EX-10.8 6 a24073exv10w8.txt EX-10.8: EMPLOYMENT AGREEMENT Exhibit 10.8 OPNEXT, INC. 246 Industrial Way West Eatontown, New Jersey 07724 TERMS OF AGREEMENT 1. Employer: OpNext, Inc. ("OPNEXT"). 2. Employee: Michael Chan ("EXECUTIVE"). 3. Position and Duties: Executive shall be the Executive Vice President, Business Development of OpNext and shall have the normal duties, responsibilities, functions and authority of an executive vice president for business development of a company the size and structure of OpNext. Executive shall report directly to the Chief Executive Officer ("CEO"). Executive has primary responsibility for identifying and pursuing strategic business opportunities, including mergers, acquisitions, partnerships, alliances and/or joint ventures. Executive shall work with the CEO and the Chief Operating Officer of OpNext in developing long-range strategic plans for OpNext. Executive shall exercise such further responsibilities and perform such further duties as directed from time to time by the CEO and the Board of Directors of OpNext (the "BOARD"). 4. Base Salary: $325,000 per annum. 5. Annual Bonus: Executive will be eligible for a target bonus equal to 50%-60% of Executive's base salary. Bonuses are awarded in the sole discretion of the Board based on OpNext's Annual Performance Bonus Plan as established by the Board. 6. OpNext Stock Options: On the Closing Date of that certain Amended and Restated Stock Purchase by and among OpNext, Hitachi, Ltd. ("HITACHI"), Clarity OpNext Holdings I, LLC, Clarity OpNext Holdings II, LLC and Clarity Partners, L.P., dated as of July 31, 2001, Executive will receive options to acquire 600,000 shares of Class B Common Stock of OpNext at a strike price of $8.34 per share (the "OPNEXT STOCK OPTIONS"). The OpNext Stock Options shall be subject to vesting as follows: 1/4 of the OpNext Stock Options shall vest on the first anniversary of the Employment Start Date (as defined below); 1/4 of the OpNext Stock Options shall vest on the second anniversary of the Employment Start Date; 1/4 of the OpNext Stock Options shall vest on the third anniversary of the Employment Start Date; and 1/4 of the OpNext Stock Options shall vest on the fourth anniversary of the Employment Start Date (it being understood that in the event Executive's employment is terminated at the conclusion of the Initial Term (as defined in Section 8 hereof) for reasons other than for Cause, the final 1/4 of Executive's OpNext Stock Options shall vest on the fourth anniversary of the Employment Start Date). Each anniversary of the Employment Start Date shall be referred to herein as an "Anniversary Date." Any unvested OpNext Stock Options shall automatically cancel upon Executive's termination of employment with OpNext; PROVIDED, HOWEVER, in the event that Executive's employment is terminated without Cause (as defined in Section 13 hereof) or for Good Reason (as defined in Section 12 hereof) on any date other than an Anniversary Date, Executive's 1/4 installment of OpNext Stock Options that was scheduled to vest on the next Anniversary Date following Executive's termination of employment shall vest on such upcoming Anniversary Date. In addition, in the event that Executive's employment is terminated by reason of Executive's death or Disability (as defined in Section 14 hereof), Executive's OpNext Stock Options, to the extent not previously vested, shall immediately vest. The OpNext Stock Options will be subject to the additional terms and conditions as will be set forth in OpNext's Stock Incentive Plan (the "STOCK INCENTIVE PLAN") and in a non-qualified stock option agreement (the "STOCK OPTION AGREEMENT") which Executive will execute in connection with receiving the OpNext Stock Options. 7. Employment Start Date: For purposes of this Agreement, Executive's employment start date will be deemed to be December 1, 2000. 8. Employment Term: The initial term (the "INITIAL TERM") of Executive's employment with OpNext shall be for a period of forty-eight (48) months, commencing on the Employment Start Date and ending on November 30, 2004, unless renewed as set forth herein. Executive's employment will be renewed automatically upon expiration of the Initial Term for successive one-year periods (each such period, a "SUCCESSIVE TERM"), unless not less than sixty (60) days prior to the end of the Initial Term or any Successive Term (as the case may be), either Executive or OpNext provides written notice to the other of such party's intention not to renew the employment. 9. Benefits: Executive will receive benefits in accordance with OpNext company policy. 10. Vacation: Executive will receive 4 weeks paid vacation time. 11. Annual Performance Executive's job performance shall be reviewed Reviews: annually by the Board. In conjunction with such annual performance review process, Executive will be eligible for salary increases, cash bonus awards (the bonus target range is set forth under Section 5 above) and additional stock option awards, which will be subject to company policy and vesting arrangements. Salary increases, cash bonuses and stock option awards will be determined by the Board in its sole discretion based on the overall performance of OpNext as well as Executive's individual performance. Stock options, salary increases and bonuses are awarded at the discretion of the Board. 2 12. Termination Without In the event Executive is terminated without Cause Cause or With Good (as defined below) or Executive terminates his Reason: employment for Good Reason (as defined below) prior to the conclusion of the Initial Term, Executive shall receive as severance an amount equal to one times his annual base salary. "Good Reason" as used herein shall mean: (i) a material and substantial diminution of Executive's duties or responsibilities or Executive's removal as Executive Vice President of OpNext; or (ii) a reduction by OpNext of Executive's base salary or target bonus range as set forth in Section 5 above. Executive must provide written notice to OpNext within 20 days after the occurrence of an event constituting Good Reason. OpNext shall have 20 days after receipt of such written notice to cure. If OpNext fails to cure and Executive resigns within 30 days after the end of the 20-day cure period, then such resignation shall constitute resignation for Good Reason. Except as set forth above, upon termination without Cause or resignation for Good Reason, Executive shall not be entitled to receive any further compensation or payments hereunder and any unvested stock options shall immediately cancel. Vested stock options shall be subject to the provisions of Executive's Stock Option Agreement and the Stock Incentive Plan. 13. Termination "Cause" as utilized herein shall mean: For Cause: (i) the commission of a felony or the commission of any other act or omission involving dishonesty or fraud with respect to OpNext or any of its subsidiaries or affiliates or any of their customers or suppliers; or (ii) conduct tending to bring OpNext or any of its subsidiaries or affiliates into substantial public disgrace or disrepute; or (iii) breach of the Confidentiality Agreement referred to below; or (iv) fraud or embezzlement with respect to OpNext or any of its subsidiaries or affiliates; or (v) gross negligence or willful misconduct with respect to OpNext or any of its subsidiaries or affiliates; or (vi) repeated failure to perform Executive's duties as directed by the Board. 3 Upon notice by OpNext to Executive of a termination for Cause, the "Termination Date" shall be the date on which such notice is mailed or hand-delivered, or as otherwise specified in the notice of termination, to Executive. Upon termination for Cause, resignation by Executive without Good Reason or expiration of the Initial Term or any Successive Term (as the case may be), Executive shall not be entitled to receive any further compensation or payments hereunder (except for Executive's Base Salary relating to the period of time prior to the Termination Date). Any unvested OpNext Stock Options shall immediately cancel and terminate as of the Termination Date. Vested stock options shall be subject to the provisions of Executive's Stock Option Agreement and the Stock Incentive Plan. 14. Disability: If, by reason of any physical or mental injury, illness or incapacity, Executive is unable to effectively perform his duties and responsibilities as determined by the Board ("DISABILITY") for more than 180 days during any 12-month period, Executive's employment with OpNext will be terminated. In addition, in the event of Executive's Disability for more than 30 consecutive days, Executive shall only be entitled to receive such compensation as is provided under OpNext's disability benefit plans. If Executive's employment is terminated by reason of a Disability as set forth herein, any unvested OpNext Stock Options shall immediately vest as set forth in Section 6 hereof and all vested OpNext Stock Options shall be subject to the provisions of this Agreement, Executive's Stock Option Agreement and the Stock Incentive Plan. 15. Proprietary Executive agrees, at OpNext's request, to enter into Information Agreement: a confidentiality agreement with OpNext (the "CONFIDENTIALITY AGREEMENT"). 16. Restrictions: Executive represents and warrants to OpNext that there are no restrictions or agreements or limitations on Executive's right or ability to enter into this Agreement or perform the terms set forth herein. 17. Confidential Executive acknowledges that during the course of Information: performing services for OpNext, Executive will have substantial access to trade secrets and other confidential information of OpNext and its subsidiaries and affiliates and will enter into the Confidentiality Agreement to restrict the disclosure by Executive of such trade secrets and other confidential information 18. Noncompetition: Executive agrees that he will not, during his employment with OpNext, and for a period of six (6) months following the termination thereof (the "NONCOMPETE PERIOD"), directly or indirectly engage or participate, either as principal, agent, employee, employer, consultant, stockholder, co-partner or in any other individual or representative capacity whatsoever, in the conduct or management of, or own or have any stock or other proprietary or financial interest in, any business that competes with 4 the business carried on or planned by OpNext or its subsidiaries at the time of the termination of his employment, unless he shall have obtained the prior written consent of OpNext, except that Executive shall be permitted (i) to own up to two percent (2%) of the capital stock of corporations whose securities are publicly-owned and regularly traded on any national exchange or in the over-the counter market; and (ii) to own up to two percent (2%) of the voting securities of companies that are privately held, provided that in no event shall Executive possess any managerial or decision-making authority in such company or have the ability to influence the management or affairs of such company. 19. Nonsolicitation: During the Noncompete Period, Executive shall not directly or indirectly through another entity (i) induce or attempt to induce any employee of OpNext or any of its subsidiaries or affiliates to leave the employ of OpNext or any of its subsidiaries or affiliates, or in any way interfere with the relationship between OpNext and any of its subsidiaries and affiliates and any employee thereof, (ii) induce or attempt to induce any customer, supplier, licensee or other business relation of OpNext or any of its subsidiaries or affiliates to cease doing business with OpNext or such subsidiary or affiliate or in any way interfere with the relationship between any such customer, supplier, licensee or business relation and OpNext and any subsidiary or affiliate, or (iii) directly or indirectly acquire or attempt to acquire an interest in any business relating to the business of OpNext or any of its subsidiaries or affiliates and with which OpNext or any of its subsidiaries or affiliates has entertained discussions or has requested and received information relating to the acquisition of such business by OpNext or any of its subsidiaries or affiliates in the two-year period immediately preceding the date of Executive's termination of employment. 20. Withholdings: All payments set forth herein which are subject to withholding shall be made less any required withholdings. 21. Binding Arbitration: Any controversy arising out of or relating to this Agreement or the Confidentiality Agreement shall be settled by binding arbitration in New York City, New York in accordance with the Commercial Arbitration Rules of the American Arbitration Association. The award rendered in any such proceeding shall be final and binding, and judgment upon the award may be entered in any court having jurisdiction thereof. The costs of any such arbitration proceedings shall be borne equally by OpNext and Executive. Neither party shall be entitled to recover attorneys' fee or costs expended in the course of such arbitration or enforcement of the award rendered thereunder. 22. Governing Law: All issues and questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New 5 Jersey, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of New Jersey or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New Jersey. 23. Notices: All notices in connection herewith or provided for hereunder shall be validly given or made only if made in writing and delivered personally or mailed by registered or certified mail, return receipt requested, postage prepaid, to the party entitled or required to receive the same, as follows: If to Executive, addressed to: Michael Chan 50 Takolusa Drive Holmdel, New Jersey 07733 If to the Company, addressed to: OpNext, Inc. 246 Industrial Way West Eatontown, New Jersey 07724 Attention: Chief Executive Officer * * * * * 6 SIGNATURE PAGE TO TERMS OF AGREEMENT Please indicate your agreement with the foregoing by signing in the space indicated below. OPNEXT, INC. By: /s/ HARRY L. BOSCO ---------------------------------------- Harry Bosco, Chief Executive Officer AGREED TO AND ACCEPTED: /s/ MICHAEL CHAN --------------------------- Name: Michael Chan 8/24/01 AMENDMENT AMENDMENT, dated April 20, 2004, to the Terms of Agreement by and between Opnext, Inc. (the "Company") and Michael Chan (the "Executive"), entered into as of August 24, 2001 (the "Terms of Agreement"). WHEREAS, the Company and the Executive are the parties to the Terms of Agreement, and wish to amend the Terms of Agreement to extend the duration of the Initial Term, as defined therein; NOW, THEREFORE, for good and valuable consideration, the parties to the Terms of Agreement agree as follows: All capitalized terms not defined in this Amendment shall have the meanings given in the Terms of Agreement. 1. The first sentence of Paragraph 8 of the Terms of Agreement shall be amended to read as follows in its entirety: "The initial term (the "Initial Term") of Executive's employment with OpNext shall be for a period of seventy-two (72) months, commencing on the Employment Start Date and ending on December 1, 2006." 2. The Terms of Agreement (including, without limitation, the remainder of Paragraph 8) shall in all other respects remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have signed their names, effective as of the date first above written. OPNEXT, INC. /s/ HARRY BOSCO --------------------------- By: HARRY L BOSCO Title: PRESIDENT & CEO /s/ MICHAEL CHAN --------------------------- MICHAEL CHAN AMENDMENT NO. 2 TO TERMS OF AGREEMENT AMENDMENT NO. 2, dated October 4, 2006, to the Terms of Agreement by and between Opnext, Inc. (the "Company") and Michael Chan (the "Executive") entered into as of August 24, 2001 (the "Terms of Agreement"). WHEREAS, the Company and the Executive are the parties to the Terms of Agreement, and wish to amend the Terms of Agreement to extend the duration of the Initial Term, as defined therein; NOW, THEREFORE, for good and valuable consideration, the parties to the Terms of Agreement agree as follows: All capitalized terms not defined in this Amendment shall have the meanings given in the Terms of Agreement. 1. The first sentence of Paragraph 8 of the Terms of Agreement shall be amended to read as follows in its entirety: "The initial term (the "Initial Term") of Executive's employment with Opnext shall be for a period of ninety-six (96) months, commencing on the Employment Start Date and ending on December 1, 2008. 2. The Terms of Agreement (including, without limitation, the remainder of Paragraph 8) shall in all other respects remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have signed their names, effective as of the date first above written. OPNEXT, INC. By: /S/ HARRY BOSCO ------------------------- HARRY L. BOSCO PRESIDENT & CEO EXECUTIVE By: /S/ MICHAEL CHAN ------------------------- MICHAEL CHAN