Document:

EX-10.15

 

Exhibit 10.15

PREFERRED PROVIDER AGREEMENT

     THIS PREFERRED PROVIDER AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Agreement”) is made and entered into as of the 31st day of July, 2001 (the
“Effective Date”), by and between HITACHI, LTD., a corporation existing under the laws of
Japan (“Hitachi”), and OPNEXT, INC., a Delaware corporation (the “Company”).

     WHEREAS, the Company, Hitachi, Clarity Partners, L.P., a Delaware limited partnership
(“Clarity”), Clarity OpNext Holdings I, LLC, a Delaware limited liability company
(“Holdings I”), and Clarity OpNext Holdings II, LLC, a Delaware limited liability company
(“Holdings II,” and collectively with Clarity and Holdings I, the “Clarity
Parties”), are parties to that certain Amended and Restated Stock Purchase Agreement dated as
of the date hereof (as amended, supplemented or otherwise modified from time to time, the
“Stock Purchase Agreement”), pursuant to which, among other things, (i) Hitachi agreed to
capitalize OpNext Japan, Inc., a corporation existing under the laws of Japan (“OpNext
Japan”), and to cause OpNext Japan to use such funds to purchase certain assets from Hitachi
pursuant to a Business Transfer Agreement, dated as of December 6, 2000, between OpNext Japan and
Hitachi, and (ii) Hitachi agreed to contribute its common stock of OpNext Japan to the Company in
exchange for common stock in the Company pursuant to a Stock Contribution Agreement, dated as of
the date hereof, between the Company and Hitachi (as amended, supplemented or otherwise modified
from time to time, the “Stock Contribution Agreement”); and

     WHEREAS, upon consummation of the transactions contemplated by the Stock Purchase Agreement
and the Stock Contribution Agreement, (i) Hitachi and the Clarity Parties will jointly own the
Company; and (ii) OpNext Japan will be a wholly-owned Subsidiary of the Company; and

     WHEREAS, the Company, OpNext Japan, and the Company’s other direct and indirect Subsidiaries
(collectively, the “OpNext Group”) will continue to operate the Business; and

     WHEREAS, pursuant to Section 3(a)(viii) of the Stock Purchase Agreement, Hitachi and the
Company have agreed to enter into a Preferred Provider Agreement on the terms and conditions set
forth herein.

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

	1.	 	Certain Definitions. Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in the Stock Contribution Agreement. In addition, as
used in this Agreement, the following terms shall have the meanings ascribed to them below:

	 	1.1	 	“Optronic Components” shall mean any components or products produced,
marketed and/or sold as of or after the Effective Date by any member of the OpNext
Group for use in any form of data communications system, cable

 

 

	 	 	 	system, fiber optic system, wireless system and/or other similar systems (including
without limitation transmitters, receivers, transceivers, laser diode modules,
photo diode modules, parallel optical interconnectors, lasers, photodiodes,
modulators, amplifier modules, optical switches and optical wave guides). As used
herein, the term Optronic Components shall also mean such components or products as
described in the preceding sentence that are produced, marketed and/or sold by
entities other than the OpNext Group.
	 
	 	1.2	 	“Qualified Public Offering” shall have the meaning set forth in the
Stockholders’ Agreement of even date herewith, between Clarity, Holdings I, Holdings
II, Hitachi and the Company.

	2.	 	Sale and Supply of Optronic Components. Subject to the terms and conditions of this
Agreement, Hitachi agrees to use the OpNext Group as its preferred provider (subject to the
terms and conditions set forth in Section 2.1 below) for Optronic Components.

	 	2.1	 	Preferred Provider. Subject to Hitachi’s needs for such products,
Hitachi agrees to purchase all of its requirements for products of the type or similar
to those included within the definition of Optronic Components from the Company or any
other member of the OpNext Group offering Optronic Components for sale during the term
of this Agreement, subject to the following terms and conditions with respect to each
purchase of such products: (i) the Optronic Components being offered by the Company
(or such other member of the OpNext Group) shall be suitable for Hitachi’s
requirements for volume, specifications and quality (it being agreed that an Optronic
Component will be deemed to be of suitable specifications and quality if it
substantially conforms to the specifications and quality standards set by Hitachi for
the specific product); (ii) the pricing to Hitachi for the applicable Optronic
Components shall be at or below the aggregate price(s) at which a comparable volume of
Optronic Components with substantially the same specifications and quality could be
purchased in the market; and (iii) the Optronic Components being offered shall meet
Hitachi’s customary requirements for delivery schedule; provided,
however, Hitachi’s foregoing commitment shall be reduced to the extent (a)
Hitachi’s customers require Optronic Components to be purchased from multiple vendors,
in which case Hitachi shall use Commercially Reasonable Efforts to obtain written
notice thereof from such customers, and to the extent Hitachi is unable to obtain
written notice from a customer after Commercially Reasonable Efforts, Hitachi shall
provide the Company with written notice thereof; (b) Hitachi’s customers require that
Optronic Components be purchased from vendors other than a member of the OpNext Group,
in which case Hitachi shall use Commercially Reasonable Efforts to obtain written
notice thereof from such customers, and to the extent Hitachi is unable to obtain
written notice from a customer after Commercially Reasonable Efforts, Hitachi shall
provide the Company with written notice thereof; (c) prudent business practices
require Hitachi to maintain a second supply source for certain Optronic Components;

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	 		 	(d) the Company (or such other member of the OpNext Group) is unable to meet
Hitachi’s or its customers’ written, good faith requirements for technical support
and technical data; or (e) the Company (or such other member of the OpNext Group)
is not able to meet Hitachi’s or its customers’ written, good faith requirements
concerning time-to-market for new products; provided, further,
Hitachi may only purchase Optronic Components from vendors other than members of
the OpNext Group pursuant to clause (c) above in any trailing twelve (12)-month
period if, and only in the amount by which, Hitachi’s aggregate purchases pursuant
to clauses (a) and (b) above (if any) are less than twenty-percent (20%) of
Hitachi’s total purchases (based on purchase price) of Optronic Components from all
vendors (including members of the OpNext Group) during such trailing twelve
(12)-month period, and in no event shall Hitachi’s purchases pursuant to clause (c)
exceed twenty-percent (20%) of Hitachi’s total purchases of Optronic Components
from vendors other than members of the OpNext Group during such trailing twelve
(12)-month period.
	 
	 	2.2	 	Specifications. Notwithstanding any provision of this Agreement to
the contrary, Hitachi shall provide written notice to the Company (or such other
member of the OpNext Group) of the specifications for each Optronic Component that
Hitachi intends to purchase (whether from the Company, its Subsidiaries or any other
supplier of such component) for incorporation into Hitachi products as soon as
reasonably possible after Hitachi has determined such specifications. Hitachi shall
provide written notice to the Company (or such other member of the OpNext Group) of
any modification to such specifications as soon as reasonably possible after Hitachi
has determined such modified specifications.

	3.	 	Definitive Procurement Agreement.

	 	3.1	 	Procurement Agreement. Subject to the terms and conditions set forth
herein, Hitachi and OpNext Japan shall, simultaneous with the execution of this
Agreement, enter into a definitive procurement agreement on commercially reasonable
terms pursuant to which Hitachi may purchase Optronic Components from OpNext Japan
(the “Procurement Agreement”). The Procurement Agreement will contain the
definitive terms for Hitachi’s purchase of any Optronic Components from OpNext Japan,
including but not limited to the following: (i) price and payment terms; (ii)
establishment of a rolling forecast of demand by Hitachi for its Optronic Components
needs; (iii) shipment and delivery terms; (iv) title and risk of loss; (v) inspection
rights; (vi) quality control; (vii) warranty(ies); (viii) intellectual property
rights; and (ix) modification and cancellation of purchase orders. The Procurement
Agreement and any other procurement agreement entered into between Hitachi and any
other member of the OpNext Group shall in all cases be subject to the terms and
conditions set forth in Section 2.1 hereof. The Procurement Agreement shall be
governed by the laws of Japan and any dispute arising therefrom shall be arbitrated in
accordance with Section 8 and Exhibit A hereof. In the event that Optronic
Components are offered for sale

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	 	 	 	by any other member of the OpNext Group (other than OpNext Japan), Hitachi and such
other member of the OpNext Group will enter into a definitive procurement agreement
on substantially the same terms as the Procurement Agreement (except that the
governing law shall be the jurisdiction of organization of such other member of the
OpNext Group).

	4.	 	Administration of Relationship.

	 	4.1	 	Designation of Representatives. Each of the Company and Hitachi will
designate one (1) individual (each, a “Representative”) in writing to manage
its sale or purchase, as applicable, of the Optronic Components to or from the other
party and to coordinate its activities under this Agreement with the other party. The
initial Representative for the Company will be Harry Bosco, and the initial
Representative for Hitachi will be Eiji Aoki. The Representative for each party may
be replaced from time to time by that party and such party shall promptly provide
written notice thereof to the other party.
	 
	 	4.2	 	Meetings of Representatives. The Representatives from the Company
and Hitachi will schedule formal meetings, at mutually agreeable times at least
bi-monthly during the term of this Agreement to be attended by authorized management
personnel of both parties with responsibility for and authority over the matters to be
discussed at such meetings. At such meetings, the parties will discuss the status of
the activities contemplated under this Agreement as well as, among other things: (i)
the status of any outstanding purchase orders, including any actual or anticipated
delays in meeting the delivery schedules or quantities specified in such purchase
orders; (ii) any current or anticipated Optronic Component shortages or third-party
customer requirements that could adversely affect the ability of a party to meet the
other party’s Optronic Component needs; (iii) the OpNext Group’s pricing for Optronic
Components relative to market prices; (iv) the OpNext Group’s delivery times for
Optronic Components relative to the delivery times of competing suppliers; and (v) any
modifications of Optronic Component specifications that may be necessary to satisfy
the needs of the other party. Similar meetings shall be held at least quarterly
during the term of this Agreement to discuss, among other things, Hitachi’s
anticipated future Optronic Component requirements.
	 
	 	4.3	 	Product Evolution Meetings. Beginning within sixty (60) days after
the Effective Date and no less than every six (6) months thereafter, the
Representatives will have formal meetings at mutually agreeable times during the term
of this Agreement, to be attended by authorized management personnel of both parties,
to discuss all relevant information (including without limitation the following
information: (i) current and anticipated product development plans; (ii) anticipated
product evolution; (iii) market trends; (iv) technological advances; (v) end-user
satisfaction data; and (vi) end-user requirements and demands) related to the
development and evolution of Hitachi products that are reasonably anticipated over the
next

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	 	 	 	twenty-four (24) month period that might incorporate Optronic Components or
products that the OpNext Group could reasonably develop during the relevant time
period. During these meetings, Hitachi shall at a minimum share with the Company
information substantially similar to that information shared with any other entity
that makes components or products similar to the Optronic Components. Such
discussions will be for informational purposes only, and any proposed product
developments and the like emanating from such discussions will not be binding on
either party. Notwithstanding anything to the contrary contained in this Section
4.3, the parties acknowledge and agree that Hitachi shall not be obligated to
disclose to the Company any information to the extent such disclosure would result
in a breach of Hitachi’s confidentiality obligations to any other Person;
provided, however, Hitachi shall notify the Company in writing of
any failure by Hitachi to disclose information covered by this Section 4.3 in order
to avoid breaching its confidentiality obligations to any other Person;
provided further, Hitachi shall use Commercially Reasonable Efforts
(including assisting the Company in entering into confidentiality agreements with
such other Person) to enable Hitachi to disclose such information to the Company
without Hitachi breaching its confidentiality obligations to such other Person.

	5.	 	Term and Termination.

	 	5.1	 	Term. The initial term of this Agreement shall commence on the
Effective Date and continue until the earlier of either (i) the third anniversary of
the date of a Qualified Public Offering of the Company, or (ii) five (5) years from
the Effective Date, unless earlier terminated as specified herein; provided,
however, Hitachi shall have no obligation to purchase Optronic Components
under this Agreement at times when Hitachi’s Telecommunications Systems Division
(“TSD”) or its successor neither manufactures nor sells products that use
Optronic Components.
	 
	 	5.2	 	Termination.

	 	5.2.1	 	Subject to Section 5.2.2, either party may terminate this
Agreement if a material breach or default of this Agreement by the other party
hereto continues for sixty (60) days after written notice to such breaching or
defaulting party. If the nature of the cure for any non-monetary breach or
default is such that it is reasonably expected to take longer than sixty (60)
days, the breaching or defaulting party shall be given an additional thirty
(30) days to cure such breach or default, provided that the cure is commenced
during the original sixty (60)-day period and is diligently carried out
thereafter. In the event that the material breach or default is not cured
within the periods specified above after delivery of the notice, the
non-breaching or non-defaulting party may terminate this Agreement in writing
as of the date specified in the termination notice. If the default or breach
is not susceptible to cure, the party providing notice will be entitled to
terminate this Agreement immediately upon written notice to the
other party. The terminating party shall have all rights and remedies set
forth in this Agreement.

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	 	5.2.2	 	So long as Hitachi and its Affiliates directly or indirectly
hold voting securities of the Company representing a majority voting interest
in the Company or have the right to designate a majority of the Company’s
directors pursuant to the Stockholders’ Agreement, Hitachi may not terminate
this Agreement as a result of any breach hereof by the Company, material or
otherwise.

	 	5.3	 	Survival. The provisions of Sections 5.3 (Survival), 6
(Confidentiality), 7 (Limitation of Liability), 8 (Arbitration), and 9 (General
Provisions) shall survive termination of this Agreement.

	6.	 	Confidentiality.

	 	6.1	 	Confidentiality Obligation of the Company: With respect to any
information furnished or disclosed to the Company pursuant to this Agreement which the
Company reasonably understands to be proprietary or confidential in nature, the
Company shall maintain the confidentiality of all such information in accordance with
the Company’s policies for the protection of its own nonpublic information. The
limitations set forth in this Section 6.1 shall not apply with respect to the
disclosure of any information: (i) to the Company’s employees, auditors, counsel or
other professional advisors or to members of the OpNext Group, if the Company, in its
sole discretion, determines that it is reasonably necessary for such Person to have
access to such information, provided that any such Person agrees to be bound by the
provisions of this Section 6.1 to the same extent as the Company; provided,
however, that prior to the disclosure of such proprietary or confidential
information to a member of the OpNext Group that is not a direct or indirect
wholly-owned Subsidiary of the Company, the Company shall obtain Hitachi’s prior
consent, which consent shall not be unreasonably withheld; (ii) as has become or
previously was generally available to the public other than by reason of a breach of
this Section 6.1 by the Company or has become available to the Company on a
non-confidential basis; (iii) as may be required or reasonably necessary in any
report, statement or testimony submitted to any municipal, state or federal regulatory
body having or claiming to have jurisdiction over the Company (it being understood
that, to the extent practicable, the Company shall provide Hitachi with prompt notice
of any such event and cooperate in good faith to enable Hitachi to participate to
protect its interest in such confidential information); (iv) as may be required or
reasonably necessary in response to any summons or subpoena or in connection with any
litigation; (v) in order to comply with any law, order, regulation or ruling
applicable to the Company; and (vi) to the extent related to the Business or the
Assets (as defined in the Stock Contribution Agreement).

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	 	6.2	 	Confidentiality Obligations of Hitachi: With respect to any
information furnished or disclosed to Hitachi pursuant to this Agreement which Hitachi
reasonably understands to be proprietary or confidential in nature, Hitachi shall
maintain the confidentiality of all such information in accordance with Hitachi’s
policies for the protection of its own nonpublic information. The limitations set
forth in this Section 6.2 shall not apply with respect to the disclosure of any
information: (i) to Hitachi’s employees, auditors, counsel or other professional
advisors or to Hitachi’s direct or indirect wholly-owned Subsidiaries, if Hitachi,
in its sole discretion, determines that it is reasonably necessary for such Person
to have access to such information, provided that any such Person agrees to be
bound by the provisions of this Section 6.2 to the same extent as Hitachi; (ii) as
has become or previously was generally available to the public other than by reason
of a breach of this Section 6.2 by Hitachi or has become available to Hitachi on a
non-confidential basis; (iii) as may be required or reasonably necessary in any
report, statement or testimony submitted to any municipal, state or federal
regulatory body having or claiming to have jurisdiction over Hitachi (it being
understood that, to the extent practicable, Hitachi shall provide the Company with
prompt notice of any such event and cooperate in good faith to enable the Company
to participate to protect its interest in such confidential information); (iv) as
may be required or reasonably necessary in response to any summons or subpoena or
in connection with any litigation; and (v) in order to comply with any law, order,
regulation or ruling applicable to Hitachi.
	 
	 	6.3	 	Protection of Optronic Components. Prior to the release of any
Optronic Components to the public markets or the general availability of such Optronic
Components publicly, Hitachi may not, and may not permit any of its Subsidiaries to,
reverse engineer, decompile or reverse assemble any Optronic Components, except as
otherwise permitted by law. Any schematic, specification, chip design or design
capabilities provided to Hitachi by any member of the OpNext Group for assembly,
maintenance or other purposes related to the sale or purchase of Optronic Components
hereunder (except to the extent that such document or other information is or becomes
generally available to the public) shall be maintained in confidence and shall not be
duplicated or disclosed except to the extent necessary for Hitachi to carry out its
obligations hereunder.
	 
	 	6.4	 	Injunctive Relief. The parties acknowledge and agree that money
damages would be inadequate to remedy any breach of the confidentiality obligations in
Sections 6.1, 6.2 or 6.3 and that the non-breaching party shall be entitled to obtain
equitable and any other available remedies with respect to any such breach, including
injunctive relief.

	7.	 	Limitation of Liability.

	 	7.1	 	IN NO EVENT SHALL ANY PARTY TO THIS AGREEMENT OR ITS SUBSIDIARIES BE LIABLE
FOR ANY INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, OR DAMAGES
FOR LOSS OF PROFITS, REVENUE, OR USE INCURRED BY THE OTHER PARTY OR ITS SUBSIDIARIES
OR ANY THIRD

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	 	 	 	PARTY, WHETHER IN AN ACTION IN CONTRACT OR TORT OR OTHERWISE, EVEN IF ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES. IN ANY TWELVE (12) MONTH PERIOD, THE LIABILITY OF
A PARTY AND ITS SUBSIDIARIES FOR DAMAGES ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT, THE PROCUREMENT AGREEMENT AND ANY OTHER PROCUREMENT AGREEMENT ENTERED
INTO BETWEEN HITACHI AND ANY OTHER MEMBER OF THE OPNEXT GROUP (EXCEPT IN CONNECTION
WITH A BREACH OF A PARTY’S CONFIDENTIALITY OBLIGATIONS PURSUANT TO SECTIONS 6.1,
6.2 AND 6.3 HEREOF OR THE CONFIDENTIALITY OBLIGATIONS OF THE RELEVANT PROCUREMENT
AGREEMENT) SHALL NOT, IN THE AGGREGATE, EXCEED U.S. $36 MILLION.
	 
	 	7.2	 	The limitations or exculpation of liability set forth in Section 7.1 shall
not be applicable to any breach of Section 9.3 below or any failure by Hitachi to pay
for any Optronic Components purchased hereunder.

	8.	 	Arbitration. Except for actions seeking injunctive relief or for confirmation or
enforcement of an arbitration award, in the event the parties are unable to resolve any
dispute arising under this Agreement, a party shall submit the matter to arbitration in
accordance with the arbitration procedures set forth in Exhibit A hereto.
	 
	9.	 	General Provisions.

	 	9.1	 	Governing Law. This Agreement (it being understood that the
Procurement Agreement will be governed by the laws of Japan) will be interpreted,
construed and enforced in all respects in accordance with the laws of the State of New
York without giving effect to (i) the choice of law or conflict of law rules or
provisions of the State of New York or any other jurisdiction, (ii) the United Nations
Convention on Contracts for the International Sale of Goods, (iii) the 1974 Convention
on the Limitation Period in the International Sale of Goods, (iv) the Protocol
amending the 1974 Convention, done at Vienna April 11, 1980, and (v) the Uniform
Computer Information Transactions Act.
	 
	 	9.2	 	Submission to Jurisdiction; Waivers. With respect to those disputes
not required to be submitted to arbitration hereunder as set forth in Section 8 above,
each party to this Agreement hereby irrevocably and unconditionally: (i) submits for
itself and its property in any legal action or proceeding relating to this Agreement,
or for recognition and enforcement of any judgment in respect thereof, to the
exclusive general jurisdiction of the courts of the State of New York located in New
York City, the courts of the United States of America situated in New York City, and
appellate courts from any thereof; (ii) consents that any such action or proceeding
may be brought in such courts, and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to plead or

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	 	 	 	claim the same; (iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such party at
its address set forth herein or at such other address of which the agent shall have
been notified pursuant thereto, to the extent permitted by law; and (iv) agrees
that nothing contained herein shall affect the right to effect service of process
in any other manner permitted by law.
	 
	 	9.3	 	Sale of TSD. Subject to Section 9.11, Hitachi shall not sell TSD or
TSD’s business or all or substantially all of TSD’s assets to a third party unless the
purchaser agrees to assume Hitachi’s obligations under this Agreement.
	 
	 	9.4	 	Relationship of the Parties. Each party is an independent contractor
and nothing in this Agreement shall be construed to create a partnership, joint
venture, agency, or employer/employee relationship between the parties.
	 
	 	9.5	 	Amendment and Waiver. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the Company
and Hitachi. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall not
affect the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
	 
	 	9.6	 	Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, mailed first class mail, air mail
(postage prepaid), sent by reputable overnight courier service (charges prepaid) or
sent by facsimile transmission to the parties at the address set forth below or at
such address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices shall be deemed to
have been given hereunder on the date delivered when delivered personally, five (5)
days after deposit in the U.S. mail or Japanese mail, one (1) day after deposit with a
reputable overnight courier service (three days if overseas) and on the next business
day if sent by facsimile transmission with confirmation of receipt. The addresses for
the Company and Hitachi are:

If to the Company:

OpNext, Inc.

246 Industrial Way West

Eatontown, NJ 07724

Attention: Harry Bosco

with a copy, which will not constitute notice to the Company, to:

Clarity Partners, L.P.

100 North Crescent Drive

Beverly Hills, CA 90210-5403

Attention: David Lee

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

Irell & Manella, LLP

1800 Avenue of the Stars, Suite 900

Los Angeles, CA 90067

Attention: Richard L. Bernacchi, Esq.

                 Ian Wiener, Esq.

If to Hitachi:

Hitachi, Ltd.

6, Kanda-Surugadai 4-chome

Chiyoda-ku

Tokyo, 101-8010 Japan

Attention: President, Telecommunication Systems Division

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.

	 	9.7	 	Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement in such jurisdiction or affect
the validity, legality or enforceability of any provision in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained herein.
	 
	 	9.8	 	Interpretation. The headings and captions contained in this
Agreement are for reference purposes only and do not constitute a part of this
Agreement. The use of the word “including” herein shall mean “including without
limitation.”
	 
	 	9.9	 	Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement, together with the other agreements entered into in connection with the
Stock Purchase Agreement, embodies the complete agreement and understanding among the
parties hereto with respect to the subject matter hereof and supersedes and preempts
any prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way. The
provisions of each of the agreements executed in connection with the Stock Purchase
Agreement shall be construed to give effect to the provisions of each of the other
agreements to the greatest extent possible.

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	 	9.10	 	Force Majeure. Neither party to this Agreement shall be held
responsible for any failure or delay in performance under this Agreement, except any
obligation to pay money, where such performance is rendered impracticable by any act
of war, fire, flood, other natural disaster, epidemic, strikes and other causes
similar to those listed, in each case where failure to perform is beyond the control,
and not caused by the negligence, of the nonperforming party.
	 
	 	9.11	 	Assignment. This Agreement shall be binding upon and shall inure to
the benefit of, the parties and their respective successors and permitted assigns.
Neither party may assign its rights (including by operation of law), or delegate the
performance of its obligations, under this Agreement, or any part hereof, without the
prior written consent of the other; provided, however, that Hitachi’s
consent shall not be unreasonably withheld in the case of any assignment by the
Company to any of its direct or indirect majority owned Subsidiaries for so long as
(i) Hitachi and its Affiliates directly or indirectly hold voting securities of the
Company representing a majority voting interest in the Company or have the right to
designate a majority of the Company’s directors pursuant to the Stockholders’
Agreement, (ii) the Company remains liable for the performance of any such assignee’s
obligations hereunder and any liability incurred in connection therewith, and (iii)
such assignment does not result in any additional costs for which Hitachi shall be
liable. Any assignment in violation of this Section 9.11 shall be void.
	 
	 	9.12	 	Representation by Counsel; Interpretation. Hitachi and the Company
acknowledge that each of them has been represented by counsel in connection with this
Agreement and the transactions contemplated hereby. Accordingly, any rule of law or
any legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is expressly
waived.
	 
	 	9.13	 	Exhibits and Schedules. All Exhibits and Schedules annexed hereto or
referred to herein are hereby incorporated in and made a part of this Agreement as if
set forth in full herein.
	 
	 	9.14	 	Delivery by Facsimile. This Agreement, the agreements referred to
herein, and each other agreement or instrument entered into in connection herewith or
therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to
the extent signed and delivered by means of a facsimile machine, shall be treated in
all manner and respects as an original agreement or instrument and shall be considered
to have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such
agreement or instrument, each other party hereto or thereto shall re-execute original
forms thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the
enforceability of a contract and each such party forever waives any such defense.

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	 	9.15	 	Third Party Beneficiaries. The Company and Hitachi acknowledge and
agree that this Agreement is intended not only for the benefit of themselves and their
Affiliates but also for the benefit of the Clarity Parties and their permitted assigns
under the Stock Purchase Agreement, and by reason thereof, the Clarity Parties and
their permitted assigns under the Stock Purchase Agreement possess legal, equitable
and any other rights hereunder as third-party beneficiaries of this Agreement.
	 
	 	9.16	 	Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together shall
constitute one and the same agreement.

[The remainder of this page is intentionally left blank.]

 - 12 - 

 

SIGNATURE PAGE TO PREFERRED PROVIDER AGREEMENT

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

	 	 	 	 	 
	 	 	OPNEXT, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Harry L. Bosco
	 

	 	 	 	 
	 

	 	 	 	Harry L. Bosco
	 

	 	 	 	Chief Executive Officer and President
	 
	 	 	 	 
	 	 	HITACHI, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Eiji Aoki
	 

	 	 	 	 
	 

	 	 	 	Eiji Aoki
	 

	 	 	 	Managing Officer & Administrative Officer 
President,
Telecommunication Systems Division

  

 

EXHIBIT A

ARBITRATION PROCEDURES

	a.	 	Appointment of Arbitrators. The arbitration shall be heard and determined by a panel
of three (3) persons. Each party shall have the right to designate one (1) member of the
panel. The party requesting arbitration shall communicate its request in writing, identifying
the nature of the dispute and the name of its arbitrator, to the other party (“Arbitration
Request”). The other party shall then name, in writing, its arbitrator within fifteen
(15) Business Days (as defined in the Stock Purchase Agreement) after receipt of the
Arbitration Request. Failure or refusal of the other party to name its arbitrator within the
fifteen (15) day time period shall empower the only appointed arbitrator to name the second
arbitrator. Within twenty-five (25) Business Days after the Arbitration Request, the two (2)
arbitrators shall mutually select a third impartial and neutral arbitrator to the panel. If
the two (2) arbitrators are unable to agree upon an arbitrator within forty-five (45) Business
Days after the Arbitration Request then within sixty-five (65) Business Days after the
Arbitration Request, the ICC shall appoint a third arbitrator.

	b.	 	Governing Law and ICC. All disputes submitted to arbitration under this Preferred
Provider Agreement shall be governed by the laws specified in the agreement that is the
subject of the dispute. The arbitration rules of the International Chamber of Commerce
(“ICC”) shall apply to any arbitration under this Preferred Provider Agreement, except to the
extent the provisions of this Exhibit A vary therefrom. ICC shall administer the arbitration.
Decisions of the panel shall be made by majority vote. The panel may not award punitive
damages, injunctions, specific performance or temporary restraining orders.

	c.	 	Expedited Schedule. The arbitration shall be conducted on an expedited schedule.
Unless otherwise agreed by the parties, the parties shall make their initial submissions to
the panel within seventy-five (75) Business Days after the Arbitration Request. Within one
hundred twenty (120) Business Days after the Arbitration Request, each party shall supply to
the other party all documents that such party intends to introduce or upon which such party
intends to rely in connection with such proceeding, as well as a list of any and all witnesses
whose testimony such party intends to introduce in connection with such proceeding (with a
brief summary of their area of testimony). Additional documents or witnesses may be
introduced only if a majority of the arbitrators determine that good cause has been shown.
Each party shall also have the right to submit written briefs to the arbitrators in accordance
with a timetable to be established by the arbitrators. Unless agreed by the parties
otherwise, the hearing shall commence within one hundred fifty (150) Business Days after the
Arbitration Request and shall be completed within two hundred twenty-five (225) Business Days
after the Arbitration Request.

	d.	 	Discovery. The parties shall be entitled to discovery of all documents and
information reasonably necessary for a full understanding of any dispute raised in the
arbitration relating to this Preferred Provider Agreement. The parties may use all methods of
discovery available under the Japanese Code of Civil Procedure and/or the United States
Federal Rules

 

 

		 	of Civil Procedure, including depositions, requests for admission and requests for production of
documents. The time periods applied to these discovery methods shall be set by the panel so as
to permit compliance with the scheduling provisions of this Exhibit A.

	e.	 	Communication with Arbitrators. Each party shall communicate with the arbitrators
only in the presence of the other party or by writing delivered to the ICC for transmittal to
the arbitrators and the other party.

	f.	 	Prompt Award. Unless otherwise agreed by the parties, the award shall be made
promptly by the panel (in any event, no later than thirty (30) Business Days from the closing
of the hearing). Unless otherwise agreed by the parties, the decision and award by the panel
shall be reasoned, explain the basis of the decision and be in writing. Any failure to render
the award within the foregoing time period shall not affect the validity of such award.

	g.	 	Binding Decisions. The decision or award rendered or made in connection with the
arbitration shall be final and binding upon the parties thereto. The prevailing party may
present the decision or award to any court of competent jurisdiction for confirmation, and
such court shall enter forthwith an order confirming such decision or award. The arbitration
award shall allocate the expenses of the arbitrator(s) and of the arbitration, between the
parties in a manner corresponding to the extent to which one (1) party prevails over the
other.

	h.	 	Location. Based upon the factors set forth below, the arbitrators shall select one
or more of the following cities for the location of the arbitration proceedings: Tokyo,
Japan; London, United Kingdom; or New York, U.S.A. The arbitrators shall take into account:
(i) the relationship between the acts and circumstances surrounding the dispute and the
arbitration location; (ii) the availability and location of witnesses; and (iii) the
accessibility and location of evidence.

	i.	 	Confidentiality. All arbitration proceedings undertaken pursuant to this Exhibit A
and any awards or decisions resulting therefrom shall be deemed to be confidential between the
parties thereto. To the extent either party maintains in good faith that any documents
submitted or testimony introduced in connection with such arbitration contains confidential
information or trade secrets, the parties shall negotiate in good faith in an effort to reach
agreement regarding terms and conditions for keeping such materials and testimony
confidential. If the parties are unable to agree upon such terms, the arbitrators shall have
the right to impose appropriate restrictions to maintain the confidentiality of any
confidential information or trade secrets in connection with the arbitration.

 

 

AMENDMENT TO

PREFERRED PROVIDER AGREEMENT

     This Amendment (the “Amendment”), is entered on October 18, 2006, (the “Amendment
Date”), and made effective retroactively as of July 31, 2006, by and between Hitachi Ltd., a
corporation organized and existing under the laws of Japan (“Hitachi”), and Opnext, Inc., a
Delaware corporation (“Company”), and is intended to modify certain provisions of the
Preferred Provider Agreement dated July 31, 2001, entered between the parties (the “Preferred
Provider Agreement”).

RECITALS

     WHEREAS, Hitachi and Company desire to amend certain provisions of the Preferred Provider
Agreement as provided for in this Amendment.

     NOW, THEREFORE, in consideration of the mutual covenants in this Amendment, Hitachi and
Company agree to amend the Preferred Provider Agreement as follows:

     A. Notwithstanding anything in the Preferred Provider Agreement to the contrary, the parties
agree that the term of the Preferred Provider Agreement will expire on July 31, 2007. Thereafter,
the Preferred Provider Agreement will renew automatically for additional one (1) year periods on an
annual basis, unless either party provides the other party with written notice of its intent not to
renew the Preferred Provider Agreement at least sixty (60) days prior to the expiration of the then
current term.

     B. Notwithstanding anything in the Preferred Provider Agreement to the contrary, the parties
agree that a change of control of a party by means of an initial public offering shall not require
the consent of the other party.

     IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed and to
be effective as of the Amendment Date set forth above.

	 	 	 	 	 	 	 	 	 
	HITACHI, LTD.	 	 	 	OPNEXT, INC.
	 
	 	 	 	 	 	 	 	 
	/s/ Naoya Takahashi	 	 	 	/s/ Harry L. Bosco
	 	 	 	 	 
	Name:

	 	Naoya Takahashi
	 	 	 	Name:
	 	Harry L. Bosco
	Title:

	 	Vice President and Executive Officer
	 	 	 	Title:
	 	President & CEOEX-10.16

 

Exhibit 10.16

PROCUREMENT AGREEMENT

     THIS PROCUREMENT AGREEMENT (as amended, supplemented or otherwise modified from time to
time, this “Agreement”) is made and entered into as of the 31st day of July, 2001 (the “Effective
Date”) by and between OpNext Japan, Inc. (hereinafter referred to as “Seller”), a corporation
organized and existing under the laws of Japan with its principal place of business at 216
Totsuka-cho, Totsuka-ku, Yokohama-shi, 244-8567, Japan and Hitachi, Ltd. (hereinafter referred to
as “Purchaser”), a corporation organized and existing under the laws of Japan with its principal
place of business at 216 Totsuka-cho, Totsuka-ku, Yokohama-shi, 244-8567, Japan.

     WHEREAS, upon the consummation of the transactions contemplated by that certain Amended and
Restated Stock Purchase Agreement, dated as of the date hereof, between Purchaser, OpNext, Inc., a
Delaware corporation (“OpNext USA”), Clarity Partners, L.P., a Delaware limited partnership
(“Clarity”), Clarity OpNext Holdings I, LLC, a Delaware limited liability company (“Holdings I”),
and Clarity OpNext Holdings II, LLC, a Delaware limited liability company (“Holdings II”), Seller
will be a wholly-owned subsidiary of OpNext USA; and

     WHEREAS, Purchaser and OpNext USA are parties to that certain Preferred Provider Agreement
(the “Preferred Provider Agreement”), dated as of the date hereof, which sets forth the terms and
conditions upon which Purchaser agrees to purchase Optronic Components (as defined therein) from
the OpNext Group (as defined therein); and

     WHEREAS, the Preferred Provider Agreement provides that Purchaser and Seller shall enter into
a definitive procurement contract to set forth certain additional terms for Purchaser’s purchase of
any Optronic Components from Seller; and

     WHEREAS, Purchaser desires to purchase Optronic Components from Seller, and Seller agrees to
sell such Optronic Components, on the terms and conditions set forth herein and in the Preferred
Provider Agreement.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter
contained and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

	1.	 	Certain Definitions. Capitalized terms used herein but not otherwise defined herein
shall have the meanings ascribed to them in the Preferred Provider Agreement. In addition, as
used in this Agreement, the following terms shall have the meanings ascribed to them below.

	 	1.1	 	“Customers” shall mean the Customers for whom the Purchaser is
performing work in which the Products (as defined below) are to be incorporated.

 

 

	 	1.2	 	“Products” shall mean any components or products produced, marketed
and/or sold currently and in the future by any member of the OpNext Group
for use in any form of data communications system, cable system, fiber optic
system, wireless system and/or other similar systems (including without limitation
transmitters, receivers, transceivers, laser diode modules, photo diode modules,
parallel optical interconnectors, lasers, photodiodes, modulators, amplifier
modules, optical switches and optical wave guides).
	 
	 	1.3	 	“day”, “week”, “month”, and “year” means the solar calendar or
Gregorian Calendar day, week, month, and year in Japan.

	2.	 	Rolling Forecast. Purchaser shall furnish to Seller on the first (1st)
day of each month a rolling three (3) months Products requirement forecast (each, a “Rolling
Forecast”) which shall indicate the forecasted amount of Products to be purchased for each of
the upcoming three months. For example, Purchaser will furnish to Seller on January
1st the forecasted amount of Products to be purchased for the months of February,
March and April and Purchaser will furnish to Seller on February 1st the forecasted
amount of Products to be purchased for the months of March, April and May. If Purchaser fails
to submit a Rolling Forecast by the first (1st) day in any given month, the most
recent Rolling Forecast submitted by Purchaser shall apply.
	 
	 	 	The forecast for the first two (2) months of each such Rolling Forecast shall be
Purchaser’s firm commitment (“Firm Commitment”) to purchase which cannot be cancelled,
except upon Seller’s written consent. The subsequent one (1) month forecast shall be for
informational purposes only and shall not be binding upon Purchaser. Six (6) months after
the Effective Date, the parties will negotiate in good faith to attempt to shorten the time
periods set forth in this paragraph in order to reflect changes in Seller’s manufacturing
capacity. After submitting a Rolling Forecast to Seller, Purchaser may increase or
decrease the quantity of Products to be purchased in the first two (2) months of each
Rolling Forecast, but only with Seller’s written consent.

	3.	 	Purchase Order and Change of Purchase Order.

	 	3.1	 	Purchase Order. Purchaser shall initiate a purchase by sending
Seller a written purchase order (“Purchase Order”). Neither Purchaser’s failure to
submit a Purchase Order to Seller nor anything contained in any Purchase Order shall
diminish Purchaser’s Firm Commitment set forth in any Rolling Forecast to purchase
Products. Each Purchase Order shall indicate that it shall be governed by the terms
and conditions of this Agreement and shall contain at least the following information:

	 	(a)	 	Seller’s Product numbers;
	 
	 	(b)	 	Quantity of Products;
	 
	 	(c)	 	Requested delivery terms and delivery dates;
	 
	 	(d)	 	List Prices (as defined below);

 - 2 - 

 

	 	(e)	 	Product specifications (“Product Specifications”) or
reference thereto; and
	 
	 	(f)	 	Inspection Requirements (as defined below) or reference
thereto.

	 	3.2	 	Acceptance of Purchase Orders. A Purchase Order will be deemed
accepted by Seller unless rejected by Seller in writing, specifying the reasons for
rejection, within ten (10) calendar days after receipt of such Purchase Order. Each
Purchase Order shall be deemed to be an offer by Purchaser to purchase the Products
pursuant to the terms of this Agreement and the Preferred Provider Agreement and, when
accepted by Seller as provided above, shall give rise to a contract under the terms
set forth in this Agreement to the exclusion of any additional or contrary terms set
forth in the Purchase Order or any acceptance by Seller unless such additional or
contrary terms are mutually agreed to in writing by the parties.
	 
	 	3.3	 	Modification of Purchase Orders. No accepted Purchase Order shall be
modified or cancelled except upon the written agreement of both parties.
	 
	 	3.4	 	Order of Precedence. The terms and conditions of this Agreement, as
amended in writing by the mutual agreement of Purchaser and Seller, take precedence
over any additional terms and conditions of Purchaser or Seller. Neither party’s
commencement of performance nor shipment of Products shall be deemed or construed to
be acceptance of any additional or inconsistent terms and conditions. None of the
terms and conditions herein may be added to, modified, superseded or otherwise altered
except by a written instrument signed by an authorized representative of both
Purchaser and Seller. Purchaser and Seller hereby object to any terms and conditions
that may be contained in any acknowledgment, invoice or other form issued by the other
party and each notifies the other party of such objection and each party acknowledges
receipt of such notice of objection.

	4.	 	Inspection.

	 	4.1	 	Inspection Requirements. Purchaser shall provide Seller with
Purchaser’s specific requirements (the “Inspection Requirements”) for inspection and
testing for the Product(s) that Purchaser intends to purchase from Seller. Purchaser
shall provide Seller written notice of any modification to such Inspection
Requirements as soon as reasonably possible after Purchaser has determined such
modified requirements. Seller shall inspect and/or test each and every part of the
Products before shipment or delivery to Purchaser in accordance with Purchaser’s
Inspection Requirements. Seller shall submit to Purchaser a record of the inspection
and/or testing of the Products upon Purchaser’s written request.
	 
	 	4.2	 	Inspection by Purchaser at Seller’s site. Seller shall grant
Purchaser reasonable access and entry at reasonable times and for a reasonable
duration to any factory of Seller or its subcontractors that is involved in the

 - 3 - 

 

	 	 	 	manufacture or distribution of Products ordered by Purchaser, but in no event must
Seller grant Purchaser such access more often than one (1) time per fiscal quarter.
Such entry and access shall be for the purpose of allowing Purchaser to review
Seller’s undertaking and performance of the inspection and/or testing of the
materials, design and workmanship of the Products as set forth in the Inspection
Requirements. Any such review is for the sole benefit of Purchaser and shall not
relieve Seller of the responsibility of inspecting and/or testing the Products in
accordance with the relevant Inspection Requirements. No review by Purchaser shall
be construed as constituting or implying acceptance of a particular Product or
shipment of Products or Seller’s performance of the Inspection Requirements.
Purchaser’s review shall not relieve Seller of any of its obligations or
liabilities under this Agreement nor affect any of the rights and remedies of
Purchaser hereunder. Upon Seller’s written consent, which consent shall not be
unreasonably withheld, Purchaser’s Customers and/or a representative of any
competent government authority or any agency thereof (“Government Representative”)
may attend such inspection and testing by Seller, provided that (i) any such
Customer must first agree to be bound by a nondisclosure agreement that protects
Seller’s interests at least as much as Sections 6.2 and 6.3 of the Preferred
Provider Agreement; and (ii) with respect to a Government Representative, Purchaser
shall request and use reasonable best efforts to cause such Government
Representative to agree to be bound by a nondisclosure agreement that protects
Seller’s interests at least as much as Sections 6.2 and 6.3 of the Preferred
Provider Agreement.
	 
	 	 	 	Seller shall be entitled to be present at all times during Purchaser’s entry and
access for the purposes described herein. Purchaser shall bear its own costs and
expenses in connection with its entry and access to Seller’s and its
subcontractor’s facilities for the purposes of reviewing Seller’s undertaking and
performance of the inspection and/or testing of the materials, design and
workmanship of the Products as set forth in the Inspection Requirements.
	 
	 	 	 	Seller shall take all reasonable actions to ensure the safety and health of
Purchaser’s personnel at Seller’s factory.
	 
	 	 	 	Purchaser may at any time designate a third-party inspector or agent to act on its
behalf in connection with Purchaser’s review as described herein, provided that (i)
such third-party inspector or agent agrees to be bound by a nondisclosure agreement
that protects Seller’s interests at least as much as Sections 6.2 and 6.3 of the
Preferred Provider Agreement; (ii) Purchaser gives prior notice to Seller of the
designation and identity of any such third-party inspector or agent; and (iii) to
the extent such third-party inspector or agent is a direct competitor of Seller,
Seller consents to such third-party inspector’s designation.

 - 4 - 

 

	5.	 	Product Prices.
At least sixty (60) days before October 1, 2001, April 1, 2002, and each subsequent October
1 and April 1 (each, a “Start Date”), Purchaser and Seller shall agree on the list prices
for each Product (the “List Prices”). The List Prices will be the prices Purchaser pays
for the Products and will be applicable for the six (6) month period (each, a “Period”)
beginning on the upcoming Start Date. List Prices in aggregate shall be at least as
favorable as the lowest prices in aggregate at which a comparable volume of Products with
substantially the same specifications, product mix, and quality could be purchased in the
market. The List Prices may be revised at any time during a Period only by the mutual
written consent of the parties. Notwithstanding the foregoing, in the event of an increase
in costs during a Period beyond Seller’s control, the parties shall discuss a corresponding
increase in List Prices and Seller shall be allowed to increase the List Prices to the
extent of Seller’s increase in costs beyond its control. The List Prices for the Period
beginning April 1, 2001 are set forth on Schedule A attached hereto.
	 
	6.	 	Taxes. List Prices do not include any taxes, now or hereafter applicable, which
apply or may apply to the Products sold or to this transaction, which will be added by Seller
to the sales price, where Seller is required by law to collect such taxes and will be paid by
Purchaser unless Purchaser provides Seller with a proper tax exemption certificate in form and
substance satisfactory to Seller.
	 
	7.	 	Discounts. In the event that (i) Purchaser receives a discount from the List Prices
based on the quantity of Products purchased or (ii) the List Prices reflect a discount based
on the quantity of Products purchased, and Purchaser subsequently does not accept delivery and
pay for such agreed-upon quantity of Products in accordance with the terms and conditions of
this Agreement, a billback will be calculated separately for each type of Product ordered
based on the number of units of such Product ordered and paid for by Purchaser. Accordingly,
Purchaser will be charged and will pay Seller, within thirty (30) days after receipt of
Seller’s invoice, an amount which represents (i) the difference in unit prices from that set
forth in the List Prices (i.e., the price per unit normally charged by Seller for the number
of units actually received and paid for by Purchaser less the unit price invoiced to
Purchaser) multiplied by the number of units received and paid for by Purchaser, and (ii) any
per unit discount negotiated by the parties and reflected in the List Prices multiplied by the
number of units received and paid for by Purchaser.
	 
	8.	 	Payment. Purchaser shall pay Seller the contract price in full within ninety (90)
days after delivery of the Products to Purchaser. Payment as required by the terms of the
Agreement must be made when due unless such Products have been rejected by Purchaser in
accordance with provisions of Section 10 hereof.
	 
	9.	 	Delivery, Title and Risk of Loss.

	 	9.1	 	Delivery Terms and Risk of Loss.

	 	(a)	 	Unless otherwise agreed to by the parties in writing,
shipments of Products shall be delivered F.C.A. Seller’s warehouse within
Japan (as per the 2000 Incoterms), and title and liability for loss or damage

 - 5 - 

 

	 	 	 	thereto shall pass to Purchaser upon Seller’s tender of delivery of such
Products to a carrier for shipment to Purchaser, and any loss or damage
thereafter shall not relieve Purchaser from any obligations hereunder.
	 
	 	(b)	 	Delivery may be made in installments. Default on any payment
by Purchaser after delivery or offer of delivery of any installment may, at
the option of Seller, be deemed a default as to the entire Purchase Order.
The date of the bill of lading or any receipt issued by the carrier, or the
date of the shipping documents, shall be conclusive proof of the date of such
shipment or delivery to Purchaser. Purchaser shall take delivery promptly and
Purchaser shall pay any demurrage accrued by reason of Purchaser’s delay or
default or repay same to Seller promptly after demand if Seller has paid or
incurred same.

	 	9.2	 	In Case of Delivery Delay. If delivery of the Products will be
delayed beyond the agreed or established schedule for any reason, Seller shall
promptly notify Purchaser in writing, stating the reason for such delay, the portion
of Products affected and the expected length of the delay. Notwithstanding the
foregoing, unless Seller can reasonably demonstrate that a delay in the delivery of
the Products is due to a cause or causes referred to in the following paragraph, such
delay shall be considered a breach unless Purchaser agrees in writing that such delay
shall not constitute a breach.
	 
	 	 	 	If delivery is delayed as a result of acts of war, fire, flood, other natural
disaster, epidemic, strikes and other causes similar to those listed, the date of
delivery shall be extended for a period equal to the time lost by reason of such
delay. However, if such delay extends for more than forty-five (45) days, the
parties shall negotiate in good faith a change in delivery schedule, and if such
delay continues for more than two (2) months following the initial forty-five
(45)-day period, Purchaser may cancel the Purchase Order or Rolling Forecast as to
the unexecuted portion upon written notice to Seller without cancellation charges
or other liability arising from the cancellation.

	10.	 	Acceptance. Products shall be subject to final inspection and acceptance by
Purchaser after delivery to Purchaser. Purchaser shall have the right to reject such Products
if the Products do not meet the Product Specifications or do not conform to the requirements
of the Purchase Order with respect to the quantity of Products or delivery date. If the
Purchaser does not notify Seller of its intention to reject Products and the reason(s) for
rejection within ten (10) business days from the date of receipt by Purchaser of such
Products, Purchaser will be deemed to have accepted such Products. Upon such notice of
rejection to Seller, Purchaser may return to Seller for reimbursement, credit, replacement or
correction such Products rejected after delivery (“Returned Products”), provided Purchaser
initiates the return of such Returned Products to Seller within a reasonable time after
Purchaser notifies Seller of Purchaser’s intent to reject such Returned Products. Any Returned
Products shall not thereafter be tendered for acceptance by Seller unless the reason for
rejection has

 - 6 - 

 

	 	 	been fully corrected and disclosed to Purchaser. Packaging, handling and transportation
costs incidental to return of the Returned Products shall be at Seller’s expense.
	 
	 	 	If Purchaser elects to have Seller replace or correct Returned Products pursuant to this
Section 10 and Seller fails to do so within the time limit fixed by Purchaser (which time
limit shall not be unreasonable based on Seller’s ability to replace or correct such
Returned Products), Purchaser may replace or correct the same at Seller’s expense.
	 
	 	 	The provisions of this Section 10 shall apply equally to any Products that are returned by
Purchaser’s Customers for any reason that Purchaser would have been entitled to reject
hereunder.
	 
	 	 	Purchaser’s acceptance of Products shall not in any manner impair the validity of the
warranties provided in Section 11 hereof.
	 
	11.	 	Warranty.

	 	11.1	 	Seller warrants to Purchaser that Products sold to Purchaser pursuant to this
Agreement will be free from defects in material and workmanship; will conform to the
relevant Product Specifications; and will be free from liens and encumbrances, for a
period of one (1) year from the date of shipment to Purchaser; provided that:

	 	(a)	 	Seller is promptly notified (within the warranty period) of
any warranty claim;
	 
	 	(b)	 	The Products are returned to Seller, freight prepaid, after
Purchaser has received a return authorization number from Seller. Seller will
credit Purchaser for reasonable freight charges paid to return such goods and
merchandise.
	 
	 	(c)	 	Seller’s examination of such Products shall disclose to its
reasonable satisfaction that the claimed defect in the Products was not caused
by misuse, static discharge, abuse, neglect, improper handling, installation,
unauthorized repair, alteration or accident. Modification of Products by
Purchaser, or at Purchaser’s direction, unless specifically authorized in
writing by Seller, shall invalidate the above warranty.

	 	11.2	 	If the Products returned to Seller are deemed by Seller and Purchaser to be
in conformance with the warranty in Section 11.1, Purchaser shall reimburse Seller for
(i) such freight charges credited by Seller to Purchaser pursuant to Section 11.1 (b),
and (ii) costs of examination of the returned Products.
	 
	 	11.3	 	Seller’s liability under this warranty is limited to, at its election,
repairing, replacing or issuing a credit in the amount of the unit List Price minus
any applicable quantity discounts times the quantity of such Product for any such

 - 7 - 

 

claim. In the event Seller repairs or replaces a Product, the one (1) year
warranty period set forth above will start over from the date of shipment of such
replacement to Purchaser or the date such repair is completed, as the case may be.

THIS WARRANTY IS GIVEN IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED,
INCLUDING IMPLIED WARRANTIES OR MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE.

	12.	 	Discontinuance. In the event that Seller decides to discontinue the manufacture or
change the characteristics, dimensioning, function or any other parts of the Product
Specifications, of Products, Seller shall make Commercially Reasonable Efforts (as defined in
the Stock Contribution Agreement (the “Stock Contribution Agreement”), dated as of the date
hereof, between Purchaser and OpNext USA) to give Purchaser twelve (12) months prior written
notice, but in no event shall Seller give Purchaser less than six (6) months prior written
notice.

	13.	 	Use Restrictions. The Products are not authorized for use in life support devices or
systems of other applications, which pose a significant risk of personal injury. Purchaser
agrees to notify Seller in writing of any such applications known to Purchaser within ten (10)
days from the date of receipt of this Agreement. In the event that Purchaser provides Seller
with such notice of restricted use, this Agreement shall not become effective until and unless
it is approved in writing by Seller’s CEO and a separate addendum for the sale of Products for
restricted uses is entered into between Purchaser and Seller. Purchaser’s failure to provide
Seller with the notice contemplated herein shall constitute Purchaser’s representation and
warranty that the Products identified herein will not be used for restricted uses.

	14.	 	Indemnification.

	 	14.1	 	Defective Products and Acts or Omissions of Seller. Seller shall
defend, indemnify and hold harmless Purchaser against all damages, claims or
liabilities and expenses (including attorneys’ fees) arising out of or resulting in
any way from any defect in the Products purchased hereunder, or from any act or
omission of Seller, its agents, employees or subcontractors except as set forth in
Sections 14.2 and 14.3 below.
	 
	 	14.2	 	Prior to the Effective Date. With respect to third party patent and
copyright infringement claims and trade secret misappropriation claims regarding the
Products as they were sold prior to the Effective Date, Purchaser shall defend and
indemnify Seller regardless of the timing of such third party’s infringement claim;
except to the extent that such infringement is attributable to any OpNext Japan IP (as
defined in the Intellectual Property License Agreement (the “IP License Agreement”),
dated as of the date hereof, between Purchaser and Seller) or any product design
developed by Seller after the Effective Date.

 - 8 - 

 

	 	14.3	 	After the Effective Date. With respect to third party patent or
copyright infringement claims or trade secret misappropriation claims regarding the
Products as they are sold after the Effective Date, Purchaser and Seller shall jointly
defend such action but only to the extent that such claim involves Assigned IP or
Licensed IP (as such terms are defined in the Stock Contribution Agreement and the IP
License Agreement). If a third party patent or copyright infringement claim or trade
secret misappropriation claim is made against Seller for a new product design that is
developed after the Effective Date, Purchaser shall be responsible for the settlement
amount of any such claim (provided that prior written approval is obtained) or the
resulting liability of any such claim only to the extent such claim results from a
product design sold by the Business (as defined in the Stock Contribution Agreement)
as of the Effective Date, Assigned IP or Licensed IP, while Seller shall be
responsible for the settlement amount of any such claim (provided that prior written
approval is obtained) or the resulting liability of any such claim only to the extent
that it is caused by the product design introduced by Seller after the Effective Date
irrespective of whether such product design is covered by Assigned IP or Licensed IP.
To the extent there is a dispute regarding the allocation of the parties’ liabilities
under this subsection, the parties shall negotiate in good faith what the allocation
of liability should be. If the parties are unable to agree even after good faith
negotiations, the parties shall submit the issue to arbitration pursuant to the terms
pursuant to the arbitration procedures set forth in Section 19 and Exhibit A
hereto. In the event that either party submits the matter to arbitration both parties
shall cooperate in such binding arbitration in accordance with Exhibit A.
	 
	 	14.4	 	The indemnification obligations of Seller pursuant to this Section 14 shall
be in addition to the warranty obligations of Seller in Section 11 hereof.

	15.	 	Limitation of Liability.

	 	15.1	 	Applicability of Preferred Provider Agreement. Purchaser and Seller
agree that the provisions of Section 7.1 of the Preferred Provider Agreement relating
to limitation of liability are applicable to this Agreement and such terms are
incorporated by reference herein in their entirety.
	 
	 	15.2	 	Exclusions. The limitations or exculpation of liability set forth in
Section 15.1 shall not be applicable to any breach of Section 21.3 below or any
failure of Purchaser to pay for any Products purchased hereunder.

	16.	 	Confidentiality. Purchaser and Seller agree to be bound by the provisions of Section
6 of the Preferred Provider Agreement relating to each Party’s confidentiality obligations and
such terms and conditions are incorporated by reference herein in their entirety.

 - 9 - 

 

	17.	 	Term and Termination. This Agreement shall become effective upon the Effective Date
and shall remain in force for a period of one year from such Effective Date (the
“Original Term”). For so long as the Preferred Provider Agreement remains in effect, this
Agreement shall automatically be extended for successive one (1) year-periods (each, a
“Successive Term”) unless the parties mutually agree to terminate this Agreement prior to
the expiration of the Original Term or any Successive Term. After the termination or
expiration of the Preferred Provider Agreement, this Agreement shall automatically be
extended for Successive Terms unless either party gives written notice of its intent to
terminate no less than ninety (90) days prior to the expiration of a Successive Term.
	 
	 	 	In the event of any breach by Seller of the terms, conditions or warranties of this
Agreement or any Purchase Order or Rolling Forecast, or in the event of the dissolution,
bankruptcy or insolvency of Seller, Purchaser shall have the right to terminate this
Agreement or any Purchase Order or Rolling Forecast. Notwithstanding the foregoing, for so
long as the Preferred Provider Agreement remains in effect between Purchaser and OpNext
USA, Purchaser may not terminate this Agreement as a result of any breach of this Agreement
by Seller.
	 
	18.	 	Survival. The following provisions of this Agreement shall survive termination or
expiration of this Agreement: Sections 11, 13, 14, 15, 16, 17, 18, 19, 20 and 21.
	 
	19.	 	Arbitration. Except for actions seeking injunctive relief or for confirmation or
enforcement of an arbitration award, in the event the parties are unable to resolve any
dispute arising under this Agreement, the parties shall submit the matter to arbitration in
accordance with the arbitration procedures set forth in Exhibit A hereto.
	 
	20.	 	Jurisdiction / Applicable Law.

	 	20.1	 	Governing Law. This Agreement shall be interpreted, construed and
enforced in all respects in accordance with the laws of Japan without giving effect to
(i) the choice of law or conflict of law rules of Japan or any other jurisdiction,
(ii) the United Nations Convention on Contracts for the International Sale of Goods,
(iii) the 1974 Convention on the Limitation Period in the International Sale of Goods,
(iv) the Protocol amending the 1974 Convention, done at Vienna April 11, 1980, and (v)
the Uniform Computer Information Transactions Act.
	 
	 	20.2	 	Submission to Jurisdiction; Waivers. With respect to those disputes
not required to be submitted to arbitration hereunder as set forth in Section 19
above, each party to this Agreement hereby irrevocably and unconditionally: (a)
submits for itself and its property in any legal action or proceeding relating to this
Agreement, or for recognition and enforcement of any judgment in respect thereof, to
the exclusive general jurisdiction of the courts of Japan; (b) consents that any such
action or proceeding may be brought in such courts, and waives any objection that it
may now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; (c) agrees that service of process in any such
action or

 - 10 - 

 

	 	 	 	proceeding may be effected by mailing a copy thereof by registered or certified
mail (or any substantially similar form of mail), postage prepaid, to such party at
its address set forth herein or at such other address of which the agent shall have
been notified pursuant thereto, to the extent permitted by Japanese law; and (d)
agrees that nothing contained herein shall affect the right to effect service of
process in any other manner permitted by Japanese law.

	21.	 	General Provisions.

	 	21.1	 	Purchaser’s Property. Unless otherwise agreed in writing, all tools,
equipment or material of every description furnished to Seller by Purchaser or
specifically paid for by Purchaser shall be and shall remain the property of
Purchaser. Such property shall be plainly marked or otherwise adequately identified
by Seller as “Property of Purchaser” and shall be safely stored separate and apart
from Seller’s property. Seller shall not substitute any property for Purchaser’s
property and shall not use Purchaser’s property except in filling Purchaser’s orders
hereunder. While in Seller’s custody or control, Purchaser’s property shall be held at
Seller’s risk and shall be kept insured by Seller at Seller’s expense in an amount
equal to the replacement cost payable to Purchaser.
	 
	 	21.2	 	Force Majeure. Subject to Section 9.2 hereof, neither party to this
Agreement shall be held responsible for any failure or delay in performance under this
Agreement, except any obligation to pay money, where such performance is rendered
impracticable by any act of war, fire, flood, other natural disaster, epidemic,
strikes and other causes similar to those listed, in each case where failure to
perform is beyond the control, and not caused by the negligence, of the nonperforming
party.
	 
	 	21.3	 	Assignment. This Agreement shall be binding upon and shall inure to
the benefit of, the parties and their respective successors and permitted assigns.
Neither party may assign its rights (including by operation of law), or delegate the
performance of its obligations, under this Agreement, or any part hereof, without the
prior written consent of the other; provided, however, that
Purchaser’s consent shall not be unreasonably withheld in the case of any assignment
by Seller to OpNext USA or to any direct or indirect majority owned Subsidiary of
OpNext USA for so long as (i) Purchaser and its Affiliates directly or indirectly hold
voting securities of OpNext USA representing a majority voting interest in OpNext USA
or have the right to designate a majority of OpNext USA’s directors pursuant to the
Stockholders’ Agreement entered into between Clarity, Holdings I, Holdings II,
Purchaser and OpNext USA dated as of the date hereof, (ii) OpNext USA remains liable
for the performance of any such assignee’s obligations hereunder and any liability
incurred in connection therewith, and (iii) such assignment does not result in any
additional costs for which Purchaser shall be liable. Any assignment in violation of
this Section 21.3 shall be void.

 - 11 - 

 

	 	21.4	 	Relationship of the Parties. Each party is an independent contractor
and nothing in this Agreement shall be construed to create a partnership, joint
venture, agency, or employer/employee relationship between the parties.
	 
	 	21.5	 	Amendment and Waiver. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Purchaser
and Seller. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall not
affect the right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
	 
	 	21.6	 	Notices. Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, mailed first class mail, air mail
(postage prepaid), sent by reputable overnight courier service (charges prepaid) or
sent by facsimile transmission to the parties at the address set forth below or at
such address or to the attention of such other person as the recipient party has
specified by prior written notice to the sending party. Notices shall be deemed to
have been given hereunder on the date delivered when delivered personally, five days
after deposit in the U.S. mail or Japanese mail, one day after deposit with a
reputable overnight courier service (three days if overseas) and on the next business
day if sent by facsimile transmission with confirmation of receipt. The addresses for
Purchaser and Seller are:

          If to Seller:

OpNext Japan, Inc.

216 Totsuka-cho, Totsuka-ku

Yokohama-shi

244-8567, Japan

Attention: Junsuke Kusanagi

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

OpNext, Inc.

246 Industrial Way West

Eatontown, NJ 07724

Attention: Harry Bosco

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

Clarity Partners, L.P.

100 North Crescent Drive

Beverly Hills, CA 90210-5403

Attention: David Lee

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

Irell & Manella, LLP

1800 Avenue of the Stars, Suite 900

Los Angeles, CA 90067

Attention: Richard L. Bernacchi, Esq.

               Ian Wiener, Esq.

 - 12 - 

 

          If to Purchaser:

Hitachi, Ltd.

6, Kanda-Surugadai 4-chome

Chiyoda-ku

Tokyo, 101-8010 Japan

Attention: President, Telecommunication Systems Division

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

Kirkland & Ellis

200 East Randolph Drive

Chicago, IL 60601

Attention: William A. Streff, Jr., Esq.

	 	21.7	 	Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect the validity, legality or
enforceability of any other provision of this Agreement in such jurisdiction or affect
the validity, legality or enforceability of any provision in any other jurisdiction,
but this Agreement shall be reformed, construed and enforced in such jurisdiction as
if such invalid, illegal or unenforceable provision had never been contained herein.
	 
	 	21.8	 	Interpretation. The headings and captions contained in this
Agreement are for reference purposes only and do not constitute a part of this
Agreement. The use of the word “including” herein shall mean “including without
limitation.”
	 
	 	21.9	 	Entire Agreement. Except as otherwise expressly set forth herein,
this Agreement, together with the Preferred Provider Agreement, embodies the complete
agreement and understanding among the parties hereto with respect to the subject
matter hereof and supersedes and preempts any prior understandings, agreements or
representations by or among the parties, written or oral, which may have related to
the subject matter hereof in any way.
	 
	 	21.10	 	Representation by Counsel; Interpretation. Purchaser and the Seller
acknowledge that each of them has been represented by counsel in connection with this
Agreement and the transactions contemplated hereby. Accordingly, any rule of law or
any legal decision that would require interpretation of any claimed ambiguities in
this Agreement against the party that drafted it has no application and is expressly
waived.

 - 13 - 

 

	 	21.11	 	Exhibits and Schedules. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part of this Agreement as
if set forth in full herein.
	 
	 	21.12	 	Delivery by Facsimile. This Agreement, the agreements referred to
herein, and each other agreement or instrument entered into in connection herewith or
therewith or contemplated hereby or thereby, and any amendments hereto or thereto, to
the extent signed and delivered by means of a facsimile machine, shall be treated in
all manner and respects as an original agreement or instrument and shall be considered
to have the same binding legal effect as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to any such
agreement or instrument, each other party hereto or thereto shall re-execute original
forms thereof and deliver them to all other parties. No party hereto or to any such
agreement or instrument shall raise the use of a facsimile machine to deliver a
signature or the fact that any signature or agreement or instrument was transmitted or
communicated through the use of a facsimile machine as a defense to the enforceability
of a contract and each such party forever waives any such defense.
	 
	 	21.13	 	Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original and all of which taken together shall
constitute one and the same agreement.
	 
	 	21.14	 	Section 2.1 of the Preferred Provider Agreement. All purchases of
Products hereunder are subject to the terms and conditions set forth in the Preferred
Provider Agreement, including without limitation, Section 2.1 thereof.
	 
	 	21.15	 	Compliance with Laws. Each party to this Agreement shall comply
with any and all applicable laws, rules and regulations of the governmental
authorities concerned.

[The remainder of this page is intentionally left blank.]

 - 14 - 

 

SIGNATURE PAGE TO PROCUREMENT AGREEMENT

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

	 	 	 	 	 
	 	 	OPNEXT JAPAN, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Junsuke Kusanagi
	 

	 	 	 	 
	 

	 	 	 	Junsuke Kusanagi

President
	 
	 	 	 	 
	 	 	HITACHI, LTD.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Eiji Aoki
	 

	 	 	 	 
	 

	 	 	 	Eiji Aoki
	 

	 	 	 	Managing Officer & Administrative Officer
	 

	 	 	 	President, Telecommunication Systems Division

 

 

EXHIBIT A

ARBITRATION PROCEDURES

	a.	 	Appointment of Arbitrators. The arbitration shall be heard and determined by a panel
of three (3) persons. Each party shall have the right to designate one (1) member of the
panel. The party requesting arbitration shall communicate its request in writing, identifying
the nature of the dispute and the name of its arbitrator, to the other party (“Arbitration
Request”). The other party shall then name, in writing, its arbitrator within fifteen
(15) Business Days (as defined in the Stock Purchase Agreement) after receipt of the
Arbitration Request. Failure or refusal of the other party to name its arbitrator within the
fifteen (15) day time period shall empower the only appointed arbitrator to name the second
arbitrator. Within twenty-five (25) Business Days after the Arbitration Request, the two (2)
arbitrators shall mutually select a third impartial and neutral arbitrator to the panel. If
the two (2) arbitrators are unable to agree upon an arbitrator within forty-five (45) Business
Days after the Arbitration Request then within sixty five (65) Business Days after the
Arbitration Request, the ICC shall appoint a third arbitrator.
	 
	b.	 	Governing Law and ICC. All disputes submitted to arbitration under this Procurement
Agreement shall be governed by the laws specified in the agreement that is the subject of the
dispute. The arbitration rules of the International Chamber of Commerce (“ICC”) shall apply
to any arbitration under this Procurement Agreement, except to the extent the provisions of
this Exhibit A vary therefrom. ICC shall administer the arbitration. Decisions of the panel
shall be made by majority vote. The panel may not award punitive damages, injunctions,
specific performance or temporary restraining orders.
	 
	c.	 	Expedited Schedule. The arbitration shall be conducted on an expedited schedule.
Unless otherwise agreed by the parties, the parties shall make their initial submissions to
the panel within seventy five (75) Business Days after the Arbitration Request. Within one
hundred twenty (120) Business Days after the Arbitration Request, each party shall supply to
the other party all documents that such party intends to introduce or upon which such party
intends to rely in connection with such proceeding, as well as a list of any and all witnesses
whose testimony such party intends to introduce in connection with such proceeding (with a
brief summary of their area of testimony). Additional documents or witnesses may be
introduced only if a majority of the arbitrators determine that good cause has been shown.
Each party shall also have the right to submit written briefs to the arbitrators in accordance
with a timetable to be established by the arbitrators. Unless agreed by the parties
otherwise, the hearing shall commence within one hundred fifty (150) Business Days after the
Arbitration Request and shall be completed within two hundred twenty five (225) Business Days
after the Arbitration Request.
	 
	d.	 	Discovery. The parties shall be entitled to discovery of all documents and
information reasonably necessary for a full understanding of any dispute raised in the
arbitration relating to this Procurement Agreement. The parties may use all methods of
discovery available under the Japanese Code of Civil Procedure and/or the United States
Federal Rules of Civil Procedure, including depositions, requests for admission and requests
for production of documents. The time periods applied to these discovery methods shall be
set by the panel so as to permit compliance with the scheduling provisions of this Exhibit A.

 

 

	e.	 	Communication with Arbitrators. Each party shall communicate with the arbitrators
only in the presence of the other party or by writing delivered to the ICC for transmittal to
the arbitrators and the other party.
	 
	f.	 	Prompt Award. Unless otherwise agreed by the parties, the award shall be made
promptly by the panel (in any event, no later than thirty (30) Business Days from the closing
of the hearing). Unless otherwise agreed by the parties, the decision and award by the panel
shall be reasoned, explain the basis of the decision and be in writing. Any failure to render
the award within the foregoing time period shall not affect the validity of such award.
	 
	g.	 	Binding Decisions. The decision or award rendered or made in connection with the
arbitration shall be final and binding upon the parties thereto. The prevailing party may
present the decision or award to any court of competent jurisdiction for confirmation, and
such court shall enter forthwith an order confirming such decision or award. The arbitration
award shall allocate the expenses of the arbitrator(s) and of the arbitration, between the
parties in a manner corresponding to the extent to which one (1) party prevails over the
other.
	 
	h.	 	Location. Based upon the factors set forth below, the arbitrators shall select one
or more of the following cities for the location of the arbitration proceedings: Tokyo,
Japan; London, United Kingdom; or New York, U.S.A. The arbitrators shall take into account:
(i) the relationship between the acts and circumstances surrounding the dispute and the
arbitration location; (ii) the availability and location of witnesses; and (iii) the
accessibility and location of evidence.
	 
	i.	 	Confidentiality. All arbitration proceedings undertaken pursuant to this Exhibit A
and any awards or decisions resulting therefrom shall be deemed to be confidential between the
parties thereto. To the extent either party maintains in good faith that any documents
submitted or testimony introduced in connection with such arbitration contains confidential
information or trade secrets, the parties shall negotiate in good faith in an effort to reach
agreement regarding terms and conditions for keeping such materials and testimony
confidential. If the parties are unable to agree upon such terms, the arbitrators shall have
the right to impose appropriate restrictions to maintain the confidentiality of any
confidential information or trade secrets in connection with the arbitration.

 

 

SCHEDULE A

List Prices for Period Beginning April 1, 2001

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Unit Price	 	 
	 	 	 	 	(April 1 to Sept. 30, 2001)	 	 
	No.	 	Product #	 	(consumption tax not included)	 	Note
	 
	1	 	DC2257D
	 	 	\27,251	 	 	 
	2	 	DC2378A
	 	 	\49,064	 	 	 
	3	 	HC2100A
	 	 	\3,478	 	 	 
	4	 	HOD6401PTK
	 	 	\36,850	 	 	 
	5	 	LPLC-PN
	 	 	\34,986	 	 	 
	6	 	ORR-L2
	 	 	\639,236	 	 	 
	7	 	ORR-M22
	 	 	\637,748	 	 	 
	10	 	ORR-S2
	 	 	\672,684	 	 	 
	11	 	OSS-3033
	 	 	\1,453,017	 	 	 
	12	 	OSS-3112
	 	 	\1,612,735	 	 	 
	13	 	OSS-3190
	 	 	\2,237,773	 	 	 
	14	 	OSS-334
	 	 	\1,612,735	 	 	 
	15	 	OSS-3347
	 	 	\1,612,735	 	 	 
	16	 	OSS-3425
	 	 	\1,612,735	 	 	 
	17	 	OSS-3504
	 	 	\1,612,735	 	 	 
	18	 	OSS-381
	 	 	\1,612,735	 	 	 
	19	 	OSS-397
	 	 	\1,612,735	 	 	 
	20	 	OSS-4214
	 	 	\1,612,735	 	 	 
	21	 	OSS-4772
	 	 	\1,612,735	 	 	 
	22	 	OSS-4932
	 	 	\1,612,735	 	 	 
	23	 	OSS-5092
	 	 	\1,612,735	 	 	 
	24	 	OSS-5172
	 	 	\1,451,840	 	 	 
	25	 	OSS-5252
	 	 	\1,468,668	 	 	 
	26	 	OSS-5333
	 	 	\1,612,735	 	 	 
	27	 	OSS-5413
	 	 	\1,612,735	 	 	 
	28	 	OSS-5494
	 	 	\1,612,735	 	 	 
	29	 	OSS-5575
	 	 	\1,612,735	 	 	 
	30	 	OSS-5655
	 	 	\1,612,735	 	 	 
	31	 	OSS-573
	 	 	\1,612,735	 	 	 
	32	 	OSS-5736
	 	 	\1,612,735	 	 	 
	33	 	OSS-5817
	 	 	\1,861,211	 	 	 
	34	 	OSS-5898
	 	 	\1,612,735	 	 	 
	35	 	OSS-EXE
	 	 	\966,303	 	 	 
	36	 	OSS-L3
	 	 	\1,221,082	 	 	 
	37	 	OSS-S3
	 	 	\979,794	 	 	 
	38	 	OSS-SN2
	 	 	\1,025,672	 	 	 
	39	 	OSS-V3
	 	 	\1,051,878	 	 	 
	40	 	RCV5706GN
	 	 	\28,220	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Unit Price	 	 
	 	 	 	 	(April 1 to Sept. 30, 2001)	 	 
	No.	 	Product #	 	(consumption tax not included)	 	Note
	 
	41	 	RCV5736DN
	 	 	\88,666	 	 	 
	42	 	RCV5736KN
	 	 	\55,161	 	 	 
	43	 	RCV5736LN
	 	 	\43,509	 	 	 
	44	 	RCV6402NA
	 	 	\54,157	 	 	 
	45	 	SDC5277M
	 	 	\200,530	 	 	 
	46	 	SDC5277S
	 	 	\200,572	 	 	 
	47	 	SDC5310M
	 	 	\162,307	 	 	 
	48	 	SDC5310P
	 	 	\161,255	 	 	 
	49	 	SDC5363PF
	 	 	\52,241	 	 	 
	50	 	SDC5363ST
	 	 	\49,385	 	 	 
	51	 	SDC5364PF
	 	 	\62,154	 	 	 
	52	 	SDC5364ST
	 	 	\55,296	 	 	 
	53	 	SDC5365P
	 	 	\177,407	 	 	 
	54	 	SDC5365S
	 	 	\177,357	 	 	 
	55	 	SDC5368MFK
	 	 	\46,028	 	 	 
	56	 	SDC5368MTK
	 	 	\47,137	 	 	 
	57	 	SDC5368MTS
	 	 	\41,953	 	 	 
	58	 	SDC5368PF
	 	 	\46,983	 	 	 
	59	 	SDC5410M
	 	 	\156,921	 	 	 
	60	 	SDC5410P
	 	 	\161,077	 	 	 
	61	 	SDC5468MF
	 	 	\49,572	 	 	 
	62	 	SDC5468MFK
	 	 	\41,915	 	 	 
	63	 	SDC5468MT
	 	 	\45,203	 	 	 
	64	 	SDC5468MTK
	 	 	\48,016	 	 	 
	65	 	SDC5468PFA
	 	 	\43,545	 	 	 
	66	 	SDC5469MFK
	 	 	\47,688	 	 	 
	67	 	SDC5469MT
	 	 	\53,047	 	 	 
	68	 	SDC5469PF
	 	 	\48,111	 	 	 
	69	 	SDC7410M
	 	 	\329,868	 	 	 
	70	 	SDC7469MF
	 	 	\212,428	 	 	 
	71	 	SDW5303SA
	 	 	\138,606	 	 	 
	72	 	SDW5462
	 	 	\57,506	 	 	 
	74	 	SDW7462C
	 	 	\345,898.56	 	 	 
	75	 	TRM5716GN
	 	 	\25,728	 	 	 
	76	 	TRM5733DN
	 	 	\547,653	 	 	 
	77	 	TRM5736GN
	 	 	\44,449	 	 	 
	78	 	TRM5736HN
	 	 	\56,054	 	 	 
	79	 	TRM5736TN
	 	 	\95,112	 	 	 
	80	 	TRM6401NA
	 	 	\326,234	 	 	 
	81	 	TRM7736GN
	 	 	\97,711	 	 	 
	82	 	TRM7736TN
	 	 	\116,980	 	 	 
	83	 	TRV5352MTK
	 	 	\46,256	 	 	 
	84	 	TRV5352MTS
	 	 	\45,252	 	 	 
	85	 	TRV5352PFS
	 	 	\52,852	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Unit Price	 	 
	 	 	 	 	(April 1 to Sept. 30, 2001)	 	 
	No.	 	Product #	 	(consumption tax not included)	 	Note
	 
	86	 	TRV5451MT
	 	 	\38,319	 	 	 
	87	 	TRV5451PTK
	 	 	\45,120	 	 	 
	88	 	TRV5451ST
	 	 	\43,326	 	 	 
	89	 	TRV5451STN
	 	 	\37,729	 	 	 
	90	 	TRV5452MT
	 	 	\45,038	 	 	 
	91	 	TRV5452MTI
	 	 	\52,648	 	 	 
	92	 	TRV5452MTK
	 	 	\53,941	 	 	 
	93	 	TRV5452PFS
	 	 	\51,789	 	 	 
	94	 	TRV5452PTK
	 	 	\52,360	 	 	 
	95	 	TRV5452ST
	 	 	\45,564	 	 	 
	96	 	TRV5452STI
	 	 	\53,371	 	 	 
	97	 	TRV5452STN
	 	 	\47,717	 	 	 
	98	 	TRV7452MTK
	 	 	\211,396	 	 	 
	99	 	TRV7452MTS
	 	 	\211,153	 	 	 
	100	 	TRV7452PFS
	 	 	\228,236	 	 	 
	101	 	SDW7463
	 	 	\192,741	 	 	 
	102	 	SDW7464
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	103	 	TRV7050BN-S
	 	 	\1,400,000	 	 	 
	104	 	TRV7040BN-S
	 	 	\1,230,000	 	 	Purchased in sets
	105	 	T10F6901AN-S*****
	 	 	\1,250,000	 	 	Purchased in sets
	106	 	R10F6901AN-SH
	 	 	\540,000	 	 	Purchased in sets

 

 

AMENDMENT TO

PROCUREMENT AGREEMENT

     This Amendment (the “Amendment”), is entered on October 18, 2006 (the “Amendment
Date”), and made effective retroactively as of July 31, 2006, by and between Hitachi Ltd., a
corporation organized and existing under the laws of Japan (“Hitachi”), and Opnext Japan,
Inc., a corporation organized and existing under the laws of Japan (“Company”), and is
intended to modify certain provisions of the Procurement Agreement dated July 31, 2001, entered
between the parties (the “Procurement Agreement”).

RECITALS

     WHEREAS, Hitachi and Company desire to amend certain provisions of the Procurement Agreement
as provided for in this Amendment.

     NOW, THEREFORE, in consideration of the mutual covenants in this Amendment, Hitachi and
Company agree to amend the Procurement Agreement as follows:

     A. Notwithstanding anything in the Procurement Agreement to the contrary, the parties agree
that the term of the Procurement Agreement will expire on July 31, 2007. Thereafter, the
Procurement Agreement will renew automatically for additional one (1) year periods on an annual
basis, unless either party provides the other party with written notice of its intent not to renew
the Procurement Agreement at least sixty (60) days prior to the expiration of the then current
term.

     B. Notwithstanding anything in the Procurement Agreement to the contrary, the parties agree
that a change of control of a party by means of an initial public offering shall not require the
consent of the other party.

     IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to be duly executed and to
be effective as of the Amendment Date set forth above.

	 	 	 	 	 	 	 	 	 
	HITACHI, LTD.	 	 	 	OPNEXT JAPAN, INC.
	 
	 	 	 	 	 	 	 	 
	/s/ Naoya Takahashi	 	 	 	/s/ Kei Oki
	 	 	 	 	 
	Name:

	 	Naoya Takahashi
	 	 	 	Name:
	 	Kei Oki
	Title:

	 	Vice President and Executive Officer
	 	 	 	Title:
	 	President, Opnext Japan, Inc.

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