Exhibit 10.4

LUMENTUM HOLDINGS INC.

EMPLOYMENT AGREEMENT

This employment agreement (the “Agreement”) is entered into by and among
Lumentum Holdings Inc. (the “Company”), Lumentum Operations, LLC (the
“Employer”), and Alan Lowe (“Executive”) to be effective as of the effective
date of the Separation and Distribution Agreement by and between JDS Uniphase
Corporation, Lumentum Holdings Inc. and Lumentum Operations, LLC (the “Effective
Date”).

Summary of Material Terms

 

Term

     

Summary

 

Cross-Reference

Position:   Chief Executive Officer   Section 1 Reports to:   The Company’s
Board of Directors   Section 1 Employment Term   Through the three year
anniversary of the Effective Date, unless extended   Section 2 Annual Salary:  
$625,000   Section 3(a) Annual Target Bonus:   100% of Base Salary   Section
3(b) Equity Awards   •   As shown on Exhibit A   Section 3(c) Non-Change in
Control Severance:   •   Any earned but unpaid salary or bonus   Section
5(b)(ii)  

 

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150% of annual salary

    •   Additional vesting of equity awards for 12 months     •   Payment equal
to the cost of health insurance coverage for 12 months   Change in Control
Severance:   •   Any earned but unpaid salary or bonus   Section 5(b)(iii)  

 

•

 

 

200% of annual salary

    •   200% of target annual bonus     •   Full acceleration of outstanding
unvested equity awards     •   Payment equal to the cost of health insurance
coverage for 24 months  

1. Duties and Scope of Employment; Director Service. Executive will serve as the
Chief Executive Officer to the Company and the Employer reporting to the
Company’s Board of Directors (the “Board”) and will perform the duties,
consistent with this position, as the Board determines. During the period that
Executive serves as the Chief Executive Officer, the Board will nominate
Executive to serve as a director on the Board, subject to the requisite approval
of the Company’s stockholders.

2. Term. Subject to the provisions of Section 5, this Agreement will have an
initial term which will expire on the three-year anniversary of the Effective
Date (the “Initial Term”). On the last day of the Initial Term and each year
thereafter, the Agreement will automatically renew for an additional successive
one year term as of the date thereof (each, a “Renewal Term”) unless any party
provides the other parties with written notice of non-renewal at least 90 days
prior to the date of automatic renewal, in which case the Agreement will expire
at the end of the Initial Term or Renewal Term, as applicable. Non-renewal at
the end of the Initial Term or a Renewal

 

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Term will constitute termination without Cause under the Agreement and entitle
Executive to severance set forth in Section 5(b)(ii) or Section 5(b)(iii), as
applicable, although if a Potential Change in Control Date has occurred prior to
the expiration of this Agreement, the Agreement shall remain in effect until the
earliest of:

(a) the end of the Change in Control Period, if a Change in Control has been
completed, so long as all payments due have been made; or

(b) 12 months after the Potential Change in Control Date if no Change in Control
has been completed; provided, however, that in the event of a protracted
regulatory clearance process with respect to a potential Change in Control, such
term shall be extended so long as the Company is pursuing the potential Change
in Control in good faith.

3. Compensation.

(a) Base Salary. The Employer will pay Executive an annual salary of $625,000 as
compensation for services (the “Base Salary”). The Base Salary will be paid
according to the Employer’s normal payroll practices and subject to the usual
and required withholdings. Executive’s salary may be reviewed and adjusted
annually by the Board.

(b) Annual Bonus. Executive is eligible to earn a target annual bonus of 100% of
Executive’s Base Salary based upon achievement of performance objectives to be
determined by the Board in its sole discretion and payable upon achievement of
those applicable objectives, subject to minimum and maximum limits as
established by the Company (the “Annual Bonus”). If any Annual Bonus is earned,
it will be paid when practicable after the Board determines it has been earned,
subject to Executive being employed on the date of payment. To the extent that a
cash bonus plan is adopted by the Company, the Annual Bonus will be paid
pursuant to that plan.

(c) Equity Awards. Executive’s current and to-be-granted equity awards are
listed on Exhibit A, and will vest based on the schedule provided therein
subject to Executive’s continued employment through the applicable vesting date.

4. Employee Benefits.

(a) Executive will be entitled to participate in the employee benefit plans
maintained by the Company and the Employer and generally applicable to senior
executives of the Employer. The Employer may cancel or change the benefit plans
and programs it offers at any time and those changes will not breach this
Agreement.

(b) During Executive’s employment with the Company or the Employer, Executive
will be provided coverage under the Company’s or the Employer’s directors’ and
officers’ liability insurance policy and form of indemnification agreement as in
effect for other senior executives of the Employer.

5. Termination of Employment; Severance.

(a) At-Will Employment. Executive, the Employer, and the Company agree that
Executive’s employment as described herein will be “at-will” employment and may
be terminated at any time with or without cause or notice. Executive understands
and agrees that neither his job performance nor promotions, commendations,
bonuses or the like from the Company or the Employer give rise to or in any way
serve as the basis for modification, amendment, or extension, by implication or
otherwise, of his employment with the Company or the Employer.

 

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(b) Terminations of Employment. Executive’s employment may be terminated under
various scenarios addressed in this Section 5(b). Upon any termination of
employment, Executive will receive benefits described in Section 5(b)(i).
Depending on the circumstances of the termination of employment, subject to the
conditions in Section 6, Executive may be entitled to payment of the amounts
listed under one of Section 5(b)(ii) or Section 5(b)(iii). Executive agrees that
upon termination of Executive’s employment for any reason, Executive will resign
as of the date of such termination and to the extent applicable, from the Board
(and any committees thereof) and the board of directors (and any committees
thereof) of any of the affiliates of the Company or the Employer and from any
other positions Executive holds with the Company, the Employer or any of their
affiliates.

(i) Termination for Cause or Resignation Other Than for Good Reason. If
Executive’s employment is terminated for Cause or Executive resigns other than
for Good Reason, Executive will receive:

(1) the Base Salary accrued through the termination date, payable under the
Employer’s usual payment practices;

(2) reimbursement for any unreimbursed business expenses properly incurred by
Executive prior to the termination date in accordance with the reimbursement
policy of the Company or the Employer, as applicable, provided that claims for
reimbursement are submitted in accordance with the applicable reimbursement
policy; and

(3) any fully vested and non-forfeitable employee benefits to which Executive
may be entitled under the Employer’s employee benefit plans (other than benefits
in the nature of severance pay) (the amounts described in clauses (1) through
(3) above are referred to later as the “Accrued Obligations”).

(ii) Termination Without Cause, Resignation for Good Reason. If (x) Executive’s
employment is terminated without Cause, or (y) Executive resigns for Good
Reason, Executive will receive:

(1) the Accrued Obligations;

(2) a lump sum cash payment equal to 150% of Executive’s Base Salary for the
year in which his employment terminated;

(3) acceleration of any of Executive’s outstanding Company equity awards such
that Executive will be vested in the number of Company equity awards that
Executive would be vested in had Executive remained continuously employed with
Company for an additional 12 months; and

(4) a lump sum cash payment equal to 12 multiplied by the monthly health
insurance continuation premiums for the health, dental, and vision insurance
options in which Executive and his eligible dependents are enrolled on the
termination date.

(iii) Termination of Employment During a Change in Control Period. If
Executive’s employment is terminated under circumstances that would entitle
Executive to payment of benefits under Section 5(b)(ii), or Executive’s
employment terminates due to Executive’s death or Disability, and such
termination of employment occurs during the Change in Control Period, then
Executive will receive the benefits described in Section 5(b)(ii), but the
payment in Section 5(b)(ii)(2) will be equal to 200% of target Annual Bonus plus
200% of Executive’s Base Salary in effect on the termination date (or the date
immediately prior to the Change in Control if higher), rather than the vesting
acceleration of Company equity awards described in Section 5(b)(ii)(3), 100% of
all Company equity awards will become vested and fully exercisable effective as
of the later of the date of termination or the date of the consummation of the
Change in Control, and the payments provided in Section 5(b)(ii)(4) will be
calculated with a multiplier of 24.

(c) Exclusive Remedy. If a termination of Executive’s employment with the
Company or the Employer occurs, the provisions of this Section 5 are intended to
be and are exclusive and in lieu of any other rights or remedies to which
Executive, the Company, or the Employer may otherwise be entitled, whether at
law, tort or contract, in equity, or under this Agreement. Executive will be
entitled to no severance or other benefits upon termination of employment other
than those benefits expressly set forth in this Section 5.

 

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6. Conditions to Receipt of Severance; No Duty to Mitigate.

(a) Executive will not receive severance pay or benefits other than the Accrued
Obligations unless (x) Executive signs and does not revoke a separation
agreement and release of claims in a form reasonably satisfactory to the Company
and the Employer (the “Release”) and (y) such Release becomes effective and
irrevocable no later than 60 days following the termination date (such deadline,
the “Release Deadline”). If the Release does not become effective and
irrevocable by the Release Deadline, Executive will forfeit any rights to
severance or benefits under this Agreement. All payments will be made upon the
effectiveness of the Release but will be delayed until a subsequent calendar
year if necessary so their timing does not result in penalty taxation under
Section 409A of the Code (“Section 409A”). Severance payments or benefits will
not be paid or provided until the Release becomes effective and irrevocable. For
avoidance of doubt, although Executive’s severance payments and benefits are
contractual rights, not “damages,” Executive is not required to seek other
employment or otherwise “mitigate damages” as a condition of receiving such
payments and benefits.

(b) If any amount or benefit that would constitute non-exempt “deferred
compensation” under Section 409A would be payable under this Agreement by reason
of Executive’s “separation from service” during a period in which Executive is a
“specified employee” (within the meaning of Section 409A as determined by the
Company), then any payment or benefits will be delayed, without payment of
interest, until the earliest date on which it could be paid or distributed
without being subject to penalty taxation under Section 409A.

(c) Each payment and benefit payable under this Agreement is intended to
constitute a separate payment under Treasury Regulations Section 1.409A-2(b)(2).

(d) Executive’s receipt of any payment or benefits other than Accrued
Obligations will be subject to Executive continuing to comply with her
confidentiality obligations to the Company and the Employer.

7. Definitions.

(a) Cause means (i) willful malfeasance of Executive that has a material adverse
effect on the Company or the Employer; (ii) substantial and continuing willful
refusal by Executive to perform duties ordinarily performed by an employee in
the same position and having similar duties as Executive; (iii) conviction of
Executive of a felony, or of a misdemeanor that would have a material adverse
effect on the goodwill of the Company or the Employer if Executive were to be
retained as an employee of the Company or the Employer; or (iv) willful failure
of Executive to comply with material policies and procedures of the Company or
the Employer, including but not limited to the Lumentum Code of Business Conduct
and Policy Regarding Inside Information and Securities Transactions. Except in
the case of a felony conviction under subsection (iii) above, if the act or
failure to act which is the basis for a decision by the Board to terminate
Executive’s employment for Cause is such that it is susceptible to cure, the
Board shall provide Executive notice that it intends to terminate Executive’s
employment for Cause, specifying the particular act or failure to act and
providing Executive with fifteen (15) days following such notice to cure such
act or failure to act to the satisfaction of the Board.

(b) Change in Control means the occurrence of one or more of the following with
respect to the Company:

(i) the acquisition by any person (or related group of persons), whether by
tender or exchange offer made directly to the Company’s stockholders, open
market purchase, or any other transaction or series of transactions, of stock of
the Company that, together with stock of the Company held by such person or
group, constitutes more than 50% of the total fair market value or total voting
power of the then-outstanding stock of the Company entitled to vote generally in
the election of the members of the Board;

 

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(ii) a merger or consolidation in which the Company is not the surviving entity,
except for a transaction in which both (A) securities representing more than 50%
of the total combined voting power of the surviving entity are beneficially
owned (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934), directly or indirectly, immediately after such merger or
consolidation by persons who beneficially owned Company common stock immediately
prior to such merger or consolidation and (B) the members of the Board
immediately prior to the transaction (the “Existing Board”) constitute a
majority of the board of directors of the surviving entity or its parent entity
immediately after such merger or consolidation;

(iii) any reverse merger in which the Company is the surviving entity but in
which either (A) persons who beneficially owned, directly or indirectly, Company
common stock immediately prior to such reverse merger do not retain immediately
after such reverse merger direct or indirect beneficial ownership of securities
representing more than 50% of the total combined voting power of the Company’s
outstanding securities or (B) the members of the Existing Board do not
constitute a majority of the board of directors of the Company’s parent entity
immediately after such reverse merger; or

(iv) the sale, transfer, or other disposition of all or substantially all of the
assets of the Company (other than a sale, transfer, or other disposition to one
or more subsidiaries of the Company).

Notwithstanding the foregoing, to the extent that any amount constituting
nonqualified deferred compensation within the meaning of Section 409A would
become payable under this Agreement by reason of a Change in Control, such
amount will become payable only if the event constituting a Change in Control
would also constitute a change in ownership or effective control of the Company
or a change in the ownership of a substantial portion of the assets of the
Company within meaning of Section 409A.

(c) Change in Control Period means that period that begins on the earliest of:

(i) the execution of a definitive agreement or letter of intent, in which the
consummation of the transactions described would result in a Change in Control,
or

(ii) the date of the public announcement by the Company of its intent to
consummate a Change in Control ((i) and (ii), the “Potential Change in Control
Date”) and ends on the date that is 18 months following the consummation of the
Change in Control.

(d) Disability means a mental or physical disability, illness, or injury,
evidenced by medical reports from a duly qualified medical practitioner, which
renders Executive unable to perform any one or more of the essential duties of
his position after the provision of a reasonable accommodation, if applicable,
for a period of greater than 90 days.

(e) Good Reason means Executive’s resignation from the Company or the Employer
within 90 days following the occurrence of any of the following events without
Executive’s express written consent:

(i) a material adverse change in Executive’s duties, authority,
responsibilities, job title, or reporting relationships relative to Executive’s
duties, authority, responsibilities, job title, or reporting relationships as in
effect immediately prior to such change in Executive’s duties, authority,
responsibilities, job title, or reporting relationships; provided, however, that
the occurrence of a Change in Control will not, in and of itself, constitute a
material adverse change in Executive’s duties, authority, responsibilities, job
title, or reporting relationships;

 

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(ii) a material reduction by Company or the Employer in the base salary of
Executive as in effect immediately prior to such reduction;

(iii) a material reduction by Company or the Employer in Executive’s annual
bonus opportunity as in effect immediately prior to such reduction;

(iv) the relocation of Executive’s principal work location to a facility or a
location more than 50 miles from Executive’s then-present principal work
location; or

(v) the failure of the Company or the Employer to obtain agreement from any
successor to provide the benefits provided for in this Agreement.

Executive may terminate his employment with the Company or the Employer for Good
Reason by first providing the Board with written notice of the acts or omissions
constituting the grounds for Good Reason within 90 days of the initial existence
of the grounds for Good Reason and after a reasonable cure period of not less
than 90 days following the date the Board receives such notice has passed,
during which such condition must not have been cured.

8. Limitation on Payments; Section 280G. If any severance or other benefits
payable to Executive (i) are “parachute payments” within the meaning of Code
Section 280G and (ii) but for this Section 8, would be subject to the “golden
parachute” excise tax imposed by Section 4999 of the Code, then Executive’s
severance benefits will reduced to a level that will result in no tax under Code
Section 4999 unless it would be better economically for Executive to receive all
of the benefits and pay the excise tax. If a reduction in benefits is necessary
for this purpose, then the reduction will occur in the following order
(1) reduction of the cash severance payments; (2) cancellation of accelerated
vesting of equity awards; and (3) reduction of continued employee benefits. If
the acceleration of vesting of equity award compensation is to be reduced, that
acceleration of vesting will be cancelled in the reverse order of the date of
grant of Executive’s equity awards. Any determination required under this
Section 8 will be made in writing by an independent professional services firm
chosen by the Company immediately prior to a Change in Control and paid for by
the Company and that determination will be conclusive and binding upon Executive
and the Company for all purposes.

9. Miscellaneous.

(a) Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the state of California, without regard to conflicts
of laws principles thereof.

(b) Entire Agreement. This Agreement, the equity award plans and agreements for
the equity awards listed on Exhibit A, and the confidential information
agreement attached as Exhibit B, contain the entire understanding of the parties
with respect to Executive’s employment and supersedes any prior agreements or
understandings (including verbal agreements) between the parties relating to the
subject matter of this Agreement. There are no restrictions, agreements,
promises, warranties, covenants or undertakings between the parties with respect
to the subject matter herein other than those expressly set forth herein.
Notwithstanding the foregoing, Executive shall be covered by the Company’s or
the Employer’s applicable liability insurance policy and its indemnification
provisions for actions taken on behalf of the Company or the Employer during the
course of Executive’s employment. This Agreement and its benefits may not be
altered, modified, or amended except by written instrument signed by the parties
that references this Section 9(b).

 

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(c) Severability. In the event that any one or more of the provisions of this
Agreement will be or become invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions of this
Agreement will not be affected.

(d) Assignment. This Agreement, and all of Executive’s rights and duties under
it, are not assignable or delegable by Executive. Any purported assignment or
delegation by Executive will be null and void. This Agreement may be assigned by
the Company or the Employer to a person or entity which is an affiliate or a
successor in interest to substantially all of its business operations. Upon such
assignment, the rights and obligations of the Company or the Employer hereunder
will become the rights and obligations of such affiliate or successor person or
entity.

(e) Successors; Binding Agreement. This Agreement will inure to the benefit of
and be binding upon personal or legal representatives, executors,
administrators, successors and heirs.

(f) Notice. The notices and all other communications provided for in this
Agreement will be deemed to have been duly given when delivered by hand or
overnight courier addressed to the addresses set forth below, or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address will be effective only upon
receipt.

 

Lumentum Holdings Inc.    To most recent address as set forth 400 N. McCarthy
Blvd.    in Executive’s personnel records Milpitas, CA 95035    Attention:
General Counsel    Lumentum Operations LLC    400 N. McCarthy Blvd.    Milpitas,
CA 95035    Attention: General Counsel   

(g) Executive Representations. Executive represents to the Company and the
Employer that the execution of this Agreement by Executive, the Company and the
Employer, and the performance by Executive of Executive’s duties hereunder will
not breach, or otherwise contravene, the terms of any employment agreement or
other agreement or policy to which Executive is a party or otherwise bound.
Executive acknowledges that he has had the opportunity to discuss this matter
with and obtain advice from his private attorney, has had sufficient time to,
and has carefully read and fully understands all the provisions of this
Agreement, and is knowingly and voluntarily entering into this Agreement.

(h) Amendment; Waiver of Breach. No amendment of this Agreement will be
effective unless it is in writing and signed by both parties. No waiver of
satisfaction of a condition or failure to comply with an obligation under this
Agreement will be effective unless it is in writing and signed by the party
granting the waiver, and no such waiver will be a waiver of satisfaction of any
other condition or failure to comply with any other obligation. To be valid, any
document signed by the Company or the Employer must be signed by the Chairman of
the Company’s Board.

(i) Counterparts. This Agreement may be executed in counterparts. Each
counterpart will have the same force and effect as an original and will
constitute an effective, binding agreement.

 

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Each party is signing this Agreement on the date set out below its signature.

 

Lumentum Holdings, Inc.     Executive

/s/ Martin Kaplan

   

/s/ Alan Lowe

By:   Martin Kaplan, Chairman of the Board     By:   Alan Lowe August 4, 2015  
  August 4, 2015 Lumentum Operations, LLC      

/s/ Aaron Tachibana

      By:   Aaron Tachibana, Chief Financial Officer       August 4, 2015      

 

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Exhibit A

Current Equity Awards (number of shares represents JDSU shares pre-spin)

 

Grant Date

   Award Number    Award Type    Number of
Shares      Exercise Price if
Any    Vested on
8/1/2015      Unvested on
8/1/2015  

8/22/2012

   MS0028    MSU      65,000            36,226         21,667   

8/20/2013

   MS0035    MSU      60,000            0         40,000   

8/20/2014

   MS0054    MSU      50,000            0         50,000   

8/22/2012

   RS10616    RSU      65,000            59,556         5,444   

8/20/2013

   RS12725    RSU      60,000            34,875         25,125   

8/20/2014

   RS15055    RSU      50,000            0         50,000   

Equity Awards to be Granted

 

Grant Date

  

Award Number

  

Award Type

  

Number of

Shares

  

Performance Conditions

if Any

  

Vesting Schedule

      Performance Share Units    $750,000 / conversion price   

xx% of units earned if FY16 organic revenue growth of xx% or higher is achieved.

 

 

 

xx% of units earned if FY17 organic revenue growth of xx% is achieved (and not
FY16)

  

1/3 per year on each of the first three anniversaries of the grant date

 

 

 

1/2 per year on each of the second and third anniversaries of the grant date

      Restricted Stock Units    $3,100,000 / conversion price       33% on the
first anniversary and then 8 equal quarterly vests for the following two years

 

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Exhibit B

Confidential Information Agreement

 

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