Exhibit 10.1

TAX MATTERS AGREEMENT

BY AND BETWEEN

JDS UNIPHASE CORPORATION

AND

LUMENTUM HOLDINGS INC.

JULY 31, 2015

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TABLE OF CONTENTS

 

          Page  

ARTICLE I

  

DEFINITIONS

     2   

1.1

  

Certain Definitions

     2   

1.2

  

Other Terms

     7   

ARTICLE II

  

PREPARATION AND FILING OF TAX RETURNS

     8   

2.1

  

JDSU’s Responsibility

     8   

2.2

  

Holdings’ Responsibility

     8   

2.3

  

Agent

     8   

2.4

  

Manner of Tax Return Preparation

     8   

ARTICLE III

  

LIABILITY FOR ORDINARY COURSE TAXES

     9   

3.1

  

JDSU’s Liability for Ordinary Course Taxes and Contribution

     9   

3.2

  

Holdings’ Liability for Ordinary Course Taxes

     9   

3.3

  

Straddle Periods

     9   

3.4

  

Refunds

     9   

3.5

  

Payment of Tax Liability

     9   

3.6

  

Computation

     9   

ARTICLE IV

  

SEPARATION TAXES, TRANSFER TAXES, TAX ITEMS AND TAX ASSETS

     10   

4.1

  

Separation Taxes

     10   

4.2

  

Continuing Covenants

     10   

4.3

  

Transfer Taxes

     12   

4.4

  

Allocation of Tax Items

     12   

4.5

  

Allocation of Tax Assets

     12   

ARTICLE V

  

EMPLOYEE WAGES

     12   

ARTICLE VI

  

INDEMNIFICATION

     13   

6.1

  

In General

     13   

6.2

  

Inaccurate or Incomplete Information

     13   

6.3

  

No Indemnification for Tax Items

     13   

ARTICLE VII

  

PAYMENTS

     13   

7.1

  

Estimated Tax Payments

     13   

7.2

  

True-Up Payments

     13   

7.3

  

Redetermination Amounts

     14   

7.4

  

Payments of Refunds and Credits

     14   

7.5

  

Payments Under This Agreement

     14   

ARTICLE VIII

  

TAX PROCEEDINGS

     15   

8.1

  

In General

     15   

8.2

  

Participation of non-Filing Party

     15   

8.3

  

Notice

     15   

 

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TABLE OF CONTENTS

(continued)

 

          Page  

8.4

  

Control of Separation Tax Proceedings

     15   

ARTICLE IX

  

MISCELLANEOUS PROVISIONS

     15   

9.1

  

Corporate Power; Facsimile Signatures

     15   

9.2

  

Cooperation and Separation of Information

     16   

9.3

  

Dispute Resolution

     17   

9.4

  

Confidentiality

     18   

9.5

  

Setoff

     18   

9.6

  

Governing Law; Submission to Jurisdiction; Waiver of Trial

     18   

9.7

  

Survival of Covenants

     18   

9.8

  

Waivers of Default

     18   

9.9

  

Force Majeure

     18   

9.10

  

Notices

     18   

9.11

  

Termination

     19   

9.12

  

Changes in Law

     19   

9.13

  

Severability

     20   

9.14

  

Entire Agreement

     20   

9.15

  

Assignment; No Third-Party Beneficiaries

     20   

9.16

  

Specific Performance

     20   

9.17

  

Amendment

     20   

9.18

  

Rules of Construction

     20   

9.19

  

Counterparts

     21   

 

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SCHEDULES

 

SCHEDULE 4.5(A)    Tax Assets

 

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TAX MATTERS AGREEMENT

This Tax Matters Agreement (this “Agreement”) dated as of July 31, 2015, is by
and between: JDS Uniphase Corporation, a Delaware corporation which is
anticipated to be renamed Viavi Solutions, Inc. (“JDSU”), and Lumentum Holdings
Inc., a Delaware corporation, (“Holdings”). Certain terms used in this Agreement
are defined in Section 1.1.

RECITALS

WHEREAS, as of the date hereof, JDSU and its direct and indirect domestic
subsidiaries are members of an Affiliated Group, of which JDSU is the common
parent; and

WHEREAS, the Board of Directors of JDSU has determined that it is in the best
interests of JDSU and its shareholders to create a new publicly traded company
to operate the Holdings Business; and

WHEREAS, pursuant to the CONTRIBUTION AGREEMENT, JDSU has previously transferred
certain assets and liabilities to Lumentum Operations LLC (“Lumentum”) in
consideration for one hundred percent (100%) of the membership interests in
Lumentum Operations LLC (the “Membership Interest”) (“Contribution”); and

WHEREAS, after the Contribution, JDSU transferred its Membership Interest to
Lumentum Inc. in consideration for 58,758,044 shares of Common Stock of Lumentum
Inc., par value $0.001 (the “Lumentum Common Stock”), 40,000 shares of Series A
Preferred Stock of Lumentum Inc. (the “Lumentum Series A Stock”) and 104,883
shares of Series B Preferred Stock of Lumentum Inc. (the “Lumentum Series B
Stock”); and

WHEREAS, pursuant to the SEPARATION AND DISTRIBUTION AGREEMENT, among other
things, JDSU will contribute the Lumentum Common Stock and Lumentum Series B
Stock it holds to Holdings (the “Separation”); and

WHEREAS, pursuant to the SEPARATION AND DISTRIBUTION AGREEMENT, JDSU will
distribute all of the issued and outstanding common stock of Holdings (“Holdings
Common Stock”) to the holders of issued and outstanding shares of the common
stock of JDSU (“JDSU Common Stock”) as of the Record Date by means of a pro rata
distribution of [•] of Holdings Common Stock for every [•] of JDSU Common Stock
held thereby (the “Distribution”); and

WHEREAS, for U.S. federal income tax purposes, the Contribution contemplated by
the SEPARATION AND DISTRIBUTION AGREEMENT is intended to constitute a taxable
disposition of the Lumentum Assets that results in a tax basis step-up; and

WHEREAS, for U.S. federal income tax purposes, the Separation and Distribution
contemplated by the SEPARATION AND DISTRIBUTION AGREEMENT, taken together, are
intended to qualify as a tax-free transaction pursuant to sections 355(a) and
368(a)(1)(D) of the Code, and this Agreement is hereby adopted as a plan of
reorganization within the meaning of section 368 of the Code and sections
1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations (the
“Regulations”); and

WHEREAS, in contemplation of the Distribution, pursuant to which the Holdings
Group will cease to be members of the Affiliated Group of which JDSU is the
common parent, the parties have determined to enter into this Agreement, setting
forth their agreement with respect to certain tax matters.

 

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AGREEMENT

NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties, intending
to be legally bound hereby, agree as follows:

Article I

DEFINITIONS

1.1 Certain Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified in this section:

(1) “Active Trade or Business” means the active conduct (as defined in
Section 355(b)(2) of the Code and the regulations thereunder) by Holdings and
its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code)
of the Holdings Business as conducted immediately prior to the Distribution or
by JDSU and its “separate affiliated group” (as defined in Section 355(b)(3)(B)
of the Code) of the JDSU Business as conducted immediately prior to the
Distribution.

(2) “Affiliated Group” means an affiliated group of corporations within the
meaning of section 1504(a)(1) of the Code that files a consolidated return for
United States federal Income Tax purposes.

(3) “After Tax Amount” means any additional amount necessary to reflect the Tax
consequences of the receipt or accrual of any payment required to be made under
this Agreement (including payment of an additional amount or amounts hereunder
and the effect of the deductions available for interest paid or accrued and for
Taxes such as state and local Income Taxes), determined by using the highest
applicable statutory corporate Income Tax rate (or rates, in the case of an item
that affects more than one Tax) for the relevant taxable period (or portion
thereof).

(4) “Agreement” shall have the meaning set forth in the preamble hereto.

(5) “Audit” means any audit, assessment of Taxes, other examination by any
Taxing Authority, proceeding, or appeal of such a proceeding relating to Taxes,
whether administrative or judicial, including proceedings relating to competent
authority determinations.

(6) “Code” means the Internal Revenue Code of 1986, as amended.

(7) “Combined Return” means any Tax Return, other than with respect to United
States federal Income Taxes, filed on a consolidated, combined (including nexus
combination, worldwide combination, domestic combination, line of business
combination or any other form of combination) or unitary basis wherein Holdings
or one or more Holdings Affiliates join in the filing of such Tax Return (for
any taxable period or portion thereof) with JDSU or one or more JDSU Affiliates.

(8) “Consolidated Return” means any Tax Return with respect to United States
federal Income Taxes filed on a consolidated basis wherein Holdings or one or
more Holdings Affiliates join in the filing of such Tax Return (for any taxable
period or portion thereof) with JDSU or one or more JDSU Affiliates.

(9) “Contribution” shall have the meaning set forth in the recitals hereto.

 

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(10) “CONTRIBUTION AGREEMENT” means the CONTRIBUTION AGREEMENT dated as of [•],
2015, by and between JDSU and Lumentum.

(11) “Distribution” shall have the meaning set forth in the recitals hereto.

(12) “Distribution Date” means the date on which the Distribution is effected.

(13) “Distribution Effective Time” means the time at which the Distribution
occurs on the Distribution Date, which shall be deemed to be 12:01 a.m., Eastern
Daylight Time.

(14) “Estimated Tax Installment Date” means, with respect to United States
federal Income Taxes, the estimated Tax installment due dates prescribed in
section 6655(c) of the Code and, in the case of any other Tax, means any other
date on which an installment payment of an estimated amount of such Tax is
required to be made.

(15) “Filing Party” shall have the meaning set forth in Section 8.1.

(16) “Final Determination” means the final resolution of liability for any Tax
for any taxable period, by or as a result of (i) a final and unappealable
decision, judgment, decree or other order by any court of competent
jurisdiction; (ii) a final settlement with the IRS, a closing agreement or
accepted offer in compromise under section 7121 or section 7122 of the Code, or
a comparable agreement under the laws of other jurisdictions, which resolves the
entire Tax liability for any taxable period; (iii) any allowance of a refund or
credit in respect of an overpayment of Tax, but only after the expiration of all
periods during which such refund may be recovered by the jurisdiction imposing
the Tax; or (iv) any other final disposition, including by reason of the
expiration of the applicable statute of limitations.

(17) “Force Majeure” means, with respect to a party, an event beyond the control
of such party (or any Person acting on its behalf), which by its nature could
not reasonably have been foreseen by such party (or such Person), or, if it
could have reasonably been foreseen, was unavoidable, and includes acts of God,
storms, floods, riots, fires, sabotage, civil commotion or civil unrest,
interference by civil or military authorities, acts of war (declared or
undeclared) or armed hostilities or other national or international calamity or
one (1) or more acts of terrorism or failure of energy sources or distribution
facilities.

(18) “Holdings” shall have the definition set forth in the preamble hereto.

(19) “Holdings Affiliate” means any corporation or other entity directly or
indirectly “controlled” by Holdings at the time in question, where “control”
means the ownership of fifty percent (50%) of the ownership interests of such
corporation or other entity (by vote or value) or the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such corporation or other entity.

(20) “Holdings Business” means the business and operations conducted by Holdings
and the Holdings Affiliates, including the Lumentum Business, as such business
and operations will continue after the Distribution Date.

(21) “Holdings Business Records” shall have the meaning set forth in Section
9.2(b).

(22) “Holdings Capital Stock” means all classes or series of capital stock of
Holdings, including (i) common stock, (ii) all options, warrants and other
rights to acquire such capital stock, and (iii) all instruments properly treated
as stock in Holdings for U.S. federal income tax purposes.

 

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(23) “Holdings Group Assets” shall mean the assets of the Holdings Group after
the Distribution Date, as determined under the SEPARATION AND DISTRIBUTION
AGREEMENT by and among the parties.

(24) “Holdings Group” means the Affiliated Group, or similar group of entities
as defined under corresponding provisions of the laws of other jurisdictions, of
which Holdings will be the common parent corporation immediately after the
Distribution and including any corporation or other entity which may become a
member of such group from time to time.

(25) “Holdings Separate Tax Amount” shall mean with respect to any Tax Return,
the amount of Taxes attributable to a Post-Distribution Period that Holdings and
each Holdings Affiliate would have incurred if they had filed a consolidated
return, combined return or a separate return, as the case may be, separate from
the members of the JDSU Group, for the relevant Tax period, and such amount
shall be computed by JDSU in a manner consistent with (i) general Tax accounting
principles, (ii) the Code and the Treasury regulations promulgated thereunder,
(iii) applicable provisions of the laws of any other jurisdictions, and
(iii) past practice.

(26) “Income Tax” means any federal, state, local or foreign Tax determined (in
whole or in part) by reference to net income, net worth, gross receipts or
capital, or any such Taxes imposed in lieu of such a Tax. For the avoidance of
doubt, the term “Income Tax” includes any franchise Tax, net worth, gross
receipts, capital or any such Taxes imposed in lieu of such a Tax.

(27) “Income Tax Return” means any Tax Return relating to any Income Tax.

(28) “IRS” means the United States Internal Revenue Service or any successor
thereto, including its agents, representatives, and attorneys.

(29) “JDSU” shall have the meaning set forth in the preamble hereto.

(30) “JDSU Affiliate” means any corporation or other entity directly or
indirectly “controlled” by JDSU where “control” means the ownership of fifty
percent (50%) of the ownership interests of such corporation or other entity (by
vote or value) or the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of such corporation or
other entity, but at all times excluding Holdings and all Holdings Affiliates.

(31) “JDSU Business” means all of the businesses and operations conducted by
JDSU and the JDSU Affiliates, excluding the Holdings Business at any time,
whether prior to, or after the Distribution Date.

(32) “JDSU Group” means the Affiliated Group, or similar group of entities as
defined under corresponding provisions of the laws of other jurisdictions, of
which JDSU is the common parent corporation, and any corporation or other entity
which may be, may have been or may become a member of such group from time to
time, but excluding any member of the Holdings Group.

(33) “JDSU Group Assets” shall mean the assets of JDSU after the Distribution
Date, as determined under the SEPARATION AND DISTRIBUTION AGREEMENT by and among
the parties.

(34) “Lumentum” shall have the meaning set forth in the recitals hereto.

(35) “Lumentum Assets” means the assets transferred to Lumentum pursuant to the
CONTRIBUTION AGREEMENT.

 

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(36) “Lumentum Business” means the communications and commercial optical
products business of JDSU, including (a) the businesses and operations conducted
prior to the Distribution Effective Time by Lumentum, but excluding those
businesses set forth on SCHEDULE 1.1(28) of the CONTRIBUTION AGREEMENT, and
(b) any other businesses or operations conducted primarily through the use of
Lumentum Assets.

(37) “Non-Income Tax Return” means any Tax Return relating to any Tax other than
an Income Tax.

(38) “Officer’s Certificate” means a letter executed by an officer of JDSU or
Holdings and provided to Tax Adviser as a condition for the completion of a Tax
Opinion.

(39) “Ordinary Course Taxes” means Taxes other than (i) Separation Taxes,
(ii) Transfer Taxes and (iii) Taxes resulting from, or arising in connection
with, the Contribution.

(40) “Owed Party” shall have the meaning set forth in Section 7.5.

(41) “Owing Party” shall have the meaning set forth in Section 7.5.

(42) “Payment Period” shall have the meaning set forth in Section 7.5(e).

(43) “Post-Distribution Period” means any taxable period (or portion thereof)
beginning after the Distribution Date.

(44) “Pre-Distribution Period” means any taxable period (or portion thereof)
ending on or before the Distribution Date.

(45) “Separation” shall have the meaning set forth in the recitals hereto.

(46) “SEPARATION AND DISTRIBUTION AGREEMENT” means the SEPARATION AND
DISTRIBUTION AGREEMENT dated as of July 31, 2015, by and between JDSU, Lumentum
and Holdings.

(47) “Separation Taxes” means any Taxes imposed on, or increase in Taxes
incurred by, JDSU, Holdings or any of their respective Affiliates, and any Taxes
imposed on any third party for which JDSU, Holdings or any of their respective
Affiliates is or becomes liable for any reason, resulting from, or arising in
connection with, the failure of the Separation and Distribution to qualify as a
transaction in which no income, gain or loss is recognized pursuant to sections
355 and 368(a)(1)(D) of the Code (including any Tax resulting from the
application of section 355(d) or section 355(e) of the Code to the Separation
and Distribution but only to the extent such Tax is not reduced by a Tax Asset)
or corresponding provisions of the laws of any other jurisdictions.

(48) “Sole Responsibility Item” means any Tax Item for which the non-Filing
Party has the entire economic liability under this Agreement.

(49) “Straddle Period” shall mean any taxable period that begins on or before
and ends after the Distribution Date.

(50) “Supplemental Tax Opinion” shall have the meaning set forth in Section
4.2(c).

 

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(51) “Tax Adviser” means a nationally recognized accounting firm (i) selected by
JDSU to provide a Tax Opinion and (ii) selected by the parties, by mutual
consent, to provide a Supplemental Tax Opinion.

(52) “Tax Asset” means any Tax Item that has accrued for Tax purposes, but has
not been realized during the taxable period in which it has accrued, and that
could reduce a Tax in another taxable period, including a net operating loss,
net capital loss, research and development tax credit, investment tax credit,
foreign tax credit, charitable deduction or credit related to alternative
minimum tax or any other Tax credit.

(53) “Tax Benefit” means a reduction in the Tax liability (or increase in refund
or credit or any item of deduction or expense) of a taxpayer (or of the
Affiliated Group, or similar group of entities as defined under corresponding
provisions of the laws of any other jurisdiction, of which it is a member) for
any taxable period. Except as otherwise provided in this Agreement, a Tax
Benefit shall be deemed to have been realized or received from a Tax Item in a
taxable period only if and to the extent that the Tax liability of the taxpayer
(or of the Affiliated Group, or similar group of entities as defined under
corresponding provisions of the laws of any other jurisdiction, of which it is a
member) for such period, after taking into account the effect of the Tax Item on
the Tax liability of such taxpayer (or of the Affiliated Group, or similar group
of entities as defined under corresponding provisions of the laws of any other
jurisdiction, of which it is a member) in the current period and all prior
periods, is less than it would have been had such Tax liability been determined
without regard to such Tax Item.

(54) “Tax Detriment” means an increase in the Tax liability (or reduction in
refund or credit or any item of deduction or expense) of a taxpayer (or of the
Affiliated Group, or similar group of entities as defined under corresponding
provisions of the laws of any other jurisdiction, of which it is a member) for
any taxable period. Except as otherwise provided in this Agreement, a Tax
Detriment shall be deemed to have been realized or incurred from a Tax Item in a
taxable period only if and to the extent that the Tax liability of the taxpayer
(or of the Affiliated Group, or similar group of entities as defined under
corresponding provisions of the laws of any other jurisdiction, of which it is a
member) for such period, after taking into account the effect of the Tax Item on
the Tax liability of such taxpayer (or of the Affiliated Group, or similar group
of entities as defined under corresponding provisions of the laws of any other
jurisdiction, of which it is a member) in the current period and all prior
periods, is more than it would have been had such Tax liability been determined
without regard to such Tax Item.

(55) “Tax Item” means any item of income, gain, loss, deduction, expense or
credit, or other attribute that may have the effect of increasing or decreasing
any Tax.

(56) “Tax Opinion” means an opinion issued by Tax Adviser as one of the
conditions to completing the Distribution addressing certain United States
federal Income Tax consequences of the Distribution under sections 355 and
368(a)(1)(D) of the Code

(57) “Tax Return” means any return, report, certificate, form or similar
statement or document (including any related or supporting information or
schedule attached thereto and any information return, amended tax return, claim
for refund or declaration of estimated Tax) required to be supplied to, or filed
with, a Taxing Authority in connection with the determination, assessment or
collection of any Tax or the administration of any laws, regulations or
administrative requirements relating to any Tax.

(58) “Taxes” means all federal, state, local or foreign taxes, charges, fees,
duties, levies, imposts, rates or other assessments, including income, gross
receipts, excise, property, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code

 

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§59A), customs duties, profits, sales, use, license, capital stock, transfer,
registration, franchise, payroll, unemployment, disability, withholding, social
security, value added, alternative or add-on minimum, estimated, or other tax of
any kind whatsoever, (including any interest, penalties or additions
attributable thereto and including any obligations to indemnify or otherwise
assume or succeed to the Tax liability of any other Person) and a “Tax” shall
mean any one of such Taxes .

(59) “Taxing Authority” means any governmental authority or any subdivision,
agency, commission or authority thereof or any quasi-governmental or private
body having jurisdiction over the assessment, determination, collection or
imposition of any Tax (including the IRS).

(60) “Transfer Taxes” means all transfer, sales, use, excise, stock, stamp,
stamp duty, stamp duty reserve, stamp duty land, documentary, filing, recording,
registration, value-added and other similar Taxes (excluding, for the avoidance
of doubt, any income, gains, profit or similar Taxes, however assessed).

1.2 Other Terms. For purposes of this Agreement, the following terms have the
meanings set forth in the sections indicated:

 

Term

  

Section

Dispute    Section 9.3 Holdings Common Stock    Recitals Initial Notice   
Section 9.3(b) JDSU Common Stock    Recitals Law    Section 1.1(32) of the
CONTRIBUTION AGREEMENT Lumentum Common Stock    Recitals Lumentum Series A Stock
   Recitals Lumentum Series B Stock    Recitals Membership Interest    Recitals
Person    Section 1.1(33) of the CONTRIBUTION AGREEMENT PLR    Section 4.2(c)
Record Date    Section 1.1(28) of the SEPARATION AND DISTRIBUTION AGREEMENT
Regulations    Recitals Response    Section 9.3(b)

 

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Article II

PREPARATION AND FILING OF TAX RETURNS

2.1 JDSU’s Responsibility. Subject to the other applicable provisions of this
Agreement, JDSU shall have sole and exclusive responsibility for the preparation
and filing of:

(a) all Consolidated Returns and all Combined Returns for any taxable period;

(b) all Income Tax Returns (other than Consolidated Returns and Combined
Returns) with respect to JDSU and/or any JDSU Affiliate for any taxable period;

(c) all Non-Income Tax Returns with respect to JDSU, any JDSU Affiliate, or the
JDSU Business or any part thereof for any taxable period; and

(d) all Non-Income Tax Returns with respect to Holdings, any Holdings Affiliate,
or the Holdings Business or any part thereof, that are required to be filed for
any taxable period (taking into account any extension of time which has been
requested or received) on or prior to the Distribution Date.

2.2 Holdings’ Responsibility. Holdings shall have sole and exclusive
responsibility for the preparation and filing of:

(a) all Income Tax Returns (other than Consolidated Returns and Combined
Returns) with respect to Holdings and/or any Holdings Affiliate for any taxable
period that are required to be filed after the Distribution Date; and

(b) all Non-Income Tax Returns with respect to Holdings, any Holdings Affiliate,
or the Holdings Business or any part thereof, that are required to be filed for
any taxable period (taking into account any extension of time which has been
requested or received) after the Distribution Date.

2.3 Agent. Subject to the other applicable provisions of this Agreement,
Holdings hereby irrevocably designates, and agrees to cause each Holdings
Affiliate to so designate, JDSU as its sole and exclusive agent and
attorney-in-fact to take such action (including execution of documents) as JDSU,
in its sole discretion, may deem appropriate in any and all matters (including
Audits) relating to any Tax Return described in Section 2.1 subject, however, to
the joint control provisions and control by a non-Filing Party provisions in
Section 8.

2.4 Manner of Tax Return Preparation.

(a) Unless otherwise required by a Taxing Authority, the parties hereby agree to
prepare and file all Tax Returns, and to take all other actions, in a manner
consistent with this Agreement. All Tax Returns shall be filed on a timely basis
(taking into account applicable extensions) by the party responsible for filing
such returns under this Agreement.

(b) Subject to the other applicable provisions of this Agreement, JDSU and
Holdings shall each have the exclusive right, in its sole discretion, with
respect to any Tax Return for which it is responsible under Sections 2.1 and
2.2, to determine (1) the manner in which such Tax Return shall be prepared and
filed, including the elections, method of accounting, positions, conventions and
principles of taxation to be used and the manner in which any Tax Item shall be
reported, (2) whether any extensions shall be requested, (3) the elections that
will be made on such Tax Return, (4) whether any amended Tax Returns shall be
filed, (5) whether any claims for refund shall be made, (6) whether any refunds
shall be paid by way of refund or credited against any liability for the related
Tax, and (7) whether to retain outside firms to prepare and/or review such Tax
Returns.

 

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Article III

LIABILITY FOR ORDINARY COURSE TAXES

3.1 JDSU’s Liability for Ordinary Course Taxes and Contribution. JDSU shall be
liable for Taxes resulting from, or arising in connection with, the Contribution
and for the following Ordinary Course Taxes, and shall be entitled to receive
and retain all refunds of:

(a) all Ordinary Course Taxes attributable to the JDSU Group, the JDSU Group
Assets or the JDSU Business, in each case for any and all periods;

(b) except with respect to foreign Holdings Affiliates, all Ordinary Course
Taxes attributable to the Holdings Group, the Holdings Group Assets or the
Holdings Business, in each case for any and all Pre-Distribution Periods; and

(c) all Ordinary Course Taxes for which the Holdings Group may be liable by
virtue of any agreement or arrangement with respect to Taxes (other than
pursuant to this Agreement or any other agreements entered into in connection
with the Distribution) entered into on or prior to the Distribution Date.

3.2 Holdings’ Liability for Ordinary Course Taxes. Holdings and each Holdings
Affiliate shall be liable for (i) all Ordinary Course Taxes attributable to any
and all members of the Holdings Group or the Holdings Group Assets or the
Holdings Business, in each case for any and all Post-Distribution Periods and
(ii) all Ordinary Course Taxes attributable to foreign Holdings Affiliates for
any and all periods. Notwithstanding anything to the contrary in Section 3.1 and
this Section 3.2, Holdings and each Holdings Affiliate shall be liable for, and
shall indemnify and hold harmless JDSU from and against any liability for, (1)
Taxes directly arising as a result of any pre-Distribution license or other
transfer of certain intellectual property rights related to the Holdings
Business to a foreign Holdings Affiliate and (2) any and all costs (including,
e.g., legal fees) related to the adoption and implementation of such license or
transfer, but, in the case of (1) and (2), only if both Holdings and JDSU agreed
to such license or transfer.

3.3 Straddle Periods. For purposes of Sections 3.1 and 3.2, in the case of any
Straddle Period, (i) property taxes and exemptions, allowances or deductions
that are calculated on an annualized basis shall be apportioned between the
Pre-Distribution Period and the Post-Distribution Period on a daily pro-rata
basis and (ii) all other Ordinary Course Taxes shall be apportioned between the
Pre-Distribution Period and the Post-Distribution Period on a closing of the
books basis as of the close of business on the Distribution Date.

3.4 Refunds. The amount of any refunds, credits or offsets of Ordinary Course
Taxes relating to (i) the Holdings Group (other than foreign Holdings
Affiliates), the Holdings Group Assets or the Holdings Business for a
Pre-Distribution Period shall be for the account of JDSU, (ii) the Holdings
Group, the Holdings Group Assets or the Holdings Business for a
Post-Distribution Period shall be for the account of Holdings, and (iii) the
JDSU Group, the JDSU Group Assets or the JDSU Business shall for the account of
JDSU.

3.5 Payment of Tax Liability. If one party is liable or responsible for Taxes,
under Sections 3.1 through 3.3, with respect to Tax Returns for which another
party is responsible for preparing and/or filing, or with respect to Taxes that
are paid by another party, then the liable or responsible party shall pay the
Taxes (or a reimbursement of such Taxes) to the other party pursuant to Section
7.5.

3.6 Computation. With respect to any Tax Return filed by JDSU for which Holdings
is liable for Taxes under this Article III, JDSU shall provide Holdings with a
written calculation in reasonable detail (including copies of work sheets and
other materials used in preparation thereof) setting

 

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forth the amount of any Holdings Separate Tax Amount or estimated Holdings
Separate Tax Amount (for purposes of Section 7.1). Holdings shall have the right
to review and comment on such calculation. Any dispute with respect to such
calculation shall be resolved pursuant to Section 9.3; provided, however, that,
notwithstanding any dispute with respect to any such calculation, in no event
shall any payment attributable to the amount of any Holdings Separate Tax Amount
or estimated Holdings Separate Tax Amount be paid later than the date provided
in Section 7.

Article IV

SEPARATION TAXES, TRANSFER TAXES, TAX ITEMS AND TAX ASSETS

4.1 Separation Taxes.

(a) JDSU’s Liability for Separation Taxes. JDSU shall be liable for any
Separation Taxes other than such Taxes for which Holdings is liable under
Section 4.1(b).

(b) Holdings’ Liability for Separation Taxes. Holdings shall be liable for any
Separation Taxes attributable to, caused by, or result from, one or more of the
following:

(i) any action or omission by Holdings (or any Holdings Affiliate) after the
Distribution at any time, that is inconsistent with any material, information,
covenant or representation related to Holdings, any Holdings Affiliate, or the
Holdings Business in an Officer’s Certificate, Tax Opinion or Supplemental Tax
Opinion;

(ii) any action or omission by Holdings (or any Holdings Affiliate), after the
Distribution Date (including any act or omission that is in furtherance of,
connected to, or part of a plan or series of related transactions (within the
meaning of section 355(e) of the Code) occurring on or prior to the Distribution
Date) including a cessation, transfer to affiliates or disposition of the Active
Trade or Business, stock buyback or payment of an extraordinary dividend;

(iii) any acquisition of any stock or assets of Holdings (or any Holdings
Affiliate) by one or more other persons (other than JDSU or any JDSU Affiliate)
following the Distribution;

(iv) any issuance of stock by Holdings (or any Holdings Affiliate) after the
Distribution, including any issuance pursuant to the exercise of employee stock
options or other employment related arrangements or the exercise of warrants, or
change in ownership of stock in Holdings (or any Holdings Affiliate) after the
Distribution;

(v) any action or omission by Holdings (or any Holdings Affiliate) in breach of
the covenants set forth herein, or in the Separation and Distribution Agreement.

(c) Representations. Each of JDSU and Holdings represents that, as of the date
of this Agreement, neither it nor its Affiliates know of any fact that may cause
the Separation and Distribution to fail to qualify under section 355 or section
368(a)(1)(D) of the Code. Each of JDSU and Holdings further represents that
(A) it has examined the Tax Opinion and Officer’s Certificates prior to the date
hereof and (B) subject to any qualifications therein, all facts contained in
such Tax Opinion or Officer’s Certificates that concern or relate to such JDSU,
Holdings or any member of its Group is and, to the extent such facts relate to
future events or circumstances, will be, true, correct and complete.

4.2 Continuing Covenants.

 

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(a) In General. Each of JDSU (for itself and each JDSU Affiliate) and Holdings
(for itself and each Holdings Affiliate) agrees (1) not to take any action
reasonably expected to result in an increased Tax liability to the other, a
reduction in a Tax Asset of the other or an increased liability to the other
under this Agreement, and (2) to take any action reasonably requested by the
other that would reasonably be expected to result in a Tax Benefit or avoid a
Tax Detriment to the other, provided, in either such case, that the taking or
refraining to take such action does not result in any additional cost not fully
compensated for by the other party or any other adverse effect to such party.
The parties hereby acknowledge that the preceding sentence is not intended to
limit, and therefore shall not apply to, the rights of the parties with respect
to matters otherwise covered by this Agreement.

(b) Holdings Restrictions. Holdings agrees that it will not knowingly take or
fail to take, or permit any Holdings Affiliate to knowingly take or fail to
take, any action where such action or failure to act would be inconsistent with
any material, information, covenant or representation that relates to facts or
matters related to Holdings (or any Holdings Affiliate) or within the control of
Holdings and is contained in an Officer’s Certificate, Tax Opinion or
Supplemental Tax Opinion (except where such material, information, covenant or
representation was not previously disclosed to Holdings) other than as permitted
in this Section 4.2. For this purpose an action is considered inconsistent with
a representation if the representation states that there is no plan or intention
to take such action. Holdings agrees that it will not take (and it will cause
the Holdings Affiliates to refrain from taking) any position on a Tax Return
that is inconsistent with the treatment of the Separation and Distribution as
transactions in which no income, gain, or loss is recognized pursuant to
sections 355 and 368(a)(1)(D) of the Code.

(c) Certain Holdings Actions Following the Distribution. Holdings agrees that,
during the two (2) year period following the Distribution, without first
obtaining, at Holdings’ own expense, a private letter ruling (a “PLR”) from the
IRS or supplemental opinion from Tax Adviser that such action will not result in
Separation Taxes (a “Supplemental Tax Opinion”), unless JDSU and Holdings agree
otherwise in writing, Holdings shall not (1) sell all or substantially all of
the assets of Holdings or any Holdings Affiliate , (2) merge Holdings, or any
Holdings Affiliate with another entity, without regard to which party is the
surviving entity (other than a merger with another entity within the Holdings
Group), (3) transfer any assets of Holdings or Holdings Affiliate in a
transaction described in section 351of the Code (other than a transfer to a
corporation which files a consolidated return with Holdings and which is
wholly-owned, directly or indirectly, by Holdings) or subparagraph (C) or (D) of
section 368(a)(1) of the Code, (4) issue stock of Holdings or any Holdings
Affiliate (or any instrument that is convertible or exchangeable into any such
stock) in an acquisition or public or private offering (excluding any issuance
pursuant to the exercise of employee stock options or other employment related
arrangements having customary terms and conditions and that satisfy the
requirements of Treasury Regulations section 1.355-7(d)(8), or any successor
provision thereto), or (5) facilitate or otherwise participate in any
acquisition of stock in Holdings that would result in any shareholder owning
five percent (5%) or more of the outstanding stock of Holdings. Holdings (or any
Holdings Affiliate) shall only undertake any of such actions after JDSU’s
receipt of such Supplemental Tax Opinion and pursuant to the terms and
conditions of any such Supplemental Tax Opinion or as otherwise consented to in
writing in advance by JDSU; provided, however, that if Holdings contemplates
entering into a transaction described in this section and Holdings acknowledges
in writing that it would have sole liability for any Separation Taxes under
Section 4.1(b) that might arise from such transaction and can demonstrate to the
reasonable satisfaction of JDSU that it can satisfy its liability for any such
Separation Taxes, JDSU shall consent to Holdings’ entering into such transaction
without further restriction; and provided, further, that in the event that JDSU
completes a transaction that results in a tax being imposed on JDSU under
Section 355(e) of the Code, after such completion, Holdings shall no longer be
subject to the restrictions under clause (4) and clause (5) of the previous
sentence. The Parties hereby agree that they will act in good faith to take all
reasonable steps necessary to amend this Section 4.2(c), from time to time, by
mutual agreement, to (i) add certain actions to the list contained herein, or
(ii) remove certain actions from the list contained herein, in either case, in
order to reflect any relevant change in law, regulation or administrative
interpretation occurring after the date of this Agreement.

 

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(d) Notice of Specified Transactions. Not later than three (3) days after the
public announcement regarding any of the transactions described in
Section 4.2(c) (including a public announcement regarding Holdings’ intent to
enter into any such transaction) Holdings shall provide written notice of such
transaction to JDSU.

4.3 Transfer Taxes. JDSU and Holdings each shall be responsible for any Transfer
Taxes incurred by the JDSU Group and the Holdings Group, respectively, as a
result of the Contribution. If, under applicable Law, both the JDSU Group and
the Holdings Group are liable for Transfer Taxes resulting from the
Contribution, then JDSU and Holdings shall be equally responsible for such
Transfer Taxes.

4.4 Allocation of Tax Items. All Tax computations for (1) any Pre-Distribution
Periods ending on the Distribution Date and (2) the immediately following
taxable period of Holdings or any Holdings Affiliate, shall be made pursuant to
the principles of section 1.1502-76(b) of the Treasury Regulations or of a
corresponding provision under the laws of other jurisdictions, as reasonably
determined by JDSU, taking into account all reasonable suggestions made by
Holdings with respect thereto. Any Tax Items relating to the Separation and
Distribution shall be treated, to the extent permitted, as extraordinary items
described in section 1.1502-76(b)(2)(ii)(C) of the Treasury Regulations and
shall (to the extent occurring on or prior to the Distribution Date) be
allocated to Pre- Distribution Periods, and any Taxes related to such items
shall be treated under section 1.1502-76(b)(2)(iv) of the Treasury Regulations
as relating to such extraordinary item and shall (to the extent occurring on or
prior to the Distribution Date) be allocated to Pre-Distribution Periods.

4.5 Allocation of Tax Assets.

(a) In General. In connection with the Distribution, JDSU and Holdings have set
forth on SCHEDULE 4.5(A) the Tax Assets allocated to JDSU and Holdings, and each
of JDSU and Holdings agrees that each shall prepare all Tax Returns in a manner
consistent with such allocation, unless otherwise required by law. The parties
hereby agree that to the extent that Tax Assets are not shown in SCHEDULE
4.5(A), such Tax Assets were incurred by JDSU and shall remain with JDSU.

(b) Earnings and Profits. JDSU will advise Holdings in writing of the decrease
in JDSU earnings and profits attributable to the Distribution under section
312(h) of the Code on or before the first anniversary of the Distribution Date;
provided, however, that JDSU shall provide Holdings with estimates of such
amounts (determined in accordance with past practice) prior to such anniversary
as reasonably requested by Holdings.

Article V

EMPLOYEE WAGES

At JDSU’s request, the Holdings Group shall assume the Form W-2 and Form W-3
reporting obligations (including the filing of all forms necessary to comply
with magnetic media reporting requirements) of JDSU with respect to any employee
of the Holdings Business that Holdings or any Holdings Affiliate employs during
the calendar year which includes the Distribution Date consistent with the
procedures set forth in section 5 of Rev. Proc. 2004-53, 2004-34 I.R.B. 320.

 

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Article VI

INDEMNIFICATION

6.1 In General. JDSU and each member of the JDSU Group shall jointly and
severally indemnify Holdings, each Holdings Affiliate, and their respective
directors, officers and employees, and hold them harmless from and against any
and all Taxes for which JDSU or any JDSU Affiliate is liable under this
Agreement and any loss, cost, damage or expense, including reasonable attorneys’
fees and costs, that is attributable to, or results from, the failure of JDSU,
any JDSU Affiliate or any director, officer or employee to make any payment
required to be made under this Agreement. Holdings and each member of the
Holdings Group shall jointly and severally indemnify JDSU, each JDSU Affiliate,
and their respective directors, officers and employees, and hold them harmless
from and against any and all Taxes for which Holdings or any Holdings Affiliate
is liable under this Agreement and any loss, cost, damage or expense, including
reasonable attorneys’ fees and costs, that is attributable to, or results from,
the failure of Holdings, any Holdings Affiliate or any director, officer or
employee to make any payment required to be made under this Agreement.

6.2 Inaccurate or Incomplete Information. JDSU and each member of the JDSU Group
shall jointly and severally indemnify Holdings, each Holdings Affiliate, and
their respective directors, officers and employees, and hold them harmless from
and against any cost, fine, penalty, or other expense of any kind attributable
to the failure of JDSU or any JDSU Affiliate in supplying Holdings or any
Holdings Affiliate with inaccurate or incomplete information, in connection with
the preparation of any Tax Return. Holdings and each member of the Holdings
Group shall jointly and severally indemnify JDSU, each JDSU Affiliate, and their
respective directors, officers and employees, and hold them harmless from and
against any cost, fine, penalty, or other expenses of any kind attributable to
the failure of Holdings or any Holdings Affiliate in supplying JDSU or any JDSU
Affiliate with inaccurate or incomplete information, in connection with the
preparation of any Tax Return.

6.3 No Indemnification for Tax Items. Nothing in this Agreement shall be
construed as a guarantee of the existence or amount of any loss, credit,
carryforward, basis or other Tax Item, whether past, present or future, of JDSU,
any JDSU Affiliate, Holdings or any Holdings Affiliate. In addition, for the
avoidance of doubt, for purposes of determining any amount owed between the
parties hereto, all such determinations shall be made without regard to any
financial accounting tax asset or liability or other financial accounting items.

Article VII

PAYMENTS

7.1 Estimated Tax Payments. Not later than ten (10) business days after each
Estimated Tax Installment Date with respect to a taxable period for which a
Consolidated Return or a Combined Return that includes a Holdings Separate Tax
Amount will be filed, Holdings shall pay to JDSU on behalf of the Holdings Group
an amount equal to the amount of any estimated Holdings Separate Tax Amount.

7.2 True-Up Payments. Not later than ten (10) business days after filing a Tax
Return, Holdings shall pay to JDSU, or JDSU shall pay to Holdings, as
appropriate, an amount equal to the difference, if any, between the Holdings
Separate Tax Amount and the aggregate amount paid by Holdings with respect to
such period under Section 7.1.

 

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7.3 Redetermination Amounts. In the event of a redetermination of any Tax Item
reflected on any Consolidated Return or Combined Return (other than Tax Items
relating to Separation Taxes), as a result of a refund of Taxes paid, a Final
Determination or any settlement or compromise with any Taxing Authority which in
any such case would affect the Holdings Separate Tax Amount, JDSU shall prepare
a revised pro forma Tax Return in accordance with Section 2.4(b) for the
relevant taxable period reflecting the redetermination of such Tax Item as a
result of such refund, Final Determination, settlement or compromise. Holdings
shall pay to JDSU, or JDSU shall pay to Holdings, as appropriate, an amount
equal to the difference, if any, between the Holdings Separate Tax Amount
reflected on such revised pro forma Tax Return and the Holdings Separate Tax
Amount for such period as originally computed pursuant to this Agreement.

7.4 Payments of Refunds and Credits. If one party receives a refund or credit of
any Tax to which the other party is entitled pursuant to Section 3.4, the party
receiving such refund or credit shall pay to the other party the amount of such
refund or credit pursuant to Section 7.5.

7.5 Payments Under This Agreement. In the event that one party (the “Owing
Party”) is required to make a payment to another party (the “Owed Party”)
pursuant to this Agreement, then such payments shall be made according to this
Section 7.5.

(a) In General. All payments shall be made to the Owed Party or to the
appropriate Taxing Authority as specified by the Owed Party within the time
prescribed for payment in this Agreement, or if no period is prescribed, within
ten (10) days after delivery of written notice of payment owing together with a
computation of the amounts due.

(b) Treatment of Payments. Unless otherwise required by any Final Determination,
the parties agree that any payments made by one party to another party pursuant
to this Agreement (other than (i) payments for the Holdings Separate Tax Amount
for the Post-Distribution Period, (ii) payments of After Tax Amounts pursuant to
Section 7.5(d), and (iii) payments of interest pursuant to Section 7.5(e)) shall
be treated for all Tax purposes as nontaxable payments (dividend distributions
or capital contributions, as the case may be) made immediately prior to the
Distribution and, accordingly, as not includible in the taxable income of the
recipient or as deductible by the payor.

(c) Prompt Performance. All actions required to be taken (including payments) by
any party under this Agreement shall be performed within the time prescribed for
performance in this Agreement, or if no period is prescribed, such actions shall
be performed promptly.

(d) After Tax Amounts. If pursuant to a Final Determination it is determined
that the receipt or accrual of any payment made under this Agreement (other than
payments of interest pursuant to Section 7.5(e)) is subject to any Tax, the
party making such payment shall be liable for (a) the After Tax Amount with
respect to such payment and (b) interest at the rate described in Section 7.5(e)
on the amount of such Tax from the date such Tax accrues through the date of
payment of such After Tax Amount. A party making a demand for a payment pursuant
to this Agreement and for a payment of an After Tax Amount with respect to such
payment shall separately specify and compute such After Tax Amount. However, a
party may choose not to specify an After Tax Amount in a demand for payment
pursuant to this Agreement without thereby being deemed to have waived its right
subsequently to demand an After Tax Amount with respect to such payment.

(e) Interest. Payments pursuant to this Agreement that are not made within the
period prescribed in this Agreement (the “Payment Period”) shall bear interest
for the period from and including the date immediately following the last date
of the Payment Period through and including the date of payment at a per annum
rate equal to the applicable rate under Section 6621 of the Code. Such interest
will be payable at the same time as the payment to which it relates and shall be
calculated on the basis of a year of three hundred sixty-five (365) days and the
actual number of days for which due.

 

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Article VIII

TAX PROCEEDINGS

8.1 In General. Except as otherwise provided in this Agreement, the party
responsible for preparing and filing a Tax Return pursuant to Article II (the
“Filing Party”) shall have the exclusive right, in its sole discretion, to
control, contest, and represent the interests of JDSU, any JDSU Affiliate,
Holdings, and/or any Holdings Affiliate in any Audit relating to such Tax Return
and to resolve, settle or agree to any deficiency, claim or adjustment proposed,
asserted or assessed in connection with or as a result of any such Audit;
provided, however, that for purposes of this Section 8, Holdings shall be
treated as the Filing Party for all Tax Returns of foreign Holdings Affiliates.
The Filing Party’s rights shall extend to any matter pertaining to the
management and control of an Audit, including execution of waivers, choice of
forum, scheduling of conferences and the resolution of any Tax Item. Any costs
incurred in handling, settling, or contesting an Audit shall be borne by the
Filing Party.

8.2 Participation of non-Filing Party. Except as provided in Section 8.4, the
non-Filing Party shall, at its own expense, have control over decisions to
resolve, settle or otherwise agree to any deficiency, claim or adjustment with
respect to any Sole Responsibility Item.

8.3 Notice. Within ten (10) days after a party receives written notice of a
proposed Audit adjustment that may give rise to an indemnification obligation
under this Agreement, such party shall give notice to the other party of such
issue (such notice shall contain factual information, to the extent known,
describing any asserted tax liability in reasonable detail), and shall forward
to the other party copies of all notices and material communications with any
Taxing Authority relating to such issue. Notwithstanding any provision in
Section 9.12 to the contrary, if a party to this Agreement fails to provide the
other party notice as required by this Section 8.3, and the failure results in a
detriment to the other party then any amount which the other party is otherwise
required to pay pursuant to this Agreement shall be reduced by the amount of
such detriment.

8.4 Control of Separation Tax Proceedings. JDSU shall have the exclusive right,
in its sole discretion, to control, contest, and represent the interests of
JDSU, any JDSU Affiliate, Holdings, and/or any Holdings Affiliate in any Audits
relating to Separation Taxes and to resolve, settle or agree to any deficiency,
claim or adjustment proposed, asserted or assessed in connection with or as a
result of any such Audit. JDSU’s rights shall extend to any matter pertaining to
the management and control of such Audit, including execution of waivers, choice
of forum, scheduling of conferences and the resolution of any Tax Item. Holdings
may assume sole control of any Audits relating to Separation Taxes if it
acknowledges in writing that it has sole liability for any Separation Taxes
under Section 4.1(b) that might arise in such Audit and can demonstrate to the
reasonable satisfaction of JDSU that it can satisfy its liability for any such
Separation Taxes. If Holdings is unable to demonstrate to the reasonable
satisfaction of JDSU that it will be able to satisfy its liability for such
Separation Taxes, but acknowledges in writing that it has sole liability for any
Separation Taxes under Section 4.1(b), Holdings and JDSU shall have joint
control over the Audit.

Article IX

MISCELLANEOUS PROVISIONS

9.1 Corporate Power; Facsimile Signatures.

(a) Holdings, on behalf of itself and any Holdings Affiliate, and JDSU, on
behalf of itself and any JDSU Affiliate, hereby represent as follows:

 

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(i) each such Person has the requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and perform
this Agreement and to consummate the transactions contemplated hereby and
thereby; and

(ii) this Agreement has been duly executed and delivered by it and constitutes a
valid and binding agreement of it enforceable in accordance with the terms
thereof.

(b) Each party acknowledges that it and each other party may execute this
Agreement by facsimile, stamp or mechanical signature, and that delivery of an
executed counterpart of a signature page to this Agreement (whether executed by
manual, stamp or mechanical signature) by facsimile or by email in portable
document format (.pdf) shall be effective as delivery of such executed
counterpart of this Agreement. Each party expressly adopts and confirms each
such facsimile, stamp or mechanical signature (regardless of whether delivered
in person, by mail, by courier, by facsimile or by email in .pdf) made in its
respective name as if it were a manual signature delivered in person, agrees
that it will not assert that any such signature or delivery is not adequate to
bind such party to the same extent as if it were signed manually and delivered
in person and agrees that, at the reasonable request of the other party at any
time, it will as promptly as reasonably practicable cause this Agreement to be
manually executed (any such execution to be as of the date of the initial date
thereof) and delivered in person, by mail or by courier.

9.2 Cooperation and Separation of Information.

(a) Cooperation. Holdings and JDSU shall each cooperate fully (and each shall
cause its respective affiliates to cooperate fully) with all reasonable requests
from another party for information and materials not otherwise available to the
requesting party in connection with the preparation and filing of Tax Returns,
claims for refund, and Audits concerning issues or other matters covered by this
Agreement or in connection with the determination of a liability for Taxes or a
right to a refund of Taxes. Such cooperation shall include:

(i) the retention until the expiration of the applicable statute of limitations,
and the provision upon request, of copies of all Tax Returns, books, records
(including information regarding ownership and Tax basis of property),
documentation and other information relating to the Tax Returns, including
accompanying schedules, related work papers, and documents relating to rulings
or other determinations by Taxing Authorities;

(ii) the execution of any document that may be necessary or reasonably helpful
in connection with any Tax Proceeding, or the filing of a Tax Return or refund
claim by a member of the JDSU Group or the Holdings Group, including
certification, to the best of a party’s knowledge, of the accuracy and
completeness of the information it has supplied; and

(iii) the use of the party’s commercially reasonable efforts to obtain any
documentation that may be necessary or reasonably helpful in connection with any
of the foregoing. Each party shall make its employees and facilities available
on a reasonable and mutually convenient basis in connection with the foregoing
matters.

(b) Retention of Records. Any party that is in possession of documentation of
JDSU (or any JDSU Affiliate) or Holdings (or any Holdings Affiliate) relating to
the Holdings Business, including books, records, Tax Returns and all supporting
schedules and information relating thereto (the “Holdings Business Records”)
shall retain such Holdings Business Records for a period of seven (7) years
following the Separation Date. Thereafter, any party wishing to dispose of
Holdings Business Records in its possession (after the expiration of the
applicable statute of limitations), shall provide

 

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written notice to the other party describing the documentation proposed to be
destroyed or disposed of sixty (60) business days prior to taking such action.
The other party may arrange to take delivery of any or all of the documentation
described in the notice at its expense during the succeeding sixty (60) day
period.

9.3 Dispute Resolution. Any dispute, controversy or claim arising out of or
relating to this Agreement or the validity, interpretation, breach or
termination thereof (a “Dispute”), shall be resolved in accordance with the
procedures set forth in this Section 9.3:

(a) General Provisions. All communications between the parties or their
representatives in connection with the attempted resolution of any Dispute shall
be deemed to have been delivered in furtherance of a Dispute settlement and
shall be exempt from discovery and production, and shall not be admissible into
evidence for any reason (whether as an admission or otherwise), in any arbitral
or other proceeding for the resolution of any Dispute.

WITH RESPECT TO ANY DISPUTE TO WHICH THIS SECTION 9.3 APPLIES OR OTHERWISE IN
RESPECT OF THIS AGREEMENT, THE PARTIES EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO
EXEMPLARY, SPECIAL, PUNITIVE, INDIRECT, REMOTE, SPECULATIVE OR CONSEQUENTIAL
DAMAGES (INCLUDING IN RESPECT OF LOST PROFITS OR REVENUES), HOWEVER CAUSED AND
ON ANY THEORY OF LIABILITY (INCLUDING NEGLIGENCE), WHETHER OR NOT SUCH PARTY HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES (PROVIDED THAT LIABILITY FOR ANY
SUCH DAMAGES WITH RESPECT TO ANY THIRD PARTY CLAIM AND ANY STATUTORY PENALTIES
UNDER ENVIRONMENTAL LAW SHALL BE CONSIDERED DIRECT DAMAGES).

The specific procedures set forth in this Section 9.3, including the time limits
referenced therein, may be modified by agreement of both of the parties in
writing. All applicable statutes of limitations and defenses based upon the
passage of time shall be tolled while the procedures specified in this
Section 9.3 are pending. The parties will take any necessary or appropriate
action required to effectuate such tolling. Unless otherwise agreed in writing,
the parties will continue to provide service and honor all other commitments
under this Agreement during the course of resolution of a Dispute pursuant to
the provisions of this Section 9.3 with respect to all matters not subject to
such Dispute.

(b) Consideration by Senior Executives. If a Dispute is not resolved in the
normal course of business at the operational level, the parties shall attempt in
good faith to resolve the Dispute by negotiation among representatives of the
parties at a senior level of management of the parties. Either party may
initiate such executive negotiation process by providing a written notice to the
other (the “Initial Notice”). Within thirty (30) days after delivery of the
Initial Notice, the receiving party shall submit to the other a written response
(the “Response”). The Initial Notice and the Response shall include (i) a
statement of the Dispute and of each party’s position and (ii) the name and
title of the executive who will represent that party and of any other Person who
will accompany the executive. The parties agree that such executives shall have
full and complete authority to resolve any Disputes submitted pursuant to this
section (or paragraph). Such executives will meet in person or by teleconference
or video conference within sixty (60) days of the date of the Initial Notice to
seek a resolution of the Dispute. In the event that the executives are unable to
agree to a format for such meeting, the meeting shall be convened by
teleconference. In the event that the executives are unable to resolve such
Dispute within ninety (90) days of the date of the Initial Notice, the parties
may seek any and all other remedies as may be available to them at law or
equity.

(c) Mediation. The parties may, by mutual consent, select a mediator to aid the
parties in their discussions and negotiations. Any opinion expressed by the
mediator shall be strictly advisory and shall not be binding on the parties, nor
shall any opinion expressed by the mediator be

 

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admissible in any arbitration proceeding. Each party shall bear its own fees,
costs and expenses and an equal share of the expenses of the mediation. Each
party shall designate a business executive to have full and complete authority
to resolve the Dispute and to represent its interests in the mediation, and each
party may, in its sole discretion, include any number of other Representatives
in the mediation process.

9.4 Confidentiality. The parties shall comply with the confidentiality
provisions in Section 5.4 of the SEPARATION AND DISTRIBUTION AGREEMENT.

9.5 Setoff. All payments to be made by any party under this Agreement may be
netted against payments due to such party under this Agreement, but otherwise
shall be made without setoff, counterclaim or withholding, all of which are
hereby expressly waived.

9.6 Governing Law; Submission to Jurisdiction; Waiver of Trial.

(a) This Agreement shall be governed by and construed and interpreted in
accordance with the Laws of the State of Delaware without giving effect to the
principles of conflicts of law thereof.

(b) Each party to this Agreement hereby irrevocably (i) agrees that any Dispute
shall be subject to the exclusive jurisdiction of the state and federal courts
located in the State of Delaware, (ii) waives any claims of forum non
conveniens, and agrees to submit to the jurisdiction of such courts and
(iii) agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 9.10 shall be
effective service of process for any litigation brought against it in any such
court or for the taking of any other acts as may be necessary or appropriate in
order to effectuate any judgment of said courts.

9.7 Survival of Covenants. Except as expressly set forth in this Agreement, the
covenants and other agreements contained in this Agreement, and liability for
the breach of any obligations contained herein or therein, shall survive the
Distribution.

9.8 Waivers of Default. A waiver by a party of any default by the other party of
any provision of this Agreement shall not be deemed a waiver by the waiving
party of any subsequent or other default, nor shall it prejudice the rights of
the waiving party. No failure or delay by a party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof, nor shall a
single or partial exercise thereof prejudice any other or further exercise
thereof or the exercise of any other right, power or privilege. No waiver by any
party of any provision of this Agreement shall be effective unless explicitly
set forth in writing and executed by the party so waiving.

9.9 Force Majeure. No party (or any Person acting on its behalf) shall have any
liability or responsibility for failure to fulfill any obligation (other than a
payment obligation) under this Agreement so long as and to the extent to which
the fulfillment of such obligation is prevented, frustrated, hindered or delayed
as a consequence of circumstances of Force Majeure. A party claiming the benefit
of this provision shall, as soon as reasonably practicable after the occurrence
of any such event, (a) notify the other parties of the nature and extent of any
such Force Majeure condition and (b) use due diligence to remove any such causes
and resume performance under this Agreement as soon as feasible.

9.10 Notices. All notices, requests, claims, demands and other communications
under this Agreement shall be in writing and shall be given or made (and shall
be deemed to have been duly given or made upon receipt) by delivery in person,
by overnight courier service, by facsimile or electronic transmission with
receipt confirmed (followed by delivery of an original via overnight courier
service) or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this section):

 

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If to JDSU, to:

JDS Uniphase Corporation

430 North McCarthy Blvd

Milpitas, California, USA

95035

Attention: General Counsel

Email:

with a copy to:

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, California 94303-2215

Attention: Ed Batts

Facsimile:

Email:

If to Holdings or any Holdings Affiliate, to:

Lumentum Holdings Inc.

400 North McCarthy Blvd

Milpitas, California USA

95035

Attention: General Counsel

Email:

with a copy to:

DLA Piper LLP (US)

2000 University Avenue

East Palo Alto, California 94303-2215

Attention: Ed Batts

Facsimile:

Email:

9.11 Termination. Notwithstanding any provision to the contrary, this Agreement
may be terminated and the Distribution abandoned at any time prior to the
Distribution Effective Time by and in the sole discretion of JDSU without the
prior approval of any Person, including Holdings. In the event of such
termination, this Agreement shall become void and no party, or any of its
officers and directors shall have any liability to any Person by reason of this
Agreement. After the Distribution Effective Time, this Agreement may not be
terminated except by an agreement in writing signed by each of the parties.

9.12 Changes in Law.

(a) Any reference to a provision of the Code or a law of another jurisdiction
shall include a reference to any applicable successor provision or law.

 

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(b) If, due to any change in applicable law or regulations or their
interpretation by any court of law or other governing body having jurisdiction
subsequent to the date of this Agreement, performance of any provision of this
Agreement or any transaction contemplated thereby shall become impracticable or
impossible, the parties hereto shall use their commercially reasonable efforts
to find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.

9.13 Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced under any Law or as a matter of public
policy, all other conditions and provisions of this Agreement shall remain in
full force and effect. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in a mutually acceptable manner in order that
the transactions contemplated by this Agreement be consummated as originally
contemplated to the greatest extent possible.

9.14 Entire Agreement. Except as otherwise expressly provided in this Agreement,
this Agreement constitutes the entire agreement of the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
undertakings, both written and oral, between or on behalf of the parties with
respect to the subject matter of this Agreement.

9.15 Assignment; No Third-Party Beneficiaries. This Agreement shall not be
assigned by any party without the prior written consent of the other party,
except that a party may assign any or all of its rights and obligations under
this Agreement in connection with a sale or disposition of any assets or
entities or lines of business of such party or in connection with a merger
transaction in which such party is not the surviving entity; provided, however,
that, in each case, no such assignment shall release such party from any
liability or obligation under this Agreement nor change any of the steps in this
Agreement, and the surviving entity of any merger or the transferee of such
assets or businesses shall agree in writing to be bound by the terms of this
Agreement as if named as a party hereto. The provisions of this Agreement and
the obligations and rights under this Agreement shall be binding upon, inure to
the benefit of and be enforceable by (and against) the parties and their
respective successors and permitted transferees and assigns. This Agreement is
for the sole benefit of the parties to this Agreement and their permitted
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other Person any legal or equitable right,
benefit or remedy of any nature whatsoever under or by reason of this Agreement.

9.16 Specific Performance. In the event of any actual or threatened default in,
or breach of, any of the terms, conditions and provisions of this Agreement, the
party or parties who are or are to be thereby aggrieved shall have the right to
specific performance and injunctive or other equitable relief (on an interim or
permanent basis) of its rights under this Agreement, in addition to any and all
other rights and remedies at law or in equity, and all such rights and remedies
shall be cumulative. The parties agree that the remedies at law for any breach
or threatened breach, including monetary damages, may be inadequate compensation
for any loss and that any defense in any action for specific performance that a
remedy at law would be adequate is waived. Any requirements for the securing or
posting of any bond with such remedy are waived by each of the parties.

9.17 Amendment. No provision of this Agreement may be amended or modified except
by a written instrument signed by each of the parties to this Agreement.

9.18 Rules of Construction. Interpretation of this Agreement shall be governed
by the following rules of construction: (a) words in the singular shall be held
to include the plural and vice versa, and words of one gender shall be held to
include the other gender as the context requires,

 

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(b) references to the terms “Article,” “Section,” “paragraph,” “clause,”
“Exhibit” and “Schedule” are references to the Articles, Sections, paragraphs,
clauses, Exhibits and Schedules of this Agreement unless otherwise specified,
(c) the terms “hereof,” “herein,” “hereby,” “hereto,” and derivative or similar
words refer to this entire Agreement, including the Schedules and Exhibits
hereto, (d) references to “$” shall mean U.S. dollars, (e) the word “including”
and words of similar import when used in this Agreement shall mean “including
without limitation,” unless otherwise specified, (f) the word “or” shall not be
exclusive, (g) references to “written” or “in writing” include in electronic
form, (h) unless the context requires otherwise, references to “party” shall
mean JDSU or Holdings, as appropriate, and references to “parties” shall mean
JDSU and Holdings, (i) provisions shall apply, when appropriate, to successive
events and transactions, (j) the table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement, (k) JDSU and Holdings have each
participated in the negotiation and drafting of this Agreement and if an
ambiguity or question of interpretation should arise, this Agreement shall be
construed as if drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or burdening either party by virtue of the authorship
of any of the provisions in this Agreement or any interim drafts of this
Agreement, and (l) a reference to any Person includes such Person’s successors
and permitted assigns.

9.19 Counterparts. This Agreement may be executed in one (1) or more
counterparts, and by each party in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement. Delivery of an executed counterpart of a
signature page to this Agreement by facsimile or .pdf shall be as effective as
delivery of a manually executed counterpart of this Agreement.

 

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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
executed by a duly authorized officer as of the date first above written.

 

JDS UNIPHASE CORPORATION

ON BEHALF OF ITSELF AND EACH OF THE

JDSU AFFILIATES

/s/ Tom Waechter By: Tom Waechter Its: Chief Executive Officer

 

LUMENTUM HOLDINGS INC.

ON BEHALF OF ITSELF AND EACH OF THE

HOLDINGS AFFILIATES

/s/ Alan Lowe By: Alan Lowe Its: Chief Executive Officer