Opnext Japan Outsourcing Agreement

Exhibit 10.14 OUTSOURCING AGREEMENT THIS OUTSOURCING AGREEMENT (this " Agreement" ) is made and entered into as of the 31st day of July, 2001, by and between HITACHI, LTD., a corporation existing under the laws of Japan (" Hitachi" ), and OPNEXT JAPAN, INC., a corporation existing under the laws of Japan (the " Company" ). This Agreement is deemed to be effective as of the 1st day of February, 2001 (the " Effective Date" ). Capitalized terms not otherwise defined herein shall have the meanings set forth in the Stock Contribution Agreement (as defined below). WHEREAS, OpNext, Inc., a Delaware corporation (" OpNext USA" ), 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 the Company and to cause the Company to use such funds to purchase certain assets from Hitachi pursuant to a Business Transfer Agreement, dated as of December 6, 2000, between the Company and Hitachi (as amended, supplemented or otherwise modified from time to time, the " Business Transfer Agreement" ) and a Stock Contribution Agreement, dated as of the date hereof, between OpNext USA and Hitachi (as amended, supplemented or otherwise modified from time to time, the " Stock Contribution Agreement" ) and (ii) Hitachi agreed to contribute its common stock of the Company to OpNext USA in exchange for common stock of OpNext USA; 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 OpNext USA; and (ii) the Company will be a wholly-owned subsidiary of OpNext USA; and WHEREAS, OpNext USA, the Company and OpNext USA' s other direct and indirect subsidiaries (collectively, " the OpNext Group" ) will continue to operate the Business; and WHEREAS, pursuant to Section 3(a)(iv) of the Stock Purchase Agreement, Hitachi and OpNext USA have agreed to enter into this Agreement pursuant to which Hitachi has agreed to provide to the Company, from and after the Effective Date, certain services on a transitional basis on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants, conditions and provisions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of Hitachi and the Company agrees as follows:


Section 1. Transitional Services to be Provided by Hitachi . (a) From the Effective Date through the Termination Date (as defined in Section 9(a) below), Hitachi shall provide to the Company, on the terms set forth herein, (i) the services listed on Schedule A and (ii) any other services requested by the Company in writing that were provided by Hitachi, either directly or indirectly through Affiliates or unaffiliated third parties, to the Business prior to the Effective Date (collectively, the " Transitional Services" ). Hitachi shall provide to the Company the Transitional Services listed on Schedule A commencing on the Effective Date, but shall provide any other Transitional Services upon the written request of the Company pursuant to Section 7(a) of this Agreement. Notwithstanding anything to the contrary herein, the parties acknowledge and agree that the Transitional Services shall be provided to the Company by Hitachi' s Telecommunication Systems Division (" TSD" ), either directly or indirectly through a subcontractor according to Section 5 hereof. (b) Hitachi shall provide the Transitional Services to the Company in a manner, including quality and timeliness, consistent with the better of: (i) the manner in which Hitachi (either directly or indirectly through Affiliates or unaffiliated third parties) provided those services to the Business prior to the Effective Date, or (ii) if after the Effective Date the manner in which TSD provides any Transitional Service to any Hitachi division, business unit or Subsidiary improves over the manner specified in clause (i), then that improved manner. Hitachi shall maintain sufficient resources to perform its obligations hereunder. (c) The Company may terminate the provision of any Transitional Service (in whole or in part) in accordance with Section 7(a) of this Agreement; provided, however, at any time prior to the Termination Date, the Company may request resumption of such terminated Transitional Service in accordance with Section 7(a) of this Agreement. Notwithstanding anything to the contrary contained herein, Hitachi shall not be obligated to resume providing any Transitional Service previously terminated by the Company if Hitachi, in its reasonable discretion, determines that it is not practicable to do so. (d) Hitachi shall not make more than inconsequential changes to the nature or volume of any Transitional Service to be provided to the Company without the Company' s prior written consent, which consent shall not be unreasonably withheld; provided, however, Hitachi may change the nature or volume of any Transitional Service to the extent such change is (i) subject to Section 1(e) below, required by any applicable law, regulation or rule; (ii) subject to Section 1(b) above, consistent with the manner in which the same service is provided by TSD to Hitachi' s divisions, business units or Subsidiaries; (iii) in response to the Company' s prior written request pursuant to Section 7(a) or Section 7(d) hereof; or (iv) as a result of a change in the Company' s actual usage of Transitional Services through no fault of Hitachi. (e) Notwithstanding the foregoing, the parties acknowledge and agree that Hitachi shall not be obligated to provide any Transitional Service required herein to the extent that the provision of such terminated Transitional Service would cause Hitachi to be in violation (a " Violation" ) of any applicable law or regulation. In the event that Hitachi reasonably concludes that the provision of any Transitional Service would result in a Violation, Hitachi shall (i) promptly notify the Company of such conclusion; (ii) at the Company' s election either (A) to the extent commercially reasonable and practicable, continue to provide such Transitional Service after such minimum modifications thereto as shall be necessary to cure such Violation (with a proportionate change in the fee for such

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Transitional Service), or (B) use its Commercially Reasonable Efforts (as defined in the Stock Contribution Agreement) to assist the Company in identifying an alternative provider for such Transitional Service; and (iii) upon the Company' s identification of an alternative provider, if any, for such Transitional Service, use its Commercially Reasonable Efforts to facilitate the transition of such Service to such alternative provider. To the extent a Violation is a result of a change in the applicable law or regulation causing such Violation since the date of this Agreement, Hitachi shall be promptly reimbursed by the Company for any out-of-pocket expenses incurred by Hitachi in connection with such transition (except to the extent such change in the applicable law or regulation occurs between the Effective Date and the first anniversary of the Effective Date, in which case Hitachi shall only be reimbursed for one-half of any such out-of-pocket expenses); otherwise, Hitachi shall bear the costs of any out-of-pocket expenses incurred by Hitachi and the Company in connection with such transition. Section 2. Representations and Warranties . Hitachi hereby represents and warrants to the Company that: (a) Except as set forth on Schedule 2(a) hereto, all Transitional Services provided to the Business during the twelve month period prior to the Effective Date were provided by TSD, either directly or indirectly through Affiliates or unaffiliated third parties. (b) Except as set forth on Schedule 2(b) hereto, the execution and delivery by Hitachi of, and the consummation by Hitachi of the transactions contemplated by, this Agreement, and compliance with the terms hereof by Hitachi, do not and shall not, (i) (A) conflict with or result in a breach of the terms, conditions or provisions of, (B) constitute a default under, (C) give any third party the right to modify, terminate or accelerate any obligation under, or (D) result in a violation of, any agreement, instrument, order, judgment or decree to which Hitachi is subject; or (ii) require any authorization, consent, approval, exemption or other action by or notice or declaration to, or filing with, any court or administrative or governmental body or agency pursuant to the charter documents of Hitachi, or any law, statute, rule or regulation to which Hitachi is subject, or any agreement, instrument, order, judgment or decree to which Hitachi is subject. (c) To Hitachi' s Knowledge, there are neither currently pending nor proposed any government proceedings to enact any new law, statute, rule or regulation or to amend any current law, statute, rule or regulation in any relevant jurisdiction that could cause the provision of any Transitional Service by Hitachi to result in a Violation as set forth in Section 1(e). (d) To Hitachi' s Knowledge: (i) the Final Volume Forecasts (as defined in Section 7(d) below) set forth in Schedule B represent the volume of each Transitional Service listed on Schedule A that will be required by the Company to operate the Business as conducted as of the Effective Date and as planned to be conducted in the three-year Business Plan of OpNext USA approved by the Board and dated as of February 28, 2001 (the " Business Plan" ) during (A) the period commencing as of the Effective Date and ending March 31, 2001, and (B) the period commencing April 1, 2001 and ending September 30, 2001; and (ii) the Transitional Services listed on Schedule A , together with any other services that the Company is receiving pursuant to other agreements or arrangements with

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Hitachi, its Affiliates, any third party or any employee of the Company, constitute all of the services that will be required by the Company to operate the Business as conducted as of the Effective Date and as planned to be conducted in the Business Plan during each such period in clause (A) and clause (B) above. Section 3. Representatives . Hitachi and the Chief Executive Officer of OpNext USA shall each designate, from time to time, a representative to act as Hitachi' s and the Company' s respective primary contact persons to coordinate the provision of all of the Transitional Services (collectively, the " Primary Coordinators" ); provided, however, in the event the Company is no longer a majority owned Subsidiary of OpNext USA, the Company shall designate a representative to act as its Primary Coordinator. Each Primary Coordinator may designate one or more service coordinators for each specific Transitional Service (the " Service Coordinators" ). Each party may treat an act of a Primary Coordinator of another party as being authorized by such other party without inquiring behind such act or ascertaining whether such Primary Coordinator had authority to so act and each party may treat an act of a Service Coordinator as being authorized by such other party only to the extent such act is directly related to the Transitional Service for which such Service Coordinator has been designated; provided , however , that no such Primary Coordinator or Service Coordinator has authority to amend this Agreement. Hitachi and the Company shall advise each other promptly (in any event within seven (7) days) in writing of any change in the Primary Coordinators and any Service Coordinator for a particular Transitional Service, setting forth the name of the Primary Coordinator or Service Coordinator to be replaced and the name of the replacement, and certifying that, in the case of a Primary Coordinator, the replacement Primary Coordinator is authorized to act for such party in all matters relating to this Agreement, or, in the case of a Service Coordinator, with respect to the Transitional Service for which such Service Coordinator has been designated. Hitachi and the Company each agree that all communications relating to the provision of the Transitional Services shall be directed to the Service Coordinators for such Transitional Service with copies to the Primary Coordinators. Hitachi' s initial Primary Coordinator shall be Sotaro Hiroshima. The Company' s initial Primary Coordinator shall be Minoru Maeda. Section 4. Contract Rights . From the Effective Date through the Termination Date, Hitachi shall, and shall use Commercially Reasonable Efforts to cause its Affiliates to, in each case to the extent permitted under the applicable agreement, make available to the Company the benefits obtained by Hitachi or its Affiliates, as the case may be, under third party purchasing or services contracts, such as volume airline arrangements (it being understood that Hitachi shall not be liable solely on account of any failure to obtain such benefits on behalf of the Company). At the Company' s request, Hitachi shall use its Commercially Reasonable Efforts to facilitate the Company securing direct contractual relationships with one or more of such third parties on terms comparable to those on which Hitachi or its Affiliates receive such product(s) or service(s). Section 5. Subcontract Rights . (a) Hitachi may provide the Transitional Services either directly or through agreements with subcontractors who are in the business of rendering such services; provided , however , if Hitachi provides any Transitional Service through a subcontractor, Hitachi shall continue to be required to provide such Transitional Service in the same

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manner set forth in Section 1(b) and otherwise in accordance with this Agreement; provided , further , (i) any such subcontractor must agree to comply with the terms and conditions of this Agreement including, without limitation, Section 11, to the same extent as Hitachi; and (ii) Hitachi shall be liable for the failure of any such subcontractor to comply with the terms and conditions of this Agreement. (b) Schedule 5(b) attached hereto sets forth (i) all subcontractors through which Hitachi is providing Transitional Services as of the Effective Date, and (ii) the Transitional Services performed by each such subcontractor. The parties agree that the obligations set forth in Section 5(a) shall apply to Hitachi' s provision of Transitional Services through subcontractors as of the Effective Date and after the Effective Date. (c) After the date of this Agreement, Hitachi shall notify the Company in writing at least ninety (90) days prior to engaging any subcontractor (other than those subcontractors set forth on Schedule 5(b) hereto) to perform Transitional Services under Section 5 of this Agreement unless a shorter notice period does not, in the Company' s reasonable business judgment, adversely affect the Company. Section 6. Pricing and Payment for Transitional Services . (a) As consideration for the provision by Hitachi of the Transitional Services pursuant to Section 1, for each Transitional Service the Company shall pay to Hitachi fees as set forth on Schedule A ; provided that in no event shall such fees exceed the lowest amount that TSD charges any Hitachi division, business unit or Subsidiary for a comparable volume of such service. Notwithstanding the foregoing, in the event of an increase in costs during a Period beyond Hitachi' s control, the parties shall discuss a corresponding increase in fees and Hitachi shall be allowed to increase the fees to the extent of Hitachi' s increase in costs beyond its control; provided that the Company gives express written approval of the increased fees. To the extent practical, Hitachi will specify all fee amounts in a manner that best reflects the marginal costs for a particular service and is usage sensitive, for example a fee per unit, or a fee per month, or a fee per employee. Hitachi shall send an itemized monthly invoice in Japanese Yen, in a format mutually agreed to by Hitachi and the Company, to the Company for the Transitional Services provided by Hitachi during the previous monthly period (pro rated for any partial month in which any Transitional Service is provided hereunder) and for any other charges that may be due by the Company under this Agreement. Notwithstanding the foregoing, with respect to Transitional Services provided by Hitachi from the Effective Date until the date of this Agreement, Hitachi shall send the applicable monthly invoices, which shall not exceed the amounts reflected on Schedule A hereto, to the Company on August 1, 2001. The Company shall pay to Hitachi all invoiced amounts by electronic funds transfer in Japanese Yen within thirty (30) days of the date of such invoice, subject to the Company' s limited right to withhold partial payment in the event of a good faith dispute pursuant to Section 6(d) below. The parties agree that Hitachi may not cease providing the Transitional Services for any such partial lack of payment due to such a good faith dispute. Late payments shall accrue interest from the invoice date at the lesser of (i) one and one-half (1.5) percent per month and (ii) the highest rate allowed by law.

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(b) The Company will pay or reimburse Hitachi for all applicable sales, use or other consumption taxes on the charges payable by the Company under this Section 6. Hitachi will provide to the Company, on a timely basis, all statements, receipts and other documentation in connection therewith required to be delivered to the Company under applicable law or necessary for the Company to report such taxes on its tax returns (including for purposes of claiming tax deductions or refunds). (c) Hitachi will be solely responsible for all costs relating to its employees, agents and subcontractors providing the Transitional Services hereunder, including without limitation all compensation payable to such Persons and all withholding taxes, payroll taxes, unemployment insurance, workmen' s compensation, and other insurance and fringe benefits with respect to such Persons. (d) If the Company, in good faith, disputes any charges contained in an invoice, it shall promptly submit to Hitachi written notice of such dispute and may withhold from its payment of the relevant invoice any such disputed amounts (except for applicable taxes) up to a maximum of the amount for the Transitional Service(s) to which such dispute relates. Hitachi and the Company agree to negotiate in good faith to resolve any dispute hereunder pursuant to the procedure set forth in Section 12 hereof. If, in accordance with the resolution of such dispute, the Company is held liable for any of the withheld amounts, the Company shall pay to Hitachi such withheld amounts, plus interest accrued on such withheld amounts at the rate provided in Section 6(a) above. Regardless of any disputed amount, the Company shall remit to Hitachi the invoiced amount minus the amount withheld pursuant to the first sentence of this Section 6(d). Section 7. Volume and Pricing Forecasts; Meetings . (a) Volume Forecasts . At least sixty (60) days before April 1 and October 1 (each a " Start Date" ) of each year, the Company will submit to Hitachi a written preliminary non-binding forecast (" Volume Forecast" ) setting forth the Company' s anticipated requirements for the Transitional Services for the six (6) month period (each, a " Period" ) commencing on the upcoming Start Date. Each Volume Forecast shall include at least the type and volume of each Transitional Service required by the Company for the relevant Period. (b) Within thirty (30) days after Hitachi receives the Volume Forecast, Hitachi will submit to the Company an initial fees (" Initial Fees" ) list in writing specifying the fees to be charged for each requested service in accordance with Section 6(a). To the extent practicable the Initial Fees will reflect usage sensitive prices. (c) The parties will then have twenty (20) days in which to hold good faith discussions of any revisions to the Volume Forecast and the Initial Fees. All changes in Volume Forecast and Initial Fees will be in writing, with all changes in Initial Fees also subject to Section 6(a). (d) Except to the extent the parties otherwise mutually agree, the last written Volume Forecast or Initial Fees submitted to the other party prior to the expiration of the twenty (20)-day period set forth in Section 7(c) above will be deemed the final binding

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Volume Forecast (the " Final Volume Forecast" ) and Initial Fees (the " Final Initial Fees" ) for the upcoming Period. The Final Volume Forecast may only be modified: (1) during the first sixty (60) days of a Period, (2) by adding or reducing up to ten (10)%, or such greater amount as Hitachi determines it can reasonably accommodate, to the volume of any service, and (3) any such modifications will only apply to the second half of that Period. In the event of any modifications to the Final Volume Forecast pursuant hereto, the Final Initial Fees shall be adjusted accordingly. (e) If the Company does not submit its Volume Forecast to Hitachi at least sixty (60) days before a Start Date, then the Company will be deemed to have submitted and Hitachi to have received, as of the date sixty (60) days before such Start Date, the same forecast as the Company submitted for the immediately preceding Period, and the parties shall proceed pursuant to Sections 7(b), (c) and (d) hereof. If Hitachi does not submit its Initial Fees to the Company within thirty (30) days after Hitachi receives the Volume Forecast, then Hitachi will be deemed to have submitted, as of the date thirty (30) days after Hitachi' s receipt of the Volume Forecast, the same fees as it submitted for the immediately preceding Period, and the parties shall proceed pursuant to Sections 7(c) and (d) hereof; provided , however , to the extent that the fees for a comparable volume of the same service for such preceding Period exceed the fees that Hitachi is entitled to receive pursuant to Section 6(a), Hitachi shall promptly reimburse the Company for any excess amount. (f) Schedule A shall be deemed to be amended with the most recent Final Initial Fees. (g) Notwithstanding the foregoing, with respect to the period commencing as of the Effective Date and ending March 31, 2001 and for the Period commencing April 1, 2001, (i) Schedule B attached hereto sets forth the Final Volume Forecasts for each such period, and (ii) Schedule A attached hereto sets forth the Final Initial Fees for each such period. Section 8. Cooperation; Provision of Information . (a) The parties will cooperate with each other in all matters relating to the provision and receipt of the Transitional Services. Such cooperation shall include, ...