Document:

EX-10.5

 

Exhibit 10.5

Opnext, Inc.

Nonqualified Stock Option Agreement

          THIS AGREEMENT (the “Agreement”), dated as of                     , between Opnext, Inc., a Delaware
corporation (hereinafter called the “Company”), and                      (hereinafter called the
“Participant”):

R E C I T A L S:

          WHEREAS, the Company has adopted the Opnext, Inc. 2001 Long-Term Stock Incentive Plan (the
“Plan”), which Plan is incorporated herein by reference and made a part of this Agreement.
Capitalized terms not otherwise defined herein shall have the same meanings as in the Plan; and

          WHEREAS,                      (the “Director”) was appointed by the Participant to serve as a member of
the Board of Directors of the Company (the “Board”); and

          WHEREAS, the Committee determined that it would be in the best interests of the Company and
its stockholders to grant the option provided for herein pursuant to the Plan and the terms set
forth herein, and did so grant such option on                      (the “Date of Grant”), to the Participant
in respect of the Director’s service on the Board.

          NOW THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:

          1. Grant of the Option.
The Company has granted to the Participant the right and
option (the “Option”) to purchase on the terms and conditions hereinafter set forth, all or any
part of an aggregate of                      Shares,
subject to adjustment as set forth in the Plan. The
purchase price of the Shares subject to the Option shall be                      per Share
(the “Exercise Price”). The Option is intended to be a non-qualified stock option, and is not
intended to be treated as an option that complies with Section 422 of the Internal Revenue Code of
1986, as amended.

          2. Vesting.

          (a) The vesting schedule of the Option as of the Date of Grant provided that, subject to the
Director’s continued service on the Board, the Option would vest and become exercisable with
respect to one-fourth of the Shares initially covered by the Option on each                      of 2001,
2002, 2003 and 2004. As of the date of this Agreement, three-fourths of the Shares initially
covered by the Option are vested and exercisable, one-fourth of which became vested and exercisable
on                     , 2001, one-fourth of which became vested and exercisable on                     , 2002 and
one-fourth of which became vested and exercisable on                     , 2003. Subject to the Director’s
continued service on the Board, the Option shall vest and become exercisable with respect to the
remaining one-fourth of the Shares initially covered by the Option on                     , 2004.

 

 

2

          At any time, the portion of the Option that has become vested and exercisable as described
above (or pursuant to Section 2(c) or (d) below) is hereinafter referred to as the “Vested
Portion”, and the Vested Portion of the Option shall remain exercisable for the period set forth in
Section 3(a).

          (b) If the Director’s service on the Board is terminated for any reason other than the death
or Disability (as defined below) of the Director, the Option shall, to the extent not then vested,
be canceled by the Company without consideration.

          (c) If the Director’s service on the Board is terminated by reason of the death or Disability
of the Director, the Option shall, to the extent not then vested and not previously canceled,
immediately become fully vested and exercisable.

          (d) Notwithstanding any other provisions of this Agreement to the contrary, in the event of a
Change of Control (as defined below), the Option shall, to the extent not then vested and not
previously canceled, immediately become fully vested and exercisable. For purposes of this
Agreement, “Change of Control” shall mean the occurrence of any of the following: (i) the sale,
lease, transfer, conveyance or other disposition, in one or a series of related transactions, of
all or substantially all of the assets of the Company to any “person” or “group” (as such terms are
used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) other than the Permitted Holders (as
defined below), (ii) any person or group, other than the Permitted Holders, is or becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have “beneficial ownership” of all shares that any such person has the
right to acquire, whether such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 60% of the total voting power of the voting stock of the
Company, including by way of merger, consolidation or otherwise, (iii) the consummation of any
transaction or series of transactions pursuant to which the Company is merged or consolidated with
any other company, other than a transaction which would result in the shareholders of the Company
(and their Affiliates) immediately prior thereto continuing to own (either by remaining outstanding
or by being converted into voting securities of the surviving entity) more than 50% of the combined
voting power of the voting securities of the Company or such surviving entity outstanding
immediately after such transaction or (iv) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board (together with any new directors whose
election by such Board or whose nomination for election by the shareholders of the Company was
approved by a vote of a majority of the directors of the Company, then still in office, who were
either directors at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the Board, then in office.
“Permitted Holders” shall mean, as of the date of determination, any and all of (i) Hitachi, Ltd.
and any of its Affiliates, (ii) Clarity Partners, L.P. and any of its Affiliates, (iii) Marubeni
Corporation and any of its Affiliates and (iv) any person of which Clarity Partners, LP., Hitachi
Ltd., Marubeni Corporation and any of their respective affiliates beneficially own, in the
aggregate, more than 40% of the total voting power of the voting securities.

          (e) For purposes of this Agreement, “Disability” shall mean as defined in the Company’s
long-term disability plan as in effect from time to time, or if there shall be no plan or if not
defined therein, the Director’s becoming physically or mentally incapacitated

 

3

and consequent inability for a period of six (6) months in any twelve (12) consecutive month
period to perform his duties to the Company.

          3. Exercise of Option.

          (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, the
Participant may exercise all or any part of the Vested Portion of the Option at any time prior to
the tenth anniversary of the Date of Grant.

          (b) Method of Exercise.

     (i) Subject to Section 3(a), the Vested Portion of the Option may be exercised by
delivering to the Company at its principal office written notice of intent to so exercise;
provided that, the Option may be exercised with respect to whole Shares only. Such
notice shall specify the number of Shares for which the Option is being exercised and shall
be accompanied by payment in full of the Exercise Price. The payment of the Exercise Price
may be made in cash, or its equivalent, or (x) by exchanging Shares owned by the
Participant (which are not the subject of any pledge or other security interest and which
have been owned by the Participant for at least 6 months) or (y) at any time that the
Shares are publicly traded on a nationally recognized stock exchange, subject to and in
accordance with rules set by the Committee, through delivery of irrevocable instructions to
a broker to sell the Shares otherwise deliverable upon the exercise of the Option and to
deliver promptly to the Company an amount equal to the aggregate exercise price, or by a
combination of the foregoing, provided that the combined value of all cash and cash
equivalents and the Fair Market Value of any such Shares so tendered to the Company as of
the date of such tender is at least equal to such aggregate exercise price.

     (ii) Notwithstanding any other provision of the Plan or this Agreement to the
contrary, the Option may not be exercised prior to the completion of any registration or
qualification of the Option or the Shares under applicable state and federal securities or
other laws, or under any ruling or regulation of any governmental body or national
securities exchange that the Committee shall in its sole discretion determine to be
necessary or advisable.

     (iii) Upon the Company’s determination that the Option has been validly exercised as
to any of the Shares, the Company shall issue certificates in the Participant’s name for
such Shares. However, the Company shall not be liable to the Participant for damages
relating to any delays in issuing the certificates, any loss of the certificates, or any
mistakes or errors in the issuance of the certificates or in the certificates themselves.

          4. Legend on Certificates. The certificates representing the Shares purchased by
exercise of the Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such Shares are listed, and
any applicable Federal or state laws, and the

 

4

Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

          5. Transferability. The Option may not be transferred or assigned by the Participant,
and any such purported transfer or assignment shall be void and unenforceable against the Company
or any Affiliate.

          6. Right of Repurchase.

          (a) The Repurchase Right. Upon the termination of the Director’s service as a
director of the Company and its Subsidiaries for any reason, all Shares issued pursuant to exercise
of the Option (the “Option Shares”) will, prior to an initial public offering by the Company of the
Shares, be subject to repurchase by the Company at its election, subject to the Participant’s prior
written consent, pursuant to the terms and conditions set forth in this Section 6 (the “Repurchase
Right”).

          (b) Repurchase Price. The “Repurchase Price” for all Option Shares shall be the Fair
Market Value for such Option Shares.

          (c) Exercise of Repurchase Option. The Company may elect to purchase all or any
portion of the Option Shares by delivering written notice (the “Repurchase Notice”) to the
Participant within the 180-day period commencing on the later of the date that is 180 days after
the Participant’s purchase of such Option Shares and the Director’s termination of service. The
Repurchase Notice shall set forth the number of Option Shares to be acquired, the aggregate
consideration to be paid for such Option Shares, and the time and place for the closing of the
repurchase (which shall occur not less than 5 and not more than 30 days after the giving of the
Repurchase Notice). The Participant shall, within 5 days following receipt of the Repurchase
Notice, deliver a notice of consent or rejection of the repurchase to the Company. If the
Participant rejects the repurchase, then the Company’s Repurchase Notice shall terminate and there
shall be no closing pursuant to such Repurchase Notice.

          (d) Assignment of the Company’s Repurchase Right. The Company will not have the right
to assign all or any portion of its Repurchase Right.

          (e) Closing of the Repurchase. At the closing of the repurchase, the Participant
shall deliver all certificates evidencing the Option Shares to be repurchased (accompanied by duly
executed stock powers) to the Company, and the Company shall pay for the Option Shares to be
purchased pursuant to the Repurchase Right by delivery of a check or wire transfer of immediately
available funds in the aggregate amount of the Repurchase Price for such Option Shares. The
Participant shall, at the Company’s request, provide customary representations and warranties with
respect to the Participant’s good title to the Option Shares, free and clear of any liens or
encumbrances.

          (f) Restrictions. Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Option Shares by the Company shall be subject to applicable
restrictions contained in the Delaware corporation laws and in the Company’s and its Subsidiaries’
debt and equity financing agreements. If any such restrictions prohibit the

 

5

repurchase of Option Shares hereunder which the Company is otherwise entitled or required to
make, the time periods provided in this Section 6 shall be suspended, and the Company may make such
repurchases as soon as it is permitted to do so under such restrictions.

          7. Withholding.

          (a) The Participant may be required to pay to the Company or any Affiliate and the Company or
any Affiliate shall have the right and is hereby authorized to withhold from any payment due or
transfer made under the Option or under the Plan or from any compensation or other amount owing to
a Participant the amount (in cash, Shares, other securities, other Awards or other property) of any
applicable withholding taxes in respect of the Option, its exercise, or any payment or transfer
under the Option or under the Plan and to take such action as may be necessary in the option of the
Company to satisfy all obligations for the payment of such taxes.

          (b) Without limiting the generality of clause (a) above, the Participant may satisfy, in whole
or in part, the foregoing withholding liability by delivery of Shares owned by the Participant
(which are not subject to any pledge or other security interest and which have been owned by the
Participant for at least 6 months) with a Fair Market Value equal to such withholding liability or
by having the Company withhold from the number of Shares otherwise issuable pursuant to the
exercise of the Option a number of Shares with a Fair Market Value equal to such withholding
liability.

          8. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of
the Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.

          9. Notices. Any notice not necessary under this Agreement shall be addressed to the
Company in care of its Secretary at the principal executive office of the Company and to the
Participant at the address appearing on the signature page hereto or to either party at such other
address as either party hereto may hereafter designate in writing to the other. Any such notice
shall be deemed effective upon receipt thereof by the addressee.

          10. Choice of Law. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
LAW.

          11. Option Subject to Plan. By entering into this Agreement the Participant agrees
and acknowledges that the Participant has received and read a copy of the Plan. The Option is
subject to the Plan. The terms and provisions of the Plan as it may be amended from time to time
are hereby incorporated herein by reference. In the event of a conflict between any term or
provision contained herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

 

6

          12. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

 

7

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

	 	 	 	 	 	 	 
	 	 	OPNEXT, INC.	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	(PARTICIPANT)	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	Participant’s Address:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Attn:EX-10.12

 

Exhibit 10.12

 

RESEARCH AND DEVELOPMENT AGREEMENT

by and between

HITACHI, LTD.

and

OPNEXT JAPAN, INC.

 

Dated as of July 31, 2001

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Section 1. Definitions
	 	 	6	 
	 
	 	 	 	 
	(a) “Affiliate”
	 	 	6	 
	(b) “Assigned IP”
	 	 	6	 
	(c) “Average Man-Month Cost”
	 	 	6	 
	(d) “Business”
	 	 	6	 
	(e) “Commercially Reasonable Efforts”
	 	 	6	 
	(f) “Confidential Information”
	 	 	6	 
	(g) “Cure Period”
	 	 	6	 
	(h) “Current R&D Projects”
	 	 	6	 
	(i) “Dispute Notice”
	 	 	7	 
	(j) “Existing R&D Agreements”
	 	 	7	 
	(k) “Future R&D Projects”
	 	 	7	 
	(l) “Hitachi R&D IP”
	 	 	7	 
	(m) “Intellectual Property”
	 	 	7	 
	(n) “Inventor”
	 	 	7	 
	(o) “Jointly Developed Intellectual Property”
	 	 	7	 
	(p) “Licensed Hitachi R&D IP”
	 	 	7	 
	(q) “Licensed IP”
	 	 	7	 
	(r) “Losses”
	 	 	7	 
	(s) “Mark-Up”
	 	 	7	 
	(t) “Mark-Up Fee”
	 	 	7	 
	(u) “Minority-Owned Affiliate”
	 	 	8	 
	(v) “Monthly Cost”
	 	 	8	 
	(w) “New Development Costs”
	 	 	8	 
	(x) “Old Development Costs”
	 	 	8	 
	(y) “OpNext Japan R&D IP”
	 	 	8	 
	(z) “Person”
	 	 	8	 
	(aa) “Project Manager”
	 	 	8	 
	(bb) “R&D Plan”
	 	 	8	 
	(cc) “R&D Procedures”
	 	 	8	 
	(dd) “R&D Project”
	 	 	8	 
	(ee) “R&D Support”
	 	 	9	 
	(ff) “Second Closing”
	 	 	9	 
	(gg) “Second Closing Date”
	 	 	9	 
	(hh) “Subsidiary”
	 	 	9	 
	(ii) “Total Project Cost”
	 	 	9	 
	(jj) “Wholly-Owned Subsidiary”
	 	 	9	 
	 
	 	 	 	 
	Section 2. Research and Development Obligations
	 	 	9	 
	 
	 	 	 	 
	(a) Current Research and Development
	 	 	9	 
	(b) Future Research and Development
	 	 	10	 
	(i) Meetings
	 	 	10	 
	(ii) Requests and Forecasts
	 	 	10	 
	(iii) Support
	 	 	10	 

- 2 -

 

	 	 	 	 	 
	(c) Assignment and License of OpNext Japan R&D IP
	 	 	10	 
	(i) Assignment and License
	 	 	10	 
	(ii) Termination Conditions
	 	 	11	 
	(iii) Review of Obligations
	 	 	11	 
	 
	 	 	 	 
	Section 3. Exclusions from Research and Development Obligations
	 	 	11	 
	 
	 	 	 	 
	(a) Hitachi
	 	 	11	 
	(b) OpNext Japan
	 	 	12	 
	 
	 	 	 	 
	Section 4. Ownership of Intellectual Property Rights
	 	 	12	 
	 
	 	 	 	 
	(a) OpNext Japan’s Intellectual Property
	 	 	12	 
	(b) Hitachi’s R&D Intellectual Property
	 	 	12	 
	(c) Jointly Developed Intellectual Property
	 	 	12	 
	(i) Hitachi Owned
	 	 	12	 
	(ii) Jointly Owned
	 	 	12	 
	(iii) OpNext Japan Owned
	 	 	13	 
	(d) Ownership Determination
	 	 	14	 
	 
	 	 	 	 
	Section 5. Cross License of Intellectual Property
	 	 	14	 
	 
	 	 	 	 
	(a) OpNext Japan R&D IP License
	 	 	14	 
	(b) Hitachi R&D IP License
	 	 	14	 
	(c) Transfer of Licensed IP
	 	 	14	 
	(d) Termination Conditions
	 	 	15	 
	(e) Review of Obligations
	 	 	15	 
	 
	 	 	 	 
	Section 6. Covenants to Protect Intellectual Property
	 	 	15	 
	 
	 	 	 	 
	(a) Notice of Infringement
	 	 	15	 
	(b) Infringement Suits on Jointly Developed Intellectual Property
	 	 	16	 
	(c) Infringement of Licensed Hitachi R&D IP
	 	 	16	 
	 
	 	 	 	 
	Section 7. Inventor Compensation
	 	 	16	 
	 
	 	 	 	 
	Section 8. Warranties and Limitations
	 	 	16	 
	 
	 	 	 	 
	(a) Existing R&D Agreements
	 	 	16	 
	(b) Disclaimer of Warranties
	 	 	16	 
	(c) Indemnification by Hitachi
	 	 	17	 
	(d) IP Infringement Indemnification
	 	 	17	 
	(e) Indemnification by OpNext Japan
	 	 	18	 
	(f) Limitation of Liability
	 	 	18	 
	 
	 	 	 	 
	Section 9. Expenses
	 	 	18	 
	 
	 	 	 	 
	Section 10. Termination
	 	 	18	 
	 
	 	 	 	 
	Section 11. Confidentiality
	 	 	18	 
	 
	 	 	 	 
	(a) Confidentiality Obligations
	 	 	19	 
	(b) Exclusions
	 	 	19	 
	(c) Injunctive Relief
	 	 	20	 
	(d) Ownership
	 	 	20	 
	(e) Press Releases and Announcements
	 	 	20	 

- 3 -

 

	 	 	 	 	 
	Section 12. Export Control
	 	 	20	 
	 
	 	 	 	 
	Section 13. Notices
	 	 	20	 
	 
	 	 	 	 
	Section 14. Amendment and Waiver
	 	 	22	 
	 
	 	 	 	 
	Section 15. Assignment
	 	 	22	 
	 
	 	 	 	 
	Section 16. Counterparts
	 	 	22	 
	 
	 	 	 	 
	Section 17. Delivery by Facsimile
	 	 	22	 
	 
	 	 	 	 
	Section 18. Exhibits and Schedules
	 	 	23	 
	 
	 	 	 	 
	Section 19. Further Assurances
	 	 	23	 
	 
	 	 	 	 
	Section 20. Governing Law
	 	 	23	 
	 
	 	 	 	 
	Section 21. Dispute Resolution
	 	 	23	 
	 
	 	 	 	 
	Section 22. Interpretation
	 	 	23	 
	 
	 	 	 	 
	Section 23. No Strict Construction
	 	 	24	 
	 
	 	 	 	 
	Section 24. Recordation
	 	 	24	 
	 
	 	 	 	 
	Section 25. Relationship of the Parties
	 	 	24	 
	 
	 	 	 	 
	Section 26. Schedules or Exhibits
	 	 	24	 
	 
	 	 	 	 
	Section 27. Severability
	 	 	24	 
	 
	 	 	 	 
	Section 28. Submission to Jurisdiction; Waivers
	 	 	24	 
	 
	 	 	 	 
	Section 29. Survival
	 	 	25	 
	 
	 	 	 	 
	Section 30. Third-Party Beneficiaries
	 	 	25	 
	 
	 	 	 	 
	Section 31. Entire Agreement
	 	 	25	 

- 4 -

 

 RESEARCH AND DEVELOPMENT AGREEMENT

          THIS RESEARCH AND DEVELOPMENT AGREEMENT (the “R&D Agreement”) is made as of July 31,
2001, by and between HITACHI, LTD., a corporation existing under the laws of Japan
(“Hitachi”) and OPNEXT JAPAN, INC., a corporation existing under the laws of Japan and a
Wholly-Owned Subsidiary of OpNext, Inc., a Delaware corporation (“OpNext Japan”), pursuant
to the terms of the Business Transfer Agreement, dated December 6, 2000 (the “Business Transfer
Agreement”) and the Intellectual Property License Agreement, dated July 31, 2001 (the “IP
License Agreement”), both of which have been entered into between Hitachi and OpNext Japan, the
Stock Contribution Agreement, dated July 31, 2001 entered into between Hitachi and OpNext, Inc.,
and a Stock Purchase Agreement dated September 19, 2000 the “Existing Purchase Agreement,”
as amended by the Amended and Restated Stock Purchase Agreement of even date herewith and as
further amended, supplemented or otherwise modified from time to time, the “Stock Purchase
Agreement”) and the Stockholders’ Agreement dated July 31, 2001 (the “Stockholders’
Agreement”), both among OpNext, Inc., Hitachi and Clarity Partners, L.P., a Delaware limited
partnership (“Clarity”), Clarity OpNext Holdings I, a Delaware limited liability company
(“Holdings I”) and Clarity OpNext Holdings II, a Delaware limited liability company
(“Holdings II,” together with Clarity and Holdings I, the “Clarity Parties”). All
capitalized terms used herein but not defined have the meanings ascribed to such terms in the IP
License Agreement, Stock Contribution Agreement, Stockholders’ Agreement and Stock Purchase
Agreement.

RECITALS

          WHEREAS, Hitachi has entered into a Stock Purchase Agreement with OpNext, Inc. and Clarity,
pursuant to which Hitachi agreed to, among other things, capitalize OpNext Japan and to cause
OpNext Japan to use such funds to purchase Assets from Hitachi pursuant to the terms set forth in
the Business Transfer Agreement and as a condition to closing under such Stock Purchase Agreement,
Hitachi agreed to provide research and development support to OpNext Japan as requested;

          WHEREAS, the Business Transfer Agreement provides the terms and conditions under which Hitachi
sold to OpNext Japan all of the Assets, which are necessary or reasonably required for the
operation of the fiber optic component business of Hitachi’s Telecommunication Systems Division.
The IP License Agreement, which is being concurrently executed herewith, provides the terms and
conditions under which Hitachi will be licensing to OpNext Japan the Intellectual Property rights,
which are necessary or reasonably required for the operation of the Business and which were not
transferred/assigned under the Business Transfer Agreement;

          WHEREAS, Hitachi has expertise necessary to provide “R&D Support” (as defined below); and

          WHEREAS, OpNext Japan desires to receive “R&D Support” from Hitachi, and Hitachi desires to
provide such “R&D Support” on the terms and conditions set forth in this R&D Agreement.

- 5 -

 

          NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
to this R&D Agreement hereby agree as follows:

Section 1. Definitions. The following terms, when used herein with initial capital
letters, shall have the respective meanings set forth in this Section 1.

          (a) “Affiliate” of any particular Person shall mean any other Person controlling,
controlled by or under common control with such particular Person, where “control” means the
possession, directly or indirectly, of the power to direct the management and policies of a Person
whether through the ownership of voting securities, contract or otherwise.

          (b) “Assigned IP” shall have the meaning set forth in Section 5(b) of the Stock
Contribution Agreement.

          (c) “Average Man-Month Cost” shall have the meaning as set forth in Exhibit C.

          (d) “Business” shall mean Hitachi’s fiber optic component business of designing,
developing, manufacturing, marketing, distributing and selling Products operated by Hitachi’s
Telecommunications Systems Division as of the First Closing and as operated by OpNext Japan between
the First Closing and the Second Closing Date.

          (e) “Commercially Reasonable Efforts” shall mean diligent and commercially reasonable
and expeditious efforts to accomplish a task or objective in a manner that is at least equal to the
efforts, quality and resources devoted by a party that such party would apply to its own high
priority task or objective under similar circumstances.

          (f) “Confidential Information” shall mean any information not generally known to the
public that is made or disclosed in contemplation of this R&D Agreement or any information related
to the Business that is disclosed or made available to the receiving party pursuant to this R&D
Agreement that the receiving party reasonably understands to be proprietary or confidential,
including all of the following: (i) prototypes, files, analyses, techniques, systems,
formulae, research, records, documentation, models, data, databases, ideas, inventions, designs,
developments, devices, methods and processes (whether or not patentable and whether or not reduced
to practice); (ii) know-how; (iii) Assigned IP; (iv) Licensed IP; (v) Hitachi R&D IP; (vi) OpNext
Japan R&D IP; and (vii) other Intellectual Property rights. In addition, Confidential Information
shall include the terms and conditions of this R&D Agreement.

          (g) “Cure Period” shall have the meaning set forth in Section 2(c)(ii) of this R&D
Agreement.

          (h) “Current R&D Projects” shall mean the research and development projects (including
any planned or proposed research and development projects) related to the Business existing as of
March 31, 2001, as set forth in Exhibit A.

- 6 -

 

          (i) “Dispute Notice” shall have the meaning set forth in Section 21 of this R&D
Agreement.

          (j) “Existing R&D Agreements” shall have the meaning set forth in Section 3(a) of this
R&D Agreement.

          (k) “Future R&D Projects” shall mean research and development projects related to the
Business to be undertaken by OpNext Japan and/or its Affiliates or by Hitachi on behalf of OpNext
Japan, on and after April 1, 2001.

          (l) “Hitachi R&D IP” shall have the meaning set forth in Section 4(b) of this R&D
Agreement.

          (m) “Intellectual Property” shall mean all: (i) patents, patent applications, patent
disclosures and inventions (including all extensions, reexaminations, reissues, continuations and
renewals related thereto); (ii) copyrights (registered or unregistered and all renewals thereof)
and copyrightable works and registrations and applications for registration thereof; (iii) mask
works and registrations and applications for registration thereof; (iv) computer software, data,
databases and documentation thereof; and (v) trade secrets and other confidential information
(including ideas, formulas, compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications, designs, plans,
proposals, technical data, operating, maintenance and safety materials and drawings, test
procedures, test data, sources of materials and supplies, financial and marketing plans and
customer and supplier lists and information). Intellectual
Property, as referred to in this R&D Agreement, refers to rights throughout the world,
including any equivalent of any of the foregoing in any jurisdiction or under any laws, regulations
or treaties.

          (n) “Inventor” shall have the meaning set forth in Section 7 of this R&D Agreement.

          (o) “Jointly Developed Intellectual Property” shall mean all Intellectual Property
resulting from an R&D Project under this R&D Agreement in accordance with Section 4(c)(ii) hereof,
and shall exclude Hitachi R&D IP, Licensed IP and Assigned IP.

          (p) “Licensed Hitachi R&D IP” shall have the meaning set forth in Section 5(b) of this
R&D Agreement.

          (q) “Licensed IP” shall have the meaning set forth in Section 3(a) of the IP License
Agreement.

          (r) “Losses” shall have the meaning set forth in Section 8(c) of this R&D Agreement.

          (s) “Mark-Up” shall have the meaning as set forth in Exhibit C.

          (t) “Mark-Up Fee” shall mean the fee that Hitachi will charge to OpNext Japan for
Hitachi’s past investment in Hitachi R&D IP and Jointly Developed Intellectual

- 7 -

 

Property that Hitachi agrees to transfer to OpNext Japan as described in Section 4(c)(iii) and shall be
determined in accordance with the formula set forth in Exhibit C.

          (u) “Minority-Owned Affiliate” shall mean any entity, that a party, directly or
indirectly, at any time, owns or controls twenty percent (20%) to fifty percent (50%) of the voting
equity shares or securities convertible into such shares.

          (v) “Monthly Cost” shall have the meaning as set forth in Exhibit C.

          (w) “New Development Costs”
shall mean all of the costs related to a particular R&D Project incurred after commencement of
such R&D Project on and after April 1, 2001, including operating expenses and charges for the use
of any tangible property made available for use in the R&D Project but shall not include the
consideration for the use of any existing or underlying Intellectual Property owned or controlled
by either party that is used for such R&D Project.

          (x) “Old Development Costs” shall mean all of the costs incurred prior to commencement
of a particular R&D Project for development of any existing or underlying Intellectual Property
owned or controlled by either party that is used for such R&D Project, including operating expenses
and charges for the use of any tangible property made available for use in developing such existing
or underlying Intellectual Property.

          (y) “OpNext Japan R&D IP” shall mean: (i) Intellectual Property resulting from the
Current R&D Projects, that has been assigned by Hitachi to OpNext Japan pursuant to Section 2(c)(i)
below; (ii) Intellectual Property that can be clearly identified as that resulting from Future R&D
Projects (excluding any Hitachi R&D IP and Licensed IP) for which OpNext Japan has paid one-hundred
percent (100%) of the New Development Costs; and (iii) Jointly Developed Intellectual Property
under 4(c)(ii) or Hitachi owned IP under 4(c)(i) that Hitachi has agreed to transfer to OpNext
Japan and OpNext Japan has paid a Mark-Up Fee to Hitachi in accordance with Section 4(c)(iii) and
Exhibit C.

          (z) “Person” shall mean any individual, corporation, partnership, limited liability
company, business trust, association, joint stock company, trust, unincorporated organization,
joint venture, firm or other entity or a government or any political subdivision or agency,
department or instrumentality thereof.

          (aa) “Project Manager” shall have the meaning set forth in Exhibit D.

          (bb) “R&D Plan” shall mean the plan, which conforms to the requirements of Exhibit
D (“R&D Procedures”), prepared jointly by Hitachi and OpNext Japan defining the details
of each research and development project related to the Business and the timetable for each such
project.

          (cc) “R&D Procedures” shall mean the procedures set forth in Exhibit D.

          (dd) “R&D Project”
shall mean Current R&D Project and/or Future R&D Project, as applicable.

- 8 -

 

          (ee) “R&D Support” shall mean research and development support in connection with the
Business provided by Hitachi to OpNext Japan in conformance with the requirements of the R&D
Procedures set forth in Exhibit D.

          (ff) “Second Closing” shall mean the closing of the Stock Purchase Agreement.

          (gg) “Second Closing Date” shall mean the date on which the Second Closing occurs.

          (hh) “Subsidiary” shall mean, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which (i) if a corporation,
a majority of the total voting power of shares of stock entitled (without regard to the occurrence
of any contingency) to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited liability company,
partnership or other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by any Person or one or more Subsidiaries of that Person or a combination
thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership
interest in a limited liability company, partnership, association or other business entity if such
Person or Persons shall be allocated a majority of limited liability company, partnership,
association or other business entity if such Person or Persons shall be allocated a majority of
limited liability company, partnership, association or other business entity gains or losses or
shall be or control the managing director or general partner of such limited liability company,
partnership, association or other business entity.

          (ii) “Total Project Cost” shall have the meaning as set forth Exhibit C.

          (jj) “Wholly-Owned Subsidiary” shall mean, with respect to any Person, any
corporation, limited liability company, partnership, association or other business entity of which
(i) if a corporation, one-hundred percent (100%) of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly,
by that Person or one or more of the other Wholly-Owned Subsidiaries of that Person or a
combination thereof, or (ii) if a limited liability company, partnership, association or other
business entity, all of the limited liability company, partnership or total ownership interest
thereof is at the
time owned or controlled, directly or indirectly, by any Person or one or more other
Wholly-Owned Subsidiaries of that Person or a combination thereof.

Section 2. Research and Development Obligations.

          (a) Current Research and Development. OpNext Japan will have the right to continue
the Current R&D Projects attached as Exhibit A to this R&D Agreement. Hitachi will use
Commercially Reasonable Efforts to provide R&D Support.

- 9 -

 

          Hitachi and Clarity shall work together to review the Current R&D Projects. Clarity will
have the right to approve Exhibit A to the extent deemed necessary or desired in its sole
discretion.

          Hitachi will make Commercially Reasonable Efforts to list all the Current R&D Projects on
Exhibit A hereto which schedule may be amended by the parties’ mutual written consent. For
nine (9) months following the Second Closing, Hitachi and OpNext Japan agree to cooperate in
supplementing Exhibit A to include all the Current R&D Projects.

          (b) Future Research and Development. During the term of this R&D Agreement, Hitachi
will provide R&D Support, as requested, to OpNext Japan for Future R&D Projects in accordance with
the R&D Procedures. Hitachi will provide such R&D Support consistent with the following:

               (i) Meetings. Hitachi and OpNext Japan will hold quarterly joint review meetings to
determine and update the R&D Plan for Future R&D Projects.

               (ii) Requests and Forecasts. Based on the R&D Plan developed in accordance with the
R&D Procedures, OpNext Japan will require assistance on a binding basis from Hitachi on specific
Future R&D Projects for the upcoming twelve (12) month period. OpNext Japan will also provide
Hitachi with a non-binding forecast of Future R&D Projects that OpNext Japan expects to request
from Hitachi for the twelve (12) month period following such twelve (12) month period. Hitachi and
OpNext Japan will update such forecasts during the quarterly meetings described in Section 2(b)(i)
above.

               (iii) Support. Hitachi will be obligated to use Commercially Reasonable Efforts to
provide continuous R&D Support for the Future R&D Projects in accordance with the specific binding
requests (to be performed in the upcoming twelve (12) month period) from OpNext Japan and for all
specific non-binding projects that OpNext Japan forecasts to be requested from Hitachi on a binding
basis within the twelve (12) month period following the
end of such twelve (12) month period. Hitachi will use Commercially Reasonable Efforts to be
able to support the balance of the non-binding forecast.

          (c) Assignment and License of OpNext Japan R&D IP.

               (i) Assignment and License. Hitachi shall assign, and does hereby assign, to OpNext
Japan all right, title and interest in and to all Intellectual Property resulting from the Current
R&D Projects and which shall be listed on Exhibit B, which is capable of assignment, to the
extent such assignment did not occur under the Business Transfer Agreement. Such Intellectual
Property shall be deemed to be OpNext Japan R&D IP. Hitachi also shall license, and does hereby
license effective as of the First Closing Date, all Intellectual Property resulting from the
Current R&D Projects, which has not been assigned and is not capable of assignment, to OpNext Japan
on a fully paid-up, non-exclusive, perpetual and irrevocable basis, to use, make, have made, sell,
advertise, offer to sell, lease, import, export and supply products and services throughout the
world, unless otherwise terminated according to the provisions of this R&D Agreement. Such licensed

- 10 -

 

Intellectual Property shall be deemed to be Licensed IP subject to the terms and conditions of the
IP License Agreement.

               (ii) Termination Conditions. Such license shall not be terminated or its exploitation
enjoined, until and unless: (i) OpNext Japan has committed a material breach of its obligations
under this R&D Agreement, Hitachi has given written notice of such breach to OpNext Japan and such
breach remains uncured after sixty (60) days of receiving notice of such breach (the “Cure
Period”), or, in the case of a breach, which cannot be cured within such Cure Period, OpNext
Japan has not instituted within such Cure Period steps necessary to remedy the default and/or
thereafter has not diligently pursued the same to completion; or (ii) OpNext Japan has committed an
incurable material breach. In the event the breach is a curable breach that cannot be cured within
the Cure Period but with respect to which OpNext Japan has instituted steps necessary to remedy the
default and is thereafter diligently pursuing such cure, both parties shall negotiate to determine
whether further pursuit of such cure is reasonable. If the parties cannot agree on a resolution in
such negotiations, then this issue shall be referred to arbitration pursuant to the arbitration
procedures set forth in Exhibit E hereto to decide whether such breach can be cured or any
other alternative remedy should be adopted. In the event the breach is an incurable breach, the
parties agree that the matter shall be referred to arbitration pursuant to the arbitration
procedures set forth in Exhibit E hereto to determine the appropriate remedy. In the event
that either party submits the dispute to arbitration, both parties shall cooperate in such binding
arbitration in accordance with Exhibit E.

               (iii) Review of Obligations. The obligations set forth in this Section 2(c) shall
expire on the tenth (10th) anniversary of the Second Closing Date; provided,
however, that the license under OpNext Japan R&D IP existing as of the tenth
(10th) anniversary of the Second Closing Date shall continue, under reasonable terms and
conditions to be agreed between the parties, until
the expiration of all of such OpNext Japan R&D IP. Notwithstanding the foregoing, if one (1)
of the conditions set forth in Section 2(c)(ii) is met, Hitachi may elect to be completely relieved
of its obligations set forth in this Section 2(c). If Hitachi elects to be relieved of its
obligations under this Section 2(c), the parties shall renegotiate in good faith and on
commercially reasonable terms a new license governing the OpNext Japan R&D IP.

Section 3. Exclusions from Research and Development Obligations

          (a) Hitachi. Nothing contained in this R&D Agreement shall limit in any way Hitachi’s
ability to continue to conduct research and development activities for other Hitachi business
units, including its Affiliates and Subsidiaries, including any fiber optical component business
(e.g., semiconductors and cable) subject to the Nonsolicitation or Noncompetition provision
in Section 12 of the Stockholders’ Agreement; provided, however, the terms and
conditions of this R&D Agreement shall be subject to the terms and conditions of any existing
agreements related to the governmental R&D projects, the joint R&D projects with national and
public universities or private universities, the R&D projects requested by other Hitachi
Subsidiaries or the joint R&D projects with any other agency or organization (collectively, the
“Existing R&D Agreements”). Prior to the commencement of any R&D Project, Hitachi shall
disclose to OpNext Japan any restrictions contained in the Existing R&D Agreements related to such
R&D Project.

- 11 -

 

          (b) OpNext Japan. Nothing in this R&D Agreement shall in any way limit OpNext Japan’s
ability to conduct its own, or utilize other third parties to conduct on its behalf, research and
development projects.

Section 4. Ownership of Intellectual Property Rights.

          (a) OpNext Japan’s Intellectual Property. OpNext Japan will own all right, title and
interest, throughout the world in and to OpNext Japan R&D IP. OpNext Japan shall have the right to
apply, in its own name and at its own expense, for Intellectual Property protection in the OpNext
Japan R&D IP. Hitachi shall cooperate with OpNext Japan in a reasonable manner in obtaining such
protection, including, obtaining signatures of Hitachi Inventors and/or officials on official
papers.

          (b) Hitachi’s R&D Intellectual Property. Hitachi will solely own all Intellectual
Property rights that result from all of its other research and development projects including the
Intellectual Property referenced in Section 4)(c)(i), excluding Jointly Developed Intellectual
Property and/or OpNext Japan R&D IP (“Hitachi R&D IP”). Hitachi shall have the right to
apply, in its own name and at its own expense, for Intellectual Property protection in Hitachi R&D
IP and, if requested, OpNext Japan shall cooperate with Hitachi in any reasonable manner in
obtaining such
protection, including, obtaining signatures of OpNext Japan Inventors and/or officials on
official papers.

          (c) Jointly Developed Intellectual Property. All right, title and interest in and to
Jointly Developed Intellectual Property, other than OpNext Japan R&D IP and Hitachi R&D IP, shall
be determined in accordance with this Section 4(c).

               (i) Hitachi Owned. If the R&D Project is jointly funded by OpNext Japan and Hitachi,
unless (ii) or (iii) below applies, the resulting Intellectual Property will be treated as Hitachi
R&D IP in accordance with Section 4(b) and will be solely owned by Hitachi.

               (ii) Jointly Owned.

                    (1) If the R&D Project is jointly funded by the parties and either: (1) OpNext Japan
contributes fifty percent (50%) or more of the New Development Costs to the R&D Project; or (2)
OpNext Japan contributes less than fifty percent (50%) of the New Development Costs to the R&D
Project but the parties determine through good faith negotiations that OpNext Japan contributed to
the R&D Project in some other fashion, and in both (1) and (2) above the resulting Intellectual
Property can clearly be identified with reasonable certainty as that resulting from such R&D
Project, then such Intellectual Property shall be deemed Jointly Developed Intellectual Property
and shall be owned jointly by the parties and either party may practice such Jointly Developed
Intellectual Property without an accounting or compensation to, or the consent of, the other party.
Except as set forth in Section 4(c)(iii) below, if either party desires to license any of its
rights to the Jointly Developed Intellectual Property herein to a third party, it shall obtain the
prior written consent of the other party hereto. Each party shall have the right to apply, in both
parties’ names, for Intellectual Property protection in the Jointly Developed Intellectual
Property. The parties shall agree on the proper way and strategy for proceeding with all

- 12 -

 

protection of the Jointly Developed Intellectual Property in accordance with the R&D Procedures.
All expenses incurred in obtaining and maintaining Intellectual Property protection in the Jointly
Developed Intellectual Property shall be equally shared by the parties. In the event that one (1)
of the parties elects not to seek or maintain patent or other intellectual or industrial property
protection for any Jointly Developed Intellectual Property in any particular country or not to
share equally in the expenses thereof with the other party, the other party shall have the right to
seek or maintain such protection at its sole expense in such country and shall have full control
over the prosecution and maintenance thereof even though title to any patent or other intellectual
or industrial property protection issuing therefrom shall be jointly owned by the parties.

                    (2) To the extent OpNext Japan shares the costs of its proportion of the joint funding as
described in (1) above, with either OpNext R&D-USA or any other Wholly-Owned Subsidiary of OpNext,
Inc. for an R&D Project that is jointly funded by Hitachi and OpNext Japan, OpNext Japan shall have
the right to license any Jointly Developed Intellectual Property arising from such R&D Project and
the right to
sublicense any Hitachi R&D IP associated with such Jointly Developed Intellectual Property, to
OpNext R&D USA and such other Wholly-Owned Subsidiary of OpNext, Inc., as the case may be;
provided, however, the following conditions are met: (i) OpNext Japan obtains
Hitachi’s reasonable prior consent; and (ii) OpNext R&D-USA and such other Wholly-Owned Subsidiary
of OpNext, Inc. abide by the terms and conditions of this R&D Agreement. Notwithstanding the
foregoing, if any such license invokes any Japanese tax issues then Hitachi shall not be obliged to
consent to such license to OpNext R&D-USA and/or such other Wholly-Owned Subsidiary of OpNext, Inc.
without entering into a separate agreement with OpNext R&D-USA and/or such other Wholly-Owned
Subsidiary of OpNext, Inc. under reasonable terms and conditions to be agreed upon between the
relevant parties to address such tax issues. Notwithstanding the foregoing, neither OpNext R&D USA
nor any such Wholly-Owned Subsidiary of OpNext, Inc. shall have any ownership rights in such
Jointly Developed Intellectual Property.

               (iii) OpNext Japan Owned.

                    (1) If OpNext Japan desires and Hitachi agrees in its reasonable discretion, OpNext Japan may
purchase the Intellectual Property resulting from an R&D Project that is either owned by Hitachi
under Section 4(c)(i) or jointly owned by the parties under Section 4(c)(ii), but excluding Hitachi
R&D IP and Licensed IP, by reimbursing Hitachi for any New Development Costs incurred by Hitachi in
such R&D Project and paying a Mark-Up to Hitachi in accordance with the formula set forth in
Exhibit C hereto.

                    (2) If OpNext Japan desires and Hitachi agrees in its reasonable discretion, OpNext Japan may
purchase the Intellectual Property resulting from an R&D Project that is either owned by Hitachi
under Section 4(c)(i) or jointly owned by the parties under Section 4(c)(ii) including the Hitachi
R&D IP and Licensed IP on which such Intellectual Property is based or derived, by paying a Mark-Up
Fee. For the purposes of determining such Mark-Up Fee, the parties shall consider the extent of
Hitachi’s New Development Costs, Hitachi’s Old Development Costs and the fair market value of such

- 13 -

 

technology (other than Assigned IP, Licensed IP and OpNext Japan R&D IP assigned pursuant to
Section 2(c)(i)).

          (d) Ownership Determination. Prior to the commencement of an R&D Project, the Hitachi
and OpNext Japan Project Managers shall discuss in good faith the ownership of the Intellectual
Property resulting from such R&D Project based upon the principles listed above. If the parties’
Project Managers cannot agree on the ownership of the Intellectual Property, the management of both
parties shall discuss in good faith the ownership of the Intellectual Property resulting from such
R&D Project. If the management is unable to come to an agreement on such ownership issues
(including clear identification of the Intellectual Property resulting from such R&D Project, New
Development Costs, Old Development Costs, OpNext Japan’s non-monetary contribution to the R&D
Project and the Mark-Up Fee, if applicable), the parties shall refer this issue to arbitration
pursuant to the arbitration procedures set forth in Exhibit E hereto. In the event that it
is impractical to resolve the disputed issue prior to the commencement of the R&D Project
(e.g., the parties are unsure as
to what extent underlying technology will be utilized or cannot determine the identification
of Intellectual Property resulting from the R&D Project, the New Development Costs, Old Development
Costs, OpNext Japan’s non-monetary contribution to the R&D Project or Mark-Up Fee), either party
may elect to proceed with the R&D Project and defer resolution of the disputed issue until a later
date; provided that if the parties remain in disagreement after such later date, the parties shall
then refer the issue to arbitration as described above. In the event that either party submits the
dispute to arbitration, both parties shall cooperate in such binding arbitration in accordance with
Exhibit E.

Section 5. Cross License of Intellectual Property.

          (a) OpNext Japan R&D IP License. OpNext Japan will license, and does hereby license
effective as of the First Closing Date, the OpNext Japan R&D IP to Hitachi and its Wholly-Owned
Subsidiaries on a fully paid-up, non-exclusive, perpetual and irrevocable basis, to use, make, have
made, sell, advertise, offer to sell, lease, import, export and supply products and services
throughout the world, provided, however, that Hitachi and its Wholly-Owned
Subsidiaries shall not have the right to sublicense OpNext Japan R&D IP to any entity without the
consent of OpNext Japan.

          (b) Hitachi R&D IP License. Hitachi will license, and does hereby license effective
as of the First Closing Date, the Hitachi R&D IP relevant to the Business to OpNext Japan on a
fully paid-up, non-exclusive, perpetual and irrevocable basis, to use, make, have made, sell,
advertise, offer to sell, lease, import, export and supply products and services throughout the
world (“Licensed Hitachi R&D IP”). Hitachi also will grant, and hereby does grant, to
OpNext Japan the right to freely sublicense the Licensed Hitachi R&D IP to its Subsidiaries, to
OpNext, Inc. and OpNext, Inc.’s Subsidiaries; provided, however, that OpNext Japan
will not have the right to sublicense any Licensed Hitachi R&D IP that is developed or filed after
the Second Closing Date to any entity other than OpNext, Inc. or OpNext Japan’s or OpNext, Inc.’s
Wholly-Owned Subsidiary, without the consent of Hitachi.

          (c) Transfer of Licensed IP. In the event a Subsidiary or division of Hitachi that is
the owner of the Licensed IP or Hitachi R&D IP is sold or otherwise

- 14 -

 

transferred by Hitachi, Hitachi will make necessary arrangements to secure a license under the terms and conditions of the IP
License Agreement for OpNext Japan from the new owner such that OpNext Japan can continue to use
such Licensed IP and/or Hitachi R&D IP until such Licensed IP or Hitachi R&D IP, respectively,
expires.

          (d) Termination Conditions. Such a license of OpNext Japan R&D IP to Hitachi and of
Licensed Hitachi R&D IP to OpNext Japan shall not be terminated or its exploitation enjoined, until
and unless: (i) the licensee has committed a material breach of its obligations under this R&D
Agreement, the licensor has given written notice of such breach to the licensee and such
breach remains uncured during the Cure Period, or, in the case of a breach which cannot be
cured within such Cure Period, the licensee has not instituted within such Cure Period steps
necessary to remedy the default and/or thereafter has not diligently pursued the same to
completion; or (ii) the breaching party has committed an incurable material breach. In the event
the breach is a curable breach that cannot be cured within the Cure Period but the licensee has
instituted steps necessary to remedy the default and is thereafter diligently pursuing such cure,
both parties shall negotiate to determine whether further pursuit of the cure is reasonable. If
the parties cannot agree on a resolution in such negotiations, then this issue shall be referred to
arbitration pursuant to the arbitration procedures set forth in Exhibit E hereto to decide
whether such breach can be cured or any other alternative remedy should be adopted. In the event
the breach is an incurable breach, the parties agree that the matter shall be referred to
arbitration pursuant to the arbitration procedures set forth in Exhibit E hereto to
determine the appropriate remedy. In the event that either party submits the dispute to
arbitration, both parties shall cooperate in such binding arbitration in accordance with
Exhibit E.

          (e) Review of Obligations. The obligations set forth in this Section 5 shall expire
on the tenth (10th) anniversary of the Second Closing Date of the Stock Purchase
Agreement; provided, however, that the licenses under OpNext Japan R&D IP and
Licensed Hitachi R&D IP existing as of the tenth (10th) anniversary of the Second
Closing Date shall continue, under reasonable terms and conditions to be agreed between the
parties, until the expiration of all of such OpNext Japan R&D IP and Licensed Hitachi R&D IP.
Notwithstanding the foregoing, if one (1) of the conditions set forth in Section 5(d) is met, the
non-breaching party may elect to be completely relieved of its obligations set forth in this
Section 5. If a party elects to be relieved of its obligations under this Section 5(d), the
parties shall renegotiate in good faith and on commercially reasonable terms a new license
governing the OpNext Japan R&D IP and/or Licensed Hitachi R&D IP, as applicable.

Section 6. Covenants to Protect Intellectual Property.

          (a) Notice of Infringement. If either party learns of facts that may constitute an
infringement of any of the Intellectual Property covered by this R&D Agreement or of any
allegations that there has been an infringement of such Intellectual Property, it shall promptly
notify the owner of the Intellectual Property of such possible infringement. With respect to
Jointly Developed Intellectual Property, each party shall notify the other party of such possible
infringement. No party shall have any duty to conduct any investigation or to make any inquiry
with respect to any such alleged infringement.

- 15 -

 

          (b) Infringement Suits on Jointly Developed Intellectual Property. If both parties
agree to initiate appropriate action to cause any infringement of Jointly Developed Intellectual
Property to cease, including if necessary bringing suit to enjoin such infringement, the parties
shall share the expense and split any damages or other court compensation equally, or in some other
proportion to be agreed by the parties prior to
initiating an action. If upon notice of infringement of Jointly Developed Intellectual
Property, a party elects not to initiate any action, the other party shall have the option to
initiate appropriate action to cause any infringement to cease, including if necessary bringing
suit to enjoin such infringement; and such party shall then be solely responsible for expenses and
shall retain any damages and other court compensation awarded but such party shall not enter into a
settlement agreement without the prior written consent of the other party, which shall not be
unreasonably withheld, unreasonably delayed or unreasonably conditioned.

          (c) Infringement of Licensed Hitachi R&D IP. To the extent a competitor of the
Business is infringing the Licensed Hitachi R&D IP in OpNext Japan’s reasonable business judgment
and such infringement is material to the Business, Hitachi will protect OpNext Japan’s interest
either by prosecuting the Intellectual Property rights on behalf of OpNext Japan or by taking some
other appropriate action that will not have a Material Adverse Effect on the ongoing business of
OpNext Japan, provided, however, that any such action taken by Hitachi shall not materially
adversely affect any other Affiliates of or business units of Hitachi. Both parties shall consult
and cooperate with each other in determining how to respond to the infringing activities. Upon the
resolution of such infringement by settlement or otherwise, any damages, profits and awards of
whatever nature recoverable for such infringement shall, after deducting the parties’ expenses, be
reasonably allocated between the parties based on the facts and circumstances of the infringement.
Both parties will reasonably consider the option of settling any such matter by granting a
sublicense of all or portion of the Licensed Hitachi R&D IP.

Section 7. Inventor Compensation. Both parties acknowledge and agree that in the event
that any employee of Hitachi or employee of OpNext Japan (hereinafter referred to as the
“Inventor”) creates any Intellectual Property under this R&D Agreement, the owner of such
Intellectual Property shall pay a certain amount of compensation to such Inventor, taking into
account the Inventor’s contribution, and according to the terms and conditions mutually agreed to
by the parties.

Section 8. Warranties and Limitations

          (a) Existing R&D Agreements. Hitachi represents and warrants that the terms and
conditions of the Existing R&D Agreements shall not have a material impact on OpNext Japan’s
ability to conduct its research and development activities pursuant to this R&D Agreement or the
ownership of or other rights in any Intellectual Property that may result from such activities, and
that Hitachi will make Commercially Reasonable Efforts to consult and cooperate with OpNext Japan
to eliminate or minimize any negative impact arising from the terms and conditions of any Existing
R&D Agreements.

          (b) Disclaimer of Warranties.
Hitachi expressly disclaims all representations and warranties, express or implied, in
connection with the R&D Support

- 16 -

 

provided pursuant to this R&D Agreement, including the warranties
of non-infringement and title and the implied warranties of merchantability and fitness for a
particular purpose. Such R&D Support is provided on an “as is” basis, except as set forth on
Exhibit D.

          (c) Indemnification by Hitachi. From and after the Second Closing, Hitachi shall
indemnify OpNext Japan and its Affiliates and each of their respective officers, directors,
members, stockholders, partners, employees and agents (as applicable) and hold them harmless from
any loss, liability, damage or expense (including court costs and reasonable attorneys’ fees) (the
“Losses”) suffered or incurred by any such indemnified party to the extent arising from:
(i) any breach of any representation or warranty of Hitachi contained in this R&D Agreement; or
(ii) any breach of any covenant of Hitachi contained in this R&D Agreement; except to the extent
that OpNext Japan, its Affiliates, their agents and/or their independent contractors have
tortiously contributed in an intentional or grossly negligent manner to the event in question.
Notwithstanding the foregoing, in no event shall Hitachi indemnify OpNext Japan under this
indemnity provision for claims under Section 8(c)(i) brought on or after two (2) years after the
Second Closing Date and in no event shall Hitachi’s obligations under this provision exceed an
amount of four hundred and twenty-eight point six million dollars ($428.6 million).

          (d) IP Infringement Indemnification. With respect to third party patent or copyright
infringement claims or trade secret misappropriation claims regarding products, processes or
methods related to the Business as it is conducted after the Second Closing, Hitachi and OpNext
Japan shall jointly defend such action but only to the extent that such claim involves OpNext Japan
R&D IP resulting from the Current R&D Projects or Hitachi R&D IP. If a third party patent or
copyright infringement claim or trade secret misappropriation claim is made against OpNext Japan
for a new product design that is developed on or after April 1, 2001: (i) Hitachi shall be
responsible for the settlement amount of any such claim (provided that prior written approval is
obtained) or the resulting liability of any such claim only to the extent such claim results from a
Current R&D Project; (ii) OpNext Japan shall be responsible for the settlement amount of any such
claim (provided that prior written approval is obtained) or the resulting liability of any such
claim to the extent that it arises from OpNext Japan R&D IP for which OpNext Japan has paid one
hundred percent (100%) of the New Development Costs irrespective of whether such claim results from
a Current R&D Project or a Future R&D Project; and (iii) both parties shall be jointly responsible
for the settlement amount of any such claim (provided that prior written approval is obtained) for
the resulting liability of any such claim to the extent it arises from Jointly Developed
Intellectual Property in the same proportion as the parties agreed to allocate the New Development
Costs prior to commencement of the R&D Project. To the extent there is a dispute regarding the
allocation of the parties’ liabilities under this subsection, the parties shall negotiate in good
faith what the allocation of liability should be. If the parties are unable to agree even after
good faith negotiations, the parties shall submit the issue to arbitration pursuant to the
arbitration procedures set forth in Exhibit E hereto. In the event that either party
submits the
dispute to arbitration, both parties shall cooperate in such binding arbitration in accordance
with Exhibit E. Notwithstanding the foregoing, in no event shall either party indemnify the
other under this infringement and misappropriation indemnity provision for claims brought on or
after two (2) years after the Second Closing Date of the Stock Purchase Agreement and in no event
shall either party’s obligations under this provision exceed an amount of four hundred and
twenty-eight point six million dollars

- 17 -

 

($428.6 million). The indemnification under this Section 8
shall be provided in accordance to the procedures set forth in Section 11 of the IP License
Agreement.

          (e) Indemnification by OpNext Japan. From and after the Second Closing, OpNext Japan
shall indemnify Hitachi and its Affiliates and each of their respective officers, directors,
members, stockholders, partners and employees (as applicable) against and hold them harmless from
any Losses suffered or incurred by any such indemnified party to the extent arising from: (i) any
breach of any representation or warranty by OpNext Japan contained in this R&D Agreement; or (ii)
any breach of any covenant of OpNext Japan contained in this R&D Agreement; except to the extent
that Hitachi, its Affiliates, their agents and/or their independent contractors have tortiously
contributed in an intentional or grossly negligent manner to the event in question. Notwithstanding
the foregoing, in no event shall OpNext Japan indemnify Hitachi under this indemnity provision for
claims under Section 8(e)(i) brought on or after two (2) years after the Second Closing Date and in
no event shall OpNext Japan’s obligations under this provision exceed an amount of four hundred and
twenty-eight point six million dollars ($428.6 million).

          (f) Limitation of Liability. Neither party shall be liable to the other party or any
third party for any special, consequential, exemplary or incidental damages (including lost or
anticipated revenues or profits relating to the same), arising from any claim relating to this R&D
Agreement, whether such claim is based on warranty, contract, tort (including negligence or strict
liability) or otherwise, even if an authorized representative of such party is advised of the
possibility or likelihood of same.

Section 9. Expenses. OpNext Japan shall be charged for R&D Support on the same basis that
Hitachi’s Wholly-Owned Subsidiaries are allocated research and development charges for their
activities, provided that in no event shall such terms be less advantageous from OpNext Japan’s
perspective, than those terms which could be reasonably expected to be obtained in an arms-length
transaction. Notwithstanding the foregoing, OpNext Japan acknowledges and agrees that if it
exercises its rights under Section 4(c)(iii), OpNext Japan shall pay a Mark-Up Fee to Hitachi.
Whether or not the transactions contemplated hereby are consummated, and except as otherwise
specifically provided in this R&D Agreement, all costs and expenses incurred in connection with
this R&D Agreement and the transactions contemplated hereby shall be paid by the party incurring
such costs or expenses.

Section 10. Termination.
This R&D Agreement will automatically terminate and be of no further force or effect upon the
termination of the Stock Purchase Agreement or upon the tenth (10th) anniversary of the
Second Closing Date; provided, however, that the following provisions of this R&D
Agreement survive termination of this R&D Agreement: (i) Section 11 relating to the obligation of
the parties to keep confidential certain information and data (ii) Section 5(e) to the extent that
the Licensed Hitachi R&D IP and/or OpNext Japan R&D IP has not expired; (iii) Sections 8(a), 8(b),
8(c), 8(d), 8(e) and 8(f) relating to indemnification; and (iii) Section 9 relating to expenses, or
any other term which specifically states that it survives termination of this R&D Agreement.

- 18 -

 

Section 11. Confidentiality.

          (a) Confidentiality Obligations. Confidential Information will not be disclosed or
made available by the receiving party, directly or indirectly, to any third party, except as shall
be agreed to in writing by the disclosing party. Each of the parties agrees to take all reasonable
steps to preserve the confidentiality of the other’s Confidential Information in accordance with
their respective policies for the protection of their own non-public information (which policies
shall provide at least reasonable protection) and agrees that it will be made available only to
those employees as shall have a need to see and use for the purpose of fulfilling that party’s
obligations under this R&D Agreement, and any such employee shall be informed of the confidential
nature of the Confidential Information and shall be required to observe the confidentiality
obligations in respect thereof. The receiving party shall ensure that all Confidential Information
received by it is kept separate (together with all information generated by the receiving party
therefrom) from all documents and other records of the receiving party, and that it shall not use,
reproduce, transfer or store any of the Confidential Information in an extremely accessible place.

          (b) Exclusions.

               (i) The limitations set forth in this Section 11 shall not apply with respect to the
disclosure of any information: (i) to the receiving party’s employees, auditors, counsel,
other professional advisors, sublicensees authorized under the terms of this R&D Agreement
(Sections 2(c) and 5(a) for OpNext Japan R&D IP and Section 5(b) for Hitachi R&D IP) or suppliers
if the receiving party or any of its sublicensees authorized under the terms of this R&D Agreement
(Sections 2(c) and 5(a) for OpNext Japan R&D IP and Section 5(b) for Hitachi R&D IP), in its sole
discretion, determines that it is reasonably necessary for such Person to have access to such
information, provided that any such Person agrees to be bound by the provisions of this Section
11(a) to the same extent as the receiving party; (ii) as has become or previously was generally
available to the public other than by reason of a breach of this Section 11(a) by the receiving
party or has become available to the receiving party on a non-confidential basis after the Second
Closing Date; (iii) as may be required or appropriate in any report, statement or testimony
submitted to any municipal, state or federal regulatory body having or claiming to have
jurisdiction over the receiving party (it being understood that, to the extent practicable, the
receiving party shall provide the disclosing party prompt notice to any such event and cooperate in
good faith to enable the disclosing party to participate to protect its interest in such
confidential information); (iv) as
may be required or appropriate in response to any summons or subpoena or in connection with
any litigation; and (v) in order to comply with any law, order, regulation or ruling applicable to
the receiving party.

               (ii) Notwithstanding Section 11(a)(i), to the extent that after the Second Closing Date,
Hitachi desires to disclose to Hitachi Minority-Owned Affiliates and/or suppliers OpNext Japan R&D
IP, Hitachi shall notify OpNext Japan of such desire and propose the terms and conditions of an
appropriate nondisclosure agreement into which OpNext Japan and the corresponding Hitachi
Minority-Owned Affiliate or supplier may enter. OpNext Japan agrees that within fifteen (15)
business days of receipt of such request and proposed nondisclosure agreement, OpNext Japan shall,
at its sole discretion, either: (i) enter into the proposed nondisclosure agreement and directly
provide the requested confidential information to the Hitachi Minority-Owned Affiliate or supplier;
(ii) propose reasonably modified terms and conditions of the nondisclosure agreement under which

- 19 -

 

OpNext Japan will provide the requested confidential information to Hitachi’s Minority-Owned
Affiliate or supplier; or (iii) commence discussions with Hitachi to reach a resolution of OpNext
Japan’s concerns with respect to such disclosure, if OpNext Japan believes such disclosure is not
in the best interest of the parties. In the event that OpNext Japan elects to exercise option (ii)
or (iii), the parties agree to negotiate in good faith and on reasonable terms to resolve the
situation within a reasonable amount of time, which shall not exceed fifteen (15) Business Days of
OpNext Japan’s provision of such a response. If the parties cannot agree on a resolution in such
negotiations, then this issue shall be referred to arbitration pursuant to the arbitration
procedures set forth in Exhibit E hereto. In the event that either party submits the
dispute to arbitration, both parties shall cooperate in such binding arbitration in accordance with
Exhibit E.

          (c) Injunctive Relief. The parties acknowledge and agree that money damages would be
inadequate to remedy any breach of the confidentiality obligations in this Section 11 and that the
non-breaching party shall be entitled to obtain equitable remedies with respect to any such breach,
including injunctive relief.

          (d) Ownership. All Confidential Information furnished hereunder shall be and remain
the exclusive property of the disclosing party, and the receiving party agrees to promptly return
to the disclosing party, upon the disclosing party’s request, all documents, samples and other
material in the possession, custody or control of the receiving party that bear or incorporate any
part of the Confidential Information, including all copies made by the receiving party, except as
otherwise provided herein.

          (e) Press Releases and Announcements. Each party agrees to consult with the other as
to the general nature of any news releases or public statements with respect to the transactions
contemplated by this R&D Agreement, and use Commercially Reasonable Efforts not to issue any news
releases or public statements inconsistent with results of such consultations. Subject to
applicable
laws or the rules of any applicable securities exchange, each party shall use Commercial
Reasonable Efforts to enable the other party to review and comment on all such news releases prior
to the release thereof.

Section 12. Export Control. Each party shall comply and have its Subsidiaries or
Affiliates comply with any applicable export laws and regulations and obtain any and all export
licenses and/or governmental approvals, if necessary. In the event a licensee (under Sections 2
and 5 above) is unable to obtain any required export license or other governmental approval, and as
a result the licensor (under Sections 2 and 5 above) suffers or will suffer irreparable harm as a
result of the licensee’s failure, the parties acknowledge and agree that money damages would be
inadequate and that the licensor shall be entitled to obtain injunctive or other similar equitable
remedies with respect to any such breach.

Section 13. Notices. Any notice provided for in this R&D Agreement shall be in writing and
shall be either personally delivered, mailed first class (postage prepaid) or sent by reputable
overnight courier service (charges prepaid) to the parties at the address set forth below or at
such address or to the attention of such other person as the recipient party has specified by prior
written notice to the sending party. Notices shall be deemed to have been given hereunder on the
date delivered when delivered personally, seven (7) days after

- 20 -

 

deposit in the U.S. mail or Japanese
mail and three (3) days after deposit with a reputable overnight courier service. The addresses
for OpNext Japan and Hitachi are:

If to OpNext Japan:

OpNext Japan, Inc.

216 Totsuka-cho, Totsuka-ku

Yokohama-shi, 244-8567, Japan

Attention: Harry L. Bosco

with a copy, which will not constitute notice to OpNext, to:

Kirkland & Ellis

200 East Randolph Drive

Chicago, IL 60601

Attention: William A. Streff Jr., Esq.

with a copy, which shall not constitute notice to OpNext, to:

Irell & Manella LLP

1800 Avenue of the Stars, Suite 900

Los Angeles, CA 90067

Attention: Richard L. Bernacchi, Esq.

                 Ian C. Wiener, Esq.

with a copy, which will not constitute notice to OpNext, to

Hitachi, Ltd.

6, Kanda-Surugadai 4-chome

Chiyoda-ku

Tokyo, 101-8010 Japan

Attention: Senior Group Executive, Information & Telecommunication

                Systems Group

and with a copy, which will not constitute notice to OpNext, to:

Clarity Partners, L.P.

100 North Crescent Drive

Beverly Hills, CA 90210-5403

Attention: David Lee

If to Hitachi:

Hitachi, Ltd.

6, Kanda-Surugadai 4-chome

Chiyoda-ku

Tokyo, 101-8010 Japan

Attention: Senior Group Executive, Information & Telecommunication

                Systems Group

- 21 -

 

with a copy, which will not constitute notice to Hitachi, to:

Kirkland & Ellis

200 East Randolph Drive

Chicago, IL 60601

Attention: William A. Streff Jr., Esq.

with a copy, which will not constitute notice to Hitachi, to:

Hitachi, Ltd.

Research & Development Group

New Marunouchi Bldg.,

5-1, Marunouchi 1-chome

Chiyoda-ku, Tokyo, 100-8220 Japan

Attention: President

with a copy, which will not constitute notice to Hitachi, to:

Clarity Partners, L.P.

100 North Crescent Drive

Beverly Hills, CA 90210-5403

Attention: David Lee

Section 14. Amendment and Waiver.
No amendment of any provision of this R&D Agreement shall be valid unless the same shall be in
writing and signed by OpNext Japan and Hitachi. The failure of any party to enforce any of the
provisions of this R&D Agreement shall in no way be construed as a waiver of such provisions and
shall not affect the right of such party thereafter to enforce each and every provision of this R&D
Agreement in accordance with its terms.

Section 15. Assignment. Except as set forth below, this R&D Agreement and any rights and
obligations hereunder shall not be assignable or transferable by OpNext Japan or Hitachi (including
by operation of law in connection with a merger or sale of stock, or sale of substantially all the
assets, of OpNext Japan or Hitachi) without the prior written consent of the other party and any
purported assignment without such consent shall be void and without effect.

Section 16. Counterparts. This R&D Agreement may be executed in one or more counterparts,
each of which shall be an original and all of which taken together shall constitute one and the
same agreement.

Section 17. Delivery by Facsimile. This R&D Agreement, the agreements referred to herein,
and each other agreement or instrument entered into in connection herewith or contemplated hereby,
and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile
machine, shall be treated in all manner and respects as an original agreement or instrument and
shall be considered to have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such agreement or
instrument, each other party hereto shall reexecute original forms thereof and deliver them to all
other parties. No party hereto or to

- 22 -

 

any such agreement or instrument shall raise the use of a
facsimile machine to deliver a signature or the fact that any signature or agreement or instrument
was transmitted or communicated through the use of a facsimile machine as a defense to the
enforceability of a contract and each such party forever waives any such defense.

Section 18. Exhibits and Schedules. All Exhibits and Schedules annexed hereto or referred
to herein are hereby incorporated in and made a part of this R&D Agreement as if set forth in full
herein.

Section 19. Further Assurances. During the term of this R&D Agreement and at all times
thereafter, each party shall provide to the other party, at its request, reasonable cooperation and
assistance (including the execution and delivery of affidavits, declarations, oaths, assignments,
samples, exhibits, specimens and any other documentation) as necessary to effect the terms of this
R&D Agreement.

Section 20. Governing Law.
Except for Section 8(a), this R&D Agreement shall be governed by and construed in accordance
with the laws of Japan without giving effect to any choice-of-law or conflict-of-law provision or
rule (whether of Japan or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than of Japan. Section 8(a) shall be governed by and construed in accordance
with the laws of the U.S. and the State of New York without giving effect to any choice-of-law or
conflict-of-law provision or rule (whether of the State of New York or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of New York.
Regardless of the law applied, because this contract is in English, the terms and conditions of
this contract will be interpreted in accordance with the meaning of the words in American
colloquial English, notwithstanding any meaning of any word when translated into its Japanese
equivalent.

Section 21. Dispute Resolution. In the event of any dispute under this R&D Agreement, as a
condition precedent to either party seeking arbitration, in connection therewith, the parties will
attempt to resolve such dispute by good faith negotiations (except for actions seeking injunctive
relief). Such negotiations shall first involve the individuals designated by the parties as having
general responsibility for the R&D Agreement. If such negotiations do not result within thirty
(30) days from written notice of either party indicating that a dispute exists (a “Dispute
Notice”) in a resolution of the dispute, OpNext Japan shall nominate one (1) corporate officer
of the rank of vice president or higher and Hitachi shall nominate one (1) corporate officer of the
rank of Board Director or higher, which corporate officers shall meet in person and attempt in good
faith to negotiate a resolution to the dispute. In the event the corporate executives are unable
to resolve the dispute within forty-five (45) days of receipt by either party of a Dispute Notice,
a party may refer the matter to arbitration (except in the case of disputes arising under Section
11(c) for which the parties may seek injunctive relief). In the event that either party submits the
dispute to arbitration, both parties shall cooperate in such binding arbitration in accordance with
Exhibit E.

Section 22. Interpretation. The headings and captions contained in this R&D Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this R&D Agreement are for reference
purposes only and do not constitute a part of this R&D

- 23 -

 

Agreement. The use of the word “including”
herein shall mean “including without limitation.”

Section 23. No Strict Construction. Notwithstanding the fact that this R&D Agreement has
been drafted or prepared by one of the parties, OpNext Japan and Hitachi confirm that both they and
their respective counsel have reviewed, negotiated and adopted this R&D Agreement as the joint
agreement and understanding of the parties, and the language used in this R&D Agreement shall be
deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule
of strict construction shall be applied against any Person.

Section 24. Recordation.
This R&D Agreement effects a transfer and license of rights in certain Intellectual Property
and may be recorded in appropriate recordal repositories to evidence such transfer and license of
rights.

Section 25. Relationship of the Parties. The parties hereto are independent contractors.
The rights, obligations and liabilities of the parties shall be several and not joint or collective
and nothing contained in this R&D Agreement shall be construed as creating a partnership, joint
venture, agency, employment, trust or other association of any kind, each party being individually
and independently responsible as set forth in this R&D Agreement.

Section 26. Schedules or Exhibits. The disclosures set forth in any of the Schedules or
Exhibits attached hereto that related to any exception to a particular representation and warranty
made hereunder shall be taken to relate to each other Schedule or Exhibit setting forth an
exception to a representation and warranty made hereunder 5o the extent it is reasonable to expect
that such disclosure relates to such other representation and warranty. The inclusion of
information in the Schedules or Exhibits hereto shall not be construed as an admission that such
information is material to the Assets, the Business or Hitachi. In addition, matters reflected in
the Schedules or Exhibits are not necessarily limited to matters required by this R&D Agreement to
be reflected in such Schedules or Exhibits. Such additional matters are set forth for
informational purposes only and do not necessarily include other matters of a similar nature.
Prior to the Second Closing, Hitachi shall have the right to supplement, modify or update the
Schedules or Exhibits hereto to reflect changes in the ordinary course of the Business prior to the
Second Closing; provided, however, that any such supplements, modifications or
updates shall be subject to the written consent of Clarity.

Section 27. Severability. Whenever possible, each provision of this R&D Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this R&D Agreement is held to be invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of any other provision of this R&D Agreement in
such jurisdiction or affect the validity, legality or enforceability of any provision in any other
jurisdiction, but this R&D Agreement shall be reformed, construed and enforced in such jurisdiction
as if such invalid, illegal or unenforceable provision had never been contained herein.

Section 28. Submission to Jurisdiction; Waivers. With respect to disputes not required to
be submitted to arbitration hereunder (including actions for injunctive relief under Section

- 24 -

 

11, or
for confirmation or enforcement of an arbitration) each party to this R&D Agreement (including any
third-party beneficiaries to this R&D Agreement) hereby irrevocably and unconditionally:

                         (i) submits for itself and its property in any legal action or proceeding relating to this R&D
Agreement, or for recognition and enforcement of any judgment in respect thereof, to the exclusive
general jurisdiction of the courts of Japan situated in Tokyo, Japan;

                         (ii) consents that any such action or proceeding may be brought in such courts, and waives any
objection that it may now or hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

                         (iii) agrees that service of process in any such action or proceeding may be effected by
mailing a copy thereof by registered or certified mail (or any substantially similar form of mail),
postage prepaid, to such party at its address set forth herein or at such other address of which
the agent shall have been notified pursuant thereto, to the extent permitted by the laws of Japan;
and

                         (iv) agrees that nothing contained herein shall affect the right to effect service of process
in any other manner permitted by law or shall limit the right to sue in any other jurisdiction.

Section 29. Survival. To the extent the terms of this R&D Agreement provide for rights,
interest, duties, claims, undertakings and obligations subsequent to the termination or expiration
of this R&D Agreement other than a termination caused by the termination of the Stock Purchase
Agreement, such terms of this R&D Agreement shall survive such termination or expiration, including
but not limited to the terms of Sections 1, 4, 6, 8 (subject to the two year survival period from
the Second Closing Date), 9, 11, 12, 18, 19, 20, 21, 22, 23, 26, 27, 28, 29, 30 and 31.

Section 30. Third-Party Beneficiaries. OpNext Japan and Hitachi acknowledge and agree that
this R&D Agreement is intended not only for the benefit of themselves and their Subsidiaries and
for purposes of Section 11(b)(ii) their Minority-Owned Affiliates but also for the benefit of the
Clarity Parties, OpNext, Inc. and OpNext Inc.’s Subsidiaries and Minority-Owned Affiliates.

Section 31.
Entire Agreement. Except as otherwise expressly set forth herein and except as
set forth in the other agreements executed in connection with the Stock Purchase Agreement, this
R&D Agreement and the other agreements executed in connection with the Stock Purchase Agreement
embody the complete agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related to the subject
matter hereof in any way. The provisions of all of the agreements executed in connection with the
Stock Purchase Agreement shall be construed to give effect to the provisions of all of the
agreements to the greatest extent possible; provided, however, that to the extent
that any clauses or terms in this R&D Agreement conflict with the concurrently
executed IP License Agreement, then the IP License Agreement shall govern, except for the following
provisions contained in this R&D Agreement, which shall govern: Sections 2, 3, 4, 5, 8 and 10.

*****

- 25 -

 

          SIGNATURE PAGE TO R&D AGREEMENT

          IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized officers as of the date first written above.

	 	 	 	 	 	 	 
	 	 	OPNEXT JAPAN, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Junsuke Kusanagi
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Junsuke Kusanagi	 	 
	 

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	HITACHI, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Masaaki Hayashi
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Masaaki Hayashi	 	 
	 

	 	 	 	Senior Vice President and Director	 	 
	 

	 	 	 	Senior Group Executive, Information &	 	 
	 

	 	 	 	Telecommunication Systems Group	 	 

Clarity Partners, L.P., Clarity OpNext Holdings I, LLC and Clarity OpNext Holdings II, LLC hereby
acknowledge, for all purposes of the Stock Purchase Agreement, that it has approved and agreed with
the form of this Agreement.

	 	 	 	 	 	 	 
	 	 	CLARITY PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	CLARITY GENPAR, LLC,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Lee
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David Lee	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	CLARITY OPNEXT HOLDINGS I, LLC	 	 
	 

	 	By:
	 	Clarity Partners, L.P., its Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	CLARITY GENPAR, LLC,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Lee
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David Lee	 	 
	 

	 	 	 	Managing Member	 	 

 

 

	 	 	 	 	 	 	 
	 	 	CLARITY OPNEXT HOLDINGS II, LLC	 	 
	 

	 	By:
	 	Clarity Partners, L.P., its Manager
	 
	 	 	 	 	 	 
	 

	 	By:
	 	CLARITY GENPAR, LLC,	 	 
	 

	 	 	 	its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ David Lee
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	David Lee	 	 
	 

	 	 	 	Managing Member	 	 

SIGNATURE PAGE TO R&D AGREEMENT (cont.)

 

 

FIRST AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT

          THIS FIRST AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT (this “Amendment”) is entered into
as of October 1, 2002 (the “Amendment Date”) by and among Hitachi, Ltd., a corporation
existing under the laws of Japan (“Hitachi”), OpNext Japan, Inc., a corporation existing
under the laws of Japan (“OpNext Japan”) and a Wholly-Owned Subsidiary of OpNext, Inc., a
Delaware corporation (“OpNext”) and Opto-Device, Ltd., a corporation existing under the
laws of Japan (“Opto-Device”). All capitalized terms used herein but not defined herein
shall have the meanings ascribed to such terms in the OpNext Japan R&D Agreement (as defined below)
or Opto-Device Stock Purchase Agreement (as defined below).

RECITALS

          WHEREAS, Hitachi and OpNext Japan have entered into that certain Research and Development
Agreement dated as of July 31, 2001 (the “R&D Agreement”);

          WHEREAS, pursuant to the terms of the Business Transfer Agreement, dated July 24, 2002, by and
between Hitachi and Opto-Device (the “Opto-Device Business Transfer Agreement”), and the
Stock Purchase Agreement, dated October 1, 2002, by and between Hitachi and OpNext (the
“Opto-Device Stock Purchase Agreement”), Hitachi and OpNext Japan desire to amend
the R&D Agreement in accordance with this Amendment;

          WHEREAS, the Opto-Device Business Transfer Agreement provides the terms and conditions under
which Hitachi sold to Opto-Device all of the Assets, which are necessary or reasonably required for
the operation of the HTS Business (as defined below) and SIC Business (as defined below);

          WHEREAS, simultaneously with the execution of this Amendment, Hitachi and OpNext are entering
into the Opto-Device Stock Purchase Agreement pursuant to which OpNext will acquire all of the
outstanding capital stock of Opto-Device; and

          WHEREAS, Hitachi, OpNext Japan and Opto-Device desire to enter into this Amendment to amend
the R&D Agreement to provide that Opto-Device shall agree to be bound by the R&D Agreement on
substantially the same terms and conditions as OpNext Japan, to expand the scope of the R&D
Agreement to include research and development support related to the SIC Business and the HTS
Business, in addition to the OpNext Japan Business (as defined below), and to extend the term of
the R&D Agreement to the tenth (10th) anniversary of the Closing Date of the Opto-Device
Stock Purchase Agreement.

          NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
to this Amendment hereby agree as follows:

1

 

Section 1. Amendment Date.

          This Amendment shall be effective as of October 1, 2002. R&D Projects requested by OpNext
Japan prior to the Amendment Date shall be governed by the R&D Agreement. R&D Projects requested
by either OpNext Japan or Opto-Device after the Amendment Date shall be governed by the R&D
Agreement as amended by this Amendment. This Amendment and any amendments made to the provisions
of the R&D Agreement shall have no retroactive effect. For the purposes of Opto-Device and Future
R&D Projects related to the HTS Business and SIC Business, references in the R&D Agreement to the
First Closing Date and Second Closing Date shall mean the Amendment Date.

Section 2. Additional Party.

          The preamble of the R&D Agreement shall be amended to include Opto-Device as a party to the
R&D Agreement as amended by this Amendment and all references to “OpNext Japan” in the R&D
Agreement shall be deemed to refer to both OpNext Japan and Opto-Device. For the avoidance of
doubt, with respect to ownership of “OpNext Japan R&D IP” and “Jointly Developed Intellectual
Property,” references to “OpNext Japan” shall be deemed to refer to OpNext Japan if OpNext Japan
funded the development of such intellectual property or to Opto-Device if Opto-Device funded the
development of such intellectual property. Where the R&D Agreement refers to the “parties” to the
R&D Agreement, such term shall be interpreted as the context so requires (for instance, in certain
provisions, such as those relating to expenses, the “parties” shall be deemed to refer to (i)
Hitachi and OpNext Japan or (ii) Hitachi and Opto-Device).

Section 3. Amendments to Section 1.

          (1) Section 1 of the R&D Agreement is hereby amended by deleting clause (b) in its entirety
and replacing it with the following clause (b):

     (b) “Assigned IP” shall have the meaning set forth in Section 5(b) of
the Stock Contribution Agreement and the meaning set forth in Section 5(b) of the
Opto-Device Stock Purchase Agreement.

          (2) Section 1 of the R&D Agreement is hereby amended by deleting clause (d) in its entirety
and replacing it with the following clause (d):

     (d) “Business” shall mean the OpNext Japan Business, the HTS Business
and the SIC Business.

          (3) Section 1 of the R&D Agreement is hereby amended by deleting clause (h) in its entirety
and replacing it with the following clause (h):

     (h) “Current R&D Projects” shall mean (i) with respect to OpNext
Japan, the research and development projects (including any planned or proposed
research and development projects) related to OpNext Japan Business existing as of
March 31, 2001, as set forth in

2

 

Exhibit A and (ii) with respect to
Opto-Device, the research and
development projects (including any planned or proposed research and
development projects) related to the HTS Business or the SIC Business existing as
of October 1, 2002 as set forth in Exhibit A, as applicable.

          (4) Section 1 of the R&D Agreement is hereby amended by deleting clause (k) in its entirety
and replacing it with the following clause (k):

     (k) “Future R&D Projects” shall mean research and development projects
related to (1) the OpNext Japan Business to be undertaken by OpNext Japan and/or
its Affiliates or by Hitachi on behalf of OpNext Japan, on and after April 1, 2001
and (2) the SIC Business or the HTS Business to be undertaken by Opto-Device and/or
its Affiliates or by Hitachi on behalf of Opto-Device, on and after October 1,
2002.

          (5) Section 1 of the R&D Agreement is hereby amended by deleting clause (q) in its entirety
and replacing it with the following clause (q):

     (q) “Licensed IP” shall have the meaning set forth in Section 3(a) of
the IP License Agreement and the meaning set forth in Section 3(a) of the
Opto-Device IP License Agreement (as defined below).

          (6) Section 1 of the R&D Agreement is hereby amended by deleting clause (w) in its entirety
and replacing it with the following clause (w):

     (w) “New Development Costs” shall mean (1) all of the costs related to
a particular R&D Project incurred after commencement of such R&D Project on and
after April 1, 2001 with respect to R&D Projects relating to the OpNext Japan
Business and (2) all of the costs related to a particular R&D Project incurred
after commencement of such R&D Project on and after October 1, 2002 with respect to
R&D Projects relating to the SIC Business or the HTS Business. New Development
Costs shall include operating expenses and charges for the use of any tangible
property made available for use in the R&D Project but shall not include the
consideration for the use of any existing or underlying Intellectual Property owned
or controlled by either party that is used for such R&D Project.

          (7) Section 1 of the R&D Agreement is hereby amended by adding the following clauses:

     (kk) “HTS Business” shall mean the business of manufacturing
opto-device laser diodes, laser diode modules, photo diodes, modulators and
infra-red emitting diodes for telecommunication, information application and
industrial uses operated by Hitachi Tohbu Semiconductor, Ltd. as of October 1,
2002.

3

 

     (ll) “SIC Business” shall mean the business of designing, developing,
manufacturing, selling and distributing opto-device laser diodes, laser diode
modules, photo diodes, modulators and infra-red emitting diodes for
telecommunication, information application and industrial uses operated by
Hitachi’s Semiconductor and Integrated Circuits Group as of October 1,
2002.

     (mm) “OpNext Japan Business” shall mean Hitachi’s fiber optic
component business of designing, developing, manufacturing, marketing, distributing
and selling Products (as defined in the Stock Contribution Agreement) operated by
Hitachi’s Telecommunications Systems Division as of the First Closing and as
operated by OpNext Japan between the First Closing and the Second Closing Date.

     (nn) “Opto-Device IP License Agreement” shall mean that certain
Intellectual Property License Agreement, dated as of October 1, 2002, by and
between Hitachi and Opto-Device.

     (oo) “Opto-Device Stock Purchase Agreement” shall mean that certain S
tock Purchase Agreement, dated October 1, 2002, by and between Hitachi and OpNext.

Section 4. Amendments to Section 3.

          Section 3(a) of the OpNext R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following clause 3(a):

     3(a) Hitachi. Nothing contained in this R&D Agreement shall limit in
any way Hitachi’s ability to continue to conduct research and development
activities for other Hitachi business units, including its Affiliates and
Subsidiaries, including any fiber optical component business (e.g.,
semiconductors and cable) subject to the Nonsolicitation or Noncompetition
provision in Section 12 of the Stockholders’ Agreement, as amended by the First
Amendment to Stockholders’ Agreement b y among OpNext, Inc., Hitachi, Clarity,
Holdings I and Holdings II (and as otherwise amended, supplemented or modified from
time to time); provided, however, the terms and conditions of this
R&D Agreement shall be subject to the terms and conditions of any existing
agreements related to the governmental R&D projects, the joint R&D projects with
national and public universities or private universities, the
R&D projects requested by other Hitachi Subsidiaries or the joint R&D projects
with any other agency or organization (collectively, the “Existing R&D
Agreements”). Prior to the commencement of any R&D Project, Hitachi shall
disclose to OpNext Japan any restrictions contained in the Existing R&D Agreements
related to such R&D Project.

4

 

Section 5. Amendments to Section 5.

          (1) Section 5 of the R&D Agreement is hereby amended by deleting clause (a) in its entirety
and replacing it with the following clause (a):

               (a) OpNext Japan R&D IP License.

          (i) OpNext Japan will license, and does hereby license effective as of the
First Closing Date, the OpNext Japan R&D IP to Hitachi and its Wholly-Owned
Subsidiaries on a fully paid-up, non-exclusive, perpetual and irrevocable basis, to
use, make, have made, sell, advertise, offer to sell, lease, import, export and
supply products and services throughout the world. For the avoidance of doubt,
this R&D Agreement does not grant Hitachi or its Wholly-Owned Subsidiaries the
right to sublicense the OpNext Japan R&D IP and Hitachi and its Wholly-Owned
Subsidiaries shall not have the right to sublicense the OpNext Japan R&D IP without
the prior written consent of OpNext Japan, not to be unreasonably withheld,
unreasonably delayed or unreasonably conditioned.

          (ii) Status of Wholly-Owned Subsidiaries.

                    (1) License to OpNext Japan R&D IP. If at any time a Wholly-Owned
Subsidiary of Hitachi ceases to remain a Wholly-Owned Subsidiary of Hitachi,
Hitachi shall provide written notice of such change to OpNext Japan in accordance
with Section 13 of this R&D Agreement and the license under OpNext Japan R&D IP
existing as of the date such Wholly-Owned Subsidiary ceases to remain a
Wholly-Owned Subsidiary, shall continue, pursuant to the terms and conditions of
this R&D Agreement; provided, however, for any OpNext Japan R&D IP
that is developed after a Wholly-Owned Subsidiary ceases to remain a Wholly-Owned
Subsidiary, the parties shall negotiate in good faith and on commercially
reasonable terms a new license governing such Intellectual Property.

                    (2) Sublicenses. For the avoidance of doubt, this R&D Agreement does
not grant Wholly-Owned Subsidiaries of Hitachi the right to sublicense the OpNext
Japan R&D IP and an entity that ceases to remain a Wholly-Owned Subsidiary of
Hitachi shall not have the right to sublicense the OpNext Japan R&D IP without the
prior
written consent of OpNext Japan, not to be unreasonably withheld, unreasonably
delayed or unreasonably conditioned; provided, however, that to the
extent any sublicenses have been granted with OpNext Japan’s prior written consent
with respect to the OpNext Japan R&D IP during the time such entity is a
Wholly-Owned Subsidiary of Hitachi, such sublicenses shall continue, pursuant to
the terms and conditions of this R&D Agreement and such sublicense.

5

 

          (2) Section 5(b) of the R&D Agreement is hereby amended by inserting “(i)” after the section
heading “Hitachi R&D IP License.” and before the first sentence of such section and adding the
following clause (ii):

     (ii) Status of Subsidiaries. If at any time a Subsidiary or
Wholly-Owned Subsidiary of OpNext Japan or a Subsidiary or Wholly-Owned Subsidiary
of OpNext ceases to remain a Subsidiary or Wholly-Owned Subsidiary (as appropriate)
to the extent any sublicenses have been granted by OpNext Japan or OpNext to such
entity with respect to the Licensed Hitachi R&D IP during the time such entity is
such a Subsidiary or Wholly-Owned Subsidiary (as appropriate), such sublicenses of
Licensed Hitachi R&D IP existing as of the date such entity ceases to remain a
Subsidiary or Wholly-Owned Subsidiary (as appropriate) shall continue, pursuant to
the terms and conditions of this R&D Agreement and such sublicense.

Section 6. Amendments to Section 6.

          (1) Section 6(c) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following clause (c):

     (c) Infringement of Licensed Hitachi R&D IP. To the extent a
competitor of the Business is infringing the Licensed Hitachi R&D IP in OpNext
Japan’s reasonable business judgment and such infringement is material to either
(x) the OpNext Japan Business or (y) the SIC Business and the HTS Business,
Hitachi, in its sole discretion, will protect OpNext Japan’s interest by either:
(i) initiating and maintaining legal proceedings with respect to such alleged
infringement or misappropriation against any such Person on behalf of OpNext Japan
or (ii) by taking some other appropriate action that will not have a Material
Adverse Effect on the ongoing business of OpNext Japan, Inc. or Opto-Device, Ltd.;
provided that with respect to clauses (i) and (ii), the parties shall consult and
cooperate with each other in determining how to respond to the infringing
activities. For the avoidance of doubt, Hitachi may or may not consult with OpNext
Japan, Inc. or Opto-Device, Ltd. prior to determining whether to pursue (i) or
(ii). Upon the resolution of such infringement by settlement or otherwise, any
damages, profits and awards
of whatever nature recoverable for such infringement shall, after deducting
the parties’ expenses, be reasonably allocated between the parties based on the
facts and circumstances of the infringement. The parties will reasonably consider
the option of settling any such matter by granting a sublicense of all or portion
of the Licensed Hitachi R&D IP.

6

 

          (2) Section 6 of the R&D Agreement is hereby amended by adding the following clause (d):

     (d) Guaranty.

     (i) Hitachi.

                    (1) Hitachi will use reasonable best efforts to cause its Wholly-Owned
Subsidiaries (for so long as they are Wholly-Owned Subsidiaries) to comply with the
terms and conditions of this R&D Agreement and Hitachi shall be liable for any
breach of such terms and conditions.

                    (2) Hitachi will use reasonable best efforts to cause its Wholly-Owned
Subsidiaries that cease to remain Wholly-Owned Subsidiaries to comply with the
terms and conditions of this R&D Agreement applicable to such entities and Hitachi
shall be liable for any breach of such terms and conditions.

               (ii) OpNext Japan. OpNext Japan will use reasonable best efforts to
cause its sublicensees authorized pursuant to Section 5(b) to comply with the terms
and conditions of this R&D Agreement applicable to such entities and sublicense,
and OpNext Japan shall be liable for any breach of such terms and conditions.

Section 7. Amendments to Section 8.

          Section 8 of the R&D Agreement is hereby amended by adding after clause (f) the following
clauses:

     (g) Indemnification by Hitachi. From and after October 1, 2002,
Hitachi shall indemnify Opto-Device and its Affiliates and each of their respective
officers, directors, members, stockholders, partners, employees and agents (as
applicable) and hold them harmless from any Losses suffered or incurred by any such
indemnified party to the extent arising from: (i) any breach of any representation
or warranty of Hitachi contained in this R&D Agreement; or (ii) any breach of any
covenant of Hitachi contained in this R&D Agreement; except to the extent that
Opto-Device, its Affiliates, their agents and/or their independent contractors have
tortiously contributed in an intentional or grossly negligent manner to
the event in question. Notwithstanding the foregoing, in no event shall
Hitachi indemnify Opto-Device under this indemnity provision for claims under
Section 8(g)(i) brought on or after one (1) year after October 1, 2002 and in no
event shall Hitachi’s obligations under this provision exceed an amount of one
billion (1,000,000,000) Yen.

     (h) IP Infringement Indemnification. With respect to third party
patent or copyright infringement claims or trade secret misappropriation claims
regarding products, processes or methods related to the Business as it is conducted
after October 1, 2002, Hitachi and Opto-Device shall jointly defend such action but
only to the extent that such

7

 

claim involves OpNext Japan R&D IP resulting from (a)
the Current R&D Projects related to the HTS Business or the SIC Business or (b)
Hitachi R&D IP. If a third party patent or copyright infringement claim or trade
secret misappropriation claim is made against Opto-Device for a new product design
that is developed on or after October 1, 2002: (i) Hitachi shall be responsible for
the settlement amount of any such claim (provided that prior written approval is
obtained) or the resulting liability of any such claim only to the extent such
claim results from a Current R&D Project related to the HTS Business or the SIC
Business; (ii) Opto-Device shall be responsible for the settlement amount of any
such claim (provided that prior written approval is obtained) or the resulting
liability of any such claim to the extent that it arises from OpNext Japan R&D IP
relating to the HTS Business or the SIC Business for which Opto-Device has paid one
hundred percent (100%) of the New Development Costs irrespective of whether such
claim results from a Current R&D Project or a Future R&D Project; and (iii)
Opto-Device and Hitachi shall be jointly responsible for the settlement amount of
any such claim (provided that prior written approval is obtained) for the resulting
liability of any such claim to the extent it arises from Jointly Developed
Intellectual Property in the same proportion as the parties agreed to allocate the
New Development Costs prior to commencement of the R&D Project. To the extent
there is a dispute regarding the allocation of the parties’ liabilities under this
subsection, the parties shall negotiate in good faith what the allocation of
liability should be. If the parties are unable to agree even after good faith
negotiations, the parties shall submit the issue to arbitration pursuant to the
arbitration procedures set forth in Exhibit E hereto. In the event that
either party submits the dispute to arbitration, both parties shall cooperate in
such binding arbitration in accordance with Exhibit E. Notwithstanding the
foregoing, in no event shall either party indemnify the other under this
infringement and misappropriation indemnity provision for claims brought on or
after one (1) year after October 1, 2002 and in no event shall either party’s
obligations under this provision exceed an amount of one billion (1,000,000,000)
Yen. The indemnification under this Section 8 shall be provided in accordance to
the procedures set forth in Section 11 of the Opto-Device IP License Agreement.

     (i) Indemnification by Opto-Device. From and after October 1, 2002,
Opto-Device shall indemnify Hitachi and its Affiliates and each of their respective
officers, directors, members, stockholders, partners and employees (as applicable)
against and hold them harmless from any Losses suffered or incurred by any such
indemnified party to the extent arising from: (1) any breach of any representation
or warranty by Opto-Device contained in this R&D Agreement; or (2) any breach of
any covenant of Opto-Device contained in this R&D Agreement; except to the extent
that Hitachi, its Affiliates, their agents and/or their independent contractors
have tortiously contributed in an intentional or grossly negligent manner to the
event in question. Notwithstanding the foregoing,

8

 

in no event shall Opto-Device
indemnify Hitachi under this indemnity provision for claims under Section 8(i)(l)
brought on or after one (1) year after October 1, 2002 and in no event shall
Opto-Device’s obligations under this provision exceed an amount of one billion
(1,000,000,000) Yen.

     (j) Limitations on Indemnification.

               For the avoidance of doubt:

               (1) an indemnifying party’s liability under Sections 8(c)(i), 8(d) and 8(e)(i)
of this R&D Agreement, Sections 11(b), 11(c)(i) and 11(d)(i) and (iii) of the IP
License Agreement or Sections 13(a)(i) and 13(a)(v), 13(b), 13(c) and 13(d)(i) and
13(d)(vi) (as Sections 13(a) and 13(d) relate to Assigned IP, Licensed IP or any
other Intellectual Property relevant to the OpNext Japan Business) of the Stock
Contribution Agreement in the aggregate shall in no event exceed four hundred and
twenty-eight point six million dollars ($428.6 million); and

               (2) an indemnifying party’s liability under Sections 11(b), 11(c)(i) and
11(d)(i) and (iii) of the Opto-Device IP License Agreement or Sections 17(a)(i) and
17(a)(iv), 17(b), 17(c) and 17(d)(i) and 17(d)(vi) (as Sections 17(a) and 17(d)
relate to Assigned IP, Licensed IP or any other Intellectual Property relevant to
the SIC Business and HTS Business) of the Stock Purchase Agreement or Sections
8(g)(i), 8(h) and 8(i)(1) of this R&D Agreement in the aggregate shall in no event
exceed one billion Yen (¥ 1,000,000,000).

Section 8. Amendments to Section 10.

          Section 10 of the R&D Agreement is hereby amended by deleting Section 10 in its entirety and
replacing it with the following Section 10:

Section 10. Termination. This R&D Agreement will automatically terminate
and be of no further force or effect upon the tenth (10th) anniversary
of the Closing Date of the Opto-Device Stock Purchase
Agreement; provided, however, that the following provisions of this
R&D Agreement survive termination of this R&D Agreement: (i) Section 11 relating to
the obligation of the parties to keep confidential certain information and data
(ii) Section 5(e) to the extent that the Licensed Hitachi R&D IP and/or OpNext
Japan R&D IP has not expired; (iii) Section 8 relating to indemnification; and
(iii) Section 9 relating to expenses, or any other term which specifically states
that it survives termination of this R&D Agreement.

Section 9. Amendments to Section 15.

          Section 15 of the R&D Agreement is hereby amended by deleting Section 15 in its entirety and
replacing it with the following Section 15:

9

 

Section 15. Assignment. Except as set forth below, this R&D Agreement and
any rights and obligations hereunder shall not be assignable or transferable by
OpNext Japan or Hitachi or Wholly-Owned Subsidiaries (whether or not it is a
Wholly-Owned Subsidiary at the time) of OpNext Japan or Hitachi (including by
operation of law in connection with a merger or sale of stock, or sale of
substantially all the assets, of OpNext Japan or Hitachi or Wholly-Owned
Subsidiaries of OpNext Japan or Hitachi) without the prior written consent of the
other party and any purported assignment without such consent shall be void and
without effect; provided, however, that this R&D Agreement, in its
entirety, shall be assignable by OpNext Japan (or any successor to OpNext Japan) to
OpNext, Inc. or any Wholly-Owned Subsidiary of OpNext, Inc.

Section 10. Hitachi Communication Technologies.

          The R&D Agreement is hereby amended by adding a new section 32 as follows:

Section 32. Hitachi Communication Technologies, Ltd. For purposes of this
R&D Agreement, the defined term “Wholly-Owned Subsidiary” shall not include
Hitachi’s Wholly-Owned Subsidiary, Hitachi Communication Technologies, Ltd.

Section 11. Amendments to Exhibits.

          (a) Exhibit A to the R&D Agreement is hereby amended by adding to such Exhibit the document
attached to this Amendment as Exhibit A-1 (Current R&D Projects related to the HTS Business and the
SIC Business).

          (b) Exhibit B to the R&D Agreement is hereby amended by adding to such Exhibit the document
attached to this Amendment as Exhibit B-1 (Intellectual Property resulting from the Current R&D
Projects related to the HTS Business and the SIC Business).

Section 12. No Other Amendments.

          Except as expressly set forth herein, all other terms and conditions of the R&D Agreement
shall remain unmodified, in full force and effect and shall apply to this Amendment.

Section 13. Governing Law.

          This Amendment shall be governed by and construed in accordance with the laws of Japan without
giving effect to any choice-of-law or conflict-of-law provision or rule (whether of Japan or any
other jurisdiction) that would cause the application of the laws of any jurisdiction other than of
Japan. Regardless of the law applied, because this contract is in English, the terms and
conditions of this contract will be interpreted in

10

 

accordance with the meaning of the words in
American colloquial English, notwithstanding any meaning of any word when translated into its
Japanese equivalent.

Section 14. Dispute Resolution.

          In the event of any dispute under this Amendment, as a condition precedent to either party
seeking arbitration, in connection therewith, the parties will attempt to resolve such dispute by
good faith negotiations (except for actions seeking injunctive relief). Such negotiations shall
first involve the individuals designated by the parties as having general responsibility for the
R&D Agreement. If such negotiations do not result within thirty (30) days from written notice of
either party indicating that a dispute exists (a “Dispute Notice”) in a resolution of the
dispute, Opto-Device shall nominate one (1) corporate officer of the rank of vice president or
higher and Hitachi shall nominate one (1) corporate officer of the rank of Board Director or
higher, which corporate officers shall meet in person and attempt in good faith to negotiate a
resolution to the dispute. In the event the corporate executives are unable to resolve the dispute
within forty-five (45) days of receipt by either party of a Dispute Notice, a party may refer the
matter to arbitration (except in the case of disputes arising under Section 11(c) for which the
parties may seek injunctive relief). In the event that either party submits the dispute
to arbitration, both parties shall cooperate in such binding arbitration in accordance with
Exhibit E to the R&D Agreement.

Section 15. Interpretation.

          The headings and captions contained in this Amendment and in any Exhibit are for reference
purposes only and do not constitute a part of this Amendment. The use of the word “including”
herein shall mean “including without limitation.”

Section 16. Severability.

          Whenever possible, each provision of this Amendment shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Amendment held to be
invalid, illegal or unenforceable in any respect under any
applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect the validity, legality or enforceability of any other provision of this Amendment
in such jurisdiction or affect the validity, legality or enforceability of any provision in any
other jurisdiction, but this Amendment shall be reformed, construed and enforced in such
jurisdiction as if such invalid, illegal or unenforceable provision had never been contained
herein.

Section 17. Counterparts.

          This Amendment may be executed in one or more counterparts, each of which shall be an original
and all of which taken together shall constitute one and the same agreement.

*****

11

 

SIGNATURE PAGE TO FIRST AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT

          IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly
authorized officers as of the Amendment Date.

	 	 	 	 	 	 	 
	 	 	OPNEXT JAPAN, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Tadayuki Kanno
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Tadayuki Kanno	 	 
	 

	 	 	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	HITACHI, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Satoru Ito
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Satoru Ito	 	 
	 

	 	 	 	President and Chief Executive Officer,	 	 
	 

	 	 	 	Semiconductor & Integrated Circuits	 	 
	 
	 	 	 	 	 	 
	 	 	OPTO-DEVICE, LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Yasutoshi Kashiwada
	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Yasutoshi Kashiwada	 	 
	 

	 	 	 	President	 	 

 

 

SECOND AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT

          THIS SECOND AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT (this “Amendment”) is entered into
as of October 27, 2006 (the “Amendment Date”), by and between Hitachi, Ltd., a corporation
existing under the laws of Japan (“Hitachi”) and Opnext Japan, Inc., a corporation existing
under the laws of Japan (“Opnext Japan”) and a Wholly-Owned Subsidiary of Opnext, Inc., a
Delaware corporation (“Opnext, Inc.”), and successor by merger to Opto-Device, Ltd., a
corporation formerly existing under the laws of Japan (“Opto-Device”). All capitalized
terms used herein but not defined herein shall have the meaning ascribed to such terms in the R&D
Agreement (as defined below).

RECITALS

          WHEREAS, Hitachi and Opnext Japan have entered into that certain Research and Development
Agreement dated as of July 31, 2001 (the “Original R&D Agreement”), as amended by the First
Amendment thereto dated as of October 1, 2002 (the “First Amendment” and together with the
any other amendments to the Original R&D Agreement, the “R&D Agreement”); and

          WHEREAS, Hitachi and Opnext Japan desire to enter into this Amendment to further amend the R&D
Agreement as set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
to this Amendment hereby agree as follows:

Section 1. Amendment Date.

          This Amendment shall be effective as of the Amendment Date. This Amendment and any amendments
made to the provisions of the R&D Agreement hereunder shall have no retroactive effect.

Section 2. Amendment.

          (1) Section 1(o) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

“Jointly Developed Intellectual Property” shall mean all Intellectual
Property resulting from an R&D Project under this R&D Agreement in accordance with
Section 4(c)(ii) hereof, and shall exclude Hitachi R&D IP, Licensed IP and Assigned
IP and Opnext Japan R&D IP.

          (2) Section 2(c)(ii) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following Section 2(c)(ii):

(ii) Termination Conditions. Such license shall not be terminated or its
exploitation enjoined, until and unless: (i) Opnext Japan has committed

1

 

a material breach of its obligations under this R&D Agreement, Hitachi has given
written notice of such breach to Opnext Japan and such breach remains uncured after
sixty (60) days of receiving notice of such breach (the “Cure Period”), or,
in the case of a breach that cannot be cured within such Cure Period, Opnext Japan
has not instituted within such Cure Period steps necessary to remedy the default
and/or thereafter has not diligently pursued the same to completion; or (ii) Opnext
Japan has committed an incurable material breach. In the event the breach is a
curable breach that cannot be cured within the Cure Period but with respect to
which Opnext Japan has instituted steps necessary to remedy the default and is
thereafter diligently pursuing such cure, both parties shall negotiate to determine
whether further pursuit of such cure is reasonable. If the parties cannot agree on
a resolution in such negotiations, then this issue shall be referred to arbitration
pursuant to the arbitration procedures set forth in Exhibit E hereto to
decide whether such breach can be cured or any other alternative remedy should be
adopted. In the event the breach is an incurable breach, (i) the parties agree
that the matter shall be referred to arbitration pursuant to the arbitration
procedures set forth in Exhibit E hereto to determine the appropriate
remedy, and (ii) Opnext Japan shall provide an on-going plan to address the
prevention of such a breach occurring again reasonably acceptable to Hitachi within
sixty (60) days of written notice of the breach and shall implement and comply with
such plan within the time period set forth in such plan. In the event that either
party submits the dispute to arbitration, both parties shall cooperate in such
binding arbitration in accordance with Exhibit E.

          (3) Section 2(c)(iii) of the R&D Agreement is hereby amended by deleting it in its entirety
and replacing it with the following Section 2(c)(iii):

          (iii) License Term. The license to the Intellectual Property licensed
pursuant to Section 2(c)(i) shall be irrevocable and: (i) with respect to patent
rights, shall survive for so long as any applicable patent is valid; and (ii) with
respect to all other Intellectual Property, shall be perpetual.

          (4) The last sentence of Section 4(a) of the R&D Agreement is hereby amended by deleting it in
its entirety and replacing it with the following sentence:

          Hitachi shall cooperate with Opnext Japan in a reasonable manner in obtaining
such protection, including, obtaining signatures of Hitachi employees, contractors
and/or officials on official papers.

          (5) The last sentence of Section 4(b) of the R&D Agreement is hereby amended by deleting it in
its entirety and replacing it with the following sentence:

2

 

          Hitachi shall have the right to apply, in its own name and at its own expense,
for Intellectual Property protection in Hitachi R&D IP and, if requested, Opnext
Japan shall cooperate with Hitachi in any reasonable manner in obtaining such
protection, including, obtaining signatures of Opnext Japan employees, contractors
and/or officials on official papers.

          (6) Section 4(c)(ii)(1) of the R&D Agreement is hereby amended by deleting it in its entirety
and replacing it with the following Section 4(c)(ii)(1):

          (1) If the R&D Project is jointly funded by the parties and either: (A)
Opnext Japan contributes fifty percent (50%) or more of the New Development Costs
to the R&D Project; or (B) Opnext Japan contributes less than fifty percent (50%)
of the New Development Costs to the R&D Project but (i) one or more employees or
contractors (other than employees of Hitachi or its Subsidiaries) of Opnext Japan
are “inventors” under the applicable patent laws of the applicable jurisdiction or
(ii) the parties determine through good faith negotiations that Opnext Japan
contributed to the R&D Project in some other fashion, and in both (A) and (B) above
the resulting Intellectual Property can clearly be identified with reasonable
certainty as that resulting from such R&D Project, then such Intellectual Property
shall be deemed Jointly Developed Intellectual Property and shall be owned jointly
by the parties and either party may practice such Jointly Developed Intellectual
Property without an accounting or compensation to, or the consent of, the other
party. Except as set forth in Section 4(c)(iii) below, if either party desires to
license any of its rights to the Jointly Developed Intellectual Property herein to
a third party, it shall obtain the prior written consent of the other party hereto.
Each party shall have the right to apply, in both parties’ names, for Intellectual
Property protection in the Jointly Developed Intellectual Property. The parties
shall agree on the proper way and strategy for proceeding with all protection of
the Jointly Developed Intellectual Property in accordance with the R&D Procedures.
All expenses incurred in obtaining and maintaining Intellectual Property protection
in the Jointly Developed Intellectual Property shall be equally shared by the
parties. In the event that one (1) of the parties elects not to seek or maintain
patent or other intellectual or industrial property protection for any Jointly
Developed Intellectual Property in any particular country or not to share equally
in the expenses thereof with the other party, the other party shall have the right
to seek or maintain such protection at its sole expense in such country and shall
have full control over the prosecution and maintenance thereof even though title to
any patent or other intellectual or industrial property protection issuing
therefrom shall be jointly owned by the parties.

          (7) Section 5(d) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following Section 5(d):

3

 

     (d) Termination Conditions. Such a license of Opnext Japan R&D IP to
Hitachi and of Licensed Hitachi R&D IP to Opnext Japan shall not be terminated or
its exploitation enjoined, until and unless: (i) the licensee has committed a
material breach of its obligations under this R&D Agreement, the licensor has given
written notice of such breach to the licensee and such breach remains uncured
during the Cure Period, or, in the case of a breach which cannot be cured within
such Cure Period, the licensee has not instituted within such Cure Period steps
necessary to remedy the default and/or thereafter has not diligently pursued the
same to completion; or (ii) the breaching party has committed an incurable material
breach. In the event the breach is a curable breach that cannot be cured within
the Cure Period but the licensee has instituted steps necessary to remedy the
default and is thereafter diligently pursuing such cure, both parties shall
negotiate to determine whether further pursuit of the cure is reasonable. If the
parties cannot agree on a resolution in such negotiations, then this issue shall be
referred to arbitration pursuant to the arbitration procedures set forth in
Exhibit E hereto to decide whether such breach can be cured or any other
alternative remedy should be adopted. In the event the breach is an incurable
breach, (i) the parties agree that the matter shall be referred to arbitration
pursuant to the arbitration procedures set forth in Exhibit E hereto to
determine the appropriate remedy, and (ii) the breaching party shall provide an
on-going plan to address the prevention of such a breach occurring again reasonably
acceptable to non-breaching party within sixty (60) days of written notice of the
breach and shall implement and comply with such plan within the time period set
forth in such plan. In the event that either party submits the dispute to
arbitration, both parties shall cooperate in such binding arbitration in accordance
with Exhibit E.

          (8) Section 5(e) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following Section 5(e):

     (e) License Term and Review of Obligations.

     (i) License Term. The license to the Opnext Japan R&D IP to Hitachi
and Licensed Hitachi Future R&D IP (as defined below) to Opnext Japan shall be
irrevocable and: (i) with respect to patent rights, shall survive for so long as
any applicable patent is valid; and (ii) with respect to all other Opnext Japan R&D
IP and Licensed Hitachi Future R&D IP, shall be perpetual. For purposes of this
Section, the term “Licensed Hitachi Future R&D IP” means Licensed Hitachi
R&D IP resulting from a Future R&D Project. Notwithstanding the foregoing, (A) if
one (1) of the conditions set forth in Section 5(d) is met, (x) Hitachi may
terminate the licenses to Licensed Hitachi R&D IP that is developed or filed on or
after the effective date of termination and (y) the licenses granted Opnext Japan
to Licensed Hitachi Future R&D IP developed or filed prior to the effective date of
termination shall continue pursuant to

4

 

the terms and conditions set forth herein and (B) if one (1) of the conditions
set forth in Section 5(d) is met, (x) Opnext Japan may terminate the licenses to
Opnext Japan R&D IP that is developed or filed on or after the effective date of
termination and (y) the licenses granted Hitachi to Opnext Japan R&D IP developed
or filed prior to the effective date of termination shall continue pursuant to the
terms and conditions set forth herein.

     (ii) Review of Obligations. The obligations set forth in this Section
5 with respect to Licensed Hitachi Other R&D IP (as defined below) shall expire on
the tenth (10th) anniversary of the Second Closing Date of the Stock Contribution
Agreement; provided, however, that the licenses under Licensed Hitachi Other R&D IP
existing as of the tenth (10th) anniversary of the Second Closing Date shall
continue, under reasonable terms and conditions to be agreed between the parties,
until the expiration of all of such Licensed Hitachi Other R&D IP. Notwithstanding
the foregoing, if one (1) of the conditions set forth in Section 5(d) is met,
Hitachi may elect to be completely relieved of its obligations set forth in this
Section 5 with respect to Licensed Hitachi Other R&D IP. If Hitachi elects to be
relieved of its obligations under this Section 5(d), the parties shall renegotiate
in good faith and on commercially reasonable terms a new license governing the
Licensed Hitachi Other R&D IP. For purposes of this Section, the term “Licensed
Hitachi Other R&D IP” means any Licensed Hitachi R&D IP other than Licensed Hitachi
Future R&D IP. For the avoidance of doubt, the expiration or termination of Opnext
Japan’s rights under this R&D Agreement with respect to Licensed Hitachi Other R&D
IP will in no way affect Opnext Japan’s rights with respect to such Licensed
Hitachi Other R&D IP, if any, under any other agreement to which Opnext Japan is a
party.

          (9) Section 10 of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

     This R&D Agreement will automatically terminate and be of no further force or
effect upon the fifth anniversary of an Initial Public Offering (as defined in the
Stockholders’ Agreement); provided, however, that the provisions of this R&D
Agreement identified in Section 29 shall survive expiration or termination of this
R&D Agreement.

          (10) Section 11(a) of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following Section 11(a):

     (a) Confidentiality Obligations. Confidential Information will not
be disclosed or made available by the receiving party, directly or indirectly, to
any third party, except as shall be agreed to in writing by the disclosing party.
Each of the parties agrees to take all reasonable steps to

5

 

preserve the confidentiality of the other’s Confidential Information in
accordance with their respective policies for the protection of their own
non-public information (which policies shall provide at least reasonable
protection) and agrees that it will be made available only to those employees and
contractors as shall have a need to see and use for the purpose of fulfilling that
party’s obligations under this R&D Agreement, and any such employee and contractor
shall be informed of the confidential nature of the Confidential Information and
shall be required to observe the confidentiality obligations in respect thereof.
The receiving party shall ensure that all Confidential Information received by it
is kept separate (together with all information generated by the receiving party
therefrom) from all documents and other records of the receiving party, and that it
shall not use, reproduce, transfer or store any of the Confidential Information in
an extremely accessible place.

          (11) Section 15 of the R&D Agreement is hereby amended by adding the following clause at the
end:

provided, however, that this R&D Agreement, in its entirety, shall be assignable by
Opnext Japan (or any successor to Opnext Japan) to Opnext, Inc. or any Wholly-Owned
Subsidiary of Opnext, Inc. For the avoidance of doubt, the parties agree that an
Initial Public Offering (as defined in the Stockholders’ Agreement) shall not
require the consent of Hitachi.

          (12) Section 29 of the R&D Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:

Section 29. Survival. To the extent the terms of this R&D Agreement provide for
rights, interest, duties, claims, undertakings and obligations subsequent to the
termination or expiration of this R&D Agreement other than a termination caused by
the termination of the Stock Purchase Agreement, such terms of this R&D Agreement
shall survive such termination or expiration, including but not limited to the
terms of Sections 1, 4, 5 (with respect to licenses to Intellectual Property (other
than Licensed Hitachi Other R&D IP) granted hereunder prior to the effective date
of such termination), 6, 8 (subject to the two year survival period from the Second
Closing Date), 9, 11, 12, 18, 19, 20, 21, 22, 23, 26-34.

          (13) A new Section 33 is hereby added to the R&D Agreement which provides as follows:

Section 33. Bankruptcy. The parties agree that if a party becomes a debtor
or debtor-in-possession under Title 11 of the United States Code (the
“Bankruptcy Code”): (i) in the event of a rejection or proposed rejection
of this R&D Agreement under Section 365 of the Bankruptcy Code, any and all rights
licensed pursuant to this R&D Agreement shall be

6

 

deemed to fall within the definition of “intellectual property” under Section 101
of the Bankruptcy Code and, in connection therewith, Section 365(n) of the
Bankruptcy Code shall be implicated by such rejection or proposed rejection; and
(ii) notwithstanding Section 365(c) of the Bankruptcy Code or applicable
non-bankruptcy law which prohibits, restricts or conditions the assignment or
assumption of this R&D Agreement or any of the rights therein, but subject to the
debtor-in-possession or trustee, as applicable, otherwise complying with the
requirements of Section 365 of the Bankruptcy Code for assumption, the
debtor-in-possession or trustee in bankruptcy may assume this R&D Agreement. The
parties agree that if a party files for bankruptcy under the laws of any other
jurisdiction, the terms of this section will apply to the extent necessary to
preserve the rights provided in this Section 33.

          (14) A new Section 34 is hereby added to the R&D Agreement which provides as follows:

Section 34. Injunctive Relief. Each party acknowledges and agrees that the
other party’s Intellectual Property and Confidential Information are valuable
property of such other party and that a material breach of this R&D Agreement
(including unauthorized use of Intellectual Property or disclosure of Confidential
Information) will cause irreparable injury for which the injured party does not
have an adequate remedy at law and for which monetary remedies are not sufficient.
Each party shall be entitled to seek equitable relief (including the granting of
injunctive relief in that party’s favor) without the obligation of posting a bond
if the other party makes or threatens a material breach of this R&D Agreement
(including unauthorized use of Intellectual Property or disclosure of Confidential
Information). Each party agrees that equitable relief is not exclusive of other
remedies to which the other party may be entitled at law or in equity as a result
of any such material breach of this R&D Agreement (including any unauthorized use
or disclosure of that party’s Intellectual Property or Confidential Information).

Section 3. No Other Amendments.

          Except as expressly set forth herein, all other terms and conditions of the R&D Agreement
shall remain unmodified, in full force and effect and shall apply to this Amendment.

Section 4. Governing Law.

          This Amendment shall be governed by and construed in accordance with the laws of Japan without
giving effect to any choice-of-law or conflict-of-law provision or rule (whether of Japan or any
other jurisdiction) that would cause the application of the laws of any jurisdiction other than of
Japan. Regardless of the law applied, because this contract is in English, the terms and
conditions of this contract will be interpreted in

7

 

accordance with the meaning of the words in American colloquial English, notwithstanding any
meaning of any word when translated into its Japanese equivalent.

Section 5. Dispute Resolution.

          In the event of any dispute under this Amendment, as a condition precedent to either party
seeking arbitration, in connection therewith, the parties will attempt to resolve such dispute by
good faith negotiations (except for actions seeking injunctive relief). Such negotiations shall
first involve the individuals designated by the parties as having general responsibility for the
R&D Agreement. If such negotiations do not result within thirty (30) days from written notice of
either party indicating that a dispute exists (a “Dispute Notice”) in a resolution of the
dispute, Opnext Japan shall nominate one (1) corporate officer of the rank of vice president or
higher and Hitachi shall nominate one (1) corporate officer of the rank of Board Director or
higher, which corporate officers shall meet in person and attempt in good faith to negotiate a
resolution to the dispute. In the event the corporate executives are unable to resolve the dispute
within forty-five (45) days of receipt by either party of a Dispute Notice, a party may refer the
matter to arbitration (except in the case of disputes arising under Section 11(c) or Section 34 of
the R&D Agreement for which the parties may seek injunctive relief). In the event that either party
submits the dispute to arbitration, both parties shall cooperate in such binding arbitration in
accordance with Exhibit E to the R&D Agreement.

Section 6. Interpretation.

          The headings and captions contained in this Amendment and in any Exhibit are for reference
purposes only and do not constitute a part of this Amendment. The use of the word “including”
herein shall mean “including without limitation.”

Section 7. Severability.

          Whenever possible, each provision of this Amendment shall be interpreted in such manner as to
be effective and valid under applicable law, but if any provision of this Amendment held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Amendment in such jurisdiction or affect
the validity, legality or enforceability of any provision in any other jurisdiction, but this
Amendment shall be reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

Section 8. Order of Precedence. To the extent of a conflict between this Amendment and the
First Amendment, the terms and conditions of this Amendment shall control.

8

 

     Section 9. Counterparts.

          This Amendment may be executed in one or more counterparts, each of which shall be an original
and all of which taken together shall constitute one and the same agreement.

* * * * *

9

 

IN WITNESS WHEREOF, the parties have caused this Amendment to be executed by their duly authorized
officers as of the Amendment Date.

	 	 	 	 	 	 	 
	OPNEXT JAPAN, INC.

	 	 	 	HITACHI, LTD.	 	 
	 
	 	 	 	 	 	 
	/s/ Kei Oki
 

	 	 	 	/s/ Naoya Takahashi
 

	 	  
	Name: Kei Oki

	 	 	 	Name: Naoya Takahashi	 	 
	Title: President

	 	 	 	Title: Vice President and Executive Officer	 	 

SIGNATURE PAGE TO SECOND AMENDMENT TO OPNEXT JAPAN R&D AGREEMENT

10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00114-of-00352.parquet"}]]