Delaware | 3674 | 22-3761205 | ||
(State or Other Jurisdiction
of
Incorporation or Organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
J. Scott Hodgkins, Esq.
Ann Lawrence, Esq. Latham & Watkins LLP 633 West Fifth Street, Suite 4000 Los Angeles, CA 90071 (213) 485-1234 |
Keith F. Higgins, Esq.
Julie H. Jones, Esq. Ropes & Gray LLP One International Place Boston, MA 02110 (617) 951-7000 |
Proposed
Maximum
|
||||||
Aggregate
Offering
|
Amount of
|
|||||
Title of Each Class of Securities To Be Registered | Price(1) (2) | Registration Fee(3) | ||||
Common Stock, par value
$0.01 per share
|
$150,000,000 | $16,050 | ||||
(1) | Includes shares that the underwriters have the option to purchase to cover over-allotments, if any. | |
(2) | Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o) under the Securities Act of 1933. |
(3) | Fee previously paid in connection with the original filing of the Registration Statement. |
The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and it is not soliciting any offers to buy these
securities in any state where the offer or sale is not
permitted.
|
Per
Share
|
Total | |||||||
Initial public offering price
|
$ | $ | ||||||
Underwriting discount
|
$ | $ | ||||||
Proceeds, before expenses, to
Opnext, Inc.
|
$ | $ | ||||||
Proceeds, before expenses, to the
selling stockholders
|
$ | $ |
JPMorgan | CIBC World Markets |
Cowen and Company | Jefferies & Company |
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Issuer
Common stock offered by Opnext
Common stock offered by the selling stockholders
Total common stock offered
Underwriters option to purchase additional shares in this
offering
Common stock to be outstanding after this offering
Use of proceeds
We estimate that the net proceeds from the sale of shares by us
in the offering (based on an offering price of
$ per share, the midpoint of
the estimated price range shown on the cover page of this
prospectus), after deducting estimated underwriting discounts
and commissions and estimated offering expenses payable by us,
will be
$ million. We
will not receive any of the proceeds from sales of common stock
by the selling stockholders in the offering. See Principal
and Selling Stockholders.
Proposed NASDAQ Global Market Symbol
13,296,766 shares of Class B common stock issuable
upon exercise of options outstanding, with a weighted average
exercise price of $4.93 per share;
1,957,750 stock appreciation rights outstanding with a
weighted average exercise price of $5.00 per share; and
6,989,683 shares of Class B common stock reserved for
future grant under our stock incentive plans.
no exercise of the underwriters option to purchase
additional shares;
adoption of our amended and restated certificate of
incorporation and amended and restated bylaws to be effective
prior to the closing of this offering; and
the conversion on a one-for-one basis of our Class A common
stock and our Class B common stock into a single class of
common stock prior to the closing of this offering.
4
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6
Six Months
Three Months
Ended
Ended
September
30,
September
30,
Year Ended
March 31,
(unaudited)
(unaudited)
(In thousands,
except per share data)
$
55,323
$
35,504
$
95,747
$
66,874
$
151,691
$
138,432
$
79,390
36,869
30,987
64,032
58,782
119,626
107,694
73,144
18,454
4,517
31,715
8,092
32,065
30,738
6,246
33.4
%
12.7
%
33.1
%
12.1
%
21.1
%
22.2
%
7.9
%
8,673
9,105
16,518
17,067
33,669
33,251
30,921
9,279
8,036
17,801
16,341
33,116
33,629
33,164
87
1,000
103
1,000
1,065
50
5,886
19,150
53
399
17
247
415
(13,624
)
(2,707
)
(26,369
)
(36,184
)
(36,209
)
(83,122
)
721
1,117
1,480
2,138
4,102
2,138
2,374
38
417
(1,073
)
625
1,886
52
258
1,174
(12,090
)
(2,300
)
(23,606
)
(30,196
)
(34,019
)
80,490
(278
)
1,275
$
1,174
$
(12,090
)
$
(2,300
)
$
(23,606
)
$
(30,474
)
$
(32,744
)
$
(80,490
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
156,025
155,828
155,997
155,826
155,834
155,619
154,148
156,201
155,828
155,997
155,826
155,834
155,619
154,148
5
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September 30,
March 31,
(In thousands)
$
226,380
$
216,826
$
291,912
$
322,540
7,478
7,716
2,245
20,774
117,293
119,663
148,176
177,901
Table of Contents
F-30
II-4
7
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changing product specifications and customer requirements;
unanticipated engineering complexities;
delays in or denials of membership in future MSAs that become
successful, or membership in and product development for MSAs
that do not become successful;
difficulties in hiring and retaining necessary technical
personnel;
difficulties in reallocating engineering resources and
overcoming resource limitations; and
changing market or competitive product requirements.
11
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cease the manufacture, use or sale of the infringing products,
processes or technology;
pay substantial damages for past, present and future use of the
infringing technology;
expend significant resources to develop non-infringing
technology;
pay substantial damages to our customers or end users to
discontinue use or replace infringing technology with
non-infringing technology; or
12
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13
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fluctuations in demand for our products;
the timing, size and product mix of sales of our products;
our ability to manufacture and deliver products to our customers
in a timely and cost-effective manner;
14
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quality control problems in our manufacturing operations;
fluctuations in our manufacturing yields;
length and variability of the sales cycles of our products;
new product introductions and enhancements by our competitors
and ourselves;
changes in our pricing and sales policies or the pricing and
sales policies of our competitors;
our ability to develop, introduce and ship new products and
product enhancements that meet customer requirements in a timely
manner;
unanticipated increase in costs and expenses; and
fluctuations in foreign currency exchange rates.
acquire complementary businesses or technologies;
enhance our operating infrastructure;
hire additional technical and other personnel; or
otherwise pursue our strategic plans and respond to competitive
pressures.
15
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difficulties in integrating the manufacturing, operations,
technologies, products, existing contracts, accounting and
personnel of the target company and realizing the anticipated
synergies of the combined businesses;
difficulties in supporting and transitioning customers, if any,
of the target company;
diversion of financial and management resources from existing
operations;
the price we pay or other resources that we devote may exceed
the value we realize, or the value we could have realized if we
had allocated the purchase price or other resources to another
opportunity or for our existing operations;
risks of entering new markets in which we have limited or no
experience;
potential loss of key employees, customers and strategic
alliances from either our current business or the target
companys business;
assumption of unanticipated problems or latent liabilities, such
as problems with the quality of the target companys
products;
inability to generate sufficient revenue and profitability to
offset acquisition costs;
equity based acquisitions may have a dilutive effect on our
stock; and
inability to successfully consummate transactions with
identified acquisition candidates.
16
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different technical standards or requirements, such as country
or region-specific requirements to eliminate the use of lead;
difficulties in staffing, managing and supporting operations in
more than one country;
difficulties in enforcing agreements and collecting receivables
through foreign legal systems;
fewer legal protections for intellectual property;
fluctuations in foreign economies;
fluctuations in the value of foreign currencies and interest
rates;
domestic and international economic or political changes,
hostilities and other disruptions in regions where we currently
operate or may operate in the future; and
17
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different and changing legal and regulatory requirements in the
jurisdictions in which we currently operate or may operate in
the future.
18
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actual or anticipated fluctuations in our results of operations;
variance in our financial performance from the expectations of
market analysts;
conditions and trends in the markets we serve;
announcements of significant new products by us or our
competitors;
changes in our pricing policies or the pricing policies of our
competitors;
legislation or regulatory policies, practices, or actions;
the commencement or outcome of litigation;
our sale of common stock or other securities in the future, or
sales of our common stock by our principal stockholders;
changes in market valuation or earnings of our competitors;
the trading volume of our common stock;
changes in the estimation of the future size and growth rate of
our markets; and
general economic conditions.
19
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pay a price per share that substantially exceeds the value of
our assets after subtracting liabilities; and
contribute % of the total amount invested
to fund our company, but will own only %
of the shares of common stock outstanding after this offering
and the use of proceeds therefrom.
authorize the issuance of preferred stock that can be created
and issued by our board of directors without prior stockholder
approval, commonly referred to as blank check
preferred stock, with rights senior to those of our common stock;
limit the persons who can call special stockholder meetings;
provide that a supermajority vote of our stockholders is
required to amend some portions of our amended and restated
certificate of incorporation and amended and restated bylaws;
establish advance notice requirements to nominate persons for
election to our board of directors or to propose matters that
can be acted on by stockholders at stockholder meetings;
not provide for cumulative voting in the election of
directors; and
provide for the filling of vacancies on our board of directors
by action of a majority of the directors and not by the
stockholders.
20
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21
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uncertainty in customer forecasts of their demands and other
factors may lead to delays and disruptions in manufacturing;
our customers may not qualify our products and their customers
may not qualify their products;
we do not have long-term volume purchase contracts with our
customers;
we may experience low manufacturing yields or higher than
expected costs;
we depend on a limited number of qualified component suppliers;
failure to continually introduce new products that achieve
market acceptance;
we may lose rights to currently utilized third party
intellectual property or fail to sufficiently protect our own
intellectual property;
demand for optical systems, particularly for 10Gbps network
systems, may not continue to expand; and
our changing relationship with Hitachi.
22
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25
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an actual basis; and
an as adjusted basis, giving effect to the completion of this
offering, including the application of the estimated net
proceeds from this offering described under Use of
Proceeds.
September 30,
2006
(In thousands except
share and
per share data)
$
5,802
$
1,500
60
405,124
(284,085
)
(5,306
)
117,293
$
123,095
$
13,317,266 shares of Class B common stock issuable
upon exercise of outstanding options, with a weighted average
exercise price of $4.93 per share;
1,957,750 outstanding stock appreciation rights with a
weighted average exercise price of $5.00 per share; and
6,969,183 shares of Class B common stock reserved for
future grant under our stock incentive plans.
no exercise of the underwriters option to purchase
additional shares;
adoption of our amended and restated certificate of
incorporation and amended and restated bylaws to be effective
prior to the closing of this offering; and
the conversion on a one-for-one basis of our Class A common
stock and our Class B common stock into a single class of
common stock prior to the closing of this offering.
26
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$
$
$
$
$
Average
Shares
Issued
Total
Consideration
Price Per
156,024,938
%
$
382,892,000
%
$
2.45
15,275,016
%
75,414,254
%
4.94
%
%
%
$
%
$
27
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28
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Six Months
Three Months
Ended
Ended
September
30,
September
30,
Year Ended
March 31,
2006
2005
2006
2005
(In thousands except
per share data)
(unaudited)
(unaudited)
(unaudited)
of operations data:
$
55,323
$
35,504
$
95,747
$
66,874
$
151,691
$
138,432
$
79,390
$
79,915
$
196,263
36,869
30,987
64,032
58,782
119,626
107,694
73,144
74,250
164,301
18,454
4,517
31,715
8,092
32,065
30,738
6,246
5,665
31,962
33.4
%
12.7
%
33.1
%
12.1
%
21.1
%
22.2
%
7.9
%
7.1
%
16.3
%
8,673
9,105
16,518
17,067
33,669
33,251
30,921
35,960
63,390
9,279
8,036
17,801
16,341
33,116
33,629
33,164
36,159
62,270
87
1,000
103
1,000
1,065
50
5,886
1,667
1,701
19,150
53
399
17
247
2,909
1,879
415
(13,624
)
(2,707
)
(26,369
)
(36,184
)
(36,209
)
(83,122
)
(71,030
)
(97,278
)
721
1,117
1,480
2,138
4,102
2,138
2,374
3,426
4,131
38
417
(1,073
)
625
1,886
52
258
71
263
1,174
(12,090
)
(2,300
)
(23,606
)
(30,196
)
(34,019
)
(80,490
)
(67,533
)
(92,884
)
(278
)
1,275
$
1,174
$
(12,090
)
$
(2,300
)
$
(23,606
)
$
(30,474
)
$
(32,744
)
$
(80,490
)
$
(67,533
)
$
(92,884
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
$
(0.45
)
$
(0.62
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
$
(0.45
)
$
(0.62
)
156,025
155,828
155,997
155,826
155,834
155,619
154,148
150,000
150,000
156,201
155,828
155,997
155,826
155,834
155,619
154,148
150,000
150,000
September 30,
March 31,
(In thousands)
(unaudited)
$
226,380
$
216,826
$
291,912
$
322,540
$
365,961
$
432,660
7,478
7,716
2,245
20,774
22,339
6,636
117,293
119,663
148,176
177,901
251,405
340,975
29
Table of Contents
Three Months
Ended
Sept. 30,
June 30,
March 31,
Dec. 31,
Sept. 30,
June 30,
2006
2006
2006
2005
2005
(In thousands except
per share data)
$
55,323
$
40,424
$
46,208
$
38,609
$
35,504
$
31,370
18,454
13,261
13,289
10,684
4,517
3,575
1,174
(3,474
)
(2,779
)
(4,089
)
(12,090
)
(11,516
)
0.01
(0.02
)
(0.02
)
(0.03
)
(0.08
)
(0.07
)
0.01
(0.02
)
(0.02
)
(0.03
)
(0.08
)
(0.07
)
156,025
155,968
155,846
155,836
155,828
155,824
156,201
155,968
155,846
155,836
155,828
155,824
Three Months
Ended
March 31,
Dec. 31,
Sept. 30,
June 30,
(In thousands except
per share data)
$
35,242
$
36,185
$
36,635
$
30,370
8,048
9,471
9,961
3,258
(9,328
)
(4,548
)
(6,731
)
(12,137
)
(0.06
)
(0.03
)
(0.04
)
(0.08
)
(0.06
)
(0.03
)
(0.04
)
(0.08
)
155,813
155,798
155,769
155,093
155,813
155,798
155,769
155,093
30
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AND RESULTS OF OPERATIONS
31
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32
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33
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34
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35
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The time period our stock based awards are expected to remain
outstanding has been determined based on the average of the
original award period and the remaining vesting period in
accordance with the SECs Staff Accounting
Bulletin 107 simplified method. Our expected term
assumption for awards issued during the six month period ended
September 30, 2006 was 6.25 years. As additional
evidence develops after trading of the Companys stock
begins, the expected term assumption will be refined to capture
the relevant trends.
The future volatility of our stock has been estimated based on
the median calculated value of the historical volatility of
companies we believe should be similar in market performance
characteristics as those of our company. Use of comparable
companies is necessary since we do not possess a stock price
history. Our expected volatility assumption for awards issued
during the six month period ended September 30, 2006 was
101.3%. Once trading begins and trends develop, we will begin
using the implied volatility trends of our own pricing history
as our estimate.
A dividend yield of zero has been assumed for awards issued
during the six month period ended September 30, 2006 based
on our actual past experience and that we do not anticipate
paying a dividend on our shares in the near future.
We have based our risk-free interest rate assumption for awards
issued during the six month period ended September 30, 2006
on the implied weighted-average yield of 4.8% available on
U.S. Treasury zero-coupon issues with an equivalent
expected term.
Forfeiture rates for awards issued during these same periods
have been estimated based on the Companys actual
historical forfeiture trends of approximately 10%.
36
Table of Contents
Three Months
Ended September 30,
Six Months Ended
September 30,
2006
2005
2006
2005
2006
2005
2006
2005
(In thousands)
(as percentage
(In thousands)
(as percentage
of sales)
of sales)
(unaudited)
(unaudited)
(unaudited)
$
55,323
$
35,504
100.0
%
100.0
%
$
95,747
$
66,874
100.0
%
100.0
%
36,869
30,987
66.6
%
87.3
%
64,032
58,782
66.9
%
87.9
%
18,454
4,517
33.4
%
12.7
%
31,715
8,092
33.1
%
12.1
%
8,673
9,105
15.7
%
25.6
%
16,518
17,067
17.2
%
25.5
%
9,279
8,036
16.8
%
22.6
%
17,801
16,341
18.6
%
24.4
%
87
1,000
0.1
%
2.8
%
103
1,053
0.1
%
1.6
%
415
(13,624
)
0.8
%
(38.4
)%
(2,707
)
(26,369
)
(2.8
)%
(39.4
)%
721
1,117
1.3
%
3.1
%
1,480
2,138
1.5
%
3.2
%
38
417
0.1
%
1.2
%
(1,073
)
625
(1.1
)%
0.9
%
1,174
(12,090
)
2.1
%
(34.1
)%
(2,300
)
(23,606
)
(2.4
)%
(35.3
)%
0.0
%
0.0
%
0.0
%
0.0
%
$
1,174
$
(12,090
)
2.1
%
(34.1
)%
$
(2,300
)
$
(23,606
)
(2.4
)%
(35.3
)%
37
Table of Contents
38
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39
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40
Table of Contents
Year Ended
March 31,
Year Ended
March 31,
(In thousands)
(as percentage of
sales)
$
151,691
$
138,432
$
79,390
100.0
%
100.0
%
100.0
%
119,626
107,694
73,144
78.9
%
77.8
%
92.1
%
32,065
30,738
6,246
21.1
%
22.2
%
7.9
%
33,669
33,251
30,921
22.2
%
24.0
%
38.9
%
33,116
33,629
33,164
21.8
%
24.3
%
41.8
%
1,464
67
25,283
1.0
%
0.0
%
31.8
%
(36,184
)
(36,209
)
(83,122
)
(23.9
)%
(26.2
)%
(104.7
)%
4,102
2,138
2,374
2.7
%
1.5
%
3.0
%
1,886
52
258
1.2
%
0.0
%
0.3
%
(30,196
)
(34,019
)
(80,490
)
(19.9
)%
(24.6
)%
(101.4
)%
(278
)
1,275
0
(0.2
)%
0.9
%
0.0
%
$
(30,474
)
$
(32,744
)
$
(80,490
)
(20.1
)%
(23.7
)%
(101.4
)%
41
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42
Table of Contents
43
Table of Contents
44
Table of Contents
Less than
More than
Total
1 year
1-3 years
3-5 years
5 years
$
50.8
$
50.8
$
$
$
8.4
2.4
5.0
1.0
10.7
2.3
4.3
4.1
31.1
31.1
$
101.0
$
86.6
$
9.3
$
5.1
$
45
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46
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47
Table of Contents
The Power Challenge.
Modules that
operate at 10Gbps consume two to more than five times as much
electrical power as those modules operating at the preceding
data rate and the power challenges are expected to become more
difficult as the industry moves beyond 10Gbps. Network service
providers generally have fixed, limited space in their network
central offices, closets, and data centers to house network
equipment, creating de facto standards on the physical size
allowed for each piece of network equipment regardless of data
rate. To offer increasingly higher speed systems, network system
vendors need more efficient modules to support greater port
density while adhering to power supply and cooling system
constraints. These constraints drive the need for laser
technology with higher temperature tolerance and improved
efficiency which reduces power consumption and enables smaller
form factor modules to be used.
The Temperature Challenge.
Within an
optical module, the laser diode is the most sensitive component
to temperature. As a result, 10Gbps modules have in the past
been constrained to 70ºC maximum operating case
temperature. Even in temperature controlled environments,
48
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heat dissipation from neighboring electronic components can
raise internal equipment temperatures to levels that degrade
laser and module performance. Furthermore, some network
equipment is located outdoors in non-temperature controlled
environments where transceiver modules need to operate reliably
up to an operating case temperature of +85ºC. Therefore,
customers are demanding optical modules that can operate at
wider temperature ranges, especially incorporating uncooled
lasers that do not require costly and inefficient thermoelectric
coolers.
The Size Challenge.
The system
throughput, data rate of each port and the overall chassis
dimensions of the system define the bandwidth capacity of that
system. Network service providers and enterprises have limited
space in which to house their optical network equipment within
an office or equipment room. Expanding the capacity of that
system requires increasing the number of ports and the data rate
of those ports. In order to meet these higher speed and density
requirements industry leaders have defined smaller 10Gbps
transceiver packages. As the size of these packages decrease, so
does their ability to dissipate heat making it virtually
impossible to support cooled laser technology. Therefore, lower
power consumption uncooled laser technology with higher
temperature tolerance and improved efficiency is required to
meet the thermal capacity of these smaller packages.
49
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50
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51
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52
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53
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Product Line
Transport & Routers
Telecom &
Datacom
40Gbps
2km
Since 2004
Transport, MSS, Routers &
AM*
Telecom &
Datacom
10Gbps
600m, 2km, 12km, 20km, 40km, 80km,
DWDM & Tunable
Since 2000
Switches & Routers
Datacom
10Gbps
300m, 10km, 40km, 80km &
DWDM
Since 2002
Switches & Routers
Datacom
10Gbps
300m, 10km, 40km, 80km
Since 2004
Servers, Switches
Datacom
10Gbps
300m, 10km
Since 2005
Transport, MSS, Switches,
Routers & AM, Servers
Datacom
10Gbps
300m, 600m, 2km, 12km, 20km, 40km,
80km, DWDM & Tunable
Since 2004
Transceiver Vendors
Telecom &
Datacom
10Gbps
10km, 40km, 80km
Since 2005
Transport & MSS
Telecom
10Gbps
40km, 80km, DWDM
Since 2000
Transport, MSS, Routers &
AM
Telecom
155Mbps, 622Mbps, 2.5Gbps
2km, 15km, 40km, 80km, DWDM
Since 2003
Hubs & Switches
Datacom
1.25Gbps
500m, 10km
Since 2004
54
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product performance including size, speed, operating temperature
range, power consumption and reliability;
price to performance characteristics;
delivery performance and lead times;
55
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ability to introduce new products in a timely manner that meet
customers design-in schedules and requirements;
breadth of product solutions;
sales, technical and post-sales service and support;
sales channels; and
ability to comply with new industry MSAs and requirements.
product performance including power output, wavelength, power
consumption, operating temperature range, and reliability;
price to performance characteristics;
delivery performance and lead times;
breadth of product solutions;
sales, technical, and post-sales service and support; and
sales channels.
56
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57
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58
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26,285 (of which 7,815 are
subleased to two third parties)
Administration, Sales, Marketing
August 23, 2011 (for the
master lease; April 30, 2007 and February 28, 2009,
respectively, for the two subleases)
18,160
Sales, Manufacturing, Research and
Development
July 31, 2008
710
Sales
November 30, 2007
112,893 (10,488 square meters)
Manufacturing, Research and
Development
September 30, 2011 (with
automatic
1-year
extensions unless notice given by either party)
34,542 (3,209 square meters)
Manufacturing, Research and
Development
March 31, 2011
(5-year
automatic extensions unless notice given by either party)
2,330 (216 square meters)
Sales
June 11, 2008 (with unlimited
automatic
2-year
extensions)
2,153 (200 square meters)
Sales
March 31, 2007
560 (52 square meters)
Market Research
March 31, 2007
59
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61
Director, President &
Chief Executive Officer
52
Executive Vice President, Business
Development and Product Portfolio Management
43
Senior Vice President, Global Sales
46
Senior Vice President, Finance
58
Executive Vice President, Opnext,
Inc. & President, Opnext Japan, Inc.
37
Vice President, Business
Management / Corporate Secretary
57
Chairman of the Board
56
Co-Chairman of the Board
55
Director
48
Director
(1)
Member of the compensation committee.
(2)
Member of the audit committee.
60
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61
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meeting with our management periodically to consider the
adequacy of our internal controls and the objectivity of our
financial reporting;
meeting with our independent auditors and with internal
financial personnel regarding these matters;
appointing, compensating, retaining and overseeing the work of
our independent auditors;
pre-approving audit and non-audit services of our independent
auditors;
reviewing our audited financial statements and reports and
discussing the statements and reports with our management,
including any significant adjustments, management judgments and
estimates, new accounting policies and disagreements with
management;
reviewing the independence and quality control procedures of the
independent auditor and the experience and qualifications of the
independent auditors senior personnel that are providing
us audit services; and
reviewing all related-party transactions for approval.
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reviewing and, as it deems appropriate, recommending to our
board of directors, policies, practices and procedures relating
to the compensation of our directors, officers and other
managerial employees and the establishment and administration of
our employee benefit plans;
exercising authority under our equity incentive plans; and
assisting the Board in developing and evaluating candidates for
key executive positions and ensuring a succession plan is in
place for the chief executive officers and other executive
officers.
reviewing and recommending nominees for election as directors;
assessing the performance of the board of directors;
developing guidelines for board composition;
recommending processes for annual evaluations of the performance
of the board of directors, the chairman of the board of
directors and the chief executive officer;
reviewing and administering our corporate governance guidelines
and considering other issues relating to corporate governance.
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Annual
Compensation
Long Term
Compensation
Securities
Restricted
Underlying
Other Annual
Stock
Options/SARs
All Other
2006
$
400,000
$
9,338(2
)
7,010(3
)
14,722(4
)
2005
400,000
$
562,000
450,000
$
8,671(2
)
5,777(3
)
13,897(4
)
2004
400,000
$
7,604(2
)
7,837(3
)
13,458(4
)
2006
325,000
$
9,338(2
)
5,998(3
)
14,516(4
)
2005
325,000
210,750
$
8,671(2
)
5,998(3
)
13,691(4
)
2004
325,000
$
8,275(2
)
6,419(3
)
13,252(4
)
2006
275,000
$
9,338(2
)
2,310(3
)
17,962(4
)
2005
275,000
140,500
$
9,171(2
)
2,310(3
)
16,407(4
)
2004
275,000
$
7,337(2
)
2,365(3
)
16,221(4
)
2006
250,000
$
9,449(2
)
2,389(3
)
17,748(4
)
2005
250,000
140,500
$
7,365(2
)
2,389(3
)
16,588(4
)
2004
250,000
$
6,681(2
)
2,445(3
)
16,013(4
)
2006
165,000
$
6,603(2
)
839(3
)
6,436(4
)
2005
155,000
140,500
$
6,203(2
)
840(3
)
5,891(4
)
2004
155,000
$
5,962(2
)
860(3
)
5,660(4
)
(1)
There was no public trading market
for our common stock as of March 31, 2005. Accordingly,
these values have been calculated based on managements
determination of the fair market value of the underlying shares
as of March 31, 2005 of $2.81 per share multiplied by the
underlying shares.
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(2)
401(k) matching contributions.
(3)
Insurance allowance for executive
officers as well as vice president levels.
(4)
Includes medical, dental,
disability, life insurance and accidental, death and
dismemberment benefits.
Number of
Securities
Shares
Underlying
Unexercised
Value of
Unexercised
Acquired
Options at
In-The-Money
Options
on
Value
March 31,
2006
at March 31,
2006
Exercise
Realized
Vested
Unvested
Vested
Unvested
3,150,000
300,000
600,000
400,000
150,000
100,000
65
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66
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67
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68
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Options granted on July 31, 2001 to purchase
3,000,000 shares of our common stock at an exercise price
of $8.34 per share. The option grant was amended on
August 25, 2003 by resolution of the Board to reflect a
reduced exercise price of $5.00 per share. These options
vested in equal annual installments on each of the first four
anniversaries of Mr. Boscos commencement of
employment (November 1, 2000); and
Options granted on November 1, 2004 to purchase
450,000 shares of our common stock at an exercise price of
$5.00 per share. These options vest in equal annual
installments on each of the first three anniversaries of the
date of grant, subject to accelerated vesting in the event of a
termination of Mr. Boscos employment by us without
cause or by him for good reason (each as
defined in the employment agreement) or due to
Mr. Boscos death or disability; and
200,000 shares of restricted stock issued on
November 1, 2004. The shares of restricted stock will vest
in equal installments on each of the first two anniversaries of
the consummation of this offering, subject to accelerated
vesting in the event of a termination of Mr. Boscos
employment by us without cause or by him for good reason.
72
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73
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any breach of the directors duty of loyalty to the
corporation or its stockholders;
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases,
redemptions, or other distributions; or
any transaction from which the director derived an improper
personal benefit.
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75
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Shares
Beneficially
Shares
Beneficially
Owned Prior to
Shares
Owned After
Title
of
Being
5% Stockholders
Hitachi, Ltd.(1)
105,000,000
70.00
%
Clarity Partners, L.P.(2)(3)
12,648,298
8.43
%
Clarity Opnext Holdings I,
LLC(2)(3)
22,500,000
15.00
%
Clarity Opnext Holdings II,
LLC(2)(3)
9,851,702
6.57
%
Dr. David Lee(3)
45,000,000
30.00
%
5% Stockholders
Hitachi, Ltd.(1)
3,030,000
33.46
%
Clarity Management, L.P.(2)(3)
3,000,000
33.24
%
Directors and Named Executive
Officers
Harry L. Bosco
3,300,000
35.39
%
Michael C. Chan
600,000
9.06
%
Chi-Ho Christopher Lin
400,000
6.23
%
Robert J. Nobile
150,000
2.43
%
Tammy L. Wedemeyer
100,000
1.63
%
Dr. Naoya Takahashi
Dr. David Lee(3)
3,000,000
33.24
%
Tetsuo Takemura
Ryuichi Otsuki
Directors and officers as a group
(9 persons)
7,550,000
55.62
%
76
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(1)
The address of Hitachi, Ltd. is 6-6, Marunouchi 1-chome,
Chiyoda-ku, Tokyo 100-8280 Japan.
(2)
The address of Clarity Partners, L.P., Clarity Opnext Holdings
I, LLC, Clarity Opnext Holdings II, LLC and Clarity
Management, LP is 100 North Crescent Drive Beverly Hills, CA
90210.
(3)
Clarity GenPar, LLC is the general partner of Clarity Partners,
L.P. and Clarity Partners, L.P. is the managing member of
Clarity Opnext Holdings I, LLC and Clarity Opnext
Holdings II, LLC. Clarity Management, LLC is the general
partner of Clarity Management, L.P. Because Dr. David Lee
is a managing member of Clarity GenPar, LLC and Clarity
Management, LLC, he may be deemed to be the beneficial owner of
the shares held by the Clarity entities, which he disclaims
except to the extent of his pecuniary interest therein.
(4)
All shares of Class B common stock consist of options
exercisable within 60 days.
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80
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81
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82
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85
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87
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provide that special meetings of the stockholders may be called
only by our Chairman of the Board, Chief Executive Officer,
President, Chief Operating Officer or the board of directors
pursuant to a resolution adopted by a majority of the total
number of authorized directors of our board of directors;
establish procedures with respect to stockholder proposals and
stockholder nominations, including requiring that advance
written notice of a stockholder proposal or director nomination
generally must be received at our principal executive offices
not less than 90 nor more than 120 days prior to the first
anniversary date of mailing of our proxy statement released to
stockholders in connection with the previous years annual
meeting of stockholders;
do not include a provision for cumulative voting in the election
of directors. Under cumulative voting, a minority stockholder
holding a sufficient number of shares may be able to ensure the
election of one or more directors. The absence of cumulative
voting may have the effect of limiting the ability of minority
stockholders to effect changes in the board of directors and, as
a result, may have the effect of deterring a hostile takeover or
delaying or preventing changes in control or management of our
company;
provide that vacancies on our board of directors may be filled
by a majority of directors in office, although less than a
quorum, and not by the stockholders;
require that the vote of holders of
66
2
/
3
%
of the voting power of the outstanding shares entitled to vote
generally in the election of directors is required to amend
various provisions of our amended and restated certificate of
incorporation and amended and restated bylaws, including
provisions relating to:
the number of directors on our board of directors;
the election, qualification and term of office of our directors;
filling vacancies on our board of directors;
the indemnification of our officers and directors;
removal of members of our board of directors; and
certain amendments to our amended and restated certificate of
incorporation and amended and restated bylaws; and
provide that the board of directors has the power to alter,
amend or repeal the bylaws without stockholder approval.
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the number of shares constituting any class or series;
the designations, powers and preferences of each class or series;
the relative, participating, optional and other special rights
of each class or series; and
any qualifications, limitations or restrictions on each class or
series.
prior to the date of the business combination, the board of
directors of the corporation approved either the business
combination or the transaction that resulted in the stockholder
becoming an interested stockholder;
on consummation of the transaction that resulted in the
stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock
outstanding (but not the outstanding voting stock of the
interested stockholder) those shares owned
by persons who are directors and also officers, and
by employee stock plans in which employee participants do not
have the right to determine confidentially whether shares held
subject to the plan will be tendered in a tender or exchange
offer; or
at or subsequent to such time, the business combination is
approved by the board of directors and authorized at an annual
or special meeting of stockholders, and not by written consent,
by the affirmative vote of at least
66
2
/
3
%
of the outstanding voting stock that is not owned by the
interested stockholder.
any merger or consolidation involving the corporation and the
interested stockholder;
any sale, transfer, pledge or other disposition of 10% or more
of the assets of the corporation involving the interested
stockholder;
subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
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any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
stockholder; or
the receipt by the interested stockholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
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restricted
shares will be eligible for sale upon expiration of the lock-up
agreements, described below; and
the
remaining restricted
shares will be eligible for sale from time to time thereafter
upon expiration of their respective one-year holding periods.
1% of the number of shares of common stock then outstanding,
which will equal
approximately shares
immediately after this offering; or
the average weekly trading volume of the common stock during the
four calendar weeks preceding the filing of the Form 144
with respect to such sale.
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CONSIDERATIONS FOR NON-UNITED STATES HOLDERS
an individual citizen or resident of the United States;
a corporation or other entity taxable as a corporation for
United States federal income tax purposes created or organized
in the United States or under the laws of the United States, any
state thereof, or the District of Columbia;
an estate, the income of which is subject to United States
federal income taxation regardless of its source; or
a trust that (1) is subject to the primary supervision of a
United States court and the control of one or more United States
persons or (2) has a valid election in effect under
applicable Treasury Regulations to be treated as a United States
person.
banks, insurance companies, or other financial institutions;
tax-exempt organizations;
dealers in securities or currencies;
traders in securities that elect to use a
mark-to-market
method of accounting for their securities holdings;
foreign persons or entities, except to the extent specifically
set forth below;
persons that are partnerships or other pass-through entities;
persons that own, or are deemed to own, more than 5% of our
company, except to the extent specifically set forth below;
persons who hold the common stock as a position in a hedging
transaction, straddle, conversion transaction or other risk
reduction transaction;
certain former citizens or long-term residents of the United
States; or
persons deemed to sell the common stock under the constructive
sale provisions of the Code.
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the gain is effectively connected with the non-United States
holders conduct of a trade or business in the United
States and, if an income tax treaty applies, is attributable to
a permanent establishment maintained by the non-United States
holder in the United States;
the non-United States holder is an individual who is present in
the United States for 183 days or more in the taxable year
of the disposition and meets certain other requirements; or
our common stock constitutes a United States real property
interest by reason of our status as a United States
real property holding corporation, or a USRPHC, for United
States federal income tax purposes at any time during the
shorter of the
5-year
period ending on the date on which the non-United States holder
disposes of our common stock or the period the non-United States
holder held our common stock, which we refer to as the
applicable period.
95
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96
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$
$
$
$
$
$
$
$
97
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98
Table of Contents
99
Table of Contents
100
Table of Contents
101
F-1
Table of Contents
F-2
Table of Contents
March 31,
$
89,358
$
169,504
33,608
24,023
45,865
43,564
2,144
2,328
170,975
239,419
39,926
46,135
5,698
5,698
227
660
$
216,826
$
291,912
$
26,127
$
26,198
10,333
12,238
20,000
50,942
82,221
2,045
834
89,447
141,491
6,392
1,576
1,324
669
97,163
143,736
1,500
1,500
59
58
405,085
405,050
(1
)
(13
)
(281,785
)
(251,311
)
(5,195
)
(7,108
)
119,663
148,176
$
216,826
$
291,912
F-3
Table of Contents
Year Ended
March 31,
$
151,691
$
138,432
$
79,390
119,626
107,694
73,144
32,065
30,738
6,246
33,669
33,251
30,921
33,116
33,629
33,164
1,464
67
25,283
(36,184
)
(36,209
)
(83,122
)
4,102
2,138
2,374
1,886
52
258
(30,196
)
(34,019
)
(80,490
)
(278
)
1,275
$
(30,474
)
$
(32,744
)
$
(80,490
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
155,834
155,619
154,148
F-4
Table of Contents
Consolidated Statements of Shareholders
Equity and Comprehensive Income (Loss)
Year ended March 31, 2004, 2005 and 2006
(Dollars in thousands, except share amounts)
Class A
Class B
Retained
Accumulated
Common
Stock
Common
Stock
Additional
Earnings
Other
Total
Number
Par
Number
Par
Unearned
Paid-in
(Accumulated
Comprehensive
Shareholders
Comprehensive
150,000,000
$
1,500
$
$
$
393,863
$
(138,077
)
$
(5,881
)
$
251,405
5,017,546
50
4,800
4,850
(109
)
(109
)
60
60
70,424
1
18
19
4,406
4,406
80,490
(80,490
)
$
(80,490
)
(2,240
)
(2,240
)
(2,240
)
$
(82,730
)
150,000,000
1,500
5,087,970
51
(49
)
403,087
(218,567
)
(8,121
)
177,901
650,000
6
(6
)
36
36
86,493
1
24
25
1,945
1,945
(32,744
)
(32,744
)
$
(32,744
)
1,013
1,013
1,013
$
(31,731
)
150,000,000
1,500
5,824,463
58
(13
)
405,050
(251,311
)
(7,108
)
148,176
12
12
132,044
1
35
36
(30,474
)
(30,474
)
$
(30,474
)
1,913
1,913
1,913
$
(28,561
)
150,000,000
$
1,500
5,956,507
$
59
$
(1
)
$
405,085
$
(281,785
)
$
(5,195
)
$
119,663
F-5
Table of Contents
Year Ended
March 31,
$
(30,474
)
$
(32,744
)
$
(80,490
)
12,579
12,567
19,023
1,065
50
25,036
12
36
60
1,945
4,406
(11,116
)
(2,051
)
(3,241
)
(5,661
)
(9,927
)
(3,693
)
(615
)
1,264
1,990
433
12
198
2,037
14,860
1,004
1,567
(13,359
)
4,375
(30,173
)
(27,347
)
(31,332
)
(3,115
)
(4,438
)
(14,244
)
(800
)
(129
)
(3,115
)
(4,438
)
(15,173
)
(25,313
)
(1,305
)
9,303
(20,000
)
(1,265
)
(681
)
(1,242
)
36
25
19
(46,542
)
(1,961
)
8,080
(316
)
35
441
(80,146
)
(33,711
)
(37,984
)
169,504
203,215
241,199
$
89,358
$
169,504
$
203,215
$
535
$
477
$
450
278
$
(7,882
)
$
(2,188
)
$
F-6
Table of Contents
1.
Background and
Basis of Presentation
$
1,428
3,325
5,698
109
(3,646
)
(1,721
)
$
5,193
F-7
Table of Contents
2.
Summary of
Significant Accounting Policies
F-8
Table of Contents
F-9
Table of Contents
3-15 years
3-7 years
F-10
Table of Contents
F-11
Table of Contents
Year Ended
March 31,
0.00
%
0.00
%
0.00
%
1.00
%
1.00
%
1.00
%
5.10
%
4.18
%
2.80
%
5
5
5
Year Ended
March 31,
$
(30,474
)
$
(32,744
)
$
(80,490
)
12
36
60
60
(323
)
(372
)
$
(30,402
)
$
(33,031
)
$
(80,802
)
$
(0.20
)
$
(0.21
)
$
(0.52
)
155,834
155,619
154,148
F-12
Table of Contents
In December 2004, the Financial Accounting Standards Board
(FASB) issued SFAS No. 123(R),
Share-Based
Payment
. This Statement requires all share-based payments to
employees to be recognized in the financial statements based on
their fair value. The Company, as required, will adopt Statement
No. 123(R) beginning April 1, 2006, using the modified
prospective method which requires compensation cost for the
portion of awards for which the requisite service has not yet
been rendered that are outstanding as of the adoption date to be
recognized over the remaining service period. The compensation
cost for that portion of awards will be based on the grant-date
fair value of those awards as calculated for pro forma
disclosures under Statement No. 123, as originally issued.
All new awards and awards that are modified, repurchased, or
cancelled after the adoption date will be accounted for under
the provisions of Statement No. 123(R).
3.
Inventories
March
31,
$
23,053
$
23,471
14,045
8,234
8,767
11,859
$
45,865
$
43,564
4.
Property, Plant,
and Equipment
March
31,
$
166,845
$
172,890
9,724
10,806
4,541
4,806
496
931
181,606
189,433
(141,680
)
(143,298
)
$
39,926
$
46,135
F-13
Table of Contents
5.
Income
Taxes
Year Ended
March 31,
(35.0
)%
(35.0
)%
(35.0
)%
(1.8
)
(2.5
)
(1.6
)
(3.7
)
(3.0
)
(3.8
)
48.9
41.3
22.0
(7.3
)
(3.7
)
5.5
12.6
(0.2
)
(0.8
)
0.3
0.9
%
(3.7
)%
0.0
%
Year Ended
March 31,
$
(10,252
)
$
(16,199
)
$
(26,590
)
(19,944
)
(17,820
)
(53,900
)
$
(30,196
)
$
(34,019
)
$
(80,490
)
F-14
Table of Contents
March 31,
$
157,852
$
144,280
32,124
49,396
15,209
15,346
9,387
9,387
(3,154
)
(4,520
)
950
315
(212,368
)
(214,204
)
$
$
6.
Net Loss Per
Share
F-15
Table of Contents
Year Ended
March 31,
$
(30,474
)
$
(32,744
)
$
(80,490
)
155,834
155,619
154,148
$
(0.20
)
$
(0.21
)
$
(0.52
)
Year Ended
March 31,
13,311
13,654
13,069
2,008
1,700
880
15,319
15,354
13,949
7.
Employee
Benefits
F-16
Table of Contents
8.
Stock-Based
Incentive Plans
Options
Outstanding
Options
Exercisable
Weighted
Weighted
Average
Average
Exercise
Number
Remaining
Number
Remaining
$
0.26
225
5.5 years
222
5.5 years
$
0.91
55
7.2
39
7.2
$
5.00
13,031
5.6
12,398
5.4
$
4.91
13,311
12,659
F-17
Table of Contents
Opnext
Options
Pine
Options
Total Stock
Options
SARs
Weighted
Weighted
Weighted
Weighted
Average
Average
Average
Average
Exercise
Exercise
Exercise
Exercise
13,206
$
8.34
$
13,206
$
8.34
1,088
$
8.34
21
5.00
752
0.36
773
0.49
23
5.00
(756
)
8.34
(84
)
0.39
(840
)
7.55
(231
)
8.34
(70
)
0.25
(70
)
0.25
12,471
5.00
598
0.37
13,069
4.79
880
5.00
779
5.00
779
5.00
885
5.00
(45
)
5.00
(63
)
0.53
(108
)
2.39
(65
)
5.00
(86
)
0.30
(86
)
0.30
13,205
5.00
449
0.36
13,654
4.85
1,700
5.00
52
5.00
52
5.00
463
5.00
(226
)
5.00
(36
)
0.40
(262
)
4.37
(155
)
5.00
(133
)
0.28
(133
)
0.28
13,031
$
5.00
280
$
0.39
13,311
$
4.90
2,008
$
5.00
9.
Short-Term
Debt
F-18
Table of Contents
10.
Concentrations of
Risk
11.
Commitments and
Contingencies
Capital
Operating
$
2,233
$
2,505
2,177
947
2,112
840
2,251
786
174
786
262
8,947
$
6,126
(510
)
8,437
2,045
$
6,392
F-19
Table of Contents
Year Ended
March 31,
$
834
$
891
$
674
(737
)
(631
)
(497
)
521
597
606
(67
)
(23
)
108
$
551
$
834
$
891
12.
Other Operating
Expenses
Year Ended
March 31,
$
1,065
$
50
$
5,886
53
17
216
346
19,150
31
$
1,464
$
67
$
25,283
13.
Related Party
Transactions
F-20
Table of Contents
F-21
Table of Contents
F-22
Table of Contents
F-23
Table of Contents
14.
Operating
Segments and Geographic Information
F-24
Table of Contents
Year Ended
March 31,
$
72,700
$
61,045
$
26,289
38,930
43,511
43,675
34,240
31,966
9,053
5,821
1,910
373
$
151,691
$
138,432
$
79,390
March 31,
$
111,730
$
194,815
92,531
87,716
12,565
9,381
$
216,826
$
291,912
15.
Valuation and
Qualifying Accounts
Year Ended March 31,
$
291
$
282
$
244
14
(2
)
(7
)
(12
)
11
45
$
293
$
291
$
282
Year Ended
March 31,
$
214,204
$
204,554
$
157,434
13,729
14,417
28,912
(15,565
)
(4,767
)
18,208
$
212,368
$
214,204
$
204,554
F-25
Table of Contents
F-26
Table of Contents
September 30,
March 31,
$
77,098
$
89,358
44,632
33,608
60,369
45,865
2,988
2,144
185,087
170,975
35,373
39,926
5,698
5,698
222
227
$
226,380
$
216,826
$
38,142
$
26,127
10,518
10,333
50,770
50,942
2,179
2,045
101,609
89,447
5,802
6,392
1,676
1,324
109,087
97,163
1,500
1,500
60
59
405,124
405,085
0
(1
)
(284,085
)
(281,785
)
(5,306
)
(5,195
)
117,293
119,663
$
226,380
$
216,826
F-27
Table of Contents
Three Months
Ended September 30,
Six Months Ended
September 30,
2006
2005
2006
2005
(unaudited)
(unaudited)
$
55,323
$
35,504
$
95,747
$
66,874
36,869
30,987
64,032
58,782
18,454
4,517
31,715
8,092
8,673
9,105
16,518
17,067
9,279
8,036
17,801
16,341
87
1,000
103
1,053
415
(13,624
)
(2,707
)
(26,369
)
721
1,117
1,480
2,138
38
417
(1,073
)
625
1,174
(12,090
)
(2,300
)
(23,606
)
$
1,174
$
(12,090
)
$
(2,300
)
$
(23,606
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
156,025
155,828
155,997
155,826
156,201
155,828
155,997
155,826
F-28
Table of Contents
Class A
Class B
Retained
Accumulated
Common
Stock
Common
Stock
Additional
Earnings
Other
Total
Number
Par
Number
Par
Unearned
Paid-in
(Accumulated
Comprehensive
Shareholders
Comprehensive
of
Shares
Value
of
Shares
Value
Compensation
Capital
Deficit)
Loss
Equity
Loss
150,000,000
$
1,500
5,956,507
$
59
$
(1
)
$
405,085
$
(281,785
)
$
(5,195
)
$
119,663
1
18
19
68,431
1
21
22
(2,300
)
(2,300
)
$
(2,300
)
(111
)
(111
)
(111
)
$
(2,411
)
150,000,000
$
1,500
6,024,938
$
60
$
0
$
405,124
$
(284,085
)
$
(5,306
)
$
117,293
F-29
Table of Contents
Six Months
Ended
September
30,
(unaudited)
$
(2,300
)
$
(23,606
)
6,056
6,203
110
1,013
19
11
(10,591
)
(3,205
)
(14,765
)
(8,300
)
(1,152
)
(1,235
)
5
246
12,397
7,698
(74
)
537
(10,295
)
(20,638
)
(978
)
(1,861
)
(978
)
(1,861
)
1,749
(20,000
)
(1,110
)
(292
)
22
3
(1,088
)
(18,540
)
101
(240
)
(12,260
)
(41,279
)
89,358
169,504
$
77,098
$
128,225
$
243
$
267
$
(675
)
$
(5,786
)
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
1.
Background and
Basis of Presentation
F-31
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
$
1,428
3,325
5,698
109
(3,646
)
(1,721
)
$
5,193
2.
Summary of
Significant Accounting Policies
F-32
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-33
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-34
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
3-15 years
3-7 years
F-35
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-36
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
The time period that stock based awards are expected to remain
outstanding has been determined based on the average of the
original award period and the remaining vesting period in
accordance with the SECs short-cut approach pursuant to
SAB No. 107,
Disclosure About Fair Value of
Financial Statements
. The expected term assumption for
awards issued during the six month period ended
September 30, 2006 was 6.25 years. As additional
evidence develops after trading of the Companys stock
begins, the expected term assumption will be refined to capture
the relevant trends.
The future volatility of the Companys stock has been
estimated based on the median calculated value of the historical
volatility of companies believed to be similar in market
performance characteristics as those of the Company. Use of
comparable companies is necessary since the Company does not
possess a stock price history. The expected volatility
assumption for awards issued during the six month period ended
September 30, 2006 was 101.3%. Once trading begins and
trends develop, the Company will begin using the implied
volatility trends of the Companys own pricing history as
its estimate.
A dividend yield of zero has been assumed for awards issued
during the six month period ended September 30, 2006 based
on the Companys actual past experience and the Company
does not anticipate paying a dividend on its shares in the near
future.
The Company has based its risk-free interest rate assumption for
awards issued during the three month period ended
September 30, 2006 on the implied yield available on U.S.
Treasury zero-coupon issues with an equivalent expected term
which was 4.8% during the period. Forfeiture rates for awards
issued during these same periods have been estimated based on
the Companys actual historical forfeiture trend of
approximately 10%.
Six Months
Ended
September
30, 2005
$
(23,606
)
6
30
$
(23,570
)
$
(0.15
)
155,826
F-37
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
September 30,
March 31,
2006
2006
$
31,022
$
23,053
18,913
14,045
10,434
8,767
$
60,369
$
45,865
4.
Property, Plant,
and Equipment
September 30,
March 31,
2006
2006
$
165,081
$
166,845
9,903
9,724
4,571
4,541
291
496
179,846
181,606
(144,473
)
(141,680
)
$
35,373
$
39,926
F-38
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
5.
Income
Taxes
Six Months
Ended
September
30, 2006
(35.0
)%
(6.1
)
3.9
34.9
2.3
0.0
%
Six Months
Ended
September
30, 2006
$
(3,433
)
1,133
$
(2,300
)
September
30, 2006
$
164,658
25,638
15,217
9,387
(2,431
)
137
(212,606
)
$
F-39
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
6.
Net Income (Loss)
Per Share
Three Months
Ended September 30,
Six Months Ended
September 30,
2006
2005
2006
2005
$
1,174
$
(12,090
)
$
(2,300
)
$
(23,606
)
156,025
155,828
155,997
155,826
176
156,201
155,828
155,997
155,826
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
$
0.01
$
(0.08
)
$
(0.01
)
$
(0.15
)
F-40
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
Six Months
Three Months
Ended
Ended
September
30,
September
30,
2006
2005
2006
2005
13,108
13,413
13,317
13,413
1,958
1,991
1,958
1,991
15,066
15,404
15,275
15,404
7.
Employee
Benefits
8.
Stock-Based
Incentive Plans
F-41
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
Options
Outstanding
Options
Exercisable
Weighted
Weighted
Average
Average
Number
Remaining
Number
Remaining
Outstanding
Life
Exercisable
Life
161
5.1
years
161
5.1
years
48
6.7
40
6.7
13,108
5.2
12,470
5.0
13,317
12,671
F-42
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
Opnext
Options
Pine
Options
Total Stock
Options
SARs
Weighted
Weighted
Weighted
Weighted
Average
Average
Average
Average
Exercise
Exercise
Exercise
Exercise
Shares
Price
Shares
Price
Shares
Price
Shares
Price
13,031
$
5.00
280
$
0.39
13,311
$
4.90
2,008
$
5.00
92
5.00
92
5.00
8
5.00
(15
)
5.00
(2
)
0.91
(17
)
4.51
(58
)
5.00
(69
)
0.30
(69
)
0.30
13,108
$
5.00
209
$
0.41
13,317
$
4.93
1,958
$
5.00
9.
Short-Term
Debt
10.
Concentrations of
Risk
11.
Commitments and
Contingencies
F-43
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
Capital
Operating
Leases
Leases
$
1,181
$
1,140
2,285
2,272
2,505
2,165
1,891
2,111
532
2,111
43
924
8,437
$
10,723
(456
)
7,981
2,179
$
5,802
Six Months
Ended
September
31, 2006
$
551
(392
)
324
132
$
615
F-44
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
12.
Other Operating
Expenses
Six Months
Ended
September
30,
2006
2005
$
103
$
1,000
53
$
103
$
1,053
13.
Related Party
Agreements
F-45
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-46
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-47
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
F-48
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
14.
Operating
Segments and Geographic Information
Six Months
Three Months
Ended
Ended
September
30,
September
30,
2006
2005
2006
2005
$
29,196
$
16,083
$
49,058
$
28,940
13,535
6,843
24,869
13,820
9,112
10,931
15,987
21,911
3,480
1,647
5,833
2,203
$
55,323
$
35,504
$
95,747
$
66,874
F-49
Table of Contents
Notes to Consolidated Financial Statements
(In thousands, except per share amounts)
(Unaudited with respect to the three month period ended
September 30, 2006 and
the three and six month periods ended September 30,
2005)
September 30,
March 31,
2006
2006
$
113,031
$
111,730
97,818
92,531
15,531
12,565
$
226,380
$
216,826
F-50
1
7
22
22
24
25
26
27
28
31
47
60
77
78
88
92
94
97
101
101
101
101
F-1
Table of Contents
Item 13.
Other Expenses
Of Issuance And Distribution
$
16,050
$
15,500
$
*
$
*
$
*
$
*
$
*
$
*
$
*
*
To be completed by amendment.
Item 14.
Indemnification
of Directors and Officers
II-1
Table of Contents
Item 15.
Recent Sales of
Unregistered Securities
II-2
Table of Contents
Item 16.
Exhibits and
Financial Statement Schedules.
1
.1
Form of Underwriting Agreement.(1)
3
.1
Form of Amended and Restated
Certificate of Incorporation of Opnext, Inc., to be effective
upon the closing of the offering to which this Registration
Statement relates.(1)
3
.2
Form of Amended and Restated
Bylaws of Opnext, Inc., to be effective upon the closing of the
offering to which this Registration Statement relates.(1)
4
.1
Stockholders Agreement,
dated as of July 31, 2001, by and among Opnext, Inc.,
Hitachi, Ltd., Clarity Partners, L.P., Clarity Opnext
Holdings I, LLC, and Clarity Opnext Holdings II, LLC,
as amended.(1)
4
.2
Registration Rights Agreement,
entered into as of July 31, 2001, by and among Opnext,
Inc., Clarity Partners, L.P., Clarity Opnext Holdings I,
LLC, Clarity Opnext Holdings II, LLC, and Hitachi, Ltd.
5
.1
Opinion of Latham &
Watkins LLP, related to the shares of common stock being sold in
the initial public offering.(1)
10
.1
Pine Photonics Communications,
Inc. 2000 Stock Plan.(2)
10
.2
Form of Pine Photonics
Communications, Inc. 2000 Stock Plan: Stock Option Agreement.(2)
10
.3
Opnext, Inc. 2001 Long-Term Stock
Incentive Plan.(2)
10
.4
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Nonqualified Stock Option
Agreement.
10
.4a
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Nonqualified Stock Option
Agreement for Senior Executives.
10
.4b
Opnext, Inc. Nonqualified Stock
Option Agreement dated as of November 1, 2004, between
Opnext, Inc. and Harry L. Bosco (Participant).
10
.4c
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Stock Appreciation Right
Agreement.
10
.5
Form of Hitachi, Ltd. and Clarity
Management, L.P. Nonqualified Stock Option Agreement.
10
.6
Opnext, Inc. Amended and Restated
2001 Long-Term Stock Incentive Plan.(1)
10
.7
Employment Agreement, entered into
as of July 31, 2001, by and between Opnext, Inc. and
Harry L. Bosco, as amended.(2)
10
.8
Employment Agreement, entered into
as of August 24, 2001, by and between Opnext, Inc. and
Michael C. Chan, as amended.(2)
10
.9
Employment Agreement, entered into
as of August 24, 2001, by and between Opnext, Inc. and
Chi-Ho
Christopher Lin, as amended.(2)
10
.10
Employment Agreement, dated
March 5, 2001, by and between Opnext, Inc. and
Robert J. Nobile.(2)
10
.11
Form of Opnext, Inc. Restricted
Stock Agreement.(2)
10
.12
Research and Development
Agreement, dated as of July 31, 2001, by and among Hitachi,
Ltd., Opnext Japan, Inc. and Opto Device, Ltd. as amended.
10
.13
Research and Development
Agreement, dated as of July 31, 2002, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
10
.14
Outsourcing Agreement, made and
entered into as of July 31, 2001, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.
10
.15
Preferred Provider Agreement, made
and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
II-3
Table of Contents
10
.16
Procurement Agreement, made and
entered into as of July 31, 2001, by and between Opnext
Japan, Inc. and Hitachi, Ltd., as amended.
10
.17
Raw Materials Supply Agreement,
made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
10
.18
Intellectual Property License
Agreement, dated as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext Japan, Inc., as amended.
10
.19
Intellectual Property License
Agreement, dated as of October 1, 2002, by and between
Hitachi, Ltd. and Opnext Japan, Inc., as amended.
10
.20
Intellectual Property License
Agreement, effective as of October 1, 2002, by and between
Hitachi Communication Technologies, Ltd. and Opnext Japan, Inc.
10
.21
Trademark Indication Agreement,
dated as of October 1, 2002, by and between Hitachi, Ltd.
and Opnext Japan, Inc., as amended.
10
.22
Trademark Indication Agreement,
dated as of July 31, 2001, by and between Hitachi, Ltd.,
Opnext, Inc. and Opnext Japan, Inc., as amended.
10
.23
Lease Agreement, made as of
July 31, 2001, between Hitachi Communication Technologies,
Ltd. and Opnext Japan, Inc., as amended.
10
.24
Lease Agreement, made as of
October 1, 2002, between Renesas Technology Corp. and
Opnext Japan, Inc., as amended.
10
.25
Business Park Net Lease Agreement,
dated as of June 30, 2000, by and between Bedford Property
Investors, Inc. and Opnext, Inc., as amended.(2)
10
.26
Agreement on Bank Transactions
between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
Ltd., as amended.(1)
21
.1
List of Subsidiaries.(2)
23
.1
Consent of Ernst & Young
LLP.
23
.2
Consent of Latham &
Watkins LLP (included in Exhibit 5.1).(1)
24
.1
Power of Attorney (included on
signature page of the Registration Statement).(2)
(1)
To be filed by amendment.
(2)
Previously filed with the Form S-1 filed by the Registrant on
October 27, 2006.
Item 17.
Undertakings
Table of Contents
(i)
Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed
pursuant to Rule 424;
(ii)
Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred
to by the undersigned registrant;
(iii)
The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned
registrant or its securities provided by or on behalf of the
undersigned registrant; and
(iv)
Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
II-5
Table of Contents
By:
President and Chief Executive Officer
Director, President and Chief
Executive Officer
(principal executive officer)
December 13, 2006
Senior Vice President, Finance
(principal financial and accounting officer)
December 13, 2006
Chairman of the Board
December 13, 2006
Co-Chairman of the Board
December 13, 2006
Director
December 13, 2006
Director
December 13, 2006
*By:
Attorney-in-fact
II-6
Table of Contents
1
.1
Form of Underwriting Agreement.(1)
3
.1
Form of Amended and Restated
Certificate of Incorporation of Opnext, Inc., to be effective
upon the closing of the offering to which this Registration
Statement relates.(1)
3
.2
Form of Amended and Restated
Bylaws of Opnext, Inc., to be effective upon the closing of the
offering to which this Registration Statement relates.(1)
4
.1
Stockholders Agreement,
dated as of July 31, 2001, by and among Opnext, Inc.,
Hitachi, Ltd., Clarity Partners, L.P., Clarity Opnext
Holdings I, LLC, and Clarity Opnext Holdings II, LLC,
as amended.(1)
4
.2
Registration Rights Agreement,
entered into as of July 31, 2001, by and among Opnext,
Inc., Clarity Partners, L.P., Clarity Opnext Holdings I,
LLC, Clarity Opnext Holdings II, LLC, and Hitachi, Ltd.
5
.1
Opinion of Latham &
Watkins LLP, related to the shares of common stock being sold in
the initial public offering.(1)
10
.1
Pine Photonics Communications,
Inc. 2000 Stock Plan.(2)
10
.2
Form of Pine Photonics
Communications, Inc. 2000 Stock Plan: Stock Option Agreement.(2)
10
.3
Opnext, Inc. 2001 Long-Term Stock
Incentive Plan.(2)
10
.4
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Nonqualified Stock Option
Agreement.
10
.4a
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Nonqualified Stock Option
Agreement for Senior Executives.
10
.4b
Opnext, Inc. Nonqualified Stock
Option Agreement dated as of November 1, 2004, between
Opnext, Inc. and Harry L. Bosco (Participant).
10
.4c
Form of Opnext, Inc. 2001
Long-Term Stock Incentive Plan, Stock Appreciation Right
Agreement.
10
.5
Form of Hitachi, Ltd. and Clarity
Management, L.P. Nonqualified Stock Option Agreement.
10
.6
Opnext, Inc. Amended and Restated
2001 Long-Term Stock Incentive Plan.(1)
10
.7
Employment Agreement, entered into
as of July 31, 2001, by and between Opnext, Inc. and
Harry L. Bosco, as amended.(2)
10
.8
Employment Agreement, entered into
as of August 24, 2001, by and between Opnext, Inc. and
Michael C. Chan, as amended.(2)
10
.9
Employment Agreement, entered into
as of August 24, 2001, by and between Opnext, Inc. and
Chi-Ho
Christopher Lin, as amended.(2)
10
.10
Employment Agreement, dated
March 5, 2001, by and between Opnext, Inc. and
Robert J. Nobile.(2)
10
.11
Form of Opnext, Inc. Restricted
Stock Agreement.(2)
10
.12
Research and Development
Agreement, dated as of July 31, 2001, by and among Hitachi,
Ltd., Opnext Japan, Inc. and Opto Device, Ltd. as amended.
10
.13
Research and Development
Agreement, dated as of July 31, 2002, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
10
.14
Outsourcing Agreement, made and
entered into as of July 31, 2001, by and between Hitachi,
Ltd. and Opnext Japan, Inc., as amended.
10
.15
Preferred Provider Agreement, made
and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
10
.16
Procurement Agreement, made and
entered into as of July 31, 2001, by and between Opnext
Japan, Inc. and Hitachi, Ltd., as amended.
10
.17
Raw Materials Supply Agreement,
made and entered into as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext, Inc., as amended.
10
.18
Intellectual Property License
Agreement, dated as of July 31, 2001, by and between
Hitachi, Ltd. and Opnext Japan, Inc., as amended.
Table of Contents
10
.19
Intellectual Property License
Agreement, dated as of October 1, 2002, by and between
Hitachi, Ltd. and Optnext Japan, Inc., as amended.
10
.20
Intellectual Property License
Agreement, effective as of October 1, 2002, by and between
Hitachi Communication Technologies, Ltd. and Opnext Japan, Inc.
10
.21
Trademark Indication Agreement,
dated as of October 1, 2002, by and between Hitachi, Ltd.
and Optnext Japan, Inc., as amended.
10
.22
Trademark Indication Agreement,
dated as of July 31, 2001, by and between Hitachi, Ltd.,
Opnext, Inc. and Opnext Japan, Inc., as amended.
10
.23
Lease Agreement, made as of
July 31, 2001, between Hitachi Communication Technologies,
Ltd. and Opnext Japan, Inc., as amended.
10
.24
Lease Agreement, made as of
October 1, 2002, between Renesas Technology Corp. and
Opnext Japan, Inc., as amended.
10
.25
Business Park Net Lease Agreement,
dated as of June 30, 2000, by and between Bedford Property
Investors, Inc. and Opnext, Inc., as amended.(2)
10
.26
Agreement on Bank Transactions
between Opnext Japan, Inc. and The Bank of Tokyo-Mitsubishi UFJ,
Ltd., as amended.(1)
21
.1
List of Subsidiaries.(2)
23
.1
Consent of Ernst & Young
LLP.
23
.2
Consent of Latham &
Watkins LLP (included in Exhibit 5.1).(1)
24
.1
Power of Attorney (included on
signature page of the Registration Statement).(2)
(1)
To be filed by amendment.
(2)
Previously filed with the Form S-1 filed by the Registrant on
October 27, 2006.
- 2 -
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- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
- 9 -
- 10 -
- 11 -
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- 13 -
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- 15 -
- 16 -
- 17 -
- 18 -
- 19 -
- 20 -
- 21 -
OPNEXT, INC. | ||||||
|
||||||
|
By: | /s/ Harry L. Bosco | ||||
|
||||||
|
Harry L. Bosco | |||||
|
Chief Executive Officer and President | |||||
|
||||||
CLARITY PARTNERS, L.P. | ||||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its General Partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member | |||||
|
||||||
CLARITY OPNEXT HOLDINGS I, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its General Partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member | |||||
|
||||||
CLARITY OPNEXT HOLDINGS II, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its General Partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member |
HITACHI, LTD. | ||||||
|
||||||
|
By: | /s/ Masaaki Hayashi | ||||
|
||||||
|
Masaaki Hayashi | |||||
|
Senior Vice President and Director | |||||
|
Senior Group Executive, | |||||
|
Information & Telecommunication Systems Group |
2
3
4
5
6
|
OPNEXT, INC. | |||
|
||||
|
||||
|
|
|||
|
Title: | |||
|
||||
|
||||
|
||||
|
PARTICIPANT |
7
2
3
4
5
6
7
|
OPNEXT, INC. | |||
|
||||
|
||||
|
|
|||
|
Title: | |||
|
||||
|
||||
|
||||
|
PARTICIPANT |
8
2
3
4
5
6
7
8
OPNEXT, INC.
|
||||
/s/ Isao Ono | ||||
By: Isao Ono | ||||
Title: | Chairman | |||
/s/ Harry L. Bosco | ||||
Harry L. Bosco | ||||
9
2
3
4
|
OPNEXT, INC. | |||
|
||||
|
||||
|
|
|||
|
Title: | |||
|
||||
|
||||
|
||||
|
PARTICIPANT |
5
3
4
5
6
7
OPNEXT, INC. | ||||||
|
||||||
|
By: | |||||
|
Title: | |||||
|
||||||
(PARTICIPANT) | ||||||
|
||||||
|
By: | |||||
|
Title: | |||||
|
||||||
Participants Address: | ||||||
|
||||||
|
||||||
|
||||||
|
||||||
|
Attn: | |||||
|
Section 1. Definitions
|
6 | |||
|
||||
(a) Affiliate
|
6 | |||
(b) Assigned IP
|
6 | |||
(c) Average Man-Month Cost
|
6 | |||
(d) Business
|
6 | |||
(e) Commercially Reasonable Efforts
|
6 | |||
(f) Confidential Information
|
6 | |||
(g) Cure Period
|
6 | |||
(h) Current R&D Projects
|
6 | |||
(i) Dispute Notice
|
7 | |||
(j) Existing R&D Agreements
|
7 | |||
(k) Future R&D Projects
|
7 | |||
(l) Hitachi R&D IP
|
7 | |||
(m) Intellectual Property
|
7 | |||
(n) Inventor
|
7 | |||
(o) Jointly Developed Intellectual Property
|
7 | |||
(p) Licensed Hitachi R&D IP
|
7 | |||
(q) Licensed IP
|
7 | |||
(r) Losses
|
7 | |||
(s) Mark-Up
|
7 | |||
(t) Mark-Up Fee
|
7 | |||
(u) Minority-Owned Affiliate
|
8 | |||
(v) Monthly Cost
|
8 | |||
(w) New Development Costs
|
8 | |||
(x) Old Development Costs
|
8 | |||
(y) OpNext Japan R&D IP
|
8 | |||
(z) Person
|
8 | |||
(aa) Project Manager
|
8 | |||
(bb) R&D Plan
|
8 | |||
(cc) R&D Procedures
|
8 | |||
(dd) R&D Project
|
8 | |||
(ee) R&D Support
|
9 | |||
(ff) Second Closing
|
9 | |||
(gg) Second Closing Date
|
9 | |||
(hh) Subsidiary
|
9 | |||
(ii) Total Project Cost
|
9 | |||
(jj) Wholly-Owned Subsidiary
|
9 | |||
|
||||
Section 2. Research and Development Obligations
|
9 | |||
|
||||
(a) Current Research and Development
|
9 | |||
(b) Future Research and Development
|
10 | |||
(i) Meetings
|
10 | |||
(ii) Requests and Forecasts
|
10 | |||
(iii) Support
|
10 |
- 2 -
(c) Assignment and License of OpNext Japan R&D IP
|
10 | |||
(i) Assignment and License
|
10 | |||
(ii) Termination Conditions
|
11 | |||
(iii) Review of Obligations
|
11 | |||
|
||||
Section 3. Exclusions from Research and Development Obligations
|
11 | |||
|
||||
(a) Hitachi
|
11 | |||
(b) OpNext Japan
|
12 | |||
|
||||
Section 4. Ownership of Intellectual Property Rights
|
12 | |||
|
||||
(a) OpNext Japans Intellectual Property
|
12 | |||
(b) Hitachis R&D Intellectual Property
|
12 | |||
(c) Jointly Developed Intellectual Property
|
12 | |||
(i) Hitachi Owned
|
12 | |||
(ii) Jointly Owned
|
12 | |||
(iii) OpNext Japan Owned
|
13 | |||
(d) Ownership Determination
|
14 | |||
|
||||
Section 5. Cross License of Intellectual Property
|
14 | |||
|
||||
(a) OpNext Japan R&D IP License
|
14 | |||
(b) Hitachi R&D IP License
|
14 | |||
(c) Transfer of Licensed IP
|
14 | |||
(d) Termination Conditions
|
15 | |||
(e) Review of Obligations
|
15 | |||
|
||||
Section 6. Covenants to Protect Intellectual Property
|
15 | |||
|
||||
(a) Notice of Infringement
|
15 | |||
(b) Infringement Suits on Jointly Developed Intellectual Property
|
16 | |||
(c) Infringement of Licensed Hitachi R&D IP
|
16 | |||
|
||||
Section 7. Inventor Compensation
|
16 | |||
|
||||
Section 8. Warranties and Limitations
|
16 | |||
|
||||
(a) Existing R&D Agreements
|
16 | |||
(b) Disclaimer of Warranties
|
16 | |||
(c) Indemnification by Hitachi
|
17 | |||
(d) IP Infringement Indemnification
|
17 | |||
(e) Indemnification by OpNext Japan
|
18 | |||
(f) Limitation of Liability
|
18 | |||
|
||||
Section 9. Expenses
|
18 | |||
|
||||
Section 10. Termination
|
18 | |||
|
||||
Section 11. Confidentiality
|
18 | |||
|
||||
(a) Confidentiality Obligations
|
19 | |||
(b) Exclusions
|
19 | |||
(c) Injunctive Relief
|
20 | |||
(d) Ownership
|
20 | |||
(e) Press Releases and Announcements
|
20 |
- 3 -
Section 12. Export Control
|
20 | |||
|
||||
Section 13. Notices
|
20 | |||
|
||||
Section 14. Amendment and Waiver
|
22 | |||
|
||||
Section 15. Assignment
|
22 | |||
|
||||
Section 16. Counterparts
|
22 | |||
|
||||
Section 17. Delivery by Facsimile
|
22 | |||
|
||||
Section 18. Exhibits and Schedules
|
23 | |||
|
||||
Section 19. Further Assurances
|
23 | |||
|
||||
Section 20. Governing Law
|
23 | |||
|
||||
Section 21. Dispute Resolution
|
23 | |||
|
||||
Section 22. Interpretation
|
23 | |||
|
||||
Section 23. No Strict Construction
|
24 | |||
|
||||
Section 24. Recordation
|
24 | |||
|
||||
Section 25. Relationship of the Parties
|
24 | |||
|
||||
Section 26. Schedules or Exhibits
|
24 | |||
|
||||
Section 27. Severability
|
24 | |||
|
||||
Section 28. Submission to Jurisdiction; Waivers
|
24 | |||
|
||||
Section 29. Survival
|
25 | |||
|
||||
Section 30. Third-Party Beneficiaries
|
25 | |||
|
||||
Section 31. Entire Agreement
|
25 |
- 4 -
- 5 -
- 6 -
- 7 -
- 8 -
- 9 -
- 10 -
- 11 -
- 12 -
- 13 -
- 14 -
- 15 -
- 16 -
- 17 -
- 18 -
- 19 -
- 20 -
- 21 -
- 22 -
- 23 -
- 24 -
- 25 -
OPNEXT JAPAN, INC. | ||||||
|
||||||
|
By: | /s/ Junsuke Kusanagi | ||||
|
||||||
|
Junsuke Kusanagi | |||||
|
President | |||||
|
||||||
HITACHI, LTD. | ||||||
|
||||||
|
By: | /s/ Masaaki Hayashi | ||||
|
||||||
|
Masaaki Hayashi | |||||
|
Senior Vice President and Director | |||||
|
Senior Group Executive, Information & | |||||
|
Telecommunication Systems Group |
CLARITY PARTNERS, L.P. | ||||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its general partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member | |||||
|
||||||
CLARITY OPNEXT HOLDINGS I, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its general partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member |
CLARITY OPNEXT HOLDINGS II, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its general partner | |||||
|
||||||
|
By: | /s/ David Lee | ||||
|
||||||
|
David Lee | |||||
|
Managing Member |
1
2
3
4
5
6
7
8
9
10
11
OPNEXT JAPAN, INC. | ||||||
|
||||||
|
By: | /s/ Tadayuki Kanno | ||||
|
||||||
|
Tadayuki Kanno | |||||
|
President | |||||
|
||||||
HITACHI, LTD. | ||||||
|
||||||
|
By: | /s/ Satoru Ito | ||||
|
||||||
|
Satoru Ito | |||||
|
President and Chief Executive Officer, | |||||
|
Semiconductor & Integrated Circuits | |||||
|
||||||
OPTO-DEVICE, LTD. | ||||||
|
||||||
|
By: | /s/ Yasutoshi Kashiwada | ||||
|
||||||
|
Yasutoshi Kashiwada | |||||
|
President |
1
2
3
4
5
6
7
8
9
OPNEXT JAPAN, INC.
|
HITACHI, LTD. | |||||
|
||||||
/s/ Kei Oki
|
/s/ Naoya Takahashi
|
|||||
Name: Kei Oki
|
Name: Naoya Takahashi | |||||
Title: President
|
Title: Vice President and Executive Officer |
10
Section 1. Definitions
|
1 | |||
|
||||
(a) Affiliate
|
1 | |||
(b) Applicable Products
|
1 | |||
(c)
Average Man-Month Cost
|
1 | |||
(d) Base Agreement
|
1 | |||
(e) Business
|
1 | |||
(f) Business Day
|
1 | |||
(g) Clarity Parties
|
2 | |||
(h) Commercially Reasonable Efforts
|
2 | |||
(i) Confidential Information
|
2 | |||
(j) Cure Period
|
2 | |||
(k) Dispute Notice
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2 | |||
(l) Effective Date
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2 | |||
(m) Exhibit
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2 | |||
(n) Existing R&D Agreements
|
2 | |||
(o) Hitachi R&D IP
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2 | |||
(p) Intellectual Property
|
2 | |||
(q) Inventor
|
3 | |||
(r) IP License Agreement
|
3 | |||
(s) Jointly Developed Intellectual Property
|
3 | |||
(t) Licensed Hitachi R&D IP
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3 | |||
(u) Licensed IP
|
3 | |||
(v) Losses
|
3 | |||
(w)
Mark-Up
|
3 | |||
(x)
Mark-Up Fee
|
3 | |||
(y)
Minority-Owned Affiliate
|
3 | |||
(z) Monthly Cost
|
3 | |||
(aa) New Development Costs
|
3 | |||
(bb) Old Development Costs
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4 | |||
(cc) OpNext Japan
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4 | |||
(dd) OpNext Japan Agreement
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4 | |||
(ee) OpNext R&D IP
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4 | |||
(ff) Permitted Entities
|
4 | |||
(gg) Person
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4 | |||
(hh) Products
|
4 | |||
(ii) Project Manager
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4 | |||
(jj) R&D Agreement
|
4 | |||
(kk) R&D Plan
|
4 | |||
(ll) R&D Procedures
|
4 | |||
(mm) R&D Projects
|
4 | |||
(nn) R&D Support
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5 | |||
(oo) Related Parties
|
5 |
i
(pp) Statement of Work
|
5 | |||
(qq) Subsidiary
|
5 | |||
(rr) Total Project Cost
|
5 | |||
(ss)
Wholly-Owned Subsidiary
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5 | |||
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Section 2. Research and Development Services
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5 | |||
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(a) Meetings
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6 | |||
(b) Request and Forecasts
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6 | |||
(c) Support
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6 | |||
|
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Section 3. Exclusions from Research and Development Services
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6 | |||
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(a) Hitachi
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6 | |||
(b) OpNext
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6 | |||
|
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Section 4. Ownership of Intellectual Property Right
|
7 | |||
|
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(a) OpNexts R&D Intellectual Property
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7 | |||
(b) Hitachis R&D intellectual Property
|
7 | |||
(c) Jointly Developed Intellectual Property
|
7 | |||
(d) Ownership Determination
|
8 | |||
|
||||
Section 5. Cross License of Intellectual Property
|
9 | |||
|
||||
(a) OpNext R&D IP License
|
9 | |||
(b) Hitachi R&D IP License
|
9 | |||
(c) Transfer of Hitachi R&D IP
|
10 | |||
(d) Termination Conditions
|
10 | |||
(e) Range of License
|
10 | |||
|
||||
Section 6. Covenants to Protect Intellectual Property
|
11 | |||
|
||||
(a) Notice of Infringement
|
11 | |||
(b) Infringement Suits on Jointly Developed Intellectual Property
|
11 | |||
(c) Infringement of Licensed Hitachi R&D IP
|
11 | |||
|
||||
Section 7. Inventor Compensation
|
11 | |||
|
||||
Section 8. Warranties and Limitations
|
12 | |||
|
||||
(a) Existing R&D Agreements
|
12 | |||
(b) Disclaimer of Warranties
|
12 | |||
(c) Indemnification by Hitachi
|
12 | |||
(d) Indemnification by OpNext
|
12 | |||
(e) IP Infringement Indemnification
|
12 | |||
(f) Patent Infringement
|
13 | |||
(g) Limitation of Liability
|
13 |
ii
Section 9. Expenses
|
13 | |||
|
||||
Section 10. Termination
|
13 | |||
|
||||
Section 11. Confidentiality
|
14 | |||
|
||||
(a) Confidentiality Obligations
|
14 | |||
(b) Exclusions
|
14 | |||
(c) Injunctive Relief
|
15 | |||
(d) Ownership
|
15 | |||
(e) Press Releases and Announcements
|
15 | |||
|
||||
Section 12. Export Control
|
15 | |||
|
||||
Section 13. Notices
|
16 | |||
|
||||
Section 14. Amendment and Waiver
|
17 | |||
|
||||
Section 15. Assignment
|
17 | |||
|
||||
Section 16. Counterparts
|
17 | |||
|
||||
Section 17. Delivery by Facsimile
|
17 | |||
|
||||
Section 18. Exhibits and Schedules
|
18 | |||
|
||||
Section 19. Further Assurances
|
18 | |||
|
||||
Section 20. Governing Law
|
18 | |||
|
||||
Section 21. Dispute Resolution
|
18 | |||
|
||||
Section 22. Interpretation
|
18 | |||
|
||||
Section 23. No Strict Construction
|
18 | |||
|
||||
Section 24. Recordation
|
19 | |||
|
||||
Section 25. Relationship of the Parties
|
19 | |||
|
||||
Section 26. Severability
|
19 | |||
|
||||
Section 27. Submission to Jurisdiction
|
19 | |||
|
||||
Section 28. Survival
|
19 | |||
|
||||
Section 29. Third-Party Beneficiaries
|
20 | |||
|
||||
Section 30. Entire Agreement
|
20 |
iii
Section 31. Bankruptcy
|
20 | |||
|
||||
Section 32. Order of Precedence
|
20 |
iv
List of Exhibits | ||
Exhibit A
|
Calculation of Mark-Up Fee | |
Exhibit B
|
R&D Procedures | |
Exhibit C
|
Arbitration Procedures | |
Exhibit D
|
List of Permitted Entities | |
Exhibit E
|
Form of Statement of Work |
v
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OPNEXT, INC.
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By: | /s/ Minoru Maeda | |||
Minoru Maeda, Ph.D. | ||||
Board Director
Chief Operating Officer |
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HITACHI, LTD.
|
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By: | /s/ Michiharu Nakamura | |||
Michiharu Nakamura, Ph.D. | ||||
Corporate Officer and President, Research and Development Group | ||||
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OPNEXT, INC.
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By: | /s/ Harry L. Bosco | |||
Harry L. Bosco | ||||
Chief Executive Officer and President | ||||
HITACHI, LTD.
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By: | /s/ Michiharu Nakamura | |||
Michiharu Nakamura, Ph.D | ||||
Corporate Officer and President, Research and Development Group | ||||
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OPNEXT, INC.
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HITACHI, LTD. | |||
|
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/s/ Harry L. Bosco
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/s/ Naoya Takahashi
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Title: President and Chief Executive Officer
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Title: Vice President and Executive Officer |
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OPNEXT JAPAN, INC.
|
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By: | /s/ Junsuke Kusanagi | |||
Junsuke Kusanagi | ||||
President | ||||
HITACHI, LTD.
|
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By: | /s/ Eiji Aoki | |||
Eiji Aoki | ||||
Managing Officer & Administrative Officer
President, Telecommunication Systems Division |
HITACHI, LTD.
|
OPNEXT JAPAN, INC. | |||||
/s/ Naoya Takahashi
|
/s/ Kei Oki | |||||
|
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Name: Naoya Takahashi
|
Name: Kei Oki | |||||
Title: Vice President and Executive
Officer
|
Title: President, Opnext Japan, Inc. |
1. | Certain Definitions . Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Stock Contribution Agreement. In addition, as used in this Agreement, the following terms shall have the meanings ascribed to them below: |
1.1 | Optronic Components shall mean any components or products produced, marketed and/or sold as of or after the Effective Date by any member of the OpNext Group for use in any form of data communications system, cable |
system, fiber optic system, wireless system and/or other similar systems (including without limitation transmitters, receivers, transceivers, laser diode modules, photo diode modules, parallel optical interconnectors, lasers, photodiodes, modulators, amplifier modules, optical switches and optical wave guides). As used herein, the term Optronic Components shall also mean such components or products as described in the preceding sentence that are produced, marketed and/or sold by entities other than the OpNext Group. | |||
1.2 | Qualified Public Offering shall have the meaning set forth in the Stockholders Agreement of even date herewith, between Clarity, Holdings I, Holdings II, Hitachi and the Company. |
2. | Sale and Supply of Optronic Components . Subject to the terms and conditions of this Agreement, Hitachi agrees to use the OpNext Group as its preferred provider (subject to the terms and conditions set forth in Section 2.1 below) for Optronic Components. |
2.1 | Preferred Provider . Subject to Hitachis needs for such products, Hitachi agrees to purchase all of its requirements for products of the type or similar to those included within the definition of Optronic Components from the Company or any other member of the OpNext Group offering Optronic Components for sale during the term of this Agreement, subject to the following terms and conditions with respect to each purchase of such products: (i) the Optronic Components being offered by the Company (or such other member of the OpNext Group) shall be suitable for Hitachis requirements for volume, specifications and quality (it being agreed that an Optronic Component will be deemed to be of suitable specifications and quality if it substantially conforms to the specifications and quality standards set by Hitachi for the specific product); (ii) the pricing to Hitachi for the applicable Optronic Components shall be at or below the aggregate price(s) at which a comparable volume of Optronic Components with substantially the same specifications and quality could be purchased in the market; and (iii) the Optronic Components being offered shall meet Hitachis customary requirements for delivery schedule; provided , however , Hitachis foregoing commitment shall be reduced to the extent (a) Hitachis customers require Optronic Components to be purchased from multiple vendors, in which case Hitachi shall use Commercially Reasonable Efforts to obtain written notice thereof from such customers, and to the extent Hitachi is unable to obtain written notice from a customer after Commercially Reasonable Efforts, Hitachi shall provide the Company with written notice thereof; (b) Hitachis customers require that Optronic Components be purchased from vendors other than a member of the OpNext Group, in which case Hitachi shall use Commercially Reasonable Efforts to obtain written notice thereof from such customers, and to the extent Hitachi is unable to obtain written notice from a customer after Commercially Reasonable Efforts, Hitachi shall provide the Company with written notice thereof; (c) prudent business practices require Hitachi to maintain a second supply source for certain Optronic Components; |
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(d) the Company (or such other member of the OpNext Group) is unable to meet Hitachis or its customers written, good faith requirements for technical support and technical data; or (e) the Company (or such other member of the OpNext Group) is not able to meet Hitachis or its customers written, good faith requirements concerning time-to-market for new products; provided , further , Hitachi may only purchase Optronic Components from vendors other than members of the OpNext Group pursuant to clause (c) above in any trailing twelve (12)-month period if, and only in the amount by which, Hitachis aggregate purchases pursuant to clauses (a) and (b) above (if any) are less than twenty-percent (20%) of Hitachis total purchases (based on purchase price) of Optronic Components from all vendors (including members of the OpNext Group) during such trailing twelve (12)-month period, and in no event shall Hitachis purchases pursuant to clause (c) exceed twenty-percent (20%) of Hitachis total purchases of Optronic Components from vendors other than members of the OpNext Group during such trailing twelve (12)-month period. | |||
2.2 | Specifications . Notwithstanding any provision of this Agreement to the contrary, Hitachi shall provide written notice to the Company (or such other member of the OpNext Group) of the specifications for each Optronic Component that Hitachi intends to purchase (whether from the Company, its Subsidiaries or any other supplier of such component) for incorporation into Hitachi products as soon as reasonably possible after Hitachi has determined such specifications. Hitachi shall provide written notice to the Company (or such other member of the OpNext Group) of any modification to such specifications as soon as reasonably possible after Hitachi has determined such modified specifications. |
3. | Definitive Procurement Agreement . |
3.1 | Procurement Agreement . Subject to the terms and conditions set forth herein, Hitachi and OpNext Japan shall, simultaneous with the execution of this Agreement, enter into a definitive procurement agreement on commercially reasonable terms pursuant to which Hitachi may purchase Optronic Components from OpNext Japan (the Procurement Agreement ). The Procurement Agreement will contain the definitive terms for Hitachis purchase of any Optronic Components from OpNext Japan, including but not limited to the following: (i) price and payment terms; (ii) establishment of a rolling forecast of demand by Hitachi for its Optronic Components needs; (iii) shipment and delivery terms; (iv) title and risk of loss; (v) inspection rights; (vi) quality control; (vii) warranty(ies); (viii) intellectual property rights; and (ix) modification and cancellation of purchase orders. The Procurement Agreement and any other procurement agreement entered into between Hitachi and any other member of the OpNext Group shall in all cases be subject to the terms and conditions set forth in Section 2.1 hereof. The Procurement Agreement shall be governed by the laws of Japan and any dispute arising therefrom shall be arbitrated in accordance with Section 8 and Exhibit A hereof. In the event that Optronic Components are offered for sale |
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by any other member of the OpNext Group (other than OpNext Japan), Hitachi and such other member of the OpNext Group will enter into a definitive procurement agreement on substantially the same terms as the Procurement Agreement (except that the governing law shall be the jurisdiction of organization of such other member of the OpNext Group). |
4. | Administration of Relationship . |
4.1 | Designation of Representatives . Each of the Company and Hitachi will designate one (1) individual (each, a Representative ) in writing to manage its sale or purchase, as applicable, of the Optronic Components to or from the other party and to coordinate its activities under this Agreement with the other party. The initial Representative for the Company will be Harry Bosco, and the initial Representative for Hitachi will be Eiji Aoki. The Representative for each party may be replaced from time to time by that party and such party shall promptly provide written notice thereof to the other party. | ||
4.2 | Meetings of Representatives . The Representatives from the Company and Hitachi will schedule formal meetings, at mutually agreeable times at least bi-monthly during the term of this Agreement to be attended by authorized management personnel of both parties with responsibility for and authority over the matters to be discussed at such meetings. At such meetings, the parties will discuss the status of the activities contemplated under this Agreement as well as, among other things: (i) the status of any outstanding purchase orders, including any actual or anticipated delays in meeting the delivery schedules or quantities specified in such purchase orders; (ii) any current or anticipated Optronic Component shortages or third-party customer requirements that could adversely affect the ability of a party to meet the other partys Optronic Component needs; (iii) the OpNext Groups pricing for Optronic Components relative to market prices; (iv) the OpNext Groups delivery times for Optronic Components relative to the delivery times of competing suppliers; and (v) any modifications of Optronic Component specifications that may be necessary to satisfy the needs of the other party. Similar meetings shall be held at least quarterly during the term of this Agreement to discuss, among other things, Hitachis anticipated future Optronic Component requirements. | ||
4.3 | Product Evolution Meetings . Beginning within sixty (60) days after the Effective Date and no less than every six (6) months thereafter, the Representatives will have formal meetings at mutually agreeable times during the term of this Agreement, to be attended by authorized management personnel of both parties, to discuss all relevant information (including without limitation the following information: (i) current and anticipated product development plans; (ii) anticipated product evolution; (iii) market trends; (iv) technological advances; (v) end-user satisfaction data; and (vi) end-user requirements and demands) related to the development and evolution of Hitachi products that are reasonably anticipated over the next |
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twenty-four (24) month period that might incorporate Optronic Components or products that the OpNext Group could reasonably develop during the relevant time period. During these meetings, Hitachi shall at a minimum share with the Company information substantially similar to that information shared with any other entity that makes components or products similar to the Optronic Components. Such discussions will be for informational purposes only, and any proposed product developments and the like emanating from such discussions will not be binding on either party. Notwithstanding anything to the contrary contained in this Section 4.3, the parties acknowledge and agree that Hitachi shall not be obligated to disclose to the Company any information to the extent such disclosure would result in a breach of Hitachis confidentiality obligations to any other Person; provided , however , Hitachi shall notify the Company in writing of any failure by Hitachi to disclose information covered by this Section 4.3 in order to avoid breaching its confidentiality obligations to any other Person; provided further , Hitachi shall use Commercially Reasonable Efforts (including assisting the Company in entering into confidentiality agreements with such other Person) to enable Hitachi to disclose such information to the Company without Hitachi breaching its confidentiality obligations to such other Person. |
5. | Term and Termination . |
5.1 | Term . The initial term of this Agreement shall commence on the Effective Date and continue until the earlier of either (i) the third anniversary of the date of a Qualified Public Offering of the Company, or (ii) five (5) years from the Effective Date, unless earlier terminated as specified herein; provided , however , Hitachi shall have no obligation to purchase Optronic Components under this Agreement at times when Hitachis Telecommunications Systems Division ( TSD ) or its successor neither manufactures nor sells products that use Optronic Components. | ||
5.2 | Termination . |
5.2.1 | Subject to Section 5.2.2, either party may terminate this Agreement if a material breach or default of this Agreement by the other party hereto continues for sixty (60) days after written notice to such breaching or defaulting party. If the nature of the cure for any non-monetary breach or default is such that it is reasonably expected to take longer than sixty (60) days, the breaching or defaulting party shall be given an additional thirty (30) days to cure such breach or default, provided that the cure is commenced during the original sixty (60)-day period and is diligently carried out thereafter. In the event that the material breach or default is not cured within the periods specified above after delivery of the notice, the non-breaching or non-defaulting party may terminate this Agreement in writing as of the date specified in the termination notice. If the default or breach is not susceptible to cure, the party providing notice will be entitled to terminate this Agreement immediately upon written notice to the other party. The terminating party shall have all rights and remedies set forth in this Agreement. |
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5.2.2 | So long as Hitachi and its Affiliates directly or indirectly hold voting securities of the Company representing a majority voting interest in the Company or have the right to designate a majority of the Companys directors pursuant to the Stockholders Agreement, Hitachi may not terminate this Agreement as a result of any breach hereof by the Company, material or otherwise. |
5.3 | Survival . The provisions of Sections 5.3 (Survival), 6 (Confidentiality), 7 (Limitation of Liability), 8 (Arbitration), and 9 (General Provisions) shall survive termination of this Agreement. |
6. | Confidentiality . |
6.1 | Confidentiality Obligation of the Company : With respect to any information furnished or disclosed to the Company pursuant to this Agreement which the Company reasonably understands to be proprietary or confidential in nature, the Company shall maintain the confidentiality of all such information in accordance with the Companys policies for the protection of its own nonpublic information. The limitations set forth in this Section 6.1 shall not apply with respect to the disclosure of any information: (i) to the Companys employees, auditors, counsel or other professional advisors or to members of the OpNext Group, if the Company, in its sole discretion, determines that it is reasonably necessary for such Person to have access to such information, provided that any such Person agrees to be bound by the provisions of this Section 6.1 to the same extent as the Company; provided , however , that prior to the disclosure of such proprietary or confidential information to a member of the OpNext Group that is not a direct or indirect wholly-owned Subsidiary of the Company, the Company shall obtain Hitachis prior consent, which consent shall not be unreasonably withheld; (ii) as has become or previously was generally available to the public other than by reason of a breach of this Section 6.1 by the Company or has become available to the Company on a non-confidential basis; (iii) as may be required or reasonably necessary in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over the Company (it being understood that, to the extent practicable, the Company shall provide Hitachi with prompt notice of any such event and cooperate in good faith to enable Hitachi to participate to protect its interest in such confidential information); (iv) as may be required or reasonably necessary in response to any summons or subpoena or in connection with any litigation; (v) in order to comply with any law, order, regulation or ruling applicable to the Company; and (vi) to the extent related to the Business or the Assets (as defined in the Stock Contribution Agreement). |
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6.2 | Confidentiality Obligations of Hitachi : With respect to any information furnished or disclosed to Hitachi pursuant to this Agreement which Hitachi reasonably understands to be proprietary or confidential in nature, Hitachi shall maintain the confidentiality of all such information in accordance with Hitachis policies for the protection of its own nonpublic information. The limitations set forth in this Section 6.2 shall not apply with respect to the disclosure of any information: (i) to Hitachis employees, auditors, counsel or other professional advisors or to Hitachis direct or indirect wholly-owned Subsidiaries, if Hitachi, in its sole discretion, determines that it is reasonably necessary for such Person to have access to such information, provided that any such Person agrees to be bound by the provisions of this Section 6.2 to the same extent as Hitachi; (ii) as has become or previously was generally available to the public other than by reason of a breach of this Section 6.2 by Hitachi or has become available to Hitachi on a non-confidential basis; (iii) as may be required or reasonably necessary in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over Hitachi (it being understood that, to the extent practicable, Hitachi shall provide the Company with prompt notice of any such event and cooperate in good faith to enable the Company to participate to protect its interest in such confidential information); (iv) as may be required or reasonably necessary in response to any summons or subpoena or in connection with any litigation; and (v) in order to comply with any law, order, regulation or ruling applicable to Hitachi. | ||
6.3 | Protection of Optronic Components . Prior to the release of any Optronic Components to the public markets or the general availability of such Optronic Components publicly, Hitachi may not, and may not permit any of its Subsidiaries to, reverse engineer, decompile or reverse assemble any Optronic Components, except as otherwise permitted by law. Any schematic, specification, chip design or design capabilities provided to Hitachi by any member of the OpNext Group for assembly, maintenance or other purposes related to the sale or purchase of Optronic Components hereunder (except to the extent that such document or other information is or becomes generally available to the public) shall be maintained in confidence and shall not be duplicated or disclosed except to the extent necessary for Hitachi to carry out its obligations hereunder. | ||
6.4 | Injunctive Relief . The parties acknowledge and agree that money damages would be inadequate to remedy any breach of the confidentiality obligations in Sections 6.1, 6.2 or 6.3 and that the non-breaching party shall be entitled to obtain equitable and any other available remedies with respect to any such breach, including injunctive relief. |
7. | Limitation of Liability . |
7.1 | IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT OR ITS SUBSIDIARIES BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR DAMAGES FOR LOSS OF PROFITS, REVENUE, OR USE INCURRED BY THE OTHER PARTY OR ITS SUBSIDIARIES OR ANY THIRD |
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PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN ANY TWELVE (12) MONTH PERIOD, THE LIABILITY OF A PARTY AND ITS SUBSIDIARIES FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, THE PROCUREMENT AGREEMENT AND ANY OTHER PROCUREMENT AGREEMENT ENTERED INTO BETWEEN HITACHI AND ANY OTHER MEMBER OF THE OPNEXT GROUP (EXCEPT IN CONNECTION WITH A BREACH OF A PARTYS CONFIDENTIALITY OBLIGATIONS PURSUANT TO SECTIONS 6.1, 6.2 AND 6.3 HEREOF OR THE CONFIDENTIALITY OBLIGATIONS OF THE RELEVANT PROCUREMENT AGREEMENT) SHALL NOT, IN THE AGGREGATE, EXCEED U.S. $36 MILLION. | |||
7.2 | The limitations or exculpation of liability set forth in Section 7.1 shall not be applicable to any breach of Section 9.3 below or any failure by Hitachi to pay for any Optronic Components purchased hereunder. |
8. | Arbitration . Except for actions seeking injunctive relief or for confirmation or enforcement of an arbitration award, in the event the parties are unable to resolve any dispute arising under this Agreement, a party shall submit the matter to arbitration in accordance with the arbitration procedures set forth in Exhibit A hereto. | |
9. | General Provisions . |
9.1 | Governing Law . This Agreement (it being understood that the Procurement Agreement will be governed by the laws of Japan) will be interpreted, construed and enforced in all respects in accordance with the laws of the State of New York without giving effect to (i) the choice of law or conflict of law rules or provisions of the State of New York or any other jurisdiction, (ii) the United Nations Convention on Contracts for the International Sale of Goods, (iii) the 1974 Convention on the Limitation Period in the International Sale of Goods, (iv) the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, and (v) the Uniform Computer Information Transactions Act. | ||
9.2 | Submission to Jurisdiction; Waivers . With respect to those disputes not required to be submitted to arbitration hereunder as set forth in Section 8 above, each party to this Agreement hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York located in New York City, the courts of the United States of America situated in New York City, and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or |
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claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth herein or at such other address of which the agent shall have been notified pursuant thereto, to the extent permitted by law; and (iv) agrees that nothing contained herein shall affect the right to effect service of process in any other manner permitted by law. | |||
9.3 | Sale of TSD . Subject to Section 9.11, Hitachi shall not sell TSD or TSDs business or all or substantially all of TSDs assets to a third party unless the purchaser agrees to assume Hitachis obligations under this Agreement. | ||
9.4 | Relationship of the Parties . Each party is an independent contractor and nothing in this Agreement shall be construed to create a partnership, joint venture, agency, or employer/employee relationship between the parties. | ||
9.5 | Amendment and Waiver . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Company and Hitachi. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. | ||
9.6 | Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail, air mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by facsimile transmission to the parties at the address set forth below or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices shall be deemed to have been given hereunder on the date delivered when delivered personally, five (5) days after deposit in the U.S. mail or Japanese mail, one (1) day after deposit with a reputable overnight courier service (three days if overseas) and on the next business day if sent by facsimile transmission with confirmation of receipt. The addresses for the Company and Hitachi are: |
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9.7 | Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or affect the validity, legality or enforceability of any provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. | ||
9.8 | Interpretation . The headings and captions contained in this Agreement are for reference purposes only and do not constitute a part of this Agreement. The use of the word including herein shall mean including without limitation. | ||
9.9 | Entire Agreement . Except as otherwise expressly set forth herein, this Agreement, together with the other agreements entered into in connection with the Stock Purchase Agreement, embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. The provisions of each of the agreements executed in connection with the Stock Purchase Agreement shall be construed to give effect to the provisions of each of the other agreements to the greatest extent possible. |
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9.10 | Force Majeure . Neither party to this Agreement shall be held responsible for any failure or delay in performance under this Agreement, except any obligation to pay money, where such performance is rendered impracticable by any act of war, fire, flood, other natural disaster, epidemic, strikes and other causes similar to those listed, in each case where failure to perform is beyond the control, and not caused by the negligence, of the nonperforming party. | ||
9.11 | Assignment . This Agreement shall be binding upon and shall inure to the benefit of, the parties and their respective successors and permitted assigns. Neither party may assign its rights (including by operation of law), or delegate the performance of its obligations, under this Agreement, or any part hereof, without the prior written consent of the other; provided , however , that Hitachis consent shall not be unreasonably withheld in the case of any assignment by the Company to any of its direct or indirect majority owned Subsidiaries for so long as (i) Hitachi and its Affiliates directly or indirectly hold voting securities of the Company representing a majority voting interest in the Company or have the right to designate a majority of the Companys directors pursuant to the Stockholders Agreement, (ii) the Company remains liable for the performance of any such assignees obligations hereunder and any liability incurred in connection therewith, and (iii) such assignment does not result in any additional costs for which Hitachi shall be liable. Any assignment in violation of this Section 9.11 shall be void. | ||
9.12 | Representation by Counsel; Interpretation . Hitachi and the Company acknowledge that each of them has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. | ||
9.13 | Exhibits and Schedules . All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. | ||
9.14 | Delivery by Facsimile . This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the enforceability of a contract and each such party forever waives any such defense. |
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9.15 | Third Party Beneficiaries . The Company and Hitachi acknowledge and agree that this Agreement is intended not only for the benefit of themselves and their Affiliates but also for the benefit of the Clarity Parties and their permitted assigns under the Stock Purchase Agreement, and by reason thereof, the Clarity Parties and their permitted assigns under the Stock Purchase Agreement possess legal, equitable and any other rights hereunder as third-party beneficiaries of this Agreement. | ||
9.16 | Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement. |
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OPNEXT, INC. | ||||
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By: | /s/ Harry L. Bosco | ||
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Harry L. Bosco | |||
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Chief Executive Officer and President | |||
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HITACHI, LTD. | ||||
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By: | /s/ Eiji Aoki | ||
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Eiji Aoki | |||
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Managing Officer & Administrative Officer
President, Telecommunication Systems Division |
HITACHI, LTD. | OPNEXT, INC. | |||||||
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/s/ Naoya Takahashi | /s/ Harry L. Bosco | |||||||
Name:
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Naoya Takahashi | Name: | Harry L. Bosco | |||||
Title:
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Vice President and Executive Officer | Title: | President & CEO |
1. | Certain Definitions . Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Preferred Provider Agreement. In addition, as used in this Agreement, the following terms shall have the meanings ascribed to them below. |
1.1 | Customers shall mean the Customers for whom the Purchaser is performing work in which the Products (as defined below) are to be incorporated. |
1.2 | Products shall mean any components or products produced, marketed and/or sold currently and in the future by any member of the OpNext Group for use in any form of data communications system, cable system, fiber optic system, wireless system and/or other similar systems (including without limitation transmitters, receivers, transceivers, laser diode modules, photo diode modules, parallel optical interconnectors, lasers, photodiodes, modulators, amplifier modules, optical switches and optical wave guides). | ||
1.3 | day, week, month, and year means the solar calendar or Gregorian Calendar day, week, month, and year in Japan. |
2. | Rolling Forecast . Purchaser shall furnish to Seller on the first (1 st ) day of each month a rolling three (3) months Products requirement forecast (each, a Rolling Forecast) which shall indicate the forecasted amount of Products to be purchased for each of the upcoming three months. For example, Purchaser will furnish to Seller on January 1 st the forecasted amount of Products to be purchased for the months of February, March and April and Purchaser will furnish to Seller on February 1 st the forecasted amount of Products to be purchased for the months of March, April and May. If Purchaser fails to submit a Rolling Forecast by the first (1 st ) day in any given month, the most recent Rolling Forecast submitted by Purchaser shall apply. | |
The forecast for the first two (2) months of each such Rolling Forecast shall be Purchasers firm commitment (Firm Commitment) to purchase which cannot be cancelled, except upon Sellers written consent. The subsequent one (1) month forecast shall be for informational purposes only and shall not be binding upon Purchaser. Six (6) months after the Effective Date, the parties will negotiate in good faith to attempt to shorten the time periods set forth in this paragraph in order to reflect changes in Sellers manufacturing capacity. After submitting a Rolling Forecast to Seller, Purchaser may increase or decrease the quantity of Products to be purchased in the first two (2) months of each Rolling Forecast, but only with Sellers written consent. |
3. | Purchase Order and Change of Purchase Order . |
3.1 | Purchase Order . Purchaser shall initiate a purchase by sending Seller a written purchase order (Purchase Order). Neither Purchasers failure to submit a Purchase Order to Seller nor anything contained in any Purchase Order shall diminish Purchasers Firm Commitment set forth in any Rolling Forecast to purchase Products. Each Purchase Order shall indicate that it shall be governed by the terms and conditions of this Agreement and shall contain at least the following information: |
(a) | Sellers Product numbers; | ||
(b) | Quantity of Products; | ||
(c) | Requested delivery terms and delivery dates; | ||
(d) | List Prices (as defined below); |
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(e) | Product specifications (Product Specifications) or reference thereto; and | ||
(f) | Inspection Requirements (as defined below) or reference thereto. |
3.2 | Acceptance of Purchase Orders . A Purchase Order will be deemed accepted by Seller unless rejected by Seller in writing, specifying the reasons for rejection, within ten (10) calendar days after receipt of such Purchase Order. Each Purchase Order shall be deemed to be an offer by Purchaser to purchase the Products pursuant to the terms of this Agreement and the Preferred Provider Agreement and, when accepted by Seller as provided above, shall give rise to a contract under the terms set forth in this Agreement to the exclusion of any additional or contrary terms set forth in the Purchase Order or any acceptance by Seller unless such additional or contrary terms are mutually agreed to in writing by the parties. | ||
3.3 | Modification of Purchase Orders . No accepted Purchase Order shall be modified or cancelled except upon the written agreement of both parties. | ||
3.4 | Order of Precedence . The terms and conditions of this Agreement, as amended in writing by the mutual agreement of Purchaser and Seller, take precedence over any additional terms and conditions of Purchaser or Seller. Neither partys commencement of performance nor shipment of Products shall be deemed or construed to be acceptance of any additional or inconsistent terms and conditions. None of the terms and conditions herein may be added to, modified, superseded or otherwise altered except by a written instrument signed by an authorized representative of both Purchaser and Seller. Purchaser and Seller hereby object to any terms and conditions that may be contained in any acknowledgment, invoice or other form issued by the other party and each notifies the other party of such objection and each party acknowledges receipt of such notice of objection. |
4. | Inspection . |
4.1 | Inspection Requirements . Purchaser shall provide Seller with Purchasers specific requirements (the Inspection Requirements) for inspection and testing for the Product(s) that Purchaser intends to purchase from Seller. Purchaser shall provide Seller written notice of any modification to such Inspection Requirements as soon as reasonably possible after Purchaser has determined such modified requirements. Seller shall inspect and/or test each and every part of the Products before shipment or delivery to Purchaser in accordance with Purchasers Inspection Requirements. Seller shall submit to Purchaser a record of the inspection and/or testing of the Products upon Purchasers written request. | ||
4.2 | Inspection by Purchaser at Sellers site . Seller shall grant Purchaser reasonable access and entry at reasonable times and for a reasonable duration to any factory of Seller or its subcontractors that is involved in the |
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manufacture or distribution of Products ordered by Purchaser, but in no event must Seller grant Purchaser such access more often than one (1) time per fiscal quarter. Such entry and access shall be for the purpose of allowing Purchaser to review Sellers undertaking and performance of the inspection and/or testing of the materials, design and workmanship of the Products as set forth in the Inspection Requirements. Any such review is for the sole benefit of Purchaser and shall not relieve Seller of the responsibility of inspecting and/or testing the Products in accordance with the relevant Inspection Requirements. No review by Purchaser shall be construed as constituting or implying acceptance of a particular Product or shipment of Products or Sellers performance of the Inspection Requirements. Purchasers review shall not relieve Seller of any of its obligations or liabilities under this Agreement nor affect any of the rights and remedies of Purchaser hereunder. Upon Sellers written consent, which consent shall not be unreasonably withheld, Purchasers Customers and/or a representative of any competent government authority or any agency thereof (Government Representative) may attend such inspection and testing by Seller, provided that (i) any such Customer must first agree to be bound by a nondisclosure agreement that protects Sellers interests at least as much as Sections 6.2 and 6.3 of the Preferred Provider Agreement; and (ii) with respect to a Government Representative, Purchaser shall request and use reasonable best efforts to cause such Government Representative to agree to be bound by a nondisclosure agreement that protects Sellers interests at least as much as Sections 6.2 and 6.3 of the Preferred Provider Agreement. | |||
Seller shall be entitled to be present at all times during Purchasers entry and access for the purposes described herein. Purchaser shall bear its own costs and expenses in connection with its entry and access to Sellers and its subcontractors facilities for the purposes of reviewing Sellers undertaking and performance of the inspection and/or testing of the materials, design and workmanship of the Products as set forth in the Inspection Requirements. | |||
Seller shall take all reasonable actions to ensure the safety and health of Purchasers personnel at Sellers factory. | |||
Purchaser may at any time designate a third-party inspector or agent to act on its behalf in connection with Purchasers review as described herein, provided that (i) such third-party inspector or agent agrees to be bound by a nondisclosure agreement that protects Sellers interests at least as much as Sections 6.2 and 6.3 of the Preferred Provider Agreement; (ii) Purchaser gives prior notice to Seller of the designation and identity of any such third-party inspector or agent; and (iii) to the extent such third-party inspector or agent is a direct competitor of Seller, Seller consents to such third-party inspectors designation. |
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5. | Product Prices . At least sixty (60) days before October 1, 2001, April 1, 2002, and each subsequent October 1 and April 1 (each, a Start Date), Purchaser and Seller shall agree on the list prices for each Product (the List Prices). The List Prices will be the prices Purchaser pays for the Products and will be applicable for the six (6) month period (each, a Period) beginning on the upcoming Start Date. List Prices in aggregate shall be at least as favorable as the lowest prices in aggregate at which a comparable volume of Products with substantially the same specifications, product mix, and quality could be purchased in the market. The List Prices may be revised at any time during a Period only by the mutual written consent of the parties. Notwithstanding the foregoing, in the event of an increase in costs during a Period beyond Sellers control, the parties shall discuss a corresponding increase in List Prices and Seller shall be allowed to increase the List Prices to the extent of Sellers increase in costs beyond its control. The List Prices for the Period beginning April 1, 2001 are set forth on Schedule A attached hereto. | |
6. | Taxes . List Prices do not include any taxes, now or hereafter applicable, which apply or may apply to the Products sold or to this transaction, which will be added by Seller to the sales price, where Seller is required by law to collect such taxes and will be paid by Purchaser unless Purchaser provides Seller with a proper tax exemption certificate in form and substance satisfactory to Seller. | |
7. | Discounts . In the event that (i) Purchaser receives a discount from the List Prices based on the quantity of Products purchased or (ii) the List Prices reflect a discount based on the quantity of Products purchased, and Purchaser subsequently does not accept delivery and pay for such agreed-upon quantity of Products in accordance with the terms and conditions of this Agreement, a billback will be calculated separately for each type of Product ordered based on the number of units of such Product ordered and paid for by Purchaser. Accordingly, Purchaser will be charged and will pay Seller, within thirty (30) days after receipt of Sellers invoice, an amount which represents (i) the difference in unit prices from that set forth in the List Prices (i.e., the price per unit normally charged by Seller for the number of units actually received and paid for by Purchaser less the unit price invoiced to Purchaser) multiplied by the number of units received and paid for by Purchaser, and (ii) any per unit discount negotiated by the parties and reflected in the List Prices multiplied by the number of units received and paid for by Purchaser. | |
8. | Payment . Purchaser shall pay Seller the contract price in full within ninety (90) days after delivery of the Products to Purchaser. Payment as required by the terms of the Agreement must be made when due unless such Products have been rejected by Purchaser in accordance with provisions of Section 10 hereof. | |
9. | Delivery, Title and Risk of Loss . |
9.1 | Delivery Terms and Risk of Loss . |
(a) | Unless otherwise agreed to by the parties in writing, shipments of Products shall be delivered F.C.A. Sellers warehouse within Japan (as per the 2000 Incoterms), and title and liability for loss or damage |
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thereto shall pass to Purchaser upon Sellers tender of delivery of such Products to a carrier for shipment to Purchaser, and any loss or damage thereafter shall not relieve Purchaser from any obligations hereunder. | |||
(b) | Delivery may be made in installments. Default on any payment by Purchaser after delivery or offer of delivery of any installment may, at the option of Seller, be deemed a default as to the entire Purchase Order. The date of the bill of lading or any receipt issued by the carrier, or the date of the shipping documents, shall be conclusive proof of the date of such shipment or delivery to Purchaser. Purchaser shall take delivery promptly and Purchaser shall pay any demurrage accrued by reason of Purchasers delay or default or repay same to Seller promptly after demand if Seller has paid or incurred same. |
9.2 | In Case of Delivery Delay . If delivery of the Products will be delayed beyond the agreed or established schedule for any reason, Seller shall promptly notify Purchaser in writing, stating the reason for such delay, the portion of Products affected and the expected length of the delay. Notwithstanding the foregoing, unless Seller can reasonably demonstrate that a delay in the delivery of the Products is due to a cause or causes referred to in the following paragraph, such delay shall be considered a breach unless Purchaser agrees in writing that such delay shall not constitute a breach. | ||
If delivery is delayed as a result of acts of war, fire, flood, other natural disaster, epidemic, strikes and other causes similar to those listed, the date of delivery shall be extended for a period equal to the time lost by reason of such delay. However, if such delay extends for more than forty-five (45) days, the parties shall negotiate in good faith a change in delivery schedule, and if such delay continues for more than two (2) months following the initial forty-five (45)-day period, Purchaser may cancel the Purchase Order or Rolling Forecast as to the unexecuted portion upon written notice to Seller without cancellation charges or other liability arising from the cancellation. |
10. | Acceptance . Products shall be subject to final inspection and acceptance by Purchaser after delivery to Purchaser. Purchaser shall have the right to reject such Products if the Products do not meet the Product Specifications or do not conform to the requirements of the Purchase Order with respect to the quantity of Products or delivery date . If the Purchaser does not notify Seller of its intention to reject Products and the reason(s) for rejection within ten (10) business days from the date of receipt by Purchaser of such Products, Purchaser will be deemed to have accepted such Products. Upon such notice of rejection to Seller, Purchaser may return to Seller for reimbursement, credit, replacement or correction such Products rejected after delivery (Returned Products), provided Purchaser initiates the return of such Returned Products to Seller within a reasonable time after Purchaser notifies Seller of Purchasers intent to reject such Returned Products. Any Returned Products shall not thereafter be tendered for acceptance by Seller unless the reason for rejection has |
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been fully corrected and disclosed to Purchaser. Packaging, handling and transportation costs incidental to return of the Returned Products shall be at Sellers expense. | ||
If Purchaser elects to have Seller replace or correct Returned Products pursuant to this Section 10 and Seller fails to do so within the time limit fixed by Purchaser (which time limit shall not be unreasonable based on Sellers ability to replace or correct such Returned Products), Purchaser may replace or correct the same at Sellers expense. | ||
The provisions of this Section 10 shall apply equally to any Products that are returned by Purchasers Customers for any reason that Purchaser would have been entitled to reject hereunder. | ||
Purchasers acceptance of Products shall not in any manner impair the validity of the warranties provided in Section 11 hereof. | ||
11. | Warranty . |
11.1 | Seller warrants to Purchaser that Products sold to Purchaser pursuant to this Agreement will be free from defects in material and workmanship; will conform to the relevant Product Specifications; and will be free from liens and encumbrances, for a period of one (1) year from the date of shipment to Purchaser; provided that: |
(a) | Seller is promptly notified (within the warranty period) of any warranty claim; | ||
(b) | The Products are returned to Seller, freight prepaid, after Purchaser has received a return authorization number from Seller. Seller will credit Purchaser for reasonable freight charges paid to return such goods and merchandise. | ||
(c) | Sellers examination of such Products shall disclose to its reasonable satisfaction that the claimed defect in the Products was not caused by misuse, static discharge, abuse, neglect, improper handling, installation, unauthorized repair, alteration or accident. Modification of Products by Purchaser, or at Purchasers direction, unless specifically authorized in writing by Seller, shall invalidate the above warranty. |
11.2 | If the Products returned to Seller are deemed by Seller and Purchaser to be in conformance with the warranty in Section 11.1, Purchaser shall reimburse Seller for (i) such freight charges credited by Seller to Purchaser pursuant to Section 11.1 (b), and (ii) costs of examination of the returned Products. | ||
11.3 | Sellers liability under this warranty is limited to, at its election, repairing, replacing or issuing a credit in the amount of the unit List Price minus any applicable quantity discounts times the quantity of such Product for any such |
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12. | Discontinuance . In the event that Seller decides to discontinue the manufacture or change the characteristics, dimensioning, function or any other parts of the Product Specifications, of Products, Seller shall make Commercially Reasonable Efforts (as defined in the Stock Contribution Agreement (the Stock Contribution Agreement), dated as of the date hereof, between Purchaser and OpNext USA) to give Purchaser twelve (12) months prior written notice, but in no event shall Seller give Purchaser less than six (6) months prior written notice. |
13. | Use Restrictions . The Products are not authorized for use in life support devices or systems of other applications, which pose a significant risk of personal injury. Purchaser agrees to notify Seller in writing of any such applications known to Purchaser within ten (10) days from the date of receipt of this Agreement. In the event that Purchaser provides Seller with such notice of restricted use, this Agreement shall not become effective until and unless it is approved in writing by Sellers CEO and a separate addendum for the sale of Products for restricted uses is entered into between Purchaser and Seller. Purchasers failure to provide Seller with the notice contemplated herein shall constitute Purchasers representation and warranty that the Products identified herein will not be used for restricted uses. |
14. | Indemnification . |
14.1 | Defective Products and Acts or Omissions of Seller . Seller shall defend, indemnify and hold harmless Purchaser against all damages, claims or liabilities and expenses (including attorneys fees) arising out of or resulting in any way from any defect in the Products purchased hereunder, or from any act or omission of Seller, its agents, employees or subcontractors except as set forth in Sections 14.2 and 14.3 below. | ||
14.2 | Prior to the Effective Date . With respect to third party patent and copyright infringement claims and trade secret misappropriation claims regarding the Products as they were sold prior to the Effective Date, Purchaser shall defend and indemnify Seller regardless of the timing of such third partys infringement claim; except to the extent that such infringement is attributable to any OpNext Japan IP (as defined in the Intellectual Property License Agreement (the IP License Agreement), dated as of the date hereof, between Purchaser and Seller) or any product design developed by Seller after the Effective Date. |
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14.3 | After the Effective Date . With respect to third party patent or copyright infringement claims or trade secret misappropriation claims regarding the Products as they are sold after the Effective Date, Purchaser and Seller shall jointly defend such action but only to the extent that such claim involves Assigned IP or Licensed IP (as such terms are defined in the Stock Contribution Agreement and the IP License Agreement). If a third party patent or copyright infringement claim or trade secret misappropriation claim is made against Seller for a new product design that is developed after the Effective Date, Purchaser shall be responsible for the settlement amount of any such claim (provided that prior written approval is obtained) or the resulting liability of any such claim only to the extent such claim results from a product design sold by the Business (as defined in the Stock Contribution Agreement) as of the Effective Date, Assigned IP or Licensed IP, while Seller shall be responsible for the settlement amount of any such claim (provided that prior written approval is obtained) or the resulting liability of any such claim only to the extent that it is caused by the product design introduced by Seller after the Effective Date irrespective of whether such product design is covered by Assigned IP or Licensed IP. To the extent there is a dispute regarding the allocation of the parties liabilities under this subsection, the parties shall negotiate in good faith what the allocation of liability should be. If the parties are unable to agree even after good faith negotiations, the parties shall submit the issue to arbitration pursuant to the terms pursuant to the arbitration procedures set forth in Section 19 and Exhibit A hereto. In the event that either party submits the matter to arbitration both parties shall cooperate in such binding arbitration in accordance with Exhibit A . | ||
14.4 | The indemnification obligations of Seller pursuant to this Section 14 shall be in addition to the warranty obligations of Seller in Section 11 hereof. |
15. | Limitation of Liability . |
15.1 | Applicability of Preferred Provider Agreement . Purchaser and Seller agree that the provisions of Section 7.1 of the Preferred Provider Agreement relating to limitation of liability are applicable to this Agreement and such terms are incorporated by reference herein in their entirety. | ||
15.2 | Exclusions . The limitations or exculpation of liability set forth in Section 15.1 shall not be applicable to any breach of Section 21.3 below or any failure of Purchaser to pay for any Products purchased hereunder. |
16. | Confidentiality . Purchaser and Seller agree to be bound by the provisions of Section 6 of the Preferred Provider Agreement relating to each Partys confidentiality obligations and such terms and conditions are incorporated by reference herein in their entirety. |
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17. | Term and Termination . This Agreement shall become effective upon the Effective Date and shall remain in force for a period of one year from such Effective Date (the Original Term). For so long as the Preferred Provider Agreement remains in effect, this Agreement shall automatically be extended for successive one (1) year-periods (each, a Successive Term) unless the parties mutually agree to terminate this Agreement prior to the expiration of the Original Term or any Successive Term. After the termination or expiration of the Preferred Provider Agreement, this Agreement shall automatically be extended for Successive Terms unless either party gives written notice of its intent to terminate no less than ninety (90) days prior to the expiration of a Successive Term. | |
In the event of any breach by Seller of the terms, conditions or warranties of this Agreement or any Purchase Order or Rolling Forecast, or in the event of the dissolution, bankruptcy or insolvency of Seller, Purchaser shall have the right to terminate this Agreement or any Purchase Order or Rolling Forecast. Notwithstanding the foregoing, for so long as the Preferred Provider Agreement remains in effect between Purchaser and OpNext USA, Purchaser may not terminate this Agreement as a result of any breach of this Agreement by Seller. | ||
18. | Survival . The following provisions of this Agreement shall survive termination or expiration of this Agreement: Sections 11, 13, 14, 15, 16, 17, 18, 19, 20 and 21. | |
19. | Arbitration . Except for actions seeking injunctive relief or for confirmation or enforcement of an arbitration award, in the event the parties are unable to resolve any dispute arising under this Agreement, the parties shall submit the matter to arbitration in accordance with the arbitration procedures set forth in Exhibit A hereto. | |
20. | Jurisdiction / Applicable Law . |
20.1 | Governing Law . This Agreement shall be interpreted, construed and enforced in all respects in accordance with the laws of Japan without giving effect to (i) the choice of law or conflict of law rules of Japan or any other jurisdiction, (ii) the United Nations Convention on Contracts for the International Sale of Goods, (iii) the 1974 Convention on the Limitation Period in the International Sale of Goods, (iv) the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, and (v) the Uniform Computer Information Transactions Act. | ||
20.2 | Submission to Jurisdiction; Waivers . With respect to those disputes not required to be submitted to arbitration hereunder as set forth in Section 19 above, each party to this Agreement hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of Japan; (b) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or |
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proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth herein or at such other address of which the agent shall have been notified pursuant thereto, to the extent permitted by Japanese law; and (d) agrees that nothing contained herein shall affect the right to effect service of process in any other manner permitted by Japanese law. |
21. | General Provisions . |
21.1 | Purchasers Property . Unless otherwise agreed in writing, all tools, equipment or material of every description furnished to Seller by Purchaser or specifically paid for by Purchaser shall be and shall remain the property of Purchaser. Such property shall be plainly marked or otherwise adequately identified by Seller as Property of Purchaser and shall be safely stored separate and apart from Sellers property. Seller shall not substitute any property for Purchasers property and shall not use Purchasers property except in filling Purchasers orders hereunder. While in Sellers custody or control, Purchasers property shall be held at Sellers risk and shall be kept insured by Seller at Sellers expense in an amount equal to the replacement cost payable to Purchaser. | ||
21.2 | Force Majeure . Subject to Section 9.2 hereof, neither party to this Agreement shall be held responsible for any failure or delay in performance under this Agreement, except any obligation to pay money, where such performance is rendered impracticable by any act of war, fire, flood, other natural disaster, epidemic, strikes and other causes similar to those listed, in each case where failure to perform is beyond the control, and not caused by the negligence, of the nonperforming party. | ||
21.3 | Assignment . This Agreement shall be binding upon and shall inure to the benefit of, the parties and their respective successors and permitted assigns. Neither party may assign its rights (including by operation of law), or delegate the performance of its obligations, under this Agreement, or any part hereof, without the prior written consent of the other; provided , however , that Purchasers consent shall not be unreasonably withheld in the case of any assignment by Seller to OpNext USA or to any direct or indirect majority owned Subsidiary of OpNext USA for so long as (i) Purchaser and its Affiliates directly or indirectly hold voting securities of OpNext USA representing a majority voting interest in OpNext USA or have the right to designate a majority of OpNext USAs directors pursuant to the Stockholders Agreement entered into between Clarity, Holdings I, Holdings II, Purchaser and OpNext USA dated as of the date hereof, (ii) OpNext USA remains liable for the performance of any such assignees obligations hereunder and any liability incurred in connection therewith, and (iii) such assignment does not result in any additional costs for which Purchaser shall be liable. Any assignment in violation of this Section 21.3 shall be void. |
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21.4 | Relationship of the Parties . Each party is an independent contractor and nothing in this Agreement shall be construed to create a partnership, joint venture, agency, or employer/employee relationship between the parties. | ||
21.5 | Amendment and Waiver . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by Purchaser and Seller. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. | ||
21.6 | Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail, air mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by facsimile transmission to the parties at the address set forth below or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices shall be deemed to have been given hereunder on the date delivered when delivered personally, five days after deposit in the U.S. mail or Japanese mail, one day after deposit with a reputable overnight courier service (three days if overseas) and on the next business day if sent by facsimile transmission with confirmation of receipt. The addresses for Purchaser and Seller are: |
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21.11 | Exhibits and Schedules . All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. | ||
21.12 | Delivery by Facsimile . This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any party hereto or to any such agreement or instrument, each other party hereto or thereto shall re-execute original forms thereof and deliver them to all other parties. No party hereto or to any such agreement or instrument shall raise the use of a facsimile machine to deliver a signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of a facsimile machine as a defense to the enforceability of a contract and each such party forever waives any such defense. | ||
21.13 | Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement. | ||
21.14 | Section 2.1 of the Preferred Provider Agreement . All purchases of Products hereunder are subject to the terms and conditions set forth in the Preferred Provider Agreement, including without limitation, Section 2.1 thereof. | ||
21.15 | Compliance with Laws . Each party to this Agreement shall comply with any and all applicable laws, rules and regulations of the governmental authorities concerned. |
- 14 -
OPNEXT JAPAN, INC. | ||||
|
||||
|
By: | /s/ Junsuke Kusanagi | ||
|
||||
|
Junsuke Kusanagi
President |
|||
|
||||
HITACHI, LTD. | ||||
|
||||
|
By: | /s/ Eiji Aoki | ||
|
||||
|
Eiji Aoki | |||
|
Managing Officer & Administrative Officer | |||
|
President, Telecommunication Systems Division |
HITACHI, LTD. | OPNEXT JAPAN, INC. | |||||||
|
||||||||
/s/ Naoya Takahashi | /s/ Kei Oki | |||||||
Name:
|
Naoya Takahashi | Name: | Kei Oki | |||||
Title:
|
Vice President and Executive Officer | Title: | President, Opnext Japan, Inc. |
1. | Definitions . Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to them in the Stock Contribution Agreement. In addition, as used in this Agreement, the following terms shall have the meanings ascribed to them below: |
1.1. | OpNext Optronic Components shall mean any components or products produced, marketed and/or sold as of or after the Effective Date by any member of the OpNext Group for use in any form of data communications |
1.2. | Raw Materials shall have the meaning set forth in Section 2.1 below. | ||
1.3. | Qualified Public Offering shall have the meaning set forth in the Stockholders Agreement of even date herewith, between Clarity, Holdings I, Holdings II, Hitachi and the Company. |
2.1. | Subject to the terms and conditions of this Agreement, during the Term (as defined in Section 4.1), Hitachi shall continue to make available for purchase by the Company and the other members of the OpNext Group laser chips and other semiconductor devices and all other raw materials (if any) that were provided by Hitachi or any of its Affiliates to the Business prior to or as of the Effective Date for the production of OpNext Optronic Components (collectively, Raw Materials ), without making any material change to the policies (including priority of delivery, delivery schedule, quality, and terms and conditions of sale) under which Hitachi or any such Affiliate sells, as of the Effective Date, such Raw Materials to the Business. Hitachi represents and warrants that there has been no material change in such policies since March 1, 2000. From the Effective Date until the first anniversary of the Effective Date, the prices at which Hitachi sells Raw Materials manufactured by Hitachi to the Company and the other members of the OpNext Group shall be the same prices at which Hitachi sells, as of the Effective Date, a comparable volume of Raw Materials of substantially the same specification and quality to the Business on substantially the same delivery terms. After the first anniversary of the Effective Date, the prices at which Hitachi sells Raw Materials manufactured by Hitachi to the Company shall be negotiated between the parties, but in no event shall such prices be greater than the lowest aggregate price which Hitachi charges to any of its customers for a comparable volume of Raw Materials of substantially the same specification and quality on substantially the same delivery terms. To the extent that Raw Materials to be sold to the OpNext Group are purchased by Hitachi from third parties, Hitachi agrees to sell such Raw Materials to the OpNext Group at the same aggregate prices at which Hitachi purchases such Raw Materials from such third-parties (net of any discounts obtained by Hitachi). | ||
2.2. | In addition, for a period of two (2) years from the Effective Date, Hitachi shall, and shall use Commercially Reasonable Efforts to cause its Affiliates to, in each case to the extent permitted under the applicable agreement, make available to the Company and the other members of the OpNext Group the benefits obtained by Hitachi or its Affiliates, as the case may be, under third party purchasing contracts for the purchase of Raw Materials which are used |
- 2 -
3.1. | Designation of Representatives . Each of the Company and Hitachi will designate one (1) individual (each, a Representative ) in writing to manage its purchase or sale, as applicable, of Raw Materials hereunder and to coordinate its activities under this Agreement with the other party. The initial Representative for the Company will be Harry Bosco, and the initial Representative for Hitachi will be Eiji Aoki. The Representative for each party may be replaced from time to time by that party and such party shall promptly provide written notice thereof to the other party. | ||
3.2. | Meetings of Representatives . The Representatives from the Company and Hitachi will schedule formal meetings, at mutually agreeable times at least bi-monthly during the Term to be attended by authorized management personnel of both parties with responsibility for and authority over the matters to be discussed at such meetings. At such meetings, the parties will discuss the status of the activities contemplated under this Agreement as well as, among other things: (i) the status of any outstanding purchase orders, including any actual or anticipated delays in meeting the delivery schedules or quantities specified in such purchase orders; (ii) any current or anticipated Raw Material shortages or third-party customer requirements that could adversely affect the ability of a party to meet the other partys Raw Material needs; (iii) Hitachis and its Affiliates pricing for Raw Materials relative to market prices; (iv) Hitachis and its Affiliates delivery times for Raw Materials relative to the delivery times of competing suppliers; and (v) any modifications of Raw Material specifications that may be necessary to satisfy the needs of the OpNext Group. Similar meetings shall be held at least quarterly during the Term to discuss, among other things, the OpNext Groups anticipated future Raw Material requirements. |
4.1. | Term . The term of this Agreement shall commence on the Effective Date and continue until the earlier of either (i) the third anniversary of the date of Qualified Public Offering of the Company, or (ii) five (5) years from the Effective Date, unless earlier terminated as specified herein (the Term ). |
- 3 -
4.2. | Termination . |
4.2.1 | Subject to Section 4.2.2, either party may terminate this Agreement if a material breach or default of this Agreement by the other party hereto continues for sixty (60) days after written notice to such breaching or defaulting party. If the nature of the cure for any non-monetary breach or default is such that it is reasonably expected to take longer than sixty (60) days, the breaching or defaulting party shall be given an additional thirty (30) calendar days to cure such breach or default, provided that the cure is commenced during the original sixty (60)-day period and is diligently carried out thereafter. In the event that the material breach or default is not cured within the periods specified above after delivery of the notice, the non-breaching or non-defaulting party may terminate this Agreement in writing as of the date specified in the termination notice. If the default or breach is not susceptible to cure, the party providing notice will be entitled to terminate this Agreement immediately upon written notice to the other party. The terminating party shall have all rights and remedies set forth in this Agreement. | ||
4.2.2 | So long as Hitachi and its Affiliates directly or indirectly hold voting securities of the Company representing a majority voting interest in the Company or have the right to designate a majority of the Companys directors pursuant to the Stockholders Agreement, Hitachi may not terminate this Agreement as a result of any breach hereof by the Company, material or otherwise. |
4.3. | Survival . The provisions of Sections 4.3 (Survival), 5 (Confidentiality), 6 (Limitation of Liability), 7 (Arbitration), and 8 (General Provisions) shall survive termination of this Agreement. |
5.1. | Confidentiality Obligation of the Company : With respect to any information furnished or disclosed to the Company pursuant to this Agreement which the Company reasonably understands to be proprietary or confidential in nature, the Company shall maintain the confidentiality of all such information in accordance with the Companys policies for the protection of its own nonpublic information. The limitations set forth in this Section 5.1 shall not apply with respect to the disclosure of any information: (i) to the Companys employees, auditors, counsel or other professional advisors or to members of the OpNext Group, if the Company, in its sole discretion, determines that it is reasonably necessary for such Person to have access to such information, provided that any such Person agrees to be bound by the provisions of this Section 5.1 to the same extent as the Company; provided , however , that prior to the disclosure of such proprietary or confidential information to a member of the OpNext Group that is not a direct or indirect wholly-owned Subsidiary of the Company, the Company shall obtain Hitachis prior consent, which |
- 4 -
consent shall not be unreasonably withheld; (ii) as has become or previously was generally available to the public other than by reason of a breach of this Section 5.1 by the Company or has become available to the Company on a non-confidential basis; (iii) as may be required or reasonably necessary in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over the Company (it being understood that, to the extent practicable, the Company shall provide Hitachi with prompt notice of any such event and cooperate in good faith to enable Hitachi to participate to protect its interest in such confidential information); (iv) as may be required or reasonably necessary in response to any summons or subpoena or in connection with any litigation; (v) in order to comply with any law, order, regulation or ruling applicable to the Company; and (vi) to the extent related to the Business or the Assets (as defined in the Stock Contribution Agreement). |
5.2. | Confidentiality Obligations of Hitachi : With respect to any information furnished or disclosed to Hitachi pursuant to this Agreement which Hitachi reasonably understands to be proprietary or confidential in nature, Hitachi shall maintain the confidentiality of all such information in accordance with Hitachis policies for the protection of its own nonpublic information. The limitations set forth in this Section 5.2 shall not apply with respect to the disclosure of any information: (i) to Hitachis employees, auditors, counsel or other professional advisors or to Hitachis direct or indirect wholly-owned Subsidiaries, if Hitachi, in its sole discretion, determines that it is reasonably necessary for such Person to have access to such information, provided that any such Person agrees to be bound by the provisions of this Section 5.2 to the same extent as Hitachi; (ii) as has become or previously was generally available to the public other than by reason of a breach of this Section 5.2 by Hitachi or has become available to Hitachi on a non-confidential basis; (iii) as may be required or reasonably necessary in any report, statement or testimony submitted to any municipal, state or federal regulatory body having or claiming to have jurisdiction over Hitachi (it being understood that, to the extent practicable, Hitachi shall provide the Company with prompt notice of any such event and cooperate in good faith to enable the Company to participate to protect its interest in such confidential information); (iv) as may be required or reasonably necessary in response to any summons or subpoena or in connection with any litigation; and (v) in order to comply with any law, order, regulation or ruling applicable to Hitachi. |
6.1. | IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT OR ITS SUBSIDIARIES BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR DAMAGES FOR LOSS OF PROFITS, REVENUE, OR USE INCURRED BY THE OTHER PARTY OR ITS SUBSIDIARIES OR ANY THIRD PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR OTHERWISE, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH |
- 5 -
6.2. | The limitations or exculpation of liability set forth in Section 6.1 shall not be applicable to any breach of Section 8.3 below or any failure by the Company or any other member of the OpNext Group to pay for the Raw Materials provided by Hitachi hereunder. |
7. | Arbitration . Except for actions seeking injunctive relief or for confirmation or enforcement of an arbitration award, in the event the parties are unable to resolve any dispute arising under this Agreement, a party shall submit the matter to arbitration in accordance with the arbitration procedures set forth in Exhibit A hereto. | |
8. | General Provisions . |
8.1. | Governing Law . This Agreement will be interpreted, construed and enforced in all respects in accordance with the laws of the State of New York without giving effect to (i) the choice of law or conflict of law rules or provisions of the State of New York or any other jurisdiction, (ii) the United Nations Convention on Contracts for the International Sale of Goods, (iii) the 1974 Convention on the Limitation Period in the International Sale of Goods, (iv) the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, and (v) the Uniform Computer Information Transactions Act. | ||
8.2. | Submission to Jurisdiction; Waivers . With respect to those disputes not required to be submitted to arbitration hereunder as set forth in Section 7 above, each party to this Agreement hereby irrevocably and unconditionally: (i) submits for itself and its property in any legal action or proceeding relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive general jurisdiction of the courts of the State of New York located in New York City, the courts of the United States of America situated in New York City, and appellate courts from any thereof; (ii) consents that any such action or proceeding may be brought in such courts, and waives any objection that it may now or hereafter have to the |
- 6 -
venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (iii) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to such party at its address set forth herein or at such other address of which the agent shall have been notified pursuant thereto, to the extent permitted by law; and (iv) agrees that nothing contained herein shall affect the right to effect service of process in any other manner permitted by law. |
8.3. | Sale of TSD . Subject to Section 8.12, Hitachi shall not sell its Telecommunication Systems Division ( TSD ) or TSDs business or all or substantially all of TSDs assets to a third party unless the purchaser agrees to assume Hitachis obligations under this Agreement as they relate to Raw Materials (if any) that the OpNext Group purchases from TSD. | ||
8.4. | Injunctive Relief . The parties acknowledge and agree that money damages would be inadequate to remedy any breach of the respective obligations of the parties herein and that the non-breaching party shall be entitled to obtain equitable remedies, in addition to all other remedies available in law or at equity, with respect to any such breach, including injunctive relief. | ||
8.5. | Relationship of the Parties . Each party is an independent contractor and nothing in this Agreement shall be construed to create a partnership, joint venture, agency, or employer/employee relationship between the parties. | ||
8.6. | Amendment and Waiver . No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and signed by the Company and Hitachi. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms. | ||
8.7. | Notices . Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, mailed first class mail, air mail (postage prepaid), sent by reputable overnight courier service (charges prepaid) or sent by facsimile transmission to the parties at the address set forth below or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices shall be deemed to have been given hereunder on the date delivered when delivered personally, five (5) days after deposit in the U.S. mail or Japanese mail, one (1) day after deposit with a reputable overnight courier service (three (3) days if overseas) and on the next business day if sent by facsimile transmission with confirmation of receipt. The addresses for the Company and Hitachi are: |
- 7 -
8.8. | Severability . Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity, legality or enforceability of any other provision of this Agreement in such jurisdiction or affect the validity, legality or enforceability of any provision in any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein. | ||
8.9. | Interpretation . The headings and captions contained in this Agreement are for reference purposes only and do not constitute a part of this Agreement. | ||
The use of the word including herein shall mean including without limitation. |
- 8 -
8.10. | Entire Agreement . Except as otherwise expressly set forth herein, this Agreement, together with the other agreements entered into in connection with the Stock Purchase Agreement, embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way. The provisions of each of the agreements executed in connection with the Stock Purchase Agreement shall be construed to give effect to the provisions of each of the other agreements to the greatest extent possible. | ||
8.11. | Force Majeure . Neither party to this Agreement shall be held responsible for any failure or delay in performance under this Agreement, except any obligation to pay money, where such performance is rendered impracticable by any act of war, fire, flood, other natural disaster, epidemic, strikes and other causes similar to those listed, in each case where failure to perform is beyond the control, and not caused by the negligence, of the nonperforming party. | ||
8.12. | Assignment . This Agreement shall be binding upon and shall inure to the benefit of, the parties and their respective successors and permitted assigns. Neither party may assign its rights (including by operation of law), or delegate the performance of its obligations, under this Agreement, or any part hereof, without the prior written consent of the other; provided , however , that Hitachis consent shall not be unreasonably withheld in the case of any assignment by the Company to any of its direct or indirect majority owned Subsidiaries for so long as (i) Hitachi and its Affiliates directly or indirectly hold voting securities of the Company representing a majority voting interest in the Company or have the right to designate a majority of the Companys directors pursuant to the Stockholders Agreement, (ii) the Company remains liable for the performance of any such assignees obligations hereunder and any liability incurred in connection therewith, and (iii) such assignment does not result in any additional costs for which Hitachi shall be liable. Any assignment in violation of this Section 8.12 shall be void. | ||
8.13. | Representation by Counsel; Interpretation . Hitachi and the Company acknowledge that each of them has been represented by counsel in connection with this Agreement and the transactions contemplated hereby. Accordingly, any rule of law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the party that drafted it has no application and is expressly waived. | ||
8.14. | Delivery by Facsimile . This Agreement, the agreements referred to herein, and each other agreement or instrument entered into in connection herewith or therewith or contemplated hereby or thereby, and any amendments hereto |
- 9 -
8.15. | Exhibits and Schedules . All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. | ||
8.16. | Third Party Beneficiaries . The Company and Hitachi acknowledge and agree that this Agreement is intended not only for the benefit of themselves and their Affiliates but also for the benefit of the Clarity Parties and their permitted assigns under the Stock Purchase Agreement, and by reason thereof, the Clarity Parties and their permitted assigns under the Stock Purchase Agreement possess legal, equitable and any other rights hereunder as third-party beneficiaries of this Agreement. | ||
8.17. | Counterparts . This Agreement may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one and the same agreement. |
- 10 -
OPNEXT, INC.
|
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By: | /s/ Harry L. Bosco | |||
Harry L. Bosco | ||||
Chief Executive Officer and President | ||||
HITACHI, LTD.
|
||||
By: | /s/ Eiji Aoki | |||
Eiji Aoki | ||||
Managing Officer & Administrative Officer
President, Telecommunication Systems Division |
HITACHI, LTD.
|
OPNEXT, INC. | |||||
|
||||||
/s/ Naoya Takahashi
|
/s/ Harry L. Bosco
|
|||||
Title: Vice President and Executive Officer
|
Title: President & CEO | |||||
|
Section 1. Definitions
|
2 | |||
|
||||
(a) Added Products
|
2 | |||
(b) Affiliate
|
2 | |||
(c) Assigned IP
|
2 | |||
(d) Business
|
2 | |||
(e) Commercially Reasonable Efforts
|
2 | |||
(f) Cure Period
|
2 | |||
(g) Dispute Notice
|
2 | |||
(h) Existing Third Party License Agreements
|
2 | |||
(i) First Closing
|
2 | |||
(j) First Closing Date
|
3 | |||
(k) Future Hitachi IP
|
3 | |||
(l) Future Third Party License Agreements
|
3 | |||
(m) Indemnified Party
|
3 | |||
(n) Intellectual Property
|
3 | |||
(o) Licensed IP
|
3 | |||
(p) Losses
|
3 | |||
(q) Material Adverse Change or Material Adverse Effect
|
3 | |||
(r) Minority-Owned Affiliate
|
4 | |||
(s) Non-Transferred License Agreements
|
4 | |||
(t) OpNext Japan IP
|
4 | |||
(u) OpNext Japan Third Party License Agreement
|
4 | |||
(v) OpNext Parties
|
4 | |||
(w) Person
|
4 | |||
(x) Second Closing
|
4 | |||
(y) Second Closing Date
|
4 | |||
(z) Subsidiary
|
4 | |||
(aa) Third Party Claim
|
5 | |||
(bb) Third Party License Agreements
|
5 | |||
(cc) Wholly-Owned Subsidiaries
|
5 | |||
|
||||
Section 2. Assigned Intellectual Property
|
5 | |||
|
||||
(a) License
|
5 | |||
(b) Review of Obligations
|
5 | |||
|
||||
Section 3.Licensed Intellectual Property
|
5 | |||
|
||||
(a) Definition
|
6 | |||
(b) License
|
6 | |||
(c) Sublicense
|
7 | |||
(d) Review of Obligations
|
8 | |||
(e) Obligation to Maintain Intellectual Property of the Business Prior to Second Closing
Date
|
8 | |||
(f) Future Hitachi IP
|
8 | |||
(g) Transfer of Licensed IP
|
9 |
ii
Section 4. OpNext Japan Intellectual Property
|
9 | |||
|
||||
(a) Definition
|
9 | |||
(b) License
|
9 | |||
(c) Review of Obligations
|
10 | |||
|
||||
Section 5. Third-Party License Agreements
|
10 | |||
|
||||
(a) Definition
|
10 | |||
(b) Existing Third Party License Agreements
|
10 | |||
(c) Future Third Party License Agreements
|
11 | |||
(d) Other Agreements
|
12 | |||
(e) Termination of Obligations
|
12 | |||
|
||||
Section 6. Representations and Warranties of Hitachi
|
12 | |||
|
||||
(a) Assigned IP and Licensed IP
|
12 | |||
(b) Authority
|
13 | |||
(c) No Conflicts
|
13 | |||
(d) Litigation, etc
|
13 | |||
(e) Infringement of Licensed IP
|
13 | |||
|
||||
Section 7. Covenants of Hitachi
|
13 | |||
|
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(a) Ordinary Course
|
14 | |||
(b) Covenant Not to Sue
|
14 | |||
(c) Confidentiality
|
14 | |||
(d) OpNext Japans and Hitachis Trademark, Trade Names, etc
|
15 | |||
(e) Taxes
|
15 | |||
(f) New Product Clearance Searches
|
15 | |||
|
||||
Section 8. Representations and Warranties of OpNext Japan
|
16 | |||
|
||||
(a) Authority
|
16 | |||
(b) No Conflicts
|
16 | |||
(c) Litigation, etc
|
16 | |||
|
||||
Section 9. Covenants of OpNext Japan
|
16 | |||
|
||||
(a) Confidentiality
|
16 | |||
(b) No Additional Representations
|
17 | |||
(c) Covenant Not to Sue
|
17 | |||
|
||||
Section 10. Mutual Covenants
|
17 | |||
|
||||
(a) Consents
|
17 | |||
(b) Non-Transferred License Agreements
|
18 | |||
(c) Press Releases
|
18 | |||
(d) Commercially Reasonable Efforts
|
18 | |||
(e) Injunctive Relief
|
18 | |||
|
||||
Section 11. Indemnification
|
18 | |||
|
||||
(a) Previously Disclosed Claims
|
18 | |||
(b) Intellectual Property Indemnification and Defense
|
19 |
iii
(c) Indemnification by Hitachi
|
19 | |||
(d) Indemnification by OpNext Japan
|
20 | |||
(e) Losses Net of Insurance
|
20 | |||
(f) Limitations on Indemnification
|
20 | |||
(g) Procedures Relating to Indemnification
|
21 | |||
(h) Controlling Provision
|
21 | |||
(i) Duty to Mitigate
|
22 | |||
|
||||
Section 12. Dispute Resolution
|
22 | |||
|
||||
Section 13. Assignment
|
22 | |||
|
||||
Section 14. Third-Party Beneficiaries
|
22 | |||
|
||||
Section 15. Termination
|
22 | |||
|
||||
Section 16. Survival of Representations and Warranties
|
23 | |||
|
||||
Section 17. Expenses
|
23 | |||
|
||||
Section 18. Export Control
|
23 | |||
|
||||
Section 19. Amendment and Waiver
|
23 | |||
|
||||
Section 20. Notices
|
23 | |||
|
||||
Section 21. Interpretation
|
25 | |||
|
||||
Section 22. Counterparts
|
25 | |||
|
||||
Section 23. Entire Agreement
|
25 | |||
|
||||
Section 24. Relationship to Other Agreements
|
25 | |||
|
||||
Section 25. Schedules or Exhibits
|
25 | |||
|
||||
Section 26. No Strict Construction
|
25 | |||
|
||||
Section 27. Severability
|
26 | |||
|
||||
Section 28. Governing Law
|
26 | |||
|
||||
Section 29. Submission to Jurisdiction; Waivers
|
26 | |||
|
||||
Section 30. Delivery by Facsimile
|
27 | |||
|
||||
Section 31. Exhibits and Schedules
|
27 | |||
|
||||
Section 32. Recordation
|
27 | |||
|
||||
Section 33. Third Parties
|
27 | |||
|
||||
Section 34. Survival
|
27 |
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OPNEXT JAPAN, INC.
|
||||
By: | /s/ Junsuke Kusanagi | |||
Junsuke Kusanagi | ||||
President | ||||
HITACHI, LTD.
|
||||
By: | /s/ Masaaki Hayashi | |||
Masaaki Hayashi | ||||
Senior Vice President and Director Senior Group Executive, Information & Telecommunication Systems Group | ||||
CLARITY PARTNERS, L.P. | ||||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its general partner | |||||
|
||||||
|
By: |
/s/ David Lee
|
||||
|
David Lee | |||||
|
Managing Member | |||||
|
||||||
CLARITY OPNEXT HOLDINGS I, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: | CLARITY GENPAR, LLC, | ||||
|
its general partner | |||||
|
||||||
|
By: |
/s/ David Lee
|
||||
|
David Lee | |||||
|
Managing Member |
CLARITY OPNEXT HOLDINGS II, LLC | ||||||
|
By: | Clarity Partners, L.P., its Manager | ||||
|
||||||
|
By: |
CLARITY GENPAR, LLC,
its general partner |
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By: |
/s/ David Lee
Managing Member |
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OPNEXT JAPAN, INC.
|
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By: | /s/ Tadayuki Kanno | |||
Tadayuki Kanno | ||||
President | ||||
HITACHI, LTD.
|
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By: | /s/ Masaaki Hayashi | |||
Masaaki Hayashi | ||||
Senior Vice President and Director | ||||
OPNEXT JAPAN, INC.
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HITACHI, LTD. | |||
|
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/s/ Kei Oki
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/s/ Naoya Takahashi | |||
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|
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Title: President
|
Title: Vice President and Executive Officer |
Section 1. Definitions
|
1 | |||
|
||||
(a) Added Products
|
1 | |||
(b) Affiliate
|
1 | |||
(c) Assets
|
2 | |||
(d) Assigned IP
|
2 | |||
(e) Business
|
2 | |||
(f) Commercially Reasonable Efforts
|
2 | |||
(g) Closing
|
2 | |||
(h) Closing Date
|
2 | |||
(i) Cure Period
|
2 | |||
(j) Dispute Notice
|
2 | |||
(k) Existing Third Party License Agreements
|
2 | |||
(l) Future Hitachi IP
|
2 | |||
(m) Future Third Party License Agreements
|
2 | |||
(n) HTS Business
|
2 | |||
(o) Indemnified Party
|
2 | |||
(p)Intellectual Property
|
2 | |||
(q) Licensed IP
|
3 | |||
(r) Losses
|
3 | |||
(s) Material Adverse Effect
|
3 | |||
(t) Minority-Owned Affiliate
|
3 | |||
(u) Non-Transferred License Agreements
|
3 | |||
(v) OpNext Japan
|
3 | |||
(w) OpNext Japan R&D Agreement
|
3 | |||
(x) OpNext Parties
|
3 | |||
(y) Opto-Device IP
|
4 | |||
(z) Opto-Device Third Party License Agreement
|
4 | |||
(aa) Person
|
4 | |||
(bb) SIC Business
|
4 | |||
(cc) Subsidiary
|
4 | |||
(dd) Third Party Claim
|
4 | |||
(ee) Third Party License Agreements
|
4 | |||
(ff) Wholly-Owned Subsidiaries
|
4 | |||
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Section 2. Assigned Intellectual Property
|
5 | |||
|
||||
(a) License
|
5 | |||
(b) Review of Obligations
|
5 | |||
(c) Status of Wholly-Owned Subsidiaries
|
5 | |||
|
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Section 3. Licensed Intellectual Property
|
5 | |||
|
||||
(a) Definition
|
5 | |||
(b) License
|
6 | |||
(c) Sublicense
|
7 | |||
(d) Review of Obligations
|
8 |
i
(e) Obligation to Maintain Intellectual Property
|
8 | |||
(f) Future Hitachi IP
|
8 | |||
(g) Transfer of Licensed IP
|
9 | |||
(h) Change in Status
|
9 | |||
|
||||
Section 4. Opto-Device Intellectual Property
|
9 | |||
|
||||
(a) Definition
|
9 | |||
(b) License
|
9 | |||
(c) Termination Conditions
|
9 | |||
(d) Review of Obligations
|
10 | |||
(e) Status of Wholly-Owned Subsidiaries
|
10 | |||
|
||||
Section 5. Third-Party License Agreements
|
11 | |||
|
||||
(a) Definition
|
11 | |||
(b) Existing Third Party License Agreements
|
11 | |||
(c) Future Third Party License Agreements
|
11 | |||
(d) Other Agreements
|
12 | |||
(e) Termination of Obligations
|
13 | |||
|
||||
Section 6. Representations and Warranties of Hitachi
|
13 | |||
|
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(a) Assigned IP and Licensed IP
|
13 | |||
(b) Authority
|
13 | |||
(c )No Conflicts
|
14 | |||
(d) Litigation, etc
|
14 | |||
(e)Infringement of Licensed IP
|
14 | |||
(f) Product Clearance Searches
|
14 | |||
|
||||
Section 7. Covenants of Hitachi
|
15 | |||
|
||||
(a) Ordinary Course
|
15 | |||
(b) Covenant Not to Sue
|
15 | |||
(c) Confidentiality
|
15 | |||
(d) Opto-Devices and Hitachis Trademark, Trade Names, etc
|
16 | |||
(e) Taxes
|
17 | |||
(f) New Product Clearance Searches
|
17 | |||
(g) Guaranty
|
17 | |||
|
||||
Section 8. Representations and Warranties of Opto-Device
|
17 | |||
|
||||
(a) Authority
|
17 | |||
(b) No Conflicts
|
17 | |||
|
||||
Section 9. Covenants of Opto-Device
|
18 | |||
|
||||
(a) Confidentiality
|
18 | |||
(b) No Additional Representations
|
18 | |||
(c) Covenant Not to Sue
|
19 | |||
(d) Guaranty
|
19 |
ii
Section 10. Mutual Covenants
|
19 | |||
|
||||
(a) Consents
|
19 | |||
(b) Non-Transferred License Agreements
|
20 | |||
(c) Press Releases
|
20 | |||
(d) Commercially Reasonable Efforts
|
20 | |||
(e) Injunctive Relief
|
20 | |||
|
||||
Section 11. Indemnification
|
20 | |||
|
||||
(a) Previously Disclosed Claims
|
20 | |||
(b)Intellectual Property Indemnification and Defense
|
21 | |||
(c) Indemnification by Hitachi
|
21 | |||
(d) Indemnification by Opto-Device
|
22 | |||
(e) Losses Net of Insurance
|
22 | |||
(f) Limitations on Indemnification
|
22 | |||
(g) Procedures Relating to Indemnification
|
23 | |||
(h) Duty to Mitigate
|
24 | |||
Section 12. Dispute Resolution
|
24 | |||
|
||||
Section 13. Assignment
|
24 | |||
|
||||
Section 14. Third-Party Beneficiaries
|
24 | |||
|
||||
Section 15. Termination
|
25 | |||
|
||||
Section 16. Survival of Representations and Warranties
|
25 | |||
|
||||
Section 17. Expenses
|
25 | |||
|
||||
Section 18. Export Control
|
25 | |||
|
||||
Section 19. Amendment and Waiver
|
25 | |||
|
||||
Section 20. Notices
|
25 | |||
|
||||
Section 21. Interpretation
|
26 | |||
|
||||
Section 22. Counterparts
|
27 | |||
|
||||
Section 23. Entire Agreement
|
27 | |||
|
||||
Section 24. Relationship to Other Agreements
|
27 | |||
|
||||
Section 25. Schedules or Exhibits
|
27 | |||
|
||||
Section 26. No Strict Construction
|
27 | |||
|
||||
Section 27. Severability
|
27 | |||
|
||||
Section 28. Governing Law
|
28 | |||
|
||||
Section 29. Submission to Jurisdiction; Waivers
|
28 | |||
|
||||
Section 30. Delivery by Facsimile
|
29 | |||
|
||||
Section 31. Exhibits and Schedules
|
29 | |||
|
||||
Section 32. Recordation
|
29 | |||
|
iii
Section 33. Third Parties
|
29 | |||
|
||||
Section 34. Survival
|
29 | |||
|
||||
Section 35. Hitachi Communication Technologies, Ltd
|
29 |
iv
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OPTO-DEVICE, LTD.
|
||||
By: | /s/ Yasutoshi Kashiwada | |||
Yasutoshi Kashiwada | ||||
President | ||||
HITACHI, LTD.
|
||||
By: | /s/ Satoru Ito | |||
Satoru Ito | ||||
President and Chief Executive Officer, Semiconductor & Integrated Circuits | ||||
OPNEXT JAPAN, INC.
|
HITACHI, LTD. | |||
|
||||
/s/ Kei Oki
|
/s/ Naoya Takahashi | |||
|
|
|||
Title: President
|
Title: Vice President and Executive Officer |
WITNESSETH
|
1 | |||
|
||||
Section 1. Definitions
|
1 | |||
|
||||
(a) Affiliate
|
1 | |||
(b) Assigned IP
|
2 | |||
(c) Business
|
2 | |||
(d) Business Transfer Agreement
|
2 | |||
(e) Clarity
|
2 | |||
(f) Commercially Reasonable Efforts
|
2 | |||
(g) Cure Period
|
2 | |||
(h) Dispute Notice
|
2 | |||
(i) Future HCT IP
|
2 | |||
(j) Future Hitachi IP
|
2 | |||
(k) Himawari I Agreements
|
2 | |||
(l) HTC Transferred IP
|
2 | |||
(m) Initial Public Offering
|
2 | |||
(n) Intellectual Property
|
2 | |||
(o) Jointly-Developed IP License Agreement
|
3 | |||
(p) Jointly Developed Intellectual Property
|
3 | |||
(q) Licensed IP
|
3 | |||
(r) Minority-Owned Affiliate
|
3 | |||
(s) Non-Competition Period
|
3 | |||
(t) OpNext Inc. R&D Agreement
|
3 | |||
(u) OpNext Japan IP
|
3 | |||
(v) OpNext Japan IP License Agreement
|
3 | |||
(w) OpNext Japan R&D Agreement
|
3 | |||
(x) Opto-Device Limited
|
4 | |||
(y) Person
|
4 | |||
(z) Restricted Products
|
4 | |||
(aa) Spin-Off Date
|
4 | |||
(bb) Stock Contribution Agreement
|
4 | |||
(cc) Stockholders Agreement
|
4 | |||
(dd) Subsidiary
|
4 | |||
(ee) TSD
|
4 | |||
(ff) TSD Sale
|
4 | |||
(gg) Wholly-Owned Subsidiaries
|
4 | |||
|
||||
Section 2. Assigned Intellectual Property
|
5 | |||
|
||||
(a) License
|
5 | |||
(b) Acknowledgment
|
5 | |||
(c) Review of Obligations
|
5 |
ii
Section 3. HCT Transferred IP
|
5 | |||
|
||||
(a) Definition
|
5 | |||
(b) License
|
5 | |||
(c) Sublicense
|
6 | |||
(d) Review of Obligations
|
7 | |||
|
||||
Section 4. Future HCT IP
|
7 | |||
|
||||
(a) Definition
|
7 | |||
(b) Future HCT IP License
|
7 | |||
(c) Sublicense
|
8 | |||
(d) Review of Obligations
|
9 | |||
(e) Cooperation
|
9 | |||
|
||||
Section 5. OpNext Japan Intellectual Property
|
9 | |||
|
||||
(a) Definition
|
9 | |||
(b) License
|
10 | |||
(c) Review of Obligations
|
11 | |||
|
||||
Section 6. Representations and Warranties of HCT
|
11 | |||
|
||||
Section 7. Covenants of HCT
|
11 | |||
|
||||
(a) Covenant Not to Sue
|
11 | |||
(b) Confidentiality
|
11 | |||
(c) OpNext Japans and HCTs Trademark, Trade Names, etc
|
12 | |||
|
||||
Section 8. Representations and Warranties of OpNext Japan
|
12 | |||
|
||||
Section 9. Covenants of OpNext Japan
|
13 | |||
|
||||
(a) Confidentiality
|
13 | |||
(b) No Additional Representations
|
13 | |||
(c) Covenant Not to Sue
|
13 | |||
|
||||
Section 10. Mutual Covenants
|
14 | |||
|
||||
(a) Press Releases
|
14 | |||
(b) Commercially Reasonable Efforts
|
14 | |||
(c) Injunctive Relief
|
14 | |||
|
||||
Section 11. Termination and Survival
|
14 | |||
|
||||
(a) Status of HCT
|
14 | |||
(b) Termination for Breach or Expiration
|
14 |
iii
Section 12. Dispute Resolution
|
15 | |||
|
||||
Section 13. Non-Compete
|
15 | |||
|
||||
(a) HCT As Wholly-Owned Subsidiary of Hitachi
|
15 | |||
(b) HCT As Subsidiary of Hitachi
|
15 | |||
(c) Exceptions
|
16 | |||
(d) Enforceability
|
16 | |||
(e) Injunctive Relief
|
16 | |||
(f) No Restriction
|
17 | |||
|
||||
Section 14. Assignment
|
17 | |||
|
||||
Section 15. Third-Party Beneficiaries
|
17 | |||
|
||||
Section 16. Survival of Representations and Warranties
|
17 | |||
|
||||
Section 17. Expenses
|
17 | |||
|
||||
Section 18. Export Control
|
17 | |||
|
||||
Section 19. Amendment and Waiver
|
17 | |||
|
||||
Section 20. Notices
|
17 | |||
|
||||
Section 21. Interpretation
|
19 | |||
|
||||
Section 22. Counterparts
|
19 | |||
|
||||
Section 23. Entire Agreement
|
19 | |||
|
||||
Section 24. Schedules or Exhibits
|
19 | |||
|
||||
Section 25. No Strict Construction
|
19 | |||
|
||||
Section 26. Severability
|
20 | |||
|
||||
Section 27. Governing Law
|
20 | |||
|
||||
Section 28. Submission to Jurisdiction; Waivers
|
20 | |||
|
||||
Section 29. Delivery by Facsimile
|
21 | |||
|
||||
Section 30. Exhibits and Schedules
|
21 | |||
|
||||
Section 31. Recordation
|
21 | |||
|
||||
Section 32. Third Parties
|
21 |
iv
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4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
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OPNEXT JAPAN, INC.
|
||||
By: | /s/ Tadayuki Kanno | |||
Tadayuki Kanno
President |
||||
HITACHI COMMUNICATION TECHNOLOGIES, LTD.
|
||||
By: | /s/ Yoshihiko Miyano | |||
Yoshihiko Miyano | ||||
Corporate Officer
President Carrier Network Systems Division |
||||
22
1
2
3
4
HITACHI, LTD.
|
||||
By: | /s/ Satoru Ito | |||
Satoru Ito | ||||
President and Chief Executive Officer,
Semiconductor & Integrated Circuits |
OPTO-DEVICE, LTD.
|
||||
By: | /s/ Yasutoshi Kashiwada | |||
Yasutoshi Kashiwada | ||||
President | ||||
A-1
HITACHI, LTD. | OPNEXT, JAPAN, INC. | |||||||||
|
||||||||||
|
/s/ Naoya Takahashi | /s/ Kei Oki | ||||||||
Name:
|
Naoya Takahashi | Name: | Kei Oki | |||||||
Title:
|
Vice President and Executive Officer | Title: | President, Opnext Japan, Inc. |
HITACHI, LTD.
|
||||
By: | /s/ Masaaki Hayashi | |||
Masaaki Hayashi | ||||
Senior Vice President and Director
Senior Group Executive, Information & Telecommunication Systems Group |
||||
OPNEXT, INC.
|
||||
By: | /s/ Harry L. Bosco | |||
Harry L. Bosco | ||||
Chief Executive Officer and President | ||||
OPNEXT JAPAN, INC.
|
||||
By: | /s/ Junsuke Kusanagi | |||
Junsuke Kusanagi | ||||
President | ||||
HITACHI, LTD. | OPNEXT, INC. | |||||||||
|
||||||||||
|
/s/ Naoya Takahashi | /s/ Harry L. Bosco | ||||||||
Name: Naoya Takahashi | Name: Harry L. Bosco | |||||||||
Title: Vice President and Executive Officer | Title: President & CEO | |||||||||
|
||||||||||
OPNEXT, JAPAN, INC. | ||||||||||
|
||||||||||
|
/s/ Kei Oki | |||||||||
Name: Kei Oki | ||||||||||
Title: President, Opnext Japan, Inc. |
Page 1
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Page 13
LANDLORD: | TENANT: | |||||||||
|
||||||||||
HITACHI, LTD . | OPNEXT JAPAN, INC. | |||||||||
|
||||||||||
By:
|
/s/ Eiji Aoki | By: | /s/ Junsuke Kusanagi | |||||||
|
||||||||||
|
Eiji Aoki | Junsuke Kusanagi | ||||||||
|
Managing Officer & Administrative Officer | President | ||||||||
|
President, Telecommunication Systems | |||||||||
|
Division |
Annual Base Rent | ||||||
per Rentable Square | ||||||
Meter of Expansion | Monthly Installments | |||||
Period | Space | Annual Base Rent | of Base Rent | |||
May 1, 2001 | 399 Yen/m2 | 64,989,852 Yen | 5,415,821 Yen | |||
June 1, 2001 | 399 Yen/m2 | 65,167,776 Yen | 5,430,648 Yen | |||
July 1, 2001 | 399 Yen/m2 | 66,531,888 Yen | 5,544,324 Yen | |||
August 1, 2001 | 399 Yen/m2 | 67,243,608 Yen | 5,603,634 Yen |
LANDLORD: | TENANT: | |||||||||
|
||||||||||
HITACHI, LTD. | OPNEXT JAPAN, INC. | |||||||||
|
||||||||||
By:
|
/s/ Eiji Aoki | By: | /s/ Junsuke Kusanagi | |||||||
|
||||||||||
|
Eiji Aoki | Junsuke Kusanagi | ||||||||
|
Managing Officer & Administrative Officer | President | ||||||||
|
President, Telecommunication Systems Division |
(Leased Area) | ||||||
Article 1 | The Landlord shall lease to the Tenant, and the Tenant shall lease from the Landlord a property which is owned by the Landlord and is described below. | |||||
Indication of the Property: | ||||||
|
Address: | 216 Totsuka-chō, Totsuka-ku, Yokohama-shi, which is located on the premises of Hitachi Communication Technologies, Ltd. Totsuka Office | ||||
|
Location: | (Refer to the drawing attached hereto for further details.) |
A portion of the office space in a new building:
|
1,740.00 m 2 | |
A portion of Plant D:
|
6,840.00 m 2 | |
A portion of Plant K:
|
1,908.00 m 2 | |
Total
|
10,488.00 m 2 à A separate agreement entered into for 49 m 2 included in the leased portion of Plant K. |
(Rent)
|
||||||
Article 4
|
(1 | ) |
Rent shall be paid on a monthly basis in the amount of 5,460,660 yen.
The foregoing notwithstanding, the Tenant shall pay the amount of 5,733,693 yen for each month which includes the monthly amount of consumption tax, etc. of 273,033 yen. |
|||
|
(2 | ) | The rent provided for in the preceding item shall be payable to the Landlord at the end of each month. |
New building:
|
Unit value per month (1,038 yen/m 2 ) | × | Leased Area (1,740.00 m 2 ) | = | 1,806,120 yen | ||||||
Building D:
|
Unit value per month ( 399 yen/m 2 ) | × | Leased Area (6,840.00 m 2 ) | = | 2,729,160 yen | ||||||
Building K:
|
Unit value per month ( 485 yen/m 2 ) | × | Leased Area (1,908.00 m 2 ) | = | 925,380 yen | ||||||
|
Rent subtotal | = | 5,460,660 yen | ||||||||
|
|||||||||||
|
Consumption taxes | = | 273,033 yen | ||||||||
|
Total leased area: 10,488 m 2 | Total rent | = | 5,733,693 yen | |||||||
|
(Term of the Lease) | ||||||
Article 1 | The term of the lease of the property, etc. shall be the five-year period which commences on October 1, 2006 and ends on September 30, 2011, provided, however, that the present agreement shall be automatically renewed for a further one-year period from the day immediately after the expiration of the term of the lease unless either the Landlord or the Tenant declares its intent to not renew the present agreement not later than one month prior to the expiration of the said term. Thereafter, the present agreement shall be renewed for successive periods of one year in the same manner. | |||||
September 29, 2006 | ||||||
|
||||||
|
Landlord: |
Hitachi Communication Technologies, Ltd.
Career Network Division 216 Totsuka-chō, Totsuka-ku, Yokohama-shi |
||||
|
Yoshihiko Miyano, General Manager of the Career Network Division | |||||
|
[seal: Hitachi Communication Technologies, Ltd. Career Network Division / Seal of the General Manager] | |||||
|
||||||
|
Tenant: | Opnext Japan, Inc. | ||||
|
216 Totsuka-chō, Totsuka-ku, Yokohama-shi | |||||
|
Kei Oki, Representative Director |
Page 1
Page 2
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Page 4
Page 5
1. | Fire | ||
2. | Lightning | ||
3. | Explosion/Burst | ||
4. | Wind, Hail, Snow | ||
5. | Flood | ||
6. | Electrical Accidents Related to Utilities | ||
7. | Mechanical Accidents Related to Utilities | ||
8. | Collision of Vehicles or Airplane | ||
9. | Object (other than No.8) Flying in from Outside Premises | ||
10. | Water Leakage Caused by Accident to Water Service Facilities | ||
11. | Noise, Labor Dispute | ||
12. | Sabotage | ||
13. | Glass Damage (does not cover inventory stock) | ||
14. | Breakage | ||
15. | Theft | ||
16. | Any Other Contingent, Sudden Accident | ||
17. | Earthquake, Volcanic Eruption, Tidal Wave | ||
18. | Suspension of Utilities Outside Premises (only loss of profit is covered) |
Page 6
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Page 10
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Page 13
Page 14
LANDLORD:
|
||||
|
||||
HITACHI, LTD. | ||||
|
||||
By:
|
/s/ Saturo Ito | |||
|
||||
|
Saturo Ito | |||
|
President and Chief Executive Officer Semiconductor & Integrated Circuits | |||
|
||||
LANDLORD: | ||||
|
||||
HITACHI TOHBU SEMICONDUCTOR, LTD. | ||||
|
||||
By:
|
/s/ Natsuki Kogiso | |||
|
||||
|
Natsuki Kogiso | |||
|
President | |||
|
||||
TENANT: | ||||
|
||||
OPTO-DEVICE, LTD. | ||||
|
||||
By:
|
/s/ Yasutoshi Kashiwada | |||
|
||||
|
Yasutoshi Kashiwada | |||
|
President |
(Property for Lease) | ||||
Article 1 | The Landlord shall lease to the Tenant, and the Tenant shall lease [from the Landlord] a certain property which is owned [by the Landlord], as indicated in the statement of rent shown in the exhibit attached hereto (hereinafter referred to as the Property). | |||
|
||||
(Purpose of Use) | ||||
Article 2 | The Tenant shall use the Property for the purpose of executing the Tenants business and affairs, and shall not use the Property for any other purpose. | |||
|
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(Term of the Lease) | ||||
Article 3 | The term of the lease of the Property shall be the one-year period which commences on April 1, 2006 and ends on March 31, 2007, provided, however, that the present agreement shall be automatically renewed for a further one-year period under the same terms and conditions, and thereafter shall be renewed for successive periods of one year in the same manner unless the Landlord or the Tenant declares its intent not to renew the present agreement prior to the expiration of the term of the lease. | |||
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(Rent)
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Article 4
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(1) | Rent shall be paid in the amount of 612,740 yen for each month. | ||
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(2) | The rent provided for in the preceding item shall be payable at the end of each month. | ||
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(3) | The rent shall be exclusive of the consumption tax, etc. levied thereupon, and the Tenant shall separately pay the amount of 30,648 yen in consumption tax, etc. to the Landlord not later than the last day of each month. | ||
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(Maintenance Costs) | ||||
Article 5 | The Landlord shall be responsible for the cost associated with the maintenance of the Property itself, while the Tenant shall bear all other necessary costs associated with the use of the Property. | |||
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(Property Management) | ||||
Article 6 | The Tenant shall manage the Property with the due care of a good manager, and shall not, without the consent of the Landlord in writing, alter the original condition of the Property. In addition, the Tenant shall ensure that the right of lease under the present agreement with respect to the Property, either in its entirety or in part, will not be assigned to a third party, be used by or used to gain a profit by a third party under any name, be sublet to any third party, or be used as the subject matter of a right of a third party. | |||
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[seal: Opnext Japan, Inc.] |
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Landlord: | Renesas Technology Corp. | ||
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Takasaki Office | |||
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111 Nishi Yokotemachi, Takasaki-shi, Gunma-ken | |||
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Kazunori Urayama, General Manager of Takasaki Office | |||
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[seal: Seal of Renesas Technology Corp. Takasaki Office] | |||
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Tenant: | Opnext Japan, Inc. | ||
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Information and Industrial Devices Business Unit | |||
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190 Ôaza Kashiwagi, Komoro-shi, Nagano-ken 384-8511 | |||
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Tadayuki Sugano, General Manager of the Information and | |||
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Industrial Devices Business Unit | |||
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[seal: Seal of Opnext Japan, Inc. Information and Industrial Devices Business Unit] | |||
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[seal: Opnext Japan, Inc.] |
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Landlord: | Renesas Technology Corp. | ||
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Takasaki Office | |||
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111 Nishi Yokotemachi, Takasaki-shi, Gunma-ken | |||
|
Kazunori Urayama, General Manager of Takasaki Office | |||
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[seal: Seal of Renesas Technology Corp. Takasaki Office] | |||
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||||
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Tenant: | Opnext Japan, Inc. | ||
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Information and Industrial Devices Business Unit | |||
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190 Kashiwagi, Komoro-shi, Nagano-ken | |||
|
Tadayuki Sugano, General Manager of the Information and Industrial Devices Business Unit | |||
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[seal: Seal of Opnext Japan, Inc. Information and Industrial Devices Business Unit] | |||
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[seal: Opnext Japan, Inc.] |
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Landlord: | Renesas Technology Corp. | ||
|
Takasaki Office | |||
|
111 Nishi Yokotemachi, Takasaki-shi, Gunma-ken | |||
|
Kazunori Urayama, General Manager of Takasaki Office | |||
|
[seal: Seal of Renesas Technology Corp. Takasaki Office] | |||
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||||
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Tenant: | Opnext Japan, Inc. | ||
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Information and Industrial Devices Business Unit | |||
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190 Kashiwagi, Komoro-shi, Nagano-ken | |||
|
Tadayuki Sugano, General Manager of the Information and Industrial Devices Business Unit | |||
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[seal: Seal of Opnext Japan, Inc. Information and
Industrial Devices Business Unit]
[seal: Opnext Japan, Inc.] |
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the reference to our firm under the caption "Experts" and to the use of our reports dated October 20, 2006 and December 4, 2006, in Amendment No. 1 to the Registration Statement (Form S-1 No. 333-138262) and related Prospectus of Opnext, Inc., dated December 13, 2006.
/s/ Ernst & Young LLP New York, New York December 12, 2006 |