Exhibit 10.7
OPNEXT, INC.
000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
TERMS OF AGREEMENT
1. Employer: OpNext, Inc. ("OpNext").
2. Employee: Xxxxx X. Xxxxx ("Executive").
3. Position and Duties: Executive shall be the Chief Executive Officer and
President of OpNext. Executive shall report directly
to the Board of Directors of OpNext (the "BOARD").
All other senior executives of OpNext shall report to
Executive. Executive shall exercise such
responsibilities and perform such duties as directed
from time to time by the Board.
4. Base Salary: $400,000 per annum.
5. Annual Bonus: Executive will be eligible for a target bonus equal
to 50%-60% of Executive's base salary. Bonuses are
awarded in the sole discretion of the Board based on
OpNext's Annual Performance Bonus Plan as established
by the Board.
6. Opnext Stock Options: On the Closing Date of that certain Amended and
Restated Stock Purchase Agreement by and among
OpNext, Hitachi, Ltd. ("HITACHI"), Clarity OpNext
Holdings I, LLC, Clarity OpNext Holdings II, LLC and
Clarity Partners, L.P., dated as of July 31, 2001,
Executive will receive options to acquire 3,000,000
shares of Class B Common Stock of OpNext at a strike
price of $8.34 per share (the "OPNEXT STOCK
OPTIONS"). The OpNext Stock Options shall be subject
to vesting as follows: 1/4 of the OpNext Stock
Options shall vest on the first anniversary of the
Employment Start Date (as defined below); 1/4 of the
OpNext Stock Options shall vest on the second
anniversary of the Employment Start Date; 1/4 of the
OpNext Stock Options shall vest on the third
anniversary of the Employment Start Date; and 1/4 of
the OpNext Stock Options shall vest on the fourth
anniversary of the Employment Start Date (it being
understood that in the event Executive's employment
is terminated at the conclusion of the Initial Term
(as defined in Section 8 hereof) for reasons other
than for Cause, the final 1/4 of Executive's OpNext
Stock Options shall vest on the fourth anniversary of
the Employment Start Date). Each anniversary of the
Employment Start Date shall be referred to herein as
an "Anniversary Date."
Any unvested OpNext Stock Options shall automatically
cancel upon Executive's termination of employment
with OpNext; PROVIDED, HOWEVER, in the event that
Executive's employment is terminated without Cause
(as defined in Section 13 hereof) or for Good Reason
(as defined in
Section 12 hereof) on any date other than an
Anniversary Date, Executive's 1/4 installment of
OpNext Stock Options that was scheduled to vest on
the next Anniversary Date following Executive's
termination of employment shall vest on such upcoming
Anniversary Date. In addition, in the event that
Executive's employment is terminated by reason of
Executive's death or Disability (as defined in
Section 14 hereof), Executive's OpNext Stock Options
that have not previously vested shall immediately
vest. The OpNext Stock Options will be subject to the
additional terms and conditions as will be set forth
in OpNext's Stock Incentive Plan (the "STOCK
INCENTIVE PLAN") and in a non-qualified stock option
agreement (the "STOCK OPTION AGREEMENT") which
Executive will execute in connection with receiving
the OpNext Stock Options.
7. Employment Start Date: For purposes of this Agreement, Executive's
employment start date will be deemed to be November
1, 2000.
8. Employment Term: The initial term (the "INITIAL TERM") of Executive's
employment with OpNext shall be for a period of
forty-eight (48) months, commencing on the Employment
Start Date and ending on October 31, 2004, unless
renewed as set forth herein. Executive's employment
will be renewed automatically upon expiration of the
Initial Term for successive one-year periods (each
such period, a "SUCCESSIVE TERM"), unless not less
than sixty (60) days prior to the end of the Initial
Term or any Successive Term (as the case may be),
either Executive or OpNext provides written notice to
the other of such party's intention not to renew the
employment.
9. Benefits: Executive will receive benefits in accordance with
OpNext company policy.
10. Vacation: Executive will receive 4 weeks paid vacation time.
11. Annual Performance Executive's job performance shall be reviewed
Reviews: annually by the Board. In conjunction with such
annual performance review process, Executive will be
eligible for salary increases, cash bonus awards (the
bonus target range is set forth under Section 5
above) and additional stock option awards, which will
be subject to company policy and vesting
arrangements. Salary increases, cash bonuses and
stock option awards will be determined by the Board
in its sole discretion based on the overall
performance of OpNext as well as Executive's
individual performance. Stock options, salary
increases and bonuses are awarded at the discretion
of the Board.
12. Termination Without In the event Executive is terminated without Cause
Cause or With Good (as defined below) or Executive terminates his
Reason: employment for Good Reason (as defined below) prior
to the conclusion of the Initial Term, Executive
shall receive as severance an amount equal to one
times his annual base salary.
"Good Reason" as used herein shall mean:
2
(i) a material and substantial diminution of
Executive's duties or responsibilities or
Executive's removal as Chief Executive
Officer of OpNext; or
(ii) a reduction by OpNext of Executive's base
salary or target bonus range as set forth in
Section 5 above.
Executive must provide written notice to OpNext
within 20 days after the occurrence of an event
constituting Good Reason. OpNext shall have 20 days
after receipt of such written notice to cure. If
OpNext fails to cure and Executive resigns within 30
days after the end of the 20-day cure period, then
such resignation shall constitute resignation for
Good Reason.
Except as set forth above, upon termination without
Cause or resignation for Good Reason, Executive shall
not be entitled to receive any further compensation
or payments hereunder and any unvested stock options
shall immediately cancel. Vested stock options shall
be subject to the provisions of Executive's Stock
Option Agreement and the Stock Incentive Plan.
13. Termination "Cause" as utilized herein shall mean:
For Cause:
(i) the commission of a felony or the commission
of any other act or omission involving
dishonesty or fraud with respect to OpNext
or any of its subsidiaries or affiliates or
any of their customers or suppliers; or
(ii) conduct tending to bring OpNext or any of
its subsidiaries or affiliates into
substantial public disgrace or disrepute; or
(iii) breach of the Confidentiality Agreement
referred to below; or
(iv) fraud or embezzlement with respect to OpNext
or any of its subsidiaries or affiliates; or
(v) gross negligence or willful misconduct with
respect to OpNext or any of its subsidiaries
or affiliates; or
(vi) repeated failure to perform Executive's
duties as directed by the Board.
Upon notice by OpNext to Executive of a termination
for Cause, the "Termination Date" shall be the date
on which such notice is mailed or hand-delivered, or
as otherwise specified in the notice of termination,
to Executive. Upon termination for Cause, resignation
by Executive without Good Reason or expiration of the
Initial Term or any Successive Term (as the case may
be), Executive shall not be entitled to receive any
further compensation or payments hereunder (except
for Executive's Base Salary
3
relating to the period of time prior to the
Termination Date). Upon termination for Cause, any
unvested OpNext Stock Options shall immediately
cancel and terminate as of the Termination Date.
Vested stock options shall be subject to the
provisions of Executive's Stock Option Agreement and
the Stock Incentive Plan.
14. Disability: If, by reason of any physical or mental injury,
illness or incapacity, Executive is unable to
effectively perform his duties and responsibilities
as determined by the Board ("DISABILITY") for more
than 180 days during any 12-month period, Executive's
employment with OpNext will be terminated. In
addition, in the event of Executive's Disability for
more than 30 consecutive days, Executive shall only
be entitled to receive such compensation as is
provided under OpNext's disability benefit plans. If
Executive's employment is terminated by reason of a
Disability as set forth herein, any unvested OpNext
Stock Options shall immediately vest as set forth in
Section 6 hereof and all vested OpNext Stock Options
shall be subject to the provisions of this Agreement,
Executive's Stock Option Agreement and the Stock
Incentive Plan.
15. Confidentiality Executive agrees, at OpNext's request, to enter into
Agreement: a confidentiality agreement with OpNext (the
"CONFIDENTIALITY AGREEMENT").
16. Restrictions: Executive represents and warrants to OpNext that
there are no restrictions or agreements or
limitations on Executive's right or ability to enter
into this Agreement or perform the terms set forth
herein, including without limitation any
restrictions, agreements or limitations to which
Executive is subject in connection with his
employment with Lucent Technologies.
17. Confidential Executive acknowledges that during the course of
Information: performing services for OpNext, Executive will have
substantial access to trade secrets and other
confidential information of OpNext and its
subsidiaries and affiliates and will enter into the
Confidentiality Agreement to restrict the disclosure
by Executive of such trade secrets and other
confidential information.
18. Noncompetition: Executive agrees that he will not, during his
employment with OpNext, and for a period of six (6)
months following the termination thereof (the
"NONCOMPETE Period"), directly or indirectly engage
or participate, either as principal, agent, employee,
employer, consultant, stockholder, co-partner or in
any other individual or representative capacity
whatsoever, in the conduct or management of, or own
or have any stock or other proprietary or financial
interest in, any business that competes with the
business carried on or planned by OpNext or its
subsidiaries at the time of the termination of his
employment, unless he shall have obtained the prior
written consent of OpNext, except that Executive
shall be permitted (i) to own up to two percent (2%)
of the capital stock of corporations whose securities
are publicly-owned and regularly traded on any
national exchange or in the over-the counter market;
and (ii) to own up to two
4
percent (2%) of the voting securities of companies
that are privately held, provided that in no event
shall Executive possess any managerial or
decision-making authority in such company or have the
ability to influence the management or affairs of
such company.
19. Nonsolicitation: During the Noncompete Period, Executive shall not
directly or indirectly through another entity (i)
induce or attempt to induce any employee of OpNext or
any of its subsidiaries or affiliates to leave the
employ of OpNext or any of its subsidiaries or
affiliates, or in any way interfere with the
relationship between OpNext and any of its
subsidiaries and affiliates and any employee thereof,
(ii) induce or attempt to induce any customer,
supplier, licensee or other business relation of
OpNext or any of its subsidiaries or affiliates to
cease doing business with OpNext or such subsidiary
or affiliate or in any way interfere with the
relationship between any such customer, supplier,
licensee or business relation and OpNext and any
subsidiary or affiliate, or (iii) directly or
indirectly acquire or attempt to acquire an interest
in any business relating to the business of OpNext or
any of its subsidiaries or affiliates and with which
OpNext or any of its subsidiaries or affiliates has
entertained discussions or has requested and received
information relating to the acquisition of such
business by OpNext or any of its subsidiaries or
affiliates in the two-year period immediately
preceding the date of Executive's termination of
employment.
20. Withholdings: All payments set forth herein which are subject to
withholding shall be made less any required
withholdings.
21. Binding Arbitration: Any controversy arising out of or relating to this
Agreement or the Confidentiality Agreement shall be
settled by binding arbitration in New York City, New
York in accordance with the Commercial Arbitration
Rules of the American Arbitration Association. The
award rendered in any such proceeding shall be final
and binding, and judgment upon the award may be
entered in any court having jurisdiction thereof. The
costs of any such arbitration proceedings shall be
borne equally by OpNext and Executive. Neither party
shall be entitled to recover attorneys' fee or costs
expended in the course of such arbitration or
enforcement of the award rendered thereunder.
22. Governing Law: All issues and questions concerning the construction,
validity, enforcement and interpretation of this
Agreement shall be governed by, and construed in
accordance with, the internal laws of the State of
New Jersey, without giving effect to any choice of
law or conflict of law provision or rule (whether of
the State of New Jersey or any other jurisdiction)
that would cause the application of the laws of any
jurisdiction other than the State of New Jersey.
5
23. Notices: All notices in connection herewith or provided for
hereunder shall be validly given or made only if made
in writing and delivered personally or mailed by
registered or certified mail, return receipt
requested, postage prepaid, to the party entitled or
required to receive the same, as follows:
If to Executive, addressed to:
Xxxxx X. Xxxxx
000 Xxxxxx Xxxxxx
Xxxxx, Xxx Xxxxxx 00000
If to the Company, addressed to:
OpNext. Inc.
000 Xxxxxxxxxx Xxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Operating Officer
* * * * *
6
SIGNATURE PAGE TO TERMS OF AGREEMENT
Please indicate your agreement with the foregoing by signing in the
space indicated below.
OPNEXT, INC.
By: /s/ X. XXXXXXX
-------------------------
Xxxxxxx Xxxxxxx
Chairman of the Board
AGREED TO AND ACCEPTED:
/s/ XXXXX X. XXXXX
-----------------------
Name: Xxxxx X. Xxxxx
AMENDMENT NO. 1
TO
TERMS OF AGREEMENT
AMENDMENT NO. 1, dated November 1, 2004 (the "Amendment"), is
made by and between Opnext, Inc. (the "Company") and Xxxxx X. Xxxxx (the
"Executive").
WHEREAS, the Company and Executive entered into an agreement
entitled the Terms of Agreement as of July 31, 2001 (the "Terms of Agreement");
WHEREAS, the Company and Executive desire to amend the Terms
of Agreement as set forth herein; and
NOW, THEREFORE, for good and valuable consideration, the
Company and Executive hereby agree that the Terms of Agreement are amended as
follows:
1. DEFINED TERMS. Except for those terms defined above, the
definition of capitalized terms used in this Amendment are as provided in the
Terms of Agreement.
2. AMENDMENT TO PARAGRAPH 4. Paragraph 4 is hereby deleted and
replaced with the following:
"$400,000 per annum during the Initial Term (as defined below)
and the Successive Term (as defined below)."
3. AMENDMENT TO PARAGRAPH 6. Paragraph 6 is hereby deleted and
replaced with the following:
"6. Award:
6.1 OpNext Stock Option: On the Closing Date of that certain
Amended and Restated Stock Purchase Agreement by and among
OpNext, Hitachi, Ltd. ("HITACHI"), Clarity OpNext Holdings I,
LLC, Clarity OpNext Holdings II, LLC and Clarity Partners,
L.P., dated as of July 31, 2001, Executive entered into the
Stock Option Agreement pursuant to which he holds options to
acquire 3,000,000 shares of Class B Common Stock of OpNext at
a strike price of $5.00 per share (the "OPNEXT STOCK
OPTIONS"). The OpNext Stock Options shall be subject to
vesting as follows: 1/4 of the OpNext Stock Options shall vest
and become exercisable on the first anniversary of the
Employment Start Date (as defined below); 1/4 of the OpNext
Stock Options shall vest and become exercisable on the second
anniversary of the Employment Start Date; 1/4 of the OpNext
Stock Options shall vest and become exercisable on
the third anniversary of the Employment Start Date; and 1/4 of
the OpNext Stock Options shall vest and become exercisable on
the fourth anniversary of the Employment Start Date (it the
second anniversary of the Employment Start Date; 1/4 of the
OpNext Stock Options shall vest and become exercisable on the
third anniversary of the Employment Start Date; and 1/4 of the
OpNext Stock Options shall vest and become exercisable on the
fourth anniversary of the Employment Start Date (it being
understood that in the event Executive's employment is
terminated at the conclusion of the Initial Term (as defined
in Section 8 hereof) for reasons other than for Cause, the
final 1/4 of Executive's OpNext Stock Options shall vest on
the fourth anniversary of the Employment Start Date).
Any unvested OpNext Stock Options shall automatically cancel
upon Executive's termination of employment with OpNext;
PROVIDED, HOWEVER, in the event that Executive's employment is
terminated without Cause (as defined in Section 13 hereof) or
for Good Reason (as defined in Section 12 hereof) on any date
other than an anniversary date of the Employment Start Date,
Executive's 1/4 installment of OpNext Stock Options that was
scheduled to vest on the next anniversary date of the
Employment Start Date following Executive's termination of
employment shall vest on such upcoming anniversary date of the
Employment Start Date. In addition, in the event that
Executive's employment is terminated by reason of Executive's
death or Disability (as defined in Section 14 hereof),
Executive's OpNext Stock Options that have not previously
vested shall immediately vest. The OpNext Stock Options will
be subject to the additional terms and conditions as will be
set forth in OpNext's Stock Incentive Plan (the "PLAN") and in
a non-qualified stock option agreement (the "STOCK OPTION
AGREEMENT") which Executive will execute in connection with
receiving the OpNext Stock Options.
6.2 OpNext New Stock Option: On or about November 1, 2004 (the
"GRANT DATE OF THE NEW STOCK OPTION"), OpNext will grant
Executive an option to purchase 450,000 shares of Class B
Common Stock of OpNext at a strike price of $5.00 per share
(the "NEW STOCK OPTION") under and subject to the terms and
conditions of the Plan. Subject to Executive's continued
employment with the Company through such dates, the New Stock
Option shall vest and become exercisable as follows: 1/3 of
the New Stock Option shall vest and become exercisable on the
first anniversary of the Grant Date of the New Stock Option;
1/3 of the New Stock Option shall vest and become exercisable
on the second anniversary of the Grant Date of the New Stock
Option; and 1/3 and become exercisable of the New Stock Option
shall vest on the third anniversary of the Grant Date of the
New Stock Option (it being understood that in the event
Executive's employment is terminated at the conclusion of the
Successive Term (as defined in Section 8 hereof) for reasons
other than for Cause, the final 1/3 of Executive's OpNext
Stock Options shall vest on the third anniversary of the Grant
Date of the New Stock Option).
2
Any unvested New Stock Option shall automatically cancel upon
Executive's termination of employment with OpNext; PROVIDED,
HOWEVER, in the event that Executive's employment is
terminated without Cause (as defined in Paragraph 13 hereof)
or for Good Reason (as defined in Paragraph 12 hereof) on any
date other than an anniversary date of the Grant Date of the
New Stock Option, Executive's 1/3 installment of New Stock
Option that was scheduled to vest on the next anniversary date
of the Grant Date of the New Stock Option following
Executive's termination of employment shall instead vest and
become exercisable on the date of such upcoming anniversary
date of the Grant Date of the New Stock Option. In addition,
in the event that Executive's employment is terminated by
reason of Executive's death or Disability (as defined in
Paragraph 14 hereof), Executive's New Stock Option shares that
have not previously vested and become exercisable shall
immediately vest and become exercisable. The New Stock Option
will be subject to the additional terms and conditions as will
be set forth in the Plan and in a non-qualified stock option
agreement (the "NEW STOCK OPTION AGREEMENT") which Executive
will execute in connection with receiving the New Stock
Option."
6.3 OpNext Restricted Stock Award: On or about November 1,
2004, OpNext will grant Executive a Restricted Stock Award
(the "AWARD") for 200,000 Class B common shares, under and
subject to the terms and conditions of, the Plan. Subject to
Executive's continued employment with the Company through such
dates, the Award will vest (meaning that Executive will earn
the right to retain the Award shares without restriction
(except such restrictions on resale as may apply under
applicable securities laws and any Xxxxxxx Xxxxxxx Policy that
the Company may then have in place)) as to 100,000 shares on
each of the first and second anniversaries of the Company's
initial public offering (such second anniversary, the "FULLY
VESTED DATE"). If Executive's employment with the Company
terminates prior to the Fully Vested Date (including as a
result of expiration of the Initial Term or any Successive
Term as set forth in Paragraph 8 below), any unvested Award
shares as of such termination date will be forfeited to the
Company in their entirety; PROVIDED, HOWEVER, that in the
event that Executive's employment is terminated without Cause
(as defined in Paragraph 13 hereof) or for Good Reason (as
defined in Paragraph 12 hereof), or due to his death or
Disability (as defined in Paragraph 14 below), then no
forfeiture of such shares will result but instead Executive
shall be treated as having been fully vested in all Award
shares as of the date of such termination (although if such
vesting occurs prior to the Company's initial public offering,
the Shares shall be subject to certain restrictions,
3
including a 180-day lock-up agreement in connection with the
Company's initial public offering and the Company's right to
repurchase such shares in connection with termination of his
employment). Executive will be required to execute, and the
Award will be subject to, the Company's standard form of
Restricted Stock Agreement used with the Plan."
4. AMENDMENT TO PARAGRAPH 8. Paragraph 8 is hereby deleted and
replaced with the following:
"The initial term (the "INITIAL TERM") of Executive's
employment with OpNext shall be for a period of forty-eight
(48) months, commencing on the Employment Start Date and
ending on October 31, 2004. Executive's employment shall renew
automatically for a period of thirty-six (36) months upon the
expiration of the Initial Term (the "SUCCESSIVE TERM").
Executive's employment will be renewed automatically upon
expiration of the Successive Term for successive one-year
periods (each such period, a "FURTHER SUCCESSIVE TERM") unless
not less than sixty (60) days prior to the end of the
Successive Term or any Further Successive Term, either
Executive or OpNext provides written notice to the other of
such party's intention not to renew the employment."
5. All other provisions of the Terms of Agreement shall remain
unchanged and in full force and effect.
B. STOCK OPTION AGREEMENT:
1. AMENDMENT TO SECTION 3. Sections 3(a)(ii) & 3(a)(iii) of
the Stock Option Agreement are hereby deleted, and Section 3(a)(iv) shall be
renumbered as Section 3(a)(ii).
2. All other provisions of the Stock Option Agreement shall
remain unchanged and in full force and effect.
4
IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed by its duly authorized officer and Executive has executed this
Amendment, each as of the day and year first set forth above.
OPNEXT, INC.
By: /S/ XXXX XXX
-------------------------------
Xxxx Xxx
Chairman
EXECUTIVE
By: /S/ XXXXX X. XXXXX
-------------------------------
Xxxxx X. Xxxxx
President & CEO
5
