Document:

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                                                                    Exhibit 10.7

                                  OPNEXT, INC.

                             246 Industrial Way West
                           Eatontown, New Jersey 07724

                               TERMS OF AGREEMENT

1. Employer:               OpNext, Inc. ("OpNext").

2. Employee:               Harry L. Bosco ("Executive").

3. Position and Duties:    Executive shall be the Chief Executive Officer and
                           President of OpNext. Executive shall report directly
                           to the Board of Directors of OpNext (the "BOARD").
                           All other senior executives of OpNext shall report to
                           Executive. Executive shall exercise such
                           responsibilities and perform such duties as directed
                           from time to time by the Board.

4. Base Salary:            $400,000 per annum.

5. Annual Bonus:           Executive will be eligible for a target bonus equal
                           to 50%-60% of Executive's base salary. Bonuses are
                           awarded in the sole discretion of the Board based on
                           OpNext's Annual Performance Bonus Plan as established
                           by the Board.

6. Opnext Stock Options:   On the Closing Date of that certain Amended and
                           Restated Stock Purchase Agreement by and among
                           OpNext, Hitachi, Ltd. ("HITACHI"), Clarity OpNext
                           Holdings I, LLC, Clarity OpNext Holdings II, LLC and
                           Clarity Partners, L.P., dated as of July 31, 2001,
                           Executive will receive options to acquire 3,000,000
                           shares of Class B Common Stock of OpNext at a strike
                           price of $8.34 per share (the "OPNEXT STOCK
                           OPTIONS"). The OpNext Stock Options shall be subject
                           to vesting as follows: 1/4 of the OpNext Stock
                           Options shall vest on the first anniversary of the
                           Employment Start Date (as defined below); 1/4 of the
                           OpNext Stock Options shall vest on the second
                           anniversary of the Employment Start Date; 1/4 of the
                           OpNext Stock Options shall vest on the third
                           anniversary of the Employment Start Date; and 1/4 of
                           the OpNext Stock Options shall vest on the fourth
                           anniversary of the Employment Start Date (it being
                           understood that in the event Executive's employment
                           is terminated at the conclusion of the Initial Term
                           (as defined in Section 8 hereof) for reasons other
                           than for Cause, the final 1/4 of Executive's OpNext
                           Stock Options shall vest on the fourth anniversary of
                           the Employment Start Date). Each anniversary of the
                           Employment Start Date shall be referred to herein as
                           an "Anniversary Date."

                           Any unvested OpNext Stock Options shall automatically
                           cancel upon Executive's termination of employment
                           with OpNext; PROVIDED, HOWEVER, in the event that
                           Executive's employment is terminated without Cause
                           (as defined in Section 13 hereof) or for Good Reason
                           (as defined in

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                           Section 12 hereof) on any date other than an
                           Anniversary Date, Executive's 1/4 installment of
                           OpNext Stock Options that was scheduled to vest on
                           the next Anniversary Date following Executive's
                           termination of employment shall vest on such upcoming
                           Anniversary Date. In addition, in the event that
                           Executive's employment is terminated by reason of
                           Executive's death or Disability (as defined in
                           Section 14 hereof), Executive's OpNext Stock Options
                           that have not previously vested shall immediately
                           vest. The OpNext Stock Options will be subject to the
                           additional terms and conditions as will be set forth
                           in OpNext's Stock Incentive Plan (the "STOCK
                           INCENTIVE PLAN") and in a non-qualified stock option
                           agreement (the "STOCK OPTION AGREEMENT") which
                           Executive will execute in connection with receiving
                           the OpNext Stock Options.

7. Employment Start Date:  For purposes of this Agreement, Executive's
                           employment start date will be deemed to be November
                           1, 2000.

8. Employment Term:        The initial term (the "INITIAL TERM") of Executive's
                           employment with OpNext shall be for a period of
                           forty-eight (48) months, commencing on the Employment
                           Start Date and ending on October 31, 2004, unless
                           renewed as set forth herein. Executive's employment
                           will be renewed automatically upon expiration of the
                           Initial Term for successive one-year periods (each
                           such period, a "SUCCESSIVE TERM"), unless not less
                           than sixty (60) days prior to the end of the Initial
                           Term or any Successive Term (as the case may be),
                           either Executive or OpNext provides written notice to
                           the other of such party's intention not to renew the
                           employment.

9. Benefits:               Executive will receive benefits in accordance with
                           OpNext company policy.

10. Vacation:              Executive will receive 4 weeks paid vacation time.

11. Annual Performance     Executive's job performance shall be reviewed
    Reviews:               annually by the Board. In conjunction with such
                           annual performance review process, Executive will be
                           eligible for salary increases, cash bonus awards (the
                           bonus target range is set forth under Section 5
                           above) and additional stock option awards, which will
                           be subject to company policy and vesting
                           arrangements. Salary increases, cash bonuses and
                           stock option awards will be determined by the Board
                           in its sole discretion based on the overall
                           performance of OpNext as well as Executive's
                           individual performance. Stock options, salary
                           increases and bonuses are awarded at the discretion
                           of the Board.

12. Termination Without    In the event Executive is terminated without Cause
    Cause or With Good     (as defined below) or Executive terminates his
    Reason:                employment for Good Reason (as defined below) prior
                           to the conclusion of the Initial Term, Executive
                           shall receive as severance an amount equal to one
                           times his annual base salary.

                           "Good Reason" as used herein shall mean:

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                           (i)      a material and substantial diminution of
                                    Executive's duties or responsibilities or
                                    Executive's removal as Chief Executive
                                    Officer of OpNext; or

                           (ii)     a reduction by OpNext of Executive's base
                                    salary or target bonus range as set forth in
                                    Section 5 above.

                           Executive must provide written notice to OpNext
                           within 20 days after the occurrence of an event
                           constituting Good Reason. OpNext shall have 20 days
                           after receipt of such written notice to cure. If
                           OpNext fails to cure and Executive resigns within 30
                           days after the end of the 20-day cure period, then
                           such resignation shall constitute resignation for
                           Good Reason.

                           Except as set forth above, upon termination without
                           Cause or resignation for Good Reason, Executive shall
                           not be entitled to receive any further compensation
                           or payments hereunder and any unvested stock options
                           shall immediately cancel. Vested stock options shall
                           be subject to the provisions of Executive's Stock
                           Option Agreement and the Stock Incentive Plan.

13.  Termination           "Cause" as utilized herein shall mean:
     For Cause:

                           (i)      the commission of a felony or the commission
                                    of any other act or omission involving
                                    dishonesty or fraud with respect to OpNext
                                    or any of its subsidiaries or affiliates or
                                    any of their customers or suppliers; or

                           (ii)     conduct tending to bring OpNext or any of
                                    its subsidiaries or affiliates into
                                    substantial public disgrace or disrepute; or

                           (iii)    breach of the Confidentiality Agreement
                                    referred to below; or

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

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

                           (vi)     repeated failure to perform Executive's
                                    duties as directed by the Board.

                           Upon notice by OpNext to Executive of a termination
                           for Cause, the "Termination Date" shall be the date
                           on which such notice is mailed or hand-delivered, or
                           as otherwise specified in the notice of termination,
                           to Executive. Upon termination for Cause, resignation
                           by Executive without Good Reason or expiration of the
                           Initial Term or any Successive Term (as the case may
                           be), Executive shall not be entitled to receive any
                           further compensation or payments hereunder (except
                           for Executive's Base Salary

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                           relating to the period of time prior to the
                           Termination Date). Upon termination for Cause, any
                           unvested OpNext Stock Options shall immediately
                           cancel and terminate as of the Termination Date.
                           Vested stock options shall be subject to the
                           provisions of Executive's Stock Option Agreement and
                           the Stock Incentive Plan.

14. Disability:            If, by reason of any physical or mental injury,
                           illness or incapacity, Executive is unable to
                           effectively perform his duties and responsibilities
                           as determined by the Board ("DISABILITY") for more
                           than 180 days during any 12-month period, Executive's
                           employment with OpNext will be terminated. In
                           addition, in the event of Executive's Disability for
                           more than 30 consecutive days, Executive shall only
                           be entitled to receive such compensation as is
                           provided under OpNext's disability benefit plans. If
                           Executive's employment is terminated by reason of a
                           Disability as set forth herein, any unvested OpNext
                           Stock Options shall immediately vest as set forth in
                           Section 6 hereof and all vested OpNext Stock Options
                           shall be subject to the provisions of this Agreement,
                           Executive's Stock Option Agreement and the Stock
                           Incentive Plan.

15. Confidentiality        Executive agrees, at OpNext's request, to enter into
    Agreement:             a confidentiality agreement with OpNext (the
                           "CONFIDENTIALITY AGREEMENT").

16. Restrictions:          Executive represents and warrants to OpNext that
                           there are no restrictions or agreements or
                           limitations on Executive's right or ability to enter
                           into this Agreement or perform the terms set forth
                           herein, including without limitation any
                           restrictions, agreements or limitations to which
                           Executive is subject in connection with his
                           employment with Lucent Technologies.

17. Confidential           Executive acknowledges that during the course of
    Information:           performing services for OpNext, Executive will have
                           substantial access to trade secrets and other
                           confidential information of OpNext and its
                           subsidiaries and affiliates and will enter into the
                           Confidentiality Agreement to restrict the disclosure
                           by Executive of such trade secrets and other
                           confidential information.

18. Noncompetition:        Executive agrees that he will not, during his
                           employment with OpNext, and for a period of six (6)
                           months following the termination thereof (the
                           "NONCOMPETE Period"), directly or indirectly engage
                           or participate, either as principal, agent, employee,
                           employer, consultant, stockholder, co-partner or in
                           any other individual or representative capacity
                           whatsoever, in the conduct or management of, or own
                           or have any stock or other proprietary or financial
                           interest in, any business that competes with the
                           business carried on or planned by OpNext or its
                           subsidiaries at the time of the termination of his
                           employment, unless he shall have obtained the prior
                           written consent of OpNext, except that Executive
                           shall be permitted (i) to own up to two percent (2%)
                           of the capital stock of corporations whose securities
                           are publicly-owned and regularly traded on any
                           national exchange or in the over-the counter market;
                           and (ii) to own up to two

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                           percent (2%) of the voting securities of companies
                           that are privately held, provided that in no event
                           shall Executive possess any managerial or
                           decision-making authority in such company or have the
                           ability to influence the management or affairs of
                           such company.

19. Nonsolicitation:       During the Noncompete Period, Executive shall not
                           directly or indirectly through another entity (i)
                           induce or attempt to induce any employee of OpNext or
                           any of its subsidiaries or affiliates to leave the
                           employ of OpNext or any of its subsidiaries or
                           affiliates, or in any way interfere with the
                           relationship between OpNext and any of its
                           subsidiaries and affiliates and any employee thereof,
                           (ii) induce or attempt to induce any customer,
                           supplier, licensee or other business relation of
                           OpNext or any of its subsidiaries or affiliates to
                           cease doing business with OpNext or such subsidiary
                           or affiliate or in any way interfere with the
                           relationship between any such customer, supplier,
                           licensee or business relation and OpNext and any
                           subsidiary or affiliate, or (iii) directly or
                           indirectly acquire or attempt to acquire an interest
                           in any business relating to the business of OpNext or
                           any of its subsidiaries or affiliates and with which
                           OpNext or any of its subsidiaries or affiliates has
                           entertained discussions or has requested and received
                           information relating to the acquisition of such
                           business by OpNext or any of its subsidiaries or
                           affiliates in the two-year period immediately
                           preceding the date of Executive's termination of
                           employment.

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

21. Binding Arbitration:   Any controversy arising out of or relating to this
                           Agreement or the Confidentiality Agreement shall be
                           settled by binding arbitration in New York City, New
                           York in accordance with the Commercial Arbitration
                           Rules of the American Arbitration Association. The
                           award rendered in any such proceeding shall be final
                           and binding, and judgment upon the award may be
                           entered in any court having jurisdiction thereof. The
                           costs of any such arbitration proceedings shall be
                           borne equally by OpNext and Executive. Neither party
                           shall be entitled to recover attorneys' fee or costs
                           expended in the course of such arbitration or
                           enforcement of the award rendered thereunder.

22. Governing Law:         All issues and questions concerning the construction,
                           validity, enforcement and interpretation of this
                           Agreement shall be governed by, and construed in
                           accordance with, the internal laws of the State of
                           New Jersey, without giving effect to any choice of
                           law or conflict of law provision or rule (whether of
                           the State of New Jersey or any other jurisdiction)
                           that would cause the application of the laws of any
                           jurisdiction other than the State of New Jersey.

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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:

                                    Harry L. Bosco
                                    546 Parker Avenue
                                    Brick, New Jersey 08724

                                    If to the Company, addressed to:

                                    OpNext. Inc.
                                    246 Industrial Way West
                                    Eatontown, New Jersey 07724
                                    Attention: Chief Operating Officer

                                    * * * * *

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                      SIGNATURE PAGE TO TERMS OF AGREEMENT

         Please indicate your agreement with the foregoing by signing in the
space indicated below.

                                               OPNEXT, INC.

                                               By: /s/ M. HAYASHI
                                                   -------------------------
                                                       Masaaki Hayashi
                                                       Chairman of the Board

AGREED TO AND ACCEPTED:

/s/ HARRY L. BOSCO
-----------------------
Name:  Harry L. Bosco

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                                 AMENDMENT NO. 1
                                       TO
                               TERMS OF AGREEMENT

                  AMENDMENT NO. 1, dated November 1, 2004 (the "Amendment"), is
made by and between Opnext, Inc. (the "Company") and Harry L. Bosco (the
"Executive").

                  WHEREAS, the Company and Executive entered into an agreement
entitled the Terms of Agreement as of July 31, 2001 (the "Terms of Agreement");

                  WHEREAS, the Company and Executive desire to amend the Terms
of Agreement as set forth herein; and

                  NOW, THEREFORE, for good and valuable consideration, the
Company and Executive hereby agree that the Terms of Agreement are amended as
follows:

                  1. DEFINED TERMS. Except for those terms defined above, the
definition of capitalized terms used in this Amendment are as provided in the
Terms of Agreement.

                  2. AMENDMENT TO PARAGRAPH 4. Paragraph 4 is hereby deleted and
replaced with the following:

                  "$400,000 per annum during the Initial Term (as defined below)
                  and the Successive Term (as defined below)."

                  3. AMENDMENT TO PARAGRAPH 6. Paragraph 6 is hereby deleted and
replaced with the following:

                  "6. Award:

                  6.1 OpNext Stock Option: On the Closing Date of that certain
                  Amended and Restated Stock Purchase Agreement by and among
                  OpNext, Hitachi, Ltd. ("HITACHI"), Clarity OpNext Holdings I,
                  LLC, Clarity OpNext Holdings II, LLC and Clarity Partners,
                  L.P., dated as of July 31, 2001, Executive entered into the
                  Stock Option Agreement pursuant to which he holds options to
                  acquire 3,000,000 shares of Class B Common Stock of OpNext at
                  a strike price of $5.00 per share (the "OPNEXT STOCK
                  OPTIONS"). The OpNext Stock Options shall be subject to
                  vesting as follows: 1/4 of the OpNext Stock Options shall vest
                  and become exercisable on the first anniversary of the
                  Employment Start Date (as defined below); 1/4 of the OpNext
                  Stock Options shall vest and become exercisable on the second
                  anniversary of the Employment Start Date; 1/4 of the OpNext
                  Stock Options shall vest and become exercisable on

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                  the third anniversary of the Employment Start Date; and 1/4 of
                  the OpNext Stock Options shall vest and become exercisable on
                  the fourth anniversary of the Employment Start Date (it the
                  second anniversary of the Employment Start Date; 1/4 of the
                  OpNext Stock Options shall vest and become exercisable on the
                  third anniversary of the Employment Start Date; and 1/4 of the
                  OpNext Stock Options shall vest and become exercisable on the
                  fourth anniversary of the Employment Start Date (it being
                  understood that in the event Executive's employment is
                  terminated at the conclusion of the Initial Term (as defined
                  in Section 8 hereof) for reasons other than for Cause, the
                  final 1/4 of Executive's OpNext Stock Options shall vest on
                  the fourth anniversary of the Employment Start Date).

                  Any unvested OpNext Stock Options shall automatically cancel
                  upon Executive's termination of employment with OpNext;
                  PROVIDED, HOWEVER, in the event that Executive's employment is
                  terminated without Cause (as defined in Section 13 hereof) or
                  for Good Reason (as defined in Section 12 hereof) on any date
                  other than an anniversary date of the Employment Start Date,
                  Executive's 1/4 installment of OpNext Stock Options that was
                  scheduled to vest on the next anniversary date of the
                  Employment Start Date following Executive's termination of
                  employment shall vest on such upcoming anniversary date of the
                  Employment Start Date. In addition, in the event that
                  Executive's employment is terminated by reason of Executive's
                  death or Disability (as defined in Section 14 hereof),
                  Executive's OpNext Stock Options that have not previously
                  vested shall immediately vest. The OpNext Stock Options will
                  be subject to the additional terms and conditions as will be
                  set forth in OpNext's Stock Incentive Plan (the "PLAN") and in
                  a non-qualified stock option agreement (the "STOCK OPTION
                  AGREEMENT") which Executive will execute in connection with
                  receiving the OpNext Stock Options.

                  6.2 OpNext New Stock Option: On or about November 1, 2004 (the
                  "GRANT DATE OF THE NEW STOCK OPTION"), OpNext will grant
                  Executive an option to purchase 450,000 shares of Class B
                  Common Stock of OpNext at a strike price of $5.00 per share
                  (the "NEW STOCK OPTION") under and subject to the terms and
                  conditions of the Plan. Subject to Executive's continued
                  employment with the Company through such dates, the New Stock
                  Option shall vest and become exercisable as follows: 1/3 of
                  the New Stock Option shall vest and become exercisable on the
                  first anniversary of the Grant Date of the New Stock Option;
                  1/3 of the New Stock Option shall vest and become exercisable
                  on the second anniversary of the Grant Date of the New Stock
                  Option; and 1/3 and become exercisable of the New Stock Option
                  shall vest on the third anniversary of the Grant Date of the
                  New Stock Option (it being understood that in the event
                  Executive's employment is terminated at the conclusion of the
                  Successive Term (as defined in Section 8 hereof) for reasons
                  other than for Cause, the final 1/3 of Executive's OpNext
                  Stock Options shall vest on the third anniversary of the Grant
                  Date of the New Stock Option).

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                  Any unvested New Stock Option shall automatically cancel upon
                  Executive's termination of employment with OpNext; PROVIDED,
                  HOWEVER, in the event that Executive's employment is
                  terminated without Cause (as defined in Paragraph 13 hereof)
                  or for Good Reason (as defined in Paragraph 12 hereof) on any
                  date other than an anniversary date of the Grant Date of the
                  New Stock Option, Executive's 1/3 installment of New Stock
                  Option that was scheduled to vest on the next anniversary date
                  of the Grant Date of the New Stock Option following
                  Executive's termination of employment shall instead vest and
                  become exercisable on the date of such upcoming anniversary
                  date of the Grant Date of the New Stock Option. In addition,
                  in the event that Executive's employment is terminated by
                  reason of Executive's death or Disability (as defined in
                  Paragraph 14 hereof), Executive's New Stock Option shares that
                  have not previously vested and become exercisable shall
                  immediately vest and become exercisable. The New Stock Option
                  will be subject to the additional terms and conditions as will
                  be set forth in the Plan and in a non-qualified stock option
                  agreement (the "NEW STOCK OPTION AGREEMENT") which Executive
                  will execute in connection with receiving the New Stock
                  Option."

                  6.3 OpNext Restricted Stock Award: On or about November 1,
                  2004, OpNext will grant Executive a Restricted Stock Award
                  (the "AWARD") for 200,000 Class B common shares, under and
                  subject to the terms and conditions of, the Plan. Subject to
                  Executive's continued employment with the Company through such
                  dates, the Award will vest (meaning that Executive will earn
                  the right to retain the Award shares without restriction
                  (except such restrictions on resale as may apply under
                  applicable securities laws and any Insider Trading Policy that
                  the Company may then have in place)) as to 100,000 shares on
                  each of the first and second anniversaries of the Company's
                  initial public offering (such second anniversary, the "FULLY
                  VESTED DATE"). If Executive's employment with the Company
                  terminates prior to the Fully Vested Date (including as a
                  result of expiration of the Initial Term or any Successive
                  Term as set forth in Paragraph 8 below), any unvested Award
                  shares as of such termination date will be forfeited to the
                  Company in their entirety; PROVIDED, HOWEVER, that in the
                  event that Executive's employment is terminated without Cause
                  (as defined in Paragraph 13 hereof) or for Good Reason (as
                  defined in Paragraph 12 hereof), or due to his death or
                  Disability (as defined in Paragraph 14 below), then no
                  forfeiture of such shares will result but instead Executive
                  shall be treated as having been fully vested in all Award
                  shares as of the date of such termination (although if such
                  vesting occurs prior to the Company's initial public offering,
                  the Shares shall be subject to certain restrictions,

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                  including a 180-day lock-up agreement in connection with the
                  Company's initial public offering and the Company's right to
                  repurchase such shares in connection with termination of his
                  employment). Executive will be required to execute, and the
                  Award will be subject to, the Company's standard form of
                  Restricted Stock Agreement used with the Plan."

                  4. AMENDMENT TO PARAGRAPH 8. Paragraph 8 is hereby deleted and
replaced with the following:

                  "The initial term (the "INITIAL TERM") of Executive's
                  employment with OpNext shall be for a period of forty-eight
                  (48) months, commencing on the Employment Start Date and
                  ending on October 31, 2004. Executive's employment shall renew
                  automatically for a period of thirty-six (36) months upon the
                  expiration of the Initial Term (the "SUCCESSIVE TERM").
                  Executive's employment will be renewed automatically upon
                  expiration of the Successive Term for successive one-year
                  periods (each such period, a "FURTHER SUCCESSIVE TERM") unless
                  not less than sixty (60) days prior to the end of the
                  Successive Term or any Further Successive Term, either
                  Executive or OpNext provides written notice to the other of
                  such party's intention not to renew the employment."

                  5. All other provisions of the Terms of Agreement shall remain
unchanged and in full force and effect.

B.  STOCK OPTION AGREEMENT:

                  1. AMENDMENT TO SECTION 3. Sections 3(a)(ii) & 3(a)(iii) of
the Stock Option Agreement are hereby deleted, and Section 3(a)(iv) shall be
renumbered as Section 3(a)(ii).

                  2. All other provisions of the Stock Option Agreement shall
remain unchanged and in full force and effect.

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<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Amendment to
be executed by its duly authorized officer and Executive has executed this
Amendment, each as of the day and year first set forth above.

                                       OPNEXT, INC.

                                       By: /S/     ISAO ONO
                                           -------------------------------
                                                   Isao Ono
                                                   Chairman

                                       EXECUTIVE

                                       By: /S/     HARRY L. BOSCO
                                           -------------------------------
                                                   Harry L. Bosco
                                                   President & CEO

                                       5<PAGE>
                                                                    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

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                           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

<PAGE>

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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>

                           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

<PAGE>
                      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

<PAGE>

                                    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

<PAGE>

                                 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

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