Document:

Exhibit 10.10

 

VIAVI SOLUTIONS INC.

 

2003 EQUITY INCENTIVE PLAN

 

(Restated effective as of August 1, 2015)

 

1.                                      Establishment and Purpose of the Plan.  The Plan was initially established as the JDS Uniphase Corporation 2003 Equity Incentive Plan effective as of November 6, 2003 and has subsequently been amended from time to time.  In connection with its spin-off of Lumentum Holdings, Inc., effective August 1, 2015 (the “Spin-Off”), and the related renaming of JDS Uniphase Corporation as Viavi Solutions Inc., the Plan is hereby amended and restated in its entirety as the Viavi Solutions Inc. 2003 Equity Incentive Plan, effective as of August 1, 2015 (the “Restatement Effective Date”).  The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company by offering them an opportunity to participate in the Company’s future performance.

 

2.                                      Definitions.  As used herein, the following definitions shall apply:

 

(a)                                 “Administrator” means the Board or any of the Committees appointed to administer the Plan.

 

(b)                                 “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.

 

(c)                                  “Applicable Laws” means the legal requirements relating to the Plan and the Awards under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.

 

(d)                                 “Assumed” means that pursuant to a Corporate Transaction either (i) the Award is expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number and type of securities of the successor entity or its Parent subject to the Award and the exercise or purchase price thereof which preserves the compensation element of the Award existing at the time of the Corporate Transaction as determined in accordance with the instruments evidencing the agreement to assume the Award.

 

(e)                                  “Award” means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit, Performance Unit, Performance Share, or other right or benefit under the Plan.

 

(f)                                   “Award Agreement” means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto.

 

(g)                                  “Board” means the Board of Directors of the Company.

 

(h)                                 “Cause” means, with respect to the termination by the Company or a Related Entity of the Grantee’s Continuous Active Service, that such termination is for “Cause” as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantee’s:  (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii) dishonesty, intentional misconduct, material violation of any applicable Company or Related Entity policy, or material breach of any agreement with the Company or a Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.

 

(i)                                     “Change in Control” means a change in ownership or control of the Company effected through either of the following transactions:

 

(i)                                     the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined

 

 

voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or

 

(ii)                                  a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors.

 

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

 

(k)                                 “Committee” means any committee composed of members of the Board appointed by the Board to administer the Plan.

 

(l)                                     “Common Stock” means the common stock of the Company.

 

(m)                             “Company” means Viavi Solutions Inc., a Delaware corporation, formerly known as JDS Uniphase Corporation.

 

(n)                                 “Consultant” means any person (other than an Employee or a Director, solely with respect to rendering services in such person’s capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.

 

(o)                                 “Continuing Directors” means members of the Board who either (i) have been Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.

 

(p)                                 “Continuous Active Service” means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant is not interrupted or terminated.  In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Active Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or Consultant can be effective under Applicable Laws.  Continuous Active Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement).  An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave.  For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds ninety (90) days, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the expiration of such ninety (90) day period.

 

(q)                                 “Corporate Transaction” means any of the following transactions:

 

(i)                                     a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;

 

(ii)                                  the sale, transfer or other disposition of all or substantially all of the assets of the Company;

 

(iii)                               the complete liquidation or dissolution of the Company;

 

(iv)                              any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but in which securities possessing more than forty percent (40%) of the total combined voting power of the Company’s outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or

 

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(v)                                 acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company’s outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.

 

(r)                                    “Covered Employee” means an Employee who is a “covered employee” under Section 162(m)(3) of the Code.

 

(s)                                   “Director” means a member of the Board or the board of directors of any Related Entity.

 

(t)                                    “Disability” means as defined under the long-term disability policy of the Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by such policy.  If the Company or the Related Entity to which the Grantee provides service does not have a long-term disability plan in place, “Disability” means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days.  A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.

 

(u)                                 “Dividend Equivalent Right” means a right entitling the Grantee to compensation measured by dividends paid with respect to Common Stock.

 

(v)                                 “Employee” means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance.  The payment of a director’s fee by the Company or a Related Entity shall not be sufficient to constitute “employment” by the Company.

 

(w)                               “Employee Matters Agreement” means the Employee Matters Agreement by and among JDS Uniphase Corporation, Lumentum Operations LLC and Lumentum Holdings, Inc. entered into in connection with the Spin-Off.

 

(x)                                 “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(y)                                 “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

 

(i)                                     If the Common Stock is listed on any established stock exchange or a national market system, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

 

(ii)                                  If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, but selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

 

(iii)                               In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith.

 

(z)                                  “Full Value Award” means the grant of Restricted Stock, Restricted Stock Units, Performance Units or Performance Shares under the Plan with a per share or unit purchase price lower than 100% of Fair Market Value on the date of grant.

 

(aa)                          “Grantee” means an Employee, Director or Consultant who receives an Award under the Plan.

 

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(bb)                          “Immediate Family” means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Grantee’s household (other than a tenant or employee), a trust in which these persons (or the Grantee) have more than fifty percent (50%) of the beneficial interest, a foundation in which these persons (or the Grantee) control the management of assets, and any other entity in which these persons (or the Grantee) own more than fifty percent (50%) of the voting interests.

 

(cc)                            “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code

 

(dd)                          “Non-Qualified Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

 

(ee)                            “Officer” means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

 

(ff)                              “Option” means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.

 

(gg)                            “Parent” means a “parent corporation”, whether now or hereafter existing, as defined in Section 424(e) of the Code.

 

(hh)                          “Performance-Based Compensation” means compensation qualifying as “performance-based compensation” under Section 162(m) of the Code.

 

(ii)                                  “Performance Shares” means Shares or an Award denominated in Shares which may be earned in whole or in part upon attainment of performance criteria established by the Administrator.

 

(jj)                                “Performance Units” means an Award which may be earned in whole or in part based upon attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by the Administrator.

 

(kk)                          “Plan” means this 2003 Equity Incentive Plan.

 

(ll)                                  “Related Entity” means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or indirectly.

 

(mm)                  “Replaced” means that pursuant to a Corporate Transaction the Award is replaced with a comparable stock award or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the compensation element of such Award existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same (or a more favorable) vesting schedule applicable to such Award.  The determination of Award comparability shall be made by the Administrator and its determination shall be final, binding and conclusive.

 

(nn)                          “Restricted Stock” means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator.

 

(oo)                          “Restricted Stock Unit” means a grant of a right to receive in cash or stock, as established by the Administrator, the market value of one Share.

 

(pp)                          “Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.

 

(qq)                          “SAR” means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock.

 

(rr)                                “Share” means a share of the Common Stock.

 

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(ss)                              “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

 

(tt)                                “Viavi Ratio” means a ratio equal to 1.7902, which is the quotient obtained by dividing (i) the Pre-Distribution JDSU Stock Price, by (ii) the Post-Distribution Viavi Stock Price (as such terms are defined by the Employee Matters Agreement).

 

3.                                      Stock Subject to the Plan.

 

(a)                                 Prior to the Restatement Effective Date, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 73,200,000 Shares, subject to the provisions of Section 10 below.  As of the Restatement Effective Date, and immediately following the conversion of all previously outstanding Awards under the Plan held by persons who ceased to be service providers to the Company in connection with the Spin-Off into awards outstanding under the 2015 Equity Incentive Plan of Lumentum Holdings, Inc. in accordance with the terms of the Employee Matters Agreement, an aggregate of 7,426,152 Shares remained subject to Awards outstanding under the Plan as to which Shares had not been issued and an aggregate of 15,092,155 Shares remained available for the future grant of Awards (after application of the Full Value Award multiplier described in Section 3(b) below).  Pursuant to the determination of the Administrator in accordance with Section 10, effective as of the Restatement Effective Date, the aggregate of number of subject to Awards outstanding under the Plan as to which Shares had not been issued shall be approximately 13,294,297 (before taking into account adjustments for fractional shares) and the aggregate number of Shares available for the future grant of Awards shall be 27,017,296.(1)The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.

 

(b)                                 Any Shares that are not subject to Full Value Awards will be counted against the numerical limits of this Section 3 as one Share for every Share subject thereto.  Any Shares subject to Full Value Awards will be counted against the numerical limits of this Section 3 as 1.5 Shares for every one Share subject thereto.  To the extent that a Share that was subject to an Award that counted as 1.5 Shares against the Plan reserve pursuant to the preceding sentence is recycled back into the Plan under the next paragraph of this Section 3, the Plan will be credited with 1.5 Shares.

 

(c)                                  Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan.  Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under the Plan, except that if unvested Shares are forfeited, or repurchased by the Company at the lower of their original purchase price or their Fair Market Value at the time of repurchase, such Shares shall become available for future grant under the Plan.  With respect to Options and SARs, the gross number of Shares subject to the Award will cease to be available under the Plan (whether or not the Award is net settled for a lesser number of Shares, or if Shares are utilized to exercise such an Award).  In addition, if Shares are withheld to pay any withholding taxes applicable to an Award, then the gross number of Shares subject to such Award will cease to be available under the Plan.

 

4.                                      Administration of the Plan.

 

(a)                                 Plan Administrator.

 

(i)                                     Administration with Respect to Directors and Officers.  With respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3.  Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.

 

(ii)                                  Administration With Respect to Consultants and Other Employees.  With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws.  Once appointed, such Committee shall continue to serve in its designated capacity

 

(1) Pursuant Section 10 of this Plan and the terms of the Employee Matters Agreement, the numbers of Shares described in Section 3(a) prior to adjustment have been adjusted by multiplying them by the Viavi Ratio.

 

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until otherwise directed by the Board.  The Board may authorize one or more Officers to grant such Awards and may limit such authority as the Board determines from time to time.

 

(iii)                               Administration With Respect to Covered Employees.  Notwithstanding the foregoing, grants of Awards to any Covered Employee intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as Performance-Based Compensation.  In the case of such Awards granted to Covered Employees, references to the “Administrator” or to a “Committee” shall be deemed to be references to such Committee or subcommittee.

 

(iv)                              Administration Errors.  In the event an Award is granted in a manner inconsistent with the provisions of this subsection (a), such Award shall be presumptively valid as of its grant date to the extent permitted by the Applicable Laws.

 

(b)                                 Powers of the Administrator.  Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:

 

(i)                                     to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;

 

(ii)                                  to determine whether and to what extent Awards are granted hereunder;

 

(iii)                               to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;

 

(iv)                              to approve forms of Award Agreements for use under the Plan;

 

(v)                                 to determine the terms and conditions of any Award granted hereunder;

 

(vi)                              to amend the terms of any outstanding Award granted under the Plan, provided that (A) any amendment that would adversely affect the Grantee’s rights under an outstanding Award shall not be made without the Grantee’s written consent, (B) the reduction of the exercise price of any Option or SAR awarded under the Plan shall be subject to stockholder approval and (C) canceling or “buying-out” an Option or SAR at a time when its exercise price exceeds the Fair Market Value of the underlying Shares, in exchange for cash, another Option, SAR, Restricted Stock, Restricted Stock Unit, or other Award shall be subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Corporate Transaction;

 

(vii)                           to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan;

 

(viii)                        to establish additional terms, conditions, rules or procedures to accommodate the rules or laws of applicable non-U.S. jurisdictions and to afford Grantees favorable treatment under such rules or laws; provided, however, that no Award shall be granted under any such additional terms, conditions, rules or procedures with terms or conditions which are inconsistent with the provisions of the Plan; and

 

(ix)                              to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.

 

(c)                                  Indemnification.  In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the Administrator or the Company is delegated shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys’ fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as

 

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to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Company’s expense to handle and defend the same.

 

5.                                      Eligibility.  Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants.  Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company.  An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards.  Awards may be granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time to time.

 

6.                                      Terms and Conditions of Awards.

 

(a)                                 Type of Awards.  The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions.  Such awards include, without limitation, Options, SARs, Restricted Stock, Restricted Stock Units, Dividend Equivalent Rights, Performance Units or Performance Shares, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative.

 

(b)                                 Designation of Award.  Each Award shall be designated in the Award Agreement.  In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option.  However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company) exceeds $100,000, such excess Options, to the extent of the Shares covered thereby in excess of the foregoing limitation, shall be treated as Non-Qualified Stock Options.  For this purpose, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date of the relevant Option.

 

(c)                                  Conditions of Award.  Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria.  The performance criteria established by the Administrator may be based on any one of, or combination of, the following: (i) increase in share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v) gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added, (xvii) market share, (xviii) personal management objectives, and (xix) other measures of performance selected by the Administrator.  Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement.

 

(d)                                 Acquisitions and Other Transactions.  The Administrator may issue Awards under the Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction.

 

(e)                                  Deferral of Award Payment.  The Administrator may establish one or more programs under the Plan to permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an Award.  The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.

 

(f)                                   Separate Programs.  The Administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time.

 

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(g)                                  Individual Limitations on Awards.  Prior to the Restatement Effective Date, the maximum number of Shares with respect to which Awards may be granted to any Grantee in any fiscal year of the Company shall be one million (1,000,000) Shares.  Prior to the Restatement Date, in connection with a Grantee’s (i) commencement of Continuous Active Service or (ii) first promotion in any fiscal year of the Company prior to the Restatement Effective Date, a Grantee may be granted Awards for up to an additional one million (1,000,000) Shares which shall not count against the limit set forth in the preceding sentence.  Effective on and after the Restatement Effective Date, the foregoing limits on the numbers of Shares with respect to which Awards may be granted to any Grantee in any fiscal year of the Company shall each be 1,790,200.(2)  The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization pursuant to Section 10, below.  To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if any Awards are canceled, the canceled Awards shall continue to count against the maximum number of Shares with respect to which Awards may be granted to the Grantee.  For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.  If the vesting or receipt of Shares under the Award is deferred to a later date, any amount (whether denominated in Shares or cash) paid in addition to the original number of Shares subject to the Award will not be treated as an increase in the number of Shares subject to the Award if the additional amount is based either on a reasonable rate of interest or on one or more predetermined actual investments such that the amount payable by the Company at the later date will be based on the actual rate of return of a specific investment (including any decrease as well as any increase in the value of an investment).

 

(h)                                 Early Exercise.  The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award.  Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.

 

(i)                                     Term of Award.  The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term of an Award shall be no more than eight (8) years from the date of grant thereof.  However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement.

 

(j)                                    Transferability of Awards.  Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee.  Other Awards shall be transferable by will and by the laws of descent and distribution, and during the lifetime of the Grantee, by gift or pursuant to a domestic relations order to members of the Grantee’s Immediate Family to the extent and in the manner determined by the Administrator.  Notwithstanding the foregoing, the Grantee may designate a beneficiary of the Grantee’s Award in the event of the Grantee’s death on a beneficiary designation form provided by the Administrator.

 

(k)                                 Time of Granting Awards.  The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such later date as is determined by the Administrator.

 

7.                                      Award Exercise or Purchase Price, Consideration and Taxes.

 

(a)                                 Exercise or Purchase Price.  The exercise or purchase price, if any, for an Award shall be as follows:

 

(i)                                     In the case of an Incentive Stock Option:

 

(A)                               granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or

 

(2) Pursuant Section 10 of this Plan and the terms of the Employee Matters Agreement, the numbers of Shares subject to the limits described in Section 6(g) as in effect prior to the Restatement Effective Date have been adjusted by multiplying them by the Viavi Ratio.

 

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any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or

 

(B)                               granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(ii)                                  In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(iii)                               In the case of a SAR, the base amount on which the stock appreciation is calculated shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(iv)                              In the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

 

(v)                                 In the case of other Awards, such price as is determined by the Administrator.

 

(vi)                              Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d) above, the exercise or purchase price for the Award shall be determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award.

 

(b)                                 Consideration.  Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option, shall be determined at the time of grant).  In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following, provided that the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law:

 

(i)                                     cash;

 

(ii)                                  check;

 

(iii)                               surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require (including withholding of Shares otherwise deliverable upon exercise of the Award) which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised, provided, however, that Shares acquired under the Plan or any other equity compensation plan or agreement of the Company must have been held by the Grantee for a period of more than six (6) months;

 

(iv)                              with respect to Options, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or

 

(v)                                 any combination of the foregoing methods of payment.

 

(c)                                  Taxes.  No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares or the disqualifying disposition of Shares received on exercise of an Incentive Stock Option.  Upon exercise of an Award the Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations.

 

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8.                                      Exercise of Award.

 

(a)                                 Procedure for Exercise; Rights as a Stockholder.

 

(i)                                     Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement.

 

(ii)                                  An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(iv).

 

(b)                                 Exercise of Award Following Termination of Continuous Active Service.

 

(i)                                     An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantee’s Continuous Active Service only to the extent provided in the Award Agreement.

 

(ii)                                  Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantee’s Continuous Active Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.

 

(iii)                               Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following the termination of a Grantee’s Continuous Active Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified in the Award Agreement.

 

9.                                      Conditions Upon Issuance of Shares.

 

(a)                                 Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

 

(b)                                 As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.

 

10.                               Adjustments Upon Changes in Capitalization.  Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Awards may be granted to any Grantee in any fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Administrator and the Administrator’s determination shall be final, binding and conclusive.  Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.

 

11.                               Corporate Transactions.

 

(a)                                 Termination of Award to Extent Not Assumed in Corporate Transaction.  Effective upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall terminate.  However, all such Awards shall not terminate to the extent they are Assumed in connection with the Corporate Transaction.

 

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(b)                                 Acceleration of Award Upon Corporate Transaction.  Except as provided otherwise in an individual Award Agreement, in the event of a Corporate Transaction, for the portion of each Award that is neither Assumed nor Replaced, such portion of the Award shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at fair market value) for all of the Shares at the time represented by such portion of the Award, immediately prior to the specified effective date of such Corporate Transaction.

 

(c)                                  Effect of Acceleration on Incentive Stock Options.  Any Incentive Stock Option accelerated under this Section 11 in connection with a Corporate Transaction shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded.  To the extent such dollar limitation is exceeded, the excess Options shall be treated as Non-Qualified Stock Options.

 

12.                               Effective Date and Term of Plan.  The Plan originally became effective upon its approval by the stockholders of the Company.  The Plan, as amended and restated, shall become effective upon its approval by the stockholders of the Company.  It shall continue in effect for a term of ten (10) years from the date of such approval unless sooner terminated.  Subject to Applicable Laws, Awards may be granted under the Plan upon its becoming effective.

 

13.                               Amendment, Suspension or Termination of the Plan.

 

(a)                                 The Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by Applicable Laws, or if such amendment would change any of the provisions of Section 4(b)(vi) or this Section 13(a). Notwithstanding any other provision of the Plan to the contrary, the Board may, in its sole and absolute discretion and without the consent of any participant, amend the Plan or any Award Agreement, to take effect retroactively or otherwise, as it deems necessary or advisable for the purpose of conforming the Plan or such Award Agreement to any present or future law, regulation or rule applicable to the Plan, including, but not limited to, Section 409A of the Code.

 

(b)                                 No Award may be granted during any suspension of the Plan or after termination of the Plan.

 

(c)                                  No suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall adversely affect any rights under Awards already granted to a Grantee.

 

14.                               Reservation of Shares.

 

(a)                                 The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.

 

(b)                                 The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

 

15.                               No Effect on Terms of Employment/Consulting Relationship.  The Plan shall not confer upon any Grantee any right with respect to the Grantee’s Continuous Active Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Grantee’s Continuous Active Service at any time, with or without Cause, and with or without notice.  The ability of the Company or any Related Entity to terminate the employment of a Grantee who is employed at will is in no way affected by its determination that the Grantee’s Continuous Active Service has been terminated for Cause for the purposes of this Plan.

 

16.                               No Effect on Retirement and Other Benefit Plans.  Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation.  The Plan is not a “Retirement Plan” or “Welfare Plan” under the Employee Retirement Income Security Act of 1974, as amended.

 

17.                               Unfunded Obligation.  Grantees shall have the status of general unsecured creditors of the Company.  Any amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended.  Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations.  The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder.  Any investments or the creation or maintenance of any trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantee’s creditors in any assets of the Company or a Related Entity.  The Grantees shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.

 

11Exhibit 10.18

 

JDS UNIPHASE CORPORATION
 2015 CHANGE OF CONTROL BENEFITS PLAN

 

1.                                      Introduction.

 

This 2015 JDS Uniphase Corporation (“Company”) Change of Control Benefits Plan (the “Plan”) is established effective as of February 10, 2015 (the “Effective Date”).

 

(a)                                 Purpose.  The purpose of the Plan is to describe eligibility for certain benefits for Eligible Employees (as defined below) whose employment is terminated in connection with a Change of Control of the Company or of the Company’s Network Service and Enablement (“NSE”) operating segment.

 

(b)                                 Effect.  This Plan supersedes and replaces any prior policies or practices of Company or any of its subsidiaries or affiliated companies that relate to severance payments or vesting acceleration with respect to stock options, restricted stock units, performance units, or any other securities or similar incentives of Company in connection with a change of control (as defined in any such agreements or arrangements) of the Company or NSE with respect to Eligible Employees.  Any such policies or procedures, to the extent they relate to severance payments or vesting acceleration with respect to equity awards of Company in connection with a change of control, are hereby rescinded and shall no longer have any force or effect to the extent such policies or procedures apply to Eligible Employees.  Notwithstanding the foregoing, this Plan is subordinated to any (i) individual written (A) severance benefit agreement, (B) change of control severance agreement, or (C) employment agreement that provides for severance benefits in existence as of the Effective Date between any Eligible Employee and Company; and to (ii) the Amended and Restated 2008 Change of Control Benefits Plan (the “2008 Plan”) with respect to employees who were eligible employees (as defined in the 2008 Plan) under the 2008 Plan as filed on Form 8-K on October 23, 2014.

 

2.                                      Definition of Terms.  The following capitalized terms used in this Plan shall have the following meanings:

 

(a)                                 Cause.  “Cause” shall mean (i) gross negligence or willful misconduct in the performance of an Eligible Employee’s duties to Company and Employer; (ii) a material and willful violation of any federal or state law by an Eligible Employee that if made public would injure the business or reputation of Company or Employer; (iii) refusal or willful failure by an Eligible Employee to comply with any specific lawful direction or order of Company or Employer or the material policies and procedures of Company or Employer, including but not limited to the JDS Uniphase Corporation Code of Business Conduct and the Inside Information and Securities Transactions policy, as well as any obligations concerning proprietary rights and confidential information of Company or Employer; (iv) conviction (including a plea of nolo contendere) of an Eligible Employee of a felony, or of a misdemeanor that would have a material adverse effect on Company’s or Employer’s goodwill if such Eligible Employee were to be retained as an employee of Company or Employer; or (v) substantial and continuing willful refusal by an Eligible Employee to perform duties ordinarily performed by an employee in the same position and having similar duties as such Eligible Employee; in each case as reasonably determined by the Board of Directors of Company or Employer or the successor to Company or Employer (the “Board of Directors”).

 

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(b)                                 Change of Control.  “Change of Control” shall mean:

 

(i)                                     the closing of a transaction that results in assets representing at least fifty percent (50%) of the assets or revenues of the NSE operating segment, as such segment is reported in the Company’s annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the last full fiscal year, being separated from the Company’s business through a sale, transfer or other disposition, provided that a Spin-Off shall not constitute a Change of Control for purposes of the Plan and under no circumstances shall a Spin-Off entitle any Eligible Employee to any benefits under the Plan;

 

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

 

(iii)                               a merger or consolidation in which Company is not the surviving entity, except for a transaction in which both (A) securities representing more than fifty percent (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 19340), directly or indirectly, immediately after such merger or consolidation by persons who beneficially owned common stock immediately prior to such merger or consolidation and (B) the members of the Board of Directors immediately prior to the transaction (the “Existing Board”) constitute a majority of the Board of Directors immediately after such merger or consolidation;

 

(iv)                              any reverse merger in which Company is the surviving entity but in which either (A) persons who beneficially owned, directly or indirectly, 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 fifty percent (50%) of the total combined voting power of Company’s outstanding securities or (B) the members of the Existing Board do not constitute a majority of the Board of Directors immediately after such reverse merger; or

 

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

 

Notwithstanding the foregoing, to the extent that any amount constituting nonqualified deferred compensation within the meaning of Section 409A of the Internal Revenue Code (including any applicable final, proposed or temporary regulations and other administrative guidance promulgated thereunder) would become payable under this Plan by reason of a Change of Control, such amount shall become payable only if the event constituting a Change of Control would also constitute a change in ownership or effective control of Company or a change in the ownership of a substantial portion of the assets of Company within the meaning of Section 409A.

 

(c)                                  Coverage Period.  “Coverage Period” with respect to an Eligible Employee shall mean the period (i) beginning (A) upon the public announcement by the

 

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Company of its intent to consummate a Change of Control if, and only if, the Chief Executive Officer of the Company and the Chairperson of the Compensation Committee of the Board of Directors has certified that the Eligible Employee’s services with the Company are no longer required or (B) otherwise upon the consummation of a Change of Control and (ii) ending twelve (12) months following the consummation of such Change of Control.

 

(d)                                 Disability.  “Disability” shall mean a mental or physical disability, illness or injury, evidenced by medical reports from a duly qualified medical practitioner, which renders an Eligible Employee unable to perform any one or more of the essential duties of his or her position after the provision of reasonable accommodation, if applicable, for a period of greater than ninety (90) days within a one year period.  “Disabled” has a corresponding meaning.

 

(e)                                  Eligible Executives. “Eligible Executives” shall mean certain individuals employed by the Company and its subsidiaries in the United States and on a United States payroll at the level of Executive Vice President, Senior Vice President, or Vice President who either (i) report to the Chief Executive Officer, the Chief Financial Officer, or Senior Vice of NSE Operations, and hold one or more of the following positions or their functional equivalents: the senior most executive responsible directly for each of NSE Product Line Management, NSE Operations, NSE Sales, NSE Chief Technology Officer, Human Resources, Information Technology, and General Counsel, or (ii) are designated in writing by the Chief Executive Officer as being an Eligible Executive, subject to subsequent review and ratification by the Compensation Committee of the Board of Directors at its discretion.

 

(f)                                   Employer.  “Employer” shall mean each entity employing or formerly employing an Eligible Employee, including Company, each present and former subsidiary of the Company and each successor to Company or present or former subsidiary of Company.

 

(g)                                  Good Reason.  “Good Reason” shall mean an Eligible Employee’s resignation from an Employer within ninety (90) days following the occurrence of any of the following events with respect to such Eligible Employee,:

 

(i)                                     without Eligible Employee’s express written consent, the significant reduction of Eligible Employee’s duties, authority, responsibilities, job title or reporting relationships relative to Eligible Employee’s duties, authority, responsibilities, job title, or reporting relationships as in effect immediately prior to such reduction, or the assignment to Eligible Employee of such reduced duties, authority, responsibilities, job title, or reporting relationships; however, the occurrence of a Change of Control shall not, in and of itself, constitute a material adverse change in Eligible Employee’s position, duties or responsibilities;

 

(ii)                                  a material reduction by Employer in the base salary or cash variable incentive compensation target, of Eligible Employee as in effect immediately prior to such reduction;

 

(iii)                               Employer’s failure to provide access to health and welfare benefits substantially the same as such access to health and welfare benefits is provided to other similarly situated employees;

 

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(iv)                              the relocation of Eligible Employee’s principal work location to a facility or a location more than fifty (50) miles from Eligible Employee’s then present principal work location, without Eligible Employee’s express written consent; or

 

(v)                                 the failure of Company or Employer to obtain agreement from any successor contemplated in Section 6 below to provide the benefits provided for in this Plan, as it exists as the time of succession.

 

(h)                                 Separation from Service.  “Separation from Service” means a separation from service (as such term is defined under Treasury Regulations Section 1.409A-1(h), without regard to any alternate definitions thereunder) with Company, each present and former subsidiary of Company, and each successor to Company.

 

(i)                                     Spin-Off.  “Spin-Off” shall mean the closing of a transaction that results in assets of the Company representing at least fifty percent (50%) of the assets or revenues of NSE, as reported in the Company’s annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 for the last full fiscal year, being separated from the Company’s business (i) as a separately held subsidiary that is not wholly owned by the Company, (ii) through a dividend or other similar distribution to the Company’s stockholders in one or more transactions in any rolling twelve calendar month period.

 

(j)                                    Termination Date.  “Termination Date” shall mean the date of an Eligible Employee’s Separation from Service.

 

3.                                      Eligibility for Severance and Other Benefits.  Eligible Employees will receive the benefits described herein under the following circumstances:

 

(a)                                 Termination in Connection with a Change of Control.  In the event of an Eligible Employee’s Separation from Service either by Employer without Cause or by such Eligible Employee for Good Reason at any time during the Coverage Period applicable to a Change of Control, then, conditioned upon the Eligible Employee’s execution and delivery of a release of claims against Company, Employer and related parties that releases Company, Employer and such parties from any claims whatsoever arising from or related to the Eligible Employee’s employment relationship with Employer, including the termination of that relationship, in a form reasonably acceptable to Employer and Eligible Employee, and provided that any statutory revocation period has expired without release having been revoked on or before the sixtieth (60th) day following the Termination Date (the “Release Effective Date”), the Eligible Employee will receive the following:

 

(i)                                     Eligible Employee’s right, title and entitlement to any and all unvested stock options, restricted stock units, performance units, or any other securities or similar incentives that have been granted or issued to Eligible Employee as of the Termination Date by Company or Employer (A) that are subject to time-based vesting conditions shall automatically be accelerated in full so as to become immediately and completely vested, and (B) that are subject to performance-based vesting conditions with a “target” achievement level shall automatically be accelerated at 100% of such “target” achievement level so as to become immediately and completely vested and fully exercisable.  Such acceleration of vesting and exercisability shall be effective upon the earlier of the Release Effective Date or the

 

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consummation of the Change of Control, as applicable.  Notwithstanding any other provision in the relevant equity incentive plan and/or notice of grant and grant agreement to the contrary, all stock options shall remain fully exercisable for the shorter of (a) two (2) years from the Termination Date, or (b) the remaining term of the stock option as provided in the relevant notice of grant and grant agreement.  In all other respects, Eligible Employee’s securities shall continue to be subject to the terms of the applicable equity incentive plan notice of grant and grant agreement.

 

(ii)                                  a lump sum cash payment within ten (10) days following the earlier of the Release Effective Date or the consummation of the Change of Control in an amount equal to (A) 18 months’ (18) salary for Eligible Executive Vice Presidents and Senior Vice Presidents, or (B) one (1) years’ salary for Eligible Vice Presidents, in each case at the Eligible Employee’s base salary rate as of the Termination Date (without taking into account any reduction in base salary that could trigger Eligible Employee’s resignation for Good Reason), less applicable withholding taxes or other withholding obligations of Employer and less any amounts to which Eligible Employee is otherwise entitled under any statutory or Employer long or short term disability plan; and

 

(iii)                               for Eligible Employees in the United States only, if Eligible Employee elects benefits continuation under the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) following Separation from Service, payment of the full monthly cost of such benefits (either directly to Eligible Employee or to the appropriate carrier or administrator at Employer’s election) for the lesser of (a) a period of twelve (12) months following the earlier of the Termination Date or the consummation of the Change of Control, or (b) until such time as Eligible Employee becomes ineligible for continued benefits under COBRA (the period of such payments the “COBRA Payment Period”), provided that, in the event Employer determines, in its sole discretion, that the payment of the COBRA premiums pursuant to this subsection would result in a violation of the nondiscrimination rules of Section 105(h)(2) of the Internal Revenue Code of 1986, as amended (the “Code”) or any statute or regulation of similar effect (including but not limited to the 2010 Patient Protection and Affordable Care Act, as amended by the 2010 Health Care and Education Reconciliation Act), then in lieu of providing the COBRA premiums, Employer, in its sole discretion, may elect to instead pay such Eligible Employee on or before the first day of each month of the COBRA Payment Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the “Additional Severance Payment”), for the remainder of the COBRA payment period.  Such Eligible Employee may, but is not obligated to, use such Additional Severance Payment toward the cost of COBRA premiums.

 

(b)                                 Voluntary Resignation; Termination for Cause.  If an Eligible Employee’s employment terminates by reason of voluntary resignation (which is not for Good Reason), or if an Eligible Employee is terminated for Cause, then such Eligible Employee shall not be entitled to receive any benefits under Section 3(a) of this Plan.

 

(c)                                  Disability.  If an Eligible Employee suffers from a Disability, Employer may terminate such Eligible Employee’s employment to the extent permitted by law and, if such Separation from Service occurs within twelve (12) months following a Change of Control, Employer will then pay to that Eligible Employee the compensation set forth in Section 3(a) of this Plan.

 

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(d)                                 Death.  If an Eligible Employee’s employment is terminated due to the death of such Eligible Employee within twelve (12) months following a Change of Control, then the compensation set forth in Section 3(a) of this Plan will be paid to the former Eligible Employee’s estate.

 

(e)                                  Application of Section 409A. Payments and benefits that may be provided pursuant to this Plan are intended to be exempt from treatment as deferred compensation subject to Section 409A of the Code by reason of the short-term deferral exception described in Treasury Regulation Section 1.409A-1(b)(4), the involuntary separation pay plan exception described in Treasury Regulation Section 1.409A-1(b)(9)(iii), or otherwise.  Notwithstanding any inconsistent provision of this Plan, to the extent Employer determines in good faith that (a) one or more of the payments or benefits received or to be received by an Eligible Employee pursuant to this Plan in connection with such Eligible Employee’s termination of employment would constitute deferred compensation subject to the rules of Section 409A, and (b) that the Eligible Employee is a “specified employee” under Section 409A, then only to the extent required to avoid the Eligible Employee’s incurrence of any additional tax or interest under Section 409A of the Code, such payment or benefit will be delayed until the date which is six (6) months after the Eligible Employee’s Separation from Service.  Employer will revise any applicable provisions of this Plan to maintain to the maximum extent practicable the original intent of the applicable Plan provisions without violating the provisions of Section 409A of the Code, if Employer deems such revisions necessary or advisable pursuant to guidance under Section 409A to avoid the incurrence of any such interest and penalties. Such revisions shall not result in a reduction of the aggregate amount of payments or benefits under this Plan.

 

(f)                                   Termination Not in Connection With a Change of Control.  In the event an Eligible Employee’s employment terminates for any reason or no reason, whether on account of Disability, death, or otherwise, on a date that is not within the Coverage Period with respect to a Change of Control, then such Eligible Employee shall not be entitled to receive severance or any other benefits under Section 3(a) of this Plan.

 

(g)                                  Coordination with Other Change of Control Benefits, Severance Benefits or Debts.  If an Eligible Employee is entitled to cash payments, accelerated vesting of stock options or restricted stock grants, or any other benefits from Company or Employer following the termination of such Eligible Employee’s employment during the Coverage Period with respect to a Change of Control under any other agreement, plan, policy or law, then the benefits received by that Eligible Employee under this Plan shall be reduced by the benefits received by Eligible Employee from Company or Employer under such other plans, programs, arrangements, agreements or requirements.  If an Eligible Employee is indebted to Company or Employer at the time of a termination that would give rise to severance benefits under Section 3(a), the Company or Employer reserves the right to offset such severance payment under the Plan by the amount of such indebtedness.

 

4.                                      At-Will Employment.  Subject only to any individual written agreement between Employer and an Eligible Employee to the contrary, each Eligible Employee’s employment is and shall continue to be at-will, as defined under applicable law.  If an Eligible Employee’s employment terminates for any reason other than as specified in Section 3, such Eligible Employee shall not be entitled to any benefits, damages, awards or compensation under this Plan.

 

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5.                                      Tax Matters. Employer may withhold from any amounts payable under the Plan such federal, state and local taxes as may be required to be withheld.  In the event that any payment or other benefits provided for in this Plan or otherwise payable to an Eligible Employee (i) constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) become subject to the excise tax imposed by Section 4999 of the Code (or any corresponding provisions of state tax law), then, notwithstanding the other provisions of this Plan, such Eligible Employee’s benefits under Section 3 will not exceed the amount which produces the greatest after-tax benefit to the Eligible Employee.  For purposes of the foregoing, the greatest after-tax benefit will be determined within thirty (30) days after the Termination Date, by the Eligible Employee in his/her sole discretion.  If no such determination is made by the Eligible Employee within thirty (30) days of the Termination Date, then Company or Employer will pay the benefits as provided in Section 3.

 

6.                                      Company’s Successors.  The Company shall require that any successor to Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of Company’s business and/or assets and any other Employer of an Eligible Employee resulting from a Change of Control shall agree to perform in accordance with this Plan in the same manner and to the same extent as Company would be required to perform such obligations in the absence of a succession.

 

7.                                      Exclusive Benefits.  Eligible Employees shall not be entitled to any payments, compensation, benefits or other consideration from Company or Employer, apart from those identified in Section 3, on account of a termination during the Coverage Period with respect to a Change of Control.

 

8.                                      Severability, Enforcement.  If any provision of this Plan, or the application thereof to any person, place or circumstance, shall be held by a court of competent jurisdiction to be invalid, unenforceable or void, the remainder of this Plan and such provisions as applied to other persons, places and circumstances shall remain in full force and effect.

 

9.                                      General.

 

(a)                                 Notice.  Notices and all other communications contemplated by this Plan shall be in writing and shall be deemed to have been duly given either (i) when personally delivered or sent by facsimile or (ii) five (5) days after being mailed by U.S. registered or certified mail, return receipt requested and postage prepaid.  In the case of an Eligible Employee, mailed notices shall be addressed to him or her at the home address or facsimile number which he or she most recently communicated to Employer in writing.  In the case of Employer, mailed notices or notices sent by facsimile shall be addressed to its corporate headquarters, and all notices shall be directed to the attention of its General Counsel or Chief Financial Officer.

 

(b)                                 Amendment.  Prior to a Change of Control, the Company reserves the right to amend or terminate this Plan upon written notice to Eligible Employees.  Upon a Change of Control, this Plan will become non-modifiable without the consent of the affected Eligible Employee(s).

 

(c)                                  Plan Termination.  The Plan shall terminate on December 31, 2016 (the “Plan Termination Date”), provided that the Plan shall not terminate, and shall continue in full

 

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force and effect and not shall not be terminable by any action of the Company or a successor in interest to the Company, in the event of the occurrence of a Change of Control on or before the Plan Termination Date.

 

10.                               Execution.  To record the adoption of the Plan as set forth herein, effective as of February 10, 2015, JDS Uniphase Corporation has caused its duly authorized officer to execute the same.

 

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