OPNEXT INC

Five putative class actions challenging the proposed merger between the Company and Oclaro, Inc. (“Oclaro”) have been filed in Alameda County Superior Court: (1) Martin Zilberberg v. Charles J. Abbe, No RG12623460, filed on March 28, 2012; (2) Eleanor Welty v. Harry L. Bosco, Case No. RG12624240, filed on April 4, 2012; (3) Todd Wright v. Harry L. Bosco, Case No. RG12624343, filed on April 5, 2012; (4) Stephen Greenberg v. Charles J. Abbe, No. RG12624444, also filed on April 5, 2012; and (5) Mark Graf v. Opnext, Inc., No. RG12624798, filed on April 9, 2012. The defendants in each case are the Company, and the members of the Company’s Board (collectively, the “Opnext Defendants”), Oclaro and Tahoe Acquisition Sub, Inc. (collectively, the “Oclaro Defendants”). Each action alleges that the Opnext Defendants breached their fiduciary duties to Company stockholders by entering into the Agreement and Plan of Merger and Reorganization, dated as of March 26, 2012, entered into among the Company, Oclaro, and Tahoe Acquisition Sub, Inc. (the “Merger Agreement”). Each action further alleges that the Oclaro Defendants aided and abetted those breaches of fiduciary duties. Among other relief, the plaintiff in each case seeks an order enjoining the merger and attorneys’ fees. All of the actions except for the Graf action seek damages and an accounting. On April 25, 2012, the Alameda County Superior Court consolidated all five cases pending before it under the caption Zilberberg v. Abbe, Lead Case No. RG12623460. On May 14, 2012, the plaintiffs filed a consolidated amended class action complaint alleging that the Opnext Defendants breached their fiduciary duties to Company stockholders by entering into the Merger Agreement and by failing to disclose all material information relating to the proposed merger, and that the Oclaro Defendants aided and abetted those breaches of fiduciary duties. The consolidated amended class action complaint seeks an order enjoining the merger, an award of attorneys’ fees and other relief, including damages and an accounting.

On March 26, 2012, the Company entered into an Agreement and Plan of Merger and Reorganization (“Merger Agreement”), by and among Oclaro, Inc. (“Oclaro”), Tahoe Acquisition Sub, Inc., a newly formed wholly owned subsidiary of Oclaro (“Merger Sub”) and the Company, pursuant to which Oclaro and the Company have agreed to combine their businesses through a merger of Merger Sub with and into the Company (“Merger”). Pursuant to the terms of the Merger Agreement, at the effective time of the Merger, by virtue of the Merger and without any action on the part of any stockholder, each share of common stock of Opnext, par value $0.01 per share, will be converted into the right to receive 0.42 of a share of common stock of Oclaro, par value $0.01 per share. Options to purchase Opnext common stock will be assumed by Oclaro pursuant to the terms of the Merger Agreement. Stock appreciation rights with respect to Opnext common stock and restricted stock units of Opnext will be converted into stock appreciation rights with respect to Oclaro common stock and restricted stock units of Oclaro pursuant to the terms described in the Merger Agreement. We incurred $1.5 million of merger-related costs in the quarter ended March 31, 2012 and we anticipate incurring approximately $4.3 million of additional merger-related costs as well as approximately $3.0 million of retention bonus payments prior to the closing. We expect the Merger to close in the third calendar quarter of 2012.

With respect to the component of the 2012 Bonus Program dependent upon individual performance and weighted at 20 percent of the bonus opportunity for our executive officers, including the Named Executive Officers, a number of shares equal to $300,000 in fair market value was available to be granted to all executive officers in the aggregate. With respect to the component of the 2012 Bonus Program dependent upon Company and/or business unit financial performance and weighted at 80 percent of the bonus opportunity for our executive officers, including the Named Executive Officers, the Compensation Committee determined that a certain number of shares of our common stock would be used to fund a bonus pool, such shares to be available to be granted to all executive officers based upon the executive officer’s, the Company’s, or the executive officer’s business unit’s achievement of certain financial, operating and/or individual performance metrics, as the case may be. The bonus pool would be funded with shares of our common stock only in the event the Company were to achieve a specified minimum level of non–GAAP operating income, excluding the charges associated with the incentive bonus programs of the Company (“Bonus Adjusted Operating Income”), in any quarter of the fiscal year ended March 31, 2012. A minimum level of Bonus Adjusted Operating Income in any fiscal quarter equal to $1 million would result in a number of shares equal to $100,000 in market value being funded into the bonus pool, with an incremental number of shares equal to $20,000 in market value being funded into the bonus pool for each additional $100,000 of Bonus Adjusted Operating Income in any fiscal quarter in excess of $1 million and up to and including $2 million of Bonus Adjusted Operating Income, and an incremental number of shares equal to $25,000 in market value being funded into the bonus pool for each additional $100,000 of Bonus Adjusted Operating Income in any fiscal quarter from and including $2.1 million of Bonus Adjusted Operating Income and up to and including $4 million of Bonus Adjusted Operating Income, subject to an overall cap of a number of shares equal to $800,000 in market value being funded into the bonus pool in any single quarter of the fiscal year if the level of Bonus Adjusted Operating Income in such fiscal quarter equaled or exceeded $4 million. The maximum value of shares that could be funded into the pool for the fiscal year as a whole was an amount equal to $1,500,000 in fair market value. The range of Bonus Adjusted Operating Income established by the Compensation Committee was based on consideration of a number of factors,

including the Company’s financial and operating performance, ability to generate cash flow, earnings growth, and general economic conditions and other specific circumstances facing the Company. Thus, under the 2012 Bonus Program, the aggregate maximum dollar value of bonuses based on the fair market value of the underlying shares that could have been awarded to the participating Named Executive Officers was $1,500,000 based upon achievement of the Company performance objectives and $300,000 based upon achievement of the individual performance objectives.

Under the 2012 Bonus Program, in the event the Company were to achieve the minimum level of Bonus Adjusted Operating Income during any fiscal quarter of fiscal 2012 necessary to fund shares into the bonus pool, the awarding of incentive compensation to our executive officers, including our Named Executive Officers, would then be contingent upon the achievement of additional Company and/or business unit financial performance metrics (except with respect to Mr. O’Neill whose performance objectives related to certain organizational and departmental objectives). The Compensation Committee approved the use of financial performance metrics in the form of adjusted EBITDA targets for Mr. Nobile, contribution margin and days of inventory on hand goals for Mr. Chan, and contribution margin goals for Mr. Oki, based on the executive’s position within business units of the Company with regard to for Messrs. Chan and Oki, or with the Company as a whole with regard to Mr. Nobile, and in consideration of certain factors, including the operating performance of the business units, general economic conditions and other specific circumstances facing the business units. The minimum level of adjusted EBITDA established by the Compensation Committee with respect to Mr. Nobile was $27.0 million, with Mr. Nobile’s full bonus being earned at $35.0 million of adjusted EBITDA during the fiscal year ended March 31, 2012. The minimum level of contribution margin established by the Compensation Committee with respect to Mr. Chan was negative $2.0 million from our subsystems business unit’s products, with Mr. Chan’s full bonus being earned at $1.0 million of contribution margin from our subsystems business unit’s products during the fiscal year ended March 31, 2012. The maximum number of days of inventory on hand established by the Committee with respect to Mr. Chan was 165 for our subsystems business unit during the fiscal quarter ended March 31, 2012, with Mr. Chan’s full bonus being earned at 160 days of inventory on hand for our subsystems business unit during the fiscal quarter ended March 31, 2012. The minimum level of contribution margin established by the Compensation Committee with respect to Mr. Oki was $27.0 million from Opnext Japan’s products, with Mr. Oki’s full bonus being earned at $31.0 million of contribution margin from Opnext Japan’s products during the fiscal year ended March 31, 2012.

On August 17, 2011, we entered into a second amended and restated employment agreement with Mr. Nobile which provided that if Mr. Nobile were to incur a separation from service with the Company by reason of Mr. Nobile’s termination without “cause” or resignation due to “good reason” immediately prior to, upon or within one year following a change in control of the Company, then Mr. Nobile would be entitled to a severance payment equal to two times Mr. Nobile’s then-current annual base salary, subject to his execution and non-revocation of a general release of claims against the Company. Mr. Nobile’s employment agreement further provides that in the event that his employment is terminated by us for a reason other than death, “disability,” or “cause,” or by Mr. Nobile for “good reason,” in each case not immediately prior to, upon or within one year following a change in control of the Company, Mr. Nobile will be entitled to receive a lump-sum cash payment equal to 100% of his then-current annual base salary, subject to his execution and non-revocation of a general release of claims against the Company (See “Potential Payments upon Termination or Change in Control” below for definitions of “disability,” “cause” and “good reason” in Mr. Nobile’s employment agreement). Such agreement also provided for an award to Mr. Nobile of a cash retention bonus equal to $120,000 if he remained employed by the Company through February 16, 2012 (which payment has been made), and an additional cash bonus equal to $530,000 if he remains employed by the Company through August 16, 2012 (the “Nobile Retention Bonuses”). If Mr. Nobile’s employment is terminated for any reason, he will not be entitled to receive any Nobile Retention Bonus not previously paid to him, except as follows: (i) in the event of a termination by the Company without “cause” or by Mr. Nobile for “good reason,” the Company will pay Mr. Nobile a lump-sum cash payment equal to any unpaid Nobile Retention Bonuses; and (ii) in the event of a termination due to Mr. Nobile’s death or “disability,” the Company will pay Mr. Nobile a pro-rata portion of the unpaid Nobile Retention Bonuses (See “Potential Payments upon Termination or Change in Control” below for definitions of “disability,” “cause,” “change in control” and “good reason” in Mr. Nobile’s employment agreement).