Company) directly or indirectly acquires beneficial ownership (within the meaning ofRule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% ofthe total combined voting power of the Company’s securities outstanding immediately aftersuch acquisition; or          (ii) During any period of two consecutive years, individuals who, at the beginning ofsuch period, constitute the Board together with any new director(s) (other than a directordesignated by a person who shall have entered into an agreement with the Company to effect atransaction described herein) whose election by the Board or nomination for election by theCompany’s stockholders was approved by a vote of at least two-thirds of the directors thenstill in office who either were directors at the beginning of the two-year period or whoseelection or nomination for election was previously so approved, cease for any reason toconstitute a majority thereof; or          (iii) The consummation by the Company (whether directly involving the Company orindirectly involving the Company through one or more intermediaries) of (x) a merger,consolidation, reorganization, or business combination or (y) a sale or other disposition ofall or substantially all of the Company’s assets in any single transaction or series ofrelated transactions or (z) the acquisition of assets or stock of another entity, in eachcase other than a transaction:               (a) Which results in the Company’s voting securities outstanding immediately before thetransaction continuing to represent (either by remaining outstanding or by being convertedinto voting securities of the Company or the person that, as a result of the transaction,controls, directly or indirectly, the Company or owns, directly or indirectly, all orsubstantially all of the Company’s assets or otherwise succeeds to the business of theCompany (the Company or such person, the “Successor Entity”)) directly or indirectly, atleast a majority of the combined voting power of the Successor Entity’s outstanding votingsecurities immediately after the transaction, and               (b) After which no person or group beneficially owns voting securities representing 50%or more of the combined voting power of the Successor Entity; *provided, however,*that noperson or group shall be treated for purposes of this Section as beneficially owning 50% ormore of combined voting power of the Successor Entity solely as a result of the voting powerheld in the Company prior to the consummation of the transaction; or          (iv) The Company’s stockholders approve a liquidation or dissolution of the Company.          The Committee shall have full and final authority, which shall be exercised in itsdiscretion, to determine conclusively whether a Change in Control of the Company hasoccurred pursuant to the above definition, and the date of the occurrence of such Change inControl and any incidental matters relating thereto.
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          “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.          “Committee” shall mean either (i) the Board or (ii) a committee of the Board designatedby the Board to administer the Plan.          “Company” shall mean Opnext, Inc., together with any successor thereto.          “Covered Employee” means an employee who is, or could be, a “covered employee” withinthe meaning of Section 162(m) of the Code.          “Director Award Election” shall have the meaning set forth in Section 8(f).          “Effective Date” shall have the meaning set forth in Section 14.          “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.          “Fair Market Value” means, as of any given date, (a) if the Shares are traded on anexchange, the closing price of a Share as reported in the *Wall Street Journal*(or such othersource as the Company may deem reliable for such purposes) for such date, or if no saleoccurred on such date, the first trading date immediately prior to such date during which asale occurred; or (b) if the Shares are not traded on an exchange but are quoted on aquotation system, the mean between the closing representative bid and asked prices for aShare on such date, or if no sale occurred on such date, the first date immediately prior tosuch date on which sales prices or bid and asked prices, as applicable, are reported by suchquotation system; or (c) if the Shares are not publicly traded, the fair market valueestablished by the Committee acting in good faith.          “Incentive Stock Option” shall mean a right to purchase Shares from the Company that isgranted under Section 6 of the Plan and that is intended to meet the requirements of Section422 of the Code or any successor provision thereto.          “Independent Director” means a member of the Board who is not an employee of theCompany.          “Independent Director Grant” shall mean and include any of an Initial Grant, Pro RataGrant, December 2007 Grant, or Annual Grant as set forth in Section 8(e) of the Plan.          “Newly Elected Director” shall have the meaning set forth in Section 8(f).          “Non-Employee Director” means a member of the Board who qualifies as a “Non-EmployeeDirector” as defined in Rule 16b-3(b)(3) under the Exchange Act, or any successor rule.
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          “Non-Qualified Stock Option” shall mean a right to purchase Shares from the Companythat is granted under Section 6 of the Plan and that is not intended to be an IncentiveStock Option.          “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.          “Other Stock-Based Award” shall mean any right granted under Section 9 of the Plan.          “Participant” shall mean any officer or other key employee, consultant or director ofthe Company or its Subsidiaries eligible for an Award under Section 5 and selected by theCommittee to receive an Award under the Plan.          “Performance-Based Award” means an Award granted to selected Covered Employees pursuantto Section 9(c) hereof, but which is subject to the terms and conditions set forth inSection 10 hereof. All Performance-Based Awards are intended to qualify as QualifiedPerformance-Based Compensation.          “Performance Bonus Award” has the meaning set forth in Section 9(c) hereof.          “Performance Criteria” means the criteria that the Committee selects for purposes ofestablishing the Performance Goal or Performance Goals for a Participant for a PerformancePeriod. The Performance Criteria that will be used to establish Performance Goals arelimited to the following: net earnings (either before or after interest, taxes, depreciationand amortization), economic value-added, sales or revenue, net income (either before orafter taxes), operating earnings, cash flow (including, but not limited to, operating cashflow and free cash flow), cash flow return on capital, return on net assets, return onstockholders’ equity, return on assets, return on capital, stockholder returns, return onsales, gross or net profit margin, productivity, expense, margins, operating efficiency,customer satisfaction, working capital, earnings per share, price per Share, and marketshare, any of which may be measured either in absolute terms, by comparison to comparableperformance in an earlier period or periods, or as compared to results of a peer group,industry index, or other company or companies. The Committee shall define in an objectivefashion the manner of calculating the Performance Criteria it selects to use for suchPerformance Period for such Participant.          “Performance Goals” means, for a Performance Period, the goals established in writingby the Committee for the Performance Period based upon the Performance Criteria. Dependingon the Performance Criteria used to establish such Performance Goals, the Performance Goalsmay be expressed in terms of overall Company performance or the performance of a division,business unit, or an individual. The Committee, in its discretion, may, within the timeprescribed by Section 162(m) of the Code, adjust or modify the calculation of PerformanceGoals for such Performance Period in order to prevent the dilution or enlargement of therights of Participants (a) in
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the event of, or in anticipation of, any unusual or extraordinary corporate item,transaction, event, or development, or (b) in recognition of, or in anticipation of, anyother unusual or nonrecurring events affecting the Company, or the financial statements ofthe Company, or in response to, or in anticipation of, changes in applicable laws,regulations, accounting principles, or business conditions.          “Performance Period” means the one or more periods of time, which may be of varying andoverlapping durations, as the Committee may select, over which the attainment of one or morePerformance Goals will be measured for the purpose of determining a Participant’s right to,and the payment of, a Performance-Based Award.          “Person” shall mean any individual, corporation, partnership, limited liabilitycompany, association, joint-stock company, trust, unincorporated organization, government orpolitical subdivision thereof or other entity.          “Plan” shall mean this Opnext, Inc. Second Amended and Restated 2001 Long-Term StockIncentive Plan, as amended from time to time.          “Public Trading Date” means the first date upon which a Share is listed (or approvedfor listing) upon notice of issuance on any securities exchange or designated (or approvedfor designation) upon notice of issuance as a national market security on an interdealerquotation system.          “Qualified Performance-Based Compensation” means any compensation that is intended toqualify as “qualified performance-based compensation” as described in Section 162(m)(4)(C)of the Code.          “Restricted Stock” shall mean any Share granted under Section 8 of the Plan.          “Restricted Stock Unit” shall mean any unit granted under Section 8 of the Plan.          “Shares” shall mean shares of common stock of the Company, par value $.01 per share, orsuch other securities of the Company (i) into which such common shares shall be changed byreason of a recapitalization, merger, consolidation, split-up, combination, exchange ofshares or other similar transaction or (ii) as may be determined by the Committee pursuantto Section 4(b).          “Stock Appreciation Right” or “SAR” shall mean any right granted under Section 7 of thePlan to receive a payment equal to the excess of the Fair Market Value of a specified numberof Shares on the date the SAR is exercised over the grant price of the SAR as set forth inthe applicable Award Agreement.          “Subsidiary” shall mean (i) any entity that, directly or indirectly, is controlled bythe Company and (ii) any entity in which the Company has a significant equity interest, ineither case as determined by the Committee.
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          “Substitute Awards” shall have the meaning specified in Section 4(e).               SECTION 3. Administration.          (a) Committee. The Board, at its discretion or as otherwise necessary to comply withthe requirements of Section 162(m) of the Code, Rule 16b-3 promulgated under the Exchange Act or tothe extent required by any other applicable rule or regulation, shall delegate administration ofthe Plan to a Committee. Unless otherwise determined by the Board, the Committee shall consistsolely of two or more members of the Board each of whom is an “outside director,” within themeaning of Section 162(m) of the Code, a Non-Employee Director and an “independent director” underthe rules of the NASDAQ Global Market (or other principal securities market on which Shares aretraded). Notwithstanding the foregoing: the full Board, acting by a majority of its members inoffice, shall conduct the general administration of the Plan with respect to all Awards granted toIndependent Directors and for purposes of such Awards the term “Committee” as used in this Planshall be deemed to refer to the Board. In its sole discretion, the Board may at any time and fromtime to time exercise any and all rights and duties of the Committee under the Plan except withrespect to matters which under Rule 16b-3 under the Exchange Act or Section 162(m) of the Code, orany regulations or rules issued thereunder, are required to be determined in the sole discretion ofthe Committee. Committee members may resign at any time by delivering written notice to the Board.Vacancies in the Committee may only be filled by the Board.          (b) Governance of the Committee. The governance of the Committee shall be subject tothe charter of the Committee as approved by the Board. Notwithstanding the foregoing, any actiontaken by the Committee shall be valid and effective, whether or not members of the Committee at thetime of such action are later determined not to have satisfied the requirements for membership setforth in Section 3(a) or otherwise provided in the charter of the Committee. Each member of theCommittee is entitled to, in good faith, rely or act upon any report or other information furnishedto that member by any officer or other employee of the Company or any Subsidiary, the Company’sindependent certified public accountants, or any executive compensation consultant or otherprofessional retained by the Company to assist in the administration of the Plan.          (c) Authority of Committee. Subject to the terms of the Plan and applicable law, andin addition to other express powers and authorizations conferred on the Committee by the Plan, theCommittee shall have full power and authority to: (i) designate Participants; (ii) determine thetype or types of Awards to be granted to a Participant; (iii) determine the number of Shares to becovered by, or with respect to which payments, rights, or other matters are to be calculated inconnection with, Awards; (iv) determine the terms and conditions of any Award; (v) determinewhether, to what extent, and under what circumstances Awards may be settled or exercised in cash,Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended andthe method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended;(vi) determine whether, to what extent, and under what circumstances cash, Shares, othersecurities, other Awards, other property, and other amounts payable with respect to an Award shallbe deferred either automatically or at the election of the holder thereof or of the Committee;(vii) interpret, administer or reconcile any inconsistency, correct any
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default and/or supply any omission in the Plan and any instrument or agreement relating to, orAward made under, the Plan; (viii) establish, amend, suspend, or waive such rules and regulationsand appoint such agents as it shall deem appropriate for the proper administration of the Plan; and(ix) make any other determination and take any other action that the Committee deems necessary ordesirable for the administration of the Plan.          (d) Unless otherwise expressly provided in the Plan, all designations, determinations,interpretations, and other decisions under or with respect to the Plan or any Award shall be withinthe sole discretion of the Committee, may be made at any time and shall be final, conclusive, andbinding upon all Persons, including the Company, any Affiliate, any Participant, any holder orbeneficiary of any Award, and any shareholder.          (e) No member of the Committee shall be liable for any action or determination made in goodfaith with respect to the Plan or any Award hereunder.               SECTION 4. Shares Available for Awards.          (a) Shares Available. Subject to adjustment as provided in Section 4(b), theaggregate number of Shares with respect to which Awards may be granted under the Plan shall be19,000,000. If, after the effective date of the Plan, any Shares covered by an Award granted underthe Plan, or to which such an Award relates, are forfeited, or if an Award has expired, terminatedor been canceled for any reason whatsoever (other than by reason of exercise or vesting), then theShares covered by such Award shall again be, or shall become, Shares with respect to which Awardsmay be granted hereunder.          (b) Limitation on Number of Shares Subject to Awards. Notwithstanding any provisionin the Plan to the contrary, and subject to Section 13, the maximum number of Shares with respectto one or more Awards that may be granted to any one Participant during any calendar year shall be1,000,000 and the maximum amount that may be paid in cash during any calendar year with respect toany Performance-Based Award (including, without limitation, any Performance Bonus Award) or anyother Award which is not denominated in Shares or otherwise for which the foregoing limitationwould not be an effective limitation shall be $1,500,000.          (c) No Other Rights. Except as expressly provided in the Plan, no Participant shallhave any rights by reason of any subdivision or consolidation of shares of stock of any class, thepayment of any dividend, any increase or decrease in the number of shares of stock of any class orany dissolution, liquidation, merger, or consolidation of the Company or any other corporation.Except as expressly provided in the Plan or pursuant to action of the Committee under the Plan, noissuance by the Company of shares of stock of any class, or securities convertible into shares ofstock of any class, shall affect, and no adjustment by reason thereof shall be made with respectto, the number of Shares subject to an Award or the grant or exercise price of any Award.          (d) Substitute Awards. Awards may, in the discretion of the Committee, be made underthe Plan in assumption of, or in substitution for, outstanding awards previously granted by theCompany or its Affiliates or a company acquired by the Company or with which the
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Company combines (“Substitute Awards”). The number of Shares underlying any Substitute Awardsshall be counted against the aggregate number of Shares available for Awards under the Plan.          (e) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to anAward may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares.               SECTION 5. Eligibility and Participation.          (a) Eligibility. Any officer or other key employee, consultant or director of theCompany or any of its Subsidiaries shall be eligible to be designated a Participant.          (b) Foreign Participants. Notwithstanding any provision of the Plan to the contrary,in order to comply with the laws in other countries in which the Company and its Subsidiariesoperate or have employees, consultants or Independent Directors, the Committee, in its solediscretion, shall have the power and authority to: (i) determine which Subsidiaries shall becovered by the Plan; (ii) determine which such employees, consultants or Independent Directorsoutside the United States are eligible to participate in the Plan; (iii) modify the terms andconditions of any Award granted to such employees, consultants or Independent Directors outside theUnited States to comply with applicable foreign laws; (iv) establish subplans and modify exerciseprocedures and other terms and procedures, to the extent such actions may be necessary or advisable(any such subplans and/or modifications shall be attached to this Plan as appendices); *provided,however*, that no such subplans and/or modifications shall increase the share limitations containedin Sections 4(a) and 4(b) of the Plan; and (v) take any action, before or after an Award is made,that it deems advisable to obtain approval or comply with any necessary local governmentalregulatory exemptions or approvals. Notwithstanding the foregoing, the Committee may not take anyactions hereunder, and no Awards shall be granted, that would violate the Exchange Act, the Code,any securities law or governing statute or any other applicable law.               SECTION 6. Stock Options.          (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole andcomplete authority to determine the Participants to whom Options shall be granted, the number ofShares to be covered by each Option, the exercise price therefor and the conditions and limitationsapplicable to the exercise of the Option, which terms shall be set forth in the applicable AwardAgreement. The Committee shall have the authority to grant Incentive Stock Options, or to grantNon-Qualified Stock Options, or to grant both types of Options. Incentive Stock Options may onlybe granted to employees of the Company or employees of any “parent corporation” or “subsidiarycorporation” thereof (within the meaning of Sections 424(e) and (f), respectively, of the Code),and the terms and conditions of such grants shall be subject to and comply with such rules as maybe prescribed by Section 422 of the Code, as from time to time amended, and any regulationsimplementing such statute. All Options when granted under the Plan are intended to beNon-Qualified Stock Options, unless the applicable Award Agreement expressly states that the Optionis intended to be an Incentive Stock Option. If an Option is
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intended to be an Incentive Stock Option, and if for any reason such Option (or any portionthereof) shall not qualify as an Incentive Stock Option, then, to the extent of suchnonqualification, such Option (or portion thereof) shall be regarded as a Non-Qualified StockOption appropriately granted under the Plan; provided that such Option (or portion thereof)otherwise complies with the Plan’s requirements relating to Non-Qualified Stock Options.          (b) Exercise Price. The exercise price per Share subject to an Option shall bedetermined by the Committee and set forth in the Award Agreement; *provided*, that the exercise pricefor any Option shall not be less than 100% of the Fair Market Value of a Share on the date ofgrant.          (c) Exercise. Each Option shall be exercisable at such times and subject to suchterms and conditions as the Committee may, in its sole discretion, specify in the applicable AwardAgreement or thereafter. The Committee may impose such conditions with respect to the exercise ofOptions, including without limitation, any relating to the application of federal or statesecurities laws, as it may deem necessary or advisable.          (d) Term of Options. The Committee shall determine the term of each Option; *provided*that such term shall not exceed ten years.          (e) Payment.               (i) No Shares shall be delivered pursuant to any exercise of an Option until payment in fullof the aggregate exercise price therefor and any related tax is received by the Company. Suchpayment may be made in cash or its equivalent, or, with the consent of the Committee (x) byexchanging Shares owned by the optionee (which are not the subject of any pledge or other securityinterest) or (y) at any time that the Shares are publicly traded on a nationally recognized stockexchange, through delivery of irrevocable instructions to a broker (as selected or approved by theCommittee) to sell the Shares otherwise deliverable upon the exercise of the Option and to deliverpromptly to the Company an amount equal to the aggregate exercise price, or (z) by a combination ofthe foregoing, provided that the combined value of all cash and cash equivalents and the FairMarket Value of any such Shares so tendered to the Company as of the date of such tender is atleast equal to such aggregate exercise price. Notwithstanding any other provision of the Plan tothe contrary, after the Public Trading Date, no Participant who is a member of the Board or an“executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall bepermitted to pay the exercise price of an Option, or continue any extension of credit with respectto the exercise price of an Option with a loan from the Company or a loan arranged by the Companyin violation of Section 13(k) of the Exchange Act.               (ii) Wherever in this Plan or any Award Agreement a Participant is permitted to pay theexercise price of an Option or taxes relating to the exercise of an Option by delivering Shares,the Participant may, subject to procedures satisfactory to the Committee, satisfy such delivery requirement by presenting proof of beneficial ownership of such Shares,in which case the Company shall treat the Option as exercised without further payment and shallwithhold such number of Shares from the Shares acquired by the exercise of the Option.
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          (f) Incentive Stock Options. The terms of any Incentive Stock Options grantedpursuant to the Plan, in addition to the other requirements of this Section 6, must comply with theprovisions of this Section 6(f).               (i) Dollar Limitation. The aggregate Fair Market Value (determined as of the time theOption is granted) of all Shares with respect to which Incentive Stock Options are firstexercisable by a Participant in any calendar year may not exceed $100,000 or such other limitationas imposed by Section 422(d) of the Code, or any successor provision. To the extent that IncentiveStock Options are first exercisable by a Participant in excess of such limitation, the excess shallbe considered Non-Qualified Stock Options.               (ii) Ten Percent Owners. An Incentive Stock Option shall be granted to any individualwho, at the date of grant, owns stock possessing more than ten percent of the total combined votingpower of all classes of stock of the Company only if such Option is granted at a price that is notless than 110% of Fair Market Value on the date of grant and the Option is exercisable for no morethan five years from the date of grant.               (iii) Failure to Meet Requirements. Any Option (or portion thereof) purported to bean Incentive Stock Option, which, for any reason, fails to meet the requirements of Section 422 ofthe Code shall be considered a Non-Qualified Stock Option.               SECTION 7. Stock Appreciation Rights.          (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole andcomplete authority to determine the Participants to whom Stock Appreciation Rights shall begranted, the number of Shares to be covered by each Stock Appreciation Right Award, the grant pricethereof and the conditions and limitations applicable to the exercise thereof, which terms shall beset forth in the applicable Award Agreement. Notwithstanding the foregoing, in no event shall theper share grant price of a Stock Appreciation Right be less than 100% of the Fair Market Value of aShare on the date of grant. Stock Appreciation Rights shall be subject to such terms andconditions not inconsistent with the Plan as the Committee shall impose. Stock Appreciation Rightsmay be granted in tandem with another Award, in addition to another Award, or freestanding andunrelated to another Award. Stock Appreciation Rights granted in tandem with or in addition to anAward may be granted either at the same time as the Award or at a later time.          (b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant(or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) toexercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisablepursuant to its terms) and to receive from the Company an amount equal to the product of (i) theexcess of (A) the Fair Market Value of a Share on the date the Stock Appreciation Right isexercised over (B) the per Share grant price of the Stock Appreciation Right and (ii) the number of Shares with respect to which the Stock Appreciation Right isexercised, subject to any limitations the Committee may impose. The Committee shall determinewhether a Stock Appreciation Right shall be settled in cash, Shares or a combination of cash andShares.
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          (c) Other Terms and Conditions. Subject to the terms of the Plan and any applicableAward Agreement, the Committee shall determine, at or after the grant of a Stock AppreciationRight, the term, methods of exercise, methods and form of settlement, and any other terms andconditions of any Stock Appreciation Right. Any such determination by the Committee may be changedby the Committee from time to time and may govern the exercise of Stock Appreciation Rights grantedor exercised prior to such determination as well as Stock Appreciation Rights granted or exercisedthereafter. The Committee may impose such conditions or restrictions on the exercise of any StockAppreciation Right as it shall deem appropriate.               SECTION 8. Restricted Stock and Restricted Stock Units.          (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole andcomplete authority to determine the Participants to whom Shares of Restricted Stock and RestrictedStock Units shall be granted, the number of Shares of Restricted Stock and/or the number ofRestricted Stock Units to be granted to each Participant, the duration of the period during which,and the conditions, if any, under which, the Restricted Stock and Restricted Stock Units may beforfeited to the Company, and the other terms and conditions of such Awards, which terms shall beset forth in the applicable Award Agreement.          (b) Transfer Restrictions. Shares of Restricted Stock and Restricted Stock Units maynot be sold, assigned, transferred, pledged or otherwise encumbered, except, in the case ofRestricted Stock, as provided in the Plan or the applicable Award Agreements. Certificates issuedin respect of Shares of Restricted Stock shall be registered in the name of the Participant anddeposited by such Participant, together with a stock power endorsed in blank, with the Company.Upon the lapse of the restrictions applicable to such Shares of Restricted Stock, the Company shalldeliver such certificates to the Participant or the Participant’s legal representative.          (c) Payment. Each Restricted Stock Unit shall have a value equal to the Fair MarketValue of a Share. Restricted Stock Units shall be paid to the Participant in cash, Shares, othersecurities or other property, as determined in the sole discretion of the Committee, upon the lapseof the restrictions applicable thereto, or otherwise in accordance with the applicable AwardAgreement. Dividends paid on any Shares of Restricted Stock may be paid directly to theParticipant, withheld by the Company subject to vesting of the Shares of Restricted Stock pursuantto the terms of the applicable Award Agreement, or may be reinvested in additional Shares ofRestricted Stock or in additional Restricted Stock Units, as determined by the Committee in itssole discretion.          (d) Exercise or Purchase Price. The Committee may establish the exercise or purchaseprice, if any, of any Award of Restricted Stock or Restricted Stock Units; *provided, however*, that such price shall not be less than the par value of a Share on the date of grant,unless otherwise permitted by applicable state law.
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          (e) Independent Director Grants.               (i) Newly Elected Independent Directors — Initial Grant. During the term of thePlan, each individual who is newly elected as an Independent Director (a “Newly Elected IndependentDirector”) shall, on the date on which such individual initially becomes an Independent Director(the “Initial Grant Date”), automatically be granted a number of Restricted Stock Units equal tothe quotient obtained by dividing (x) $35,000 by (y) the Fair Market Value of a Share on theInitial Grant Date (the “Initial Grant”). Subject to the Independent Director’s continued servicewith the Company, each Initial Grant shall vest in full on the one-year anniversary of the InitialGrant Date.               (ii) Existing Independent Directors Initially Elected in Connection with Initial PublicOffering. Each individual who was initially elected as an Independent Director during theperiod commencing on February 1, 2007 and ending on December 12, 2007, shall on December 12, 2007,automatically be granted 3,193 Restricted Stock Units (the “December 2007 Grant”). Subject to theIndependent Director’s continued service with the Company, each December 2007 Grant shall vest infull on the one-year anniversary of the date of grant.               (iii) Annual Grants. During the term of the Plan, on the date of each annual meetingof stockholders of the Company, each individual who becomes an Independent Director at such annualmeeting and each individual who otherwise continues to be an Independent Director immediatelyfollowing such meeting shall automatically be granted a number of Restricted Stock Units equal tothe quotient obtained by dividing (x) $35,000 by (y) the Fair Market Value of a Share on the dateof such meeting (the “Annual Grant”). Subject to the Independent Director’s continued service withthe Company, each Annual Grant shall vest in full on the one-year anniversary of the date of grant.For purposes of clarification, a Newly Elected Independent Director who becomes an IndependentDirector at an annual meeting of stockholders of the Company shall receive both an Initial Grantand an Annual Grant (but not a Pro Rata Grant (as defined below)) on the date of such annualmeeting of stockholders. A Newly Elected Independent Director who is initially elected at anannual meeting of stockholders of the Company but who does not become an Independent Director onthe date of such annual meeting shall receive both an Initial Grant and a Pro Rata Grant (but notan Annual Grant) on the date on which he or she initially becomes an Independent Director.               (iv) Newly Elected Independent Directors — Pro Rata Grant. In the event that a NewlyElected Independent Director first becomes an Independent Director on a date other than the date ofan annual meeting of stockholders of the Company, then, in addition to such Independent Director’sInitial Grant, such individual shall automatically be granted on the Initial Grant Date a number ofRestricted Stock Units equal to the product of (A) the quotient obtained by dividing (x) $35,000 by(y) the Fair Market Value of a Share on the Initial Grant Date, multiplied by (B) the quotientobtained by dividing (x) 365 minus the number of days that have elapsed from the immediatelypreceding annual meeting of stockholders of the Company to the Initial Grant Date, by (y) 365 (the“Pro Rata Grant”). Subject to the Independent Director’s continued service with the Company, eachPro Rata Grant shall vest in full on the one-year anniversary of the immediately preceding annualmeeting of stockholders of the Company.
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          (f) Timing of Payment for Independent Director Grants. Each Independent DirectorGrant of Restricted Stock Units shall provide that the cash, Shares or other securities or propertypayable in respect of the vested Restricted Stock Units shall be paid to the Independent Directorupon the earliest to occur of (i) a “change in control event” (within the meaning of Section 409Aof the Code), (ii) such director’s “separation from service” from the Company (within the meaningof Section 409A of the Code), and (iii) such director’s death; provided, however, that no suchpayment shall be made to an Independent Director during the 6-month period following suchIndependent Director’s separation from service if such Independent Director is a “specifiedemployee” at the time of such separation from service (as determined by the Company in accordancewith Section 409A of the Code) and the Company determines that paying such amounts at the time ortimes set forth in this subsection (f) would be a prohibited distribution under Section409A(a)(2)(B)(i) of the Code. If the payment of any such amounts is delayed as a result of theprevious sentence, then on the first day following the end of such 6-month period, the Companyshall pay the Independent Director the cumulative payments that would have otherwise been payableto the Independent Director during such 6-month period          (g) Effect of Termination of Service. To the extent otherwise eligible, members ofthe Board who are employees of the Company who subsequently retire from the Company and remain onthe Board shall receive a Pro Rata Grant on the date of such individual’s retirement fromemployment and shall, subject to his or her continued directorship, receive an Annual Grant at eachannual meeting of stockholders after his or her retirement from employment with the Company, butshall not receive an Initial Grant.          (h) Independent Director Grant Compliance with Section 409A. Any Independent DirectorGrant that constitutes, or provides for, a deferral of compensation subject to Section 409A of theCode shall satisfy the requirements of Section 409A of the Code and this Section 8, to the extentapplicable. The Award Agreement with respect to such Award shall incorporate the terms andconditions required by Section 409A of the Code and this Section 8. Without limiting the generalityof the foregoing, the time or schedule of any distribution or payment of any cash, Shares or othersecurities or property payable in respect of vested Restricted Stock Units subject to Section 409Aof the Code shall not be accelerated, except as otherwise permitted under Section 409A(a)(3) of theCode and the Treasury Regulations thereunder.               SECTION 9. Other Stock-Based Awards.          (a) General. The Committee shall have authority to grant to Participants an “OtherStock-Based Award”, which shall consist of any right which is (i) not an Award described inSections 6 through 8 above and (ii) an Award of Shares or an Award denominated or payable in,valued in whole or in part by reference to, or otherwise based on or related to, Shares (including,without limitation, securities convertible into Shares), as deemed by the Committee to beconsistent with the purposes of the Plan. Subject to the terms of the Plan and any applicableAward Agreement, the Committee shall determine the terms and conditions of any such OtherStock-Based Award, including the price, if any, at which securities may be purchased pursuant toany Other Stock-Based Award granted under this Plan.
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          (b) Dividend Equivalents. In the sole and complete discretion of the Committee, anAward, whether made as an Other Stock-Based Award under this Section 9 or as an Award grantedpursuant to Sections 6 through 8 hereof, may provide the Participant with dividends or dividendequivalents, payable in cash, Shares, other securities or other property on a current or deferredbasis.          (c) Performance Bonus Awards. Any Participant selected by the Committee may begranted a cash bonus (a “Performance Bonus Award”) payable upon the attainment of Performance Goalsthat are established by the Committee and relate to one or more of the Performance Criteria orother specific performance criteria determined to be appropriate by the Committee, in each case ona specified date or dates or over any period or periods determined by the Committee. Any suchPerformance Bonus Award paid to a Covered Employee may be a Performance-Based Award and be basedupon objectively determinable bonus formulas established in accordance with Section 10.          (d) Form of Payment. Payments with respect to any Awards granted under this Section 9shall be made in cash, in Shares or a combination of both, as determined by the Committee.               SECTION 10. Performance-Based Awards.          (a) Purpose. The purpose of this Section 10 is to provide the Committee the abilityto qualify Awards other than Options and SARs and that are granted pursuant to Sections 8 and 9 asQualified Performance-Based Compensation. If the Committee, in its discretion, decides to grant aPerformance-Based Award to a Covered Employee, the provisions of this Section 10 shall control overany contrary provision contained in 8 and 9; *provided, however*, that the Committee may in itsdiscretion grant Awards to Covered Employees that are based on Performance Criteria or PerformanceGoals but that do not satisfy the requirements of this Section 10.          (b) Applicability. This Section 10 shall apply only to those Covered Employeesselected by the Committee to receive Performance-Based Awards. The designation of a CoveredEmployee as a Participant for a Performance Period shall not in any manner entitle the Participantto receive an Award for the period. Moreover, designation of a Covered Employee as a Participantfor a particular Performance Period shall not require designation of such Covered Employee as aParticipant in any subsequent Performance Period and designation of one Covered Employee as aParticipant shall not require designation of any other Covered Employees as a Participant in suchperiod or in any other period.          (c) Procedures with Respect to Performance-Based Awards. To the extent necessary tocomply with the Qualified Performance-Based Compensation requirements of Section 162(m)(4)(C) ofthe Code, with respect to any Award granted under Section 8 or 9 which may be granted to one ormore Covered Employees, no later than ninety (90) days following the commencement of any fiscalyear in question or any other designated fiscal period or period of service (or such other time asmay be required or permitted by Section 162(m) of the Code), the Committee shall, in writing, (a)designate one or more Covered Employees, (b) select the
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Performance Criteria applicable to the Performance Period, (c) establish the PerformanceGoals, and amounts of such Awards, as applicable, which may be earned for such Performance Period,and (d) specify the relationship between Performance Criteria and the Performance Goals and theamounts of such Awards, as applicable, to be earned by each Covered Employee for such PerformancePeriod. Following the completion of each Performance Period, the Committee shall certify inwriting whether the applicable Performance Goals have been achieved for such Performance Period.In determining the amount earned by a Covered Employee, the Committee shall have the right toreduce or eliminate (but not to increase) the amount payable at a given level of performance totake into account additional factors that the Committee may deem relevant to the assessment ofindividual or corporate performance for the Performance Period.          (d) Payment of Performance-Based Awards. Unless otherwise provided in the applicableAward Agreement, a Participant must be employed by the Company or a Subsidiary on the day aPerformance-Based Award for such Performance Period is paid to the Participant. Furthermore, aParticipant shall be eligible to receive payment pursuant to a Performance-Based Award for aPerformance Period only if the Performance Goals for such period are achieved. In determining theamount earned under a Performance-Based Award, the Committee may reduce or eliminate the amount ofthe Performance-Based Award earned for the Performance Period, if in its sole and absolutediscretion, such reduction or elimination is appropriate.          (e) Additional Limitations. Notwithstanding any other provision of the Plan, anyAward which is granted to a Covered Employee and is intended to constitute QualifiedPerformance-Based Compensation shall be subject to any additional limitations set forth in Section162(m) of the Code (including any amendment to Section 162(m) of the Code) or any regulations orrulings issued thereunder that are requirements for qualification as qualified performance-basedcompensation as described in Section 162(m)(4)(C) of the Code, and the Plan shall be deemed amendedto the extent necessary to conform to such requirements.               SECTION 11. Amendment and Termination.          (a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue, orterminate the Plan or any portion thereof at any time; provided that any such amendment,alteration, suspension, discontinuance or termination that would impair the rights of anyParticipant or any holder or beneficiary of any Award theretofore granted shall not to that extentbe effective without the consent of the affected Participant, holder or beneficiary; *provided,however*, that (a) to the extent necessary and desirable to comply with any applicable law,regulation, or stock exchange rule, the Company shall obtain stockholder approval of any Planamendment in such a manner and to such a degree as required, and (b) stockholder approval shall berequired for any amendment to the Plan that (i) increases the number of shares available under thePlan (other than any adjustment as provided by Section 13), (ii) permits the Committee to grantOptions with an exercise price that is below Fair Market Value on the date of grant or (iii)permits the Committee to extend the exercise period for an Option beyond ten years from the date ofgrant.          (b) Amendments to Awards. The Committee may waive any conditions or rights under,amend any terms of, or alter, suspend, discontinue, cancel or terminate, any Award
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theretofore granted, prospectively or retroactively; provided that any such waiver, amendment,alteration, suspension, discontinuance, cancellation or termination that would impair the rights ofany Participant or any holder or beneficiary of any Award theretofore granted shall not to thatextent be effective without the consent of the affected Participant, holder or beneficiary.               SECTION 12. General Provisions.          (a) Nontransferability.               (i) Each Award, and each right under any Award, shall be exercisable only by the Participant,except that upon death or disability of a Participant, if permissible under applicable law, itshall be exercisable by the Participant’s legal guardian or representative.               (ii) Unless otherwise specified in an Award Agreement, no Award may be transferred or assignedby a Participant otherwise than by will or by the laws of descent and distribution, and any suchpurported transfer or assignment shall be void and unenforceable against the Company or anyAffiliate; provided that the designation of a beneficiary shall not constitute a transfer orassignment.          (b) No Rights to Awards. No Participant or other Person shall have any claim to begranted any Award, and there is no obligation for uniformity of treatment of Participants, orholders or beneficiaries of Awards. The terms and conditions of Awards and the Committee’sdeterminations and interpretations with respect thereto need not be the same with respect to eachParticipant (whether or not such Participants are similarly situated).          (c) Share Certificates. All certificates for Shares or other securities of theCompany or any Affiliate delivered under the Plan pursuant to any Award or the exercise thereofshall be subject to such stop transfer orders and other restrictions as the Committee may deemadvisable under the Plan or the rules, regulations, and other requirements of the Securities andExchange Commission, any stock exchange upon which such Shares or other securities are then listed,and any applicable Federal or state laws, and the Committee may cause a legend or legends to be puton any such certificates to make appropriate reference to such restrictions.          (d) Withholding.               (i) A Participant may be required to pay to the Company or any Affiliate and the Company orany Affiliate shall have the right and is hereby authorized to withhold from any Award, from anypayment due or transfer made under any Award or under the Plan or from any compensation or otheramount owing to a Participant the amount (in cash, Shares, other securities, other Awards or otherproperty) of any applicable withholding taxes in respect of an Award, its exercise, or any paymentor transfer under an Award or under the Plan and to take such other action as may be necessary inthe opinion of the Company to satisfy all obligations for the payment of such taxes. The Committeemay provide for additional cash payments to holders of Awards to defray or offset any tax arisingfrom the grant, vesting, exercise or payments of any Award.
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               (ii) Without limiting the generality of clause (i) above, a Participant may satisfy, in wholeor in part, the foregoing withholding liability by delivery of Shares owned by the Participant(which are not subject to any pledge or other security interest) with a Fair Market Value equal tosuch withholding liability or by having the Company withhold from the number of Shares otherwiseissuable pursuant to the exercise of the Award a number of Shares with a Fair Market Value equal tosuch withholding liability. Notwithstanding any other provision of the Plan, the number of Shareswhich may be withheld with respect to the issuance, vesting, exercise or payment of any Award inorder to satisfy the Participant’s federal, state, local and foreign income and payroll taxliabilities with respect to the issuance, vesting, exercise or payment of the Award shall belimited to the number of shares which have a Fair Market Value on the date of withholding orrepurchase equal to the aggregate amount of such liabilities based on the minimum statutorywithholding rates for federal, state, local and foreign income tax and payroll tax purposes thatare applicable to such supplemental taxable income.               (iii) Notwithstanding any provision of this Plan to the contrary, in connection with thetransfer of an Award pursuant to Section 11(a) of the Plan, the transferee shall remain liable forany withholding taxes required to be withheld upon the exercise of such Award by such transferee.          (e)  Award Agreements. Each Award hereunder shall be evidenced by an Award Agreementwhich shall be delivered to the Participant and shall specify the terms and conditions of the Awardand any rules applicable thereto, including but not limited to the effect on such Award of thedeath, disability or termination of employment or service of a Participant and the effect, if any,of such other events as may be determined by the Committee.          (f) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shallprevent the Company or any Affiliate from adopting or continuing in effect other compensationarrangements, which may, but need not, provide for the grant of options, restricted stock, Sharesand other types of Awards provided for hereunder (subject to shareholder approval if such approvalis required), and such arrangements may be either generally applicable or applicable only inspecific cases.          (g) No Right to Employment. The grant of an Award shall not be construed as giving aParticipant the right to be retained in the employ of, or in any consulting relationship to, theCompany or any Affiliate. Further, the Company or an Affiliate may at any time dismiss aParticipant from employment or discontinue any consulting relationship, free from any liability orany claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreementor any other written agreement between such Participant and the Company.          (h) No Rights as Stockholder. Subject to the provisions of the applicable Award, noParticipant or holder or beneficiary of any Award shall have any rights as a stockholder withrespect to any Shares to be distributed under the Plan until he or she has become the holder ofsuch Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stockhereunder, the applicable Award shall specify if and to what extent the Participant shall not beentitled to the rights of a stockholder in respect of such Restricted Stock.
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          (i) Governing Law. The validity, construction, and effect of the Plan and any rulesand regulations relating to the Plan and any Award Agreement shall be determined in accordance withthe laws of the State of New York, without regard to principles of conflicts of laws.          (j) Severability. If any provision of the Plan or any Award is or becomes or isdeemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award,or would disqualify the Plan or any Award under any law deemed applicable by the Committee, suchprovision shall be construed or deemed amended to conform to the applicable laws, or if it cannotbe construed or deemed amended without, in the determination of the Committee, materially alteringthe intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction,Person or Award and the remainder of the Plan and any such Award shall remain in full force andeffect.          (k) Other Laws. The Committee may refuse to issue or transfer any Shares or otherconsideration under an Award if, acting in its sole discretion, it determines that the issuance ortransfer of such Shares or such other consideration might violate any applicable law or regulationor entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any paymenttendered to the Company by a Participant, other holder or beneficiary in connection with theexercise of such Award shall be promptly refunded to the relevant Participant, holder orbeneficiary. Notwithstanding any other provision of the Plan, the Plan and any Award granted orawarded to any Participant who is then subject to Section 16 of the Exchange Act, shall be subjectto any additional limitations set forth in any applicable exemptive rule under Section 16 of theExchange Act (including any amendment to Rule 16b-3 under the Exchange Act) that are requirementsfor the application of such exemptive rule. To the extent permitted by applicable law, the Planand Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conformto such applicable exemptive rule. Without limiting the generality of the foregoing, no Awardgranted hereunder shall be construed as an offer to sell securities of the Company, and no suchoffer shall be outstanding, unless and until the Committee in its sole discretion has determinedthat any such offer, if made, would be in compliance with all applicable requirements of the U.S.federal securities laws.          (l) Section 409A. To the extent that the Committee determines that any Award grantedunder the Plan is subject to Section 409A of the Code, the Award Agreement evidencing such Awardshall incorporate the terms and conditions required by Section 409A of the Code. To the extentapplicable, the Plan and Award Agreements shall be interpreted in accordance with Section 409A ofthe Code and Department of Treasury regulations and other interpretive guidance issued thereunder,including without limitation any such regulations or other guidance that may be issued after theEffective Date. Notwithstanding any provision of the Plan to the contrary, in the event thatfollowing the Effective Date the Committee determines that any Award may be subject to Section 409Aof the Code and related Department of Treasury guidance (including such Department of Treasuryguidance as may be issued after the Effective Date), the Committee may adopt such amendments to thePlan and the applicable Award Agreement or adopt other policies and procedures (includingamendments, policies and procedures with retroactive effect), or take any other actions, that theCommittee determines are necessary or appropriate to (a) exempt the Award from Section 409A of theCode and/or preserve the intended
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tax treatment of the benefits provided with respect to the Award, or (b) comply with therequirements of Section 409A of the Code and related Department of Treasury guidance.          (m) No Trust or Fund Created. Neither the Plan nor any Award shall create or beconstrued to create a trust or separate fund of any kind or a fiduciary relationship between theCompany or any Affiliate and a Participant or any other Person. To the extent that any Personacquires a right to receive payments from the Company or any Affiliate pursuant to an Award, suchright shall be no greater than the right of any unsecured general creditor of the Company or anyAffiliate.          (n) No Fractional Shares. No fractional Shares shall be issued or delivered pursuantto the Plan or any Award, and the Committee shall determine whether cash, other securities, orother property shall be paid or transferred in lieu of any fractional Shares or whether suchfractional Shares or any rights thereto shall be canceled, terminated, or otherwise eliminated.          (o) Headings. Headings are given to the Sections and subsections of the Plan solelyas a convenience to facilitate reference. Such headings shall not be deemed in any way material orrelevant to the construction or interpretation of the Plan or any provision thereof.          (p) Paperless Exercise. In the event that the Company establishes, for itself orusing the services of a third party, an automated system for the exercise of Awards, such as asystem using an internet website or interactive voice response, then the paperless exercise ofAwards by a Participant may be permitted through the use of such an automated system.               SECTION 13. Changes in Capital Structure and Corporate Transactions.          (a) In the event of any stock dividend, stock split, combination or exchange of shares,merger, consolidation, spin-off, recapitalization or other distribution (other than normal cashdividends) of Company assets to stockholders, or any other change affecting the Shares or the Shareprice, the Committee shall make proportionate adjustments to reflect such change with respect to(a) the aggregate number and kind of shares that may be issued under the Plan (including, but notlimited to, adjustments of the limitations in Sections 4(a) and 4(b)); (b) the terms and conditionsof any outstanding Awards (including, without limitation, any applicable performance targets orcriteria with respect thereto); and (c) the grant or exercise price per share for any outstandingAwards under the Plan. Any adjustment affecting an Award intended as Qualified Performance-BasedCompensation shall be made consistent with the requirements of Section 162(m) of the Code.          (b) In the event of a Change in Control or any transaction or event described in Section 13(a)or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of theCompany, or the financial statements of the Company or any affiliate, or of changes in applicablelaws, regulations or accounting principles, the Committee, on such terms and conditions as it deemsappropriate, either by the terms of the Award or by action taken prior to the occurrence of suchtransaction or event, is hereby authorized to take any one or more of
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the following actions in order to prevent dilution or enlargement of the benefits or potentialbenefits intended to be made available under the Plan or with respect to any Award under the Plan,to facilitate such transactions or events or to give effect to such changes in laws, regulations orprinciples:               (i) To provide for either (A) termination of any such Award in exchange for an amount of cash,if any, equal to the amount that would have been attained upon the exercise of such Award orrealization of the Participant’s rights (and, for the avoidance of doubt, if as of the date of theoccurrence of the transaction or event described in this Section 4(b) the Committee determines ingood faith that no amount would have been attained upon the exercise of such Award or realizationof the Participant’s rights, then such Award may be terminated by the Company without payment) or(B) the replacement of such Award with other rights or property selected by the Committee in itssole discretion;               (ii) To provide that such Award be assumed by the successor or survivor corporation, or aparent or subsidiary thereof, or shall be substituted for by similar options, rights or awardscovering the stock of the successor or survivor corporation, or a parent or subsidiary thereof,with appropriate adjustments as to the number and kind of shares and prices;               (iii) To make adjustments in the number and type of Shares (or other securities or property)subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock and/or inthe terms and conditions of (including the grant or exercise price), and the criteria included in,outstanding options, rights and awards and options, rights and awards which may be granted in thefuture;               (iv) To provide that such Award shall be exercisable or payable or fully vested with respectto all shares covered thereby, notwithstanding anything to the contrary in the Plan or theapplicable Award Agreement; and               (v) To provide that the Award cannot vest, be exercised or become payable after such event.          (c) Acceleration Upon a Change in Control. Notwithstanding the foregoing, and exceptas may otherwise be provided in any applicable Award Agreement or other written agreement enteredinto between the Company and a Participant, if a Change in Control occurs and a Participant’sAwards are not converted, assumed, or replaced by a successor entity, then immediately prior to theChange in Control such Awards shall become fully exercisable and all forfeiture restrictions onsuch Awards shall lapse. Upon, or in anticipation of, a Change in Control, the Committee may causeany and all Awards outstanding hereunder to terminate at a specific time in the future, includingbut not limited to the date of such Change in Control, and shall give each Participant the right toexercise such Awards during a period of time as the Committee, in its sole and absolute discretion,shall determine.
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               SECTION 14. Effective and Expiration Date.          (a) Effective Date. This Opnext, Inc. Second Amended and Restated 2001 Long-TermStock Incentive Plan shall be effective as of the date on which it is duly approved by theCompany’s stockholders (the “Effective Date”).          (b) Expiration Date. This Opnext, Inc. Second Amended and Restated 2001 Long-TermStock Incentive Plan will expire on, and no Award may be granted pursuant to this Plan after thetenth anniversary of the date on which the First Amended and Restated Plan was adopted by theBoard. Any Awards that are outstanding on the tenth anniversary of such date shall remain in forceaccording to the terms of this Plan and the applicable Award Agreement.
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*** * * * ***I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Opnext,Incorporated on August 5, 2008.*** * * * ***I hereby certify that the foregoing Plan was approved by the stockholders of Opnext, Incorporatedon January 6, 2009.Executed on this 6th day of January, 2009.                                                               /s/ Tammy L. Wedemeyer   Corporate Secretary      
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