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a person shall be deemed to have “beneficial ownership” of all shares that any such
person has the right to acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 60% of the total voting power of the voting
stock of the Company, including by way of merger, consolidation or otherwise, (iii) the
consummation of any transaction or series of transactions pursuant to which the Company is merged
or consolidated with any other company, other than a transaction which would result in the
shareholders of the Company (and their Affiliates (as defined in the Plan)) immediately prior
thereto continuing to own (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such transaction
or (iv) during any period of two consecutive years, individuals who at the beginning
of such period constituted the Board (as defined in the Plan) (together with any new directors
whose election by such Board or whose nomination for election by the shareholders of the Company
was approved by a vote of a majority of the directors of the Company, then still in office, who
were either directors at the beginning of such period or whose election or nomination
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for election
was previously so approved) cease for any reason to constitute a majority of the Board, then in
office. “Permitted Holders” shall mean, as of the date of determination, any and all of (i)
Hitachi, Ltd. and any of its Affiliates, (ii) Clarity Partners, L.P. and any of its Affiliates
(iii) Marubeni Corporation and any of its Affiliates and (iv) any person of which Clarity Partners,
L.P., Hitachi Ltd., Marubeni Corporation and any of their respective affiliates beneficially own,
in the aggregate, more than 40% of the total voting power of the voting securities.
3. Exercise of Option.
(a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, the
Participant may exercise all or any part of the Vested Portion of the Option at any time prior to
the earliest to occur of:
(i) the tenth anniversary of the Date of Grant;
(ii) one year following the date of the Participant’s termination of employment due to
death or Disability;
(iii) three months following the date of the Participant’s termination of employment by
the Company without Cause or by the Participant for Good Reason; and
(iv) the date of the Participant’s termination of employment by the Company for Cause
or by the Participant without Good Reason.
For purposes of this Agreement:
“Cause” shall mean “Cause” as defined in any employment agreement then in effect between the
Participant and the Company or if not defined therein or, if there shall be no such agreement, (i)
Participant’s engagement in misconduct which is materially injurious to the Company or any of its
Affiliates, (ii) Participant’s continued failure to substantially perform his duties to the
Company or any of its Subsidiaries, (iii) Participant’s repeated dishonesty in the performance of
his duties to the Company or any of its Subsidiaries, (iv) Participant’s commission of an act or
acts constituting any (x) fraud against, or misappropriation or embezzlement from the Company or
any of its Affiliates, (y) crime involving moral turpitude, or (z) offense that could result in a
jail sentence of at least 30 days or (v) Participant’s material breach of any confidentiality,
non-solicitation, non-competition or inventions covenant entered into between the Participant and
the Company or any of its Subsidiaries. The determination of the existence of Cause shall be made
by the Committee in good faith, which determination shall be conclusive for purposes of this
Agreement;
“Disability” shall mean “disability” as defined in any employment agreement then in effect
between the Participant and the Company or if not defined therein or if there shall
be no such agreement, as defined in the Company’s long-term disability plan as in effect from
time to time, or if there shall be no plan or if not defined therein, the Participant’s becoming
physically or mentally incapacitated and consequent inability for a period of six (6) months in
any twelve (12) consecutive month period to perform his duties to the Company; and
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“Good Reason” shall mean “Good Reason” as defined in any employment agreement then in effect
between the Participant and the Company or if not defined therein or, if there shall be no such
agreement, (i) a material and substantial diminution of the Participant’s duties or
responsibilities or (ii) a reduction by the Company of the Participant’s base salary or target
bonus range; provided that the Participant must (x) provide the Company written notice
within 20 days after the occurrence of an event constituting Good Reason, after which the Company
shall have 20 days from receipt of such notice to cure such event constituting Good Reason and
(ii) if the Company fails to so cure, resign for such Good Reason within 30 days from the
expiration of the cure period.
(b) Method of Exercise.
(i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by
delivering to the Company at its principal office written notice of intent to so exercise;
provided that, the Option may be exercised with respect to whole Shares only. Such
notice shall specify the number of Shares for which the Option is being exercised and shall
be accompanied by payment in full of the Exercise Price. The payment of the Exercise Price
may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the Participant
(which are not the subject of any pledge or other security interest and which have been
owned by the Participant for at least 6 months) or (y) at any time that the Shares are
publicly traded on a nationally recognized stock exchange, through delivery of irrevocable
instructions to a broker (as selected or approved by the Committee) to sell the Shares
otherwise deliverable upon the exercise of the Option and to deliver promptly to the Company
an amount equal to the aggregate exercise price, or by a combination of the foregoing,
provided that the combined value of all cash and cash equivalents and the Fair Market Value
of any such Shares so tendered to the Company as of the date of such tender is at least
equal to such aggregate exercise price.
(ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary,
the Option shall be exercised in accordance with any registration or qualification of the
Option or the Shares under applicable state and federal securities or other laws, or under
any ruling or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine to be necessary or advisable.
(iii) Upon the Company’s determination that the Option has been validly exercised as to
any of the Shares, the Company shall issue certificates in the Participant’s name for such
Shares. However, the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates to him, any loss of the
certificates, or any mistakes or errors in the issuance of the certificates or in the
certificates themselves.
(iv) In the event of the Participant’s death, the Vested Portion of the Option shall
remain exercisable by the Participant’s executor or administrator, or the person or persons
to whom the Participant’s rights under this Agreement shall pass by will or by the laws of
descent and distribution as the case may be, to the extent set forth in Section 3(a). Any
heir or legatee of the Participant shall take rights herein granted subject to the terms and
conditions hereof.
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(c) No Right to Exercise. Notwithstanding the foregoing with respect to any
termination of employment, the Vested Portion of the Option may not be exercised pursuant to this
Section 3 if the Company in its sole discretion determines that the Participant has, at any time
during the term of employment or following termination of employment, violated the terms of any
agreement with the Company or a Subsidiary regarding competition with the business of the Company
or any Subsidiary, interference with contractual or business relationships of the Company or any
Subsidiary, solicitation of employees, officers, partners, agents, or consultants of the Company or
a Subsidiary or other similar covenant. In the event that a Participant violates the terms of any
such agreement, the Company may cause such Participant to forfeit all of his or her outstanding
Options and disgorge any gain realized upon the exercise of any Option within the six-month period
preceding the violation.
4. No Right to Continued Employment. Neither the Plan nor this Agreement shall be
construed as giving the Participant the right to be retained in the employ of, or in any consulting
relationship to, the Company or any Affiliate. Further, the Company or an Affiliate may at any
time dismiss the Participant or discontinue any consulting relationship, free from any liability or
any claim under the Plan or this Agreement, except as otherwise expressly provided herein.
5. Legend on Certificates. The certificates representing the Shares purchased by
exercise of the Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and
any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on
any such certificates to make appropriate reference to such restrictions.
6. Transferability. The Option may not be transferred or assigned by the Participant
otherwise than by will or by the laws of descent and distribution, and any such purported transfer
or assignment shall be void and unenforceable against the Company or any- Affiliate; provided that
the designation of a beneficiary shall not constitute a transfer or assignment. No such permitted
transfer of the Option to heirs or legatees of the Participant shall be effective to bind the
Company unless the Committee shall have been furnished with written notice thereof and a copy
of such evidence as the Committee may deem necessary to establish the validity of the transfer and
the acceptance by the transferee or transferees of the terms and conditions hereof.
7. Right of Repurchase.
(a) The Repurchase Right. Upon the termination of a Participant’s service as a
director, officer, consultant or employee of the Company and its Subsidiaries for any reason, all
Shares issued (before or after termination of service) pursuant to exercise of the Option (the
“Option Shares”), whether held by the Participant or one or more of his transferees, will, prior to
an initial public offering by the Company of the Shares, be subject to repurchase by the Company at
its election pursuant to the terms and conditions set forth in this Section 7 (the “Repurchase
Right”).
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(b) Repurchase Price. The “Repurchase Price” for all Option Shares shall be the Fair
Market Value for such Option Shares.
(c) Exercise of Repurchase Option. The Company may elect to purchase all or any
portion of the Option Shares by delivering written notice (the “Repurchase Notice”) to the holder
or holders of such Option Shares within the notice period commencing on the later of the date that
is 6 months and 1 day after the Participant’s purchase of such Option Shares or such Participant’s
termination of employment or service. The Repurchase Notice shall set forth the number of Option
Shares to be acquired from each such holder, the aggregate consideration to be paid for such Option
Shares, and the time and place for the closing of the repurchase (which shall occur not less than 5
and not more than 30 days after the giving of the Repurchase Notice).
(d) Assignment of the Company’s Repurchase Right. The Company will not have the right
to assign all or any portion of its Repurchase Right without the consent of Clarity Partners, L.P.
(so long as Clarity Partners, L.P. or one of its affiliates has the right to appoint at least one
director to the Board) and Hitachi, Ltd.
(e) Closing of the Repurchase. At the closing of the repurchase, the holders of
Option Shares shall deliver all certificates evidencing the Option Shares to be repurchased
(accompanied by duly executed stock powers) to the Company (and/or any assignees of the Company’s
Repurchase Right), and the Company (and/or any assignees) shall pay for the Option Shares to be
purchased pursuant to the Repurchase Right by delivery of a check or wire transfer of immediately
available funds in the aggregate amount of the Repurchase Price for such Option Shares; provided
that the Company may pay the Repurchase Price for such Option Shares by offsetting amounts
outstanding under any indebtedness or obligations owed by the Participant to the Company. The
holders of Option Shares to be repurchased shall, at the Company’s request, provide customary
representations and warranties with respect to such holder’s good title to the Option Shares, free
and clear of any liens or encumbrances.
(f) Restrictions. Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Option Shares by the Company shall be subject to applicable
restrictions contained in the Delaware corporation laws and in the Company’s and its
Subsidiaries’ debt and equity financing agreements. If any such restrictions prohibit the
repurchase of Option Shares hereunder which the Company is otherwise entitled or required to make,
the time periods provided in this Section 7 shall be suspended, and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.
8. Withholding.
(a) The Participant may be required to pay to the Company or any Affiliate and the Company or
any Affiliate shall have the right and is hereby authorized to withhold from any payment due or
transfer made under the Option or under the Plan or from any compensation or other amount owing to
a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any
applicable withholding taxes in respect of the Option, its
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exercise, or any payment or transfer
under the Option or under the Plan and to take such action as may be necessary in the option of the
Company to satisfy all obligations for the payment of such taxes.
(b) Without limiting the generality of clause (a) above, the Participant may satisfy, in whole
or in part, the foregoing withholding liability by delivery of Shares owned by the Participant
(which are not subject to any pledge or other security interest and which have been owned by the
Participant for at least 6 months) with a Fair Market Value equal to such withholding liability or
by having the Company withhold from the number of Shares otherwise issuable pursuant to the
exercise of the option a number of Shares with a Fair Market Value equal to such withholding
liability.
9. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of
the Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.
10. Notices. Any notice necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the Company and to the
Participant at the address appearing in the personnel records of the Company for the Participant or
to either party at such other address as either party hereto may hereafter designate in writing to
the other. Any such notice shall be deemed effective upon receipt thereof by the addressee.
11. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS
OF LAW.
12. Option Subject to Plan. By entering into this Agreement the Participant agrees and acknowledges that the
Participant has received and read a copy of the Plan. The Option is subject to the Plan. The
terms and provisions of the Plan as it may be amended from time to time are hereby incorporated
herein by reference. In the event of a conflict between any term or provision contained herein and
a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and
prevail.
13. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
| OPNEXT, INC. | ||||
| Title: | ||||
| PARTICIPANT |
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