exv10w36






Exhibit 10.36




OPNEXT, INC.




1 Christopher Way

Eatontown, New Jersey 07724




     This Amended and Restated Employment Agreement (this “Agreement”) is dated as of July
29, 2008, by and between Opnext, Inc., a Delaware corporation (“Opnext” or the
“Company”), and Michael Chan (“Executive”). This Agreement amends and restates in
its entirety that certain Employment Agreement entered into by and between Opnext and Executive,
dated as of August 24, 2001, as subsequently amended by the first amendment thereto dated April 20,
2004, and the second amendment thereto dated October 4, 2006.



	 	 	 	 	 
	1.

	 	Employer:
	 	Opnext, Inc.
	 
	 	 	 	 
	2.

	 	Employee:
	 	Michael Chan
	 
	 	 	 	 
	3.

	 	Position and
Duties:
	 	Executive shall be the Executive Vice President,
Business Development and Product Portfolio
Management of Opnext and shall have the normal
duties, responsibilities, functions and authority
of an executive vice president for business
development and product portfolio management 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:
	 	$360,000 per annum
	 
	 	 	 	 
	5.

	 	Annual Bonus:
	 	Executive will be eligible to participate in the
Company’s annual incentive bonus plan applicable to
similarly situated executives of the Company. The
amount of Executive’s annual bonus will be based on
the attainment of performance criteria established
and evaluated by the Company in accordance with the
terms of such bonus plan as in effect from time to
time, provided that, subject to the terms of such
bonus plan, Executive’s target annual bonus will be
60% of his annual base salary for such year. Each
annual bonus is intended to satisfy the
short-deferral exemption under Treasury Regulation
Section 1.409A-1(b)(4) and shall be paid not later
than the last day of the applicable two and
one-half (2 1/2) month short-term deferral period
with respect to such annual bonus payment, within
the meaning of Treasury Regulation Section
1.409A-1(b)(4).






 









 






	 	 	 	 	 
	6.

	 	Restricted
Stock:
	 	Opnext and Executive acknowledge and agree that Opnext has previously granted Executive 25,000 shares of
restricted common stock (the “Restricted Stock”) pursuant to that certain Restricted Stock Agreement
between Opnext and Executive, dated as of July 1, 2004 (the “Restricted Stock Agreement”), and the
Amended and Restated 2001 Long Term Stock Incentive Plan (the “Plan”). The parties hereby agree that in
the event that Executive’s employment is terminated by Opnext without Cause (as defined in Section 12
hereof) or by Executive for Good Reason (as defined in Section 11 hereof) during the twelve (12) month
period immediately following a Change in Control (as defined in the Plan), the Restricted Stock shall
become fully vested and the restrictions thereon shall lapse with respect to all of the shares of
Restricted Stock as of the date of such termination. Notwithstanding the foregoing, the Restricted
Stock shall remain subject to the terms and conditions of the Restricted Stock Agreement, as modified by
this Section 6.
	 
	 	 	 	 
	7.

	 	Employment
Term:
	 	The initial term (the “Initial Term”) of Executive’s employment under this Agreement shall be for the
period commencing on the date hereof and ending on December 1, 2009. 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.
	 
	 	 	 	 
	8.

	 	Benefits:
	 	Executive will be eligible to receive group welfare and retirement benefits in accordance with Opnext
company plans or policies as in effect from time to time.
	 
	 	 	 	 
	9.

	 	Vacation:
	 	Executive will receive four (4) weeks paid vacation time per annum.
	 
	 	 	 	 
	10.

	 	Annual
Performance
Reviews:
	 	Executive’s job performance shall be reviewed 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 is set forth under Section 5 above) and additional stock option awards, which will be
subject to Company policy and vesting terms. 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.






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	11.

	 	Termination
Without Cause

or With Good
Reason:
	 	In the event that Executive incurs a “separation from service” (within the meaning of Section
409A(a)(2)(A)(i) of the Internal Revenue Code of 1986, as amended (the “Code”), and Treasury Regulation
Section 1.409A-1(h)) (“Separation from Service”) by reason of (a) a termination of Executive’s
employment by the Company without Cause (as defined below) or (b) Executive’s resignation for Good
Reason (as defined below), the Company shall pay Executive as severance a lump-sum cash payment equal to
100% of his then current annual base salary (the “Severance Payment”). Subject to the Payment Delay (as
defined below), the Severance Payment shall be made to Executive within ten (10) days after the date of
such Separation from Service. Executive’s right to receive the Severance Payment is conditioned on and
subject to Executive’s execution and non-revocation of a general release of claims substantially in the
form attached hereto as Exhibit A. For purposes of clarification, a termination of Executive’s
employment by reason of Executive’s death, disability or failure by the Company to renew the Initial
Term or any Successive Term shall not be deemed to be a termination by the Company “without Cause” for
purposes of this Agreement.
	 
	 	 	 	 
	 

	 	 	 	The Severance Payment is intended to satisfy the short-deferral exemption
under Treasury Regulation Section 1.409A-1(b)(4) and shall be made not later
than the last day of the applicable two and one-half (2 1/2) month short-term
deferral period with respect to the Severance Payment, within the meaning of
Treasury Regulation Section 1.409A-1(b)(4).
	 
	 	 	 	 
	 

	 	 	 	“Good Reason” as used herein shall mean the occurrence of any of the
following without the consent of Executive:
	 
	 	 	 	 
	 

	 	 	 	(i) a material and substantial diminution of Executive’s duties or
responsibilities; or
	 
	 	 	 	 
	 

	 	 	 	(ii) a material reduction by Opnext of Executive’s base salary or target
bonus as set forth in Section 5 above.
	 
	 	 	 	 
	 

	 	 	 	provided, however, that Executive’s resignation shall only constitute a
resignation for Good Reason hereunder if (x) Executive provides the Company
with written notice setting forth the specific facts or circumstances
constituting Good Reason within 20 days after the initial existence of such
facts or circumstances, (y) the Company has failed to cure such facts or
circumstances within 30 days after receipt of such written notice, and (z)
the date of Executive’s Separation from Service occurs no later than 60 days
after the initial occurrence of the facts or circumstances constituting Good
Reason.






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	 	 	 	Except as set forth above, upon termination by Opnext without Cause or
resignation by Executive for Good Reason, Executive shall not be entitled to
receive any further compensation or payments hereunder (except for
Executive’s unpaid Base Salary, accrued vacation and expense reimbursements
relating to the period prior to the date of termination of employment). In
the event of such a termination, any stock options or other equity-based
awards held by Executive shall be subject to the provisions of the incentive
award plan and applicable award agreement pursuant to which such awards were
granted.
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding anything to the contrary in this Agreement, no compensation
or benefits, including, without limitation, the Severance Payment, shall be
paid to Executive during the six-month period following Executive’s
Separation from Service if Executive is a “specified employee” at the time
of such Separation from Service (as determined by the Company in accordance
with Section 409A of the Code) and the Company determines that paying such
amounts at the time or times indicated in this Agreement would be a
prohibited distribution under Section 409A(a)(2)(b)(i) of the Code. If the
payment of any such amounts is delayed as a result of the previous sentence
(the “Payment Delay”), then on the first day following the end of
such six-month period, the Company shall pay Executive a lump-sum amount
equal to the cumulative amount that would have otherwise been payable to
Executive during such six-month period.
	 
	 	 	 	 
	12.

	 	Termination
For Cause:
	 	“Cause” as utilized herein shall mean:
	 
	 	 	 	 
	 

	 	 	 	(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;
	 
	 	 	 	 
	 

	 	 	 	(ii) conduct that brings Opnext or any of its subsidiaries or affiliates
into substantial public disgrace or disrepute;
	 
	 	 	 	 
	 

	 	 	 	(iii) any material breach of the Non-Competition Agreement referred to
below;
	 
	 	 	 	 
	 

	 	 	 	(iv) fraud or embezzlement with respect to Opnext or any of its subsidiaries
or affiliates;
	 
	 	 	 	 
	 

	 	 	 	(v) gross negligence or willful misconduct with respect to Opnext or any of
its subsidiaries or affiliates; or
	 
	 	 	 	 
	 

	 	 	 	(vi) repeated failure to perform in any material respect Executive’s duties
as directed by the Board.
	 
	 	 	 	 





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	 	 	 	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 unpaid Base
Salary, accrued vacation and expense reimbursements relating to the period
prior to the Termination Date). In the event of a termination for Cause,
any unvested stock options or other equity-based awards held by Executive
shall immediately be cancelled and terminate as of the Termination Date.
Vested stock options and other equity-based awards shall be subject to the
provisions of the incentive award plan and applicable award agreement
pursuant to which such awards were granted.
	 
	 	 	 	 
	13.

	 	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 stock options or other
equity-based awards held by Executive shall be
subject to the provisions of the incentive award
plan and applicable award agreement pursuant to
which such awards were granted.
	 
	 	 	 	 
	14.

	 	Non-Competition
Agreement:
	 	In connection with the execution of this
Agreement, Executive hereby agrees to enter into a
Non-Competition Agreement with Opnext in a form
prescribed by Opnext (the “Non-Competition
Agreement”).
	 
	 	 	 	 
	15.

	 	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.
	 
	 	 	 	 
	16.

	 	Confidential
Information:
	 	Executive acknowledges that during the course of
performing services for Opnext, Executive will
have substantial access to trade secrets and other
confidential information of Opnext and its
subsidiaries and affiliates and is entering into
the Non-Competition Agreement in part to restrict
the disclosure by Executive of such trade secrets
and other confidential information.






5









 






	 	 	 	 	 
	17.

	 	Withholdings:
	 	All payments set forth herein which are subject to
withholding shall be made less any required
withholdings.
	 
	 	 	 	 
	18.

	 	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.
	 
	 	 	 	 
	19.

	 	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 Delaware, without giving
effect to any choice of law or conflict of law
provision or rule (whether of the State of
Delaware or any other jurisdiction) that would
cause the application of the laws of any
jurisdiction other than the State of Delaware.
	 
	 	 	 	 
	20.

	 	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 him at his most recent address
on the records of the Company.



If to the Company, addressed to:


Opnext, Inc.

1 Christopher Way

Eatontown, New Jersey 07724

Attention: Chief Executive Officer




	 	 	 	 	 
	21.

	 	Section 409A:
	 	The payments and benefits under this Agreement are
not intended to constitute “nonqualified deferred
compensation” within the meaning of Section 409A of
the Code. Notwithstanding any provision of this
Agreement to the contrary, in the event that the
Company determines that any payments or benefits
payable hereunder may be subject to Section 409A of
the Code, the Company may adopt such amendments to
this Agreement or take any other actions that the
Company determines are necessary or appropriate to
(i) exempt such payments and benefits from






6









 






	 	 	 	 	 
	 

	 	 	 	Section 409A of the Code and/or preserve the intended tax treatment of such
payments or benefits, or (ii) comply with the requirements of Section 409A
of the Code and related Department of Treasury guidance and thereby avoid
the application of penalty taxes under Section 409A of the Code.






[Signature Page Follows]




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SIGNATURE PAGE TO AGREEMENT



IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year
first above written.




	 	 	 	 	 	 	 
	 	 	OPNEXT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Harry L. Bosco 	 	 
	 

	 	 	 	 

     Harry L. Bosco
	 	 
	 

	 	 	 	     CEO and President	 	 
	 
	 	 	 	 	 	 
	 	 	AGREED TO AND ACCEPTED:	 	 
	 
	 	 	 	 	 	 
	 	 	/s/ Michael C. Chan	 	 
	 	 	Name: Michael C. Chan	 	 







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