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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------
                                   FORM 10-K
                             ---------------------

<Table>
<C>          <S>
(Mark One)
    [X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE
             SECURITIES EXCHANGE ACT OF 1934



             FOR THE FISCAL YEAR ENDED JUNE 30, 2001



                                   OR



    [ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)



   OF THE
 SECURITIES
EXCHANGE ACT
  OF 1934



             For the transition period from           to           .
</Table>

                         COMMISSION FILE NUMBER 0-22874
                             ---------------------

                            JDS UNIPHASE CORPORATION
             (Exact name of registrant as specified in its charter)

<Table>
<S>                                              <C>
                    DELAWARE                                        94-2579683
        (State or other jurisdiction of                          (I.R.S. Employer
         incorporation or organization)                        Identification No.)
      210 BAYPOINTE PARKWAY, SAN JOSE, CA                             95134
    (Address of principal executive offices)                        (Zip code)
</Table>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (408) 434-1800
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

<Table>
<Caption>
              TITLE OF EACH CLASS                   NAME OF EACH EXCHANGE ON WHICH REGISTERED
              -------------------                   -----------------------------------------
<S>                                              <C>
                      None                                             None
</Table>

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                    COMMON STOCK, PAR VALUE $.001 PER SHARE
                                (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes [X]     No [ ]

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [ ]

     As of August 23, 2001, the aggregate market value of the voting stock held
by non-affiliates of the Registrant was approximately $9.3 billion based upon
the closing prices of the Common Stock and Exchangeable Shares as reported on
The Nasdaq National Market and The Toronto Stock Exchange, respectively, on such
date. Shares of Common Stock held by officers, directors and holders of more
than 5% of the outstanding Common Stock have been excluded from this calculation
because such persons may be deemed to be affiliates. This determination of
affiliate status is not necessarily a conclusive determination for other
purposes.

     As of August 23, 2001, the Registrant had 1,324,211,931 shares of Common
Stock outstanding, including 153,553,002 Exchangeable Shares.

                      DOCUMENTS INCORPORATED BY REFERENCE
                        (To the Extent Indicated Herein)

     Certain information required in Part III hereto is incorporated by
reference to the Proxy Statement for the Registrant's 2001 Annual Meeting of
Stockholders to be filed with the Securities and Exchange Commission pursuant to
Regulation 14A not later than 120 days after the end of the fiscal year covered
by this Form 10-K.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2

                                     PART I

ITEM 1.  BUSINESS

GENERAL

     JDS Uniphase Corporation is a high technology company that designs,
develops, manufactures and distributes fiber optic components, modules and
subsystems for the fiber optic communications industry. These products are
deployed in advanced optical communications networks for the telecommunications
and cable television industries. Incorporated in Delaware in October 1993, we
are the product of several substantial mergers and acquisitions, including,
among others, the combination of Uniphase Corporation and JDS FITEL Inc. to form
JDS Uniphase Corporation on June 30, 1999, and the subsequent acquisitions of
Optical Coating Laboratory, Inc. ("OCLI") on February 4, 2000, E-TEK Dynamics,
Inc. ("E-TEK") on June 30, 2000 and SDL, Inc. ("SDL") on February 13, 2001.

     Fiber optic communications systems deliver voice, video, audio and text
data information over high-capacity fiber optic cables. Although ultimately
highly complex, a fiber optic communications system performs three basic
functions common to all communications systems: transmitting, receiving and
routing (switching) information, in this case information encoded on light
signals. Our products, fiber optic components, modules and subsystems, alone and
in combinations, perform all of these functions and are the building blocks of
fiber optic communications systems. We sell our products to the world's leading
and emerging telecommunications networking and cable television system
providers. These companies include established industry participants, such as
Alcatel, Ciena, Cisco, Corning, Lucent, Marconi, Motorola, Nortel, Siemens and
Tyco, along with emerging companies, such as Corvis, ONI Systems, Juniper
Networks and Sycamore. In turn, the system providers supply integrated systems
to telecommunications carriers such as AT&T, WorldCom, Qwest and Sprint.

     Our component products include semiconductor lasers, high-speed external
modulators, transmitters, couplers, multiplexers, circulators, tunable filters,
optical switches and isolators for fiber optic applications. Our module and
subsystem level products include amplifiers, transponders, transceivers, optical
performance monitors and dispersion compensation modules. We also supply our
system provider customers with test instruments for both system production
applications and network installation.

     We also sell a number of other products for applications outside the fiber
optic industry that use the same or similar technologies as those used in our
fiber optics products business. These additional products include commercial
lasers, advanced light interference pigments, optical display and projection
products, and gas cluster ion beam surface equipment used in a variety of
markets, including the semiconductor and biomedical industries.

INDUSTRY ENVIRONMENT AND OUR GLOBAL REALIGNMENT PROGRAM

  INDUSTRY ENVIRONMENT

     During the second half of the 1990s through calendar 2000, the fiber optic
communications industry experienced a period of considerable growth, and we
participated in that growth as a leading supplier in these markets. This growth
was attributable primarily to: (a) the introduction of wavelength division
multiplexing (WDM) technology (under which multiple light signals are
transmitted down a single optical fiber cable), which allowed the expansion of
fiber optic network capacity without the expense and time required to install
additional fiber cable; (b) the unprecedented growth during this period in data
traffic, in general, and the internet, in particular, which created
exponentially increasing demand for larger, faster and more robust networks
(commonly collectively referred to loosely as "bandwidth"); (c) the
Telecommunications Act of 1996, which sought to open existing proprietary
telecommunications infrastructures to multiple carriers, and, as a consequence,
created a market for new upstart telecommunications carriers (called competitive
local exchange carriers, or CLECs), each of which moved rapidly to deploy its
own network; and (d) an abundance of relatively low cost capital available for
network development and expansion. Together, these factors fueled a rapid and
substantial installation of fiber optic networks in anticipation of rapidly
growing bandwidth demand and future sales. As a result of the demand placed on
our system provider customers by established and
                                        1
<PAGE>   3

emerging telecommunications carriers, we faced mounting, unrelenting, demand
during this period for our products. In response, we focused much of our efforts
on growing our business, internally and through acquisitions, to meet the
increasingly urgent needs of our customers for higher performance products,
increased product breadth and expanded manufacturing capacity. As a result of
these efforts, our quarterly sales grew rapidly, for example increasing from $87
million for the quarter ended June 30, 1999 to $925 million for the quarter
ended December 31, 2000.

     Since the beginning of calendar 2001, we and our industry have experienced
a dramatic downturn, the primary direct cause of which has been a precipitous
decrease in network deployment and capital spending by the telecommunications
carriers. This decrease can be attributable to, among other things: (a) network
overcapacity, as bandwidth demand, while continuing to grow, did not reach
levels sufficient to match the pace of network deployment; (b) constrained
capital markets; and (c) other factors, including the general inability of the
CLECs to obtain sufficient access to established telecommunications
infrastructures and consolidation among telecommunications carriers. All of the
above factors resulted in a decrease in the overall demand for new fiber optic
networks. In response, the carriers dramatically slowed their purchases of
systems from our customers, who in turned slowed purchases of components and
modules from our competitors and from us. Moreover, as their sales declined, our
customers moved to reduce their component and module inventory levels.
Consequently, the impact of the slowdown on our business is magnified, as we
face declining sales as the result of our customers' declining business and the
resulting adjustment to their inventory levels. Currently, we do not see a
reversal of the industry downturn.

     Nevertheless, we believe the industry will ultimately rebound from the
current downturn and grow in the future for several reasons: (a) internet
traffic, an important driver of network expansion, is expected to continue to
grow annually at a rate of between 50 percent and 100 percent, according to
industry research firm Ryan, Hankin & Kent; (b) this internet traffic is likely
to increasingly include content, such as full motion video (including,
ultimately, high definition video) and multichannel high quality audio, the
delivery of which will require as yet unavailable bandwidth; and (c) the
expansion of fiber optic network technology deeper into the networks that serve
both businesses and consumers. Concerning network expansion, fiber optic
networks are currently relegated primarily to long-haul, city-to-city, and
undersea applications, while new markets, in particular the intra-city, or
metro, markets, and, ultimately, neighborhood access, or so-called "fiber to the
curb," remain largely untapped. We believe these untapped markets represent a
significant future opportunity for our industry and for us. Moreover, we
anticipate that installation of metro fiber optic systems and, ultimately, fiber
to the curb, will increase demand for long haul capacity as overall network
traffic expands as users are provided and use greater bandwidth. Consequently,
we anticipate future continued telecommunications network development and
expansion both through the installation of new networks and through the upgrade
and expansion of existing networks. However, given our current lack of
visibility, we cannot provide any assurance as to the timing or extent of any
industry recovery or as to any increase in business or other benefits that we
may receive as a result thereof.

  GLOBAL REALIGNMENT PROGRAM

     In April 2001 we initiated our Global Realignment Program (the "Program"),
under which we are restructuring our business in response to the current market
environment and as part of our continuing program to integrate our operations.

     Specific actions taken under the Global Realignment Program include:

     - Reducing our workforce from approximately 29,000 employees to what we
       anticipate will be approximately 13,000 employees.

     - Eliminating overlapping product development programs and concentrating
       our key product development activities in specific global centers, with
       the goal to allocate our resources, both geographically and
       technologically, to those products and technologies that we believe will
       be the most important to our customers.

                                        2
<PAGE>   4

     - Consolidating our manufacturing, sales and administrative facilities,
       through building and site closures, from a total of approximately 6.3
       million square feet into approximately 4.4 million square feet. As of
       June 30, 2001, nine sites have been closed or scheduled for closure:
       Asheville, North Carolina; Bracknell, United Kingdom; Freehold, New
       Jersey; Hillend, United Kingdom; Oxford, United Kingdom; Richardson,
       Texas; Rochester, New York; Shunde, China and Taipei, Taiwan.

     - Integrating our sales force to, among other things, provide each of our
       customers with a single point of contact and, in the case of our larger
       customers, a dedicated sales team. We have largely completed this task.
       This year, we expect to expand our sales restructuring efforts to include
       our customer service program by creating technical and support centers to
       streamline customer interactions with product line managers. Ultimately,
       we intend that every customer have a single point of contact for order
       placement, status updates, billing and related questions. We also intend
       to exploit our global Oracle systems implementation to consolidate
       administrative functions and realize cost savings in all areas of product
       sales and support.

     The Global Realignment Program is expected to reduce our costs by
approximately $700 million annually after its complete implementation, which is
expected in fiscal 2002. We believe that the measures taken under the Program
will provide us the flexibility to meet our customers' current operating needs
without sacrificing our ability to expand our business and respond to future
increases in business levels.

     The Global Realignment Program represents our concerted efforts to respond
to the current demands of our industry. However, these efforts may be
inappropriate or insufficient. The Global Realignment Program may not be
successful in achieving the benefits expected, may be insufficient to align our
operations with customer demand and the changes affecting our industry, or may
be more costly or extensive than currently anticipated.

SPECIAL CHARGES

     We recorded significant special charges in the fourth quarter of 2001 of
$264.3 million, $510.6 million, and $59.8 million, related to restructuring
activities, inventory write-downs, and loss on excess inventory purchase
commitments, respectively. Please refer to Management's Discussion and Analysis
of Financial Condition and Results of Operations for further details regarding
the nature of these charges.

     The downturn in telecommunications equipment and financial markets has
created unique circumstances with regard to the assessment of certain of our
long-lived assets. In the second half of fiscal 2001, we evaluated the carrying
value of certain long-lived assets and acquired equity investments, consisting
primarily of goodwill and other intangible assets and our investment in ADVA. We
were carrying a large amount of goodwill on our balance sheet. Because of our
significant acquisitions as accounting rules required that goodwill be recorded
based on stock prices at the time merger agreements are executed and announced,
and our merger agreements were negotiated and announced at times when market
valuations were considerably higher than at present.

     On April 24, 2001, we announced that we were evaluating the carrying value
of certain long-lived assets and that such evaluation may result in an
approximately $40 billion reduction in goodwill for the quarter ended March 31,
2001. On July 26, 2001, we announced that we were recording reductions of $38.7
billion and $6.1 billion in goodwill and other intangible assets for the
quarters ended March 31, 2001 and June 30, 2001, respectively. In addition, we
announced we were recording a $715 million charge for the quarter ended March
31, 2001 to write down the value of our investment in ADVA. We also announced at
that time that we would be conducting a further assessment of our long-lived
assets and that further adjustments to our fiscal 2001 results may result from
this assessment. We subsequently completed this review and it resulted in our
recording additional charges to reduce goodwill and other long-lived assets of
$1.1 billion and $4.2 billion during the quarters ended March 31, 2001 and June
30, 2001, respectively.

     The largest portion of our goodwill arose from the merger of JDS FITEL and
Uniphase and the subsequent acquisitions of SDL, E-TEK, and OCLI. The businesses
associated with these business combinations remain significant operations within
JDS Uniphase notwithstanding the current business downturn and change in market
valuations and each is forecasted to produce positive cash flows over future

                                        3
<PAGE>   5

periods. The goodwill resulted from our acquiring strategic companies when
valuations were high. However, while we purchased highly valued shares, we were
also in effect exchanging our highly valued shares at the same time so that none
of the transactions resulting in the creation of large goodwill amounts resulted
from a corresponding outlay of our cash. Had these transactions been done at
different times when valuations were lower with exactly the same share exchange
ratios, the goodwill amounts would have been considerably smaller. However,
waiting for lower valuations may have reduced their strategic value or otherwise
have allowed competitors to buy these companies thereby, eliminating an
opportunity to strengthen JDS Uniphase.

OUR PRODUCTS

     Our telecommunications systems customers focus on developing and installing
increasingly flexible, dynamic, efficient and robust high-capacity
communications networks. Our products help meet their needs by enabling higher
capacity through higher transmission speeds and the use of multichannnel signals
(known as wavelength division multiplexing or WDM), amplifying signals further
to reduce or eliminate the need for costly electrical signal regeneration, and
improving reliability and flexibility by offering additional provisioning and
monitoring functionality. Our products include a broad range of components,
modules and subsystems better enabling our customers to satisfy all of their
requirements through "one-stop" shopping at a single supplier. We strive to be
able to supply 100 percent of our customers' component, module and subsystem
needs through our existing, and continually expanding, product portfolio. In
this report, we focus on our more recent product offerings.

     We have two principal operating segments through which we develop and
manufacture our telecommunications products: (a) Amplification and Transmission;
and (b) Wavelength Division Multiplexing (WDM), Switching and Thin Film Filters.

AMPLIFICATION AND TRANSMISSION PRODUCTS

     Our amplification and transmission products send, receive and amplify
transmission signals in fiber optic systems. Products in this group include, but
are not limited to: (a) products that send signals (source lasers, transmitters,
modulators and wavelength lockers), (b) products that amplify signals
(amplifiers and pump lasers); (c) products that receive signals (photodetectors
and receivers); and (d) integrated products that transmit and detect signals
(transceivers and transponders).

     Source Lasers.  At the beginning of the network, a source laser powers the
initial signal that will be transmitted over the network. These source lasers
are characterized by their wavelength and power levels. Power, which is measured
in milliwatts, generally determines the ability of the source laser to transmit
over longer distances, with higher power source lasers enabling greater initial
transmission distances. A single source laser is required for each channel in a
WDM system.

     Transmitters.  We manufacture transmitters that combine source lasers,
modulators, wavelength lockers and electronic drivers so that the signal is
created and encoded in a single package.

     Modulators.  Modulators turn the source light on and off to encode and send
the information throughout the network. Modulation can be achieved either by
directly turning the laser light source on and off or externally by transmitting
or alternating a continuous source laser signal to achieve the same on and off
effect. Lower performance, shorter distance network systems are better suited
for direct modulation, while other systems are designed to utilize external
modulators to encode the information signal. We produce both direct and external
modulators used in fiberoptic telecommunications systems.

     Wavelength Lockers.  We supply wavelength lockers that are used to
stabilize the wavelength of lasers used in dense WDM transmission systems. These
lockers ensure that, over the lifetime of the system, the wavelength of a source
laser does not drift to interfere with an adjacent wavelength channel. The
locker operates by filtering and detecting a small amount of the source-laser
light and providing a stabilizing feedback signal to the laser.

     Amplifiers.  We supply both Erbium-doped fiber amplifier ("EDFA") optical
amplifiers and Raman amplification pumps. These products are designed to boost
the WDM optical signals without reconversion to
                                        4
<PAGE>   6

electrical signal and permit an optical signal to travel a greater distance
between electronic terminals and regenerators. These modules include multiple
passive and active components such as couplers, isolators, pump combiners and
pump lasers.

     Pump Lasers.  Pump lasers are used in optical amplifiers within networks to
regenerate the light signal that naturally suffers loss over distance within the
network. The advent of the optical amplifier in the early 1990s has permitted
the development of today's advanced fiberoptic networks by eliminating the need
within those networks to convert attenuated optical signals back into the
electrical domain to amplify these signals for continued transmission over long
distances. Optical amplifiers each contain from one to six pump lasers depending
on amplifier performance requirements. We supply 980-nanometer and
1480-nanometer pump lasers that are used in optical amplifiers. These pumps are
used to energize the erbium-doped fiber that comprises the amplifier. We also
supply 14xx-nanometer pump lasers that are utilized in Raman modules to create
gain in the transmission fiber, allowing the signal to travel farther without
electrical regeneration.

     Photodetectors and Receivers.  Receivers and photodetectors detect the
optical signals and convert them back into electronic signals. We supply optical
photodetectors and receivers for fiberoptic telecommunications and cable
television networks. Receivers are used in WDM products for each channel at both
sides of the fiberoptic link as wavelength translation is required.
Photodetectors are used throughout a network to monitor a variety of statistics
including power levels and channel count.

     Transceivers.  In addition to transmitters we also offer transceivers that
combine transmitters with receivers so that signals can be generated and encoded
or received and detected in a single package. These modules would be installed
at the beginning and end of a system.

     Cable Television Transmitters and Amplifiers.  In cable television networks
we supply externally modulated transmitters for trunk-line applications,
directly modulated transmitters for the distribution portion of cable television
networks, return-path lasers for interactive communications and transmitters
providing both analog and digital signals to the recipient.

     Telecommunications Specialty Modules and Instruments.  We supply a number
of specialty products for multi-gigabit fiberoptics systems. In particular, we
provide some of the transmit/receive instrumentation modules used to design and
test such systems. We also provide a variety of variable-bit rate receivers and
OC-48 transmit/receive products that operate over extended temperature ranges.

     We believe our customers are seeking greater integration and functionality
from their component vendors. By reducing the number of component integration
and manufacturing steps at the customer level, our customers can better focus
their time and resources on their core competencies of system architecture,
software design and related competitive advantages. Furthermore, we believe that
greater integration of components into single-box modules and subsystems will
reduce overall system costs. Consistent with this belief, in 2001 our new
product offerings in the Amplification and Transmission Products Group focused
on module level solutions, under which various individual components are
combined to provide increased functionality and standardization in a smaller
package. For example our transceiver modules generally combine a transmitter,
modulator, wavelength locker, photodetector and control electronics into a
single package. Examples of new 2001 products include:

     - 10 Gb/s (OC-192) and 2.5 Gb/s (OC-48) MSA Transceivers/Transponders for
       Extended, Long and Short Reach that feature integrated optical and
       electronic components for transmitting and receiving optical signals.

     - 10 Gb/s APD/PIN Receiver with automatic gain control (AGC) that improves
       signal reception in OC-192 systems.

     - C, L or C plus L Raman Amplification Pump that enables the transmission
       fiber to serve as a medium for providing signal gain.

     - High Power 360 mW 980nm Grating-Stabilized Pump Modules that are the
       next-generation high power pumps for EDFA designs.

                                        5
<PAGE>   7

     - C-Band Cooled Micro-Amplifier that provides simple optical amplification
       in a compact size, and is designed both for DWDM systems at points where
       signals are not multiplexed and for deployment in edge or access
       networks.

     - Uncooled 980 nm pump laser that for EDFAs offers the highest power in the
       industry (up to 200 mW), eliminates the need for additional components
       and electronics for temperature control, and uses only a fraction of the
       operating power required by standard, cooled pump lasers.

     - 40 Gb/s Small Signal Amplifier Driver that provides optical-to-electrical
       conversion at the point where the signal is received.

WDM, SWITCHING AND THIN FILM FILTER PRODUCTS

     Our WDM, switching and thin film products guide and route light signals
through a fiber optic network. These products include, but are not limited to:
add-drop multiplexers, isolators, thin film-based wavelength division
multiplexers, arrayed waveguides, fiber Bragg gratings, couplers, circulators,
optical switches, micro-electro-mechanical systems, gain flattening filters,
attenuators, and test instruments for optical components. Our non-telecom
products are also included in this segment.

     Add-Drop Multiplexers.  We supply add-drop multiplexers that allow systems
to add and drop optical signals without reconversion to an electrical signal.
For example, a system operating from San Francisco to New York can drop one
signal in Chicago and add another allowing for greater network flexibility. The
modules include multiple components such as switches, fiber Bragg gratings and
attenuators.

     Couplers, Filters, Isolators and Circulators.  Wavelength division
multiplexer couplers are used to split and combine signals in an optical
network. We supply WDM demultiplexers and access/bi-directional couplers. Many
of these products are based on thin-film filters, arrayed waveguide gratings,
fused fiber couplers, microlenses and/or special optical materials. The WDM
products are used after the source lasers and before the receivers.

     Isolator products are used to cause light signals in a network to propagate
in one direction within a network, but prevent that signal from returning in the
opposite direction. Circulators are similar to isolators in causing light in a
system to flow in only one direction, but are different in that circulators
incorporate multiple ports and use these multiple ports to perform a routing
function within the network. We supply various types of isolators, circulators
and we also produce tunable narrow-bandpass filters that are wavelength-tunable
by voltage control.

     Fiber Bragg Gratings.  We supply fiber Bragg gratings to separate and
filter multiple wavelengths of light propagating in the same fiber. These
gratings are generally used in signal monitoring, dispersion compensation and
gain flattening applications.

     Switches and Attenuators.  Optical switches are used to route and switch
signals to different destinations within networks. Attenuators are used to
adjust the power of the optical signal to be compatible with the optical
receivers within a network system.

     Consistent with our belief that our customers are seeking greater
integration and functionality in products provided by their component vendors,
our new product offerings in the WDM, Switching and Thin Film Group focused on
module level solutions in year 2001. Examples of new products include:

     - Tunable Dispersion Compensator is the first available product for
       per-channel, adjustable dispersion compensation for 40 Gb/s and 10 Gb/s
       ultra long-haul systems. Different colors of light travel along an
       optical fiber at slightly different speeds, and light signals that carry
       information always have some small variation in the color of the light.
       The dispersion compensation modules cancel out those differences in speed
       so that all the colors of the light signal arrive at their destination at
       the same time.

     - 50 and 100 GHz, 8 and 40 Channel V-MUX Integrated VOA Array/WDM
       Multiplexer that incorporates arrayed waveguide gratings for dense
       wavelength division multiplexing with temperature

                                        6
<PAGE>   8

       control and variable optical attenuators. Attenuators adjust the strength
       of the optical signals to make them equal so that they can be received
       cleanly.

     - MEMS Variable Optical Attenuator (VOA) is JDS Uniphase's first product
       based on Micro-Electro-Mechanical Systems (MEMS) technology and offers
       high performance and fast response in an ultra-compact package. The MEMS
       VOA is well suited to equalize the strength of multiple optical signals
       and provide network power provisioning in optical amplifiers giving
       network designers more flexibility in managing bandwidth.

     - MOMS Series 1x2 Optical Switches, based on Micro-Opto-Mechanical Systems
       (MOMS) technology, these switches feature improved fiber management
       provided in an extremely small, compact package.

     - MEMS 1x2 and 2x2 Optical Switches that use MEMS technology to provide
       advanced switching speeds and improved optical performance bundled in a
       condensed, hermetically sealed package.

     - VCF Series of 100 GHz tunable filters that offer attractive solutions for
       selecting specific wavelengths to be dropped to metropolitan rings or for
       provisioning single wavelengths to end users as they grow.

     - Network Monitoring Module is an eight-channel power monitoring device
       that provides a digital output of channel power and a control output for
       power balancing, which helps identify any potential network problems and
       directs data flow accordingly to allow optimal network reliability.

     - Wavelength Monitoring Unit that measures optical power, optical
       signal-to-noise ratio (OSNR), and wavelength.

     - Optical Performance Monitor that has the highest accuracy for OSNR and
       also measures optical power and wavelength.

  TEST INSTRUMENTS

     Test instruments are used for testing and measuring optical components.
Many of the test instruments were originally developed for evaluating our own
optical components during design and production. In 2001, JDS Uniphase
introduced our Multiple Application Platform (MAP), the next generation platform
for its line of fiber optic test and measurement instrumentation. MAP provides a
wide range of test and measurement switches and attenuators in a modular and
upgradeable architecture suitable for R&D and manufacturing environments.

  NON-TELECOM PRODUCTS

     In addition to our core optical components and modules business, we also
manufacture and supply laser subsystems for a broad range of applications,
optical display and projection products used in computer displays and other
similar applications and light interference pigments used in security products
and decorative surface treatments.

     Our principal laser subsystem products consist of air-cooled argon gas
laser subsystems, which generally emit blue or green light, helium-neon lasers,
which generally emit red or green light, and solid state lasers, which generally
emit infrared, blue or green light. These systems consist of a combination of a
laser head containing the lasing medium, power supply, cabling and packaging,
including heat dissipation elements.

     Optical display and projection products control the brightness, contrast
and resolution of next generation display products including computer displays,
digital image projectors, flat panel displays, scanners and personal digital
assistants (commonly known as PDAs).

     Light interference pigments achieve unique color shifting characteristics
in security products and decorative surface treatments. Security related
products include bank notes, passports, credit cards, tax stamps and brand
protection labels. Decorative surface treatments include automotive paint,
cosmetics, electronic cases and apparel.

                                        7
<PAGE>   9

COMPETITIVE ENVIRONMENT

     We compete with numerous fiber optic component manufacturers, including
independent merchant suppliers and business units within vertically integrated
equipment manufacturers, including some of our customers. While each of our
product families has multiple competitors, we believe that we have the broadest
range of fiber optic components and modules available from one supplier in the
industry. We also believe that this range of products will position us well in
the industry as it continues to move towards module and subsystem level products
as we can better control the cost and quality of the components contained in
module and subsystem level products.

     While not a comprehensive list, our competitors in one or more product
lines include: Agere, Agilent, Alcatel Optronics, Avanex, Chorum, Ciena,
Corning, DiCon, Exfo, Fujitsu, Furukawa, Hitachi, New Focus, Nortel HPOCS,
Oplink, Sumitomo, Tellium, and Tyco.

     To save on costs and time, we believe that telecommunications system
suppliers generally seek fewer vendors for a greater variety of components and
integrated modules. A single vendor of multiple components or modules has the
ability to design these products to interact more effectively within a network
infrastructure and to optimize performance between them when installed in a
single network system. Given these factors, we believe that established system
suppliers will seek to reduce the level of their vertical integration at the
component and module level and to focus on the overall system design and
architecture of their products, which has historically been the primary means by
which those system suppliers have differentiated themselves from their
competitors. In this environment, we will continue to focus on selling customers
a portfolio of products that meets their system and cost requirements while
ensuring us a substantial portion of their component and module needs for the
particular system. Moreover, in the current industry uncertainty, we believe
that the communications equipment manufacturers will seek to further consolidate
their vendor relationships, strengthening ties with established industry
leaders, like us, and eliminate or reduce their dependence on smaller and less
secure suppliers. We believe our broad product portfolio, financial stability,
strongly funded research and development, and high qualification standards,
position us increasingly to compete to be the supplier of choice to these
companies now and in the future.

COMPANY STRATEGY

     Our mission has been and continues to be to maintain and expand our
position as the leading merchant supplier of advanced components, modules and
subsystems to the telecommunications and cable television networking
marketplace. The key elements of our business strategy are as follows:

     - Maintain Close Customer Relationships.  We work closely with our
       customers from initial product design through to manufacturing and
       delivery. We strive to engage with our customers at the early stages of
       system development to provide them with all of their component and module
       needs through customized design and manufacturing, aligned with the
       requirements of their systems. Maintaining and strengthening these
       relationships is particularly critical during the current industry
       downturn. Accordingly, reorganizing and focusing our sales, customer
       support and product development efforts to strengthen and streamline our
       customer relationships is a fundamental aspect of our Global Realignment
       Program.

     - Maintain Technology Leadership and High Product Reliability.  We consider
       our technology and product leadership to be critical to our continued
       success. We offer the broadest range of components and modules to
       telecommunications system providers, and we expect to continue this
       leadership. To do so, we must continue to develop new products, offering
       increased efficiency, performance and functionality, and with higher
       levels of integration, to our customers. To this end, notwithstanding the
       current economic downturn, we allocate, and expect to continue to
       allocate, significant funding and management emphasis to our product and
       technology development programs. Moreover, by eliminating overlapping R&D
       programs and concentrating our key product development activities in
       specific global centers, under our Global Realignment Program, we expect
       to conduct these programs with greater efficiency and focus. We believe
       that focused, judicious, and vigorous product development

                                        8
<PAGE>   10

       programs are critical to maintaining and strengthening our leadership in
       current and future industry climates.

     - Offer a Comprehensive Portfolio of Fiber Optic Components and
       Modules.  We endeavor to be the preferred, comprehensive, source for an
       increasingly greater variety of optical components and modules, for both
       the established network system providers as well as the emerging system
       providers. We believe our customers will continue to reduce the number of
       suppliers of components and modules for their systems. We believe this
       trend will accelerate because of the current economic downturn and the
       need for our customers to build relationships with financially secure,
       comprehensive solution providers. Accordingly, we strive to provide a
       comprehensive solution to our customers' component and module needs.

     - Develop Modules and Subsystems.  Our customers continue to seek an
       increase in the level of integration in the optoelectronic and optical
       products they purchase from their suppliers. Moreover, we believe our
       customers' ability to offer robust, dynamic high bandwidth systems to
       their carrier customers on a cost-effective basis will be integral to an
       industry recovery. We believe that greater integration of components into
       single-box modules and subsystems will reduce overall system costs.
       Furthermore, we believe reductions in the number of component integration
       and manufacturing steps required to be performed by our customers enable
       our customers to better focus their resources on aspects of their
       business that build on their core system architecture and maintenance
       competencies and related competitive advantages over other system
       providers. To this end, we expect to continue to devote substantial
       resources and effort to develop and manufacture increasingly integrated
       module and subsystem-level solutions for our customers. We believe that
       our broad core competencies in optical components, together with our
       strong customer relationships, will enable us to successfully develop and
       manufacture products offering these levels of integration and
       functionality to our customers.

     - Structure Our Manufacturing Capabilities for Maximum Efficiency and
       Quality.  Prior to the current industry downturn, in response to
       increasing customer demand, we expanded our worldwide manufacturing
       capacity through a number of initiatives, including facility expansion,
       mergers and acquisitions, enhanced manufacturing efficiencies and yield
       improvements, automation, and outsourcing. In the current economic
       environment, we realize the need to shift our manufacturing focus from
       capacity expansion to efficiency, while continuing to maintain product
       quality and the ability to expand during any future business upturn.
       Consequently, a critical goal of our Global Realignment Program is to
       reorganize and consolidate our manufacturing operations into those
       facilities best suited economically, technologically and geographically,
       to manufacture our products while consistently meeting our and our
       customers' quality standards. When completed, we expect production to be
       centralized in designated competency centers in order to enhance
       productivity and streamline operations. In connection with the Global
       Realignment Program, we are moving the manufacturing of many of our
       established products to our facility in Shenzen, Peoples Republic of
       China. In addition to our efforts under the Global Realignment Program,
       we continue our efforts to increase manufacturing efficiency through
       automation and outsourcing, where partners may help remove production
       bottlenecks and create a more cost-effective and scalable process.

     - Seek Complementary Mergers and Acquisitions.  The telecommunications
       industry is experiencing rapid consolidation and realignment because of
       globalization, deregulation and rapidly changing competitive technologies
       such as fiber optics for cable television, wireless communications and
       the Internet. We expect this consolidation and realignment trend to
       increase as the result of the current industry downturn. We have grown in
       part by acquiring or merging with telecommunications component and module
       businesses and may continue to do so in the future. We frequently
       evaluate strategic opportunities and intend in the future to pursue
       acquisitions of additional products, technologies and businesses
       actively.

     Although we expect to be successful in implementing our strategy, our
statements about our strategy are necessarily forward looking. We cannot predict
the future and many factors, some within and some outside of

                                        9
<PAGE>   11

our control, may cause us to fail to achieve one or more of our strategic goals.
Some of these factors are discussed under "Risk Factors" below.

SALES AND MARKETING

     We market our telecommunications components to our customers primarily
through our direct sales force in North America, Asia, Europe and Australia. In
addition, we currently sell some of our products through distributors and
manufacturers' representatives in North America, Europe, Asia, South America,
the Middle East and Australia. Selected customers for telecommunications
components include:

<Table>
<S>                   <C>                        <C>
Alcatel               Corvis                     Nortel
Agilent               Juniper Networks           ONI Systems
Ciena                 Lucent                     Siemens
Cisco                 Marconi                    Sycamore
Corning               Motorola                   Tyco
</Table>

     Subsequent to our acquisition of SDL and continuing with our Global
Realignment Program, we are integrating our sales force to, among other things,
provide each of our customers with a single point of contact, who is or will be
the dedicated account specialist for that customer. In addition, each of our
larger customers has or will have a dedicated sales team. We have largely
completed this task. Ultimately, it is our intention that every customer has a
single point of contact for order placement, status updates, billing and related
questions.

     We market our non-telecommunication products through our specialized
non-telecommunications direct sales force and worldwide network of
representatives and distributors.

CUSTOMER SUPPORT AND SERVICE

     We believe that a high level of customer support is necessary to
successfully develop and maintain long-term relationships with all of our
customers. With respect to our core telecommunications businesses, each
relationship begins at the design-in phase and is maintained as customer needs
change and evolve. We provide direct service and support to our
telecommunications customers through our offices in North America, Asia and
Europe. This year we expect to establish technical and support centers to
streamline customer interactions with product line managers. We also intend that
our customer service unit exploit our global Oracle implementation to
consolidate administrative functions and realize cost savings.

RESEARCH AND DEVELOPMENT

     During 2001, 2000 and 1999, we incurred research and development
expenditures of $325.9 million, $113.4 million and $27.0 million, respectively.

     We are currently developing new and enhanced telecommunications components,
modules and subsystems. Once the design of a product is complete, our
engineering efforts shift to enhance both the performance of that product and
our ability to manufacture it at higher volumes and at lower cost. For the
telecommunications marketplace, we are directing research and development to
strategically important areas: tunable compensation, wavelength switching, and
next-generation amplification and transponder products. We continue to develop
packaging technology for a number of our optoelectronic components so as to
enable us to supply more integrated and lower cost packaged modules to our
customers.

     In response to the recent economic downturn, we are cutting the dollar
amount of our research and development expenditures for 2002. However, we expect
such expenditures will increase as a percentage of net sales during the same
period. In addition, as part of our Global Realignment Program, we are
eliminating overlapping product development programs and concentrating our key
product development activities in specific global centers. The goal is to
allocate our resources both geographically and technologically to products and
technologies that we believe will be most important to our customers.

                                        10
<PAGE>   12

MANUFACTURING

     The following table sets forth our main manufacturing locations and the
primary products manufactured at each location as at June 30, 2001 (except as
indicated):

<Table>
<Caption>
LOCATION                                                            PRODUCTS
--------                                                            --------
<S>                                         <C>
NORTH AMERICA
Canada, British Columbia, Victoria*.......  980-nm and 14xx-nm terrestrial pump packaging
Canada, Ontario, Ottawa...................  Optical amplifiers, wavelength division multiplexers,
                                            couplers, circulators, switches, tunable filters, EDFAs,
                                            isolators and test instruments for telecommunications,
                                            waveguides and attenuators
Canada, Ontario, Toronto..................  Optical performance monitors and dispersion compensation
                                            modules
USA, California, Manteca..................  Laser subsystems
USA, California, San Jose.................  Add-drop multiplexer modules, wavelength division
                                            multiplexers, Raman amplifiers, 980-nm pump lasers,
                                            couplers, circulators, switches, isolators, optical
                                            amplifiers and laser subsystems
USA, California, Santa Rosa...............  Thin film filters, optical display and projection
                                            products and light interference pigments
USA, Connecticut, Bloomfield..............  Lithium niobate modulators and wavelength lockers
USA, Florida, Melbourne...................  Transponder modules (OC-48 and OC-768) and automation
                                            equipment
USA, Massachusetts, Norwood...............  Specialty fiber
USA, New Jersey, Eatontown................  EDFA optical amplifiers
USA, New Jersey, Piscataway...............  Electronic drivers for telecommunications
USA, New Jersey, Trenton..................  Optical photodetectors and receivers
USA, New York, Rochester*.................  Display optics
USA, North Carolina, Raleigh-Durham.......  Micro-electro-mechanical-systems
USA, Ohio, Columbus.......................  Arrayed waveguide grating
USA, Pennsylvania, Horsham................  Transponder modules (OC-192)
USA, Texas, Richardson*...................  Optical performance monitors
EUROPE
Germany, Waghaeusel-Kirrlach..............  Waveguide splitters and splitter shelves
Netherlands, Eindhoven....................  Source lasers, semiconductor amplifiers, and
                                            semiconductor optical amplifiers
Switzerland, Zurich**.....................  980-nm pump lasers
United Kingdom, Bracknell*................  Optical performance monitors
United Kingdom, Hillend*..................  Thin film filters
United Kingdom, Oxford*...................  Optical subassemblies
United Kingdom, Plymouth*.................  Advanced laser packaging
United Kingdom, Torquay...................  Fused fiber components
United Kingdom, Witham*...................  Integrated RZ and OC-768 modulators
REST OF WORLD
Australia, Sydney.........................  Fiber Bragg gratings
China, Fuzhou.............................  YVO4 and lithium niobate crystals
China, Shenzhen...........................  Isolators and wavelength division multiplexers
China, Shunde*............................  Isolators and wavelength division multiplexers
Taiwan, Taipei*...........................  Couplers and isolators
</Table>

---------------

 * These facilities have currently been identified for closure in 2002 under the
   Global Realignment Program.

** The Zurich facility was sold to Nortel Networks on February 13, 2001.

                                        11
<PAGE>   13

SOURCES AND AVAILABILITY OF RAW MATERIALS

     Our policy is to establish at least two sources of supply for materials
whenever possible, although we do have some sole source supply arrangements. The
loss or interruption of such arrangements could have an impact on our ability to
deliver certain products on a timely basis.

PATENTS AND PROPRIETARY RIGHTS

     Intellectual property rights that apply to our various products include
patents, trade secrets and trademarks. Because of the rapidly changing
technology and a broad distribution of patents in the optoelectronics industry,
our intention is not to rely primarily on intellectual property rights to
protect or establish our market position. We do not intend to broadly license
our intellectual property rights unless we can obtain adequate consideration or
enter into acceptable patent cross-license agreements. We held over 600 U.S.
patents and numerous foreign patents at June 30, 2001.

MINORITY INVESTMENTS

     We make minority investments in companies that build technology or provide
services that are complementary to our products. By investing in new ventures,
we strengthen our partnerships with such companies. Together with our partners,
we believe we can offer more complete solutions to the market.

BACKLOG

     Backlog consists of written purchase orders for products for which we have
assigned shipment dates within the following 12 months. As of June 30, 2001, our
backlog was $677 million as compared to a backlog of $931 million at June 30,
2000. Orders in backlog are firm, but are subject to cancellation or
rescheduling by the customer. Because of possible changes in product delivery
schedules and cancellation of product orders and because our sales will often
reflect orders shipped in the same quarter in which they are received, our
backlog at any particular date is not necessarily indicative of actual sales for
any succeeding period. Certain of our customers have adopted "just in time"
techniques with respect to ordering the our products, which will cause us to
have shorter lead times for providing products to some customers. Such shorter
lead times are likely to result in lower backlog relative to sales in future
periods.

     As a consequence of the industry downturn subsequent to June 30, 2001, we
experienced cancellations of some orders included in our June 30, 2001 backlog.
Moreover, we expect our backlog for future periods to be lower than at June 30,
2001. For these reasons, our ability to translate our current backlog (including
the $677 million of backlog at June 30, 2001) into sales has been and is likely
to continue to be adversely affected by order cancellation and rescheduling,
which were significant in recent quarters. Consequently, during this period of
industry uncertainty, we caution that, our announced backlog may not be a
reliable indicator of future sales or the level of future orders.

EMPLOYEES

     At June 30, 2001, we had a total of 19,948 full-time employees worldwide,
including 2,350 in research, development and engineering, 622 in sales,
marketing and service, 14,979 in manufacturing, and 1,997 in general management,
administration and finance. On July 26, 2001, we announced our intention to
reduce our global work force to approximately 13,000 employees through the
Global Realignment Program. As of June 30, 2001, approximately 6,100 employees
had been terminated as part of the Program. Of the total work force reduction,
the majority was in manufacturing.

     Our employees are not represented by any collective bargaining organization
except for our Netherlands and Germany operations. We have never experienced a
work stoppage, slowdown or strike. Notwithstanding the current downturn, we
consider our employee relations to be generally good.

                                        12
<PAGE>   14

RISK FACTORS

  OUR OPERATING RESULTS AND STOCK PRICE FLUCTUATE SUBSTANTIALLY

     Operating results for future periods are never perfectly predictable even
in the most certain of economic times, and we expect to continue to experience
fluctuations in our quarterly results and in our guidance, when provided, for
financial performance in future periods. These fluctuations, which in the future
may be significant, could cause substantial variability in the market price of
our stock. In addition to those concerns discussed below, all of the concerns we
have discussed under "Risk Factors" could affect our operating results from time
to time.

  Our Operating Results and Stock Price Are Affected by Fluctuations in Our
  Customers' Businesses

     Our business is dependent upon product sales to telecommunications network
system providers, who in turn are dependent for their business upon orders for
fiber optic systems from telecommunications carriers. Any downturn in the
business of any of these parties affects us. Moreover, our sales often reflect
orders shipped in the same quarter in which they are received, which makes our
sales vulnerable to short-term fluctuations in customer demand and difficult to
predict. In general, customer orders may be cancelled, modified or rescheduled
after receipt. Consequently, the timing of these orders and any subsequent
cancellation, modification or rescheduling of these orders have affected and
will in the future affect our results of operations from quarter to quarter.
Also, as our customers typically order in large quantities, any subsequent
cancellation, modification or rescheduling of an individual order may alone
affect our results of operations.

  We Are Experiencing Decreased Sales and Increased Difficulty in Predicting
  Future Operating Results

     As the result of currently unfavorable economic and market conditions, (a)
our sales are declining, (b) we are unable to predict future sales accurately,
and (c) we are currently unable to provide guidance for future financial
performance. The conditions contributing to this difficulty include:

     - uncertainty regarding the capital spending plans of the major
       telecommunications carriers, upon whom our customers and, ultimately we,
       depend for sales;

     - the telecommunications carriers' current limited access to the capital
       required for expansion;

     - our customers decreasing inventory levels, which, in turn, reduces our
       sales;

     - lower near term sales visibility; and

     - general market and economic uncertainty.

     Based on these and other factors, many of our major customers have reduced,
modified, cancelled or rescheduled orders for our products and have expressed
uncertainty as to their future requirements. As a result, we currently
anticipate that our net sales in future periods may decline. In addition, our
ability to meet financial expectations for future periods may be harmed.

  We Have Incurred, and May in the Future Incur, Inventory-Related Charges, the
  Amounts of Which Are Difficult to Predict Accurately

     As a result of the business downturn we have incurred charges to align our
inventory with actual customer requirements over the near term. We use a rolling
six-month forecast based on anticipated product orders, product order history,
forecasts, and backlog to assess our inventory requirements. As discussed above,
our ability to forecast our customers' needs for our products in the current
economic environment is very limited. We have incurred, and may in the future
incur, significant inventory-related charges. In the fourth quarter of 2001, we
incurred charges related to inventory write-downs and losses on excess inventory
purchase commitments of $510.6 million, and $59.8 million, respectively. We may
incur significant similar charges in future periods. Moreover, because of our
current difficulty in forecasting sales, we may in the future revise our
previous forecasts. While we believe, based on current information, that the
inventory-related charges

                                        13
<PAGE>   15

recorded in 2001, are appropriate, subsequent changes to our forecast may
indicate that these charges were insufficient or even excessive.

     As a result of these and other factors, our stock price has declined
substantially over the past year. Despite this decline, the market price of our
stock and the stocks of many of the other companies in the optical components,
modules and systems industries continue to trade at high multiples of earnings.
An outgrowth of these multiples and market volatility is the significant
vulnerability of our stock price and the stock prices of our customers and
competitors to any actual or perceived fluctuation in the strength of the
markets we serve, no matter how minor in actual or perceived consequence.
Consequently, these multiples and, hence, market prices may not be sustainable.
These broad market and industry factors have caused and may in the future cause
the market price of our stock to decline, regardless of our actual operating
performance or the operating performance of our customers.

  IF WE FAIL TO MANAGE OR ANTICIPATE OUR FUTURE GROWTH, OUR BUSINESS WILL SUFFER

     The optical networking business has historically grown, at times rapidly,
and we have grown accordingly. We have made and, although we are currently in an
industry downturn, expect to continue to make significant investments to enable
our future growth through, among other things, internal expansion programs,
internal product development and acquisitions and other strategic relationships.
If we fail to effectively manage or anticipate our future growth effectively,
particularly during periods of industry decline, such as these, our business
will suffer.

  Difficulties Associated With Integrating Our Acquired Businesses Could Harm
  Our Overall Business Operations

     Our growth strategy includes acquisitions of other companies, technologies
and product lines to complement our internally developed products. In fact, we
are the product of several substantial acquisitions, including, among others,
JDS FITEL on June 30, 1999, OCLI on February 4, 2000, E-TEK on June 30, 2000 and
SDL on February 13, 2001. We expect to continue this strategy. Critical to the
success of this strategy and, ultimately, our business as a whole, is the
ordered, efficient integration of acquired businesses into our organization. If
our integration efforts are unsuccessful, our businesses will suffer. Successful
integration depends upon:

     - our ability to integrate the manufacture, sale and marketing of the
       products of the businesses acquired with our existing products;

     - our ability to complete product development programs and consolidate
       research and development efforts;

     - our ability to retain key personnel of the acquired business and
       effectively organize the acquired business' personnel with our own;

     - our ability to consolidate and reorganize operations with those of the
       acquired business; and

     - our ability to expand our information technology systems (including
       accounting and financial systems, management controls and procedures).

Our integration efforts, which are ongoing, may not be successful and may result
in unanticipated operations problems, expenses and liabilities and the diversion
of management attention.

  Our Acquisition Strategy is Costly

     Our acquisition strategy is costly. For example, we have incurred direct
costs associated with the combination of Uniphase and JDS FITEL of $12.0
million, incurred $8.2 million associated with the acquisition of OCLI, incurred
$32.3 million associated with the acquisition of E-TEK and incurred $44.6
associated with the acquisition of SDL. In addition, we paid certain SDL
executives $300.9 million in consideration of their agreement to amend their
change of control agreements and enter into non-compete agreements with us. We
may incur additional material charges in subsequent quarters to reflect
additional
                                        14
<PAGE>   16

costs associated with these and other combinations and acquisitions, which will
be expensed as incurred. Moreover, to the extent an acquired business does not
perform as expected, we have and may continue to incur substantial additional
unforeseen costs to develop, restructure or dispose of such business.
Nonperforming or underperforming acquired businesses may also divert management
attention, dilute the value of our common stock and exchangeable shares and
weaken our financial condition.

  Our Global Realignment Program May Not Be Successful

     As part of our continuing integration efforts and in response to the
current economic slowdown, we recently commenced a Global Realignment Program,
under which we are, among other things:

     - consolidating our product development programs and eliminating
       overlapping programs,

     - consolidating our manufacturing of several products from multiple sites
       into specific locations around the world, and

     - realigning our sales organization to offer customers a single point of
       contact within the company, and creating regional and technical centers
       to streamline customer interactions with product line managers.

     Implementation of the Global Realignment Program involves reductions in our
workforce and facilities and, in certain instances, the relocation of products,
technologies and personnel. We will incur significant expenses to implement the
program and we expect to realize significant future cost savings as a result. As
with our other integration efforts, the Global Realignment Program may not be
successful in achieving the expected benefits within the expected timeframes,
may be insufficient to align our operations with customer demand and the changes
affecting our industry, may disrupt our operations, or may be more costly than
currently anticipated.

  If We Fail to Commercialize New Product Lines Our Business Will Suffer

     We intend to continue to develop new product lines and to improve existing
product lines to meet our customers' diverse and changing needs. However, our
development of new products and improvements to existing products may not be
successful, as:

     - we may fail to complete the development of a new product or product
       improvement; or

     - our customers may not purchase the new product or improved product
       because, among other things, the product is too expensive, is defective
       in design, manufacture or performance, or is uncompetitive, or because
       the product has been superceded by another product or technology.

Nonetheless, if we fail to successfully develop and introduce new products and
improvements to existing products, our business will suffer.

     Furthermore, new products require increased sales and marketing, customer
support and administrative functions to support anticipated increased levels of
operations. We may not be successful in creating this infrastructure nor may we
realize any increased sales and operations to offset the additional expenses
resulting from this increased infrastructure. In connection with our recent
acquisitions, we have incurred expenses in anticipation of developing and
selling new products. Our operations may not achieve levels sufficient to
justify the increased expense levels associated with these new businesses.

  Any Failure of Our Information Technology Infrastructure Could Harm Our
  Business

     We rely upon the capacity, reliability and security of our information
technology hardware and software infrastructure and our ability to expand and
update this infrastructure in response to our growth and changing needs. In
connection with our growth, we are constantly updating our current information
technology infrastructure and expect to incur significant costs and expend
significant management and other resources relating to our upgrade efforts.
Among other things, we are currently unifying our manufacturing, accounting,
sales and human resource data systems using an Oracle platform and expanding and
upgrading our networks

                                        15
<PAGE>   17

and integrating our voice communications systems. Any failure to manage, expand
and update our information technology infrastructure could hurt our business.

  WE HAVE MANUFACTURING AND PRODUCT QUALITY CONCERNS

  If We Do Not Achieve Acceptable Manufacturing Volumes, Yields and Costs, Our
  Business Will Suffer

     Our success depends upon our ability to timely deliver products to our
customers at acceptable volume and cost levels. The manufacture of our products
involves highly complex and precise processes, requiring production in highly
controlled and clean environments. Changes in our manufacturing processes or
those of our suppliers, or their inadvertent use of defective or contaminated
materials, could significantly hurt our ability to meet our customers' product
volume and quality needs. Moreover, in some cases, existing manufacturing
techniques, which involve substantial manual labor, may not achieve the volume
or cost targets of our customers. In these cases, we will need to develop new
manufacturing processes and techniques, which are anticipated to involve higher
levels of automation, to achieve these targets, and we will need to undertake
other efforts to reduce manufacturing costs. Currently, we are devoting
significant funds and other resources to (a) the development of advanced
manufacturing techniques to improve product volumes and yields and reduce costs,
and (b) realign some of our product manufacturing to locations offering optimal
labor costs. These efforts may not be successful. If we fail to achieve
acceptable manufacturing yields, volumes and costs, our business will be harmed.

  If Our Customers Do Not Qualify Our Manufacturing Lines for Volume Shipments,
  Our Operating Results Could Suffer

     Customers will not purchase any of our products, other than limited numbers
of evaluation units, prior to qualification of the manufacturing line for the
product. Each new manufacturing line must go through varying levels of
qualification with our customers. Moreover, under our Global Realignment Program
we are consolidating our worldwide manufacturing operations. Among other things,
we will be moving the manufacturing of some of our products to other facilities.
The manufacturing lines for these products at the consolidated facilities must
undergo qualification with our customers before commercial manufacture of these
products can recommence. The qualification process, whether for new products or
in connection with the relocation of manufacturing of current products,
determines whether the manufacturing line achieves the customers' quality,
performance and reliability standards. Delays in qualification can cause a
product to be dropped from a long-term supply program and result in significant
lost sales opportunities over the term of that program. We may experience delays
in obtaining customer qualification of our manufacturing lines and, as a
consequence, our operating results and customer relationships would be harmed.

  If Our Products Fail to Perform, Our Business Will Suffer

     Our business depends on our producing excellent products of consistently
high quality. To this end, our products are rigorously tested for quality both
by us and our customers. Nevertheless, our products are highly complex and our
customers testing procedures are limited to evaluating our products under likely
and foreseeable failure scenarios. For various reasons (including, among others,
the occurrence of performance problems unforeseeable in testing), our products
may fail to perform as expected. Failures could result from faulty design or
problems in manufacturing. In either case, we could incur significant costs to
repair and/or replace defective products under warranty, particularly when such
failures occur in installed systems. We have experienced such failures in the
past and remain exposed to such failures, as our products are widely deployed
throughout the world in multiple demanding environments and applications. In
some cases, product redesigns or additional capital equipment may be required to
correct a defect. In addition, any significant or systemic product failure could
result in lost future sales of the affected product and other products, as well
as customer relations problems.

                                        16
<PAGE>   18

  ACCOUNTING TREATMENT OF OUR ACQUISITIONS HAS IMPACTED OUR OPERATING RESULTS

  Our Operating Results Are Adversely Impacted by Purchase Accounting Treatment,
  Primarily Due to the Impact of Amortization of and Other Reductions in the
  Carrying Value of Goodwill and Other Intangibles Originating From Acquisitions

     Under accounting principles generally accepted in the United States through
June 30, 2001, we accounted for most of our acquisitions using the purchase
method of accounting. Under purchase accounting, we recorded the market value of
our common shares and the exchangeable shares of our subsidiary, JDS Uniphase
Canada Ltd., issued in connection with acquisitions and the fair value of the
stock options assumed and the amount of direct transaction costs as the cost of
acquiring these entities. That cost is allocated to the individual assets
acquired and liabilities assumed, including various identifiable intangible
assets such as in-process research and development, acquired technology,
acquired trademarks and trade names and acquired workforce, based on their
respective fair values. We allocated the excess of the purchase cost over the
fair value of the net identifiable assets to goodwill.

     The impact of purchase accounting on our operating results is significant.
For fiscal 2001, we recorded an acquisition related amortization expense of
$5,387.0 million.

     Additionally, we also incur other purchase accounting related costs and
expenses in the period a particular transaction closes to reflect purchase
accounting adjustments adversely affecting gross profit and the costs of
integrating new businesses or curtailing overlapping operations. Purchase
accounting treatment of our mergers and acquisitions, at least through the end
of 2002 at which time new accounting rules will apply, will result in a net
loss, which will have a material and adverse effect on our results of
operations.

     The downturn in telecommunications equipment and financial markets created
unique circumstances with regard to the assessment of certain of our long-lived
assets and investments. In the second half of fiscal 2001, we evaluated the
carrying value of certain long-lived assets and acquired equity investments,
consisting primarily of goodwill and other intangible assets and our investment
in ADVA. We were carrying a large amount of goodwill on our balance sheet
because of our significant acquisitions as accounting rules require that
goodwill be recorded based on stock prices at the time merger agreements are
executed and announced, and our merger agreements were negotiated and announced
at times when market valuations were considerably higher than at present.

     On April 24, 2001, we announced that we were evaluating the carrying value
of certain long-lived assets and that such evaluation may result in an
approximately $40 billion reduction in goodwill for the quarter ended March 31,
2001. On July 26, 2001, we announced that we were recording reductions of $38.7
billion and $6.1 billion in goodwill and other intangible assets for the
quarters ended March 31, 2001 and June 30, 2001, respectively. In addition, we
announced we were recording a $715 million charge for the quarter ended March
31, 2001 to write down the value of our investment in ADVA. We also announced at
that time that we would be conducting a further assessment of our long-lived
assets and that further adjustments to our fiscal 2001 results may result from
this assessment. We subsequently completed this review and it resulted in our
recording additional charges to reduce goodwill and other long-lived assets of
$1.1 billion and $4.2 billion during the quarters ended March 31, 2001 and June
30, 2001, respectively.

     We also reclassified $300.9 million in amounts paid to certain SDL
executives in connection with the acquisition which were previously recorded as
acquisition costs in the quarter ended March 31, 2001 as a one-time charge for
that period. We also recorded a $715 million charge for that period to write
down the value of our equity investment in ADVA.

     The largest portion of our goodwill arose from the merger of JDS FITEL and
Uniphase and the subsequent acquisition of SDL, E-TEK, and OCLI. The businesses
associated with these business combinations remain significant operations within
JDS Uniphase notwithstanding the current business downturn and change in market
valuations and each is forecasted to produce positive cash flows over future
periods. The goodwill resulted from our acquiring strategic companies when
valuations were high. However, while we purchased highly valued shares, we were
also in effect exchanging our highly valued shares at the same time so that none
of the transactions resulting in creation of large goodwill balances resulted
from a corresponding
                                        17
<PAGE>   19

outlay of our cash. Had these transactions been done at different times when
valuations were lower with exactly the same share exchange ratios, the goodwill
amounts would have been considerably smaller. However, waiting for lower
valuations may have reduced their strategic value or otherwise have allowed
competitors to buy these companies thereby, eliminating an opportunity to
strengthen JDS Uniphase.

  OUR SALES ARE DEPENDENT UPON A FEW KEY CUSTOMERS

     Our customer base is highly concentrated. Historically, orders from a
relatively limited number of optical system providers accounted for a
substantial portion of our net sales. During 2001, three customers, Nortel
Networks Corporation, Alcatel, and Lucent Technologies, Inc., accounted for 14
percent, 12 percent and 10 percent of net sales, respectively. During 2000,
Lucent Technologies, Inc., and Nortel Networks Corporation, accounted for 21
percent and 15 percent of net sales, respectively. We expect that, for the
foreseeable future, sales to a limited number of customers will continue to
account for a high percentage of our net sales. Sales to any single customer may
vary significantly from quarter to quarter. If current customers do not continue
to place orders, we may not be able to replace these orders with new orders from
new customers. In the telecommunications industry, our customers evaluate our
products and competitive products for deployment in their telecommunications
systems. Our failure to be selected by a customer for particular system projects
can significantly impact our business, operating results and financial
condition. Similarly, even if our customers select us, the failure of those
customers to be selected as the primary suppliers for an overall system
installation could adversely affect us. Such fluctuations could materially harm
our business.

  INTERRUPTIONS AFFECTING OUR KEY SUPPLIERS COULD DISRUPT PRODUCTION, COMPROMISE
  OUR PRODUCT QUALITY AND ADVERSELY AFFECT OUR SALES

     We obtain various components included in the manufacture of our products
from single or limited source suppliers. A disruption or loss of supplies from
these companies or a price increase for these components would materially harm
our results of operations, product quality and customer relationships. In
addition, we currently utilize a sole source for the crystal semiconductor chip
sets incorporated in our solid state microlaser products for use in our solid
state laser products from Opto Power Corporation and GEC. We obtain lithium
niobate wafers, gallium arsenide wafers, specialized fiber components and some
lasers used in our telecommunications products primarily from Crystal
Technology, Inc., Fujikura, Ltd., Philips Key Modules and Sumitomo,
respectively. We do not have long-term or volume purchase agreements with any of
these suppliers, and these components may not in the future be available in the
quantities required by us, if at all.

  ANY FAILURE TO REMAIN COMPETITIVE IN OUR INDUSTRY WOULD HARM OUR OPERATING
  RESULTS

  If Our Business Operations Are Insufficient to Remain Competitive in Our
  Industry, Our Operating Results Could Suffer

     The telecommunications markets in which we sell our products are highly
competitive and characterized by rapidly changing and converging technologies.
We face intense competition from established competitors and the threat of
future competition from new and emerging companies in all aspects of our
business. Among our current competitors are our customers, who are vertically
integrated and either manufacture and/or are capable of manufacturing some or
all of the products we sell to them. In addition to our current competitors, we
expect that new competitors providing niche, and potentially broad, product
solutions will increase in the future. While the current economic downturn has
reduced the overall level of business in our industry, the competition for that
business remains fierce. To remain competitive in both the current and future
business climates, we believe we must maintain a substantial commitment to
focused research and development, improve the efficiency of our manufacturing
operations, and streamline our marketing and sales efforts, and attendant
customer service and support. Under our Global Realignment Program, we have
ongoing initiatives in each of these areas. However, our efforts to remain
competitive, under the Global Realignment Program and otherwise, may be
unsuccessful. Among other things, we may not have sufficient resources to
continue to make the investments necessary to remain competitive, or we may not
make the technological advances necessary to remain competitive. In addition,
notwithstanding our efforts, technological changes, manufactur-

                                        18
<PAGE>   20

ing efficiencies or development efforts by our competitors may render our
products or technologies obsolete or uncompetitive.

  Our Industry is Consolidating

     Our industry is consolidating and we believe it will continue to
consolidate in the future as companies attempt to strengthen or hold their
market positions in an evolving industry. We anticipate that consolidation will
accelerate as the result of the current industry downturn. We believe that
industry consolidation may result in stronger competitors that are better able
to compete as sole-source vendors for customers. This could lead to more
variability in operating results as we compete to be a single vendor solution
and could hurt our business.

  Fiber Optic Component Average Selling Prices Are Declining

     Prices for telecommunications fiber optic products generally decline over
time as new and more efficient components and modules, with increased
functionality, are developed, manufacturing processes improve and competition
increases. The current economic downturn has exacerbated the general trend, as
declining sales have forced telecommunications carriers and their systems
provider suppliers to reduce costs, leading to increasing pricing pressure on us
and our competitors. Weakened demand for optical components and modules has
created an oversupply of these products, which has increased pressure on us to
reduce our prices. To the extent this oversupply is not corrected in subsequent
periods, we anticipate continuing pricing pressure. Moreover, currently, fiber
optic networks have significant excess capacity. Industry participants disagree
as to the amount of this excess capacity. However, to the extent that there is
significant overcapacity and this capacity is not profitably utilized in
subsequent periods, we expect to face additional pricing pressure.

     In response to pricing pressure, we must continue to (1) timely develop and
introduce new products that incorporate features that can be sold at higher
selling prices, (2) increase the efficiency of our manufacturing operations, and
(3) generally reduce costs. Failure to do so could cause our net sales and gross
margins to decline, which would harm our business.

  If We Fail to Attract and Retain Key Personnel, Our Business Could Suffer

     Our future depends, in part, on our ability to attract and retain key
personnel. In addition, our research and development efforts depend on hiring
and retaining qualified engineers. Competition for highly skilled engineers is
extremely intense, and, the current economic downturn notwithstanding, we
continue to face difficulty identifying and hiring qualified engineers in many
areas of our business. We may not be able to hire and retain such personnel at
compensation levels consistent with our existing compensation and salary
structure. Our future also depends on the continued contributions of our
executive officers and other key management and technical personnel, each of
whom would be difficult to replace. We do not maintain a key person life
insurance policy on our chief executive officer or any other officer. The loss
of the services of one or more of our executive officers or key personnel or the
inability to continue to attract qualified personnel could delay product
development cycles or otherwise materially harm our business.

  WE FACE RISKS RELATED TO OUR INTERNATIONAL OPERATIONS AND SALES

     Our customers are located throughout the world. In addition, we have
significant offshore operations, including manufacturing facilities, sales
personnel and customer support operations. Our operations outside North America
include facilities in the United Kingdom, the Netherlands, Germany, Australia
and the People's Republic of China.

     Our international presence exposes us to risks not faced by wholly North
American companies. Specifically, we face the following risks, among others:

     - our ability to comply with the customs, import/export and other trade
       compliance regulations of the countries in which we do business, together
       with any unexpected changes in such regulations;

     - tariffs and other trade barriers;
                                        19
<PAGE>   21

     - political, legal and economic instability in foreign markets,
       particularly in those markets in which we maintain manufacturing and
       research facilities;

     - difficulties in staffing and management;

     - language and cultural barriers;

     - seasonal reductions in business activities in the summer months in Europe
       and some other countries;

     - integration of foreign operations;

     - longer payment cycles;

     - greater difficulty in accounts receivable collection;

     - currency fluctuations; and

     - potentially adverse tax consequences.

     Net sales to customers outside the United States and Canada accounted for
$1,043.4 million, $326.7 million and $114.4 million or 32 percent, 23 percent,
and 40 percent of net sales for the years ended June 30, 2001, 2000 and 1999,
respectively. We expect that sales to customers outside of North America will
continue to account for a significant portion of our net sales. We continue to
expand our operations outside of the United States and to enter additional
international markets, both of which will require significant management
attention and financial resources.

     Since a significant portion of our foreign sales are denominated in U.S.
dollars, our products may also become less price competitive in countries in
which local currencies decline in value relative to the U.S. dollar. Lower sales
levels that typically occur during the summer months in Europe and some other
overseas markets may also materially and adversely affect our business.
Furthermore, the sales of many of our optical system provider customers depend
on international sales and consequently further exposes us to the risks
associated with such international sales.

     We have significant and increasing operations in the People's Republic of
China and those operations are subject to greater political, legal and economic
risks than those faced by our other international operations. In particular, the
political, legal and economic climate in China is extremely fluid and
unpredictable. Among other things, the legal system in China, both at the
national and regional levels, remains highly underdeveloped and subject to
change, with little or no prior notice, for political or other reasons.
Moreover, the enforceability of applicable existing Chinese laws and regulations
is uncertain. These concerns are exacerbated for foreign businesses, such as
ours, operating in China. Our business could be materially harmed by any
modifications to the political, legal or economic climate in China or the
inability to enforce applicable Chinese laws and regulations.

  IF WE HAVE INSUFFICIENT PROPRIETARY RIGHTS OR IF WE FAIL TO PROTECT THOSE WE
  HAVE, OUR BUSINESS WOULD BE MATERIALLY HARMED

  We May Not Obtain the Intellectual Property Rights We Require

     Others, including academic institutions and our competitors hold numerous
patents in the industries in which we operate. We may seek to acquire license
rights to these or other patents or other intellectual property to the extent
necessary for our business. Unless we are able to obtain such licenses on
commercially reasonable terms, patents or other intellectual property held by
others could inhibit our development of new products for our markets. While in
the past licenses generally have been available to us where third-party
technology was necessary or useful for the development or production of their
products, in the future licenses to third-party technology may not be available
on commercially reasonable terms, if at all. Generally, a license, if granted,
includes payments by us of up-front fees, ongoing royalties or a combination
thereof. Such royalty or other terms could have a significant adverse impact on
our operating results. We are a licensee of a number of third-party technologies
and intellectual properties rights and are required to pay royalties to these
third-party licensors on some of our telecommunications products and laser
subsystems.

                                        20
<PAGE>   22

  Our Products May Be Subject to Claims That They Infringe the Intellectual
  Property Rights of Others

     The industry in which we operate experiences periodic claims of patent
infringement or other intellectual property rights. We have in the past and may
from time to time in the future receive notices from third parties claiming that
our products infringe upon third-party proprietary rights. Any litigation to
determine the validity of any third-party claims, regardless of the merit of
these claims, could result in significant expense to us and divert the efforts
of our technical and management personnel, whether or not we are successful in
such litigation. If we are unsuccessful in any such litigation, we could be
required to expend significant resources to develop non-infringing technology or
to obtain licenses to the technology that is the subject of the litigation. We
may not be successful in such development or such licenses may not be available
on terms acceptable to us, if at all. Without such a license, we could be
enjoined from future sales of the infringing product or products. We are
currently subject to various claims regarding third party intellectual property
rights. These claims are not expected to have a material adverse effect on our
business.

  Our Intellectual Property Rights May Not Be Adequately Protected

     Our future depends in part upon our intellectual property, including trade
secrets, know-how and continuing technological innovation. We currently hold
numerous U.S. patents on products or processes and corresponding foreign patents
and have applications for some patents currently pending. The steps taken by us
to protect our intellectual property may not adequately prevent misappropriation
or ensure that others will not develop competitive technologies or products.
Other companies may be investigating or developing other technologies that are
similar to our own. It is possible that patents may not be issued from any
application pending or filed by us and, if patents do issue, the claims allowed
may not be sufficiently broad to deter or prohibit others from marketing similar
products. Any patents issued to us may be challenged, invalidated or
circumvented. Further, the rights under our patents may not provide a
competitive advantage to us. In addition, the laws of some territories in which
our products are or may be developed, manufactured or sold, including Asia,
Europe or Latin America, may not protect our products and intellectual property
rights to the same extent as the laws of the United States.

  IF WE FAIL TO SUCCESSFULLY MANAGE OUR EXPOSURE TO WORLDWIDE FINANCIAL MARKETS,
  OUR OPERATING RESULTS COULD SUFFER

     We are exposed to financial market risks, including changes in interest
rates, foreign currency exchange rates and marketable equity security prices. We
utilize derivative financial instruments to mitigate these risks. We do not use
derivative financial instruments for speculative or trading purposes. The
primary objective of our investment activities is to preserve principal while at
the same time maximizing yields without significantly increasing risk. To
achieve this objective, a majority of our marketable investments are floating
rate and municipal bonds, auction instruments and money market instruments
denominated in U.S. dollars. We mitigate currency risks of investments
denominated in foreign currencies with forward currency contracts. If we
designate such contracts as hedges and they are determined to be effective,
depending on the nature of the hedge, changes in the fair value of derivatives
will be offset against the change in fair value of assets, liabilities or firm
commitments through earnings (fair value hedges) or recognized in other
comprehensive income until the hedged item is recognized in earnings (cash flow
hedges). The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. A substantial portion of our sales, expense
and capital purchasing activities are transacted in U.S. dollars. However, we do
enter into these transactions in other currencies, primarily Canadian and
European currencies. To protect against reductions in value and the volatility
of future cash flows caused by changes in foreign exchange rates, we enter into
foreign currency forward contracts. The contracts reduce, but do not always
entirely eliminate, the impact of foreign currency exchange rate movements.
Actual results on our financial position may differ materially.

  IF WE FAIL TO OBTAIN ADDITIONAL CAPITAL AT THE TIMES, IN THE AMOUNTS AND UPON
  THE TERMS REQUIRED, OUR BUSINESS COULD SUFFER

     We have devoted substantial resources for new facilities and equipment to
the production of our products. Currently we are incurring substantial costs
associated with restructuring our business and operations under
                                        21
<PAGE>   23

our Global Realignment Program. Although we believe existing cash balances, cash
flow from operations, available lines of credit, and proceeds from the
realization of investments in other businesses will be sufficient to meet our
capital requirements at least for the next 12 months, we may be required to seek
additional equity or debt financing to compete effectively in these markets. We
cannot precisely determine the timing and amount of such capital requirements
and will depend on several factors, including our acquisitions and the demand
for our products and products under development. Such additional financing may
not be available when needed, or, if available, may not be on terms satisfactory
to us.

  OUR CURRENTLY OUTSTANDING PREFERRED STOCK AND OUR ABILITY TO ISSUE ADDITIONAL
  PREFERRED STOCK COULD HARM THE RIGHTS OF OUR COMMON STOCKHOLDERS

     Our board of directors has the authority to issue up to 799,999 shares of
undesignated preferred stock and to determine the powers, preferences and rights
and the qualifications, limitations or restrictions granted to or imposed upon
any wholly unissued shares of undesignated preferred stock and to fix the number
of shares constituting any series and the designation of such series, without
the consent of our stockholders. The preferred stock could be issued with
voting, liquidation, dividend and other rights superior to those of the holders
of common stock.

     The issuance of preferred stock under some circumstances could have the
effect of delaying, deferring or preventing a change in control. Each
outstanding share of our common stock includes one-eighth of a right. Each right
entitles the registered holder, subject to the terms of the rights agreement, to
purchase from us one unit, equal to one one-thousandth of a share of series B
preferred stock, at a purchase price of $3,600 per unit, subject to adjustment,
for each share of common stock held by the holder. The rights are attached to
all certificates representing outstanding shares of our common stock, and no
separate rights certificates have been distributed. The purchase price is
payable in cash or by certified or bank check or money order payable to our
order. The description and terms of the rights are set forth in a rights
agreement between us and American Stock Transfer & Trust Company, as rights
agent, dated as of June 22, 1998, as amended from time to time.

     Some provisions contained in the rights plan, and in the equivalent rights
plan that our subsidiary, JDS Uniphase Canada Ltd., has adopted with respect to
our exchangeable shares, may have the effect of discouraging a third party from
making an acquisition proposal for us and may thereby inhibit a change in
control. For example, such provisions may deter tender offers for shares of
common stock or exchangeable shares which offers may be attractive to the
stockholders, or deter purchases of large blocks of common stock or exchangeable
shares, thereby limiting the opportunity for stockholders to receive a premium
for their shares of common stock or exchangeable shares over the then-prevailing
market prices.

  SOME ANTI-TAKEOVER PROVISIONS CONTAINED IN OUR CHARTER AND UNDER DELAWARE LAWS
  COULD HINDER A TAKEOVER ATTEMPT

     We are subject to the provisions of Section 203 of the Delaware General
Corporation Law prohibiting, under some circumstances, publicly-held Delaware
corporations from engaging in business combinations with some stockholders for a
specified period of time without the approval of the holders of substantially
all of our outstanding voting stock. Such provisions could delay or impede the
removal of incumbent directors and could make more difficult a merger, tender
offer or proxy contest involving us, even if such events could be beneficial, in
the short term, to the interests of the stockholders. In addition, such
provisions could limit the price that some investors might be willing to pay in
the future for shares of our common stock. Our certificate of incorporation and
bylaws contain provisions relating to the limitations of liability and
indemnification of our directors and officers, dividing our board of directors
into three classes of directors serving three-year terms and providing that our
stockholders can take action only at a duly called annual or special meeting of
stockholders. These provisions also may have the effect of deterring hostile
takeovers or delaying changes in control or management of us.

                                        22
<PAGE>   24

  FORWARD-LOOKING STATEMENTS

     Statements contained in this Annual Report on Form 10-K which are not
historical facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. A forward-looking
statement may contain words such as "plans," "hopes," "believes," "estimates,"
"will continue to be," "will be," "continue to," "expect to," "anticipate that,"
"to be" or "can impact." These forward-looking statements include statements
relating to our expectations as to:

     - the future prospects for and growth of our Company and our industry,
       including, without limitation, (a) the extent and duration of the current
       economic downturn, (b) the timing and extent of any recovery from such
       downturn, (c) the viability, development and growth of new fiber optic
       telecommunications markets, including the metro and fiber to the curb
       markets, and (d) the benefits and opportunities for us and others in our
       industry provided by such new markets;

     - the implementation of our Global Realignment Program, the timing and
       level of benefits we expect to receive as a result of the Program, and
       the expected cost to complete the Program, including, without limitation,
       (a) the level of the expected workforce reductions, (b) the benefits we
       expect to receive from the elimination and consolidation of research and
       development programs and manufacturing facilities, and (c) the benefits
       we expect to receive from integrating our sales force and restructuring
       our customer service programs;

     - the capabilities of, and customer demand for, our products, the breadth
       and scope of our product line, our ability to supply 100% of our
       customers' component, module and subsystem needs and our ability to
       capitalize on opportunities for module and subsystem level products;

     - the demand for products providing greater integration and functionality,
       and any system cost reductions resulting from the integration of
       components into single box modules and subsystems;

     - our customers' desire to (a) reduce the number of their outside vendors,
       (b) reduce the level of their vertical integration, and (c) focus on
       overall system design and architecture;

     - our strategy for the future, our ability to implement such strategy
       successfully at an acceptable cost and any benefits expected to be
       received through the implementation of such strategy, including our
       strategies to (a) maintain close customer relationships, (b) maintain our
       technology leadership and product reliability, (c) offer a comprehensive
       portfolio of fiber optic components and modules, (d) develop modules and
       subsystems, (e) structure our manufacturing capabilities for maximum
       efficiency and quality, and (f) seek complementary mergers and
       acquisitions;

     - modifications being made to our sales and marketing and customer support
       and service programs, and our ability to complete such modifications at
       an acceptable cost and realize benefits therefrom;

     - our global Oracle implementation, the costs thereof and any benefits
       expected to be realized therefrom;

     - our research and development programs, including, without limitation, the
       costs thereof, the anticipated completion of our R&D programs, new
       product introductions and projected revenue from new and developing
       products and technologies;

     - our employee relations;

     - our allowance for deferred tax assets and the realization thereof;

     - our expected future expenditures for capital equipment purchases and
       leasehold improvements;

     - the sufficiency of existing cash balances and investments, together with
       cash flow from operations and available lines of credit to meet our
       liquidity and capital spending requirements for future periods; and

     - the cost to complete our acquired in-process research and development
       programs and the expected amortization of such costs.

     Management cautions that forward-looking statements are subject to risks
and uncertainties that could cause our actual results to differ materially from
those projected in such forward-looking statements. These
                                        23
<PAGE>   25

risks and uncertainties include, among other things, the risks that (1) the
current economic downturn may be more severe and long-lasting than we can
anticipate, and, notwithstanding our projects, beliefs and expectations for our
business, may cause our business and financial condition to suffer, (2) due to
the current economic slowdown, in general, and setbacks in our customers'
businesses, in particular, our ability to predict our financial performance, in
particular, and our future success, in general, for future periods is far more
difficult than in previous periods; (3) our ongoing integration and
restructuring efforts, including, among other things, the Global Realignment
Program, may not be successful in achieving their expected benefits, may be
insufficient to align our operations with customer demand and the changes
affecting our industry, or may be more costly or extensive than currently
anticipated (4) increasing pricing pressure, as the result of the economic
downturn and competitive factors, may harm our revenue and profit margins; (5)
our research and development programs may be insufficient or too costly or may
not produce new products, with performance, quality, quantity and price levels
satisfactory to our customers; and (6) our ongoing efforts to reduce product
costs to our customers, through, among other things, automation, improved
manufacturing processes and product rationalization may be unsuccessful.
Further, our future business, financial condition and results of operations
could differ materially from those anticipated by such forward-looking
statements and are subject to risks and uncertainties including the risks set
forth above. Moreover, neither we nor any other person assumes responsibility
for the accuracy and completeness of the forward-looking statements. We are
under no duty to update any of the forward-looking statements after the date of
this Annual Report on Form 10-K to conform such statements to actual results or
to changes in our expectations.

                                        24
<PAGE>   26

ITEM 2.  PROPERTIES

     Our principal offices are located in San Jose, California and Ottawa,
Ontario, Canada. The table below summarizes the properties owned and leased as
of June 30, 2001.

LEASED PROPERTIES AS OF JUNE 30, 2001:

<Table>
<Caption>
SITE                                                          SQUARE FOOTAGE
----                                                          --------------
<S>                                                           <C>
USA, San Jose, California...................................      599,290
USA, Santa Rosa, California.................................       82,362
USA, Manteca, California....................................       20,000
USA, Bloomfield, Connecticut................................      327,850
USA, Melbourne, Florida.....................................       96,900
USA, Billerica, Massachusetts...............................       34,500
USA, Norwood, Massachusetts.................................       20,800
USA, Rochester, New York....................................       33,110
USA, Trenton, New Jersey....................................      132,000
USA, Freehold, New Jersey...................................       16,000
USA, Eatontown, New Jersey..................................       84,000
USA, Piscataway, New Jersey.................................      132,000
USA, RTP, North Carolina....................................      181,000
USA, Horsham, Pennsylvania..................................      120,000
USA, Richardson, Texas......................................       24,000
Canada, Ontario, Ottawa.....................................      706,420
Canada, Ontario, Toronto....................................       28,062
Canada, British Columbia, Victoria..........................       54,750
Australia, Sydney...........................................       65,689
China, Fuzhou...............................................      444,366
China, Shenzen..............................................      330,827
China, Shunde...............................................       26,437
China, Beijing..............................................       23,400
Hong Kong...................................................        2,914
Taiwan, Taipei..............................................       57,220
Scotland, Fife..............................................        9,000
Japan, Tokyo................................................          859
Japan, Kanagawaan...........................................        2,804
Japan, Atsugi, Japan........................................       18,000
Netherlands, Eindhoven......................................      170,300
United Kingdom, Witney......................................        9,900
United Kingdom, Yarnton.....................................       60,000
United Kingdom, Plymouth....................................       20,000
United Kingdom, Torquay.....................................       65,000
United Kingdom, Berkshire...................................       40,530
United Kingdom, Luton.......................................        3,000
United Kingdom, Witham......................................       28,500
Germany, Eching.............................................        8,712
France, Grenoble............................................        9,306
TOTAL LEASED SQUARE FOOTAGE.................................    4,089,808
</Table>

                                        25
<PAGE>   27

OWNED PROPERTIES AS OF JUNE 30, 2001

<Table>
<Caption>
SITE                                                          SQUARE FOOTAGE
----                                                          --------------
<S>                                                           <C>
USA, San Jose, California...................................      284,106
USA, Santa Rosa, California.................................      493,560
USA, Columbus, Ohio.........................................      105,000
USA, Trenton, New Jersey....................................       77,000
USA, Asheville, North Carolina..............................       11,200
USA, Melbourne, Florida.....................................       60,000
Canada, Ontario, Ottawa.....................................      813,000
Scotland, Hillend...........................................       56,000
China, Fuzhou...............................................       84,163
Taiwan, Taipei..............................................      226,060
United Kingdom, Plymouth....................................       25,000
United Kingdom, Torquay.....................................       15,000
United Kingdom, Berkshire...................................        5,210
TOTAL OWNED SQUARE FOOTAGE..................................    2,255,299
TOTAL SQUARE FOOTAGE OWNED AND LEASED:......................    6,345,107
</Table>

     As part of our restructuring plans announced in April 2001 and July 2001,
we are in the process of consolidating our properties around the world.
Currently, it is projected that we will decrease our square footage by almost
two million square feet, from 6.3 million to 4.4 million square feet.

ITEM 3.  LEGAL PROCEEDINGS

     In the ordinary course of business, various lawsuits and claims are filed
against us. We also maintain various lawsuits and claims. While the outcome of
these matters is currently not determinable, management believes that the
ultimate resolution of these matters will not have a material adverse effect on
our financial statements.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     Not applicable

                                    PART II

ITEM 5.  MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     At August 23, 2001, we had approximately 1,595,798 holders of record of our
common stock and exchangeable shares. We had 1,170,658,929 common shares and
153,553,002 exchangeable shares outstanding on the Nasdaq National Market and
the Toronto Stock Exchange, respectively. Holders of exchangeable shares may
tender their holdings for common stock on a one-for-one basis at any time. The
closing price on August 23, 2001 for the common stock and the exchangeable
shares was $7.02 and Canadian $11.76, respectively. We have not paid cash
dividends on our common stock and do not anticipate paying cash dividends in the
foreseeable future. The following high and low closing sale prices indicated for
our common stock are as reported on the Nasdaq National Market during each of
the quarters indicated. The prices in the

                                        26
<PAGE>   28

following table have been adjusted to reflect all previous stock dividends and
splits through the date of this Annual Report on Form 10-K.

<Table>
<Caption>
                                                               HIGH      LOW
                                                              -------   ------
<S>                                                           <C>       <C>
Fiscal 2001 Quarter Ended:
  June 30...................................................  $ 28.53   $10.00
  March 31..................................................  $ 63.88   $17.50
  December 31...............................................  $102.37   $40.94
  September 30..............................................  $135.94   $94.69
Fiscal 2000 Quarter Ended:
  June 30...................................................  $128.94   $79.00
  March 31..................................................  $146.53   $74.88
  December 31...............................................  $ 83.61   $28.81
  September 30..............................................  $ 29.14   $19.63
</Table>

     During the second and third quarter of 2001, the Company issued 1.4 million
shares of the Company's common stock in connection with the acquisition of Epion
Corporation valued at $89.2 million. These shares were issued in connection with
milestones achieved as part of initial purchase agreement. The issuance of the
common stock was exempt from registration pursuant to Section 3(a)(10) of the
Securities Act of 1933, as amended.

                                        27
<PAGE>   29

ITEM 6.  SELECTED FINANCIAL DATA

                              FINANCIAL HIGHLIGHTS

SELECTED FINANCIAL DATA (IN MILLIONS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
            YEARS ENDED JUNE 30,              2001(2)(3)   2000(4)(5)   1999(6)     1998     1997
            --------------------              ----------   ----------   --------   ------   ------
<S>                                           <C>          <C>          <C>        <C>      <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales...................................  $  3,232.8   $ 1,430.4    $  282.8   $185.2   $113.2
Amortization of purchased intangibles.......  $  5,387.0   $   896.9    $   15.7   $  5.6   $  1.8
Acquired in-process research and              $    393.2   $   360.7    $  210.4   $ 40.3   $ 33.3
  development...............................
Merger and other costs (1)..................  $       --   $      --    $    6.8   $   --   $   --
Reduction of goodwill and other long-lived    $ 50,085.0   $      --    $     --   $   --   $   --
  assets....................................
Restructuring charges.......................  $    264.3   $      --    $     --   $   --   $   --
Loss from operations........................  $(56,347.4)  $  (865.1)   $ (153.2)  $(11.5)  $(15.8)
Net loss....................................  $(56,121.9)  $  (904.7)   $ (171.1)  $(19.6)  $(17.8)
Loss per share:
  Basic.....................................  $   (51.40)  $   (1.27)   $  (0.54)  $(0.07)  $(0.07)
  Dilutive..................................  $   (51.40)  $   (1.27)   $  (0.54)  $(0.07)  $(0.07)
Shares used in per share calculation:
  Basic.....................................     1,091.9       710.9       318.2    283.6    269.5
  Dilutive..................................     1,091.9       710.9       318.2    283.6    269.5
</Table>

<Table>
<Caption>
                AT JUNE 30,                      2001        2000        1999      1998     1997
                -----------                   ----------   ---------   --------   ------   ------
<S>                                           <C>          <C>         <C>        <C>      <C>
CONSOLIDATED BALANCE SHEET DATA:
Working capital.............................  $  2,187.8   $ 1,325.7   $  314.8   $121.4   $110.2
Total assets................................  $ 12,245.4   $26,389.1   $4,096.1   $332.9   $180.7
Long-term obligations.......................  $     18.0   $    61.2   $    9.8   $  5.7   $  2.5
Total stockholders' equity..................  $ 10,706.5   $24,778.6   $3,619.3   $280.0   $152.0
</Table>

---------------

(1) Results of operations include $5.9 million of costs and expenses
    attributable to the pooling of interests transaction with Uniphase Broadband
    Products, and $0.9 million loss on sale of the Ultrapointe Systems assets in
    1999.

(2) JDS Uniphase merged with SDL, Inc. on February 13, 2001 in a transaction
    accounted for as a purchase. The consolidated statement of operations for
    2001 and the consolidated balance sheet data as of June 30, 2001 include the
    results of operations subsequent to February 13, 2001 and financial
    position, respectively, of SDL.

(3) On February 13, 2001, the Company completed the sale of its Zurich,
    Switzerland subsidiary to Nortel Networks ("Nortel") for 65.7 million shares
    of Nortel common stock valued at $1,953.3 million, as well as up to an
    additional $500.0 million in Nortel common stock payable to the extent
    Nortel purchases do not meet certain levels under new and existing programs
    through December 31, 2003. After adjusting for the net costs of the assets
    sold and for the expenses associated with the divestiture, the Company
    realized a gain of $1,770.2 million. The Company subsequently sold
    approximately 41.0 million shares of Nortel stock resulting in a realized
    loss of $559.1 million. In addition, the Company recognized a reduction in
    the fair value of $511.8 million associated with the 24.7 million shares
    held at June 30, 2001.

(4) JDS Uniphase merged with Optical Coating Laboratory, Inc. (OCLI) on February
    4, 2000 in a transaction accounted for as a purchase. The consolidated
    statement of operations for 2000 and the

                                        28
<PAGE>   30

    consolidated balance sheet data as of June 30, 2000 include the results of
    operations subsequent to February 4, 2000 and financial position,
    respectively, of OCLI.

(5) JDS Uniphase merged with E-TEK Dynamics, Inc. (E-TEK) on June 30, 2000 in a
    transaction accounted for as a purchase. The consolidated balance sheet data
    as of June 30, 2000 includes the financial position of E-TEK.

(6) JDS Uniphase merged with JDS FITEL on June 30, 1999 in a transaction
    accounted for as a purchase. The consolidated balance sheet data as of June
    30, 1999 includes the financial position of JDS FITEL.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     JDS Uniphase is a high technology company that designs, develops,
manufactures and distributes fiber optic components, modules and subsystems for
the fiber optic communications industry. These products are deployed in advanced
optical communications networks for the telecommunications and cable television
industries. Our products, fiber optic components, modules and subsystems, alone
and in combinations, perform all of these functions and are the building blocks
of fiber optic communications systems. We sell our products to the world's
leading and emerging telecommunications networking and cable television system
providers. These companies include established industry participants, such as
Alcatel, Ciena, Cisco, Corning, Lucent, Marconi, Motorola, Nortel, Siemens and
Tyco, along with emerging companies, such as Corvis, ONI Systems, Juniper
Networks and Sycamore. In turn, the system providers supply integrated systems
to telecommunications carriers such as AT&T, WorldCom, Qwest and Sprint. Our
component products include semiconductor lasers, high-speed external modulators,
transmitters, couplers, multiplexers, circulators, tunable filters, optical
switches and isolators for fiber optic applications. Our module and subsystem
level products include amplifiers, transponders, transceivers, optical
performance monitors and dispersion compensation modules. We also supply our
system provider customers with test instruments for both system production
applications and network installation. We also sell a number of other products
for applications outside the fiber optic industry that use the same or similar
technologies as those used in our fiber optics products business. These
additional products include commercial lasers, advanced light interference
pigments, optical display and projection products, and gas cluster ion beam
surface equipment used in a variety of markets, including the semiconductor and
biomedical industries.

     In 2001, we changed our year-end from a fiscal year ending June 30, to a 52
week year ending on the Saturday closest to June 30. This change had no impact
on our results of operations, cash flows or financial position in 2001.

     We are the product of several strategic mergers and acquisitions, including
the June 30, 1999 combination of Uniphase and JDS FITEL. During 2000, we
acquired the following companies and businesses, in chronological order: AFC
Technologies ("AFC"), Ramar Corporation ("Ramar"), EPITAXX, SIFAM, Oprel
Technologies Inc. ("Oprel"), IOT Limited ("IOT"), OCLI, Cronos, Fujian Casix
Lasers Inc. ("Casix") and E-TEK. During 2001, we acquired the following
companies and businesses in chronological order: Epion, Iridian, OPA, and SDL.
Consequently, while our historical results of operations for each year include
the results of operations of acquired companies from the date of acquisition,
our results from prior years, for comparison purposes, exclude such acquired
companies' results. Most significantly, the 2000 results of operations include a
full year's results of operations from the merger with JDS FITEL as well as the
post acquisition results of each of the companies mentioned above, while the
1999 results of operations include business activities from only Uniphase.

     Accordingly, at the end of "Results of Operations -- Actual" we have
provided supplemental discussions of our 2000 actual results with 1999 pro forma
results, which combine the historical consolidated 1999 results of operations of
the former Uniphase Corporation for the 12 months ended June 30, 1999, with the
historical results of operations of JDS FITEL for the twelve months ended May
31, 1999, under the headings "Results of Operations -- Pro forma" and "Operating
Segment Information -- Pro forma." These pro forma results have been disclosed
in our Report on Form 8-K/A filed on May 22, 2000 and are hereby incorporated
herein by this reference.

                                        29
<PAGE>   31

RECENT DEVELOPMENTS

  INDUSTRY ENVIRONMENT AND OUR GLOBAL REALIGNMENT PROGRAM

  INDUSTRY ENVIRONMENT

     During the second half of the 1990s through calendar 2000, the fiber optic
communications industry experienced a period of considerable growth, and we
participated in that growth as a leading supplier in these markets. This growth
was attributable primarily to: (a) the introduction of wavelength division
multiplexing (WDM) technology (under which multiple light signals are
transmitted down a single optical fiber cable), which allowed the expansion of
fiber optic network capacity without the expense and time required to install
additional fiber cable; (b) the unprecedented growth during this period in data
traffic, in general, and the internet, in particular, which created
exponentially increasing demand for larger, faster and more robust networks
(commonly collectively referred to loosely as "bandwidth"); (c) the
Telecommunications Act of 1996, which sought to open existing proprietary
telecommunications infrastructures to multiple carriers, and, as a consequence,
created a market for new upstart telecommunications carriers (called competitive
local exchange carriers, or CLECs), each of which moved rapidly to deploy its
own network; and (d) an abundance of relatively low cost capital available for
network development and expansion. Together, these factors fueled a rapid and
substantial installation of fiber optic networks in anticipation of rapidly
growing bandwidth demand and future sales. As a result of the demand placed on
our system provider customers by established and emerging telecommunications
carriers, we faced mounting, unrelenting, demand during this period for our
products. In response, we focused much of our efforts on growing our business,
internally and through acquisitions, to meet the increasingly urgent needs of
our customers for higher performance products, increased product breadth and
expanded manufacturing capacity. As a result of these efforts, our quarterly
sales grew rapidly, for example increasing from $87 million for the quarter
ended June 30, 1999 to $925 million for the quarter ended December 31, 2000.

     Since the beginning of calendar 2001, we and our industry have experienced
a dramatic downturn, the primary direct cause of which has been a precipitous
decrease in network deployment and capital spending by the telecommunications
carriers. This decrease can be attributable to, among other things: (a) network
overcapacity, as bandwidth demand, while continuing to grow, did not reach
levels sufficient to match the pace of network deployment; (b) constrained
capital markets; and (c) other factors, including the general inability of the
CLECs to obtain sufficient access to established telecommunications
infrastructures and consolidation among telecommunications carriers. All of the
above factors resulted in a decrease in the overall demand for new fiber optic
networks. In response, the carriers dramatically slowed their purchases of
systems from our customers, who in turned slowed purchases of components and
modules from our competitors and from us. Moreover, as their sales declined, our
customers moved to reduce their component and module inventory levels.
Consequently, the impact of the slowdown on our business is magnified, as we
face declining sales as the result of our customers' declining business and the
resulting adjustment to their inventory levels. Currently, we do not see a
reversal of the industry downturn.

     In April 2001, we initiated the Global Realignment Program, under which we
are restructuring our business in response to the changes in our industry and
customer demand and as part of our continuing overall integration program.
During the fourth quarter of 2001 in connection with the Program, we recorded
$264.3 million of restructuring charges and $236.6 million of inventory
write-downs associated with discontinued products.

     In addition, on April 24, 2001, we announced that we were evaluating the
carrying value of certain long-lived assets and that such evaluation may result
in an approximately $40 billion reduction in goodwill for the quarter ended
March 31, 2001. On July 26, 2001, we announced that we were recording reductions
of $38.7 billion and $6.1 billion in goodwill and other intangible assets for
the quarters ended March 31, 2001 and June 30, 2001, respectively. We also
announced at that time that we would be conducting a further assessment of our
long-lived assets and that further adjustments to our 2001 results may result
from this assessment. We subsequently completed this review, which resulted in
our recording additional charges to reduce goodwill and other long-lived assets
of $1.1 billion and $4.2 billion during the quarters ended March 31, 2001 and
June 30, 2001, respectively.

                                        30
<PAGE>   32

     The following paragraphs describe the Global Realignment Program in greater
detail. Please refer to the "Special Charges" section of Management's Discussion
and Analysis of Financial Condition and Results of Operations for further
details regarding the nature of the special charges including the charges
recorded to reduce goodwill and other long-lived assets in accordance with
Statement of Financial Accounting Standards No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(SFAS 121).

  Global Realignment Program

     In April 2001 we initiated our Global Realignment Program (the "Program"),
under which we are restructuring our business in response to the current market
environment and as part of our continuing program to integrate our operations.

     Specific actions taken under the Global Realignment Program include:

     - Reducing our workforce from approximately 29,000 employees to what we
       anticipate will be approximately 13,000 employees.

     - Eliminating overlapping product development programs and concentrating
       our key product development activities in specific global centers, with
       the goal to allocate our resources, both geographically and
       technologically, to those products and technologies that we believe will
       be most important to our customers.

     - Consolidating our manufacturing, sales and administrative facilities,
       through building and site closures, from a total of approximately 6.3
       million square feet into approximately 4.4 million square feet. As of
       June 30, 2001, nine sites have been closed or scheduled for closure:
       Asheville, North Carolina; Bracknell, United Kingdom; Freehold, New
       Jersey; Hillend, United Kingdom; Oxford, United Kingdom; Richardson,
       Texas; Rochester, New York; Shunde, China and Taipei, Taiwan.

     - Integrating our sales force to, among other things, provide each of our
       customers with a single point of contact and, in the case of our larger
       customers, a dedicated sales team. We have largely completed this task.
       This year, we will expand our sales restructuring efforts to include our
       customer service programs by creating technical and support centers to
       streamline customer interactions with product line managers. Ultimately,
       we intend that every customer have a single point of contact for order
       placement, status updates, billing and related questions. We also intend
       to exploit our global Oracle systems implementation to consolidate
       administrative functions and realize cost savings in all areas of product
       sales and support.

     During the fourth quarter of 2001, we recorded total restructuring charges
of $264.3 million as part of the Global Realignment Program. In addition,
approximately $236.6 million of other charges primarily related to inventory
write-downs associated with discontinued products were also recorded in the
fourth quarter of 2001 as part of the Program. These charges were classified as
cost of sales. As announced on July 26, 2001, it is anticipated that the total
costs of the Global Realignment Program will be between $900 million and $950
million. We expect to recognize the majority of the additional charges
associated with the Program in the first quarter of 2002 once the specific plans
have been determined in sufficient detail and approved by management.

     The Global Realignment Program is expected to reduce our costs by
approximately $700 million annually after its complete implementation, which is
expected by the end of fiscal 2002. We believe that the measures taken under the
Program will provide us the flexibility to meet our customers' current operating
needs without sacrificing our ability to expand our businesses and respond to
future increases in business levels.

     The Global Realignment Program represents our concerted efforts to respond
to the current demands of our industry. However, these efforts may be
inappropriate or insufficient. The Global Realignment Program may not be
successful in achieving the benefits expected, may be insufficient to align our
operations with customer demand and the changes affecting our industry, or may
be more costly or extensive than currently anticipated.

                                        31
<PAGE>   33

  Impact of Recently Issued Accounting Standards

     In July 2001, the FASB issued Statements of Financial Accounting Standards
No. 141 ("SFAS 141"), "Business Combinations." SFAS 141 eliminates the
pooling-of-interests method of accounting for business combinations except for
qualifying business combinations that were initiated prior to July 1, 2001. In
addition, SFAS 141 further clarifies the criteria to recognize intangible assets
separately from goodwill. The requirements of Statement 141 are effective for
any business combination accounted for by the purchase method that is completed
after June 30, 2001 (i.e., the acquisition date is July 1, 2001 or after). We
are currently evaluating the impact of SFAS 141.

     In July 2001, the FASB issued Statements of Financial Accounting Standards
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." Under SFAS 142,
goodwill and indefinite lived intangible assets are no longer amortized but are
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives (but with
no maximum life). The amortization provisions of SFAS 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, we will apply the new
accounting rules beginning June 30, 2002. Because of the different transition
dates for goodwill and intangible assets acquired on or before June 30, 2001 and
those acquired after that date, pre-existing goodwill and intangibles will be
amortized during this transition period until adoption whereas new goodwill and
indefinite lived intangible assets acquired after June 30, 2001 will not. We are
currently evaluating the impact of SFAS 142.

RESULTS OF OPERATIONS -- ACTUAL

     The following table sets forth, for the periods indicated, certain actual
financial data as a percentage of net sales:

<Table>
<Caption>
                                                                YEARS ENDED JUNE 30,
                                                              -------------------------
                                                               2001      2000     1999
                                                              -------    -----    -----
<S>                                                           <C>        <C>      <C>
Net sales...................................................    100.0%   100.0%   100.0%
Cost of sales...............................................     71.4%    52.5%    49.0%
                                                              -------    -----    -----
  Gross profit..............................................     28.6%    47.5%    51.0%
Operating expenses:
  Research and development..................................     10.1%     7.9%     9.5%
  Selling, general and administrative.......................     25.3%    12.2%    13.3%
  Amortization of purchased intangibles.....................    166.6%    62.7%     5.6%
  Acquired in-process research and development..............     12.2%    25.2%    74.4%
  Reduction of goodwill and other long-lived assets.........   1549.3%      --       --
  Restructuring charges.....................................      8.2%      --       --
  Merger and other costs....................................       --       --      2.4%
                                                              -------    -----    -----
Total operating expenses....................................   1771.7%   108.0%   105.2%
                                                              -------    -----    -----
Loss from operations........................................  (1743.1)%  (60.5)%  (54.2)%
  Gain on sale of subsidiary................................     54.8%      --       --
  Activity related to equity method investments.............    (27.3)%     --       --
  Loss on sale of investments...............................    (17.3)%     --       --
  Reduction in fair value of available-for-sale
     investments............................................    (16.2)%     --       --
  Interest and other income, net............................      1.5%     2.5%     1.3%
                                                              -------    -----    -----
  Loss before income taxes..................................  (1747.6)%  (58.0)%  (52.9)%
Income tax expense (benefit)................................    (11.5)%    5.2%     7.6%
                                                              -------    -----    -----
Net loss....................................................  (1736.1)%  (63.2)%  (60.5)%
                                                              =======    =====    =====
</Table>

                                        32
<PAGE>   34

  YEARS ENDED JUNE 30, 2001, 2000 AND 1999

     Net Sales.  Net sales of $3,232.8 million for 2001 represented an increase
of $1,802.4 million or 126 percent over 2000 net sales of $1,430.4 million,
which increased $1,147.6 million or 406 percent over 1999 net sales of $282.8
million. However, quarterly net sales for the fourth quarter of 2001 as compared
to the third quarter of 2001 declined $319.0 million due to the current business
environment in the worldwide telecommunications industry. Net sales for the
Amplification and Transmission Group increased 91 percent in 2001 compared to
2000. The increase in net sales for the Amplification and Transmission Group was
due to the acquisitions of SDL and Epitaxx and higher unit sales volume of
optical amplifiers, transmitters, modulators and pump lasers. Net sales for the
WDM, Switching and Thin Film Filters Group increased 153 percent in 2001
compared to 2000. The increase in net sales for the WDM, Switching and Thin Film
Filters Group was primarily due to the acquisition of E-TEK and SDL and higher
unit sales volume in wavelength division multiplexers ("WDM"), instruments and
waveguides. The impact of the SDL and E-TEK acquisitions provided approximately
$804.1 million of net sales for 2001. The increase from 1999 to 2000 reflected
177 percent and 1,287 percent growth in our Amplification and Transmission and
WDM, Switching and Thin Film Filters segments, respectively. Net sales from JDS
FITEL are included for the entire year 2000, and net sales from the companies we
acquired in 2000 are included subsequent to their date of acquisition (see Note
10 of Notes to Consolidated Financial Statements). Separate discussions with
respect to net sales and operating profits by each of the reportable operating
segments can be found following the Results of Operations -- Pro forma section.

     Net sales to customers outside the United States and Canada accounted for
$1,043.4 million, $326.7 million and $114.4 million or 32 percent, 23 percent,
and 40 percent of net sales for the years ended June 30, 2001, 2000 and 1999,
respectively. The increase in net sales outside of North America from 2000 to
2001 is primarily due to the inclusion of a full year's sales from E-TEK and the
acquisition of SDL during 2001. The 2001 growth in international sales was
primarily in Europe. The increase in sales from 1999 to 2000 is primarily due to
the inclusion of JDS FITEL sales, as well as the acquisitions of OCLI, SIFAM,
Oprel and AFC during 2000. The decrease in international sales as a percentage
of net sales from 1999 to 2000, is primarily due to the inclusion of JDS FITEL,
which sells a higher mix of its products to customers in the U.S. and Canada.

     During 2001, three customers, Nortel, Alcatel, and Lucent Technologies,
Inc., accounted for 14 percent, 12 percent and 10 percent of consolidated net
sales, respectively. During 2000, Lucent Technologies, Inc., and Nortel,
accounted for 21 percent and 15 percent of consolidated net sales, respectively.
During 1999, none of the our customers exceeded 10 percent of consolidated net
sales. Sales to our leading customers vary significantly from year to year and
we do not have the ability to predict future sales to these customers.

     Net sales for 2001 are not considered indicative of the results to be
expected for any future period. In addition, there can be no assurance that the
market for our products will grow in future periods at its historical percentage
rate or that certain market segments will not decline. Further, there can be no
assurance that we will be able to increase or maintain our market share in the
future or to achieve historical growth rates.

     Gross Margin.  Gross margin as a percentage of net sales was 29 percent in
2001, compared to 48 percent and 51 percent for 2000 and 1999, respectively.
Three factors contributed to the decrease in gross margins during 2001. These
were: (i) inventory write-downs and loss on purchase commitments of
approximately $570.4 million resulting from lower sales estimates for future
periods and product consolidations and discontinuations in connection with the
Global Realignment Program during the fourth quarter of 2001 (see Special
Charges), (ii) the impact of purchase accounting adjustments of $71.5 million to
reflect the fair value of inventory associated with acquired entities, and (iii)
non-cash stock compensation of $18.2 million. The decline in gross margin as a
percentage of net sales from 1999 to 2000 reflects the impact of $25.3 million
in purchase accounting adjustments to reflect the fair value of JDS FITEL,
EPITAXX, SIFAM, OCLI and Cronos inventories. Gross margin was also reduced by a
$22.6 million write-down of inventory related to the E-TEK acquisition based on
management's decision subsequent to the acquisition to discontinue using certain
inventory. Reductions in average selling prices were largely offset by
reductions in manufacturing costs through automation, yield improvements and
other improvements in the manufacturing processes.

                                        33
<PAGE>   35

     Our gross margin can experience reduced or delayed product shipments or be
affected by a number of factors, including product mix, customer mix,
applications mix, product demand, pricing pressures, manufacturing constraints,
higher costs resulting from new production facilities, product yield, and
acquisitions of businesses that may have different margins than ours. If actual
orders do not match our forecasts, as we experienced in the second half of 2001,
we may have excess or shortfalls of some materials and components as well as
excess inventory purchase commitments. Furthermore, we could incur additional
inventory write-downs and cancellation charges or penalties, which would
increase our costs and could seriously harm our business. Considering these
factors, gross margin fluctuations are difficult to predict and there can be no
assurance that we will achieve or maintain gross margin percentages at
historical levels in future periods.

     Research and Development Expense.  For 2001, research and development
("R&D") was $325.9 million, or 10 percent of net sales as compared to $113.4
million, or 8 percent of net sales for the corresponding 2000 period. The
increase in R&D spending is primarily due to the continued development and
enhancement of our Amplification and Transmission, and WDM, Switching and Thin
Film Filters products and the inclusion of our acquisitions completed during
2001.

     For 2000, R&D expense of $113.4 million or 8 percent of net sales
represented an increase of $86.4 million or 320 percent over 1999 expense of
$27.0 million or 10 percent of net sales. The increase in R&D expenses is
primarily due to increased personnel costs and other expenses related to the
development of new products and technologies, and the continued development and
enhancement of existing products, the inclusion of JDS FITEL for the entire year
of 2000, and the inclusion of our acquisitions during 2000 from the date of
acquisition.

     We believe that continued investment in R&D is critical to attaining our
strategic objectives. However, due to our recently announced Global Realignment
Program, we expect our absolute dollar amount of R&D expenses to decrease over
the next three quarters. There can be no assurance that expenditures for R&D
will be successful or that improved processes or commercial products will result
from these projects.

     Selling, General and Administrative Expense.  Selling, general and
administrative ("SG&A") expense was $818.1 million, or 25 percent of net sales
for 2001 compared to $172.9 million, or 12 percent of net sales for 2000. The
increase in SG&A was primarily due to the following: (i) one-time compensation
related charge for amounts paid to certain SDL executives in connection with the
acquisition of SDL of $300.9 million (see Note 10 of Notes to Consolidated
Financial Statements); (ii) higher personnel-related costs to support the growth
in sales and operations; (iii) expansion of the information systems
infrastructure to manage the our growth; (iv) inclusion of our E-TEK and SDL
acquisitions; (v) non-cash stock compensation charges of $24.2 million
associated with certain of our acquisitions; (vi) increase in bad debt expense
of $25.6 million, reflecting the current instability in our industry; (vii)
litigation settlement of approximately $22.8 million; and (viii) higher payroll
tax expenses related to the exercise of non-qualified stock option exercises of
$20.9 million.

     For 2000, SG&A of $172.9 million or 12 percent of net sales represented an
increase of $135.5 million or 362 percent over 1999 expense of $37.4 million or
13 percent of net sales. The increase in 2000 is primarily due to higher SG&A
costs resulting from the hiring of additional sales, marketing and
administrative personnel, the inclusion of JDS FITEL for the entire year of
2000, and the inclusion of acquisitions completed during 2000. As a percentage
of net sales, SG&A for 2000 was consistent with 1999.

     We expect the level of SG&A expenses to decrease in the future as part of
our Global Realignment Program (see Note 12 of Notes to Consolidated Financial
Statements). We also expect to continue incurring charges to operations, which
to date have been within management's expectations, associated with integrating
recent acquisitions.

     Amortization of Purchased Intangibles.  Since 1995, we have entered into
several mergers and acquisitions that resulted in the recording of approximately
$63.9 billion in identified intangible assets (primarily developed technology)
and goodwill. In 2001, amortization of purchased intangibles ("API") was
$5,387.0 million or 167 percent of net sales, which represented an increase of
$4,490.1 million or 501 percent over 2000 API of $896.9 million or 63 percent of
net sales. The increase in API is primarily due to the

                                        34
<PAGE>   36

intangible assets generated from the acquisition of E-TEK in June 2000, and the
acquisitions of SDL, OPA, Iridian and Epion during 2001 (see Note 10 of Notes to
Consolidated Financial Statements).

     In 2000, API was $896.9 million or 63 percent of net sales, which
represented an increase of $881.2 million or 5,613 percent over 1999 API of
$15.7 million or 6 percent of net sales. The increase in API is primarily due to
the intangible assets generated from the acquisition of JDS FITEL in June 1999,
and the acquisitions of AFC, Ramar, EPITAXX, SIFAM, Oprel, IOT, OCLI, Cronos,
and Casix during 2000 (see Note 10 of Notes to Consolidated Financial
Statements).

     In connection with each of our acquisitions, we determined the useful lives
of each of the identified intangible assets and goodwill. For our significant
acquisitions, the useful lives were based upon independent valuations as well as
market forecasts. Although we recorded a significant charge in 2001 to reduce
the carrying value of our goodwill and purchased intangible assets, we continue
to believe the remaining goodwill and purchased intangible assets will provide
benefit to us over periods consistent with the established useful lives.

     Our API expense will continue to generate net losses at least through the
end of 2002 at which time new accounting rules will apply. The balance at June
30, 2001, of goodwill and other intangibles arising from acquisition activity
was $7.0 billion (see Note 10 of Notes to Consolidated Condensed Financial
Statements). While API expense is expected to be reduced in future periods
because of reductions recorded in the value of existing identified intangible
assets and goodwill in 2001, it could increase in the future, because of new
acquisitions.

     Acquired In-process Research and Development.  In 2001, we recorded charges
of $393.2 million or 12 percent of net sales for acquired in-process research
and development ("IPR&D") resulting from the acquisitions of SDL ($380.7
million), OPA ($3.0 million), Iridian ($0.6 million), and Epion ($8.9 million).
In 2000, we recorded charges of $360.7 million or 25 percent of net sales for
IPR&D resulting from the acquisitions of EPITAXX ($16.7 million), SIFAM ($3.0
million), OCLI ($84.1 million), Cronos ($6.3 million) and E-TEK ($250.6
million). In 1999, we recorded $210.4 million or 74 percent of net sales of
IPR&D resulting from the former Uniphase Corporation's merger with JDS FITEL
(see Note 10 of Notes to Consolidated Financial Statements). These amounts were
expensed on the acquisition dates because the acquired technology had not yet
reached technological feasibility and had no future alternative uses. There can
be no assurance that acquisitions of businesses, products or technologies by us
in the future will not result in substantial charges for IPR&D that may cause
fluctuations in our quarterly or annual operating results.

     A description of the acquired in-process technology, stage of development,
estimated completion costs, and time to complete at the date of the merger for
our significant 2001 acquisitions, as well as the current status of acquired
in-process research and development projects for each acquisition can be found
at the end of this Management's Discussion and Analysis of Financial Condition
and Results of Operations.

     Special Charges.  During the second half of the 1990s through calendar
2000, the fiber optic communications industry experienced a period of
considerable growth, and we participated in that growth as a leading supplier to
these markets. This growth was attributable primarily to: (a) the introduction
of wavelength division multiplexing (WDM) technology (under which multiple light
signals are transmitted down a single optical fiber cable), which allowed the
expansion of fiber optic network capacity without the expense and time required
to install additional fiber cable; (b) the unprecedented growth during this
period in data traffic, in general, and the internet, in particular, which
created rapidly increasing demand for larger, faster and more robust networks
(commonly collectively referred to loosely as "bandwidth"); (c) the
Telecommunications Act of 1996, which sought to open existing proprietary
telecommunications infrastructures to multiple carriers, and, as a consequence,
created a market for new upstart telecommunications carriers (called competitive
local exchange carriers, or CLECs), each of which moved rapidly to deploy its
own network; and (d) an abundance of relatively low cost capital available for
network development and expansion. Together, these factors fueled a rapid and
substantial installation of fiber optic networks in anticipation of rapidly
growing bandwidth demand and future sales. As a result of the demand placed on
our system provider customers by established and emerging telecommunications
carriers, we faced mounting, unrelenting, demand for our products during this
period. In response, we focused much of our efforts on expanding our business,
internally and through
                                        35
<PAGE>   37

acquisitions, to meet the increasingly urgent needs of our customers for
increased product breadth and manufacturing capacity. As a result of these
efforts, our quarterly sales grew rapidly, for example increasing from $87
million for the fourth quarter of 1999 to $925 million for the second quarter of
2001.

     Since the beginning of calendar 2001, we and our industry have experienced
a dramatic downturn, the primary direct cause of which has been a precipitous
decrease in network deployment and capital spending by telecommunications
carriers. This decrease can be attributable to, among other things: (a) network
overcapacity, as bandwidth demand, while continuing to grow, did not reach
levels sufficient to sustain the pace of network deployment; (b) constrained
capital markets; and (c) other factors, including the general inability of the
CLECs to obtain sufficient access to established telecommunications
infrastructures and consolidation among the telecommunications carriers. The
result was a decrease in the overall demand for new fiber optic networks and
capacity increases on existing networks. In response, carriers dramatically
slowed their purchases of systems from our customers, which in turned slowed
purchases of components and modules from our competitors and us. Moreover, as
their sales declined, our customers moved to reduce their component and module
inventory levels. Consequently, the impact of the slowdown on our business is
magnified, as we face declining sales as the result of our customers' declining
business and the resulting adjustment to their inventory levels.

     In April 2001, we initiated the Global Realignment Program, under which we
are restructuring our business in response to the changes in our industry and
customer demand and as part of our continuing overall integration program.
During the fourth quarter of 2001 in connection with the Program, we recorded
$264.3 million of restructuring charges, and $236.6 million of inventory
write-downs associated with discontinued products. In addition, we also recorded
additional $274.0 million and $59.8 million related to further inventory write
downs and loss on excess inventory commitments associated with reduced customer
demand for our product.

     On April 24, 2001, we announced that we were evaluating the value of
certain long-lived assets and that such evaluation may result in an
approximately $40 billion reduction in goodwill for the quarter ended March 31,
2001. On July 26, 2001, we announced that we were recording reductions of $38.7
billion and $6.1 billion in goodwill and other intangible assets for the
quarters ended March 31, 2001 and June 30, 2001, respectively. We further
announced at that time that we would be conducting a further assessment of our
long-lived assets and that further adjustments to fiscal 2001 results may result
from this assessment. We subsequently completed this review and it resulted in
us recording additional charges to reduce goodwill and other long-lived assets
of $1.1 billion and $4.2 billion during the quarters ended March 31, 2001 and
June 30, 2001, respectively.

     The following table and paragraphs describe the nature of the special
charges.

<Table>
<Caption>
                                                 YEAR ENDED                             PROVISION
                                                  JUNE 30,      CASH      NON-CASH    BALANCE AS OF
                                                    2001      PAYMENTS    CHARGES     JUNE 30, 2001
                                                 ----------   --------   ----------   -------------
<S>                                              <C>          <C>        <C>          <C>
Restructuring activities:
  Worldwide workforce reduction................  $    79.1     $(24.9)   $    (11.1)     $ 43.1
  Facilities and equipment.....................      122.2         --        (122.2)         --
  Lease commitments............................       63.0       (0.9)           --        62.1
                                                 ---------     ------    ----------      ------
Restructuring charges..........................      264.3      (25.8)       (133.3)      105.2
Reduction of goodwill and other long-lived
  assets.......................................   50,085.0         --     (50,085.0)         --
                                                 ---------     ------    ----------      ------
Special charges................................  $50,349.3     $(25.8)   $(50,218.3)     $105.2
</Table>

  RESTRUCTURING ACTIVITIES

     The Global Realignment Program (the "Program") is intended to align our
resources and operations into a global structure that is competitive now and
positions us to remain competitive in the future. The Program includes
restructuring certain business functions including a worldwide workforce
reduction and consolidation of excess facilities and equipment.

                                        36
<PAGE>   38

     As of June 30, 2001 we have completed and approved plans to close nine
operations located in North America, Europe and Asia, vacate approximately 25
buildings or 1.2 million square feet of manufacturing and office space at
operations to be closed, as well as at continuing operations, and reduce our
workforce by approximately 9,000 employees.

     During the fourth quarter of 2001, in connection with these plans, we
recorded restructuring charges of $264.3 million as part of the Program. The
following paragraphs provide detailed information related to the restructuring
charges and reduction in goodwill and other long-lived assets recorded in the
fourth quarter of 2001.

  WORLDWIDE WORKFORCE REDUCTION

     As of June 30, 2001, we had recorded a charge of approximately $79.1
million primarily related to severance and fringe benefits associated with the
reduction of 9,000 employees. Of the 9,000 terminations for which costs have
been accrued as at June 30, 2001, approximately 8,200 were engaged in
manufacturing activities and approximately 7,100, 1,200, and 700 were from sites
located in North America, Europe and Asia, respectively. As of June 30, 2001,
approximately 6,100 employees had been terminated. The workforce reductions
began in the fourth quarter of 2001 and we expect them to be completed by the
second quarter of 2002. In addition, we incurred non-cash severance charges of
$11.1 million related to the modification of a former executive's stock options
(see Note 9 of Notes to Consolidated Financial Statements).

     Prior to the date of the financial statements, management with the
appropriate level of authority, approved and committed us to a plan of
termination which included the benefits terminated employees would receive.
Prior to June 30, 2001, the expected termination benefits were communicated to
employees in detail sufficient to enable them to determine the nature and
amounts of their individual severance benefits.

     Remaining cash expenditures relating to workforce reductions and
termination agreements will be paid throughout the first and second quarters of
2002.

  CONSOLIDATION OF EXCESS FACILITIES AND EQUIPMENT

     The consolidation of excess facilities includes the closure of certain
manufacturing, research and development facilities, and administrative and sales
offices throughout North America, Europe and Asia for business activities that
have been restructured as part of the Program. The operations being closed as of
June 30, 2001 are in Asheville, North Carolina; Bracknell, United Kingdom;
Freehold, New Jersey; Hillend, United Kingdom; Oxford, United Kingdom;
Richardson, Texas; Rochester, New York; Shunde, China and Taipei, Taiwan.

     Property and equipment that was disposed or removed from operations
resulted in a charge of $122.2 million and consisted primarily of leasehold
improvements, computer equipment and related software, production and
engineering equipment, and office equipment, furniture, and fixtures. We will
also incur higher depreciation costs totaling approximately $35.1 million in the
first three quarters of 2002 due to shorter estimated useful lives of certain
assets that are being phased out as part of the Program. In addition, we
incurred a charge of $63.0 million for exiting and terminating leases primarily
related to excess or closed facilities with planned exit dates. We estimated the
cost of exiting and terminating the facility leases based on the contractual
terms of the agreements and then current real estate market conditions. We
determined that it would take approximately six to twenty-four months to
sublease the various properties that will be vacated in connection with the
Program.

     Amounts related to the lease expense (net of anticipated sublease proceeds)
related to the consolidation of facilities will be paid over the respective
lease terms through 2015. We anticipate completing implementation of our
restructuring program during the next twelve months.

     In addition, because we restructured certain of our businesses and
realigned our operations to focus on profit contribution, high growth markets,
and core opportunities as of June 30, 2001, we abandoned certain redundant
products and product platforms and reduced the workforce that had been valued in
previous acquisitions. In accordance with SFAS 121, we wrote the related
intangible assets down to their fair value,
                                        37
<PAGE>   39

which was deemed to be zero, and recorded a charge of $0.3 billion related to
the reduction in purchased intangibles and $3.1 billion related to goodwill
associated with these assets.

  IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS

     As part of our review of financial results for 2001, we also performed an
assessment of the carrying value of the our long-lived assets to be held for use
including significant amounts of goodwill and other intangible assets recorded
in connection with our various acquisitions. The assessment was performed
pursuant to SFAS 121 because of the significant negative industry and economic
trends affecting both our current operations and expected future sales as well
as the general decline of technology valuations. The conclusion of that
assessment was that the decline in market conditions within our industry was
significant and other than temporary. As a result, we recorded charges of $39.8
billion and $6.9 billion to reduce goodwill and other long-lived assets during
the third and fourth quarters of 2001, respectively, based on the amount by
which the carrying amount of these assets exceeded their fair value. Of the
total write down, $46.6 billion is related to the goodwill primarily associated
with the acquisitions of E-TEK, SDL, and OCLI with the balance of $0.1 billion
relating to other long-lived assets. Fair value was determined based on
discounted future cash flows for the operating entities that had separately
identifiable cash flows. The cash flow periods used were five years using annual
growth rates of 15 percent to 60 percent, the discount rate used was 13.0
percent in the third quarter of 2001 and 14.5 percent in the fourth quarter of
2001, and the terminal values were estimated based upon terminal growth rates of
7 percent. The assumptions supporting the estimated future cash flows, including
the discount rate and estimated terminal values, reflect management's best
estimates. The discount rate was based upon our weighted average cost of capital
as adjusted for the risks associated with our operations.

     It is reasonably possible that the estimates and assumptions used under our
SFAS 121 assessment may change in the near term resulting in the need to further
write-down our goodwill and other long-lived assets. In addition, it is
reasonably possible we may incur additional reductions in goodwill if our market
capitalization is less than our net assets in future periods.

  INVENTORY WRITE-DOWN AND LOSS ON PURCHASE COMMITMENTS NOT INCLUDED IN
  RESTRUCTURING CHARGES

     We recorded a loss on purchase commitments of $59.8 million and inventory
write-down of $510.6 million during the fourth quarter of 2001. These additional
charges to cost of sales were due to (i) a sudden and significant decrease in
forecasted sales in the fourth quarter of 2001 and were calculated based on
inventory levels and purchase commitments in excess of expected demand for each
specific product and (ii) product consolidations and discontinuations in
connection with the Program.

     Gain on Sale of Subsidiary.  On February 13, 2001, we completed the sale of
our Zurich, Switzerland subsidiary to Nortel Networks ("Nortel") for 65.7
million shares of Nortel common stock valued at $1,953.3 million. After
adjusting for the net costs of the assets sold and for the expenses associated
with the divestiture, we realized a gain of $1,770.2 million.

     Activity Related to Equity Investments.  For 2001, activity related to
equity investments was a net loss of $883.9 million. This includes: (i) a $744.7
million charge to earnings to write down the carrying value of our investment in
ADVA due to an other than temporary decline in its fair value, (ii) $136.2
million of amortization expense related to the difference between the cost of
the investment and the underlying equity in the net assets of ADVA at the date
of acquisition; and (iii) $3.0 million related to our share of the net income of
the Photonics Fund and net loss of ADVA.

     Loss on Sale of Available-for-Sale Investments.  During 2001, we sold
approximately 41.0 million shares of Nortel common stock resulting in a realized
loss of $559.1 million.

     Reduction in fair value of Available-for-Sale Investments.  At June 30,
2001, we had 24.7 million shares of Nortel common stock at a fair value of
$223.1 million. We recognized a reduction in fair value of $511.8 million
associated with the 24.7 million shares held by us as of June 30, 2001, as we
determined the decline in the fair value of the shares of Nortel common stock to
be other-than-temporary. In addition, we

                                        38
<PAGE>   40

recorded a charge of $10.3 million in connection with another of our
available-for-sale investments related to an other-than-temporary decline in
fair value.

     Should the Company decide to sell the shares of Nortel common stock or
should the fair value of the shares of Nortel common stock held by the Company
continue to decline in the near future, the Company may record additional losses
related to these shares.

     Interest and Other Income, net.  Net interest and other income of $48.5
million for 2001 represented an increase of $13.2 million from 2000 income of
$35.3 million, which represented an increase of $31.7 million from 1999 income
of $3.6 million. In 2001, The increase in interest and other income was the
result of higher investment balances obtained through cash generated from
operating activities, our acquisition of E-TEK and proceeds from the issuance of
common stock under our stock option and stock purchase plans. In 2000, the
increase in interest and other income was the result of higher investment
balances obtained through cash generated from operating activities, our mergers
with JDS FITEL and OCLI, and the completion of a public offering of our common
stock and a private placement of exchangeable shares in August 1999 that
generated $713.6 million in cash, net of transaction costs.

     Income Tax Expense.  We recorded a $371.9 million benefit for income taxes
for 2001 and income tax expense of $74.9 million, and $21.5 million for 2000 and
1999, respectively. The expected tax benefit derived by applying the federal
statutory rate to the operating losses each year differs from the amount
recorded primarily due to non-deductible acquisition related charges.

     We have a $996.0 million valuation allowance for deferred tax assets at
June 30, 2001. The valuation allowance for deferred tax assets reduces the net
deferred tax assets to $411.1 million, an amount management believes is more
likely than not realizable. Approximately $81 million of the net deferred tax
assets are supported by foreign recoverable income taxes. Realization of the
remaining $330.1 million of net deferred tax assets is based on our projections
of future domestic taxable income. The amount of the deferred tax assets
considered realizable, however, could be reduced in the near term if estimate of
future domestic taxable income is reduced.

     Approximately $663.0 million of the deferred tax assets subject to the
valuation allowance are attributable to stock options that will be credited to
paid in capital when realized. Deferred tax assets of approximately $192.6
million attributable to acquisition related items that are subject to the
valuation allowance will, when realized, first reduce unamortized goodwill, then
other non-current intangible assets of acquired subsidiaries, and then income
tax expense.

                                        39
<PAGE>   41

RESULTS OF OPERATIONS -- PRO FORMA

     The following supplemental table compares actual results of operations of
JDS Uniphase for 2000 with pro forma results of operations of the former
Uniphase Corporation and JDS FITEL combined for 1999 (in millions).

<Table>
<Caption>
                                                                           PRO FORMA
                                                                           RESULTS OF
                                                           AS REPORTED     OPERATIONS     AS REPORTED
                                                              GAAP        UNIPHASE AND       GAAP
                                                             RESULTS       JDS FITEL        RESULTS
                                                          OF OPERATIONS     COMBINED     OF OPERATIONS
                                                          -------------   ------------   -------------
                                                                            JUNE 30,
                                                          --------------------------------------------
                                                              2000            1999           1999
                                                          -------------   ------------   -------------
<S>                                                       <C>             <C>            <C>
Net sales...............................................    $1,430.4        $  587.9        $ 282.8
Cost of sales...........................................       751.6           284.4          138.7
                                                            --------        --------        -------
  Gross profit..........................................       678.8           303.5          144.1
Operating expenses:
  Research and development..............................       113.4            52.5           27.0
  Selling, general and administrative...................       172.9            71.5           37.4
  Amortization of purchased intangibles.................       896.9           687.5           15.7
  Acquired in-process research and development..........       360.7           210.4          210.4
  Merger and other costs................................          --             6.8            6.8
                                                            --------        --------        -------
Total operating expenses................................     1,543.9         1,028.7          297.3
                                                            --------        --------        -------
Loss from operations....................................      (865.1)         (725.2)        (153.2)
  Interest and other income, net........................        35.3            10.4            3.6
                                                            --------        --------        -------
Loss before income taxes................................      (829.8)         (714.8)        (149.6)
  Income tax expense....................................        74.9            (2.5)          21.5
                                                            --------        --------        -------
Net loss................................................    $ (904.7)       $ (712.3)       $(171.1)
                                                            ========        ========        =======
</Table>

  YEARS ENDED JUNE 30, 2000 AND 1999

     Net Sales.  Net sales of $1,430.4 million for 2000 represented an increase
of $842.5 million or 143 percent over pro forma 1999 net sales of $587.9
million. The increase from 1999 to 2000 reflected $648.9 or 330 percent growth
in our existing products on a pro forma basis. Growth was driven by customer
demands for higher channel count systems to meet increased bandwidth
requirements. The additional increase in 2000 reflected the impact of $193.6
million net sales from companies we acquired in 2000 (see Note 10 of Notes to
Consolidated Financial Statements).

     Gross Margin.  Gross margin of $678.8 million, or 47 percent of net sales
for 2000 represents an increase of $375.3 million or 124 percent over 1999 pro
forma gross margin of $303.5 million, or 52 percent of pro forma net sales.
Strong demand for virtually all our optical components and modules products
combined with $83.3 million gross profits from companies we acquired in 2000
contributed to the increases. The decline in the pro forma gross margin from
1999 to 2000 reflects the impact of $25.3 million in purchase accounting
adjustments that increased JDS FITEL, EPITAXX, SIFAM, OCLI and Cronos
inventories. These adjustments flowed through to cost of sales during the year.
Gross margin was also reduced by $22.6 million in adjustments related to the
E-TEK acquisition, which decreased E-TEK net inventory and flowed through to
cost of sales upon completion of our acquisition of E-TEK. Excluding the impact
of above described acquisition related adjustments, gross profit declined from
52 percent in 1999 to 51 percent in 2000. The decrease reflects 15 percent to 20
percent reductions in average selling prices, which were largely offset by
reductions in manufacturing costs through automation, yield improvements and
other improvements in the manufacturing processes.

                                        40
<PAGE>   42

     Research and Development Expense.  R&D expense of $113.4 million or 8
percent of net sales represented an increase of $60.9 million or 116 percent
over pro forma 1999 expense of $52.5 million or 9 percent of pro forma net
sales. The increase in R&D expenses is primarily due to increased personnel
costs and other expenses related to the development of new products and
technologies, and the continued development and enhancement of existing products
and the inclusion of our acquisitions during 2000 from the date of acquisition.

     Selling, General and Administrative Expense.  Selling, general and
administrative expense (SG&A) of $172.9 million or 12 percent of net sales
represented an increase of $101.4 million or 142 percent over pro forma 1999
expense of $71.5 million or 12 percent of net sales. The increase in 2000 is
primarily a result of higher SG&A costs due to the hiring of additional
administrative personnel and inclusion of our 2000 acquisitions expenses
subsequent to the date of acquisition. As a percentage of net sales, SG&A for
2000 was consistent with pro forma 1999 SG&A.

     Amortization of Purchased Intangibles.  Since 1995, we have entered into
several mergers and acquisitions that generated approximately $23.3 billion in
identified intangibles (primarily developed technology) and goodwill. In 2000,
API was $896.9 million or 63 percent of net sales, which represented an increase
of $209.4 million or 30 percent over pro forma 1999 API of $687.5 million or 117
percent of net sales. The pro forma 1999 API is calculated as the 12 months
amortization expense for JDS FITEL, which would have been incurred in 1999
assuming that the merger between Uniphase and JDS FITEL was completed on July 1,
1998. The increase in API in 2000, is primarily due to the intangible assets
generated from the acquisitions of AFC, Ramar, EPITAXX, SIFAM, Oprel, IOT, OCLI,
Cronos, and Casix during 2000 (see Note 10 of Notes to Consolidated Financial
Statements).

     Acquired In-Process Research and Development.  In 2000, we recorded charges
of $360.7 million or 25 percent of net sales for acquired in-process research
and development resulting from the acquisitions of EPITAXX ($16.7 million),
SIFAM ($3.0 million), OCLI ($84.1 million), Cronos ($6.3 million) and E-TEK
($250.6 million). In 1999, we recorded $210.4 million or 36 percent of pro forma
net sales of acquired in-process research and development resulting from the
former Uniphase Corporation's merger with JDS FITEL (See Note 10 of Notes to
Consolidated Financial Statements). These amounts were expensed on the
acquisition dates because the acquired technology had not yet reached
technological feasibility and had no future alternative uses. There can be no
assurance that acquisitions of businesses, products or technologies by us in the
future will not result in substantial charges for acquired in-process research
and development that may cause fluctuations in our quarterly or annual operating
results.

     Interest and Other Income.  Net interest and other income of $35.3 million
for 2000 represented an increase of $24.9 million from pro forma 1999 income of
$10.4 million. The increase in interest and other income was the result of
higher investment balances obtained through cash generated from operating
activities, our acquisition of OCLI and the completion of a public offering of
our common stock and a private placement of Exchangeable shares in August 1999
that generated $713.6 million in cash, net of transaction costs.

OPERATING SEGMENT INFORMATION -- ACTUAL

     Amplification and Transmission Group.  Net sales for the Amplification and
Transmission Group increased 91 percent in 2001 compared to 2000. The increase
in net sales for the Amplification and Transmission Group was primarily due to
higher unit sales volume of optical receivers, transmitters, modulators and pump
lasers, and the acquisitions of SDL and Epitaxx. Operating income as a
percentage of net sales decreased to 12 percent of net sales in 2001 compared to
26 percent in 2000. The decrease in operating income as a percentage of net
sales was due to inventory write-downs due to lower sales estimates for future
periods and charges related to our restructuring activities.

     WDM, Switching and Thin Film Filters.  Net sales for the WDM, Switching and
Thin Film Filters Group increased 153 percent in 2001 compared to 2000. The
increase in net sales for the WDM, Switching and Thin Film Filters Group was
primarily due to the acquisitions of E-TEK and OCLI and higher unit sales volume
in wavelength division multiplexers ("WDM"), instruments and waveguides.
Operating income as a
                                        41
<PAGE>   43

percentage of net sales decreased to 10 percent of net sales in 2001 compared to
37 percent in 2000. The decrease in operating income as a percentage of net
sales was due to inventory write-downs due to lower sales estimates for future
periods and charges related to our restructuring activities.

LIQUIDITY AND CAPITAL RESOURCES

     At June 30, 2001, our combined balance of cash, cash equivalents and
short-term investments was $1,812.2 million. For the year, we met our liquidity
needs through cash generated from operating activities. Excluding the impact of
indirect acquisition costs of $300.9 million paid to certain SDL executives in
connection with the acquisition of SDL during 2001, net cash provided by
operating activities was $354.1 million in 2001, compared with $281.1 million
and $67.0 million in 2000 and 1999, respectively.

     Excluding the impact of indirect acquisition costs of $300.9 million paid
to certain SDL executives in connection with the acquisition of SDL, operating
activities generated $354.1 million during 2001 primarily resulting from the
following: (i) earnings before non-cash accounting charges for depreciation,
IPR&D, loss on sale of investments, loss on disposal of fixed assets, stock
based compensation, write-off of goodwill and purchased intangibles, activity
related to equity interests in equity investments, and amortization of
intangibles, (ii) increases in accrued liabilities as a result of the
restructuring liability established in the fourth quarter of 2001, and (iii) tax
benefit from employee stock options. These items were partially offset by a net
increase in deferred tax assets of $598.3 million, decrease in taxes payable,
and the gain on the divestiture of the Zurich subsidiary. Increases to accounts
receivable, inventories and other working capital attributable to our
acquisitions are excluded from operating cash flow as the acquisition of these
balances is not a result of operations (see Note 10 of Notes to Consolidated
Financial Statements).

     Cash used in investing activities was $0.5 million in 2001 compared with
$819.6 million and $40.3 million for 2000 and 1999, respectively. During 2001,
we incurred capital expenditures of $732.5 million for facilities expansion and
capital equipment purchases to expand our manufacturing capacity for our
telecommunications products and installation of a new enterprise resource
planning system. We currently expect to spend approximately $230 million for
capital equipment purchases and leasehold improvements during 2002. During 2001,
we sold net short-term and long-term investments of $570.4 million. In addition,
we acquired Epion, OPA, and SDL during 2001 and these acquisitions provided an
additional $175.7 million of cash.

     We generated $391.1 million, $782.1 million, and $15.4 million in cash from
financing activities in 2001, 2000, and 1999, respectively. In 2001, we
generated $417.7 million from the exercise of stock options and the sale of
stock through our employee stock purchase plan and used $26.6 million to repay a
portion of the debt assumed from our acquisitions.

     We believe that our existing cash balances and investments, together with
cash flow from operations will be sufficient to meet our liquidity and capital
spending requirements at least through the end of 2002. However, possible
investments in or acquisitions of complementary businesses, products or
technologies may require additional financing prior to such time. There can be
no assurance that additional debt or equity financing will be available when
required or, if available, can be secured on terms satisfactory to us.

     At June 30, 2001, we had two standby letter of credit facilities totaling
approximately $11.0 million. We also had an unsecured operating bank line of
credit for $25.0 million. Advances under the line of credit bear interest at the
Canadian Prime Rate of 6.25 percent at June 30, 2001. We had no outstanding
borrowings under this facility at June 30, 2001.

ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT PROJECTS

  SDL

     An independent valuation specialist performed an allocation under our
direction of the total purchase price of SDL to its individual assets. Of the
total purchase price, $380.7 million has been allocated to IPR&D and was charged
to expense for the three months ended March 31, 2001. The remaining purchase
price has been allocated specifically to identifiable assets acquired.

                                        42
<PAGE>   44

     After allocating value to the IPR&D projects and SDL tangible assets,
specific intangible assets were then identified and valued. The identifiable
intangible assets include existing technology, core technology, trademarks and
tradename, and assembled workforce.

     The IPR&D is comprised of five main categories: (1) pump laser chips; (2)
pump laser modules; (3) Raman chips and amplifiers; (4) external modulators and
drivers; and (5) industrial laser products. The following is a brief description
of each IPR&D project as of the date of the acquisition:

     Pump Laser Chips.  SDL supplies high power 980-nm pump laser chips to
provide power to optical amplifiers used in fiber optic systems. SDL pump laser
chip development efforts support future generation optical amplifiers. SDL
completed the development cycles for the current research and development
project with respect to these products in the second quarter of the calendar
year 2001.

     Pump Laser Modules.  SDL supplies 980-nm pump laser modules that lead the
industry in output power and performance. SDL expects the development cycle for
the current research and development project with respect to these pump laser
modules to continue for another four months, with expected completion dates in
the fourth quarter of calendar year 2001.

     Raman Chips and Amplifiers.  SDL is engaged in the development of Raman
chips and amplifiers, which are an emerging technology in fiber optic
transmissions systems. Raman amplifiers differ from conventional EDFAs in that
they use installed optical fiber as the amplification medium rather than erbium-
doped fiber. SDL expects the development cycle for the current research and
development project with respect to these Raman chips and amplifiers to continue
for another three months, with expected completion dates in the fourth quarter
of calendar year 2001.

     External Modulators and Drivers.  SDL supplies external modulators that are
utilized in very high channel count systems with very long propagation
distances.

     Industrial Laser Products.  SDL supplies products for non-communications
applications. These include applications such as printing and materials
processing. SDL expects to complete the development cycle for the current
research and development projects with respect to these industrial products in
the third quarter of calendar year 2001.

  Value Assigned to In-Process Research and Development

     The value assigned to IPR&D was determined by considering the relative
importance of each project to the overall development plan, estimating costs to
develop the purchased IPR&D into commercially viable products, estimating the
resulting net cash flows from the projects when completed and discounting the
net cash flows to their present value. The sales estimates used to value the
purchased IPR&D were based on estimates of relevant market sizes and growth
factors, expected trends in technology and the nature and expected timing of new
product introductions by SDL and its competitors.

     The rates utilized to discount the net cash flows to their present value
are based on SDL's weighted average cost of capital. Given the nature of the
risks associated with the difficulties and uncertainties in completing each
project and thereby achieving technological feasibility, anticipated market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets, the weighted average cost of
capital was adjusted. Based on these factors, discount rates of 12 percent and
20 percent were deemed appropriate for the developed and in-process technology,
respectively. The estimates used in valuing IPR&D were based upon assumptions
believed to be reasonable but which are inherently uncertain and unpredictable.
Assumptions may be incomplete or inaccurate, and no assurance can be given that
unanticipated events and circumstances will not occur. Accordingly, actual
results may vary from the projected results. Any such variance may result in a
material adverse effect on SDL's financial condition and results of operations.
With respect to the acquired in-process technologies, the calculations of value
were

                                        43
<PAGE>   45

adjusted to reflect the value creation efforts of SDL prior to the merger.
Following are the estimated completion percentages with respect to the current
research and development efforts and technology lives:

<Table>
<Caption>
                                                                           EXPECTED
                                                               PERCENT    TECHNOLOGY
PROJECT                                                       COMPLETED      LIFE
-------                                                       ---------   ----------
<S>                                                           <C>         <C>
Pump Laser Chips............................................     92%       5 years
Pump Laser Modules..........................................     50%       5 years
Raman Chips and Amplifiers..................................     64%       5 years
External Modulators and Drivers.............................     31%       5 years
Industrial Laser Products...................................     74%       5 years
</Table>

     The value assigned to each acquired IPR&D project was as follows (in
millions):

<Table>
<S>                                                           <C>
Pump Laser Chips............................................  $140.8
Pump Laser Modules..........................................    22.7
Raman Chips and Amplifiers..................................   113.7
External Modulators and Drivers.............................    87.4
Industrial Laser Products...................................    16.1
                                                              ------
Total acquired in-process research and development..........  $380.7
                                                              ======
</Table>

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
analysis of data provided by SDL concerning developmental products, their stage
of development, the time and resources needed to complete them, if applicable,
their expected income generating ability, target markets and associated risks.
The Income Approach, which includes an analysis of the markets, cash flows and
risks associated with achieving such cash flows, was the primary technique
utilized in valuing the developed technology and IPR&D.

     Where developmental projects had reached technological feasibility, they
were classified as developed technology, and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

  OPA

     An independent appraiser performed an allocation under our direction of the
total purchase price of OPA to its individual assets. Of the total purchase
price, $3.0 million has been allocated to IPR&D and was charged to expense in
the quarter ended March 31, 2001. The remaining purchase price has been
allocated specifically to identifiable assets acquired. The product under
development at the time of acquisition was OptoMate that is an automated and
semi-automated system for the manufacture of fiberoptic components and modules.

  EPION

     An independent appraiser performed an allocation under our direction of the
total purchase price of Epion to its individual assets. Of the total purchase
price, $8.9 million has been allocated to IPR&D and was charged to expense in
the quarter ended September 30, 2000. The remaining purchase price has been
allocated specifically to identifiable assets acquired. The products under
development at the time of acquisition included Gas Cluster Ion Beam technology
used for atomic scale surface smoothing and cleaning where surface or film
quality is of great importance.

                                        44
<PAGE>   46

CURRENT STATUS OF ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT PROJECTS

     We periodically review the stage of completion and likelihood of success of
each of the IPR&D projects. The current status of the IPR&D projects for all
significant mergers and acquisitions during the past three years are as follows:

  SDL

     The products under development at the time of acquisition included: (1)
pump laser chips; (2) pump laser modules; (3) Raman chips and amplifiers; (4)
external modulators and drivers; and (5) industrial laser products. The pump
laser chips and industrial laser products have been completed at a cost
consistent with our expectations. The pump laser modules and Raman chips are
expected to be completed by the fourth quarter of calendar 2001. We have
incurred costs of $28.2 million, with estimated costs to complete of $4.9
million. The differences between the actual outcome noted above and the
assumptions used in the original valuation of the technology are not expected to
significantly impact our results of operations and financial position.

  EPION

     The products under development at the time of acquisition included Gas
Cluster Ion Beam technology used for atomic scale surface smoothing and cleaning
where surface or film quality is of great importance. Epion has incurred $2.4
million to date and estimates that a total investment of approximately $4.5
million in research and development over the next 24 months will be required to
complete the IPR&D. The nature of the efforts required to develop the purchased
IPR&D into commercially viable products principally relate to the completion of
all planning, designing, prototyping, verification and testing activities that
are necessary to establish that the products can be produced to meet their
design specifications, including functions, features and technical performance
requirements.

  E-TEK

     The products under development at the time of acquisition included: (1)
wavelength division multiplexers (WDM's); (2) submarine products: and (3) other
component products and modules. The WDM and submarine products have been
completed at a cost consistent with our expectations. Our development efforts
for other components and modules include attenuators, circulators, switches,
dispersion equalization monitors and optical performance monitors. Our
development efforts are behind schedule on some of these products, with
estimated completion dates in the third quarter of calendar 2002. The costs
incurred to date are approximately $6.2 million, with estimated costs to
complete of $0.9 million. The differences between the actual outcome noted above
and the assumptions used in the original valuation of the technology are not
expected to significantly impact our results of operations and financial
position.

  CRONOS

     The products under development at the time of acquisition included: (1) RF
microrelays; (2) variable optical attenuators; and (3) active fiber aligners.
The microrelays development and the variable optical attenuators project are
substantially complete at a cost consistent with our expectations. The active
fiber aligner development project is currently being evaluated relative to
similar efforts already underway within the Company.

  OCLI

     The products under development at the time of the acquisition included: (1)
thin film filters and switches, (2) optical display and projection products, and
(3) light interference pigments. Thin film filters includes switches and
dispersion compensators. The MEMS 2x2 Switch development has been terminated at
OCLI and transferred over to JDS FITEL beginning in the first quarter of
calendar year 2002. Dispersion compensators and other switches, are currently in
the exploratory and prototype development stages of the development cycle. The
expected development on these products is between 3 and 12 months. We have

                                        45
<PAGE>   47

incurred post acquisition costs of approximately $4.9 million with an estimated
cost to complete the remaining projects of $1.4 million, which we expect to
incur ratably for the remainder of the development cycle.

     The optical display and projection products development has been terminated
due to the uncertainty of current market conditions. Light interference pigments
are currently in the commercial stage of the development cycle for this product
family and these projects have expected completion dates in the first quarter of
calendar year 2002. We have incurred post-acquisition research and development
expenses of approximately $15.6 million and estimates that cost to complete
these projects will be another $1.0 million which we expect to incur ratably
over the remainder of the product development cycle.

  SIFAM

     The products under development at the time of the acquisition included: (1)
miniature couplers; (2) combined components; and (3) micro-optic devices.
Miniature coupler development and combined components development are complete
at a cost consistent with our expectations. Micro-optic device development is
currently being evaluated relative to similar efforts already underway within
the Company. The costs incurred post acquisition for micro-optic device
development has been consistent with our expectations.

  EPITAXX

     The products under development at the time of the acquisition included (1)
high-speed receivers, and (2) an optical spectrum analyzer product. The
high-speed receiver and optical spectrum analyzer have been completed at costs
consistent with our expectations.

  JDS FITEL

     The products under development at the time of our merger included: (i)
Thermo Optic Waveguide Attenuators, (ii) Solid State Switch, (iii) 50 GHz WDM,
and (iv) Erbium Doped Fiber Amplifiers ("EDFA"). Thermo Optic Waveguide
Attenuator development was discontinued in the first quarter of 2001, due to
lower than expected demand for this product, and higher demand for other
products. Solid State Switch, WDM and EDFA developments are complete at a cost
consistent with our expectations.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

     We maintain an investment portfolio of various holdings, types, and
maturities. These securities are generally classified as available for sale and,
consequently, are recorded on the balance sheet at fair value with unrealized
gains or losses reported as a separate component of other comprehensive income.
Part of this portfolio includes minority equity investments in several publicly
traded companies, the values of which are subject to market price volatility. We
also have certain real estate lease commitments with payments tied to short-term
interest rates. At any time, a sharp rise in interest rates could have a
material adverse impact on the fair value of our investment portfolio while
increasing the costs associated with our lease commitments. Conversely, declines
in interest rates could have a material impact on interest earnings for our
investment portfolio. We do not currently hedge these interest rate exposures.

INVESTMENTS

     The following tables present the hypothetical changes in fair value in the
financial instruments held at June 30, 2001 and June 30, 2000 that are sensitive
to changes in interest rates. These instruments are not leveraged and are held
for purposes other than trading. The modeling technique used measures the change
in fair values arising from selected potential changes in interest rates. Market
changes reflect immediate hypothetical parallel shifts in the yield curve of
plus or minus 50 basis points ("BPS"), 100 BPS, and 150 BPS over a 12-month
horizon. Beginning fair values represent the principal plus accrued interest and
dividends at

                                        46
<PAGE>   48

June 30, 2001 and June 30, 2000. The following tables estimate the fair value of
the portfolio at a 12-month horizon (in millions):

<Table>
<Caption>
                                                                                               VALUATION OF SECURITIES GIVEN AN
                               VALUATION OF SECURITIES GIVEN AN INTEREST RATE    FAIR VALUE    INTEREST RATE INCREASE OF X BASIS
                                         DECREASE OF X BASIS POINTS                AS OF                    POINTS
                               -----------------------------------------------    JUNE 30,    -----------------------------------
ISSUER                           (150 BPS)        (100 BPS)        (50 BPS)         2001       50 BPS      100 BPS      150 BPS
------                         --------------   --------------   -------------   ----------   ---------   ----------   ----------
<S>                            <C>              <C>              <C>             <C>          <C>         <C>          <C>
U.S. Treasuries & agencies
  notes......................         51               50               50            50            49         49           48
State, municipal, and county
  government notes and
  bonds......................        704              701              698           695           693        690          687
Corporate notes and bonds....         68               67               67            67            66         66           65
Money market fund............        732              732              732           732           732        732          732
                                   -----            -----            -----         -----         -----      -----        -----
  Total......................      1,555            1,550            1,547         1,544         1,540      1,537        1,532
                                   =====            =====            =====         =====         =====      =====        =====
</Table>

<Table>
<Caption>
                                                                                               VALUATION OF SECURITIES GIVEN AN
                               VALUATION OF SECURITIES GIVEN AN INTEREST RATE    FAIR VALUE    INTEREST RATE INCREASE OF X BASIS
                                         DECREASE OF X BASIS POINTS                AS OF                    POINTS
                               -----------------------------------------------    JUNE 30,    -----------------------------------
ISSUER                           (150 BPS)        (100 BPS)        (50 BPS)         2000       50 BPS      100 BPS      150 BPS
------                         --------------   --------------   -------------   ----------   ---------   ----------   ----------
<S>                            <C>              <C>              <C>             <C>          <C>         <C>          <C>
U.S. Treasuries & agencies
  notes......................        25               25               25            25            25         25           25
State, municipal, and county
  government notes and
  bonds......................       602              599              596           593           590        587          584
Corporate notes and bonds....        42               42               42            42            42         41           41
Money market fund............       164              164              164           164           164        164          164
                                    ---              ---              ---           ---           ---        ---          ---
  Total......................       833              830              827           824           821        817          814
                                    ===              ===              ===           ===           ===        ===          ===
</Table>

     A 50 BPS move in the Federal Funds Rate has occurred in 6 of the last 10
years; a 100 BPS move in the Federal Funds Rate has occurred in 4 of the last 10
years; and a 150 BPS move in the Federal Funds Rate has occurred in 2 of the
last 10 years.

     The following analyses present the hypothetical changes in fair values of
public equity investments that are sensitive to changes in global equity
markets. These equity securities are held for purposes other than trading. The
modeling technique used measures the hypothetical change in fair values arising
from selected hypothetical changes in each stock's price. Stock price
fluctuations of plus or minus 15%, plus or minus 35%, and plus or minus 50% were
selected.

     The following tables estimate the fair value of the publicly traded
corporate equities at a 12-month horizon (in millions):

<Table>
<Caption>
                                         VALUATION OF SECURITIES                 VALUATION OF SECURITIES
                                            GIVEN X% DECREASE       FAIR VALUE      GIVEN X% INCREASE
                                          IN EACH STOCK'S PRICE       AS OF       IN EACH STOCK'S PRICE
                                         ------------------------    JUNE 30,    -----------------------
                                          50%      35%      15%        2001       15%     35%      50%
                                         ------   ------   ------   ----------   -----   -----   -------
<S>                                      <C>      <C>      <C>      <C>          <C>     <C>     <C>
Corporate equities.....................   $139     $181     $236       $278      $320    $375    $  417
</Table>

<Table>
<Caption>
                                         VALUATION OF SECURITIES                 VALUATION OF SECURITIES
                                            GIVEN X% DECREASE       FAIR VALUE      GIVEN X% INCREASE
                                          IN EACH STOCK'S PRICE       AS OF       IN EACH STOCK'S PRICE
                                         ------------------------    JUNE 30,    -----------------------
                                          50%      35%      15%        2001       15%     35%      50%
                                         ------   ------   ------   ----------   -----   -----   -------
<S>                                      <C>      <C>      <C>      <C>          <C>     <C>     <C>
Corporate equities.....................   $359     $467     $610       $718      $826    $969    $1,077
</Table>

LEASES

     We are exposed to interest rate risk associated with leases on our
facilities where payments are tied to the London Interbank Offered Rate
("LIBOR"). We have evaluated the hypothetical change in lease obligations held
at June 30, 2001 due to changes in the LIBOR. The modeling technique used
measures hypothetical changes in lease obligations arising from selected
hypothetical changes in LIBOR. The hypothetical market changes reflected
immediate parallel shifts in the LIBOR curve of plus or minus 50 BPS, 100 BPS,
and 150

                                        47
<PAGE>   49

BPS over a 12-month period. The results of this analysis were not material in
comparison to our financial results.

FOREIGN EXCHANGE FORWARD CONTRACTS

     We generate a significant portion of our sales from sales to customers
located outside the United States, principally in Europe. International sales
are made mostly from our foreign subsidiaries in the local countries and are
typically denominated in either U.S. dollars or the local currency of each
country. These subsidiaries also incur most of their expenses in the local
currency. Accordingly, all foreign subsidiaries use the local currency as their
functional currency.

     Our international business is subject to risks typical of an international
business including, but not limited to: differing economic conditions, changes
in political climate, differing tax structures, other regulations and
restrictions, and foreign exchange rate volatility. Accordingly, our future
results could be materially adversely impacted by changes in these or other
factors.

     We enter into foreign exchange forward contracts to offset the impact of
currency fluctuations on certain nonfunctional currency assets and liabilities,
primarily denominated in the Australian dollar, Canadian dollar, Euro and
British pound.

     The foreign exchange forward contracts we enter into generally have
original maturities ranging from one to three months. We do not enter into
foreign exchange forward contracts for trading purposes. We do not expect gains
or losses on these contracts to have a material impact on our financial results.

                                        48
<PAGE>   50

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

               REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
JDS Uniphase Corporation

     We have audited the accompanying consolidated balance sheets of JDS
Uniphase Corporation as of June 30, 2001 and 2000, and the related consolidated
statements of operations, stockholders' equity and cash flows for each of the
three years in the period ended June 30, 2001. Our audits also included the
financial statement schedule listed in the index at Item 14(a). These financial
statements and schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements and
schedule based on our audits.

     We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

     In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of JDS Uniphase
Corporation at June 30, 2001 and 2000, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
June 30, 2001, in conformity with accounting principles generally accepted in
the United States. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information set forth
therein.

                                          /s/ ERNST & YOUNG LLP

San Jose, California
September 12, 2001

                                        49
<PAGE>   51

                            JDS UNIPHASE CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN MILLIONS, EXCEPT PER SHARE DATA)

<Table>
<Caption>
                                                                   YEARS ENDED JUNE 30,
                                                              -------------------------------
                                                                 2001        2000      1999
                                                              ----------   --------   -------
<S>                                                           <C>          <C>        <C>
Net sales...................................................  $  3,232.8   $1,430.4   $ 282.8
Cost of sales...............................................     2,306.7      751.6     138.7
                                                              ----------   --------   -------
  Gross profit..............................................       926.1      678.8     144.1
Operating expenses:
  Research and development..................................       325.9      113.4      27.0
  Selling, general and administrative.......................       818.1      172.9      37.4
  Amortization of purchased intangibles.....................     5,387.0      896.9      15.7
  Acquired in-process research and development..............       393.2      360.7     210.4
  Reduction of goodwill and other long-lived assets.........    50,085.0         --        --
  Restructuring charges.....................................       264.3         --        --
  Merger and other costs....................................          --         --       6.8
                                                              ----------   --------   -------
Total operating expenses....................................    57,273.5    1,543.9     297.3
                                                              ----------   --------   -------
Loss from operations........................................   (56,347.4)    (865.1)   (153.2)
Interest income, net........................................        48.5       35.3       3.6
Gain on sale of subsidiary..................................     1,770.2         --        --
Activity related to equity method investments...............      (883.9)        --        --
Loss on sale of available-for-sale investments..............      (559.1)        --        --
Reduction in fair value of available-for-sale investments...      (522.1)        --        --
                                                              ----------   --------   -------
Loss before income taxes....................................   (56,493.8)    (829.8)   (149.6)
Income tax expense (benefit)................................      (371.9)      74.9      21.5
                                                              ----------   --------   -------
Net loss....................................................  $(56,121.9)  $ (904.7)  $(171.1)
                                                              ==========   ========   =======
Basic and dilutive loss per share...........................  $   (51.40)  $  (1.27)  $ (0.54)
                                                              ==========   ========   =======
Shares used in per share calculation:
  Basic and dilutive........................................     1,091.9      710.9     318.2
                                                              ==========   ========   =======
</Table>

          See accompanying notes to consolidated financial statements.
                                        50
<PAGE>   52

                            JDS UNIPHASE CORPORATION

                          CONSOLIDATED BALANCE SHEETS
                 (IN MILLIONS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>
                                                                     JUNE 30,
                                                              ----------------------
                                                                 2001        2000
                                                              ----------   ---------
<S>                                                           <C>          <C>
                                       ASSETS
Current assets:
  Cash and cash equivalents.................................  $    762.8   $   319.0
  Short-term investments....................................     1,049.4       795.3
  Accounts receivable, less allowances for doubtful accounts
     of $40.3 at June 30, 2001 and $8.2 at June 30, 2000....       477.6       381.6
  Inventories...............................................       287.6       375.4
  Refundable income taxes...................................        31.2         8.1
  Deferred income taxes.....................................       340.2        62.4
  Other current assets......................................        87.5        31.1
                                                              ----------   ---------
     Total current assets...................................     3,036.3     1,972.9
Property, plant, and equipment, net.........................     1,173.0       670.7
Deferred income taxes.......................................       806.3       642.7
Goodwill and other intangible assets........................     7,045.6    22,337.8
Long-term investments.......................................       169.0       760.9
Other assets................................................        15.2         4.1
                                                              ----------   ---------
     Total assets...........................................  $ 12,245.4   $26,389.1
                                                              ==========   =========
                        LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $    190.6   $   195.2
  Accrued payroll and related expenses......................       133.0        98.8
  Income taxes payable......................................        30.6       108.6
  Deferred income taxes.....................................        63.0         0.2
  Restructuring accrual.....................................       105.2          --
  Other current liabilities.................................       326.1       244.4
                                                              ----------   ---------
     Total current liabilities..............................       848.5       647.2
Deferred income taxes.......................................       672.4       902.1
Other non-current liabilities...............................         5.2        20.2
Long-term debt..............................................        12.8        41.0
Commitments and contingencies
Stockholders' equity:
  Preferred stock, $0.001 par value:
     Authorized shares -- 1,000,000
     Series A: 100,000 shares issued and outstanding at June
      30, 2001 and 2000.....................................          --          --
     Series B: 100,000 shares authorized at June 30, 2001
      and 2000..............................................          --          --
     Undesignated: 1 voting share authorized, issued and
      outstanding...........................................          --          --
  Common stock, $0.001 par value
     Authorized shares -- 3,000,000,000
     Issued and outstanding shares -- 1,318,246,161 at June
      30, 2001 and 935,928,995 at June 30, 2000.............         1.3         0.9
  Common stock to be issued.................................        90.8          --
  Additional paid-in capital................................    68,046.8    25,900.0
  Deferred compensation.....................................      (183.6)       (2.6)
  Accumulated deficit.......................................   (57,224.4)   (1,102.5)
  Accumulated other comprehensive loss......................       (24.4)      (17.2)
                                                              ----------   ---------
       Total stockholders' equity...........................    10,706.5    24,778.6
                                                              ----------   ---------
       Total liabilities and stockholders' equity...........  $ 12,245.4   $26,389.1
                                                              ==========   =========
</Table>

          See accompanying notes to consolidated financial statements.
                                        51
<PAGE>   53

                            JDS UNIPHASE CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN MILLIONS)
<Table>
<Caption>

                                        PREFERRED STOCK     COMMON STOCK      COMMON     ADDITIONAL     DEFERRED
                                        ---------------   ----------------   STOCK TO     PAID-IN        STOCK       ACCUMULATED
                                        SHARES   AMOUNT   SHARES    AMOUNT   BE ISSUED    CAPITAL     COMPENSATION     DEFICIT
                                        ------   ------   -------   ------   ---------   ----------   ------------   -----------
<S>                                     <C>      <C>      <C>       <C>      <C>         <C>          <C>            <C>
Balance at June 30, 1998..............   0.1      $--       311.4    $0.3      $  --     $   310.8      $  (3.6)     $    (26.1)
 Shares issued under employee stock
   plans and related tax benefits.....    --       --        12.5      --         --          29.5           --              --
 Common stock and options issued in
   connection with JDS FITEL merger,
   net of issuance costs..............    --       --       319.5     0.3         --       3,482.6           --              --
 Conversion of debt for common
   stock..............................    --       --         0.3      --         --           2.4           --              --
 Amortization of deferred
   compensation.......................    --       --          --      --         --            --          0.5              --
 Dividends on BCP stock...............    --       --          --      --         --            --           --            (0.6)
 Net loss.............................    --       --          --      --         --            --           --          (171.1)
 Net unrealized gain (loss) on
   securities available-for-sale......    --       --          --      --         --            --           --              --
 Foreign currency translation
   adjustment.........................    --       --          --      --         --            --           --              --
 Comprehensive loss...................    --       --          --      --         --            --           --              --
                                         ---      ---     -------    ----      -----     ---------      -------      ----------
Balance at June 30, 1999..............   0.1       --       643.7     0.6         --       3,825.3         (3.1)         (197.8)
 Shares issued under employee stock
   plans and related tax benefits.....    --       --        36.6      --         --         149.5           --              --
 Common stock issued in connection
   with offerings.....................    --       --        35.8     0.1         --         713.5           --              --
   in connection with acquisitions....    --       --       219.8     0.2         --      21,211.4           --              --
 Amortization of deferred
   compensation.......................    --       --          --      --         --            --          0.5              --
 Conversion of Chassis debt...........    --       --          --      --         --           0.3           --              --
 Net loss.............................    --       --          --      --         --            --           --          (904.7)
 Net unrealized gain (loss) on
   securities available-for-sale......    --       --          --      --         --            --           --              --
 Foreign currency translation
   adjustment.........................    --       --          --      --         --            --           --              --
 Comprehensive loss...................    --       --          --      --         --            --           --              --
                                         ---      ---     -------    ----      -----     ---------      -------      ----------
Balance at June 30, 2000..............   0.1       --       935.9     0.9         --      25,900.0         (2.6)       (1,102.5)
Shares issued under employee stock
 plans and related tax benefits.......    --       --        43.4     0.1         --         552.4           --              --
 Common stock issued in connection
   with acquisitions, net of issuance
   costs..............................    --       --       338.9     0.3         --      41,512.7           --              --
 Common stock to be issued............    --       --          --      --       90.8            --           --              --
 Payments on stockholders' note
   receivable.........................    --       --          --      --         --           8.1           --              --
 Compensation expense related to stock
   options............................    --       --          --      --         --          11.1           --              --
 Modification of stock options in
   connection with the sale of
   subsidiary.........................    --       --          --      --         --          61.2           --              --
 Deferred stock based compensation
   related to acquisitions............    --       --          --      --         --            --       (233.6)             --
 Amortization of deferred
   compensation.......................    --       --          --      --         --            --         52.6              --
 Conversion of Ramar debt.............    --       --         0.1      --         --           1.3           --              --
 Net loss.............................    --       --          --      --         --            --           --       (56,121.9)
 Net unrealized gain (loss) on
   securities available-for-sale, net
   of tax.............................    --       --          --      --         --            --           --              --
 Foreign currency translation
   adjustment.........................    --       --          --      --         --            --           --              --
 Comprehensive loss...................    --       --          --      --         --            --           --              --
                                         ---      ---     -------    ----      -----     ---------      -------      ----------
Balance at June 30, 2001..............   0.1      $--     1,318.3    $1.3      $90.8     $68,046.8      $(183.6)     $(57,224.4)
                                         ===      ===     =======    ====      =====     =========      =======      ==========

<Caption>
                                         ACCUMULATED
                                            OTHER
                                        COMPREHENSIVE
                                        INCOME (LOSS)     TOTAL
                                        -------------   ----------
<S>                                     <C>             <C>
Balance at June 30, 1998..............     $ (1.4)      $    280.0
 Shares issued under employee stock
   plans and related tax benefits.....         --             29.5
 Common stock and options issued in
   connection with JDS FITEL merger,
   net of issuance costs..............         --          3,482.9
 Conversion of debt for common
   stock..............................         --              2.4
 Amortization of deferred
   compensation.......................         --              0.5
 Dividends on BCP stock...............         --             (0.6)
 Net loss.............................         --           (171.1)
 Net unrealized gain (loss) on
   securities available-for-sale......       (0.2)            (0.2)
 Foreign currency translation
   adjustment.........................       (4.1)            (4.1)
                                                        ----------
 Comprehensive loss...................         --           (175.4)
                                           ------       ----------
Balance at June 30, 1999..............       (5.7)         3,619.3
                                                        ----------
 Shares issued under employee stock
   plans and related tax benefits.....         --            149.5
 Common stock issued in connection
   with offerings.....................         --            713.6
   in connection with acquisitions....         --         21,211.6
 Amortization of deferred
   compensation.......................         --              0.5
 Conversion of Chassis debt...........         --              0.3
 Net loss.............................         --           (904.7)
 Net unrealized gain (loss) on
   securities available-for-sale......       (1.8)            (1.8)
 Foreign currency translation
   adjustment.........................       (9.7)            (9.7)
                                                        ----------
 Comprehensive loss...................         --           (916.2)
                                           ------       ----------
Balance at June 30, 2000..............      (17.2)        24,778.6
Shares issued under employee stock
 plans and related tax benefits.......         --            552.5
 Common stock issued in connection
   with acquisitions, net of issuance
   costs..............................         --         41,513.0
 Common stock to be issued............         --             90.8
 Payments on stockholders' note
   receivable.........................         --              8.1
 Compensation expense related to stock
   options............................         --             11.1
 Modification of stock options in
   connection with the sale of
   subsidiary.........................         --             61.2
 Deferred stock based compensation
   related to acquisitions............         --           (233.6)
 Amortization of deferred
   compensation.......................         --             52.6
 Conversion of Ramar debt.............         --              1.3
 Net loss.............................         --        (56,121.9)
 Net unrealized gain (loss) on
   securities available-for-sale, net
   of tax.............................        7.7              7.7
 Foreign currency translation
   adjustment.........................      (14.9)           (14.9)
                                                        ----------
 Comprehensive loss...................         --        (56,129.1)
                                           ------       ----------
Balance at June 30, 2001..............     $(24.4)      $ 10,706.5
                                           ======       ==========
</Table>

          See accompanying notes to consolidated financial statements.
                                        52
<PAGE>   54

                            JDS UNIPHASE CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN MILLIONS)

<Table>
<Caption>
                                                                    YEARS ENDED JUNE 30,
                                                              ---------------------------------
                                                                 2001        2000        1999
                                                              ----------   ---------   --------
<S>                                                           <C>          <C>         <C>
OPERATING ACTIVITIES
  Net loss..................................................  $(56,121.9)  $  (904.7)  $ (171.1)
  Adjustments to reconcile net loss to net cash provided by
    operating activities:
    Depreciation expense....................................       155.4        52.3       13.9
    Amortization expense....................................     5,387.0       898.4       16.8
    Acquired in-process research and development............       393.2       360.7      210.4
    Amortization of deferred compensation...................        52.6         0.5        0.5
    Reduction of goodwill and other long-lived assets.......    50,085.0          --        2.5
    Gain on sale of subsidiary..............................    (1,770.2)         --         --
    Loss on sale of investments.............................       559.1          --         --
    Noncash restructuring costs.............................       133.3          --         --
    Activity related to equity method investments...........       883.9          --         --
    Reduction in fair value of available-for-sale
     investments............................................       522.1          --         --
    Tax benefit on non-qualified stock options..............       142.7        47.8       11.4
    Change in deferred income taxes, net....................      (598.3)      (78.9)       5.1
  Changes in operating assets and liabilities:
    Accounts receivable.....................................       (21.0)     (132.9)     (21.5)
    Inventories.............................................       190.3       (94.7)     (12.1)
    Refundable income taxes.................................       (23.1)         --       (0.4)
    Other current assets....................................       (69.3)        5.5       (5.1)
    Income taxes payable....................................       (31.3)       18.6        6.2
    Accounts payable, accrued liabilities, other current
     liabilities and other, net.............................       183.7       108.5       10.4
                                                              ----------   ---------   --------
Net cash provided by operating activities...................        53.2       281.1       67.0
                                                              ----------   ---------   --------
INVESTING ACTIVITIES
  Purchase of available-for-sale investments................    (1,523.7)   (2,395.9)    (204.8)
  Sale of available-for-sale investments....................     2,164.4     1,757.3      176.4
  Acquisitions of businesses, net of cash acquired..........       175.7        99.9       35.0
  Purchase of property, plant and equipment and licenses....      (732.5)     (280.0)     (46.6)
  Other assets, net.........................................       (14.1)       (0.9)      (0.3)
  Purchase of other investments.............................       (70.3)         --         --
                                                              ----------   ---------   --------
Net cash used in investing activities.......................        (0.5)     (819.6)     (40.3)
                                                              ----------   ---------   --------
FINANCING ACTIVITIES
  Repayment of debt acquired................................       (26.6)      (45.1)        --
  Proceeds from issuance of common stock in a public
    offering................................................          --       713.5         --
  Proceeds from issuance of common stock other than in a
    public offering.........................................       417.7       113.7       16.0
  Pre-merger dividends paid on BCP stock....................          --          --       (0.6)
                                                              ----------   ---------   --------
Net cash provided by financing activities...................       391.1       782.1       15.4
                                                              ----------   ---------   --------
Increase in cash and cash equivalents.......................       443.8       243.6       42.1
Cash and cash equivalents at beginning of period............       319.0        75.4       33.3
                                                              ----------   ---------   --------
Cash and cash equivalents at end of period..................  $    762.8   $   319.0   $   75.4
                                                              ==========   =========   ========
Supplemental disclosure of cash flow information:
  Net cash provided by operating activities excluding
    indirect acquisition costs paid to SDL executives.......  $    354.1   $   281.1   $   67.0
  Cash paid for interest....................................  $      1.7   $     3.4   $     --
  Cash paid for taxes.......................................  $    154.0   $    67.9   $    9.3
Non-cash transactions:
  Proceeds from sale of subsidiary..........................  $  1,953.3   $      --   $     --
  Stock issued in connection with acquisitions..............  $ 41,446.2   $21,234.5   $3,482.6
  Common stock to be issued in connection with the
    acquisition of UNL......................................  $     90.8   $      --   $     --
</Table>

          See accompanying notes to consolidated financial statements.
                                        53
<PAGE>   55

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BUSINESS ACTIVITIES AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BUSINESS ACTIVITIES

     JDS Uniphase Corporation (the "Company" or "JDS Uniphase") is a high
technology company that designs, develops, manufactures and distributes fiber
optic components, modules and subsystems for the fiber optic communications
industry. These products are deployed in advanced optical communications
networks for the telecommunications and cable television industries.
Incorporated in Delaware in October 1993, the Company is the product of several
substantial mergers and acquisitions, including, among others, the combination
of Uniphase Corporation and JDS FITEL Inc. to form JDS Uniphase Corporation on
June 30, 1999, and the subsequent acquisitions of Optical Coating Laboratory,
Inc. ("OCLI") on February 4, 2000, E-TEK Dynamics ("E-TEK") on June 30, 2000 and
SDL, Inc. ("SDL") on February 13, 2001.

     In 2001, the Company changed its year-end from a fiscal year ending June
30, to a 52-week year ending on the Saturday closest to June 30. This change had
no impact on the Company's results of operations, financial position, or cash
flows in 2001.

     Certain amounts in prior year financial statements and notes thereto have
been reclassified to conform to current year presentation.

  BASIS OF PRESENTATION

     The consolidated financial statements include JDS Uniphase and its wholly
owned subsidiaries. All significant inter-company accounts and transactions have
been eliminated.

  CASH AND CASH EQUIVALENTS

     The Company considers all highly liquid investments with original
maturities of three months or less at the time of purchase to be cash
equivalents.

  INVESTMENTS

     The Company's investments in marketable equity securities and all debt
securities are classified as available-for-sale and are recorded at fair value.
Fair value is based upon market prices quoted on the last day of the year. The
cost of securities sold is based on the specific identification method.
Unrealized gains and losses are reported as a separate component of
stockholders' equity. The Company periodically reviews these investments for
other-than-temporary declines in fair value and writes down these investments to
their fair value when an other-temporary-decline has occurred. The Company
generally believes other-than-temporary decline occurs when fair value of the
investment is below the carrying value for two full consecutive quarters.

     The Company also has certain other minority investments in nonpublicly
traded companies. These investments are included in long-term investments on the
Company's balance sheet and are generally carried at cost. The Company monitors
these investments for impairment and makes appropriate reductions in carrying
values when necessary.

  INVENTORIES

     Inventories are stated at the lower of cost or market. Cost is computed
using standard cost, which approximates actual cost on a first-in, first-out
basis.

  PROPERTY, PLANT AND EQUIPMENT

     Property, plant and equipment are stated at cost. Depreciation is computed
by the straight-line method over the following estimated useful lives of the
assets: building and improvements, 5 to 45 years; machinery and equipment, 2 to
10 years; furniture, fixtures, software, and office equipment, 2 to 5 years.
Leasehold

                                        54
<PAGE>   56
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

improvements are amortized by the straight-line method over the shorter of the
estimated useful lives of the assets or the term of the lease.

  FAIR VALUE OF FINANCIAL INSTRUMENTS

     Carrying amounts of certain of the Company's financial instruments,
including cash and cash equivalents, accrued compensation, and other accrued
liabilities, approximate fair value because of their short maturities. The fair
values of investments are determined using quoted market prices for those
securities or similar financial instruments.

  EQUITY METHOD OF ACCOUNTING

     The Company accounts for investments in joint ventures, limited liability
partnerships and other investments in 50 percent or less owned companies over
which it has the ability to exercise significant influence using the equity
method of accounting. The Company accounts for the increase or decrease of its
proportionate share of net book value in equity basis investments from the
investees' issuance of stock at a price above or below the net book value per
share as a change to additional paid-in capital. Due to the limited availability
of timely data, the Company records the adjustments to its equity basis
investments in the quarter subsequent to the issued financial statements. The
Company periodically reviews these investments for other-than-temporary declines
in market value and writes these investments to their fair value when an other-
temporary-decline has occurred.

  VALUATION OF LONG LIVED ASSETS

     Long-lived assets and certain identifiable intangible assets to be held and
used are reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of such assets may not be recoverable such as
a significant industry downturn, significant decline in the market value of the
Company, or significant reductions in projected future cash flows of operating
segments. Determination of recoverability is based on an estimate of
undiscounted future cash flows resulting from the use of the asset and its
eventual disposition. Measurement of impairment charges for long-lived assets
and certain identifiable intangible assets including goodwill relating to those
assets that management expects to hold and use are based on the fair value of
such assets. Long-lived assets and certain identifiable intangible assets to be
disposed of are reported at the lower of carrying amount or fair value less
costs to sell.

  GOODWILL AND OTHER INTANGIBLE ASSETS

     Intangible assets represent licenses and intellectual property acquired,
purchased intangible assets and the excess acquisition cost over the fair value
of tangible and identified intangible net assets of businesses acquired
(goodwill). Purchased intangible assets include developed technology, trademarks
and trade names, assembled workforces and customer bases. Intangible assets are
being amortized using the straight-line method over estimated useful lives
ranging from 3 to 15 years.

     The amortization and write-off of goodwill and purchased intangibles are
separately presented as a component of operating expenses on the Consolidated
Statement of Operations.

     The Company assesses enterprise level goodwill for recoverability if the
market capitalization of the Company is less than its net assets. The Company
measures declines in value of enterprise level goodwill that are other than
temporary using the market value method. The Company measures the market value
at the consolidated company level based on the quoted market price of the
Company that is most representative of fair value of the Company's common stock
multiplied by the number of common shares outstanding.

                                        55
<PAGE>   57
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  CONCENTRATION OF CREDIT AND OTHER RISKS

     Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash equivalents, short-term
investments and trade receivables. The Company places its cash equivalents and
short-term investments with high credit-quality financial institutions. The
Company invests its excess cash equivalents and short-term investments primarily
in money market funds, commercial paper, municipal bonds, and auction rate
preferred stock. The Company has established guidelines relative to credit
ratings, diversification and maturities that seek to maintain safety and
liquidity. The Company sells primarily to customers involved in the application
of laser technology and the manufacture of telecommunications products. The
Company performs ongoing credit evaluations of its customers' financial
condition and maintains an allowance for uncollectible accounts receivable based
upon the expected collectibility of all accounts receivable. The Company is not
able to predict changes in the financial stability of its customers. Any
material change in the financial status of any one or a group of customers could
have a material adverse effect on the Company's results of operations. Although
such losses have been within management's expectations to date, there can be no
assurance that such reserves will continue to be adequate. The Company does not
require collateral from its customers. At June 30, 2001, Alcatel, Nortel, and
Ciena accounted for 21 percent, 10 percent, and 10 percent of accounts
receivable, respectively.

     The Company depends on a single or limited number of outside contractors
and suppliers for raw materials, packages and standard components. The Company
generally purchases these single or limited source products through standard
purchase orders or one-year supply agreements and has no long-term guaranteed
supply agreements with such suppliers. While the Company seeks to maintain a
sufficient safety stock of such products and also endeavors to maintain ongoing
communications with its suppliers to guard against interruptions or cessation of
supply, the Company's business and results of operations could in the future be
adversely affected by a stoppage or delay of supply, substitution of more
expensive or less reliable products, receipt of defective parts or contaminated
materials, an increase in the price of such supplies, or the Company's inability
to obtain reduced pricing from its suppliers in response to competitive
pressures.

     The Company uses a rolling six-month forecast based on anticipated product
orders, product order history and backlog to determine its material
requirements. Lead times for the parts and components that the Company orders
vary significantly and depend on factors such as the specific supplier, contract
terms and demand for a component at a given time. If actual orders do not match
our forecasts, as the Company experienced in the second half of 2001, the
Company may have excess or short-falls of some materials and components as well
as excess inventory purchase commitments. Furthermore, the Company could
experience reduced or delayed product shipments or could incur additional
inventory write-downs and cancellation charges or penalties, which would
increase costs or prevent or delay product shipments and could seriously impact
the Company's operating results.

  FOREIGN CURRENCY TRANSLATION AND EXCHANGE CONTRACTS

     The Company adopted Statement of Financial Accounting Standards No. 133
("SFAS 133"), "Accounting for Derivative Instruments and Hedging Activities," as
amended, as of the beginning of 2001. The standards require the Company to
recognize all derivatives on the balance sheet at fair value. Derivatives that
are not hedges must be adjusted to fair value through income. If the derivative
is a hedge, depending on the nature of the hedge, changes in the fair value of
the derivatives will either be offset against the change in fair value of the
hedged assets, liabilities or firm commitments through earnings, or recognized
in other comprehensive income until the hedged item is recognized in earnings.
The change in a derivative's fair value related to the ineffective portion of a
hedge, if any, will be immediately recognized in earnings. The effect of
adopting SFAS 133, as amended, did not have a material effect on the Company's
financial position or overall trends in results of operations.

     The Company's objectives and strategies for holding and issuing derivatives
is to minimize the transaction and translation risks associated with
non-functional currency transactions.

                                        56
<PAGE>   58
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Company conducts its business in a number of foreign countries and
sells its products directly to customers in Australia, Canada, China, France,
Germany, Hong Kong, Japan, Netherlands, Taiwan, Singapore and the United Kingdom
through its foreign subsidiaries. These sales are often denominated in the local
country's currency. Therefore, in the normal course of business, the Company's
financial position is routinely subjected to market risk associated with foreign
currency rate fluctuations. The Company's policy is to ensure that business
exposures to foreign exchange risks are identified, measured and minimized using
the most effective and efficient methods to eliminate or reduce such exposures.
The Company has entered into a number of foreign currency forward contracts, but
has not designated such contracts as hedges for accounting purposes. The foreign
currency forward contracts generally expire within 30 to 90 days. The change in
fair value of these foreign currency forward contracts is recorded as income
(loss) in the Company's Statement of Operations as a component of interest
income, net. The notional amount associated with these foreign currency forward
contracts is approximately $59 million and the fair value of such contracts is
not material to the Company's financial statements. The Company does not use
derivatives for trading purposes.

  REVENUE RECOGNITION

     The Company recognizes revenue at the time of delivery, with provisions
established for estimated product returns and allowances. Revenue on the
shipment of evaluation units is deferred until customer acceptance. The Company
provides for the estimated cost to repair products under warranty at the time of
sale.

  COMPREHENSIVE INCOME

     Accumulated other comprehensive income presented in the accompanying
consolidated balance sheets consists of the accumulated net unrealized losses on
available-for-sale short term investments and foreign currency translation
adjustments, net of the related tax effect for all periods presented. The tax
effects for unrealized losses on short-term investments included in other
comprehensive loss were immaterial. At June 30, 2001, the Company had a balance
of unrealized gains on available-for-sale investments of $5.8 million, net of
tax. At June 30, 2000, the Company had a balance of unrealized losses on
available-for-sale investments of $1.9 million. Additionally, at June 30, 2001
and June 30, 2000, the Company had $30.2 million and $15.3 million,
respectively, of foreign currency translation losses. The components of
comprehensive loss are as follows (in millions):

<Table>
<Caption>
                                                             YEARS ENDED JUNE 30,
                                                        ------------------------------
                                                           2001       2000      1999
                                                        ----------   -------   -------
<S>                                                     <C>          <C>       <C>
Net loss..............................................  $(56,121.9)  $(904.7)  $(171.1)
Unrealized gains (losses).............................         7.7      (1.8)     (0.2)
Change in foreign currency translation................       (14.9)     (9.7)     (4.1)
                                                        ----------   -------   -------
       Total comprehensive loss.......................  $(56,129.1)  $(916.2)  $(175.4)
                                                        ==========   =======   =======
</Table>

  LOSS PER SHARE

     As the Company incurred a loss in 2001, 2000 and 1999, the effect of
dilutive securities totaling 47.3 million, 64.4 million, and 27.3 million
equivalent shares, respectively, have been excluded from the computation as they
are antidilutive.

                                        57
<PAGE>   59
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table sets forth the computation of basic and diluted loss
per share (in millions, except share data):

<Table>
<Caption>
                                                             YEARS ENDED JUNE 30,
                                                        ------------------------------
                                                           2001       2000      1999
                                                        ----------   -------   -------
<S>                                                     <C>          <C>       <C>
Denominator for basic and dilutive loss per
  share -- weighted average shares....................     1,091.9     710.9     318.2
                                                        ==========   =======   =======
Net loss..............................................  $(56,121.9)  $(904.7)  $(171.1)
                                                        ==========   =======   =======
Basic and dilutive loss per share.....................  $   (51.40)  $ (1.27)  $ (0.54)
                                                        ==========   =======   =======
</Table>

  STOCK-BASED COMPENSATION

     In accordance with APB Opinion No. 25, "Accounting for Stock Issued to
Employees," as amended by Financial Accounting Standards Board Interpretation
No. 44 "Accounting for Certain Transactions Involving Stock Compensation," ("FIN
44") the Company records and amortizes, over the related vesting periods,
deferred compensation representing the difference between the price per share of
stock issued or the exercise price of stock options granted and the fair value
of the Company's common stock at the time of issuance or grant. Stock
compensation costs are immediately recognized to the extent the exercise price
is below the fair value on the date of grant and no future vesting criteria
exist.

  USE OF ESTIMATES

     The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the amounts reported in the consolidated
financial statements and accompanying notes. Estimates are used for, but not
limited to, the accounting for the allowance for doubtful accounts, inventory
write-downs, depreciation and amortization, sales returns, warranty costs,
restructuring costs, deferred taxes and contingencies. Actual results could
differ from those estimates and such differences could be material to the
financial statements.

  IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

     In July 2001, the FASB issued Statements of Financial Accounting Standards
No. 141 ("SFAS 141"), "Business Combinations." SFAS 141 eliminates the
pooling-of-interests method of accounting for business combinations except for
qualifying business combinations that were initiated prior to July 1, 2001. In
addition, SFAS 141 further clarifies the criteria to recognize intangible assets
separately from goodwill. The requirements of Statement 141 are effective for
any business combination accounted for by the purchase method that is completed
after June 30, 2001 (i.e., the acquisition date is July 1, 2001 or after). The
Company is currently evaluating the impact of SFAS 141.

     In July 2001, the FASB issued Statements of Financial Accounting Standards
No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." Under SFAS 142,
goodwill and indefinite lived intangible assets are no longer amortized but are
reviewed annually (or more frequently if impairment indicators arise) for
impairment. Separable intangible assets that are not deemed to have an
indefinite life will continue to be amortized over their useful lives (but with
no maximum life). The amortization provisions of SFAS 142 apply to goodwill and
intangible assets acquired after June 30, 2001. With respect to goodwill and
intangible assets acquired prior to July 1, 2001, the Company will apply the new
accounting rules beginning June 30, 2002. Because of the different transition
dates for goodwill and intangible assets acquired on or before June 30, 2001 and
those acquired after that date, pre-existing goodwill and intangibles will be
amortized during this transition period until adoption of SFAS 142 whereas new
goodwill and indefinite lived intangible assets acquired after June 30, 2001
will not. The Company is currently evaluating the impact of SFAS 142.

                                        58
<PAGE>   60
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 2.  FINANCIAL INSTRUMENTS

  INVESTMENTS

     The Company's available for sale investments consist of the following (in
millions):

<Table>
<Caption>
                                                                    GROSS        GROSS      ESTIMATED
                                                      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                        COST        GAINS        LOSSES       VALUE
                                                      ---------   ----------   ----------   ---------
<S>                                                   <C>         <C>          <C>          <C>
JUNE 30, 2001:
  Floating rate bonds...............................  $   46.8       $ --          $--      $   46.8
  Municipal bonds...................................     568.4        6.8          --          575.2
  Auction instruments...............................      74.3         --          --           74.3
  Money market instruments and funds................     731.7         --          --          731.7
  Corporate bonds...................................      65.6        0.5          --           66.1
  Agency bonds......................................      49.9        0.1          --           50.0
                                                      --------       ----          --       --------
  Total debt investments............................   1,536.7        7.4          --        1,544.1
  Marketable equity investments.....................     236.7        0.3          --          237.0
                                                      --------       ----          --       --------
                                                      $1,773.4       $7.7          $--      $1,781.1
                                                      ========       ====          ==       ========
</Table>

     Available-for-sale investments included in the consolidated balance sheet
at June 30, 2001 is as follows (in millions):

<Table>
<S>                                                           <C>
Cash equivalents............................................  $  731.7
Short-term investments......................................   1,049.4
                                                              --------
                                                              $1,781.1
                                                              ========
</Table>

<Table>
<Caption>
                                                                    GROSS        GROSS      ESTIMATED
                                                      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                                        COST        GAINS        LOSSES       VALUE
                                                      ---------   ----------   ----------   ---------
<S>                                                   <C>         <C>          <C>          <C>
JUNE 30, 2000:
  Floating rate bonds...............................   $128.7         $--         $0.3       $128.4
  Municipal bonds...................................    465.0         --           1.5        463.5
  Auction instruments...............................     69.0         --            --         69.0
  Money market instruments and funds................    163.6         --            --        163.6
                                                       ------         --          ----       ------
  Total debt investments............................    826.3         --           1.8        824.5
  Marketable equity investments.....................     16.9         --            --         16.9
                                                       ------         --          ----       ------
                                                       $843.2         $--         $1.8       $841.4
                                                       ======         ==          ====       ======
</Table>

     Available-for-sale investments included in the consolidated balance sheet
at June 30, 2000 is as follows (in millions):

<Table>
<S>                                                            <C>
Cash equivalents............................................   $ 29.2
Short-term investments......................................    795.3
Long-term investments.......................................     16.9
                                                               ------
                                                               $841.4
                                                               ======
</Table>

                                        59
<PAGE>   61
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following is a summary of contractual maturities of the Company's debt
investments (in millions):

<Table>
<Caption>
                                                                          ESTIMATED
                                                              AMORTIZED     FAIR
                                                                COST        VALUE
                                                              ---------   ---------
<S>                                                           <C>         <C>
JUNE 30, 2001:
  Money market instruments and funds........................  $  731.7    $  731.7
  Amounts maturing within one year..........................     407.8       408.8
  Amounts maturing after one year, within five years........     397.2       403.6
                                                              --------    --------
                                                              $1,536.7    $1,544.1
                                                              ========    ========
</Table>

     During 2001, the Company completed the sale of its Zurich, Switzerland
subsidiary to Nortel Networks Corporation ("Nortel") for 65.7 million shares of
Nortel common stock valued at $1,953.3 million (see Note 13). The shares of
Nortel common stock are classified as available-for-sale securities. The Company
sold approximately 41.0 million shares resulting in a realized loss on the sale
of available-for-sale securities of $559.1 million. At June 30, 2001, the
Company had 24.7 million shares with a fair value of $223.1 million. The Company
has recognized a reduction in fair value of $511.8 million associated with the
24.7 million shares held by the Company as of June 30, 2001, as the Company has
determined the decline in the fair value of the shares of Nortel common stock to
be other-than-temporary. The reduction in fair value has been included in the
line item "Reduction in fair value of available-for-sale investments" in its
Statement of Operations for 2001. Should the fair value of the shares of Nortel
common stock held by or later sold by the Company continue to decline in the
near future, the Company may record additional losses related to these shares.

     During 2001, the Company recorded a charge of approximately $10.3 million
related to a decline in the market value of another of the Company's
available-for-sale investments that was deemed to be other-than-temporary. The
reduction in fair value has been included in the line item "Reduction in fair
value of available-for-sale investments" in its Statement of Operations for
2001.

     At June 30, 2001 and June 30, 2000, the Company had $104.0 million and
$50.6 million, respectively, of non-marketable equity securities accounted for
under the cost method. The cost of such investments is included in long-term
investments, which are recorded at cost.

  EQUITY METHOD INVESTMENTS

     At June 30, 2001, the Company had the following investments accounted for
using the equity method:

     ADVA: On June 30, 2000, the Company acquired E-TEK Dynamics, Inc.
("E-TEK"), which at the time of acquisition had a 31 percent ownership stake in
ADVA, a publicly traded German company that develops and manufactures fiber
optic components and products. At June 30, 2001, the Company had a 29 percent
ownership stake in ADVA. At June 30, 2000, the Company's cost and estimated fair
value of its investment in ADVA was $701.1 million. In the process of completing
the E-TEK purchase accounting, the Company increased the cost and estimated fair
value of its investment in ADVA to $931.5 million during the first quarter of
2001. The difference between the cost of the investment and the underlying
equity in the net assets of ADVA is being amortized over a 5-year period. For
2001, the Company recorded $136.2 million in amortization expense related to the
difference between the cost of the investment and the underlying equity in the
net assets of ADVA. The significant decline in the fair value of ADVA, as of
March 31, 2001 and June 30, 2001, which the Company determined was
other-than-temporary required, that its carrying value be written down to fair
value and the amount of the write-down was included in earnings. As a result,
the Company recognized a $744.7 million charge to earnings to write down the
basis of its investment in ADVA to $41 million. For 2001, under the equity
method, the Company recorded a net loss of $9.5 million as its pro rata share of
ADVA's net loss. The Company's share of the net loss of ADVA for the quarter
ended June 30, 2001 was $5.0 million, which will be recorded by the Company in
the quarter ending September 30, 2001.

                                        60
<PAGE>   62
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The Photonics Fund, LLP: During 2000 and 2001, the Company contributed $7.6
million for a 40 percent stake in The Photonics Fund, LLP, a California limited
liability partnership (the "Partnership"), which emphasizes privately negotiated
venture capital equity investments. The Partnership was formed on December 21,
1999 and extends to December 31, 2006, unless extended or terminated as provided
for in the Partnership agreement. At June 30, 2001, the carrying value of the
Company's equity share in the Partnership was $13.9 million. The market value of
the Company's equity share in the Partnership at June 30, 2001 was $14.2
million. The Company's share of the earnings of the Partnership for the quarter
ended June 30, 2001 was $0.3 million, which will be recorded by the Company in
the quarter ended September 30, 2001.

NOTE 3.  BALANCE SHEET DETAIL

     The components of inventory consist of the following (in millions):

<Table>
<Caption>
                                                                 JUNE 30,
                                                              ---------------
                                                               2001     2000
                                                              ------   ------
<S>                                                           <C>      <C>
Finished goods..............................................  $ 56.1   $ 39.2
Work in process.............................................    99.2    176.7
Raw materials and purchased parts...........................   132.3    159.5
                                                              ------   ------
                                                              $287.6   $375.4
                                                              ======   ======
</Table>

     The Company recorded a loss on purchase commitments of $59.8 million and
inventory write-down of $510.6 million during the fourth quarter of 2001. These
additional charges to cost of sales were due to (i) a sudden and significant
decrease in forecasted sales in the fourth quarter of 2001 and were calculated
based on inventory levels and purchase commitments in excess of expected demand
for each specific product and (ii) product consolidations and discontinuations
in connection with the Global Realignment Program (see Note 12).

     The components of property, plant and equipment are as follows (in
millions):

<Table>
<Caption>
                                                                  JUNE 30,
                                                              -----------------
                                                                2001      2000
                                                              --------   ------
<S>                                                           <C>        <C>
Land........................................................  $   36.3   $ 33.2
Building and improvements...................................     167.0    127.4
Machinery and equipment.....................................     683.9    439.8
Furniture, fixtures, software and office equipment..........     207.0     40.5
Leasehold improvements......................................     106.7     28.8
Construction in progress....................................     210.3     84.1
                                                              --------   ------
                                                               1,411.2    753.8
Less: accumulated depreciation..............................    (238.2)   (83.1)
                                                              --------   ------
                                                              $1,173.0   $670.7
                                                              ========   ======
</Table>

     The Company recorded a write-down of $122.2 million of facilities and
equipment during the fourth quarter of 2001 as part of the Company's Global
Realignment Program (See Note 12).

                                        61
<PAGE>   63
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The components of intangible assets are as follows (in millions):

<Table>
<Caption>
                                                                    JUNE 30,
                                                              ---------------------
                                                                2001        2000
                                                              ---------   ---------
<S>                                                           <C>         <C>
Goodwill....................................................  $10,985.6   $21,307.1
Purchased intangibles.......................................    2,353.6     1,945.5
Licenses and other intellectual property....................        4.5         5.6
                                                              ---------   ---------
                                                               13,343.7    23,258.2
Less: accumulated amortization..............................   (6,298.1)     (920.4)
                                                              ---------   ---------
                                                              $ 7,045.6   $22,337.8
                                                              =========   =========
</Table>

     The Company recorded a reduction of goodwill and other intangible assets of
$50.1 billion during 2001 (see Note 12).

     The components of other current liabilities are as follows (in millions):

<Table>
<Caption>
                                                                 JUNE 30,
                                                              ---------------
                                                               2001     2000
                                                              ------   ------
<S>                                                           <C>      <C>
Acquisition costs...........................................  $  1.8   $135.4
Warranty reserve............................................    49.7     11.3
Legal accrual...............................................    28.7      1.5
Deferred revenue............................................    34.3      5.4
Loss on purchase commitments................................    52.8       --
Other.......................................................   158.8     91.0
                                                              ------   ------
                                                              $326.1   $244.6
                                                              ======   ======
</Table>

     The loss on purchase commitments is related to commitments to purchase
excess inventory.

     Acquisition costs at June 30, 2000 consisted primarily of $92.0 million of
estimated direct transaction costs associated with the acquisition of E-TEK,
approximately $34.7 million in costs incurred by E-TEK in connection with the
acquisition and $8.7 million of direct transaction costs associated with other
acquisitions in 2000.

                                        62
<PAGE>   64
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 4.  LINES OF CREDIT AND LONG-TERM DEBT

     The Company had two Standby Letter of Credit facilities totaling
approximately U.S. $11.0 million. The Company also has an unsecured operating
bank line of credit for U.S. $25.0 million. Advances under the line of credit
bear interest at the Canadian Prime Rate of plus a spread of fifty basis points.
As of June 30, 2001, the rate was 6.25 percent and the Company had no
outstanding borrowings under this facility. The following table summarized the
debt obligations (in millions):

<Table>
<Caption>
                                                              JUNE 30,   JUNE 30,
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Secured term loan, interest at 7.85% per annum. Monthly
  principal and interest payments are $0.1 million with
  final payment on December 1, 2001. .......................   $ 7.1      $ 7.3
Secured term loan, interest at 6.38% per annum. Monthly
  principal and interest are $0.2 million with final payment
  on January 1, 2002. ......................................     1.7        4.4
Secured term loan, interest 1.33% to 1.35% per annum.
  Interest is payable monthly. Principal is payable March
  15, 2002. ................................................      --        6.5
Secured term loan, interest at 6.46% per annum. Monthly
  principal and interest payments are $0.1 million with
  final payment on September 1, 2002. ......................     1.9        3.2
Secured term loan, interest at 7.73% per annum. Monthly
  principal and interest payments are $0.3 million with
  final payment on January 1, 2003. ........................     5.6        8.7
Secured term loan, interest at 6.89% per annum. Monthly
  principal and interest are $0.2 million with final payment
  on April 15, 2002.........................................     2.0        4.4
Secured term loan, interest at 8.46% per annum. Monthly
  principal and interest are $0.2 million with final payment
  on April 15, 2003. .......................................     4.8        7.1
Secured term loan, interest at 8.01% per annum. Monthly
  principal and interest are $0.3 million with final payment
  on April 15, 2003. .......................................     6.4        9.5
Secured bond, interest rate is variable and based on Tax
  Exempt Note Rate plus 0.625% and is reset weekly. The
  interest rate at June 30, 2001 was 4.8%. Interest is
  payable quarterly. Principal is payable August 1,
  2016. ....................................................     5.0        5.0
                                                               -----      -----
Total.......................................................    34.5       56.1
  Less current maturities, included in other current
     liabilities............................................    21.7       15.1
                                                               -----      -----
     Total long-term debt, net of current maturities........   $12.8      $41.0
                                                               =====      =====
</Table>

     Annual debt maturities are as follows (in millions):

<Table>
<S>                                                            <C>
Year 2002...................................................   $21.7
Year 2003...................................................     7.8
Year 2004...................................................      --
Year 2005...................................................      --
Thereafter..................................................     5.0
                                                               -----
                                                               $34.5
                                                               =====
</Table>

                                        63
<PAGE>   65
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 5.  INCOME TAXES

     The expense (benefit) for income taxes consists of the following (in
millions):

<Table>
<Caption>
                                                               YEARS ENDED JUNE 30,
                                                              -----------------------
                                                               2001     2000    1999
                                                              -------   -----   -----
<S>                                                           <C>       <C>     <C>
Federal:
  Current...................................................  $ (86.4)  $34.0   $15.4
  Deferred..................................................   (226.6)  (17.5)   (3.0)
                                                              -------   -----   -----
                                                               (313.0)   16.5    12.4
State:
  Current...................................................     23.0     5.0     1.4
  Deferred..................................................    (32.4)   (2.3)   (0.2)
                                                              -------   -----   -----
                                                                 (9.4)    2.7     1.2
Foreign:
  Current...................................................     80.9   115.9     9.8
  Deferred..................................................   (130.4)  (60.2)   (1.9)
                                                              -------   -----   -----
                                                                (49.5)   55.7     7.9
                                                              -------   -----   -----
  Income tax expense (benefit)..............................  $(371.9)  $74.9   $21.5
                                                              =======   =====   =====
</Table>

     The tax benefit associated with exercises of stock options reduced taxes
currently payable by $142.7 million, $47.7 million and $11.4 million for the
fiscal years ended June 30, 2001, 2000 and 1999, respectively.

     Income (loss) before income taxes consisted of the following (in millions):

<Table>
<Caption>
                                                             YEARS ENDED JUNE 30,
                                                        ------------------------------
                                                           2001       2000      1999
                                                        ----------   -------   -------
<S>                                                     <C>          <C>       <C>
Domestic..............................................  $(56,544.0)  $(452.5)  $  29.3
Foreign...............................................        50.2    (377.3)   (178.9)
                                                        ----------   -------   -------
                                                        $(56,493.8)  $(829.8)  $(149.6)
                                                        ==========   =======   =======
</Table>

                                        64
<PAGE>   66
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A reconciliation of the income tax expense (benefit) at the federal
statutory rate to the income tax provision (benefit) at the effective tax rate
is as follows (in millions):

<Table>
<Caption>
                                                             YEARS ENDED JUNE 30,
                                                         -----------------------------
                                                            2001       2000      1999
                                                         ----------   -------   ------
<S>                                                      <C>          <C>       <C>
Income tax expense (benefit) computed at federal
  statutory rate.......................................  $(19,772.9)  $(290.4)  $(52.4)
State taxes, net of federal benefit....................        (6.1)      1.8      0.8
Non-deductible acquired in-process research &
  development..........................................       137.6     126.2     82.1
Reduction of goodwill..................................    17,515.3        --       --
Non-deductible amortization............................     1,688.7     208.4       --
Non-deductible merger expenses incurred in pooling of
  interests transaction................................          --        --      2.3
Income tax expense (benefit) from net earnings of
  foreign subsidiary considered to be permanently
  invested in non-U.S. operations......................        10.1      (5.5)    (4.6)
Valuation allowance....................................        51.2      42.0     (0.4)
Tax exempt income......................................       (10.6)     (7.1)    (1.2)
Gain on sale of foreign subsidiary.....................        10.9        --       --
Other..................................................         3.9      (0.5)    (5.1)
                                                         ----------   -------   ------
Income tax expense (benefit)...........................  $   (371.9)  $  74.9   $ 21.5
                                                         ==========   =======   ======
</Table>

     On February 13, 2001, the Company completed the sale of its Zurich,
Switzerland subsidiary to Nortel and realized a gain of $1,770.2 million. As a
result of the sale, the Company provided for $10.1 million of U.S. income taxes
in connection with foreign earnings of this subsidiary that had previously been
considered to be permanently invested offshore.

                                        65
<PAGE>   67
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The components of deferred taxes consist of the following (in millions):

<Table>
<Caption>
                                                                   JUNE 30,
                                                              -------------------
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Deferred tax assets:
  Tax credit carryforwards..................................  $   25.1   $    8.4
  Net operating loss carryforwards..........................     851.3      356.7
  Inventory.................................................     214.1       24.6
  Additional tax basis of intangibles.......................      87.3        4.9
  Accruals and reserves.....................................     153.5       35.2
  Other.....................................................      17.1        9.2
  Acquisition related items.................................     794.1      841.5
                                                              --------   --------
       Total deferred tax assets............................   2,142.5    1,280.5
  Valuation allowance.......................................    (996.0)    (575.4)
                                                              --------   --------
       Net deferred tax assets..............................   1,146.5      705.1
Deferred tax liabilities:
  Acquisition related items.................................    (669.6)    (899.0)
  Investment holdings.......................................     (61.7)        --
  Other.....................................................      (4.1)      (3.1)
                                                              --------   --------
       Total deferred tax liabilities.......................    (735.4)    (902.1)
                                                              --------   --------
       Total net deferred tax assets (liabilities)..........  $  411.1   $ (197.0)
                                                              ========   ========
</Table>

     The valuation allowance increased by approximately $420.6 million, $564.5
million, and $1.7 million in 2001, 2000 and 1999, respectively. The valuation
allowance for deferred tax assets reduces the net deferred tax assets to $411.1
million, an amount the Company believes is more likely than not realizable.
Approximately $81 million of the net deferred tax assets are supported by
foreign recoverable income taxes. Realization of the remaining $330.1 million of
net deferred tax assets is based on the Company's projections of future domestic
taxable income. The amount of the deferred tax assets considered realizable,
however, could be reduced in the near term if the estimate of future domestic
taxable income is reduced.

     Approximately $663.0 million of the valuation allowance at June 30, 2001 is
attributable to stock option deductions, the benefit of which will be credited
to paid-in-capital when realized. Approximately $192.6 million of the valuation
allowance at June 30, 2001 is attributable to deferred tax assets that when
realized, will first reduce unamortized goodwill, other intangible assets of
acquired subsidiaries, and then income tax expense.

     At June 30, 2001, the Company had federal and state net operating loss
carryforwards of approximately $2,296.9 million and $945.3 million,
respectively, and federal and state research and development credit
carryforwards of approximately $18.1 million and $12.1 million, respectively.
The net operating loss and credit carryforwards will expire at various dates
beginning in 2002, if not utilized.

NOTE 6.  LEASE COMMITMENTS

     The Company leases certain of its facilities and certain equipment under
operating leases. The operating facilities leases contain renewal options.
Certain of the Company's facility leases provide for periodic rent increases
based on general rate of inflation.

     As part of certain lease transactions, the Company has an option to
purchase the property (land or ground lease interest) and improvements for $37.9
million or, at the end of the lease, to arrange for the sale of the

                                        66
<PAGE>   68
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

property to a third party with the Company retaining an obligation to the owner
for the difference between the sales price and the guaranteed residual value of
$32.2 million if the sales price is less than this amount, subject to certain
provisions of the lease. Additionally, the Company restricted $37.9 million of
its investment securities as collateral for specified obligations of the lessors
under the leases. These investment securities are restricted as to withdrawal
and are managed by a third party subject to certain limitations under the
Company's investment policy. In addition, the Company must maintain a minimum
consolidated tangible net worth, as defined, of $500.0 million.

     In connection with the Company's Global Realignment Program, the Company
incurred a charge of $63.0 million for exiting and terminating lease facilities
included in the below table.

     The future minimum rental payments as of June 30, 2001, under operating
leases are as follows (in millions):

<Table>
<Caption>
                                                               OPERATING
YEAR ENDING JUNE 30,                                            LEASES
--------------------                                           ---------
<S>                                                            <C>
2002........................................................    $ 49.6
2003........................................................      42.4
2004........................................................      40.0
2005........................................................      37.6
2006........................................................      31.3
Thereafter..................................................      85.9
                                                                ------
       Total minimum lease payments.........................    $286.8
                                                                ======
</Table>

     Rental expense for operating leases for the years ended June 30, 2001, 2000
and 1999 amounted to approximately $32.4 million, $9.3 million, and $5.0
million, respectively.

NOTE 7.  RELATED PARTY TRANSACTIONS

     On June 30, 1999, Furukawa Electric Co., LTD. ("Furukawa") and its
subsidiaries, in conjunction with the Company's acquisition of JDS FITEL,
acquired 24 percent of the Company's outstanding common stock and exchangeable
shares. At June 30, 2001, Furukawa owned approximately 10 percent of the
Company's outstanding common stock and exchangeable shares.

     During 2001 and 2000, the Company entered into transactions with Furukawa
in the normal course of business. Transactions with Furukawa for 2001 and 2000
are as follows (in millions):

<Table>
<Caption>
                                                              JUNE 30,   JUNE 30,
                                                                2001       2000
                                                              --------   --------
<S>                                                           <C>        <C>
Sales.......................................................    $3.2      $ 0.9
Purchases...................................................      --       13.1
Accounts receivable.........................................     1.8        0.6
Accounts payable............................................    $ --      $10.2
</Table>

     Two members of the Company's Board of Directors were Vice Presidents at
Cisco Systems, Inc ("Cisco") during portions of 2001. Transactions with Cisco
for 2001 are as follows (in millions):

<Table>
<Caption>
                                                               JUNE 30,
                                                                 2001
                                                               --------
<S>                                                            <C>
Sales.......................................................    $147.5
Accounts receivable.........................................    $ 10.6
</Table>

                                        67
<PAGE>   69
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 8.  EMPLOYEE BENEFIT PLAN

     The Company has an employee 401(k) salary deferral plan, covering all
domestic employees. Employees may make contributions by withholding a percentage
of their salary up to the IRS annual limit ($10,500 for 2001). For the first six
months of the 2001, Company contributions consist of $0.25 per dollar
contributed by the employees with at least six months of service. Effective
January 1, 2001, the Company adopted a safe harbor company match which provides
a 100 percent match on the first 3 percent of compensation and 50 percent of
each participant's salary deferrals in excess of 3 percent of compensation up to
a maximum of 5 percent of compensation, subject to a maximum match contribution
of $3,400 for those employees the IRS considers Highly Compensated Employees
(for 2001, earning $85,000 or more). Company contributions were approximately
$3.2 million, $2.5 million, and $0.6 million for the years ended June 30, 2001,
2000 and 1999, respectively.

     Pursuant to the Company's acquisition of OCLI, E-TEK, and SDL, the Company
assumed responsibility of the OCLI, E-TEK, and SDL 401(k) Savings Plans and the
employees of OCLI, E-TEK and SDL continued their 401(k) participation with their
respective plans. The OCLI, E-TEK, and SDL plans were converted to the Company's
plan in June 2001. The following is a description of the OCLI, E-TEK, and SDL
plans:

     OCLI has a 401(k) pre-tax voluntary retirement savings plan for its U.S.
employees. The Company matches 100 percent of the first 3 percent of deferred
salary and 50 percent for the next 3 percent of deferred salary. Eligible
employees can defer up to 15 percent of their salary, up to the IRS annual
limit. Contributions to the 401(k) plan are immediately vested. Company matching
contributions to the 401(k) plan are funded in cash.

     E-TEK sponsors a 401(k) Savings Plan ("E-TEK Plan"). All E-TEK employees
are eligible to participate in the E-TEK Plan following certain minimum
eligibility requirements. Under the E-TEK Plan, employees may elect to
contribute up to 20 percent of their compensation to the E-TEK Plan, subject to
annual limitations. Matching contributions from E-TEK are 50 cents on the
dollar, to a maximum of $1,000 per year. E-TEK contributions are vested over
four years. Employee contributions are immediately vested.

     SDL sponsors a Profit Sharing and Saving Plus Plan ("SDL Plan"). The SDL
Plan covers substantially all U.S. full-time employees and is qualified under
Sections 401(a) and 401(k) of the Internal Revenue Code. Under the SDL Plan,
participants may defer up to 20 percent of their pre-tax earnings (up to the
Internal Revenue Service limit). SDL matches 50 percent of employee
contributions up to a maximum of 5 percent of the participant's pre-tax
earnings. The participants' as well as the Company's matching contributions are
fully vested.

NOTE 9.  STOCKHOLDERS' EQUITY

  PREFERRED STOCK

     In connection with the acquisition of UNL, the Company issued 100,000
shares of non-voting, non-cumulative Series A Preferred Stock to Philips having
a par value of $0.001 per share. The Series A Preferred Stock is convertible
into additional shares of common stock based on an agreed upon formula for
annual and cumulative shipments of certain products during the four-year period
ending June 30, 2002. The number of shares of common stock to be issued upon
conversion of this preferred stock is tied to unit shipments of certain products
by UNL during the four-year period ending June 30, 2002 and the Company's stock
price at the date the contingency attributable to the unit shipments is removed.
During the fourth quarter of 2001, UNL achieved cumulative shipments of certain
products that will require the Company to issue at least $90.8 million of the
Company's common stock to the former shareholder of UNL. The number of common
shares to be issued is based on the stock price at the end of the earn-out
period. The Preferred Stock is also convertible into common stock upon the
occurrence of a Redemption Event, as defined in the Series A Preferred Stock
Agreement. All redemption events are solely within the control of the Company.

                                        68
<PAGE>   70
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     In June 1998, the Company adopted a Stockholder Rights Agreement, as
amended (the "Company Rights Agreement") and declared a dividend distribution of
one right (a "Right") per share of common stock for stockholders of record as of
July 6, 1998. As adjusted for stock splits and dividends by the Company, each
outstanding share of the Company's common stock currently includes one-eighth of
a Right. Each Right entitles stockholders to purchase 1/1000 share of the
Company's Series B Preferred Stock at an exercise price of $3,600. The Rights
only become exercisable in certain limited circumstances following the tenth day
after a person or group announces acquisitions of or tender offers for 15
percent or more of the Company's common stock. For a limited period of time
following the announcement of any such acquisition or offer, the Rights are
redeemable by the Company at a price of $0.01 per Right. If the Rights are not
redeemed, each Right will then entitle the holder to purchase common stock
having the value of twice the then-current exercise price. For a limited period
of time after the exercisability of the Rights, each Right, at the discretion of
the Board, may be exchanged for either 1/1000 share of the Company's Series B
Preferred Stock or one share of common stock per Right. The Rights expire on
June 22, 2008.

     The Board of Directors has the authority, without any further vote or
action by the stockholders, to provide for the issuance of an additional 799,999
shares of Preferred Stock from time to time in one or more series with such
designations, rights, preferences and limitations as the Board of Directors may
determine, including the consideration received therefore, the number of shares
comprising each series, dividend rates, redemption provisions, liquidation
preferences, redemption fund provisions, conversion rights and voting rights,
all without the approval of the holders of common stock.

  EXCHANGEABLE SHARES OF JDS UNIPHASE CANADA LTD.

     On June 30, 1999, in connection with the merger with JDS FITEL, JDS
Uniphase Canada Ltd., a subsidiary of the Company, adopted an Exchangeable Share
Rights Plan (the "Exchangeable Rights Plan") substantially equivalent to the
Company Rights Agreement. Under the Exchangeable Rights Plan, each Exchangeable
Share issued has an associated right (an "Exchangeable Share Right") entitling
the holder of such Exchangeable Share Right to acquire additional Exchangeable
Shares on terms and conditions substantially the same as the terms and
conditions upon which a holder of shares of common stock is entitled to acquire
either 1/1000 share of the Company's Series B Preferred Stock or, in certain
circumstances, shares of common stock under the Company Rights Agreement. The
definitions of beneficial ownership, the calculation of percentage ownership and
the number of shares outstanding and related provisions of the Company Rights
Agreement and the Exchangeable Rights Plan apply, as appropriate, to shares of
common stock and Exchangeable Shares as though they were the same security. The
Exchangeable Share Rights are intended to have characteristics essentially
equivalent in economic effect to the Rights granted under the Company Rights
Agreement.

  STOCK OPTION PLANS

     As of June 30, 2001 JDS Uniphase had reserved approximately 50,431,000 of
common stock for future issuance to employees and directors under its Restated
1993 Flexible Stock Incentive Plan (the "1993 Option Plan"), the 1996
Non-qualified Stock Option Plan ("the 1996 Option Plan"), and the other various
plans the Company assumed as a result of acquisitions. The Board of Directors
has the authority to determine the type of option and the number of shares
subject to option. The exercise price is generally equal to fair value of the
underlying stock at the date of grant. Options generally become exercisable over
a four-year period and, if not exercised, expire from five to ten years from the
date of grant.

                                        69
<PAGE>   71
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes option activity through June 30, 2001:

<Table>
<Caption>
                                                               OPTIONS OUTSTANDING
                                                              ---------------------   WEIGHTED
                                                               SHARES                 AVERAGE
                                                              AVAILABLE    NUMBER     EXERCISE
                                                              FOR GRANT   OF SHARES    PRICE
                                                              ---------   ---------   --------
                                                              (IN THOUSANDS, EXCEPT PRICE PER
                                                                           SHARE)
<S>                                                           <C>         <C>         <C>
Balance at June 30, 1998....................................    15,828      53,316     $ 2.37
  Increase in authorized shares.............................    27,888          --         --
  Plans assumed related to acquisitions.....................    29,700          --         --
  Options converted related to acquisitions.................   (29,700)     29,700      10.88
  Granted...................................................   (20,012)     20,012       9.24
  Canceled..................................................     2,312      (2,312)      4.53
  Exercised.................................................        --     (11,836)      1.37
  Expired...................................................       (24)         --         --
                                                               -------     -------     ------
Balance at June 30, 1999....................................    25,992      88,880       5.83
  Increase in authorized shares.............................    66,989          --         --
  Plans assumed related to acquisitions.....................    31,015          --         --
  Options converted related to acquisitions.................   (31,015)     31,015      30.62
  Granted...................................................   (60,350)     60,350      40.91
  Canceled..................................................     3,011      (3,011)     14.85
  Exercised.................................................        --     (35,791)      3.00
  Expired...................................................      (321)        (35)      5.15
                                                               -------     -------     ------
Balance at June 30, 2000....................................    35,321     141,408      26.62
  Increase in authorized shares.............................    50,914          --         --
  Plans assumed related to acquisitions.....................    43,506          --         --
  Options converted related to acquisitions.................   (43,506)     43,506      32.35
  Granted...................................................   (46,789)     46,789      36.17
  Canceled..................................................     9,230     (16,942)     45.22
  Exercised.................................................        --     (41,576)      9.03
  Expired...................................................     1,755      (1,647)     51.61
                                                               -------     -------     ------
Balance at June 30, 2001....................................    50,431     171,538     $33.02
                                                               =======     =======     ======
</Table>

                                        70
<PAGE>   72
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The following table summarizes information about options outstanding at
June 30, 2001 (shares in thousands):

<Table>
<Caption>
                            OPTIONS OUTSTANDING
                    ------------------------------------
                                   WEIGHTED                 OPTIONS EXERCISABLE
                                    AVERAGE                ----------------------
                                   REMAINING    WEIGHTED                 WEIGHTED
AVERAGE RANGE OF                  CONTRACTUAL   AVERAGE                  AVERAGE
 EXERCISE PRICES      NUMBER         LIFE       EXERCISE     NUMBER      EXERCISE
(150% INCREMENTS)   OUTSTANDING   (IN YEARS)     PRICE     EXERCISABLE    PRICE
-----------------   -----------   -----------   --------   -----------   --------
<S>                 <C>           <C>           <C>        <C>           <C>
$    0.00-$  0.01         125         8.1       $  0.01          42      $  0.01
     0.02-   0.02         851         1.2          0.02         831         0.02
     0.04-   0.05         631         9.3          0.04          27         0.04
     0.10-   0.10          32         1.0          0.10          32         0.10
     0.23-   0.34         299         3.0          0.31         299         0.31
     0.35-   0.43         133         3.7          0.38         133         0.38
     0.57-   0.82       2,107         4.3          0.72       1,796         0.71
     0.86-   1.28       3,891         5.7          1.01       3,213         1.00
     1.30-   1.91       5,464         5.4          1.55       4,472         1.57
     1.97-   2.96         986         3.9          2.59         848         2.57
     3.13-   4.65       9,487         4.6          4.12       6,931         4.12
     4.72-   7.05      13,360         6.1          6.55       7,436         6.48
     7.19-  10.77       2,950         6.2          9.57         989         9.52
    10.81-  15.97      27,893         7.6         14.47         888        14.90
    16.23-  24.21      45,909         6.1         19.99      14,294        20.30
    24.52-  36.41       9,140         7.8         29.55       2,518        29.19
    38.50-  57.50      11,379         7.5         51.18       3,072        52.49
    58.52-  87.63      19,416         8.6         70.01       1,691        70.80
    88.00- 131.81      17,235         7.3        111.64       3,275       114.87
   132.31- 146.53         250         6.7        139.86          77       139.91
-----------------     -------         ---       -------      ------      -------
$    0.00-$146.53     171,538         6.8       $ 33.02      52,864      $ 21.66
                      =======                                ======
</Table>

  EMPLOYEE STOCK PURCHASE PLANS

     The JDS Uniphase 1998 Employee Stock Purchase Plan (the "98 Purchase Plan")
was adopted in June 1998. The Company has reserved 20,000,000 shares of common
stock for issuance under the 98 Purchase Plan and has 18,087,940 shares
remaining. The 98 Purchase Plan, effective August 1, 1998, provides eligible
employees with the opportunity to acquire an ownership interest in JDS Uniphase
through participation in a program of periodic payroll deductions applied at
specific intervals to the purchase of common stock. The Purchase Plan is
structured as a qualified employee stock purchase plan under Section 423 of the
amended Internal Revenue Code of 1986. However, the Purchase Plan is not
intended to be a qualified pension, profit sharing or stock bonus plan under
Section 401(a) of the 1986 Code and is not subject to the provisions of the
Employee Retirement Income Security Act of 1974. The Purchase Plan will
terminate upon the earlier of August 1, 2008 or the date on which all shares
available for issuance under the Purchase Plan have been sold.

     The JDS Uniphase Corporation 1999 Canadian Employee Stock Purchase Plan
(the "Canadian Plan") was adopted in November 1999. The Company has reserved
1,000,000 shares of common stock for issuance under the Canadian Plan and has
674,730 shares remaining. The Canadian Plan has similar provisions to the
Company's existing plans.

                                        71
<PAGE>   73
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Pursuant to the Company's acquisition of OCLI, E-TEK and SDL, the Company
continued the OCLI, E-TEK and SDL Employee Stock Purchase Plans, which have
similar provisions to the Company's existing plans. The plans will continue
through December 31, 2000, April 30, 2002 and October 10, 2002 for OCLI, E-TEK,
and SDL, respectively.

  STOCK BASED COMPENSATION

     The Company has elected to follow APB Opinion No. 25, "Accounting for Stock
Issued to Employees," as amended by FIN No. 44, "Accounting for Certain
Transactions Involving Stock Compensation," in accounting for its employee stock
options because, as discussed below, the alternative fair value accounting
provided for under SFAS No. 123, "Accounting for Stock-Based Compensation,"
requires the use of option valuation models that were not developed for use in
valuing employee stock options. Under APB No. 25, when the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized in the Company's
financial statements.

     In connection with certain of the Company's acquisitions, outstanding stock
options held by employees of acquired companies became exercisable, according to
their terms, for the Company's common stock effective at the acquisition date.
These options did not reduce the shares available for grant under any of the
Company's other option plans. For acquisitions accounted for as purchases, the
fair value of these options was included as part of the purchase price. As of
July 1, 2000, the Company began recording deferred compensation related to
unvested options held by employees of companies acquired in a purchase
acquisition, in accordance with FIN No. 44. Deferred stock-based compensation
expense related to acquisitions was $52.6 million in 2001. The deferred expense
calculation and future amortization is based on the graded vesting schedule of
the awards.

     In connection with the termination of a former executive, the Company
extended the exercise period for options to purchase 1,216,010 shares of common
stock at exercise prices ranging from $2.60 to $105.59. The Company determined
the compensation expense for these stock options based on the stock price on the
date of modification. As a result, the Company recorded compensation expense
associated with these stock options of $11.1 million.

     Pro forma information regarding net loss and loss per share is required by
SFAS No. 123. This information is required to be determined as if the Company
had accounted for its employee stock options (including shares issued under the
Employee Stock Purchase Plan, collectively called "options") granted subsequent
to June 30, 1995 under the fair value method of that statement. The fair value
of options granted in 2001, 2000, and 1999 reported below has been estimated at
the date of grant using a Black-Scholes option pricing model with the following
weighted average assumptions:

<Table>
<Caption>
                                                          EMPLOYEE STOCK        EMPLOYEE STOCK
                                                             OPTIONS         PURCHASE PLAN SHARES
                                                        ------------------   ---------------------
                                                        2001   2000   1999   2001    2000    1999
                                                        ----   ----   ----   -----   -----   -----
<S>                                                     <C>    <C>    <C>    <C>     <C>     <C>
Expected life (in years)..............................  5.00   5.50   6.10   0.50    0.60    0.50
Volatility............................................  0.78   0.70   0.67   0.78    0.70    0.68
Risk-free interest rate...............................  5.00%  6.00%  5.60%  5.70%   5.00%   5.60%
Dividend yield........................................  0.00%  0.00%  0.00%  0.00%   0.00%   0.00%
</Table>

     The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions, including the expected stock price
volatility. Because the Company's options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in the opinion
of management, the existing models do not necessarily provide a reliable single
measure of the fair value of its options. A total of approximately 90,295,000
and 91,365,000 options, including options assumed through acquisitions, were
granted during 2001 and during 2000, respectively, with exercise prices equal to
the market

                                        72
<PAGE>   74
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

price of the stock on the grant date. The weighted-average exercise price and
weighted-average fair value of these options in 2001 were $34.34 and $26.81,
respectively. The weighted-average exercise price and weighted-average fair
value of these options in 2000 were $40.94 and $27.92, respectively. The
weighted-average exercise price and weighted-average fair value of stock options
granted during 1999 was $10.22 and $3.05 per share, respectively. The weighted
average fair value of shares granted under the Employee Stock Purchase Plan
during 2001, 2000, and 1999 was $21.92, $7.93, $1.56, respectively.

     For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The Company's
pro forma information follows (in millions, except per share data):

<Table>
<Caption>
                                                            YEARS ENDED JUNE 30,
                                                      --------------------------------
                                                         2001        2000       1999
                                                      ----------   ---------   -------
<S>                                                   <C>          <C>         <C>
Pro forma net loss..................................  $(56,557.9)  $(1,110.5)  $(228.7)
Pro forma loss per share............................  $   (51.80)  $   (1.56)  $ (0.72)
</Table>

NOTE 10.  MERGERS AND ACQUISITIONS

  SDL

     On February 13, 2001, the Company completed the acquisition of SDL Inc., a
world leader in providing products for optical communications and related
markets. The transaction was accounted for as a purchase and accordingly, the
accompanying financial statements include the results of operations of SDL
subsequent to the acquisition date. The merger agreement provided for the
exchange of 3.8 shares of the Company's common stock and options to purchase
shares of the Company's common stock for each common share and outstanding
option of SDL, respectively. The total purchase price of $41.2 billion included
consideration of 333.8 million shares of the Company's common stock valued at an
average market price of $111.13 per common share. The average market price is
based on the average closing price for a range of trading days around the
announcement date (July 10, 2000) of the merger. In addition, the Company issued
options to purchase 42.6 million shares of common stock valued at $4.1 billion
in exchange for SDL options. The Company also provided cash consideration of
$0.2 million to the former shareholders of SDL in respect of fractional shares
relinquished in connection with the acquisition. The value of the options, as
well as estimated direct transaction costs of $44.6 million, have been included
as part of the total purchase cost.

     The total purchase cost of the SDL merger is as follows (in millions):

<Table>
<S>                                                           <C>
Value of securities issued..................................  $37,091.9
Assumption of SDL options...................................    4,056.4
Cash consideration..........................................        0.2
                                                              ---------
  Total consideration.......................................   41,148.5
Estimated transaction costs.................................       44.6
                                                              ---------
  Total purchase cost.......................................  $41,193.1
                                                              =========
</Table>

                                        73
<PAGE>   75
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The purchase price allocation is as follows (in millions):

<Table>
<S>                                                           <C>
Tangible net assets.........................................  $   617.4
  Intangible assets acquired:
     Existing technology....................................      455.4
     Core technology........................................      214.2
     Trademarks and tradename...............................       46.0
     Assembled workforce....................................       47.7
Deferred compensation.......................................      203.7
Goodwill....................................................   39,228.0
In-process research and development.........................      380.7
                                                              ---------
Total purchase price:.......................................  $41,193.1
                                                              =========
</Table>

     Tangible net assets acquired include cash, accounts receivable, inventories
and fixed assets (including an adjustment to write-up inventory of SDL to fair
value by $22.9 million and an adjustment to write-up fixed assets of SDL to fair
value by $5.8 million). Liabilities assumed principally include accounts
payable, accrued compensation and accrued expenses.

     The Company paid certain SDL executives $300.9 million in consideration of
their agreement to amend their change of control agreements and enter into
non-compete agreements with the Company. These costs were charged to selling,
general and administrative expense as compensation expense during the third
quarter of 2001.

     A portion of the purchase price has been allocated to developed technology
and acquired in-process research and development. Developed technology and
in-process research and development ("IPR&D") were identified and valued through
analysis of data provided by SDL concerning developmental products, their stage
of development, the time and resources needed to complete them, if applicable,
their expected income generating ability, target markets and associated risks.
The Income Approach, which includes an analysis of the markets, cash flows and
risks associated with achieving such cash flows, was the primary technique
utilized in valuing the developed technology and IPR&D.

     Developmental projects that had reached technological feasibility were
classified as developed technology, and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered the importance of each project
to the overall development plan, estimating costs to develop the purchased IPR&D
into commercially viable products, estimating the resulting net cash flows from
the projects when completed and discounting the net cash flows to their present
value. The sales estimates used to value the purchased IPR&D were based on
estimates or relevant market sizes and growth factors, expected trends in
technology and the nature and expected timing of new product introductions by
SDL and its competitors. The rates utilized to discount the net cash flows to
their present value are based on SDL's weighted average cost of capital. Given
the nature of the risks associated with the difficulties and uncertainties in
completing each project and thereby achieving technological feasibility,
anticipated market acceptance and penetration, market growth rates and risks
related to the impact of potential changes in future target markets, the
weighted average cost of capital was adjusted. Based on these factors, discount
rates of 12 percent and 20 percent were deemed appropriate for the developed and
in-process technology, respectively.

                                        74
<PAGE>   76
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The estimates used in valuing IPR&D were based upon assumptions believed to
be reasonable but which are inherently uncertain and unpredictable. Assumptions
may be incomplete or inaccurate, and no assurance can be given that
unanticipated events and circumstances will not occur. Accordingly, actual
results may vary from the projected results. Any such variance may result in a
material adverse effect on SDL's financial condition and results of operations.
The acquired existing technology, was comprised of products that are already
technologically feasible, includes products in most of SDL's product lines. The
Company is amortizing the acquired existing technology of approximately $455.4
million on a straight-line basis over an average estimated remaining useful life
of five years. The acquired core technology represents SDL trade secrets and
patents developed through years of experience in design, package and manufacture
of laser components and modules for fiber optic telecommunication networks.
SDL's products are designed for long-haul applications, as well as emerging
short-haul applications, such as metropolitan area networks. This proprietary
know-how can be leveraged by the Company to develop new and improved products
and manufacturing processes. The Company is amortizing the acquired core
technology of approximately $214.2 million on a straight-line basis over an
average estimated remaining useful life of five years.

     The trademarks and tradenames include the SDL trademark and tradename. The
Company is amortizing the trademarks and trade names of approximately $46.0
million on a straight-line basis over an estimated remaining useful life of five
years.

     The acquired assembled workforce was comprised of over 1,660 skilled
employees across SDL's Executive, Research and Development, Manufacturing,
Supervisor/Manager, and Sales and Marketing groups. The Company is amortizing
the value assigned to the assembled workforce of approximately $47.7 million on
a straight-line basis over an estimated remaining useful life of four years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of five years.

  OPA

     In January 2001, the Company acquired Optical Process Automation Corp.
("OPA") of Melbourne, Florida. OPA also has operations in Asheville, North
Carolina. OPA designs and manufactures automated and semi-automated systems for
the manufacture of fiber optic components and modules. The transaction was
accounted for as a purchase and accordingly, the accompanying financial
statements include the results of operations of OPA subsequent to the
acquisition date. The total purchase price of $168.5 million included
consideration of 2.4 million shares of the Company's common stock valued at
$131.8 million, the issuance of options to purchase an additional 0.7 million
shares of JDS Uniphase common stock valued at $36.5 million in exchange for OPA
options and direct transaction costs of $0.2 million. The purchase price
allocation included net tangible deficit of $4.6 million, acquired IPR&D of $3.0
million, purchased intangibles of $15.5 million, $30.1 million related to
deferred compensation on unvested options and goodwill of $124.5 million. The
purchased intangibles and goodwill are being amortized over a period of two to
seven years. Subject to the completion of certain milestones, the purchase
agreement also provides for the issuance of additional shares of JDS Uniphase
common stock, estimated to be approximately $29.9 million, with the final
milestone payment scheduled to be paid on or prior to January 31, 2004.

  IRIDIAN SPECTRAL TECHNOLOGIES LIMITED

     In October 2000, the Company acquired the remaining 80.1 percent interest
in Iridian Spectral Technologies Limited ("Iridian") of Ottawa, Canada. Iridian
is a supplier of custom designed thin film filters. The transaction was
accounted for as a purchase and accordingly, the accompanying financial
statements include the results of operations of Iridian subsequent to the
acquisition date. The total purchase price of $39.4 million included
consideration of 0.4 million exchangeable shares of the Company's subsidiary,
JDS Uniphase Canada Ltd. valued at $34.6 million, $4.7 million in cash and
direct transaction costs of $0.1 million.

                                        75
<PAGE>   77
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The purchase price allocation included net tangible assets of $2.3 million,
acquired IPR&D of $0.6 million, purchased intangibles of $1.3 million, and
goodwill of $35.2 million. The purchased intangibles and goodwill are being
amortized over a period of five years.

  EPION CORPORATION

     In September 2000, the Company acquired Epion Corporation ("Epion") of
Billerica, Massachusetts. Epion is a developer of gas cluster ion beam ("GCIB")
technology and a manufacturer of pulsed laser deposition ("PLD") equipment. The
transaction was accounted for as a purchase and accordingly, the accompanying
financial statements include the results of operations of Epion subsequent to
the acquisition date. The initial purchase price of $95.3 million included
consideration of 0.8 million shares of JDS Uniphase common stock valued at $86.8
million, the issuance of options to purchase an additional 91,862 shares of JDS
Uniphase common stock valued at $8.2 million in exchange for Epion options and
direct transaction costs of $0.3 million. The purchase price allocation included
net tangible assets of $11.0 million, acquired IPR&D of $8.9 million, purchased
intangibles of $10.9 million, $3.7 million related to deferred compensation on
unvested options and goodwill of $60.8 million. The purchased intangibles and
goodwill are being amortized over a period of three to five years. Subject to
the completion of certain milestones, the merger agreement also provides for the
issuance of additional shares of common stock, estimated to be approximately
$150.0 million, with the final milestone payment scheduled to be paid on or
prior to January 31, 2003. During the second and third quarters of 2001, Epion
reached three milestones that resulted in the Company issuing 1.4 million shares
of JDS Uniphase common stock valued at $98.7 million (including $9.5 million
related to deferred compensation on unvested options).

  E-TEK DYNAMICS, INC.

     On June 30, 2000, the Company completed the acquisition of E-TEK, a
designer and manufacturer of high quality components and modules for fiber optic
systems. The transaction was accounted for as a purchase and accordingly, the
accompanying statements of operations include the results of E-TEK subsequent to
the acquisition date. The merger agreement provided for the exchange of 2.2
shares of the Company's common stock for each common share and outstanding
option of E-TEK. The total purchase price of $17,506.4 million included
consideration of 150.1 million shares of the Company's common stock, which
includes 0.8 million exchangeable shares of its subsidiary, JDS Uniphase Canada,
Ltd., each of which is exchangeable for one share of its common stock, the
issuance of options to purchase 23.2 million shares valued at $2,005.2 million
in exchange for E-TEK options, the issuance of 0.5 million common shares valued
at $45.5 million in exchange for E-TEK shares to be issued under E-TEK's
employee stock purchase plan, $53.9 million of cash, and estimated direct
transaction costs of $32.3 million.

     The total purchase cost of E-TEK is as follows (in millions):

<Table>
<S>                                                           <C>
Value of securities issued..................................  $15,369.3
Assumption of options.......................................    2,005.4
Cash consideration..........................................       53.9
Assumption of employee stock purchase plan..................       45.5
                                                              ---------
  Total consideration.......................................   17,474.1
Direct transactions costs and expenses......................       32.3
                                                              ---------
  Total purchase cost.......................................  $17,506.4
                                                              =========
</Table>

                                        76
<PAGE>   78
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The purchase price allocation is as follows (in millions):

<Table>
<S>                                                           <C>
Tangible net assets acquired................................  $   395.0
Marketable equity investments...............................      950.0
Intangible assets acquired:
  Developed technology:
     Existing technology....................................      248.7
     Core technology........................................      168.5
  Trademark and tradename...................................       60.4
  Assembled workforce.......................................       10.7
In-process research and development.........................      250.6
Goodwill....................................................   15,422.5
                                                              ---------
Total purchase price allocation.............................  $17,506.4
                                                              =========
</Table>

     Tangible net assets acquired included cash, accounts receivable,
inventories and fixed assets (including an adjustment to write-up inventory of
E-TEK to fair value by $48.6 million). Liabilities assumed principally included
accounts payable, accrued compensation and accrued expenses. Goodwill and
intangible assets acquired are each being amortized on a straight-line basis
over estimated useful lives ranging from three to five years.

     A portion of the purchase price has been allocated to write-up the equity
investments of E-TEK to a fair value of $950.0 million. The fair value includes
a $932 million increase to E-TEK's investment of ADVA, which is accounted for
under the equity method of accounting. The increase represents the fair value of
the Company's investment, over the net assets of ADVA, and is being amortized on
a straight-line basis over the estimated life of 5 years.

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by E-TEK concerning
developmental products, their stage of development, the time and resources
needed to complete them, and, if applicable, their expected income generating
ability, target markets and associated risks. The Income Approach, which
includes an analysis of the markets, cash flows and risks associated with
achieving such cash flows, was the primary technique utilized in valuing the
developed technology and IPR&D.

     Where developmental projects had reached technological feasibility, they
were classified as developed technology, and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered, among other factors, the
importance of each project to the overall development plan, projected
incremental cash flows from the projects when completed and any associated
risks. The projected incremental cash flows were discounted back to their
present value using discount rates ranging from 12 percent to 20 percent.
Discount rates were determined after consideration of E-TEK's weighted average
cost of capital and the weighted average return on assets. Associated risks
include the inherent difficulties and uncertainties in completing each project
and thereby achieving technological feasibility, anticipated levels of market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets.

                                        77
<PAGE>   79
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The acquired existing technology, which was comprised of products that are
already technologically feasible, includes products in most of E-TEK's product
line. These include wavelength division multiplexing ("WDM") components and
modules, isolators, couplers, and micro-optic integrated components. The Company
is amortizing the acquired existing technology of approximately $248.7 million
on a straight-line basis over an average estimated remaining useful life of 3
years.

     The acquired core technology represented E-TEK trade secrets and patents
developed through years of experience in design, package, and manufacture of
passive components for fiber optic telecommunication networks. E-TEK's products
are designed for established terrestrial and submarine long-haul applications,
as well as emerging short-haul applications, such as metropolitan area networks.
This proprietary know-how can be leveraged by E-TEK to develop new and improved
products and manufacturing processes. The Company is amortizing the acquired
core technology of approximately $168.5 million on a straight-line basis over an
average estimated remaining useful life of 5 years.

     The trademarks and tradenames include the E-TEK trademark and tradename as
well as all branded E-TEK products, such as E-TEK(TM), Unifuse(TM), Kaifa(TM)
and TIGRA(TM). The Company is amortizing the trademark and tradenames of
approximately $60.4 million on a straight-line basis over an estimated remaining
useful life of 5 years.

     The acquired assembled workforce was comprised of over 3,300 skilled
employees across E-TEK's Executive, Research and Development, Manufacturing,
Supervisor/Manager, and Sales and Marketing groups. The Company expects to
amortize the value assigned to the assembled workforce of approximately $10.7
million on a straight-line basis over an estimated remaining useful life of 3 to
5 years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of 5 years.

  FUJIAN CASIX LASER, INC.

     On April 29, 2000, the Company acquired Fujian Casix Laser Inc ("Casix"), a
supplier of crystals, fiber optic components and optics for telecommunications
networks, for $60 million in cash. Casix is based in Fuzhou, Fujian, China.
Casix's key technologies consist principally of fiberoptic component processing
and precision assembly; optical design, fabrication and coating; and advanced
crystal growth and processing. The transaction was accounted for as a purchase,
and accordingly, the accompanying financial statements include the results of
operations of Casix subsequent to the acquisition date. The purchase price
allocation included tangible net assets of $11.4 million and intangible assets
(primarily goodwill) of $48.6 million that are being amortized over a five-year
period.

  CRONOS INTEGRATED MICROSYSTEMS, INC.

     On April 19, 2000, the Company acquired Cronos Integrated Microsystems,
Inc. ("Cronos"), a provider of optical micro-electro-mechanical systems ("MEMS")
components and component technology to the fiber optic communications market.
The transaction was accounted for as a purchase and accordingly, the
accompanying financial statements include the results of operations of Cronos
subsequent to the acquisition date. The total purchase price of $565.3 million
included consideration of 6.3 million shares of JDS Uniphase common stock, the
issuance of options to purchase 0.2 million shares valued at $15.7 million in
exchange for Cronos options and estimated direct transaction costs of $1.1
million.

                                        78
<PAGE>   80
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The total purchase cost of Cronos is as follows (in millions):

<Table>
<S>                                                            <C>
Value of securities issued..................................   $548.5
Assumption of options.......................................     15.7
                                                               ------
       Total consideration..................................    564.2
Direct transaction costs and expenses.......................      1.1
                                                               ------
       Total purchase cost..................................   $565.3
                                                               ======
</Table>

     The allocation of the purchase price is as follows (in millions):

<Table>
<S>                                                            <C>
Tangible net assets acquired................................   $  1.0
Intangible assets acquired:
  Developed technology......................................      8.0
  Core technology...........................................      4.1
  Assembled workforce.......................................      1.8
Goodwill....................................................    544.1
In-process research and development.........................      6.3
                                                               ------
       Total purchase price allocation......................   $565.3
                                                               ======
</Table>

     Tangible net assets acquired included cash, accounts receivable,
inventories and fixed assets. Liabilities assumed principally included accounts
payable, accrued compensation and accrued expenses. Goodwill and intangible
assets acquired are each being amortized on a straight-line basis over estimated
useful lives ranging from three to five years.

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by Cronos concerning
developmental products, their stage of development, the time and resources
needed to complete them, and, if applicable, their expected income generating
ability, target markets and associated risks. The Income Approach, which
includes an analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in valuing the
developed technology and IPR&D.

     Where development projects had reached technological feasibility, they were
classified as developed technology and the value assigned to developed
technology was capitalized. Where the development projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the transaction. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered, among other factors, the
importance of each project to the overall development plan, projected
incremental cash flows from the projects when completed and any associated
risks. The projected incremental cash flows were discounted back to their
present value using discount rates ranging from 12 percent to 20 percent.
Discount rates were determined after consideration of Cronos weighted average
cost of capital and the weighted average return on assets. Associated risks
include the inherent difficulties and uncertainties in completing each project
and thereby achieving technological feasibility, anticipated levels of market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets.

                                        79
<PAGE>   81
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The acquired existing technology, which was comprised of products that are
already technologically feasible, includes products in the following areas:
relays and optical communication cross connects. The Company is amortizing the
acquired existing technology of approximately $8.0 million on a straight-line
basis over an average estimated remaining useful life of 5 years.

     The acquired core technology represents Cronos trade secrets and patents
developed through years of experience designing and manufacturing
micro-electromechanical systems components for fiber optic and RF
telecommunication networks. This knowledge can be leveraged by Cronos to develop
new and improved products and manufacturing processes. The Company is amortizing
the acquired core technology of approximately $4.1 million on a straight-line
basis over an average estimated remaining useful life of 5 years.

     The acquired assembled workforce was comprised of approximately 72 skilled
employees across Cronos Sales and Marketing, Management, Supervision, Quality &
Training, General & Administrative, and Engineering groups. The Company is
amortizing the value assigned to the assembled workforce of approximately $1.8
million on a straight-line basis over an estimated remaining useful life of 3
years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of 5 years.

  OPTICAL COATING LABORATORY, INC.

     On February 4, 2000, the Company acquired OCLI, a manufacturer of optical
thin film coatings and components used to control and enhance light propagation
to achieve specific effects such as reflection, refraction, absorption and
wavelength separation. The transaction was accounted for as a purchase and
accordingly, the accompanying financial statements include the results of
operations of OCLI subsequent to the acquisition date. The total purchase price
of $2,707.5 million included consideration of 54.0 million shares of JDS
Uniphase common stock, the issuance of options to purchase 6.4 million shares
valued at $267.2 million in exchange for OCLI options and direct transaction
costs of $8.2 million.

     The total purchase cost of OCLI is as follows (in millions):

<Table>
<S>                                                           <C>
Value of securities issued..................................  $2,432.1
Assumption of options.......................................     267.2
                                                              --------
       Total consideration..................................   2,699.3
Direct transaction costs and expenses.......................       8.2
                                                              --------
       Total purchase cost..................................  $2,707.5
                                                              ========
</Table>

                                        80
<PAGE>   82
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The purchase price allocation was as follows (in millions):

<Table>
<S>                                                            <C>
Tangible net assets acquired................................   $  253.2
Intangible assets acquired:
  Developed technology:
     Telecommunications.....................................      115.1
     Flex Products..........................................       92.2
     Applied Photonics......................................        1.0
     Information Industries.................................       23.9
  Proprietary know-how......................................      161.9
  Trademark and tradename...................................       38.5
  Assembled workforce.......................................       14.3
In-process research and development.........................       84.1
Goodwill....................................................    1,927.4
Deferred tax liabilities....................................       (4.1)
                                                               --------
       Total purchase price allocation......................   $2,707.5
                                                               ========
</Table>

     Tangible net assets acquired included cash, accounts receivable,
inventories and fixed assets (including an adjustment to write-up property and
equipment of OCLI to fair value by $28.0 million). Liabilities assumed
principally included accounts payable, accrued compensation and accrued
expenses. Goodwill and intangible assets acquired are each being amortized on a
straight-line basis over estimated useful lives ranging from six to fifteen
years.

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by OCLI concerning developmental
products, their stage of development, the time and resources needed to complete
them, and, if applicable, their expected income generating ability, target
markets and associated risks. The Income Approach, which includes an analysis of
the markets, cash flows and risks associated with achieving such cash flows, was
the primary technique utilized in valuing the developed technology and IPR&D.

     Where developmental projects had reached technological feasibility, they
were classified as developed technology, and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered, among other factors, the
importance of each project to the overall development plan, projected
incremental cash flows from the projects when completed and any associated
risks. The projected incremental cash flows were discounted back to their
present value using discount rates ranging from 18 percent to 25 percent.
Discount rates were determined after consideration of OCLI's weighted average
cost of capital and the weighted average return on assets. Associated risks
include the inherent difficulties and uncertainties in completing each project
and thereby achieving technological feasibility, anticipated levels of market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets.

     The acquired existing technology, which was comprised of products that are
already technologically feasible, includes products that are manufactured and
marketed by OCLI's Telecommunications, Flex

                                        81
<PAGE>   83
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Products, Applied Photonics, and Information Industries groups. The Company is
amortizing the acquired existing technology of approximately $232.2 million on a
straight-line basis over an average estimated remaining useful life of 8.2
years.

     The acquired proprietary know-how represents OCLI trade secrets and patents
developed through years of experience designing and manufacturing thin film
products. This know-how enables OCLI to develop new and improve existing thin
film products, processes and manufacturing equipment, thereby providing OCLI
with a distinct advantage over its competitors and a reputation for
technological superiority in the industry. The Company is amortizing the
proprietary know-how of approximately $161.9 million on a straight-line basis
over an average estimated remaining useful life of 10.4 years

     The trademarks and tradenames include the OCLI trademark and tradename as
well as all branded OCLI products such as GlareGuard(R) and processes such as
MetaMode(R). The Company is amortizing the trademark and tradenames of
approximately $38.5 million on a straight-line basis over an estimated remaining
useful life of 10 years.

     The acquired assembled workforce was comprised of over 1,400 skilled
employees across OCLI's General and Administration, Science and Technology,
Sales and Marketing, and Manufacturing groups. The Company is amortizing the
value assigned to the assembled workforce of approximately $14.3 million on a
straight-line basis over an estimated remaining useful life of 6 years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of 7.2 years.

  INTEGRIERTE OPTIK GMBH & CO. KG

     In January 2000, the Company acquired the remaining 49 percent minority
interest in Integrierte Optik GmbH & Co. KG ("IOT"), a joint venture of JDS
Uniphase and the Schott Group, for $12.6 million in cash in a transaction
accounted for as a purchase. Prior to the transaction, IOT's balance sheet and
results of operations were consolidated with the Company, with appropriate
adjustments to reflect minority interest of 49 percent. As a result of the
transaction, the Company's ownership interest increased to 100 percent and the
minority interest adjustments have been discontinued. IOT manufactures passive
optical splitters for fiber optic network applications in cable plants and
transmission networks. The purchase price allocation included tangible net
assets of $2.9 million and intangible assets (including goodwill) of $9.7
million that are being amortized over a five-year period.

  OPREL TECHNOLOGIES, INC.

     In December 1999, the Company acquired Oprel Technologies, Inc. ("OPREL"),
a developer of optical amplifiers, test equipment and optoelectronic packaging,
located in Nepean, Ontario. The transaction was accounted for as a purchase and
accordingly, the accompanying financial statements include the results of
operations of OPREL subsequent to the acquisition date. The Company paid $9.3
million in cash and issued a total of 0.2 million exchangeable shares of its
subsidiary, JDS Uniphase Canada Ltd., each of which is exchangeable for one
share of common stock. The total purchase cost was $27.7 million. The purchase
price allocation included net tangible assets of $1.4 million and intangible
assets (including goodwill) of $26.3 million that are expected to be amortized
over a five-year period.

  SIFAM LIMITED

     In December 1999, the Company acquired SIFAM Limited ("SIFAM"), a supplier
of fused components for fiber optic telecommunications networks, which is based
in the United Kingdom, for $97.6 million in cash. SIFAM products, which included
couplers, wavelength division multiplexers and gain flattening filters, are used
for advanced applications in optical amplifiers and network monitoring. The
transaction was

                                        82
<PAGE>   84
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

accounted for as a purchase and accordingly, the accompanying financial
statements include the results of operations of SIFAM subsequent to the
acquisition date.

     The allocation of the purchase price is as follows (in millions):

<Table>
<S>                                                           <C>
Tangible net assets acquired................................  $  4.3
Intangible assets acquired:
  Developed technology......................................    27.0
  Trade secrets and patents.................................     6.1
  Assembled workforce.......................................     0.6
Goodwill....................................................    70.1
In-process research and development.........................     3.0
Deferred tax liabilities....................................   (13.5)
                                                              ------
       Total purchase price allocation......................  $ 97.6
                                                              ======
</Table>

     Tangible net assets acquired included cash, accounts receivable,
inventories and fixed assets. Liabilities assumed principally included accounts
payable, accrued compensation and accrued expenses. Goodwill and intangible
assets acquired are each being amortized on a straight-line basis over estimated
useful lives ranging from three to five years.

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by SIFAM concerning
developmental products, their stage of development, the time and resources
needed to complete them, and, if applicable, their expected income generating
ability, target markets and associated risks. The Income Approach, which
includes an analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in valuing the
developed technology and IPR&D.

     Where development projects had reached technological feasibility, they were
classified as developed technology and the value assigned to developed
technology was capitalized. Where the development projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the transaction. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered, among other factors, the
importance of each project to the overall development plan, projected
incremental cash flows from the projects when completed and any associated
risks. The projected incremental cash flows were discounted back to their
present value using discount rates ranging from 14 percent to 18 percent.
Discount rates were determined after consideration of SIFAM's weighted average
cost of capital and the weighted average return on assets. Associated risks
include the inherent difficulties and uncertainties in completing each project
and thereby achieving technological feasibility, anticipated levels of market
acceptance and penetration, market growth rates and risks related to the impact
of potential changes in future target markets.

     The acquired existing technology, which was comprised of products that are
already technologically feasible, includes products in the following areas:
fused couplers and attenuators, pump/signal wavelength division multiplexers,
polished products (polarizers, variable ratio couplers), and gain flattening
filters. The Company is amortizing the acquired existing technology of
approximately $27.0 million on a straight-line basis over an average estimated
remaining useful life of 5 years.

                                        83
<PAGE>   85
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The acquired core technology represents SIFAM trade secrets and patents
developed through years of experience designing and manufacturing fused
components for fiberoptic telecommunication networks. This knowledge can be
leveraged by SIFAM to develop new and improved products and manufacturing
processes. The Company is amortizing the acquired core technology of
approximately $6.1 million on a straight-line basis over an average estimated
remaining useful life of 5 years.

     The acquired assembled workforce was comprised of approximately 50 skilled
employees across SIFAM's Sales and Marketing, Management, Supervision, Quality &
Training, General & Administrative, and Engineering groups. The Company is
amortizing the value assigned to the assembled workforce of approximately $0.6
million on a straight-line basis over an estimated remaining useful life of 3
years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of 5 years.

  EPITAXX, INC.

     In November 1999, the Company acquired EPITAXX, Inc. ("EPITAXX"), a
supplier of optical detectors and receivers for fiberoptic telecommunications
and cable televisions networks. The transaction was accounted for as a purchase
and accordingly, the accompanying financial statements include the results of
operations of EPITAXX subsequent to the acquisition date. The Company issued
cash in the amount of $9.3 million and a total of approximately 9.0 million
shares of common stock in exchange for all of the outstanding shares of EPITAXX
common stock. Outstanding options to acquire shares of EPITAXX common stock were
converted into options to purchase shares of the Company's common stock at the
same exchange ratio. The total purchase cost of EPITAXX is as follows (in
millions):

<Table>
<S>                                                           <C>
Value of securities issued..................................  $429.5
Assumption of options.......................................    61.9
                                                              ------
Total equity consideration..................................   491.4
Cash paid to seller.........................................     9.3
Direct transaction costs and expenses.......................     1.0
                                                              ------
       Total purchase cost..................................  $501.7
                                                              ======
</Table>

     The allocation of the purchase price is as follows (in millions):

<Table>
<S>                                                           <C>
Tangible net assets acquired................................  $ 14.2
Intangible assets acquired:
  Developed technology......................................    63.4
  Trademark and tradename...................................     5.4
  Assembled workforce.......................................     2.9
Goodwill....................................................   397.9
In-process research and development.........................    16.7
Deferred tax liabilities....................................     1.2
                                                              ------
       Total purchase price allocation......................  $501.7
                                                              ======
</Table>

     Tangible net assets acquired included cash, accounts receivable,
inventories and fixed assets. Liabilities assumed principally included accounts
payable, accrued compensation, accrued expenses, and Industrial Revenue Bonds.
Goodwill and intangible assets acquired are each being amortized on a
straight-line basis over estimated useful lives ranging from four to seven
years.

                                        84
<PAGE>   86
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by EPITAXX concerning
developmental products, their stage of development, the time and resources
needed to complete them, and, if applicable, their expected income generating
ability, target markets and associated risks. The Income Approach, which
includes an analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in valuing the
developed technology and IPR&D.

     Where development projects had reached technological feasibility, they were
classified as developed technology and the value assigned to developed
technology was capitalized. Where the development projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, the Company considered, among other factors, the
importance of each project to the overall development plan projected incremental
cash flows from the projects when completed and any associated risks. The
projected incremental cash flows were discounted back to their present value
using discount rates ranging from 12 percent to 18 percent. Discount rates were
determined after consideration of EPITAXX's weighted average cost of capital and
the weighted average return on assets. Associated risks include the inherent
difficulties and uncertainties in completing each project and thereby achieving
technological feasibility, anticipated levels of market acceptance and
penetration, market growth rates and risks related to the impact of potential
changes in future target markets.

     The acquired existing technology, which was comprised of products that are
already technologically feasible, includes products in the following areas: high
speed receivers for the telecommunications market, optical network monitoring,
and optical detectors/receivers for access/datacom applications and cable
television fiberoptic networks. The Company is amortizing the acquired existing
technology of approximately $63.4 million on a straight-line basis over an
average estimated remaining useful life of 7 years.

     The trademarks and tradenames include the EPITAXX trademark and tradename.
The Company is amortizing the trademark and tradenames of approximately $5.4
million on a straight-line basis over an estimated remaining useful life of 7
years.

     The acquired assembled workforce was comprised of approximately 400 skilled
employees across EPITAXX's Executive, Research and Development, Manufacturing,
Quality Assurance, Sales and Marketing, and General and Administrative groups.
The Company is amortizing the value assigned to the assembled workforce of
approximately $2.9 million on a straight-line basis over an estimated remaining
useful life of 4 years.

     Goodwill, which represents the excess of the purchase price of an
investment in an acquired business over the fair value of the underlying net
identifiable assets, is being amortized on a straight-line basis over its
estimated remaining useful life of 7 years.

  RAMAR CORPORATION

     In October 1999, the Company acquired Ramar Corporation ("Ramar") of
Northborough, Massachusetts for $1.0 million in cash and convertible debt as
described below, in a transaction accounted for as a purchase and accordingly,
the accompanying financial statements include the results of operations of Ramar
subsequent to the acquisition date. Ramar designs, develops and manufactures
lithium-niobate products for telecommunications applications. The convertible
debt was composed of $3.5 million in demand obligations and two
performance-based instruments totaling $1.0 million that become due upon
achieving certain milestones through October 2001. The convertible debt bears
interest at 5.54 percent per annum and the

                                        85
<PAGE>   87
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

principal can be exchanged for newly issued shares of common stock at a price of
$27.961 per share. The total purchase cost was $4.5 million. The purchase price
allocation included net tangible assets of $0.2 million and intangible assets
(including goodwill) of $4.3 million (net of deferred tax) that are being
amortized over a five year period. During 2001, $1.4 million of debt was
converted into 0.1 million shares of common stock. Convertible debt of $2.1
million is included in other current liabilities.

  ACQUISITION OF AFC TECHNOLOGIES, INC.

     In August 1999, the Company acquired AFC Technologies, Inc. ("AFC") of
Ottawa, Canada for $22.0 million in cash and common stock of $17.5 million in a
transaction accounted for as a purchase and accordingly, the accompanying
financial statements include the results of operations of AFC subsequent to the
acquisition date. AFC designs, develops and manufactures fiber amplifiers for
telecommunications applications. The purchase price allocation included net
tangible assets of $1.3 million and intangible assets (including goodwill) of
$38.2 million that are being amortized over a five-year period.

  JDS FITEL

     Effective June 30, 1999, the Company combined its operations with JDS FITEL
Inc. of Ottawa, Canada in a transaction accounted for as a purchase.
Accordingly, the accompanying financial statements include the results of
operations of JDS FITEL subsequent to the acquisition date. JDS FITEL primarily
manufactures passive products that include components and modules that route and
guide optical signals transmitted through a fiberoptic network. The total
purchase price of $3,496.7 million includes the issuance of common shares or
Exchangeable Shares of JDS Uniphase Canada Ltd. for all of the outstanding JDS
FITEL common shares based on the outstanding JDS FITEL common shares on June 30,
1999, the exchange ratio of 2.0342 of a JDS Uniphase share of common stock or
2.0342 of an Exchangeable Share of JDS Uniphase Canada Ltd. for each JDS FITEL
common share and an average market price per JDS Uniphase common share of
$20.428 per share. The average market price per JDS Uniphase common share is
based on the average closing price for a range of trading days around the
announcement date (January 28, 1999) of the merger. In addition, JDS Uniphase
issued options to purchase 26.4 million JDS Uniphase common shares in exchange
for outstanding JDS FITEL options with the number of shares and the exercise
price appropriately adjusted by the exchange ratio. The value of the options, as
well as direct transaction expenses of $12.0 million, have been included as a
part of the total purchase cost. In addition, the Company granted options to
purchase approximately 27.2 million shares of JDS Uniphase common shares to
certain former JDS FITEL employees subsequent to the effective date of the
merger.

     The total purchase cost of the JDS FITEL merger was as follows (in
millions):

<Table>
<S>                                                           <C>
Value of securities issued..................................  $3,263.1
Assumption of JDS FITEL options.............................     221.6
                                                              --------
  Total consideration.......................................   3,484.7
Direct transaction costs and expenses.......................      12.0
                                                              --------
  Total purchase cost.......................................  $3,496.7
                                                              ========
</Table>

                                        86
<PAGE>   88
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     The purchase price was allocated as follows (in millions):

<Table>
<S>                                                           <C>
Tangible net assets acquired................................  $  244.8
Intangible assets acquired:
  Developed technology......................................     490.5
  Trademark and tradename...................................     348.0
  Assembled workforce.......................................      19.2
Goodwill....................................................   2,501.1
In-process research and development.........................     210.4
Deferred tax liabilities....................................    (317.3)
                                                              --------
       Total purchase price allocation......................  $3,496.7
                                                              ========
</Table>

     Tangible net assets acquired included $47.4 million of cash acquired from
JDS FITEL. Tangible net assets of JDS FITEL also included short-term
investments, accounts receivable, inventories and fixed assets. Liabilities
assumed principally included accounts payable, accrued compensation and accrued
expenses. Goodwill and intangible assets acquired are each being amortized on a
straight-line basis over estimated useful lives of five years.

     A portion of the purchase price has been allocated to developed technology
and IPR&D. Developed technology and IPR&D were identified and valued through
extensive interviews, analysis of data provided by JDS FITEL concerning
developmental products, their stage of development, the time and resources
needed to complete them, and, if applicable, their expected income generating
ability, target markets and associated risks. The Income Approach, which
includes an analysis of the markets, cash flows, and risks associated with
achieving such cash flows, was the primary technique utilized in valuing the
developed technology and IPR&D.

     Where developmental projects had reached technological feasibility, they
were classified as developed technology and the value assigned to developed
technology was capitalized. Where the developmental projects had not reached
technological feasibility and had no future alternative uses, they were
classified as IPR&D and charged to expense upon closing of the merger. The
nature of the efforts required to develop the purchased IPR&D into commercially
viable products principally relate to the completion of all planning, designing,
prototyping, verification and testing activities that are necessary to establish
that the products can be produced to meet their design specifications, including
functions, features and technical performance requirements.

     In valuing the IPR&D, JDS Uniphase considered, among other factors, the
importance of each project to the overall development plan projected incremental
cash flows from the projects when completed and any associated risks. The
projected incremental cash flows were discounted back to their present value
using a discount rate of 27 percent. This discount rate was determined after
consideration of JDS FITEL's weighted average cost of capital and the weighted
average return on assets. Associated risks include the inherent difficulties and
uncertainties in completing each project and thereby achieving technological
feasibility, anticipated levels of market acceptance and penetration, market
growth rates and risks related to the impact of potential changes in future
target markets.

     The IPR&D relates to sophisticated optical components and modules that
manage light transmission through today's most advanced telecommunications
systems. The IPR&D is comprised of four main categories: (i) Thermo Optic
Waveguide Attenuators, (ii) Solid State Switch, (iii) 50 GHz Wavelength Division
Multiplexing ("WDM"), and (iv) Erbium Doped Fiber Amplifiers.

  BROADBAND COMMUNICATION PRODUCTS, INC.

     On November 25, 1998, the Company acquired BCP of Melbourne, Florida in a
tax-free reorganization that was accounted for as a pooling of interests. BCP
manufactures high-speed and high-bandwidth fiber optic

                                        87
<PAGE>   89
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

products including transmitters, receivers and multiplexers used to extend the
reach of fiber optic transmission into metropolitan and local access networks.
The Company exchanged 5.8 million shares of JDS Uniphase common stock and
reserved 3.3 million shares for BCP options assumed by the Company. Merger
related expenses of approximately $6.0 million are included in merger and other
expenses in the Statements of Operations. Separate unaudited net sales and
related net loss amounts of the merged entities are presented in the following
table (in millions).

<Table>
<Caption>
                                                              JUNE 30,
                                                                1999
                                                              --------
<S>                                                           <C>
Net sales:
  JDS Uniphase through September 30, 1998...................  $  54.2
  BCP through September 30, 1998............................      3.2
  JDS Uniphase subsequent to September 30, 1998.............    225.4
                                                              -------
     Net sales as reported..................................  $ 282.8
                                                              =======
Net loss:
  JDS Uniphase through September 30, 1998...................  $   7.6
  BCP through September 30, 1998............................      0.6
  JDS Uniphase subsequent to September 30, 1998.............   (179.2)
                                                              -------
     Net loss as reported...................................  $(171.1)
                                                              =======
</Table>

  CHASSIS ENGINEERING, INC.

     In August 1998, the Company acquired certain assets of Chassis Engineering
Inc. ("Chassis") for $70,000 in cash and convertible debt of $2.73 million.
Chassis designs, develops, markets and manufactures packaging solutions for
fiber optic and other high performance components. The convertible debt was
composed of a $1.93 million demand obligation and two performance-based
instruments totaling $0.8 million that became due upon achieving certain
milestones through February 2000. The convertible debt bore interest at 5.48
percent and principal could be exchanged for newly issued shares of Uniphase
common stock at a price of $6.89 per share. The convertible debt was secured by
a letter of credit issued against the Company's unused revolving bank line of
credit until February 1999, when the holder tendered the $1.93 million
obligation and a performance-based instrument valued at $0.5 million for 359,920
shares of common stock.

  UNAUDITED PRO FORMA INFORMATION

     The following unaudited pro forma summary presents the consolidated results
of operations of the Company, excluding the charge for acquired in-process
research and development, as if the acquisition of SDL (combining SDL with PIRI,
Veritech and Queensgate), E-TEK, OCLI and JDS FITEL had occurred at the
beginning of 1999 and does not purport to be indicative of what would have
occurred had the acquisition been made as of the beginning of 1999 or of results
which may occur in the future. The pro forma 2001, 2000 and 1999 results of
operations combines the consolidated results of operations of the Company,
excluding the charge for acquired in-process research and development
attributable to SDL, E-TEK, OCLI and JDS FITEL, for the years ended June 30,
2001, 2000 and 1999 with the historical results of operations of SDL, E-TEK,
OCLI, and JDS FITEL for the years ended June 30 2001, 2000 and 1999, June 30,
2000 and 1999, April 30, 2000 and 1999, and May 31, 2000, respectively. The pro
forma 2001, 2000 and 1999 results exclude

                                        88
<PAGE>   90
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the effect of other acquisitions, as the impact to the results of operations for
2001, 2000 and 1999 would not be materially different from those shown below (in
millions, except per share data).

<Table>
<Caption>
                                                           YEARS ENDED JUNE 30,
                                                   ------------------------------------
                                                      2001         2000         1999
                                                   ----------   ----------   ----------
<S>                                                <C>          <C>          <C>
Net sales........................................  $  3,583.7   $  2,238.5   $  1,172.2
Net loss.........................................  $(60,764.6)  $(11,954.2)  $(12,364.1)
Loss per share...................................  $   (46.79)  $   (10.24)  $   (11.79)
</Table>

NOTE 11.  OPERATING SEGMENTS AND GEOGRAPHIC INFORMATION

     During 2001, JDS Uniphase changed the structure of its internal
organization following the acquisition of SDL, Inc. ("SDL"), which became
effective February 13, 2001 (see Note 10). Segment information for the prior
years has been restated to conform to the current year's presentation.

     The Chief Executive Officer has been identified as the Chief Operating
Decision Maker as defined by Statement of Financial Accounting Standards
("SFAS") No. 131. The Chief Executive Officer allocates resources to each
segment based on their business prospects, competitive factors, net sales and
operating profits before interest, taxes, and certain purchase accounting
related costs.

     JDS Uniphase designs, develops, manufactures and markets optical components
and modules at various levels of integration. The reportable segments are each
managed separately because they manufacture and distribute distinct products
with different production processes. The Company views its business as having
two principal operating segments: (i) Amplification and Transmission Group, and
(ii) WDM, Switching and Thin Film Filters Group. The Amplification and
Transmission Group consists primarily of source lasers, pump lasers, pump
modules, external modulators, transmitters, transceivers, optical photodetectors
and receivers, and optical amplifier products used in telecommunications and
cable television ("CATV") applications. The WDM, Switching and Thin Film Filters
Group includes wavelength division multiplexers ("WDM"), isolators, WDM
couplers, monitor tap couplers, gratings, circulators, optical switches, tunable
filters, thin film filters, micro-electro-mechanical-systems, instruments,
waveguides, switches, industrial lasers, and optical display and projection
products. The Company's other operating segments, which are below the
quantitative threshold defined by SFAS 131, are disclosed in the "all other"
category and consist of internal manufacturing automation products and certain
unallocated corporate-level operating expenses. All of the Company's products
are sold directly to original equipment manufacturers and industrial
distributors throughout the world.

     Where practicable, the Company allocates corporate sales, marketing,
finance and administration expenses to operating segments, primarily as a
percentage of net sales. Certain corporate-level operating expenses (primarily
charges originating from purchased intangibles, activity related to equity
method investments, gain on sale of subsidiary, loss on sale of available for
sale investments, other expenses and acquired-in process research and
development expenses) are not allocated to operating segments. In addition, the
Company does not allocate income taxes, non-operating income and expenses or
specifically identifiable assets to its operating segments.

                                        89
<PAGE>   91
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Intersegment sales are recorded at either cost or cost plus an agreed upon
intercompany profit on intersegment sales. Information on reportable segments is
as follows (in millions):

<Table>
<Caption>
                                                                   YEARS ENDED JUNE 30,
                                                              -------------------------------
                                                                 2001        2000      1999
                                                              ----------   --------   -------
<S>                                                           <C>          <C>        <C>
Amplification and Transmission:
  Shipments.................................................  $  1,219.8   $  628.9   $ 224.7
  Intersegment sales........................................       (27.2)      (4.8)       --
                                                              ----------   --------   -------
  Net sales to external customers...........................  $  1,192.6   $  624.1   $ 224.7
  Operating income..........................................  $     82.7   $  162.2   $  72.6
  WDM, Switching and Thin Film Filters:
  Shipments.................................................  $  2,147.6   $  880.0   $  58.1
  Intersegment sales........................................      (100.2)     (73.7)       --
                                                              ----------   --------   -------
  Net sales to external customers...........................  $  2,047.4   $  806.3   $  58.1
  Operating income..........................................  $    198.0   $  298.0   $  (0.6)
  Net sales by reportable segments..........................  $  3,240.0   $1,430.3   $ 282.8
  All other.................................................        (7.2)       0.1        --
                                                              ----------   --------   -------
  Net external sales........................................  $  3,232.8   $1,430.4   $ 282.8
                                                              ==========   ========   =======
  Operating income by reportable segments...................  $    280.7   $  460.2   $  72.0
  All other operating income................................      (303.5)      (0.5)     (0.6)
  Unallocated amounts:
  Reduction of goodwill and other long-lived assets,
     acquisition related charges and payroll taxes on stock
     option exercises.......................................   (56,324.6)  (1,324.8)   (224.6)
  Gain on sale of subsidiary................................     1,770.2         --        --
  Loss on sale of available for sale investments............      (559.1)        --        --
  Reduction in fair value of available-for-sale
     securities.............................................      (522.1)        --        --
  Activity related to equity method investments.............      (883.9)        --        --
  Interest and other income, net............................        48.5       35.3       3.6
                                                              ----------   --------   -------
  Loss before income taxes..................................  $(56,493.8)  $ (829.8)  $(149.6)
                                                              ==========   ========   =======
</Table>

                                        90
<PAGE>   92
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     JDS Uniphase operates primarily in two geographic regions: North America
and Europe. The following table shows sales and other identifiable assets by
geographic region (in millions):

<Table>
<Caption>
                                                                    YEARS ENDED JUNE 30,
                                                              --------------------------------
                                                                2001        2000        1999
                                                              ---------   ---------   --------
<S>                                                           <C>         <C>         <C>
NET SALES:
  North America.............................................  $ 2,189.4   $ 1,103.7   $  168.5
  Europe....................................................      840.6       256.8      103.8
  Rest of World.............................................      202.8        69.9       10.5
                                                              ---------   ---------   --------
       Total net sales......................................  $ 3,232.8   $ 1,430.4   $  282.8
Identifiable assets:
  North America.............................................  $17,287.8   $26,141.3   $3,994.5
  Europe....................................................      169.3       194.7       97.1
  Rest of World.............................................      115.1        53.1        4.5
                                                              ---------   ---------   --------
       Total assets.........................................  $17,572.2   $26,389.1   $4,096.1
                                                              =========   =========   ========
</Table>

     Identifiable assets are those assets of the Company that are identified
with the operations of the corresponding geographic area. Identified intangible
assets and goodwill of $12.3 billion are included in North America assets.

     During 2001, three customers, Nortel, Alcatel, and Lucent Technologies,
Inc., accounted for 14 percent, 12 percent and 10 percent of net sales,
respectively. During 2000, Lucent Technologies, Inc. and Nortel, accounted for
21 percent and 15 percent of net sales, respectively. During 1999, none of the
Company's customers exceeded 10 percent of net sales.

NOTE 12.  SPECIAL CHARGES

<Table>
<Caption>
                                                                                         PROVISION
                                                  YEAR ENDED                           BALANCE AS OF
                                                   JUNE 30,      CASH      NON-CASH      JUNE 30,
                                                     2001      PAYMENTS    CHARGES         2001
                                                  ----------   --------   ----------   -------------
<S>                                               <C>          <C>        <C>          <C>
Restructuring activities:
  Worldwide workforce reduction.................  $    79.1     $(24.9)   $    (11.1)     $ 43.1
  Facilities and equipment......................      122.2         --        (122.2)         --
  Lease commitments.............................       63.0       (0.9)           --        62.1
                                                  ---------     ------    ----------      ------
Restructuring charges...........................      264.3      (25.8)       (133.3)      105.2
Reduction of goodwill and other long-lived
  assets........................................   50,085.0         --     (50,085.0)         --
                                                  ---------     ------    ----------      ------
Special charges.................................  $50,349.3     $(25.8)   $(50,218.3)     $105.2
                                                  =========     ======    ==========      ======
</Table>

     Since the beginning of calendar 2001, the Company and its industry have
experienced a dramatic downturn, the primary direct cause of which has been a
precipitous decrease in network deployment and capital spending by
telecommunications carriers. This decrease can be attributable to, among other
things: (a) network overcapacity, as bandwidth demand, while continuing to grow,
did not reach levels sufficient to sustain the pace of network deployment; (b)
constrained capital markets; and (c) other factors, including the general
inability of the CLECs to obtain sufficient access to established
telecommunications infrastructures and consolidation among the
telecommunications carriers. The result was a decrease in the overall demand for
new fiber optic networks and capacity increases on existing networks. In
response, carriers dramatically slowed their purchases of systems from the
Company's customers, which in turned slowed purchases of components and modules
from the Company's competitors and the Company. Moreover, as their sales
declined, the Company's customers moved to reduce their component and module
inventory levels. Consequently, the

                                        91
<PAGE>   93
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

impact of the slowdown on the Company's business is magnified, as it faces
declining sales as the result of its customers' declining business and the
resulting adjustment to their inventory levels.

     In April 2001, the Company initiated the Global Realignment Program (the
"Program"), under which it is restructuring its business in response to the
changes in its industry and customer demand and as part of its continuing
overall integration program. Consequently, this resulted in the Company
recording $264.3 million related to restructuring activities in the fourth
quarter of 2001. In addition, the Company recorded a reduction in goodwill and
other long-lived assets of approximately $50,085.0 million.

     The Company also expects to incur further material restructuring costs in
the future as it continues to implement the Global Realignment Program. Such
charges will be recognized at the time the specific plans have been determined
in sufficient detail and have been approved by management.

     The following paragraphs provide further details regarding the nature of
the special charges.

  RESTRUCTURING ACTIVITIES

     As of June 30, 2001, the Company had completed and approved plans to close
nine operations located in North America, Europe and Asia, vacate approximately
25 buildings or 1.2 million square feet of manufacturing and office space at
operations to be closed, as well as at continuing operations, and reduce its
workforce by approximately 9,000 employees.

  WORLDWIDE WORKFORCE REDUCTION

     As of June 30, 2001, the Company had recorded a charge of approximately
$79.1 million primarily related to severance and fringe benefits associated with
the reduction of 9,000 employees. Of the 9,000 terminations for which costs have
been accrued prior to June 30, 2001, approximately 8,200 were engaged in
manufacturing activities and approximately 7,100, 1,200, and 700 were from sites
located in North America, Europe and Asia, respectively. As of June 30, 2001,
approximately 6,100 employees had been terminated. The workforce reductions
began in the fourth quarter of 2001 and the Company expects them to be completed
by the second quarter of 2002. In addition, the Company incurred non-cash
severance charges of $11.1 million related to the modification of a former
executive's stock options (see Note 9).

     Prior to the date of the financial statements, management with the
appropriate level of authority, approved and committed the Company to a plan of
termination which included the benefits terminated employees would receive.
Prior to June 30, 2001, the expected termination benefits were communicated to
employees in detail sufficient to enable them to determine the nature and
amounts of their individual severance benefits.

     The remaining cash expenditures relating to workforce reduction and
termination agreements will be paid throughout the first and second quarters of
2002.

  CONSOLIDATION OF EXCESS FACILITIES AND EQUIPMENT

     The consolidation of excess facilities includes the closure of certain
manufacturing, research and development facilities, and administrative and sales
offices throughout North America, Europe and Asia for business activities that
have been restructured as part of the Program. The operations being closed as of
June 30, 2001 are in Asheville, North Carolina; Bracknell, United Kingdom;
Freehold, New Jersey; Hillend, United Kingdom; Oxford, United Kingdom;
Richardson, Texas; Rochester, New York; Shunde, China and Taipei, Taiwan.

     Property and equipment that was disposed or removed from operations
resulted in a charge of $122.2 million of which $22.3 million, $96.4 million and
$3.5 million, respectively, related to the Amplification and Transmission Group,
WDM, Switching and Thin Film Filters Group, and other operating segments. The
property and equipment write-down consisted primarily of leasehold improvements,
computer equipment and

                                        92
<PAGE>   94
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

related software, production and engineering equipment, and office equipment,
furniture, and fixtures. In addition, the Company incurred a charge of $63.0
million for exiting and terminating leases primarily related to excess or closed
facilities with planned exit dates. The Company estimated the cost of exiting
and terminating the facility leases based on the contractual terms of the
agreements and then current real estate market conditions. The Company
determined that it would take approximately six to twenty-four months to
sublease the various properties that will be vacated in connection with the
Program.

     Amounts related to the lease expense (net of anticipated sublease proceeds)
related to the consolidation of facilities will be paid over the respective
lease terms through 2015. The Company anticipates completing implementation of
its restructuring program during the next twelve months.

     In addition, because the Company restructured certain of its businesses and
realigned its operations to focus on profit contribution, high-growth markets,
and core opportunities, it abandoned certain redundant products and product
platforms and reduced the workforce that had been valued in previous
acquisitions. In accordance with SFAS 121, the Company wrote the related
intangible assets down to their fair value, which was deemed to be zero, and
recorded a charge of $0.3 billion related to the reduction in purchased
intangibles and $3.1 billion related to the goodwill. The charge is included in
the "Reduction of goodwill and other long-lived assets" caption in the
Statements of Operations.

  IMPAIRMENT OF GOODWILL AND OTHER LONG-LIVED ASSETS

     The Company, as part of its review of financial results for 2001, also
performed an assessment of the carrying value of the Company's long-lived assets
to be held and used including significant amounts of goodwill and other
intangible assets recorded in connection with its various acquisitions. The
assessment was performed pursuant to SFAS 121 because of the significant
negative industry and economic trends affecting both the Company's current
operations and expected future sales as well as the general decline of
technology valuations. The conclusion of that assessment was that the decline in
market conditions within the Company's industry was significant and other than
temporary. As a result, the Company recorded charges of $39.8 billion and $6.9
billion to reduce goodwill and other long-lived assets during the third and
fourth quarters of 2001, respectively, based on the amount by which the carrying
amount of these assets exceeded their fair value. Of the total write down, $46.6
billion is related to the goodwill primarily associated with the acquisitions of
E-TEK, SDL, and OCLI with the balance of $0.1 billion relating to other
long-lived assets. The charge is included in the caption "Reduction of goodwill
and other long-lived assets" on the Statements of Operations. Fair value was
determined based on discounted future cash flows for the operating entities that
had separately identifiable cash flows. The cash flow periods used were five
years using annual growth rates of 15 percent to 60 percent, the discount rate
used was 13.0 percent in the third quarter of 2001 and 14.5 percent in the
fourth quarter of 2001, and the terminal values were estimated based upon
terminal growth rates of 7 percent. The assumptions supporting the estimated
future cash flows, including the discount rate and estimated terminal values,
reflect management's best estimates. The discount rate was based upon the
Company's weighted average cost of capital as adjusted for the risks associated
with its operations.

     The Company believes it is likely there will be additional reductions in
goodwill in the quarter ending September 29, 2001 because of the decline in its
market capitalization since June 30, 2001, although such reductions in goodwill
may be based on an assessment of its long-lived assets pursuant to SFAS 121.

NOTE 13.  SALE OF SUBSIDIARY

     On February 13, 2001, the Company completed the sale of its Zurich,
Switzerland subsidiary to Nortel for 65.7 million shares of Nortel common stock
valued at $1,953.3 million, as well as up to an additional $500.0 million in
Nortel common stock payable to the extent Nortel purchases do not meet certain
levels under new and existing programs through December 31, 2003. After
adjusting for the net cost of the assets sold and for the expenses associated
with the divestiture, the Company realized a gain of $1,770.2 million. The

                                        93
<PAGE>   95
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

shares of Nortel common stock are being accounted for as available-for-sale
securities. The Company sold approximately 41.0 million shares resulting in a
realized loss of $559.1 million during 2001. (See Note 2).

NOTE 14.  LITIGATION SETTLEMENT

     On August 29, 2001, the Company settled certain claims relating primarily
to SDL's business operations for periods prior to February 13, 2001, the
effective date of the Company's merger with SDL. Under the settlement, the
Company paid the claimant $16.0 million in cash and issued 325,000 shares of
common stock valued at approximately $2.3 million which the Company has agreed
to register for resale. The Company may make an additional payment to the
claimant in cash or stock of up to $4.5 million one year after the initial
payment, depending on the value of the initial stock payment to the claimant at
the end of that year. In connection with this settlement the Company has
recorded a charge of approximately $22.8 million to "Selling, general and
administrative" expense in the Statement of Operations.

NOTE 15.  UNAUDITED QUARTERLY RESULTS

     The following table contains selected unaudited consolidated statement of
operations data for each quarter of years 2001 and 2000 (in millions).

<Table>
<Caption>
                                  SEPT. 30,   DEC. 31,   MAR. 31,   JUNE 30,   SEPT. 30,   DEC. 31,    MAR. 31,     JUNE 30,
                                    1999        1999       2000       2000       2000        2000        2001         2001
                                  ---------   --------   --------   --------   ---------   --------   ----------   ----------
<S>                               <C>         <C>        <C>        <C>        <C>         <C>        <C>          <C>
Net sales.......................   $ 230.1    $ 281.7    $ 394.6    $ 524.0    $   786.5   $  925.1   $    920.1   $    601.1
Cost of sales...................     125.2      139.2      202.1      285.2        436.7      449.8        494.2        926.0
                                   -------    -------    -------    -------    ---------   --------   ----------   ----------
  Gross profit..................     104.9      142.5      192.5      238.8        349.8      475.3        425.9       (324.9)
Operating expenses:
  Research and development......      17.2       21.6       33.3       41.2         62.4       71.2         98.0         94.3
  Selling, general, and
    administrative..............      27.9       33.8       49.1       62.1        116.2      105.7        440.8        155.4
  Amortization of purchased
    intangibles.................     172.9      185.1      249.6      289.3      1,107.4    1,104.1      2,120.2      1,055.3
  Reduction of goodwill and
    other long-lived assets.....        --         --         --         --           --         --     39,777.2     10,307.8
  Restructuring charges.........        --         --         --         --           --         --           --        264.3
  Acquired in-process research
    and development.............        --       19.7       84.1      256.9          8.9         --        383.7          0.6
                                   -------    -------    -------    -------    ---------   --------   ----------   ----------
Total operating expenses........     218.0      260.2      416.1      649.5      1,294.9    1,281.0     42,819.9     11,877.7
Loss from operations............    (113.1)    (117.7)    (223.6)    (410.7)      (945.1)    (805.7)   (42,394.0)   (12,202.6)
Gain on sale of subsidiary......        --         --         --         --           --         --      1,770.2           --
Activity related to equity
  method investments............        --         --         --         --        (41.2)     (52.3)      (759.9)       (30.5)
Interest and other income,
  net...........................       5.5       10.7       10.0        9.1         13.6       12.2          4.6     (1,063.1)
                                   -------    -------    -------    -------    ---------   --------   ----------   ----------
Loss before income taxes........    (107.6)    (107.0)    (213.6)    (401.6)      (972.7)    (845.8)   (41,379.1)   (13,296.2)
Income tax expense (benefit)....       6.3       24.2       27.3       17.2         43.9       49.6        468.8       (934.2)
                                   -------    -------    -------    -------    ---------   --------   ----------   ----------
Net loss........................   $(113.9)   $(131.2)   $(240.9)   $(418.8)   $(1,016.6)  $ (895.4)  $(41,847.9)  $(12,362.0)
                                   =======    =======    =======    =======    =========   ========   ==========   ==========
Loss per share(1):
  Basic and diluted.............   $ (0.17)   $ (0.19)   $ (0.32)   $ (0.54)   $   (1.07)  $  (0.93)  $   (36.63)  $    (9.39)
</Table>

---------------

(1) Earnings per share are computed independently for each of the quarters
    presented. Therefore, the sum of the quarterly per common share information
    may not equal the annual loss per common share.

                                        94
<PAGE>   96

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     Not applicable.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

     The information required by this Item is included in the Proposal One:
Elections of Directors, Directors and Executive Officers, and Section 16(a)
Beneficial Ownership Reporting Compliance sections of the Company's Proxy
Statement to be filed in connection with the Company's 2001 Annual Meeting of
Stockholders and is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this Item is included in the Executive
Compensation and Related Information sections of the Company's Proxy Statement
to be filed in connection with the Company's 2001 Annual Meeting of Stockholders
and is incorporated herein by reference.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this Item is included in the Security Ownership
of Certain Beneficial Owners and Management section of the Company's Proxy
Statement to be filed in connection with the Company's 2001 Annual Meeting of
Stockholders and is incorporated herein by reference.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this Item is included in the Compensation
Committee Interlocks and Insider Participation and Certain Transactions sections
of the Company's Proxy Statement to be filed in connection with the Company's
2001 Annual Meeting of Stockholders and is incorporated herein by reference.

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)(1) Financial Statements

     The following Consolidated Financial Statements of the Company are included
in Item 8.

     Consolidated Statements of Operations -- Years ended June 30, 2001, 2000
and 1999

     Consolidated Balance Sheets -- June 30, 2001 and 2000

     Consolidated Statements of Stockholders' Equity -- Years ended June 30,
2001, 2000 and 1999

     Consolidated Statements of Cash Flows -- Years ended June 30, 2001, 2000
and 1999

     Notes to Consolidated Financial Statements

     (a)(2) Financial Statement Schedules

     The following financial statement schedule is filed as part of this annual
report. All other financial statement schedules have been omitted because they
are not applicable or are not required or the information required to be set
forth therein is included in the Company's consolidated financial statements set
forth in this Annual Report on Form 10-K and the notes thereto.

                                        95
<PAGE>   97

                            JDS UNIPHASE CORPORATION

                SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<Table>
<Caption>
                                       BALANCE AT    CHARGED TO   CHARGED TO                   BALANCE AT
                                      BEGINNING OF   COSTS AND       OTHER                       END OF
DESCRIPTION                              PERIOD       EXPENSES    ACCOUNTS(2)   DEDUCTION(1)     PERIOD
-----------                           ------------   ----------   -----------   ------------   ----------
                                                                 (IN MILLIONS)
<S>                                   <C>            <C>          <C>           <C>            <C>
Year ended June 30, 2001:
  Allowance for doubtful accounts...      $8.2         $26.4         $6.0           $0.3         $40.3
Year ended June 30, 2000:
  Allowance for doubtful accounts...      $1.1         $ 0.8         $6.3           $ --         $ 8.2
Year ended June 30, 1999:
  Allowance for doubtful accounts...      $0.8         $ 0.3         $0.5           $0.5         $ 1.1
</Table>

---------------

(1) Charges for uncollectible accounts, net of recoveries.

(2) Allowance assumed through the merger with SDL in 2001, OCLI, E-TEK, and
    Epitaxx in 2000, and the acquisition of JDS FITEL in 1999.

     (a)(3) Exhibits

EXHIBIT INDEX

<Table>
<Caption>
     EXHIBIT
     NUMBER                            EXHIBIT DESCRIPTION
     -------                           -------------------
    <C>       <C>  <S>
     3.1(1)     -- Restated Certificate of Incorporation.
     3.2(2)     -- Certificate of Designation.
     3.3(3)     -- Certificate of Designation.
     3.4(4)     -- Certificate of Designation.
     3.5        -- Bylaws of the Company, as amended.
     4.1(5)     -- Fourth Amended and Restated Rights Agreement.
     4.2(6)     -- Exchangeable Share Provisions attaching to the exchangeable
                   shares of JDS Uniphase Canada Ltd. (formerly 3506967 Canada
                   Inc.).
     4.3(7)     -- Voting and Exchange Trust Agreement dated as of July 6, 1999
                   between the Company, JDS Uniphase Canada Ltd. and CIBC
                   Mellon Trust Company.
     4.4(7)     -- Exchangeable Share Support Agreement dated as of July 6,
                   1999 between the Company, JDS Uniphase Canada Ltd. and JDS
                   Uniphase Nova Scotia Company.
     4.5        -- Fourth Amended and Restated JDS Uniphase Canada Ltd. Rights
                   Agreement.
     4.6(7)     -- Registration Rights Agreement dated as of July 6, 1999
                   between the Company, JDS Uniphase Canada Ltd. and The
                   Furukawa Electric Co., Ltd.
    10.1(8)     -- Amended and Restated 1993 Flexible Stock Incentive Plan.
    10.2(9)     -- Stockholder Agreement dated as of June 9, 1998, by and
                   between Uniphase Corporation, and Koninklijke Philips
                   Electronics N.V.
    10.3(9)     -- Series A Preferred Conversion and Redemption Agreement dated
                   as of June 9, 1998, by and between Uniphase Corporation and
                   Koninklijke Philips Electronics N.V.
    10.4(10)    -- 1998 Employee Stock Purchase Plan, as amended.
    10.5(7)     -- Support Agreement dated as of April 29, 1999, by and among
                   Uniphase Corporation, 3506967 Canada Inc., The Furukawa
                   Electric Company, Ltd., and JDS FITEL Inc.
    10.9(11)    -- Employment Agreement for Anthony R. Muller.
    10.11(12)   -- Retention and Change of Control Agreement for Jozef Straus,
                   Ph.D.
    10.12       -- Employment Agreement for Mike Phillips
    10.13       -- Employment Agreement for Don Scifires
</Table>

                                        96
<PAGE>   98

<Table>
<Caption>
     EXHIBIT
     NUMBER                            EXHIBIT DESCRIPTION
     -------                           -------------------
    <C>       <C>  <S>
    10.14       -- Change of Control Agreement for Don Scifires
    10.15(13)   -- Amended and restated 1999 Canadian Employee Stock Purchase
                   Plan
    10.16       -- Transition Agreement for Don Scifires
    10.17       -- Employment Agreement for Greg Dougherty
    10.18       -- Change of Control Agreement for Greg Dougherty
    10.19       -- Transition Agreement for Greg Dougherty
    21.1        -- Subsidiaries of the Company.
    23.1        -- Consent of Ernst &Young LLP, Independent auditors.
    24.1        -- Powers of Attorney (see page 99).
</Table>

---------------

 (1) Incorporated by reference to exhibit 3.1 to the Company's Annual Report on
     Form 10-K/A filed February 13, 2001.

 (2) Incorporated by reference to exhibit 3.(i)(d) to the Company's Annual
     Report of Form 10-K filed September 28, 1998.

 (3) Incorporated by reference to exhibit 4.1 to the Company's Registration
     Statement on Form S-3 filed July 14, 1999.

 (4) Incorporated by reference to exhibit 10.3 to the Company's current Report
     on Form 8-K filed June 24, 1998.

 (5) Incorporated by reference to the Company's Registration Statement on Form
     8-A 12G/A filed on February 13, 2001.

 (6) Incorporated by reference to the Company's Definitive Proxy Statement on
     Schedule 14A filed on June 2, 1999.

 (7) Incorporated by reference to exhibits 4.2, 4.3, 4.5 and 10.23,
     respectively, to the Company's Annual Report on Form 10-K for the period
     ending June 30, 1999.

 (8) Incorporated by reference to exhibits filed with the Company's registration
     statement on form S-8, file number 33-31722 filed with the Securities and
     Exchange Commission on February 27, 1996.

 (9) Incorporated by reference to the exhibit to the Company's Current Report on
     Form 8-K filed June 24, 1998.

(10) Incorporated by reference to exhibit 10.4 to the Company's Annual Report on
     Form 10-K/A filed on February 13, 2001.

(11) Incorporated by reference to exhibit 10.1 to the Company's quarterly report
     on Form 10-Q for the period ended September 30, 1999.

(12) Incorporated by reference to exhibit 10.11 to the Company's Annual Report
     on Form 10-K filed on September 28, 2000.

(13) Incorporated by reference to exhibit 10.14 to the Company's Annual Report
     on Form 10-K/A filed on February 13, 2001.

                                        97
<PAGE>   99

     (b) Reports on Form 8-K

<Table>
<Caption>
          DATE OF REPORT                                ITEM REPORTED ON
          --------------                                ----------------
<S>                                  <C>
September 4, 2001                    Regulation FD disclosure in connection with a
                                     stockholder update delivered by the officers of the
                                     Company on September 4, 2001 that included written
                                     communication comprised of slides.
July 26, 2001                        Regulation FD disclosure in connection with a
                                     conference call delivered by the officers of the
                                     Company on July 26, 2001.
July 24, 2001                        Regulation FD disclosure in connection with a
                                     stockholder update delivered by the officers of the
                                     Company on July 24, 2001 that included written
                                     communication comprised of slides
June 14, 2001                        Regulation FD disclosure in connection with revised
                                     guidance for future periods.
June 6, 2001                         The plan of certain Board of Directors and Executive
                                     Officers under Rule 10b5-1 of the Securities Exchange
                                     Act of 1934, as amended, for trading in shares of
                                     Registrant's common stock.
May 2, 2001                          Regulation FD disclosure in connection with a
                                     stockholder update delivered by the officers of the
                                     Company on May 2, 2001 that included written
                                     communication comprised of slides.
April 24, 2001                       Regulation FD disclosure in connection with a
                                     conference call delivered by the officers of the
                                     Company on April 24, 2001.
</Table>

     (c) Exhibit Index

     See Exhibit index.

     (d) Financial Statement Schedule

     See Financial statement schedule set forth in (a)(2) above

                                        98
<PAGE>   100

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: September 17, 2001                  JDS UNIPHASE CORPORATION

                                          By:       /s/ JOZEF STRAUS
                                            ------------------------------------
                                                    Jozef Straus, Ph.D.
                                                Co-Chairman, Chief Executive
                                                    Officer, and President

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Anthony R. Muller his or her
attorneys-in-fact, each with the power of substitution, for him or her in any
and all capacities, to sign any amendments to this Report on Form 10-K, and to
file the same with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his substitute or substitutes, may do or
cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.

<Table>
<Caption>
                   SIGNATURE                                   TITLE                       DATE
                   ---------                                   -----                       ----
<C>                                                <C>                              <S>
                /s/ JOZEF STRAUS                    Co-Chairman, Chief Executive    September 17, 2001
------------------------------------------------       Officer, and President
              Jozef Straus, Ph.D.                  (Principal Executive Officer)




             /s/ DONALD R. SCIFRES                 Co-Chairman and Chief Strategy   September 17, 2001
------------------------------------------------              Officer
            Donald R. Scifres, Ph.D.




             /s/ ANTHONY R. MULLER                   Executive Vice President,      September 17, 2001
------------------------------------------------    Chief Financial Officer and
               Anthony R. Muller                             Secretary
                                                      (Principal Financial and
                                                        Accounting Officer)




              /s/ MARTIN A. KAPLAN                            Chairman              September 17, 2001
------------------------------------------------
                Martin A. Kaplan




                /s/ BRUCE D. DAY                              Director              September 17, 2001
------------------------------------------------
                  Bruce D. Day




               /s/ ROBERT E. ENOS                             Director              September 17, 2001
------------------------------------------------
                 Robert E. Enos




            /s/ JOHN A. MACNAUGHTON                           Director              September 17, 2001
------------------------------------------------
              John A. MacNaughton




           /s/ CASIMIR S. SKRZYPCZAK                          Director              September 17, 2001
------------------------------------------------
             Casimir S. Skrzypczak
</Table>

                                        99
<PAGE>   101

<Table>
<Caption>
                   SIGNATURE                                   TITLE                       DATE
                   ---------                                   -----                       ----
<C>                                                <C>                              <S>




             /s/ PETER A. GUGLIELMI                           Director              September 17, 2001
------------------------------------------------
               Peter A. Guglielmi




             /s/ DONALD J. LISTWIN                            Director              September 17, 2001
------------------------------------------------
               Donald J. Listwin
</Table>

                                       100
<PAGE>   102

                                 EXHIBIT INDEX

<Table>
<Caption>
 EXHIBIT
 NUMBER                            EXHIBIT DESCRIPTION
 -------                           -------------------
<C>       <C>  <S>
 3.1(1)     -- Restated Certificate of Incorporation.
 3.2(2)     -- Certificate of Designation.
 3.3(3)     -- Certificate of Designation.
 3.4(4)     -- Certificate of Designation.
 3.5        -- Bylaws of the Company, as amended.
 4.1(5)     -- Fourth Amended and Restated Rights Agreement.
 4.2(6)     -- Exchangeable Share Provisions attaching to the exchangeable
               shares of JDS Uniphase Canada Ltd. (formerly 3506967 Canada
               Inc.).
 4.3(7)     -- Voting and Exchange Trust Agreement dated as of July 6, 1999
               between the Company, JDS Uniphase Canada Ltd. and CIBC
               Mellon Trust Company.
 4.4(7)     -- Exchangeable Share Support Agreement dated as of July 6,
               1999 between the Company, JDS Uniphase Canada Ltd. and JDS
               Uniphase Nova Scotia Company.
 4.5        -- Fourth Amended and Restated JDS Uniphase Canada Ltd. Rights
               Agreement.
 4.6(7)     -- Registration Rights Agreement dated as of July 6, 1999
               between the Company, JDS Uniphase Canada Ltd. and The
               Furukawa Electric Co., Ltd.
10.1(8)     -- Amended and Restated 1993 Flexible Stock Incentive Plan.
10.2(9)     -- Stockholder Agreement dated as of June 9, 1998, by and
               between Uniphase Corporation, and Koninklijke Philips
               Electronics N.V.
10.3(9)     -- Series A Preferred Conversion and Redemption Agreement dated
               as of June 9, 1998, by and between Uniphase Corporation and
               Koninklijke Philips Electronics N.V.
10.4(10)    -- 1998 Employee Stock Purchase Plan, as amended.
10.5(7)     -- Support Agreement dated as of April 29, 1999, by and among
               Uniphase Corporation, 3506967 Canada Inc., The Furukawa
               Electric Company, Ltd., and JDS FITEL Inc.
10.9(11)    -- Employment Agreement for Anthony R. Muller.
10.11(12)   -- Retention and Change of Control Agreement for Jozef Straus,
               Ph.D.
10.12       -- Employment Agreement for Mike Phillips
10.13       -- Employment Agreement for Don Scifires
10.14       -- Change of Control Agreement for Don Scifires
10.15(13)   -- Amended and restated 1999 Canadian Employee Stock Purchase
               Plan
10.16       -- Transition Agreement for Don Scifires
10.17       -- Employment Agreement for Greg Dougherty
10.18       -- Change of Control Agreement for Greg Dougherty
10.19       -- Transition Agreement for Greg Dougherty
21.1        -- Subsidiaries of the Company.
23.1        -- Consent of Ernst &Young LLP, Independent auditors.
24.1        -- Powers of Attorney (see page 99).
</Table>

---------------

 (1) Incorporated by reference to exhibit 3.1 to the Company's Annual Report on
     Form 10-K/A filed February 13, 2001.

 (2) Incorporated by reference to exhibit 3.(i)(d) to the Company's Annual
     Report of Form 10-K filed September 28, 1998.

 (3) Incorporated by reference to exhibit 4.1 to the Company's Registration
     Statement on Form S-3 filed July 14, 1999.
<PAGE>   103

 (4) Incorporated by reference to exhibit 10.3 to the Company's current Report
     on Form 8-K filed June 24, 1998.

 (5) Incorporated by reference to the Company's Registration Statement on Form
     8-A 12G/A filed on February 13, 2001.

 (6) Incorporated by reference to the Company's Definitive Proxy Statement on
     Schedule 14A filed on June 2, 1999.

 (7) Incorporated by reference to exhibits 4.2, 4.3, 4.5 and 10.23,
     respectively, to the Company's Annual Report on Form 10-K for the period
     ending June 30, 1999.

 (8) Incorporated by reference to exhibits filed with the Company's registration
     statement on form S-8, file number 33-31722 filed with the Securities and
     Exchange Commission on February 27, 1996.

 (9) Incorporated by reference to the exhibit to the Company's Current Report on
     Form 8-K filed June 24, 1998.

(10) Incorporated by reference to exhibit 10.4 to the Company's Annual Report on
     Form 10-K/A filed on February 13, 2001.

(11) Incorporated by reference to exhibit 10.1 to the Company's quarterly report
     on Form 10-Q for the period ended September 30, 1999.

(12) Incorporated by reference to exhibit 10.11 to the Company's Annual Report
     on Form 10-K filed on September 28, 2000.

(13) Incorporated by reference to exhibit 10.14 to the Company's Annual Report
     on Form 10-K/A filed on February 13, 2001.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3.5
<SEQUENCE>3
<FILENAME>f75587ex3-5.txt
<DESCRIPTION>EXHIBIT 3.5
<TEXT>
<PAGE>   1
                                                                     EXHIBIT 3.5

                                 RESTATED BYLAWS
                                       OF
                            JDS UNIPHASE CORPORATION
                         (FORMERLY UNIPHASE CORPORATION)
                             A DELAWARE CORPORATION
                              AS OF AUGUST 22, 2001


                                    ARTICLE I

                                     OFFICES

Section 1.   Registered Office.

      The registered office of the corporation in the State of Delaware shall be
in the City of Dover, County of Kent.

Section 2.   Other Offices.

      The corporation shall also have and maintain an office or principal place
of business at 163 Baypointe Parkway, San Jose, California 95134, and may also
have offices at such other places, both within and without the State of Delaware
as the Board of Directors may from time to time determine or the business of the
corporation may require.


                                   ARTICLE II

                             Stockholders' Meetings

Section 1.   Place of Meetings.

      (a)   Meetings of stockholders may be held at such place, either within or
without this State, as may be designated by or in the manner provided in these
Bylaws or, if not so designated, as determined by the Board of Directors. The
Board of Directors may, in its sole discretion, determine that the meeting shall
not be held at any place, but may instead be held solely by means of remote
communication as authorized by paragraph (b) of this Section 1.

      (b)   If authorized by the Board of Directors in its sole discretion, and
subject to such guidelines and procedures as the Board of Directors may adopt,
stockholders and proxyholders not physically present at a meeting of
stockholders may, by means of remote communication:

            (1)   Participate in a meeting of stockholders; and

            (2)   Be deemed present in person and vote at a meeting of
stockholders whether such meeting is to be held at a designated place or solely
by means of remote


                                       1
<PAGE>   2

communication, provided that (A) the corporation shall implement reasonable
measures to verify that each person deemed present and permitted to vote at the
meeting by means of remote communication is a stockholder or proxyholder, (B)
the corporation shall implement reasonable measures to provide such stockholders
and proxyholders a reasonable opportunity to participate in the meeting and to
vote on matters submitted to the stockholders, including an opportunity to read
or hear the proceedings of the meeting substantially concurrently with such
proceedings, and (C) if any stockholder or proxyholder votes or takes other
action at the meeting by means of remote communication, a record of such vote or
other action shall be maintained by the corporation.

      (c)   For purposes of this Section 1, "remote communication" shall mean
electronic mail or other forms of written or visual electronic communication
satisfying the requirements of Section 11(b).

Section 2.  Annual Meetings.

      The annual meetings of the stockholders of the corporation, commencing
with the year 1994, for the purpose of election of directors and for such other
business as may lawfully come before it, shall be held on such date and at such
time as may be designated from time to time by the Board of Directors.

Section 3.  Special Meetings.

        Special Meetings of the stockholders of the corporation may be called,
for any purpose or purposes, by the Chairman of the Board or the Chief Executive
Officer or the Board of Directors at any time, subject to the rights of the
holders of any stock having a preference over the common stock as to dividends
or liquidation. Stockholders are not permitted to call a special meeting or to
require the Board of Directors to call a special meeting of stockholders.

Section 4.  Notice of Meetings.

      (a)   Except as otherwise provided by law or the Certificate of
Incorporation, written notice of each meeting of stockholders, specifying the
place, if any, date and hour and purpose or purposes of the meeting, and the
means of remote communication, if any, by which stockholders and proxyholders
may be deemed to be present in person and vote at such meeting, shall be given
not less than ten nor more than sixty days before the date of the meeting to
each stockholder entitled to vote thereat, directed to his address as it appears
upon the books of the corporation; except that where the matter to be acted on
is a merger or consolidation of the Corporation or a sale, lease or exchange of
all or substantially all of its assets, such notice shall be given not less than
twenty nor more than sixty days prior to such meeting.

      (b)   If at any meeting action is proposed to be taken which, if taken,
would entitle stockholders fulfilling the requirements of Section 262(d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.


                                       2
<PAGE>   3

      (c)   When a meeting is adjourned to another time or place, notice need
not be given of the adjourned meeting if the time, place, if any, thereof, and
the means of remote communication, if any, by which stockholders and
proxyholders may be deemed to be present in person and vote at such adjourned
meeting, are announced at the meeting at which the adjournment is taken unless
the adjournment is for more than thirty days, or unless after the adjournment a
new record date is fixed for the adjourned meeting, in which event a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.

      (d)   Notice of the time, place and purpose of any meeting of stockholders
may be waived in writing, either before or after such meeting, and, to the
extent permitted by law, will be waived by any stockholder by his attendance
thereat, in person or by proxy. Any stockholder so waiving notice of such
meeting shall be bound by the proceedings of any such meeting in all respects as
if due notice thereof had been given.

      (e)   Without limiting the manner by which notice otherwise may be given
effectively to stockholders, any notice to stockholders given by the corporation
under any provision of this chapter, the Certificate of Incorporation, or these
Bylaws shall be effective if given by a form of electronic transmission
consented to by the stockholder to whom the notice is given. Any such consent
shall be revocable by the stockholder by written notice to the corporation. Any
such consent shall be deemed revoked if (i) the corporation is unable to deliver
by electronic transmission two consecutive notices given by the corporation in
accordance with such consent, and (ii) such inability becomes known to the
secretary or an assistant secretary of the corporation or to the transfer agent
or other person responsible for the giving of notice; provided, however, the
inadvertent failure to treat such inability as a revocation shall not invalidate
any meeting or other action. Notice given pursuant to this subparagraph (e)
shall be deemed given: (1) if by facsimile telecommunication, when directed to a
number at which the stockholder has consented to receive notice; (2) if by
electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (3) if by a posting on an
electronic network together with separate notice to the stockholder of such
specific posting, upon the later of (A) such posting and (B) the giving of such
separate notice; and (4) if by any other form of electronic transmission, when
directed to the stockholder. An affidavit of the secretary or an assistant
secretary or of the transfer agent or other agent of the corporation that the
notice has been given by a form of electronic transmission shall, in the absence
of fraud, be prima facie evidence of the facts stated therein. For purposes of
these Bylaws, "electronic transmission" means any form of communication, not
directly involving the physical transmission of paper, that creates a record
that may be retained, retrieved and reviewed by a recipient thereof, and that
may be directly reproduced in paper form by such a recipient through an
automated process.

Section 5.  Quorum and Voting.

      (a)   At all meetings of stockholders, except where otherwise provided by
law, the Certificate of Incorporation, or these Bylaws, the presence, in person
or by proxy duly authorized, of the holders of a majority of the outstanding
shares of stock entitled to vote shall constitute a quorum for the transaction
of business. Shares, the voting of which at said meeting have been enjoined, or
which for any reason cannot be lawfully voted at such meeting, shall not be
counted to determine a quorum at said meeting. In the absence of a quorum, any
meeting of


                                       3
<PAGE>   4

stockholders may be adjourned, from time to time, by vote of the holders of a
majority of the shares represented thereat, but no other business shall be
transacted at such meeting. At such adjourned meeting at which a quorum is
present or represented any business may be transacted which might have been
transacted at the original meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.

      (b)   Except as otherwise provided by law, the Certificate of
Incorporation or these Bylaws, all action taken by the holders of a majority of
the voting power represented at any meeting at which a quorum is present shall
be valid and binding upon the corporation.

Section 6.   Voting Rights.

      (a)   Except as otherwise provided by law, only persons in whose names
shares entitled to vote stand on the stock records of the corporation on the
record date for determining the stockholders entitled to vote at said meeting
shall be entitled to vote at such meeting. Shares standing in the names of two
or more persons shall be voted or represented in accordance with the
determination of the majority of such persons, or, if only one of such persons
is present in person or represented by proxy, such person shall have the right
to vote such shares and such shares shall be deemed to be represented for the
purpose of determining a quorum.

      (b)   Every person entitled to vote or to execute consents shall have the
right to do so either in person or by an agent or agents authorized by a written
proxy executed by such person or his duly authorized agent, which proxy shall be
filed with the Secretary of the corporation at or before the meeting at which it
is to be used. Said proxy so appointed need not be a stockholder. No proxy shall
be voted on after three (3) years from its date unless the proxy provides for a
longer period. Unless and until voted, every proxy shall be revocable at the
pleasure of the person who executed it or of his legal representatives or
assigns, except in those cases where an irrevocable proxy permitted by statute
has been given.

      (c)   Without limiting the manner in which a stockholder may authorize
another person or persons to act for him as proxy pursuant to subsection (b) of
this section, the following shall constitute a valid means by which a
stockholder may grant such authority:

            (1)   A stockholder may execute a writing authorizing another person
or persons to act for him as proxy. Execution may be accomplished by the
stockholder or his authorized officer, director, employee or agent signing such
writing or causing his or her signature to be affixed to such writing by any
reasonable means including, but not limited to, by facsimile signature.

            (2)   A stockholder may authorize another person or persons to act
for him as proxy by transmitting or authorizing the transmission of a telephone,
telegram, cablegram or other means of electronic transmission to the person who
will be the holder of the proxy or to a proxy solicitation firm, proxy support
service organization or like agent duly authorized by the person who will be the
holder of the proxy to receive such transmission, provided that any such



                                       4
<PAGE>   5

telephone transmission, telegram, cablegram or other means of electronic
transmission must either set forth or be submitted with information from which
it can be determined that the telephone transmission, telegram, cablegram or
other electronic transmission was authorized by the stockholder. Such
authorization can be established by the signature of the stockholder on the
proxy, either in writing or by a signature stamp or facsimile signature, or by a
number or symbol from which the identity of the stockholder can be determined,
or by any other procedure deemed appropriate by the inspectors or other persons
making the determination as to due authorization. If it is determined that such
telephone transmissions, telegrams, cablegrams or other electronic transmissions
are valid, the inspectors or, if there are no inspectors, such other persons
making that determination shall specify the information upon which they relied.

            (d)   Any copy, facsimile telecommunication or other reliable
reproduction of the writing or transmission created pursuant to subsection (c)
of this Section may be substituted or used in lieu of the original writing or
transmission for any and all purposes for which the original writing or
transmission could be used, provided that such copy, facsimile telecommunication
or other reproduction shall be a complete reproduction of the entire original
writing or transmission.

Section 7.  Voting Procedures and Inspectors of Elections.

            (a)   The corporation shall, in advance of any meeting of
stockholders, appoint one or more inspectors to act at the meeting and make a
written report thereof. The corporation may designate one or more persons as
alternate inspectors to replace any inspector who fails to act. If no inspector
or alternate is able to act at a meeting of stockholders, the person presiding
at the meeting shall appoint one or more inspectors to act at the meeting. Each
inspector, before entering upon the discharge of his duties, shall take and sign
an oath faithfully to execute the duties of inspector with strict impartiality
and according to the best of his ability.

            (b)   The inspectors shall (i) ascertain the number of shares
outstanding and the voting power of each, (ii) determine the shares represented
at a meeting and the validity of proxies and ballots, (iii) count all votes and
ballots, (iv) determine and retain for a reasonable period a record of the
disposition of any challenges made to any determination by the inspectors, and
(v) certify their determination of the number of shares represented at the
meeting, and their count of all votes and ballots. The inspectors may appoint or
retain other persons or entities to assist the inspectors in the performance of
the duties of the inspectors.

            (c)   The date and time of the opening and the closing of the polls
for each matter upon which the stockholders will vote at a meeting shall be
announced at the meeting. No ballot, proxies or votes, nor any revocations
thereof or changes thereto, shall be accepted by the Inspectors after the
closing of the polls unless the Court of Chancery upon application by a
stockholder shall determine otherwise.

            (d)   In determining the validity and counting of proxies and
ballots, the inspectors shall be limited to an examination of the proxies, any
envelopes submitted with those proxies, any information provided in accordance
with Section 212(c)(2) of the Delaware General Corporation Law, ballots and the
regular books and records of the corporation, except that the inspectors may
consider other reliable information for the limited purpose of reconciling
proxies


                                       5
<PAGE>   6

and ballots submitted by or on behalf of banks, brokers, their nominees or
similar persons which represent more votes than the holder of a proxy is
authorized by the record owner to cast or more votes than the stockholder holds
of record. If the inspectors consider other reliable information for the limited
purpose permitted herein, the inspectors at the time they make their
certification pursuant to subsection (b)(v) of this section shall specify the
precise information considered by them including the person or persons from whom
they obtained the information, when the information was obtained, the means by
which the information was obtained and the basis for the inspectors' belief that
such information is accurate and reliable.

Section 8.  List of Stockholders.

      The officer who has charge of the stock ledger of the corporation shall
prepare and make, at least ten days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at said meeting, arranged in
alphabetical order, showing the address of and the number of shares registered
in the name of each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during ordinary
business hours, for a period of at least ten days prior to the meeting, either
at a place within the city where the meeting is to be held and which place shall
be specified in the notice of the meeting, or, if not specified, at the place
where said meeting is to be held, and the list shall be produced and kept at the
time and place of meeting during the whole time thereof, and may be inspected by
any stockholder who is present.

Section 9.  Stockholder Proposals at Annual Meetings.

      At an annual meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting. To be properly
brought before an annual meeting, business must be specified in the notice of
meeting (or any supplement thereto) given by or at the direction of the Board of
Directors, otherwise properly brought before the meeting by or at the direction
of the Board of Directors, or otherwise properly brought before the meeting by a
stockholder. In addition to any other applicable requirements for business to be
properly brought before an annual meeting by a stockholder, the stockholder must
have given timely notice thereof in writing to the Secretary of the corporation.
To be timely a stockholder's notice must be delivered to or mailed and received
at the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the meeting; provided, however, that in the event
that less than 40 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting was
mailed or such public disclosure was made. A stockholder's notice to the
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting (i) a brief description of the business desired to be
brought before the annual meeting and the reasons for conducting such business
at the annual meeting, (ii) the name and record address of the stockholder
proposing such business, (iii) the class and number of shares of the corporation
which are beneficially owned by the stockholder, and (iv) any material interest
of the stockholder in such business.



                                       6
<PAGE>   7

      Notwithstanding anything in the Bylaws to the contrary, no business shall
be conducted at the annual meeting except in accordance with the procedures set
forth in Section 1 and this Section 9, provided, however, that nothing in this
Section 9 shall be deemed to preclude discussion by any stockholder of any
business properly brought before the annual meeting in accordance with said
procedure.

      The Chairman of an annual meeting shall, if the facts warrant, determine
and declare to the meeting that business was not properly brought before the
meeting in accordance with the provisions of Section 1 and this Section 9, and
if he should so determine he shall so declare to the meeting, and any such
business not properly brought before the meeting shall not be transacted.

Section 10.  Nominations of Persons for Election to the Board of Directors.

      In addition to any other applicable requirements, only persons who are
nominated in accordance with the following procedures shall be eligible for
election as directors. Nominations of persons for election to the Board of
Directors of the corporation may be made at a meeting of stockholders by or at
the direction of the Board of Directors, by any nominating committee or person
appointed by the Board of Directors or by any stockholder of the corporation
entitled to vote for the election of directors at the meeting who complies with
the notice procedures set forth in this Section 10. Such nominations, other than
those made by or at the direction of the Board of Directors, shall be made
pursuant to timely notice in writing to the Secretary of the corporation. To be
timely, a stockholder's notice shall be delivered to or mailed and received at
the principal executive offices of the corporation not less than 30 days nor
more than 60 days prior to the meeting; provided, however, that in the event
that less than 40 days notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice by the stockholder to be timely
must be so received not later than the close of business on the 10th day
following the day on which such notice of the date of the meeting was mailed or
such public disclosure was made. Such stockholder's notice shall set forth (a)
as to each person whom the stockholder proposes to nominate for election or
re-election as a director, (i) the name, age, business address and residence
address of the person, (ii) the principal occupation or employment of the
person, (iii) the class and number of shares of the corporation which are
beneficially owned by the person, and (iv) any other information relating to the
person that is required to be disclosed in solicitations for proxies for
election of directors pursuant to Rule 14a under the Securities Exchange Act of
1934; and (b) as to the stockholder giving the notice, (i) the name and record
address of the stockholder, and (ii) the class and number of shares of the
corporation which are beneficially owned by the stockholder. The corporation may
require any proposed nominee to furnish such other information as may reasonably
be required by the corporation to determine the eligibility of such proposed
nominee to serve as a director of the corporation. No person shall be eligible
for election as a director of the corporation unless nominated in accordance
with the procedures set forth herein. These provisions shall not apply to
nomination of any persons entitled to be separately elected by holders of
preferred stock.

      The Chairman of the meeting shall, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure, and if he



                                       7
<PAGE>   8

should so determine, he shall so declare to the meeting and the defective
nomination shall be disregarded.

Section 11.  Action Without Meeting.

      (a)   Unless otherwise provided in the Certificate of Incorporation, any
action required by statute to be taken at any annual or special meeting of
stockholders of the corporation, or any action which may be taken at any annual
or special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing setting
forth the action so taken are signed by the holders of outstanding stock having
not less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares entitled to vote thereon
were present and voted. To be effective, a written consent must be delivered to
the corporation by delivery to its registered office in Delaware, its principal
place of business, or an officer or agent of the corporation having custody of
the book in which proceedings of meetings of stockholders are recorded. Delivery
made to a corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. Every written consent shall bear the
date of signature of each stockholder who signs the consent, and no written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered in the manner
required by this Section to the corporation, written consents signed by a
sufficient number of holders to take action are delivered to the corporation in
accordance with this Section. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing.

      (b)   A telegram, cablegram or other electronic transmission consent to an
action to be taken and transmitted by a stockholder or proxyholder, or by a
person or persons authorized to act for a stockholder or proxyholder, shall be
deemed to be written, signed and dated for the purposes of this Section,
provided that any such telegram, cablegram or other electronic transmission sets
forth or is delivered with information from which the corporation can determine
(i) that the telegram, cablegram or other electronic transmission was
transmitted by the stockholder or proxyholder or by a person or persons
authorized to act for the stockholder or proxyholder, and (ii) the date on which
such stockholder or proxyholder or authorized person or persons transmitted such
telegram, cablegram or electronic transmission. The date on which such telegram,
cablegram or electronic transmission is transmitted shall be deemed to be the
date on which such consent was signed. No consent given by telegram, cablegram
or other electronic transmission shall be deemed to have been delivered until
such consent is reproduced in paper form and until such paper form shall be
delivered to the corporation by delivery to its registered office in this State,
its principal place of business or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to a corporation's registered office shall be made by
hand or by certified or registered mail, return receipt requested.
Notwithstanding the foregoing limitations on delivery, consents given by
telegram, cablegram or other electronic transmission may be otherwise delivered
to the principal place of business of the corporation or to an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded if to the extent and in the manner provided by
resolution of the Board of Directors of the corporation.



                                       8
<PAGE>   9

      (c)   Any copy, facsimile or other reliable reproduction of a consent in
writing may be substituted or used in lieu of the original writing for any and
all purposes for which the original writing could be used, provided that such
copy, facsimile or other reproduction shall be a complete reproduction of the
entire original writing.


                                   ARTICLE III

                                    Directors

Section 1.  Number and Term of Office.

      The number of directors which shall constitute the whole of the Board of
Directors shall be nine (9). With the exception of the first Board of Directors,
which shall be elected by the incorporators, and except as provided in Section 3
of this Article III, the directors shall be elected by a plurality vote of the
shares represented in person or by proxy, at the stockholders annual meeting in
each year and entitled to vote on the election of directors. Elected directors
shall hold office until their successors shall be duly elected and qualified.
Directors need not be stockholders. If, for any cause, the Board of Directors
shall not have been elected at an annual meeting, they may be elected as soon
thereafter as convenient at a special meeting of the stockholders called for
that purpose in the manner provided in these Bylaws.

Section 2.  Powers.

      The powers of the corporation shall be exercised, its business conducted
and its property controlled by or under the direction of the Board of Directors.

Section 3.  Vacancies.

      Vacancies and newly created directorships resulting from any increase in
the authorized number of directors may be filled by a majority of the directors
then in office, although less than a quorum, or by a sole remaining director,
and each director so elected shall hold office for the unexpired portion of the
term of the director whose place shall be vacant, and until his successor shall
have been duly elected and qualified. A vacancy in the Board of Directors shall
be deemed to exist under this section in the case of the death, removal or
resignation of any director, or if the stockholders fail at any meeting of
stockholders at which directors are to be elected (including any meeting
referred to in Section 4 below) to elect the number of directors then
constituting the whole Board.

Section 4.  Resignations and Removals.

      (a)   Any director may resign at any time by delivering his written
resignation to the Secretary, such resignation to specify whether it will be
effective at a particular time, upon receipt by the Secretary or at the pleasure
of the Board of Directors. If no such specification is made it shall be deemed
effective at the pleasure of the Board of Directors. When one or more directors
shall resign from the Board, effective at a future date, a majority of the
directors then in office, including those who have so resigned, shall have power
to fill such vacancy or vacancies,


                                       9
<PAGE>   10

the vote thereon to take effect when such resignation or resignations shall
become effective, and each director so chosen shall hold office for the
unexpired portion of the term of the director whose place shall be vacated and
until his successor shall have been duly elected and qualified.

      (b)   At a special meeting of stockholders called for the purpose in the
manner hereinabove provided, the Board of Directors, or any individual director,
may be removed from office, with or without cause, and a new director or
directors elected by a vote of stockholders holding a majority of the
outstanding shares entitled to vote at an election of directors.

Section 5.  Meetings.

      (a)   The annual meeting of the Board of Directors shall be held
immediately after the annual stockholders' meeting and at the place where such
meeting is held or at the place announced by the Chairman at such meeting. No
notice of an annual meeting of the Board of Directors shall be necessary and
such meeting shall be held for the purpose of electing officers and transacting
such other business as may lawfully come before it.

      (b)   Except as hereinafter otherwise provided, regular meetings of the
Board of Directors shall be held in the office of the corporation required to be
maintained pursuant to Section 2 of Article I hereof. Regular meetings of the
Board of Directors may also be held at any place within or without the State of
Delaware which has been designated by resolutions of the Board of Directors or
the written consent of all directors.

      (c)   Special meetings of the Board of Directors may be held at any time
and place within or without the State of Delaware whenever called by the
Chairman of the Board or, if there is no Chairman of the Board, by the
President, or by any of the directors.

      (d)   Written notice of the time and place of all regular and special
meetings of the Board of Directors shall be delivered personally to each
director or sent by telegram or facsimile transmission at least 48 hours before
the start of the meeting, or sent by first class mail at least 120 hours before
the start of the meeting. Notice of any meeting may be waived in writing at any
time before or after the meeting and will be waived by any director by
attendance thereat.

Section 6.  Quorum and Voting.

      (a)   A quorum of the Board of Directors shall consist of a majority of
the exact number of directors fixed from time to time in accordance with Section
I of Article III of these Bylaws, but not less than one; provided, however, at
any meeting whether a quorum be present or otherwise, a majority of the
directors present may adjourn from time to time until the time fixed for the
next regular meeting of the Board of Directors, without notice other than by
announcement at the meeting.

      (b)   At each meeting of the Board at which a quorum is present all
questions and business shall be determined by a vote of a majority of the
directors present, unless a different vote be required by law, the Certificate
of Incorporation, or these Bylaws.




                                       10
<PAGE>   11

      (c)   Any member of the Board of Directors, or of any committee thereof,
may participate in a meeting by means of conference telephone or similar
communication equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting by such means shall
constitute presence in person at such meeting.

      (d)   The transactions of any meeting of the Board of Directors, or any
committee thereof, however called or noticed, or wherever held, shall be as
valid as though had at a meeting duly held after regular call and notice, if a
quorum be present and if, either before or after the meeting, each of the
directors not present shall sign a written waiver of notice, or a consent to
holding such meeting, or an approval of the minutes thereof. All such waivers,
consents or approvals shall be filed with the corporate records or made a part
of the minutes of the meeting.

Section 7.  Action Without Meeting.

      Unless otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any meeting of the Board
of Directors or of any committee thereof may be taken without a meeting, if all
members of the Board or of such committee, as the case may be, consent thereto
in writing, and such writing or writings are filed with the minutes of
proceedings of the Board or committee.

Section 8.  Fees and Compensation.

      Directors and members of committees may receive such compensation, if any,
for their services, and such reimbursement for expenses, as may be fixed or
determined by resolution of the Board of Directors.

Section 9.  Committees.

      (a)   Executive Committee: The Board of Directors may, by resolution
passed by a majority of the whole Board, appoint an Executive Committee of not
less than one member, each of whom shall be a director. The Executive Committee,
to the extent permitted by law, shall have and may exercise when the Board of
Directors is not in session all powers of the Board in the management of the
business and affairs of the corporation, including, without limitation, the
power and authority to declare a dividend or to authorize the issuance of stock,
except such committee shall not have the power or authority to amend the
Certificate of Incorporation, to adopt an agreement or merger or consolidation,
to recommend to the stockholders the sale, lease or exchange of all or
substantially all of the corporation's property and assets, to recommend to the
stockholders of the Corporation a dissolution of the Corporation or a revocation
of a dissolution, or to amend these Bylaws.

      (b)   Other Committees: The Board of Directors may, by resolution passed
by a majority of the whole Board, from time to time appoint such other
committees as may be permitted by law. Such other committees appointed by the
Board of Directors shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committee, but in no
event shall any such committee have the powers denied to the Executive Committee
in these Bylaws.




                                       11
<PAGE>   12

      (c)   Term: The members of all committees of the Board of Directors shall
serve a term coexistent with that of the Board of Directors which shall have
appointed such committee. The Board, subject to the provisions of subsections
(a) or (b) of this Section 9, may at any time increase or decrease the number of
members of a committee or terminate the existence of a committee; provided, that
no committee shall consist of less than one member. The membership of a
committee member shall terminate on the date of his death or voluntary
resignation, but the Board may at any time for any reason remove any individual
committee member and the Board may fill any committee vacancy created by death,
resignation, removal or increase in the number of members of the committee. The
Board of Directors may designate one or more directors as alternate members of
any committee, who may replace any absent or disqualified member at any meeting
of the committee, and, in addition, in the absence or disqualification of any
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.

      (d)   Meetings: Unless the Board of Directors shall otherwise provide,
regular meetings of the Executive Committee or any other committee appointed
pursuant to this Section 9 shall be held at such times and places as are
determined by the Board of Directors, or by any such committee, and when notice
thereof has been given to each member of such committee, no further notice of
such regular meetings need be given thereafter; special meetings of any such
committee may be held at the principal office of the corporation required to be
maintained pursuant to Section 2 of Article I hereof; or at any place which has
been designated from time to time by resolution of such committee or by written
consent of all members thereof, and may be called by any director who is a
member of such committee, upon written notice to the members of such committee
of the time and place of such special meeting given in the manner provided for
the giving of written notice to members of the Board of Directors of the time
and place of special meetings of the Board of Directors. Notice of any special
meeting of any committee may be waived in writing at any time after the meeting
and will be waived by any director by attendance thereat. A majority of the
authorized number of members of any such committee shall constitute a quorum for
the transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.


                                   ARTICLE IV

                                    Officers

Section 1.  Officers Designated.

      The officers of the corporation shall be a Chairman of the Board of
Directors and a President, each of whom shall be a member of the Board of
Directors, and one or more Vice-Presidents, a Secretary, and a Treasurer. The
order of the seniority of the Vice Presidents shall be in the order of their
nomination, unless otherwise determined by the Board of Directors. The Board of
Directors or the Chairman of the Board or the President may also appoint one or
more assistant secretaries, assistant treasurers, and such other officers and
agents with such powers and


                                       12
<PAGE>   13

duties as it or he shall deem necessary. The Board of Directors may assign such
additional titles to one or more of the officers as they shall deem appropriate.
Any one person may hold any number of offices of the corporation at any one time
unless specifically prohibited therefrom by law. The salaries and other
compensation of the officers of the corporation shall be fixed by or in the
manner designated by the Board of Directors.

Section 2.  Tenure and Duties of Officers.

      (a)   General: All officers shall hold office at the pleasure of the Board
of Directors and until their successors shall have been duly elected and
qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office
of any officer becomes vacant for any reason, the vacancy may be filled by the
Board of Directors. Nothing in these Bylaws shall be construed as creating any
kind of contractual right to employment with the corporation.

      (b)   Duties of the Chairman of the Board of Directors: The Chairman of
the Board of Directors (if there be such an officer appointed) shall preside at
all meetings of the shareholders and the Board of Directors. The Chairman of the
Board of Directors shall perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.

      (c)   Duties of President: The President shall be the chief executive
officer of the corporation (unless the Board of Directors shall designate
otherwise) and shall preside at all meetings of the shareholders and at all
meetings of the Board of Directors, unless the Chairman of the Board of
Directors has been appointed and is present. The President shall perform such
other duties and have such other powers as the Board of Directors shall
designate from time to time.

      (d)   Duties of Vice-Presidents: The Vice-Presidents, in the order of
their seniority, may assume and perform the duties of the President in the
absence or disability of the President or whenever the office of the President
is vacant. The Vice-President shall perform such other duties and have such
other powers as the Board of Directors or the President shall designate from
time to time.

      (e)   Duties of Secretary: The Secretary shall attend all meetings of the
shareholders and of the Board of Directors and any committee thereof, and shall
record all acts and proceedings thereof in the minute book of the corporation.
The Secretary shall give notice, in conformity with these Bylaws, of all
meetings of the shareholders, and of all meetings of the Board of Directors and
any Committee thereof requiring notice. The Secretary shall perform such other
duties and have such other powers as the Board of Directors shall designate from
time to time. The President may direct any Assistant Secretary to assume and
perform the duties of the Secretary in the absence or disability of the
Secretary, and each Assistant Secretary shall perform such other duties and have
such other powers as the Board of Directors or the President shall designate
from time to time.

      (f)   Duties of Treasurer: The Treasurer shall keep or cause to be kept
the books of account of the corporation in a thorough and proper manner, and
shall render statements of the


                                       13
<PAGE>   14

financial affairs of the corporation in such form and as often as required by
the Board of Directors or the President. The Treasurer, subject to the order of
the Board of Directors, shall have the custody of all funds and securities of
the corporation. The Treasurer shall perform all other duties commonly incident
to his office and shall perform such other duties and have such other powers as
the Board of Directors or the President shall designate from time to time. The
President may direct any Assistant Treasurer to assume and perform the duties of
the Treasurer in the absence or disability of the Treasurer, and each Assistant
Treasurer shall perform such other duties and have such other powers as the
Board of Directors or the President shall designate from time to time. At the
election of the Board of Directors, the duties of Treasurer shall be performed
by a Vice President designated by the Board of Directors to perform financial
functions.


                                    ARTICLE V

                     Execution of Corporate Instruments, and
                  Voting of Securities Owned by the Corporation

Section 1.  Execution of Corporate Instruments.

      (a)   The Board of Directors may, in its discretion, determine the method
and designate the signatory officer or officers, or other person or persons, to
execute any corporate instrument or document, or to sign the corporate name
without limitation, except where otherwise provided by law, and such execution
or signature shall be binding upon the corporation.

      (b)   Unless otherwise specifically determined by the Board of Directors
or otherwise required by law, formal contracts of the corporation, promissory
notes, deeds of trust, mortgages and other evidences of indebtedness of the
corporation, and other corporate instruments or documents requiring the
corporate seal, and certificates of shares of stock owned by the corporation,
shall be executed, signed or endorsed by the Chairman of the Board (if there be
such an officer appointed) or by the President; such documents may also be
executed by any Vice-President and by the Secretary or Treasurer or any
Assistant Secretary or Assistant Treasurer. All other instruments and documents
requiring the corporate signature, but not requiring the corporate seal, may be
executed as aforesaid or in such other manner as may be directed by the Board of
Directors.

      (c)   All checks and drafts drawn on banks or other depositaries on funds
to the credit of the corporation, or in special accounts of the corporation,
shall be signed by such person or persons as the Board of Directors shall
authorize so to do.

Section 2.  Voting of Securities Owned by Corporation.

      All stock and other securities of other corporations owned or held by the
corporation for itself, or for other parties in any capacity, shall be voted,
and all proxies with respect thereto shall be executed, by the person authorized
so to do by resolution of the Board of Directors or, in the absence of such
authorization, by the Chairman of the Board (if there be such an officer
appointed), or by the President, or by any Vice-President.


                                       14
<PAGE>   15


                                   ARTICLE VI

                                 Shares of Stock

Section 1.  Form and Execution of Certificates.

      Certificates for the shares of stock of the corporation shall be in such
form as is consistent with the Certificate of Incorporation and applicable law.
Every holder of stock in the corporation shall be entitled to have a certificate
signed by, or in the name of the corporation by, the Chairman of the Board (if
there be such an officer appointed), or by the President or any Vice- President
and by the Treasurer or Assistant Treasurer or the Secretary or Assistant
Secretary, certifying the number of shares owned by him in the corporation. Any
or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent, or registrar who has signed or whose facsimile
signature has been placed upon a certificate shall have ceased to be such
officer, transfer agent, or registrar before such certificate is issued, it may
be issued with the same effect as if he were such officer, transfer agent, or
registrar at the date of issue. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights shall be set forth
in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class or series of stock, provided
that, except as otherwise provided in section 202 of the Delaware General
Corporation Law, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.

Section 2.  Lost Certificates.

      The Board of Directors may direct a new certificate or certificates to be
issued in place of any certificate or certificates theretofore issued by the
corporation alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of stock to be
lost or destroyed. When authorizing such issue of a new certificate or
certificates, the Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost or destroyed
certificate or certificates, or his legal representative, to indemnify the
corporation in such manner as it shall require and/or to give the corporation a
surety bond in such form and amount as it may direct as indemnity against any
claim that may be made against the corporation with respect to the certificate
alleged to have been lost or destroyed.




                                       15
<PAGE>   16

Section 3.  Transfers.

      Transfers of record of shares of stock of the corporation shall be made
only upon its books by the holders thereof, in person or by attorney duly
authorized, and upon the surrender of a certificate or certificates for a like
number of shares, properly endorsed.

Section 4.  Fixing Record Dates.

      (a)   In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, the Board of Directors may fix a record date, which record
date shall not precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors, and which record date shall not be more
than sixty nor less than ten days before the date of such meeting. If no record
date is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders shall
be at the close of business on the day next preceding the day on which notice is
given, or, if notice is waived, at the close of business on the day next
preceding the date on which the meeting is held. A determination of stockholders
of record entitled notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting; provided, however, that the Board of
Directors may fix a new record date for the adjourned meeting.

      (b)   In order that the corporation may determine the stockholders
entitled to consent to corporate action in writing without a meeting, the Board
of Directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the Board of
Directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the Board of
Directors. If no record date has been fixed by the Board of Directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the Board of Directors is
required by the Delaware General Corporation Law, shall be the first date on
which a signed written consent setting forth the action taken or proposed to be
taken is delivered to the corporation by delivery to its registered office in
Delaware, its principal place of business, or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation's registered office
shall be by hand or by certified or registered mail, return receipt requested.
If no record date has been fixed by the Board of Directors and prior action by
the Board of Directors is required by law, the record date for determining
stockholders entitled to consent to corporate action in writing without a
meeting shall be at the close of business on the day on which the Board of
Directors adopts the resolution taking such prior action.

      (c)   In order that the corporation may determine the stockholders
entitled to receive payment of any dividend or other distribution or allotment
of any rights or the stockholders entitled to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose of any other
lawful action, the Board of Directors may fix a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is



                                       16
<PAGE>   17

fixed, the record date for determining stockholders for any such purpose shall
be at the close of business on the day on which the Board of Directors adopts
the resolution relating thereto.

Section 5.  Registered Stockholders.

      The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends, and
to vote as such owner, and shall not be bound to recognize any equitable or
other claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.


                                   ARTICLE VII

                       Other Securities of the Corporation

      All bonds, debentures and other corporate securities of the corporation,
other than stock certificates, may be signed by the Chairman of the Board (if
there be such an officer appointed), or the President or any Vice- President or
such other person as may be authorized by the Board of Directors and the
corporate seal impressed thereon or a facsimile of such seal imprinted thereon
and attested by the signature of the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer; provided, however, that where any such
bond, debenture or other corporate security shall be authenticated by the manual
signature of a trustee under an indenture pursuant to which such bond, debenture
or other corporate security shall be issued, the signature of the persons
signing and attesting the corporate seal on such bond, debenture or other
corporate security may be the imprinted facsimile of the signatures of such
persons. Interest coupons appertaining to any such bond, debenture or other
corporate security, authenticated by a trustee as aforesaid, shall be signed by
the Treasurer or an Assistant Treasurer of the corporation, or such other person
as may be authorized by the Board of Directors, or bear imprinted thereon the
facsimile signature of such person. In case any officer who shall have signed or
attested any bond, debenture or other corporate security, or whose facsimile
signature shall appear thereon or before the bond, debenture or other corporate
security so signed or attested shall have been delivered, such bond, debenture
or other corporate security nevertheless may be adopted by the corporation and
issued and delivered as though the person who signed the same or whose facsimile
signature shall have been used thereon had not ceased to be such officer of the
corporation.


                                  ARTICLE VIII

                                 Corporate Seal

      The corporate seal shall consist of a die bearing the name of the
corporation and the state and date of its incorporation. Said seal may be used
by causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise.





                                       17
<PAGE>   18

                                   ARTICLE IX

                               Indemnification of
                    Officers, Directors, Employees and Agents

Section 1.  Right to Indemnification.

      Each person who was or is a party or is threatened to be made a party to
or is involved (as a party, witness, or otherwise), in any threatened, pending,
or completed action, suit, or proceeding, whether civil, criminal,
administrative, or investigative (hereinafter a "Proceeding"), by reason of the
fact that he, or a person of whom he is the legal representative, is or was a
director, officer, employee, or agent of the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation or of a partnership, joint venture, trust, or other
enterprise, including service with respect to employee benefit plans, whether
the basis of the Proceeding is alleged action in an official capacity as a
director, officer, employee, or agent or in any other capacity while serving as
a director, officer, employee, or agent (hereafter an "Agent"), shall be
indemnified and held harmless by the corporation to the fullest extent
authorized by the Delaware General Corporation Law, as the same exists or may
hereafter be amended or interpreted (but, in the case of any such amendment or
interpretation, only to the extent that such amendment or interpretation permits
the corporation to provide broader indemnification rights than were permitted
prior thereto) against all expenses, liability, and loss (including attorneys'
fees, judgments, fines, ERISA excise taxes or penalties, and amounts paid or to
be paid in settlement, and any interest, assessments, or other charges imposed
thereon, and any federal, state, local, or foreign taxes imposed on any Agent as
a result of the actual or deemed receipt of any payments under this Article)
reasonably incurred or suffered by such person in connection with investigating,
defending, being a witness in, or participating in (including on appeal), or
preparing for any of the foregoing in, any Proceeding (hereinafter "Expenses");
provided, however, that except as to actions to enforce indemnification rights
pursuant to Section 3 of this Article, the corporation shall indemnify any Agent
seeking indemnification in connection with a Proceeding (or part thereof)
initiated by such person only if the Proceeding (or part thereof) was authorized
by the Board of Directors of the corporation. The right to indemnification
conferred in this Article shall be a contract right.

Section 2.  Authority to Advance Expenses.

      Expenses incurred by an officer or director (acting in his capacity as
such) in defending a Proceeding shall be paid by the corporation in advance of
the final disposition of such Proceeding, provided, however, that if required by
the Delaware General Corporation Law, as amended, such Expenses shall be
advanced only upon delivery to the corporation of an undertaking by or on behalf
of such director or officer to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the corporation as
authorized in this Article or otherwise. Expenses incurred by other Agents of
the corporation (or by the directors or officers not acting in their capacity as
such, including service with respect to employee benefit plans) may be advanced
upon such terms and conditions as the Board of Directors deems appropriate. Any
obligation to reimburse the corporation for Expense advances shall be unsecured
and no interest shall be charged thereon.




                                       18
<PAGE>   19

Section 3.  Right of Claimant to Bring Suit.

      If a claim under Section 1 or 2 of this Article is not paid in full by the
corporation within 120 days after a written claim has been received by the
corporation, the claimant may at any time thereafter bring suit against the
corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense
(including attorneys' fees) of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending a Proceeding in advance of its final disposition where the
required undertaking has been tendered to the corporation) that the claimant has
not met the standards of conduct that make it permissible under the Delaware
General Corporation Law for the corporation to indemnify the claimant for the
amount claimed. Neither the failure of the corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper under the circumstances because he has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant had not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.

Section 4.  Provisions Nonexclusive.

      The rights conferred on any person by this Article shall not be exclusive
of any other rights that such person may have or hereafter acquire under any
statute, provision of the Certificate of Incorporation, agreement, vote of
stockholders or disinterested directors, or otherwise, both as to action in an
official capacity and as to action in another capacity while holding such
office. To the extent that any provision of the Certificate, agreement, or vote
of the stockholders or disinterested directors is inconsistent with these
bylaws, the provision, agreement, or vote shall take precedence.

Section 5.  Authority to Insure.

      The corporation may purchase and maintain insurance to protect itself and
any Agent against any Expense, whether or not the corporation would have the
power to indemnify the Agent against such Expense under applicable law or the
provisions of this Article.

Section 6.  Survival of Rights.

      The rights provided by this Article shall continue as to a person who has
ceased to be an Agent and shall inure to the benefit of the heirs, executors,
and administrators of such a person.

Section 7.  Settlement of Claims.

      The corporation shall not be liable to indemnify any Agent under this
Article (a) for any amounts paid in settlement of any action or claim effected
without the corporation's written consent, which consent shall not be
unreasonably withheld; or (b) for any judicial award if the



                                       19
<PAGE>   20

corporation was not given a reasonable and timely opportunity, at its expense,
to participate in the defense of such action.

Section 8.  Effect of Amendment.

      Any amendment, repeal, or modification of this Article shall not adversely
affect any right or protection of any Agent existing at the time of such
amendment, repeal, or modification.

Section 9.  Subrogation.

      In the event of payment under this Article, the corporation shall be
subrogated to the extent of such payment to all of the rights of recovery of the
Agent, who shall execute all papers required and shall do everything that may be
necessary to secure such rights, including the execution of such documents
necessary to enable the corporation effectively to bring suit to enforce such
rights.

Section 10.  No Duplication of Payments.

      The corporation shall not be liable under this Article to make any payment
in connection with any claim made against the Agent to the extent the Agent has
otherwise actually received payment (under any insurance policy, agreement,
vote, or otherwise) of the amounts otherwise indemnifiable hereunder.


                                    ARTICLE X

                                     Notices

      Whenever, under any provisions of these Bylaws, notice is required to be
given to any stockholder, the same shall be given either (1) in writing, timely
and duly deposited in the United States Mail, postage prepaid, and addressed to
his last known post office address as shown by the stock record of the
corporation or its transfer agent, or (2) by a means of electronic transmission
that satisfies the requirements of Section 4(e) of Article II of these Bylaws,
and has been consented to by the stockholder to whom the notice is given. Any
notice required to be given to any director may be given by the method
hereinabove stated, or by telegram or other means of electronic transmission,
except that such notice other than one which is delivered personally, shall be
sent to such address or (in the case of facsimile telecommunication) facsimile
telephone number as such director shall have filed in writing with the Secretary
of the corporation, or, in the absence of such filing, to the last known post
office address of such director. If no address of a stockholder or director be
known, such notice may be sent to the office of the corporation required to be
maintained pursuant to Section 2 of Article I hereof. An affidavit of mailing,
executed by a duly authorized and competent employee of the corporation or its
transfer agent appointed with respect to the class of stock affected, specifying
the name and address or the names and addresses of the stockholder or
stockholders, director or directors, to whom any such notice or notices was or
were given, and the time and method of giving the same, shall be conclusive
evidence of the statements therein contained. All notices given by mail, as
above provided, shall be deemed to have been given as at the time of mailing and
all notices



                                       20
<PAGE>   21

given by telegram or other means of electronic transmission shall be deemed to
have been given as at the sending time recorded by the telegraph company or
other electronic transmission equipment operator transmitting the same. It shall
not be necessary that the same method of giving be employed in respect of all
directors, but one permissible method may be employed in respect of any one or
more, and any other permissible method or methods may be employed in respect of
any other or others. The period or limitation of time within which any
stockholder may exercise any option or right, or enjoy any privilege or benefit,
or be required to act, or within which any director may exercise any power or
right, or enjoy any privilege, pursuant to any notice sent him in the manner
above provided, shall not be affected or extended in any manner by the failure
of such a stockholder or such director to receive such notice. Whenever any
notice is required to be given under the provisions of the statutes or of the
Certificate of Incorporation, or of these Bylaws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto. Whenever notice is
required to be given, under any provision of law or of the Certificate of
Incorporation or Bylaws of the corporation, to any person with whom
communication is unlawful, the giving of such notice to such person shall not be
required and there shall be no duty to apply to any governmental authority or
agency for a license or permit to give such notice to such person. Any action or
meeting which shall be taken or held without notice to any such person with whom
communication is unlawful shall have the same force and effect as if such notice
had been duly given. In the event that the action taken by the corporation is
such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate shall state, if such is the
fact and if notice is required, that notice was given to all persons entitled to
receive notice except such persons with whom communication is unlawful.


                                   ARTICLE XI

                                   Amendments

      These Bylaws may be repealed, altered or amended or new Bylaws adopted by
written consent of stockholders in the manner authorized by Section 8 of Article
II, or at any meeting of the stockholders, either annual or special, by the
affirmative vote of a majority of the stock entitled to vote at such meeting.
The Board of Directors shall also have the authority to repeal, alter or amend
these Bylaws or adopt new Bylaws (including, without limitation, the amendment
of any Bylaws setting forth the number of directors who shall constitute the
whole Board of Directors) by unanimous written consent or at any annual,
regular, or special meeting by the affirmative vote of a majority of the whole
number of directors, subject to the power of the stockholders to change or
repeal such Bylaws and provided that the Board of Directors shall not make or
alter any Bylaws fixing the qualifications, classifications, or term of office
of directors.




                                       21
<PAGE>   22

                                 RESTATED BYLAWS

                                       OF

                            JDS UNIPHASE CORPORATION



                             A DELAWARE CORPORATION






<PAGE>   23

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
<S>             <C>                                                                   <C>
ARTICLE I OFFICES......................................................................1

   Section 1.   Registered Office......................................................1

   Section 2.   Other Offices..........................................................1

ARTICLE II STOCKHOLDERS' MEETINGS......................................................1

   Section 1.   Place of Meetings......................................................1

   Section 2.   Annual Meetings........................................................2

   Section 3.   Special Meetings.......................................................2

   Section 4.   Notice of Meetings.....................................................2

   Section 5.   Quorum and Voting......................................................3

   Section 6.   Voting Rights..........................................................4

   Section 7.   Voting Procedures and Inspectors of Elections..........................5

   Section 8.   List of Stockholders...................................................6

   Section 9.   Stockholder Proposals at Annual Meetings...............................6

   Section 10.  Nominations of Persons for Election to the Board of Directors..........7

   Section 11.  Action Without Meeting.................................................8

ARTICLE III DIRECTORS..................................................................9

   Section 1.   Number and Term of Office..............................................9

   Section 2.   Powers.................................................................9

   Section 3.   Vacancies..............................................................9

   Section 4.   Resignations and Removals..............................................9

   Section 5.   Meetings...............................................................10

   Section 6.   Quorum and Voting......................................................10

   Section 7.   Action Without Meeting.................................................11

</TABLE>


                                       i
<PAGE>   24

<TABLE>

<S>             <C>                                                                   <C>
   Section 8.   Fees and Compensation..................................................11

   Section 9.   Committees.............................................................11

ARTICLE IV OFFICERS....................................................................12

   Section 1.   Officers Designated....................................................12

   Section 2.   Tenure and Duties of Officers..........................................13

ARTICLE V EXECUTION OF CORPORATE INSTRUMENTS, AND VOTING OF
           SECURITIES OWNED BY THE CORPORATION ........................................14

   Section 1.   Execution of Corporate Instruments.....................................14

   Section 2.   Voting of Securities Owned by Corporation..............................14

ARTICLE VI SHARES OF STOCK.............................................................15

   Section 1.   Form and Execution of Certificates.....................................15

   Section 2.   Lost Certificates......................................................15

   Section 3.   Transfers..............................................................16

   Section 4.   Fixing Record Dates....................................................16

   Section 5.   Registered Stockholders................................................17

ARTICLE VII OTHER SECURITIES OF THE CORPORATION........................................17

ARTICLE VIII CORPORATE SEAL............................................................17

ARTICLE IX INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS................18

   Section 1.   Right to Indemnification...............................................18

   Section 2.   Authority to Advance Expenses..........................................18

   Section 3.   Right of Claimant to Bring Suit........................................19

   Section 4.   Provisions Nonexclusive................................................19

   Section 5.   Authority to Insure....................................................19

   Section 6.   Survival of Rights.....................................................19

   Section 7.   Settlement of Claims...................................................19
</TABLE>


                                       ii
<PAGE>   25

<TABLE>
<S>             <C>                                                                   <C>
   Section 8.   Effect of Amendment....................................................20

   Section 9.   Subrogation............................................................20

   Section 10.  No Duplication of Payments.............................................20

ARTICLE X NOTICES......................................................................20

ARTICLE XI AMENDMENTS..................................................................21
</TABLE>


                                       iii


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.5
<SEQUENCE>4
<FILENAME>f75587ex4-5.txt
<DESCRIPTION>EXHIBIT 4.5
<TEXT>
<PAGE>   1
                                                                     Exhibit 4.5





                            JDS UNIPHASE CANADA LTD.



                                       and



                           CIBC MELLON TRUST COMPANY,

                                  Rights Agent







                      AMENDED AND RESTATED RIGHTS AGREEMENT



                         Dated as of February ___, 2000



<PAGE>   2

                                TABLE OF CONTENTS
<Table>
<S>        <C>                                                                              <C>
Section 1. Certain Definitions...............................................................1
Section 2. Appointment of Rights Agent.......................................................3
Section 3. Issue of Rights Certificates......................................................3
Section 4. Form of Rights Certificates.......................................................5
Section 5. Countersignature and Registration.................................................5
Section 6. Transfer, Split Up, Combination and Exchange of Rights Certificates; Mutilated,
               Destroyed, Lost or Stolen Rights Certificates.................................5
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights.....................6
Section 8. Cancellation and Destruction of Rights Certificates...............................8
Section 9. Reservation and Availability of Capital Stock.....................................8
Section 10. Exchangeable Share Record Date..................................................10
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or  Number of Rights....10
Section 12. Certificate of Adjusted Purchase Price or Number of Shares......................15
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power............16
Section 14. Fractional Rights and Fractional Shares.........................................17
Section 15. Rights of Action................................................................18
Section 16. Agreement of Rights Holders.....................................................18
Section 17. Rights Certificate Holder Not Deemed a Shareholder..............................19
Section 18. Concerning the Rights Agent.....................................................19
Section 19. Merger or Consolidation or Change of Name of Rights Agent.......................20
Section 20. Duties of Rights Agent..........................................................20
Section 21. Change of Rights Agent..........................................................23
Section 22. Issuance of New Rights Certificates.............................................24
Section 23. Redemption and Termination......................................................24
Section 24. Notice of Certain Events........................................................25
Section 25. Notices.........................................................................26
Section 26. Supplements and Amendments......................................................26
Section 27. Successors......................................................................27
Section 28. Determinations and Actions by the Board of Directors, etc.......................27
Section 29. Benefits of this Agreement......................................................27
Section 30. Severability....................................................................28
Section 31. Governing Law...................................................................28
Section 32. Counterparts....................................................................28
Section 33. Descriptive Headings............................................................28
Section 34. Exchange........................................................................29

Exhibit A   Form of Rights Certificate
</Table>


                                      -i-
<PAGE>   3

                     AMENDED AND RESTATED RIGHTS AGREEMENT

               AMENDED AND RESTATED RIGHTS AGREEMENT, dated as of February ____,
2000 (the "Agreement"), between JDS Uniphase Canada Ltd., a corporation
incorporated under the laws of Canada (the "Company"), and CIBC Mellon Trust
Company, a trust company formed under the laws of Canada (the "Rights Agent").

RECITALS:

               WHEREAS effective June 22, 1998 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company authorized and issued one right
(as such number may hereinafter be adjusted pursuant hereto) (a "Right") for
each exchangeable share of the Company (an "Exchangeable Share") issued between
the Effective Time (including the Exchangeable Shares issued at the Effective
Time) and, except as otherwise provided in Section 22, the Distribution Date (as
these terms are hereinafter defined), each Right initially representing the
right to purchase upon the terms and subject to the conditions hereinafter set
forth one Exchangeable Share;

               WHEREAS, the Rights are intended to provide rights to acquire
additional Exchangeable Shares (or in certain circumstances other securities) on
terms substantially the same as the Uniphase Rights (as hereinafter defined)
confer the right to acquire shares of preferred stock (or other securities) of
JDS Uniphase Corporation (formerly, Uniphase Corporation) ("Uniphase"), a
Delaware corporation, that are essentially the economic equivalent of Uniphase
Common Stock (or in certain circumstances other securities);

               WHEREAS, the Company desires to set forth certain terms and
conditions governing the Rights;

               WHEREAS, the Board of Directors of Uniphase has determined that
it is in the best interest of Uniphase and the holders of Uniphase Common Stock
to amend the Third Amended and Restated Rights Agreement dated October 15, 1999
between Uniphase and American Stock Transfer & Trust Company, as rights agent
(such agreement, as amended being the Uniphase Rights Agreement) to increase the
purchase price of the Series B Preferred Stock of Uniphase, par value U.S.$0.001
per share, from U.S.$600 to U.S.$3,600;

               WHEREAS, the Board of Directors of the Company has approved an
amendment to this Agreement such that it conforms to the Uniphase Rights
Agreement;

               NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:

SECTION 1.   CERTAIN DEFINITIONS

        Capitalized terms used herein and not otherwise defined herein will have
the meaning given in the Uniphase Rights Agreement. In addition, for purposes of
this Agreement, the following terms have the meanings indicated:


<PAGE>   4
        (a)     "Adjustment Shares" has the meaning set forth in Section
                11(a)(ii).

        (b)     "Adjustment Spread" has the meaning set forth in Section 34
                (a)(ii).

        (c)     "Business Day" shall mean any day other than a Saturday, Sunday
                or a day on which banking institutions in the city of New York,
                New York are authorized or obligated by law or executive order
                to close.

        (d)     "Canadian Prospectus" shall mean a prospectus (including a short
                form prospectus) prepared in accordance with applicable Canadian
                Securities Laws for the purposes of qualifying securities for
                distribution or distribution to the public, as the case may be,
                in any province or territory of Canada.

        (e)     "Canadian Securities Law" shall mean statutes and regulations
                applicable to the trading of securities in any province or
                territory of Canada including applicable rules, policy
                statements and blanket rulings and orders promulgated by
                Canadian securities regulatory authorities.

        (f)     "Company" means JDS Uniphase Canada Ltd., a corporation
                incorporated under the laws of Canada, and also means a
                Principal Party to the extent provided in Section 13(a).

        (g)     "Current Value" has the meaning set forth in Section 11(a)(iii).

        (h)     "Depositary Agent" has the meaning set forth in Section 7(c).

        (i)     "Effective Date" has the meaning set forth in the Plan of
                Arrangement.

        (j)     "Exchangeable Shares" has the meaning set forth in the Recitals.

        (k)     "Plan of Arrangement" shall mean the plan of arrangement of JDS
                FITEL Inc., a corporation incorporated under the laws of Canada
                ("JDS"), contemplated by that certain merger agreement made as
                of January 28, 1999, as amended and restated as of April 29,
                1999 among Uniphase, the Company and JDS, as amended from time
                to time.

        (l)     "Principal Party" has the meaning set forth in Section 13(b).

        (m)     "Purchase Price" has the meaning set forth in Section 7(b).

        (n)     "Redemption Price" has the meaning set forth in Section 23(a).

        (o)     "Registration Date" has the meaning set forth in Section 9(c).

        (p)     "Registration Statement" has the meaning set forth in Section
                9(c).

        (q)     "Right" has the meaning set forth in the Recitals to this
                Agreement.



                                       2
<PAGE>   5

        (r)     "Rights Agent" has the meaning set forth in the Recitals to this
                Agreement.

        (s)     "Rights Certificate" has the meaning set forth in Section 3(a).

        (t)     "Rights Dividend Declaration Date" has the meaning set forth in
                the recitals to this Agreement.

        (u)     "Section 11(a)(ii) Event" shall mean the event described in
                Section 11(a)(ii) of the Uniphase Rights Agreement.

        (v)     "Section 13 Event" shall mean any event described in clause (x),
                (y) or (z) of Section 13(a) of the Uniphase Rights Agreement.

        (w)     "Section 34(a)(i) Exchange Ratio" has the meaning set forth in
                Section 34(a)(i).

        (x)     "Spread" has the meaning set forth in Section 11(a)(iii).

        (y)     "Triggering Event" shall mean any Section 11(a)(ii) Event or any
                Section 13 Event.

        (z)     "Uniphase" has the meaning set forth in the Recitals to this
                Agreement.

        (aa)    "Uniphase Common Stock" means the common stock, par value
                U.S.$0.001 per share, of Uniphase.

        (bb)    "Uniphase Purchase Price" means the "Purchase Price" as defined
                in the Uniphase Rights Agreement.

        (cc)    "Uniphase Rights" shall mean the "Rights" as defined in the
                Uniphase Rights Agreement.

        (dd)    "Uniphase Rights Agreement" means the fourth amended and
                restated rights agreement dated as of February ____, 2000 (and
                as it may be thereafter amended and in effect from time to time)
                between Uniphase and American Stock Transfer & Trust Company, as
                rights agent.

SECTION 2.  APPOINTMENT OF RIGHTS AGENT

        The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. With the consent of the Rights Agent, the
Company may from time to time appoint such co-rights agents as it may deem
necessary or desirable.

SECTION 3.  ISSUE OF RIGHTS CERTIFICATES

        (a)     Until the Distribution Date, (x) the Rights will be evidenced
                (subject to the provisions of paragraph (b) of this Section 3)
                by the certificates for Exchangeable Shares registered in the
                names of the holders of Exchangeable Shares as of and subsequent
                to the


                                       3
<PAGE>   6
Effective Date (which certificates for Exchangeable Shares shall be deemed also
to be certificates for Rights) and not by separate certificates, and (y) the
Rights will be transferable only in connection with the transfer of the
underlying Exchangeable Shares including a transfer to the Company; provided,
however, that if a tender or exchange offer (or take-over bid) is terminated
prior to the occurrence of a Distribution Date, then no Distribution Date shall
occur as a result of such tender or exchange offer (or take-over bid). As soon
as practicable after the Distribution Date, the Rights Agent will send by
first-class, insured, postage prepaid mail, to each registered holder of
Exchangeable Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more rights
certificates, in substantially the form of Exhibit A hereto (the "Rights
Certificates"), evidencing one Right for each Exchangeable Share so held,
subject to adjustment as provided herein.

        In the event that an adjustment in the number of Rights per Exchangeable
Share has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company may make the necessary and
appropriate rounding adjustments (in accordance with Section 14(a) hereof) so
that Rights Certificates representing only whole numbers of Rights are
distributed and cash is paid in lieu of any fractional Rights. As of and after
the Distribution Date, the Rights will be evidenced solely by such Rights
Certificates.

        (b)     Rights shall, without any further action, be issued in respect
of all Exchangeable Shares which are issued on or after the Effective Date but
prior to the earlier of the Distribution Date and the Expiration Date.
Certificates representing such Exchangeable Shares shall bear the following
legend:

        This certificate also evidences and entitles the holder hereof to
                certain Rights as set forth in the Rights Agreement between JDS
                Uniphase Canada Ltd. (the "Company") and CIBC Mellon Trust
                Company (the "Rights Agent") dated as of June 30, 1999, as
                amended from time to time (the "Rights Agreement"), the terms of
                which are hereby incorporated herein by reference and a copy of
                which is on file at the principal office of the stock transfer
                administration office of the Rights Agent. Under certain
                circumstances, as set forth in the Rights Agreement, such Rights
                will be evidenced by separate certificates and will no longer be
                evidenced by this certificate. The Company will mail to the
                holder of this certificate a copy of the Rights Agreement, as in
                effect on the date of mailing, without charge promptly after
                receipt of a written request therefor. UNDER CERTAIN
                CIRCUMSTANCES SET FORTH IN THE RIGHTS AGREEMENT, RIGHTS ISSUED
                TO, OR HELD BY, ANY PERSON WHO IS, WAS OR BECOMES AN ACQUIRING
                PERSON OR ANY AFFILIATE OR ASSOCIATE THEREOF (AS SUCH TERMS ARE
                DEFINED IN THE RIGHTS AGREEMENT), WHETHER CURRENTLY HELD BY OR
                ON BEHALF OF SUCH PERSON OR BY ANY SUBSEQUENT HOLDER, MAY BECOME
                NULL AND VOID.

Until the earlier of the Distribution Date and the Expiration Date, the Rights
        associated with the Exchangeable Shares represented by such certificates
        shall be evidenced by such certificates alone, notwithstanding the
        absence of the foregoing legend, and registered holders of the
        Exchangeable Shares shall also be the registered holders of the
        associated Rights, and the transfer


                                       4
<PAGE>   7
of any of such certificates shall also constitute the transfer of the Rights
associated with the Exchangeable Shares represented by such certificates.

SECTION 4.  FORM OF RIGHTS CERTIFICATES

        The Rights Certificates (and the forms of election to purchase,
assignment and certificate to be printed on the reverse thereof) shall each be
substantially in the form set forth in Exhibit A hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
applicable law or any rule or regulation thereunder or with any rule or
regulation of any stock exchange or automated quotation system on which the
Rights may from time to time be listed or to conform to usage. Subject to the
provisions of Sections 11 and 22 hereof, the Rights Certificates, whenever
distributed, shall be dated as of the Effective Date and on their face shall
entitle the holders thereof to purchase such number of Exchangeable Shares as
shall be set forth therein at the price set forth therein, but the amount and
type of securities, cash or other assets that may be acquired upon the exercise
of each Right and the Purchase Price thereof shall be subject to adjustment as
provided herein.

SECTION 5.  COUNTERSIGNATURE AND REGISTRATION

        (a)     Rights Certificates shall be executed on behalf of the Company
by its Chairman, the President or one of its Vice Presidents, under its
corporate seal reproduced thereon attested by its Secretary, Treasurer or one of
its Assistant Secretaries. The signature of any of these officers on the Rights
Certificates may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of the individuals who were at any time the proper
officers of the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
countersignature of such Rights Certificates or did not hold such offices at the
date of such Rights Certificates. No Rights Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose unless there appears on
such Rights Certificate a countersignature duly executed by the Rights Agent by
manual signature of an authorized signatory, and such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.

        (b)     Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its office designated for surrender of Rights Certificates
upon exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.


SECTION 6.  TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS CERTIFICATES;
            MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES

        (a)     Subject to the provisions of Sections 4, 7(e) and 14 hereof, at
any time after the Close of Business on the Distribution Date, and at or prior
to the Close of Business on the



                                       5
<PAGE>   8

Expiration Date, any Rights Certificate or Certificates may be transferred,
split up, combined or exchanged for another Rights Certificate or Certificates,
entitling the registered holder to purchase a like number of Exchangeable Shares
(or, following a Triggering Event, other securities, cash or other assets, as
the case may be) as the Rights Certificate or Certificates surrendered then
entitled such holder to purchase. Any registered holder desiring to transfer,
split up, combine or exchange any Rights Certificate or Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Rights Certificate or Certificates to be transferred, split up, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Company shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Rights
Certificate until the registered holder shall have completed and executed the
certificate set forth in the form of assignment on the reverse side of such
Rights Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request; whereupon the Rights Agent shall, subject
to the provisions of Sections 4, 7(e) and 14 hereof, countersign and deliver to
the Person entitled thereto a Rights Certificate or Rights Certificates, as the
case may be, as so requested. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, split up, combination or exchange of Rights
Certificates.

        (b)     Subject to Section 7(e) hereof, if a Rights Certificate shall be
mutilated, lost, stolen or destroyed, upon request by the registered holder of
the Rights represented thereby and upon payment to the Company and the Rights
Agent of all reasonable expenses incident thereto, there shall be issued, in
exchange for and upon cancellation of the mutilated Rights Certificate, or in
substitution for the lost, stolen or destroyed Rights Certificate, a new Rights
Certificate, in substantially the form of the prior Rights Certificate, of like
tenor and representing the equivalent number of Rights, but, in the case of
loss, theft or destruction, only upon receipt of evidence satisfactory to the
Company and the Rights Agent of such loss, theft or destruction of such Rights
Certificate and an indemnity satisfactory to them to save each of them and any
of their agents harmless.

SECTION 7.  EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS

        (a)     Prior to the Expiration Date, the registered holder of any
Rights Certificate may, subject to the provisions of Sections 7(e), 9(c) and
11(a)(ii) hereof, exercise the Rights evidenced thereby, in whole or in part, at
any time after the Distribution Date upon surrender of the Rights Certificate,
with the form of election to purchase and the certificate on the reverse side
thereof duly executed, to the Rights Agent at the office of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price (as hereinafter defined) for the number of Exchangeable Shares (or,
following a Triggering Event, other securities, cash or other assets, as the
case may be) for which such surrendered Rights are then exercisable.

        (b)     The purchase price for each Exchangeable Share shall be
U.S.$3,600, subject to adjustment from time to time as provided in Sections 11
and 13(a) hereof (such purchase price, as so adjusted, being the "Purchase
Price"), and shall be payable in accordance with paragraph (c) below.


                                       6
<PAGE>   9

        (c)     As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with the Rights Agent or other
corporation in good standing organized under the laws of Canada or any Province
thereof, which is authorized under such laws to exercise corporate trust or
stock transfer powers and is subject to supervision or examination by any
Canadian authority (such institution being the "Depositary Agent"), certificates
representing the Exchangeable Shares that may be acquired upon exercise of the
Rights and shall cause such Depositary Agent to enter into an agreement pursuant
to which the Depositary Agent shall issue receipts representing interests in the
Exchangeable Shares so deposited. Upon receipt of a Rights Certificate
representing exercisable Rights, with the form of election to purchase and the
certificate duly executed, accompanied by payment, with respect to each Right so
exercised, of the Purchase Price for the Exchangeable Shares (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased thereby as set forth below and an amount equal to any applicable
transfer tax or charge which may be payable in respect of any transfer involved
in the transfer or delivery of Rights Certificates or the issuance and delivery
of certificates for Exchangeable Shares in a name other than that of the holder
of the Rights being exercised or evidence satisfactory to the Company of payment
of such tax or charge, the Rights Agent shall, subject to Section 20(k) hereof,
thereupon promptly (i) requisition from the Depositary Agent depositary receipts
representing such number of Exchangeable Shares as are to be purchased and the
Company will direct the Depositary Agent to comply with such request, (ii)
requisition from the Company the amount of cash, if any, to be paid in lieu of
fractional Exchangeable Shares in accordance with Section 14 hereof, (iii) after
receipt of such depositary receipts, cause the same to be delivered to or upon
the order of the registered holder of such Rights Certificate, registered in
such name or names as may be designated by such holder, and (iv) after receipt
thereof, deliver such cash, if any, to or upon the order of the registered
holder of such Rights Certificate. In the event that the Company is obligated to
issue Exchangeable Shares, other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such Exchangeable Shares, other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in
cash or by certified or bank check or money order payable to the order of the
Company.

        (d)     In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the Rights remaining unexercised shall be issued by the Rights Agent
and delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.

        (e)     Notwithstanding anything in this Agreement to the contrary, from
and after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Associate or Affiliate of an
Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of



                                       7
<PAGE>   10

equity interests in such Acquiring Person (or any such Associate or Affiliate)
or to any Person with whom the Acquiring Person (or such Associate or Affiliate)
has any continuing agreement, arrangement or understanding regarding the
transferred Rights, Exchangeable Shares or the Company or (B) a transfer which a
majority of the Board of Directors has determined to be part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) are complied with, but shall have no liability
to any holder of Rights or any other Person as a result of its failure to make
any determination under this Section 7(e) with respect to an Acquiring Person or
its Affiliates, Associates or transferees.

        (f)     Notwithstanding anything in this Agreement or any Rights
Certificate to the contrary, neither the Rights Agent nor the Company shall be
obligated to undertake any action with respect to a registered holder upon the
occurrence of any purported exercise by such registered holder unless such
registered holder shall have (i) completed and executed the certificate
following the form of election to purchase set forth on the reverse side of the
Rights Certificate surrendered for such exercise, and (ii) provided such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) of the Rights represented by such Rights Certificate or
Affiliates or Associates thereof as the Company shall reasonably request.

SECTION 8.  CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES

        All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
cancelled form, or, if surrendered to the Rights Agent, shall be cancelled by
it, and no Rights Certificates shall be issued in lieu thereof except as
expressly permitted by this Agreement. The Company shall deliver to the Rights
Agent for cancellation and retirement, and the Rights Agent shall so cancel and
retire, any Rights Certificates acquired by the Company otherwise than upon the
exercise thereof. The Rights Agent shall deliver all cancelled Rights
Certificates to the Company, or shall, at the written request of the Company,
destroy such cancelled Rights Certificates, and in such case shall deliver a
certificate of destruction thereof to the Company.

SECTION 9.  RESERVATION AND AVAILABILITY OF CAPITAL STOCK

        (a)     The Company shall at all times prior to the Expiration Date
cause to be reserved and kept available, out of its authorized and unissued
Exchangeable Shares, the number of Exchangeable Shares that, as provided in this
Agreement, will be sufficient to permit the exercise in full of all outstanding
Rights. Upon the occurrence of any events resulting in an increase in the
aggregate number of Exchangeable Shares (or other equity securities of the
Company) issuable upon exercise of all outstanding Rights above the number then
reserved, the Company shall make appropriate increases in the number of shares
so reserved.

        (b)     If the Exchangeable Shares to be issued and delivered upon the
exercise of the Rights may be listed on any stock exchange or automated
quotation system, the Company shall



                                       8
<PAGE>   11

during the period from the Distribution Date through the Expiration Date use its
best efforts to cause all securities reserved for such issuance to be listed on
such exchange or system upon official notice of issuance upon such exercise.

        (c)     The Company shall use its best efforts (i) as soon as
practicable following the occurrence of a Section 11(a)(ii) Event and a
determination by the Company in accordance with Section 11(a)(iii) hereof of the
consideration to be delivered by the Company upon exercise of the Rights or, if
so required by law, as soon as practicable following the Distribution Date (such
date being the "Registration Date"), to file a registration statement on an
appropriate form under the Securities Act, with respect to the securities that
may be acquired upon exercise of the Rights (the "Registration Statement"), (ii)
to cause the Registration Statement to become effective as soon as practicable
after such filing, (iii) to cause the Registration Statement to continue to be
effective (and to include a prospectus complying with the requirements of the
Securities Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration Statement, and
(B) the Expiration Date and (iv) to take as soon as practicable following the
Registration Date such action as may be required to ensure that any acquisition
of securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws; provided that (i) the terms "registration
statement" or "Registration Statement" include a Canadian Prospectus; and (ii)
any references to a registration statement or Registration Statement having
become effective, or similar references, shall include a Canadian Prospectus for
which a final receipt has been obtained from the relevant Canadian securities
regulatory authorities. The Company may temporarily suspend, for a period of
time not to exceed one hundred twenty (120) days after the date set forth in
clause (i) of the first sentence of this Section 9(c), the exercisability of the
Rights in order to prepare and file such registration statement and permit it to
become effective. Upon any such suspension, the Company shall issue a public
announcement stating that the exercisability of the Rights has been temporarily
suspended, as well as a public announcement at such time as the suspension is no
longer in effect. In addition, if the Company shall determine that a
registration statement is required following the Distribution Date, the Company
may temporarily suspend the exercisability of the Rights until such time as a
registration statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law or a registration statement shall not have been declared
effective.

        (d)     The Company shall take such action as may be necessary to ensure
that all Exchangeable Shares (and, following the occurrence of a Triggering
Event, any other securities that may be delivered upon exercise of Rights) shall
be, at the time of delivery of the certificates or depositary receipts for such
securities (subject to payment of the Purchase Price), duly and validly
authorized and issued and fully paid and non-assessable.

        (e)     The Company shall pay any documentary, stamp or transfer tax or
charge imposed in connection with the issuance or delivery of the Rights
Certificates or upon the exercise of Rights; provided, however, the Company
shall not be required to pay any such tax or charge imposed in connection with
the issuance or delivery of Exchangeable Shares, or any certificates for such
Exchangeable Shares (or, following the occurrence of a Triggering Event, any
other



                                       9
<PAGE>   12

securities, cash or assets, as the case may be) to any Person other than
the registered holder of the Rights Certificates evidencing the Rights
surrendered for exercise. The Company shall not be required to issue or deliver
any certificates for Exchangeable Shares (or, following the occurrence of a
Triggering Event, any other securities, cash or assets, as the case may be) to,
or in a name other than that of, the registered holder of the Rights Certificate
upon the exercise of any Rights represented thereby until any such tax or charge
shall have been paid (any such tax or charge being payable by the holder of such
Rights Certificate at the time of surrender) or until it has been established to
the Company's satisfaction that no such tax or charge is due.

SECTION 10.  EXCHANGEABLE SHARE RECORD DATE

        Each Person in whose name any certificate for Exchangeable Shares (or,
following the occurrence of a Triggering Event, other securities) is issued upon
the exercise of Rights shall for all purposes be deemed to have become the
holder of record of the Exchangeable Shares (or, following the occurrence of a
Triggering Event, other securities) represented thereby on, and such certificate
shall be dated, the date upon which the Rights Certificate evidencing such
Rights was duly surrendered and payment of the Purchase Price (and any
applicable transfer taxes) was made; provided, however, that if the date of such
surrender and payment is a date upon which the Exchangeable Shares (or,
following the occurrence of a Triggering Event, other securities) transfer books
of the Company are closed, such Person shall be deemed to have become the
registered holder of such securities on, and such certificate shall be dated,
the next succeeding Business Day on which the Exchangeable Shares (or, following
the occurrence of a Triggering Event, other securities) transfer books of the
Company are open and, further provided, however, that if delivery of
Exchangeable Shares (or, following the occurrence of a Triggering Event, other
securities) is delayed pursuant to Section 9(c), such Persons shall be deemed to
have become the registered holders of such Exchangeable Shares (or, following
the occurrence of a Triggering Event, other securities) only when such
Exchangeable Shares (or other securities) first become deliverable. Prior to the
exercise of the Rights evidenced thereby, the holder of a Rights Certificate
shall not be entitled to any rights of a shareholder of the Company with respect
to securities for which the Rights shall be exercisable, including, without
limitation, the right to vote, to receive dividends or other distributions or to
exercise any pre-emptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein.

SECTION 11.  ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
             NUMBER OF RIGHTS

        The Purchase Price, the number and kind of securities purchasable upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 11.

        (a)     (i) If any adjustment shall be made pursuant to Section 11(a)(i)
of the Uniphase Rights Agreement (including any such adjustment resulting from
the application of Section 11(f) thereof) or in the event the Company shall at
any time after the Rights Dividend Declaration Date (A) declare a dividend on
the Exchangeable Shares payable in Exchangeable Shares, (B) subdivide the
outstanding Exchangeable Shares, (C) combine the outstanding Exchangeable



                                       10
<PAGE>   13

Shares into a smaller number of shares, or (D) issue any shares of its capital
stock in a reclassification of the Exchangeable Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), then, in connection therewith, the number of
Exchangeable Shares or shares of capital stock, as the case may be, issuable on
such date upon exercise of the Rights, shall be proportionately adjusted so that
the holder of any Right exercised after such time shall be entitled to receive,
upon payment of the Purchase Price then in effect, the aggregate number and kind
of Exchangeable Shares or shares of capital stock, as the case may be, which, if
such Right had been exercised immediately prior to such date, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section
11(a)(ii) hereof, the adjustment provided for in this Section 11(a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11(a)(ii) hereof.

(ii)    If any adjustment shall be made pursuant to Section 11(a)(ii) of the
Uniphase Rights Agreement, there shall at the same time be made a corresponding
adjustment to the Rights so that each holder of a Right (except as provided
below and in Section 7(c) hereof) shall thereafter have the right to receive,
upon exercise thereof at the current Purchase Price in accordance with the terms
of this Agreement, in lieu of the number of Exchangeable Shares for which such
Rights were theretofore exercisable, such number of Exchangeable Shares as shall
equal the number of Units for which each Uniphase Right is exercisable following
such adjustment multiplied by the ratio of the number of Rights then associated
with each Exchangeable Share and the Purchase Price shall thereafter be adjusted
to the Uniphase Purchase Price in effect under the Uniphase Rights Agreement
following the corresponding adjustment thereunder; provided that the Purchase
Price and the number of Exchangeable Shares issuable upon exercise of a Right
shall be further adjusted as provided in this Agreement to reflect any events
occurring after the date of such adjustment (such Exchangeable Shares being the
"Adjustment Shares").

(iii)   In the event that the number of Exchangeable Shares which are authorized
for issuance by the Company but are not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit the
exercise in full of the Rights in accordance with the foregoing subparagraph
(ii) of this Section 11(a), the Company, by the vote of a majority of the Board
of Directors, shall, to the extent permitted by applicable law: (A) determine
the excess (such excess being the "Spread") of (1) the aggregate value of the
Adjustment Shares issuable upon the exercise of a Right (the "Current Value")
over (2) the Purchase Price, and (B) with respect to each Right (other than
Rights which have become void pursuant to Section 7(e)), make adequate provision
to substitute, in whole or in part, for such Adjustment Shares, upon exercise of
a Right and payment of the Purchase Price, (1) cash, (2) a reduction in the
Purchase Price, (3) other equity securities of the Company, (4) debt securities
of the Company, (5) other assets, or (6) any combination of the foregoing,
having an aggregate value which, when added to the value of the Exchangeable
Shares actually issued upon exercise of such Right, shall have an aggregate
value equal to the Current Value (less the amount of any reduction in such
Purchase Price), where such aggregate value has been determined by a majority of
the Board of Directors, after receiving advice from a nationally recognized
investment banking firm; provided, however, that if the Company shall not have
made adequate provision to deliver value pursuant to clause



                                       11
<PAGE>   14

(B) above within thirty (30) days following the later of (x) the first
occurrence of a Section 11(a)(ii) Event and (y) the date on which the Company's
right of redemption pursuant to Section 23(a) expires (the later of (x) and (y)
being referred to herein as the "Section 11(a)(iii) Trigger Date"), then,
subject to Section 34 hereof, the Company shall be obligated (to the extent
permitted by applicable law) to deliver, upon the surrender for exercise of a
Right and without requiring payment of the Purchase Price, Exchangeable Shares
(to the extent available), and then, if necessary, cash or a combination
thereof, which Exchangeable Shares and/or cash shall have an aggregate value
equal to the Spread. To the extent that the Company determines that some action
need be taken pursuant to the first sentence of this Section 11(a)(iii), the
Company shall provide, subject to Section 7(e) hereof, that such action shall
apply uniformly to all outstanding Rights. For purposes of this Section
11(a)(iii), the value of an Exchangeable Share shall be the current market price
(as determined pursuant to Section 11(d) hereof) per Exchangeable Share, on the
Section 11(a)(iii) Trigger Date.

        (b)     If any adjustment shall be made pursuant to Section 11(b) of the
Uniphase Rights Agreement (including any such adjustment resulting from the
application of Section 11(f) thereof), then, in connection with the issuance of
rights, options or warrants to all holders of Exchangeable Shares corresponding
to the issuance of rights, options or warrants to the holders of Uniphase Common
Stock which occasioned such adjustment, the Purchase Price to be in effect after
the record date for the issuance of such rights, options or warrants to holders
of Exchangeable Shares shall be determined by multiplying the Purchase Price in
effect immediately prior to such record date by the same fraction by which the
"Purchase Price" under Section 11(b) of the Uniphase Rights Agreement is
multiplied to effect the corresponding adjustment thereunder. In the event such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by a majority of the Board of Directors, whose
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights. Exchangeable
Shares owned by or held for the account of the Company or any Subsidiary shall
not be deemed outstanding for the purpose of any such computation. Such
adjustment shall be made successively whenever such a record date is fixed, and
in the event that such rights or warrants are not so issued, the Purchase Price
shall be adjusted to be the Purchase Price which would then be in effect if such
record date had not been fixed.

        (c)     If any adjustment shall be made pursuant to Section 11(c) of the
Uniphase Rights Agreement (including any such adjustment resulting from the
application of Section 11(f) thereof), then, in connection with a distribution
of evidences of indebtedness, cash, assets or subscription rights or warrants,
the Purchase Price to be in effect after the record date for the distribution of
such evidences of indebtedness, cash, assets or subscription rights or warrants
to the holders of Exchangeable Shares shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by the same
fraction by which the "Purchase Price" under Section 11(c) of the Uniphase
Rights Agreement is multiplied to effect the corresponding adjustment
thereunder. Such adjustments shall be made successively whenever such a record
date is fixed, and in the event that such distribution is not so made, the
Purchase Price shall be adjusted to be the Purchase Price which would have been
in effect if such record date had not been fixed.


                                       12
<PAGE>   15

        (d)     For the purpose of any computation hereunder, the "current
market price" per Exchangeable Share on any date shall be deemed to be
equivalent to the "current market price" per share of Uniphase Common Stock as
determined in accordance with Section 11(d) of the Uniphase Rights Agreement.

        (e)     Anything herein to the contrary notwithstanding, no adjustment
in the Purchase Price shall be required if no adjustment in the Uniphase
Purchase Price is required pursuant to Section 11(e) of the Uniphase Rights
Agreement.

        (f)     If as a result of an adjustment made pursuant to Section 13(a)
hereof, the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock other than Exchangeable Shares, thereafter
the number of such other shares so receivable upon exercise of any Right and the
Purchase Price thereof shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Exchangeable Shares contained in Sections 11(a), (b), (c), (e),
(g), (h), (i), (k), (l), (m) and (p), and the provisions of Sections 7, 9, 10,
13 and 14 hereof with respect to the Exchangeable Shares shall apply on like
terms to any such other shares.

        (g)     All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Exchangeable Shares (or
other securities or amount of cash or combination thereof) that may be acquired
from time to time hereunder upon exercise of the Rights, all subject to further
adjustment as provided herein.

        (h)     Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of the
calculations made in Sections 11(b) and (c), each Right outstanding immediately
prior to the making of such adjustment shall thereafter evidence the right to
purchase, at the adjusted Purchase Price, that number of Exchangeable Shares
(calculated to the nearest one hundred-thousandth of an Exchangeable Share)
obtained by (i) multiplying (x) the number of Exchangeable Shares covered by a
Right immediately prior to such adjustment by (y) the Purchase Price in effect
immediately prior to such adjustment of the Purchase Price and (ii) dividing the
product so obtained by the Purchase Price in effect immediately after such
adjustment of the Purchase Price.

        (i)     The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any adjustment in
the number of Exchangeable Shares that may be acquired upon the exercise of a
Right. Each of the Rights outstanding after the adjustment in the number of
Rights shall be exercisable for the number of Exchangeable Shares for which a
Right was exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that number
of Rights (calculated to the nearest one hundredth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase Price
by the Purchase Price in effect immediately after adjustment of the Purchase
Price. The Company shall make a public announcement of its election to adjust
the number of Rights, indicating the record date for the adjustment, and, if
known at the time, the amount of the adjustment to be made. This record date may
be the date on which the Purchase Price is adjusted or any day thereafter, but,
if the Rights



                                       13
<PAGE>   16

Certificates have been issued, shall be at least ten days later than the date of
such public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Rights Certificates evidencing,
subject to Section 14 hereof, the additional Rights to which such holders shall
be entitled as a result of such adjustment, or, at the option of the Company,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, if required by the Company, new
Rights Certificates evidencing all the Rights to which such holders shall be
entitled after such adjustment. Rights Certificates to be so distributed shall
be issued, executed and countersigned in the manner provided for herein (and may
bear, at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on the
record date specified in the public announcement.

        (j)     Irrespective of any adjustment or change in the Purchase Price
or the number of Exchangeable Shares issuable upon the exercise of the Rights,
the Rights Certificates theretofore and thereafter issued may continue to
express the Purchase Price per Exchangeable Share and the number of Exchangeable
Shares which were expressed in the initial Rights Certificates issued hereunder.

        (k)     [INTENTIONALLY LEFT BLANK.]

        (l)     In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Company may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
of that number of Exchangeable Shares and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise over and above
the number of Exchangeable Shares and shares of other capital stock or
securities of the Company, if any, issuable upon such exercise on the basis of
the Purchase Price in effect prior to such adjustment; provided, however, that
the Company shall deliver to such holder a due bill or other appropriate
instrument evidencing such holder's right to receive such additional shares
(fractional or otherwise) or securities upon the occurrence of the event
requiring such adjustment.

        (m)     Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment a majority of the Board of
Directors shall determine to be advisable in order that any (i) consolidation or
subdivision of the Exchangeable Shares, (ii) issuance wholly for cash of any
Exchangeable Shares at less than the current market price, (iii) issuance wholly
for cash of Exchangeable Shares or securities which by their terms are
convertible into or exchangeable for Exchangeable Shares, (iv) stock dividends
or (v) issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Exchangeable Shares, shall not
be taxable to such holders or shall reduce the taxes payable by such holders.

        (n)     Neither Uniphase nor the Company shall, at any time after the
Distribution Date, (i) consolidate or amalgamate with any other Person (other
than a Subsidiary of Uniphase or the



                                       14
<PAGE>   17

Company in a transaction which complies with Section 11(o)), (ii) merge with or
into any other Person (other than a Subsidiary of Uniphase or the Company in a
transaction which complies with Section 11(o)), or (iii) sell or transfer (or
permit any Subsidiary to sell or transfer), in one transaction, or a series of
transactions, assets or earning power aggregating more than 50% of the assets or
earning power, in the case of the Company, of the Company and its Subsidiaries
(taken as a whole) or, in the case of Uniphase, of Uniphase and its Subsidiaries
(taken as a whole), to any other Person or Persons (other than Uniphase or the
Company, as applicable, and/or any of their Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), if (x) at the
time of or immediately after such consolidation, merger or sale there are any
rights, warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the Person which
constitutes, or would constitute, the "Principal Party" for purposes of Section
13(a) hereof shall have distributed or otherwise transferred to its shareholders
or other persons holding an equity interest in such Person Rights previously
owned by such Person or any of its Affiliates and Associates; provided, however,
this Section 11(n) shall not affect the ability of any Subsidiary of the Company
or Uniphase (other than the Company) to consolidate or amalgamate with, merge
with or into, or sell or transfer assets or earning power to, any other
Subsidiary of the Company or Uniphase (other than the Company).

        (o)     After the Distribution Date, the Company shall not, except as
permitted by Section 23, Section 26 or Section 34 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or otherwise
eliminate the benefits intended to be afforded by the Rights.

        (p)     Notwithstanding anything in this Agreement to the contrary, in
the event any adjustment is made under Section 11 or 13 of the Uniphase Rights
Agreement and the adjustment to be made under this Section 11 or Section 13
hereof by reason of the events requiring the adjustment under the Uniphase
Rights Agreement does not result in conferring upon the holders of the Rights
the right to acquire additional Exchangeable Shares (or, following a Trigger
Event, other securities, cash or other assets, as the case may be) on terms
substantially the same as the Uniphase Rights confer the right to acquire shares
of Uniphase Common Stock or preferred stock of Uniphase that is essentially the
economic equivalent of Uniphase Common Stock (or, following a Triggering Event,
other securities, cash or other assets, as the case may be) as contemplated by
the recitals to this Agreement, the Board of Directors shall, concurrently with
the adjustment made under the Uniphase Rights Agreement, make such adjustment in
the Purchase Price, the number and kind of shares or other property subject to
purchase upon exercise of each Right and the number of Rights outstanding as
shall be appropriate in the circumstances to achieve the same result.

SECTION 12.  CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES

        Whenever an adjustment is made as provided in Section 11 or Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with the transfer agent for the
Exchangeable Shares, a copy of such certificate, and (c) mail a



                                       15
<PAGE>   18

brief summary thereof to each holder of a Rights Certificate (or, if prior to
the Distribution Date, to each holder of a certificate representing Exchangeable
Shares) in accordance with Section 25 hereof. The Rights Agent shall be fully
protected in relying on any such certificate and on any adjustment therein
contained and shall not be deemed to have knowledge of any such adjustment
unless and until it shall have received such certificate.

SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING POWER

        (a)     In the event that, following the first occurrence of a Section
11(a)(ii) Event, a Section 13 Event shall occur, then, and in each such case,
proper provision shall be made concurrently with the corresponding action
pursuant to Section 13 of the Uniphase Rights Agreement so that: (i) each holder
of a Right (other than Rights which have become void as provided in Section 7(e)
hereof), shall thereafter have the right to receive, upon the exercise thereof
at the then current Purchase Price, such number of validly authorized and
issued, fully paid, non-assessable and freely tradeable shares of Common Stock
of the Principal Party (as such term is hereinafter defined), which shares shall
not be subject to any liens, encumbrances, rights of call or first refusal,
transfer restrictions or other adverse claims, as shall be equal to the number
of shares of such Uniphase Common Stock for which each Uniphase Right is
exercisable following the corresponding adjustment under Section 13(a) of the
Uniphase Rights Agreement multiplied by the ratio of the number of Uniphase
Rights then associated with each share of Uniphase Common Stock to the number of
Rights then associated with each Exchangeable Share and the Purchase Price in
effect under this Agreement shall thereafter be adjusted to the Uniphase
Purchase Price in effect under the Uniphase Rights Agreement following the
corresponding adjustment thereunder; provided, however, that the Purchase Price
and the number of shares of Common Stock of such Principal Party so receivable
upon exercise of a Right shall be further adjusted as provided in this Agreement
to reflect any changes occurring after such adjustment; (ii) such Principal
Party shall thereafter be liable for, and shall assume, by virtue of such
Section 13 Event, all the obligations and duties of the Company pursuant to this
Agreement; (iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party in all respects; (iv) such Principal Party shall take such steps
(including, but not limited to, the reservation of a sufficient number of shares
of its Common Stock in accordance with Section 9 hereof) in connection with the
consummation of any such transaction as may be necessary to assure that the
provisions of this Agreement shall thereafter be applicable, as nearly as
reasonably may be, in relation to its shares of Common Stock thereafter
deliverable upon the exercise of the Rights to its shares of Common Stock;
provided, however, that, upon the subsequent occurrence of any merger,
consolidation, sale of all or substantially all of the assets, recapitalization,
reclassification of shares, reorganization or other extraordinary transaction in
respect of such Principal Party, each holder of a Right shall thereupon be
entitled to receive, upon exercise of a Right and payment of the Purchase Price,
such cash, shares, rights, warrants and other property which such holder would
have been entitled to receive had it, at the time of such transaction, owned the
shares of Common Stock of the Principal Party purchasable upon the exercise of a
Right, and such Principal Party shall take such steps (including, but not
limited to, reservation of shares of stock) as may be necessary to permit the
subsequent exercise of the Rights in accordance with the terms hereof for such
cash, shares, rights, warrants and other property; and (v) the provisions of
Section 11(a)(ii) hereof shall be of no further effect following the first
occurrence of any Section 13 Event.

                                       16
<PAGE>   19

        (b)     "Principal Party" shall mean the Person designated as such under
the Uniphase Rights Agreement.

        (c)     The provisions of this Section 13 shall similarly apply to
successive mergers or consolidations or amalgamations or sales or other
transfers. In the event that a Section 13 Event shall occur at any time after
the occurrence of a Section 11(a)(ii) Event, the Rights that have not
theretofore been exercised shall thereafter become exercisable in a manner
described in Section 13(a).

SECTION 14.  FRACTIONAL RIGHTS AND FRACTIONAL SHARES

        (a)     The Company shall not be required to issue fractions of Rights
or to distribute Rights Certificates which evidence fractional Rights. In lieu
of issuing such fractional Rights, there shall be paid to the Persons to which
such fractional Rights would otherwise be issuable, an amount in cash equal to
such fraction of the market value of a whole Right. For purposes of this Section
14(a), the market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price of the
Rights for any day shall be, if the Rights are listed or admitted to trading on
a stock exchange, as reported in the principal consolidated transaction
reporting system with respect to securities listed on the principal stock
exchange on which the Rights are listed or admitted to trading or, if the Rights
are not listed or admitted to trading on any securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use in the United States or Canada or, if on any such date the
Rights are not quoted by any such organization, the average of the closing bid
and asked prices as furnished by a professional market maker making a market in
the Rights selected by a majority of the Board of Directors. If on any such date
no such market maker is making a market in the Rights, the fair value of the
Rights on such date as determined in good faith by a majority of the Board of
Directors shall be used and such determination shall be described in a statement
filed with the Rights Agent and the holders of the Rights and shall be
conclusive for all such persons.

        (b)     The Company shall not be required to issue fractional
Exchangeable Shares upon exercise of the Rights or to distribute certificates
which evidence such fractional Exchangeable Shares. In lieu of such fractional
Exchangeable Shares, the Company may pay to the registered holders of Rights
Certificates at the time such Rights are exercised as herein provided an amount
in cash equal to the same fraction of the then current market price of an
Exchangeable Share on the day of exercise, determined in accordance with Section
11(d) hereof.

        (c)     The holder of a Right by the acceptance of such Right expressly
waives his right to receive any fractional Rights or any fractional Exchangeable
Shares upon exercise of a Right, except as permitted by this Section 14.

SECTION 15.  RIGHTS OF ACTION

        All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the



                                       17
<PAGE>   20

Rights Certificates (and, prior to the Distribution Date, the registered holders
of certificates representing Exchangeable Shares); and any registered holder of
a Rights Certificate (or, prior to the Distribution Date, of a certificate
representing Exchangeable Shares), without the consent of the Rights Agent or of
the holder of any other Rights Certificate (or, prior to the Distribution Date,
of a certificate representing Exchangeable Shares), may, in his own behalf and
for his own benefit, enforce, and may institute and maintain any suit, action or
proceeding against the Company or any other Person to enforce, or otherwise act
in respect of, his right to exercise the Rights evidenced by such Rights
Certificate in the manner provided in such Rights Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
shall be entitled to specific performance of the obligations hereunder and
injunctive relief against actual or threatened violations of the obligations
hereunder of any Person subject to this Agreement.

SECTION 16.  AGREEMENT OF RIGHTS HOLDERS

        Every holder of a Right by accepting the same consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:

        (a)     to be bound by and subject to the provisions of this Agreement,
as amended from time to time in accordance with the terms hereof, in respect of
all Rights held;

        (b)     prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Exchangeable Shares;

        (c)     after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the office of the Rights Agent designated for such purposes, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate forms
and certificates duly executed;

        (d)     subject to Section 6(a) and Section 7(f) hereof, the Company and
the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Distribution Date, the associated Exchangeable
Shares) is registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on the Rights
Certificates or the associated Exchangeable Shares certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever, and
neither the Company nor the Rights Agent, subject to the last sentence of
Section 7 (e) hereof, shall be affected by any notice to the contrary;

        (e)     notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or any other Person as a result of its inability to perform any of
its obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided,



                                       18
<PAGE>   21

however, the Company must use its best efforts to have any such order, decree or
ruling lifted or otherwise overturned as promptly as practicable; and

        (f)     subject to the provisions of Section 26, without the approval of
any holder of Rights or Exchangeable Shares and upon the sole authority of the
Board of Directors, acting in good faith, this Agreement may be supplemented or
amended from time to time as provided herein;

SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER

        No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the number of
Exchangeable Shares or any other securities of the Company which may at any time
be issuable on the exercise of the Rights represented thereby, nor shall
anything contained herein or in any Rights Certificate be construed to confer
upon the holder of any Rights Certificate, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or, except as provided in Section 24
hereof, to receive notice of meetings or other actions affecting shareholders,
or to receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof. This Section 17 shall also apply to
holders, as such, of Rights prior to the issuance of Rights Certificates.

SECTION 18. CONCERNING THE RIGHTS AGENT

        (a)     The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses, including reasonable
fees and disbursements of its counsel, incurred in connection with the execution
and administration of this Agreement and the exercise and performance of its
duties hereunder. The Company shall indemnify the Rights Agent for, and hold it
harmless against, any loss, liability, or expense, incurred without negligence,
bad faith or wilful misconduct on the part of the Rights Agent, for anything
done or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement, including the reasonable costs and expenses of
defending against any claim of liability hereunder. This right to
indemnification shall survive the termination of this Agreement and the
resignation or removal of the Rights Agent.

        (b)     The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with its administration of this Agreement in reliance upon any Rights
Certificate or certificate for Exchangeable Shares or for other securities of
the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement or other paper or document believed by it to be genuine and to have
been signed, executed and, where necessary, verified or acknowledged by the
proper Person or Persons.


                                       19
<PAGE>   22

        (c)     The Company shall inform the Rights Agent in a reasonably timely
manner of events which may materially affect the administration of this
Agreement by the Rights Agent and, at any time upon request, shall provide to
the Rights Agent an incumbency certificate certifying the then current officers
of the Company.

SECTION 19.   MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT

        (a)     Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or with which it may be consolidated, or any
corporation resulting from any merger or consolidation to which the Rights Agent
or any successor Rights Agent shall be a party, or any corporation succeeding to
the security services businesses of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any document or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of Section 21
hereof. In case at the time such successor Rights Agent shall succeed to the
agency created by this Agreement, any of the Rights Certificates shall have been
countersigned but not delivered, any such successor Rights Agent may adopt the
countersignature of a predecessor Rights Agent and deliver such Rights
Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

        (b)     In case at any time the name of the Rights Agent shall be
changed and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the countersignature
under its prior name and deliver Rights Certificates so countersigned; and in
case at that time any of the Rights Certificates shall not have been
countersigned, the Rights Agent may countersign such Rights Certificates either
in its prior name or in its changed name; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.

SECTION 20.  DUTIES OF RIGHTS AGENT

        The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the Company
and the holders of Rights Certificates, by their acceptance thereof, shall be
bound:

        (a)     The Rights Agent may retain and consult with legal counsel (who
may be legal counsel for the Company), and the opinion of such counsel shall be
full and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such opinion
and the Rights Agent may also consult with such other experts as the Rights
Agent shall consider necessary or appropriate to properly carry out the duties
and obligations imposed under this Agreement, and shall be protected in acting
and relying in good faith on the advice of any such expert.


                                       20
<PAGE>   23

        (b)     Whenever in the performance of its duties under this Agreement
the Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person, the
determination of "current market price" and the nature and amount of any
adjustment under the Uniphase Rights Agreement corresponding to an adjustment to
be made under this Agreement) be proved or established by the Company prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be specified herein) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman, the
Vice Chairman, the Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent; provided, however, that so long as any Person is an Acquiring Person
hereunder, such certificate shall be signed and delivered by a majority of the
Board of Directors; and such certificate shall be full authorization to the
Rights Agent for any action taken or suffered in good faith by it under the
provisions of this Agreement in reliance upon such certificate.

        (c)     The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.

        (d)     The Rights Agent shall not be liable for or by reason of any of
the statements of fact or recitals contained in this Agreement or in the
certificates for Exchangeable Shares or in the Rights Certificates or be
required to verify the same (except as to its countersignature thereof), but all
such statements and recitals are and shall be deemed to have been made by the
Company only.

        (e)     The Rights Agent shall not have any responsibility for the
validity of this Agreement or the execution and delivery hereof (except the due
execution hereof by the Rights Agent) or for the validity or execution of any
Exchangeable Share certificate or of any Rights Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Company of any covenant or failure by the Company to satisfy conditions
contained in this Agreement or in any Rights Certificate; nor shall it be
responsible for any adjustment required under the provisions of Section 11 or
Section 13 hereof or for the manner, method or amount of any such adjustment or
the ascertaining of the existence of facts that would require any such
adjustment (except with respect to the exercise of Rights evidenced by Rights
Certificates after receipt by the Rights Agent of the certificate describing any
such adjustment contemplated by Section 12); nor shall it by any act hereunder
be deemed to make any representation or warranty as to the authorization or
reservation of any Exchangeable Shares or any other securities to be issued
pursuant to this Agreement or any Rights Certificate or as to whether any
Exchangeable Shares or any other securities will, when so issued, be validly
authorized and issued, fully paid and non-assessable.

        (f)     The Company shall perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further
acts, instruments and assurances as may reasonably be required by the Rights
Agent for the performance by the Rights Agent of its duties under this
Agreement.


                                       21
<PAGE>   24

        (g)     The Rights Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties hereunder
from the Chairman, the Vice Chairman, the Chief Executive Officer, the
President, the Chief Financial Officer, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer;
provided, however, that so long as any Person is an Acquiring Person hereunder,
the Rights Agent shall accept such instructions and advice only from a majority
of the Board of Directors and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with such instructions of
a majority of the Board of Directors. Any application by the Rights Agent for
written instructions from the Company may, at the option of the Rights Agent,
set forth in writing any action proposed to be taken or omitted by the Rights
Agent under this Rights Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.

        (h)     The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or have a pecuniary interest in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.

        (i)     The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent will not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from such act, default, neglect
or misconduct, provided such act, default, neglect or misconduct did not
constitute or such loss was not a result of such attorneys' or agents'
negligence, bad faith or willful misconduct.

        (j)     No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.

        (k)     If, with respect to any Rights Certificate surrendered to the
Rights Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed, not signed or indicates an



                                       22
<PAGE>   25

affirmative response to clause 1 and/or 2 thereof, the Rights Agent shall not
take any further action with respect to such requested exercise or transfer
without first consulting with the Company. If such certificate has been
completed and signed and shows a negative response to clauses 1 and 2 of such
certificate, unless previously instructed otherwise in writing by the Company
(which instructions may impose on the Rights Agent additional ministerial
responsibilities, but no discretionary responsibilities), the Rights Agent may
assume without further inquiry that the Rights Certificate is not owned by a
Person described in Section 7(e) hereof and shall not be charged with any
knowledge to the contrary.

SECTION 21. CHANGE OF RIGHTS AGENT

        The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty days' prior notice
in writing mailed to the Company, and to the transfer agent of the Exchangeable
Shares, by registered or certified mail, and to the holders of the Rights
Certificates by first-class mail. The Company may remove the Rights Agent or any
successor Rights Agent upon thirty days' prior notice in writing, mailed to the
Rights Agent or successor Rights Agent, as the case may be, and to the transfer
agent of the Exchangeable Shares, by registered or certified mail, and to the
holders of the Rights Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Company shall appoint a successor to the Rights Agent. If the Company shall fail
to make such appointment within a period of thirty days after giving notice of
such removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of a
Rights Certificate or, prior to the Distribution Date, the holder of a
certificate for the Exchangeable Shares (who shall, with such notice, submit his
Rights Certificate or certificate for the Exchangeable Shares, as the case may
be, for inspection by the Company), then any registered holder of any Rights
Certificate or, prior to the Distribution Date, the holder of a certificate for
the Exchangeable Shares may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of Canada or any Province thereof in good
standing, shall be authorized under applicable laws to exercise corporate trust
or stock transfer powers or (b) an Affiliate of a corporation described in
clause (a). After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and the transfer agent of
the Exchangeable Shares, and mail a notice thereof in writing to the registered
holders of the Rights Certificates (or certificates for Exchangeable Shares
prior to the Distribution Date). Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent.


                                       23
<PAGE>   26

SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES

        Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by a majority of the Board of
Directors to reflect any adjustment or change made in accordance with the
provisions of this Agreement in the Purchase Price or the number or kind or
class of shares or other securities or property that may be acquired under the
Rights Certificates. In addition, in connection with the issuance or sale of
Exchangeable Shares following the Distribution Date and prior to the Expiration
Date, the Company (a) shall, with respect to Exchangeable Shares so issued or
sold pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and (b) may, in any other case, if deemed
necessary or appropriate by a majority of the Board of Directors, issue Rights
Certificates representing the appropriate number of Rights in connection with
such issuance or sale; provided, however, that (i) no such Rights Certificate
shall be issued if, and to the extent that, the Company shall be advised by
counsel that such issuance would create a significant risk of material adverse
tax consequences to the Company or the Person to whom such Rights Certificate
would be issued, and (ii) no such Rights Certificate shall be issued if, and to
the extent that, appropriate adjustment shall otherwise have been made in lieu
of the issuance thereof.

SECTION 23.  REDEMPTION AND TERMINATION

        (a)     The Company shall, at such time as the Uniphase Rights are
redeemed pursuant to the Uniphase Rights Agreement, redeem all but not less than
all of the then outstanding Rights at a redemption price of U.S.$0.01 per Right,
as such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being the "Redemption Price"). The Company may, at its option, by action
of a majority of the Board of Directors, pay the Redemption Price either in
Exchangeable Shares (based on the "current market price", as defined in Section
11(d) hereof, of the Exchangeable Shares at the time of redemption) or cash and
the redemption of the Rights shall be effective on the basis and with such
conditions as the Board of Directors may in its sole discretion establish.

        (b)     Immediately upon the action of Uniphase ordering the redemption
of the Uniphase Rights pursuant to Section 23 of the Uniphase Rights Agreement,
evidence of which shall be filed with the Rights Agent, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Promptly after the action of a majority of the Board of Directors ordering the
redemption of the Rights, the Company shall give notice of such redemption to
the Rights Agent and the holders of the then outstanding Rights by mailing such
notice to all such holders at each holder's last address as it appears upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Exchangeable Shares. Any notice
which is mailed in the manner herein provided shall be deemed given, whether or
not the holder receives the notice. Each such notice of redemption will state
the method by which the payment of the Redemption Price will be made.


                                       24
<PAGE>   27

SECTION 24. NOTICE OF CERTAIN EVENTS

        (a)     In the event that (x) Uniphase shall give notice pursuant to
Section 24 of the Uniphase Rights Agreement or (y) the Company shall propose, at
any time after the Distribution Date, (i) to pay any dividend payable in stock
of any class to the holders of Exchangeable Shares or to make any other
distribution to the holders of Exchangeable Shares (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Exchangeable Shares rights or warrants to subscribe for
or to purchase any additional Exchangeable Shares or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Exchangeable Shares (other than a reclassification
involving only the subdivision of outstanding Exchangeable Shares), (iv) to
effect any consolidation, amalgamation or merger into or with any other Person
(other than a Subsidiary of the Company in a transaction that complies with
Section 11(o) hereof), or to effect any sale or other transfer (or to permit one
or more of its Subsidiaries to effect any sale or other transfer), in one or
more transactions, of more than 50% of the assets or earning power of the
Company and its Subsidiaries (taken as a whole) to any other Person or Persons
(other than Uniphase and/or any of its Subsidiaries (including the Company) in
one or more transactions each of which complies with Section 11(o) hereof), or
(v) to effect the liquidation, dissolution or winding up of the Company, then,
in each such case, the Company shall give to each holder of a Rights Certificate
(or prior to the Distribution Date, to each holder of certificates for the
Exchangeable Shares), to the extent feasible and in accordance with Section 25
hereof, (A) a notice of the action proposed by Uniphase as set forth in the
notice given pursuant to Section 24 of the Uniphase Rights Agreement or (B)
notice of such proposed action by the Company, which shall specify the record
date for the purposes of such stock dividend, distribution of rights or
warrants, or the date on which such reclassification, consolidation,
amalgamation, merger, sale, transfer, liquidation, dissolution, or winding up is
to take place and the date of participation therein by the holders of the
Exchangeable Shares, if any such date is to be fixed. Such notice shall be so
given in the case of any action covered by clause (x) above as soon as possible
but not later than two (2) Business Days after such notice is given by Uniphase,
and in the case of any action covered by clause (y) (i) or (ii) above at least
twenty (20) days prior to the record date for determining holders of the
Exchangeable Shares for purposes of such action, and in the case of any such
other action, at least twenty (20) days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Exchangeable Shares whichever shall be the earlier; provided, however, no such
notice shall be required pursuant to this Section 24, if any Subsidiary of the
Company effects a consolidation, amalgamation or merger with or into, or effects
a sale or other transfer of assets or earnings power to, any other Subsidiary of
the Company.

        (b)     In case any Triggering Event shall occur, then, in any such
case, the Company shall as soon as practicable thereafter give to each holder of
a Rights Certificate, to the extent feasible and in accordance with Section 25
hereof, a notice of the occurrence of such event, which shall specify the event
and the consequences of the event to holders of Rights under Section 11(a)(ii)
or Section 13 hereof, as the case may be.


                                       25
<PAGE>   28

SECTION 25. NOTICES

        All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing and mailed or sent or delivered
(including by telecopier), if to the Company, at:


        JDS Uniphase Canada Ltd.
        c/o JDS Uniphase Corporation
        210 Baypointe Parkway
        San Jose, California 95134

        Attention: Senior Vice President, Business Development
        Telecopier No.:  (408) 954-0540

        and if to the Rights Agent, at its address at:


        CIBC Mellon Trust Company
        320 Bay Street
        P.O. Box 1
        Toronto, Ontario

        Attention:  AVP, Client Services
        Telecopier No.: (416) 643-5570

        Notices or demands authorized or required by this Agreement to be given
or made by the Company or the Rights Agent to the holder of any Rights
Certificate (or, if prior to the Distribution Date, to the holder of
certificates representing Exchangeable Shares) shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.

SECTION 26.  SUPPLEMENTS AND AMENDMENTS

        Prior to the Distribution Date and subject to the penultimate sentence
of this Section 26, the Company may and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of this Agreement in any respect
without the approval of any holders of certificates representing Exchangeable
Shares. From and after the Distribution Date and subject to the penultimate
sentence of this Section 26, the Company may and the Rights Agent shall, if the
Company so directs, supplement or amend this Agreement without the approval of
any holders of Rights Certificates in order (i) to cure any ambiguity, (ii) to
correct or supplement any provision contained herein which may be defective or
inconsistent with any other provisions herein, (iii) to shorten or lengthen any
time period hereunder, or (iv) to change or supplement the provisions hereunder
in any manner which the Company may deem necessary or desirable and which shall
not adversely affect the interests of the holders of Rights Certificates (other
than an Acquiring Person or an Affiliate or Associate of an Acquiring Person);
provided, however, that this Agreement may not be supplemented or amended to
lengthen, pursuant to clause (iii) of this



                                       26
<PAGE>   29

sentence, (A) subject to Section 28 hereof, a time period relating to when the
Rights may be redeemed at such time as the Rights are not then redeemable, or
(B) any other time period unless such lengthening is for the purpose of
protecting, enhancing or clarifying the rights of, and/or the benefits to, the
holders of Rights. Upon the delivery of a certificate from an appropriate
officer of the Company or, so long as any Person is an Acquiring Person
hereunder, from the majority of the Board of Directors which states that the
proposed supplement or amendment is in compliance with the terms of this Section
26, the Rights Agent shall execute such supplement or amendment. At any time and
subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall supplement or amend any provision of this Agreement without
the approval of any holders of Rights Certificates in order to ensure that the
Rights provide rights to acquire additional Exchangeable Shares (or in certain
circumstances other securities) on terms substantially the same as the Uniphase
Rights confer the right to acquire shares of preferred stock (or other
securities) of Uniphase that are essentially the economic equivalent of Uniphase
Common Stock (or in certain circumstances other securities). Notwithstanding
anything contained in this Agreement to the contrary, (i) no supplement or
amendment shall be made which changes the Redemption Price, the Purchase Price,
the Expiration Date or the number of Exchangeable Shares or other securities or
assets for which a Right is exercisable without the approval of a majority of
the Board of Directors, and (ii) following the occurrence of a Section 11(a)(ii)
Event, no supplement or amendment whatsoever shall be made without the approval
of the Board of Directors. Prior to the Distribution Date, the interests of the
holders of Rights shall be deemed coincident with the interests of the holders
of Exchangeable Shares.

SECTION 27.  SUCCESSORS

        All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

SECTION 28.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.

        Except as otherwise specifically provided herein, the Board of Directors
of the Company shall have the exclusive power and authority to administer this
Agreement and to exercise all rights and powers specifically granted to the
Board or to the Company, or as may be necessary or advisable in the
administration of this Agreement, including, without limitation, the right and
power (i) to interpret the provisions of this Agreement, and (ii) to make all
determinations deemed necessary or advisable for the administration of this
Agreement. All such actions, calculations, interpretations and determinations
(including, for purposes of clause (y) below, all omissions with respect to the
foregoing) which are done or made by a majority of the Board of Directors in
good faith shall (x) be final, conclusive and binding on the Company, the Rights
Agent, the holders of the Rights and all other parties, and (y) not subject the
Board or any member thereof to any liability to the holders of the Rights.

SECTION 29.  BENEFITS OF THIS AGREEMENT

        Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the



                                       27
<PAGE>   30

Distribution Date, registered holders of Exchangeable Shares) any legal or
equitable right, remedy or claim under this Agreement; but this Agreement shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the
registered holders of the Rights Certificates (and, prior to the Distribution
Date, registered holders of Exchangeable Shares).


SECTION 30.  SEVERABILITY

        If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be
invalid, void or unenforceable and a majority of the Board of Directors
determines in its good faith judgment that severing the invalid language from
this Agreement would adversely affect the purpose or effect of this Agreement
and the Rights shall not then be redeemable, the right of redemption set forth
in Section 23 hereof shall be reinstated and shall not expire until the Close of
Business on the tenth Business Day following the date of such determination by a
majority of the Board of Directors.

SECTION 31.  GOVERNING LAW

        This Agreement, each Right and each Rights Certificate issued hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Delaware applicable to contracts executed in and to be performed entirely in
such State.

SECTION 32.  COUNTERPARTS

        This Agreement may be executed (including by telecopier) in one or more
counterparts, and by the different parties hereto 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 instrument.

SECTION 33.  DESCRIPTIVE HEADINGS

        The headings contained in this Agreement are for descriptive purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.



                                       28
<PAGE>   31

SECTION 34.  EXCHANGE

        (a)   (i) The Company shall, at such time as the Uniphase Rights are
exchanged pursuant to Section 34(a)(i) of the Uniphase Rights Agreement,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become void pursuant to Section 7(e) hereof) for
Exchangeable Shares at an exchange ratio of one Exchangeable Share per Right, as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof (such exchange ratio being the
"Section 34(a)(i) Exchange Ratio").

(ii)    The Company shall, at such time as the Uniphase Rights are exchanged
pursuant to Section 34(a)(ii) of the Uniphase Rights Agreement, exchange all or
part of the then outstanding and exercisable Rights (which shall not include
Rights that have become void pursuant to Section 7(e)) for Exchangeable Shares
at an exchange ratio equal to the Section 34(a)(ii) Exchange Ratio (as defined
in the Uniphase Rights Agreement), as appropriately adjusted to reflect any
stock split, stock dividend or similar transaction occurring after the date
hereof. The "Adjustment Spread" shall equal (x) the aggregate market price on
the date of such event of the number of Adjustment Shares determined pursuant to
Section 11(a)(ii), minus (y) the Purchase Price.

        (b)     Immediately upon the exchange of any Rights pursuant to Section
34(a) and without any further action and without any notice, the right to
exercise such Rights shall terminate and the only right thereafter of a holder
of such Rights shall be to receive that number of Exchangeable Shares, equal to
the number of such Rights held by such holder multiplied by the Section 34(a)(i)
Exchange Ratio or the Section 34(a)(ii) Exchange Ratio, as the case may be. The
Company shall promptly give notice of any such exchange; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. The Company promptly shall mail a notice of any such exchange
to all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the manner
herein provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange shall state the method by which the
exchange of Exchangeable Shares for Rights will be effected and, in the event of
any partial exchange, the number of Rights which will be exchanged. Any partial
exchange shall be effected pro rata based on the number of Rights (other than
Rights which have become void pursuant to the provisions of Section 7(e) hereof)
held by each holder of Rights.

        (c)     In the event that the number of Exchangeable Shares which are
authorized for issuance by the Company but not outstanding or reserved for
issuance for purposes other than upon exercise of the Rights are not sufficient
to permit any exchange of Rights as contemplated in accordance with this Section
34, the Company, upon a resolution of a majority of the Board of Directors,
shall take all such action as may be necessary to authorize additional
Exchangeable Shares for issuance upon exchange of the Rights or make adequate
provision to substitute, in whole or in part, (1) cash, (2) other equity
securities of the Company, (3) debt securities of the Company, (4) other assets,
or (5) any combination of the foregoing, having an aggregate value for each
Right to be exchanged equal to the Adjustment Spread where such aggregate value
has been determined by a majority of the Board of Directors.

                                       29
<PAGE>   32

        (d)     The Company shall not be required to issue fractions of
Exchangeable Shares or to distribute certificates which evidence fractional
Exchangeable Shares. In lieu of issuing fractional Exchangeable Shares, the
Company may pay to the registered holders of Rights Certificates at the time
such Rights are exchanged as herein provided an amount in cash equal to the same
fraction of the current market price (determined pursuant to Section 11(d)
hereof) of one Exchangeable Share immediately prior to the date of exchange
pursuant to this Section 34.


        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.

                                     JDS UNIPHASE CANADA LTD.




                                     By:
                                        ---------------------------------------
                                        Name:
                                        Title:


                                     CIBC MELLON TRUST COMPANY


                                     By:
                                        ---------------------------------------
                                         Name:
                                         Title:

                                     By:
                                        ---------------------------------------
                                         Name:
                                         Title:




                                       30
<PAGE>   33

                                                                      EXHIBIT A

                          [FORM OF RIGHTS CERTIFICATE]



Certificate No. ______                                            ______ Rights

        NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS
        AGREEMENT REFERRED TO BELOW). THE RIGHTS ARE SUBJECT TO REDEMPTION OR
        EXCHANGE, AT THE OPTION OF THE COMPANY, ON THE TERMS SET FORTH IN THE
        RIGHTS AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN THE RIGHTS
        AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS DEFINED
        IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
        BECOME NULL AND VOID.

                               RIGHTS CERTIFICATE

                            JDS UNIPHASE CANADA LTD.

        This certifies that ______________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement dated as of June 30, 1999, as amended from time to time
(the "Rights Agreement"; terms defined therein are used herein with the same
meaning unless otherwise defined herein) between JDS Uniphase Canada Ltd., a
corporation incorporated under the laws of Canada (the "Company"), and CIBC
Mellon Trust Company, as Rights Agent (which term shall include any successor
Rights Agent under the Rights Agreement), to purchase from the Company at any
time after the Distribution Date and prior to the Expiration Date at the office
of the Rights Agent, one Exchangeable Share of the Company at the Purchase Price
initially of U.S.$270 per Exchangeable Share, upon presentation and surrender of
this Rights Certificate with the Election to Purchase and related certificate
duly executed. The number of Rights evidenced by this Rights Certificate (and
the number of shares which may be purchased upon exercise thereof) set forth
above, and the Purchase Price per Unit set forth above, and the Purchase Price
per share set forth above, are the number and Purchase Price as of June 30, 1999
based on the Exchangeable Shares as constituted at such date.

        Upon the occurrence of Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person or, under certain
circumstances described in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate, such Rights shall become null and void
and no holder hereof shall have any right with respect to such rights from and
after the occurrence of such Section 11(a)(ii) Event.

In certain circumstances described in the Rights Agreement, the Rights evidenced
hereby may entitle the registered holder thereof to purchase capital stock of an
entity other than the Company or receive Exchangeable Shares, cash or other
assets, all as provided in the Rights



<PAGE>   34

Agreement. As provided in the Rights Agreement, the Purchase Price and the
number and kind of Exchangeable Shares or other securities, which may be
purchased upon the exercise of the Rights evidenced by this Rights Certificate
are subject to modification and adjustment upon the happening of certain events,
including a Triggering Event.

        This Rights Certificate is subject to all of the terms and conditions of
the Rights Agreement, which terms and conditions are hereby incorporated herein
by reference and made a part hereof and to which Rights Agreement reference is
hereby made for a full description of the rights, limitations of rights,
obligations, duties and immunities hereunder of the Rights Agent, the Company
and the holders of the Rights Certificates, which limitations of rights include
the temporary suspension of the exercisability of such Rights under the specific
circumstances set forth in the Rights Agreement. Copies of the Rights Agreement
are on file at the principal office of the Rights Agent and are available from
the Rights Agent upon written request.

        This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.

        Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of U.S.$0.01 per Right, at any time prior to
the earlier of the close of business on (i) the tenth day following the Stock
Acquisition Date (as such time period may be extended pursuant to the Rights
Agreement), other than a Stock Acquisition Date that occurs as a result of a
Qualifying Offer, or (ii) the Final Expiration Date.

        No fractional Exchangeable Shares will be issued upon the exercise of
any Right or Rights evidenced hereby, but in lieu thereof a cash payment will be
made, as provided in the Rights Agreement.

        No holder of this Rights Certificate, as such, shall be entitled to vote
or receive dividends or be deemed for any purpose the holder of Exchangeable
Shares or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Company or any right to vote for the election of directors or
upon any matter submitted to shareholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting (except as provided in the Rights Agreement), or to
receive dividends of subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate shall have been exercised as provided in
the Rights Agreement.

        This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.


                                       A-2
<PAGE>   35

        WITNESS the facsimile signature of the proper officers of the Company
and its corporate seal. Dated as of _____, __________

                                          JDS UNIPHASE CANADA LTD.






                                          -------------------------------------
                                          Name:  Mike Phillips
                                          Title:  Secretary

Countersigned:
CIBC MELLON TRUST COMPANY





---------------------------------
Authorized Signature:



                                      A-3
<PAGE>   36





                  [FORM OF REVERSE SIDE OF RIGHTS CERTIFICATE]

                               FORM OF ASSIGNMENT

                   (To be executed by the registered holder if
                         such holder desires to transfer
                            the Rights Certificate.)


FOR VALUE RECEIVED ____________________ hereby sells, assigns and transfers
unto:___________________________________________________________________________
                   (Please print name and address of transferee)
________________________________________________________________________________
________________________________________________________________________________
this Rights Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Rights Certificate on the books of the within-named Company, with full
power of substitution.

Dated:





                                                  ------------------------------
                                                  Signature

Signature Guaranteed:


                                      A-4
<PAGE>   37

                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes that:

        (1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and

        (2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.



Dated:                                            ______________________________
                                                          Signature



Signature Guaranteed:



                                     NOTICE

        The signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.

        Signatures must be guaranteed, if presented for transfer in Canada, by a
Canadian chartered bank, major Canadian trust company, or a member of the Stock
Transfer Agents Medallion Program ("STAMP"). If presented for transfer in the
United States, signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.

        In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.



                                       A-5
<PAGE>   38

                          FORM OF ELECTION TO PURCHASE

                    (To be executed if the registered holder
                     desires to exercise Rights represented
                           by the Rights Certificate.)

TO: JDS UNIPHASE CANADA LTD.


        The undersigned hereby irrevocably elects to exercise
____________________ Rights represented by this Rights Certificate to purchase
the Exchangeable Shares issuable upon the exercise of the Rights (or such other
securities of the Company or of any other person or other property which may be
issuable upon the exercise of the Rights) and requests that certificates for
such Exchangeable Shares be issued in the name of and delivered to


________________________________________________________________________________
                         (Please print name and address)

(Please insert social security or other identifying number).____________________

If such number of Rights shall not be all the Rights evidenced by this Rights
Certificate, a new Rights Certificate for the balance of such Rights shall be
registered in the name of and delivered to:

________________________________________________________________________________
                         (Please print name and address)

(Please insert social security or other identifying number).____________________


Dated:







                                                 _______________________________
                                                          Signature


                                      A-6
<PAGE>   39





                                   CERTIFICATE

        The undersigned hereby certifies by checking the appropriate boxes in
(1) and (2) that:

        (1)     the Rights evidenced by this Rights Certificate [ ] are [ ] are
not beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and

        (2)     after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.

Dated:

                                                    ____________________________
                                                          Signature

Signature Guaranteed:



                                     NOTICE

        The signature in the foregoing Election to Purchase and Certificate must
conform to the name as written upon the face of this Rights Certificate in every
particular, without alteration or enlargement or any change whatsoever.

        Signatures must be guaranteed, if presented for transfer in Canada, by a
Canadian chartered bank, major Canadian trust company, or a member of the Stock
Transfer Agents Medallion Program ("STAMP"). If presented for transfer in the
United States, signatures must be guaranteed by an approved eligible financial
institution acceptable to the Rights Agent in its sole discretion or by a
participant in the Securities Transfer Agents Medallion Program, the Stock
Exchange Medallion Program or the New York Stock Exchange Medallion Program.

        In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.

                                      A-7

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>5
<FILENAME>f75587ex10-12.txt
<DESCRIPTION>EXHIBIT 10.12
<TEXT>
<PAGE>   1
                                                                   EXHIBIT 10.12



                              EMPLOYMENT AGREEMENT


        This Agreement, dated as of September 29, 1999, is between JDS Uniphase
Corporation, a Delaware corporation (the "Company") and the Employee of the
Company who is a signatory to this agreement ("Employee").


                                    PREMISES

        WHEREFORE,

        1. Employee currently is employed by Company or one of its subsidiaries;
and

        2. Company and Employee wish to clarify their existing employment
relationship with a written Employment Agreement upon the terms herein provided
regarding Employee's employment with Company;


                                    AGREEMENT

        NOW, THEREFORE, based on the foregoing premises and in consideration of
the commitments set forth below, Employee and Company agree as follows:

        1. Definitions.

           As used herein, the following terms are defined as follows:

           a. "Cause" means:

              (i) willful malfeasance by Employee, which has a material adverse
effect on the Company;

              (ii) substantial and continuing willful refusal by Employee to
perform duties ordinarily performed by an employee in the same position and
having similar duties as Employee;

              (iii) conviction of Employee for a felony which has a material
adverse effect on the Company's goodwill if Employee is retained as an employee
of the Company;

              (iv) willful failure by Employee to comply with material policies
and procedures of the Company; or

              (v) material failure by Employee to fulfill his employment
responsibilities in a competent and professional manner consistent with his
assigned job responsibilities and such failure shall not have been remedied by
Employee following not less than thirty (30) days written notice from the
Company to Employee regarding such failure.




                                       1
<PAGE>   2

           b. "Good Reason" means:

              (i) a material reduction in Employee's salary without Employee's
prior written consent;

              (ii) a material adverse change in Employee's position, duties or
responsibilities without Employee's prior written consent;

              (iii) an actual change in Employee's principal work location by
more than 50 kilometers without Employee's prior written consent; or

              (iv) failure by the Company to obtain from any successor company
the assumption of the Company's obligations under this Agreement.

           c. "Disabled" means a mental or physical disability, illness or
injury, evidence by medical reports from a duly qualified medical practitioner,
which renders the Employee unable to perform the essential duties of his or her
position, and "Disability" has a corresponding meaning.

           d. "Effective Date" means:

              (i) in the event the Company terminates the employment of
Employee, the date designated by the Company as the last day of Employee's
employment;

              (ii) in the event the Employee resigns his or her employment with
the Company, the date designated by the Company as the effective date of
resignation;

              (iii) in the event the Employee dies, the date of death;

              (iv) in the event the Employee becomes Disabled, the date
designated by the Company as the last day of Employee's employment.

        2. Position, Duties, Responsibilities

           a. Position: Employee is employed by Company to render services to
Company in the position described in Exhibit A attached hereto, subject to the
provisions of paragraph 3 below.

           b. Other Activities: Except upon the prior written consent of the
Company, Employee will not (i) accept any other employment, or (ii) engage,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that is or may be in conflict with, or that might place
Employee in a conflicting position to that of, the Company.

        3. Compensation

           In consideration of the services to be rendered under this Agreement,
Company shall pay to Employee a base annual salary and an annual bonus
contingent upon performance in




                                       2
<PAGE>   3

the amounts and in accordance with the parameters set forth in Exhibit A
attached hereto. Such salary and bonus, if any, shall in each case be payable in
accordance with the Company's payroll practices. Employee's salary and bonus
parameters will be reviewed from time to time in accordance with Company's
established procedures for adjusting salaries for similarly situated employees.
Employee shall be eligible to participate in Company's benefit plans and to
receive prerequisites of employment as established by Company, and as may be
amended from time to time in Company's sole discretion.

        4. Term

              The term (the "Term") of this Agreement shall commence on the
date hereof and shall expire on July 6, 2004 unless sooner terminated as
provided herein (the date of termination of this Agreement, the "Expiration
Date"). In the event that the Expiration Date shall be July 6, 2004 and
Employee's employment with the Company shall continue thereafter, such
employment shall be employment at will, terminable by either Employee or the
Company on reasonable notice, and neither party shall have any further rights or
obligations pursuant to this Agreement.

        5. Termination.

           a. Termination Benefits Under Certain Circumstances. If the
Employee's employment is terminated, prior to the Expiration Date, by the
Company (other than for Cause), as the result of the Death or Disability of the
Employee, or by the Employee for Good Reason, conditioned upon the Employee's
executing and delivering to the Company a release of claims, reasonably
acceptable to the Company, Employee will be entitled to the following benefits
in full satisfaction of any statutory, contractual or common law entitlements
which Employee has or could have as a result of the termination of the Term: (i)
the Company shall pay to the Employee, in one lump sum, an amount equal to (A)
salary for the period specified in Exhibit A attached hereto (the "Severance
Period"), at the Employee's annual salary in effect on the Effective Date, plus
(B) a bonus for that year(s) comprising the Severance Period (calculated based
on the average of the bonus awarded to Employee in each of the previous three
years of employment by the Company), minus any amounts to which Employee is
otherwise entitled under any statutory or Company long or short term disability
plan and minus any required withholdings or deductions; and (ii) Employee's
right, title and entitlement to any unvested options or any other securities or
similar incentives which have been granted or issued to Employee as of the
Effective Date, which would have vested during that period commencing upon the
Effective Date and continuing for the duration of the Severance period, shall
immediately vest, free from any restrictions (other than those imposed by
applicable state and federal securities laws), provided that all such securities
shall continue to be exercisable (if applicable) for 90 days from the Effective
Date or until the term such securities would have otherwise expired (if
applicable), whichever is earlier. Such payments and other consideration payable
by the Company pursuant to this Section 5(a) shall be accepted by Employee, or
his heirs as the case may be, in exchange for a full and complete release by
Employee of all causes of action, claims or other rights that he may have
against the Company arising in connection with his employment or pursuant to
this Agreement. The Company shall have no obligations under this paragraph with
respect to any termination of the Term for any reason other than as specified in
the first sentence of this paragraph.




                                       3
<PAGE>   4

           b. Termination For Cause: This Agreement shall terminate immediately
upon the termination of Employee for Cause. Thereafter, all obligations of
Company under this Agreement shall cease.

           c. By Death: Employee's employment shall terminate automatically upon
the death of Employee. Company shall pay to Employee's beneficiaries or estate,
as appropriate, the compensation set forth in Section 5.a. Thereafter, all
obligations of Company under this Agreement shall cease. Nothing in this Section
shall affect any entitlement of Employee's heirs to the benefits of any life
insurance plan or other applicable benefits.

           d. By Disability: If Employee suffers from a Disability, then, to the
extent permitted by law, Company may terminate Employee's employment. Company
shall pay to Employee the compensation set forth in Section 5.a. Thereafter, all
of Company's obligations under this Agreement shall cease. Nothing in this
Section shall affect Employee's rights under any disability plan in which he is
a participant.

        6. Termination Obligations

           a. Return of Company's Property: Employee hereby acknowledges and
agrees that all personal property, including, without limitation, all books,
manuals, records, reports, notes, contracts, lists, blueprints, and other
documents, or materials, or copies thereof, and equipment furnished to or
prepared by Employee in the course of or incident to Employee's employment,
belong to Company and shall be promptly returned to Company upon termination of
Employee's employment.

           b. Cooperation in Pending Work: Following any termination of
Employee's employment, Employee shall fully cooperate with Company in all
matters relating to the winding up of pending work on behalf of Company and the
orderly transfer of work to other employees of Company. Employee shall also
cooperate in the defense of any action brought by any third party against
Company that relates in any way to Employee's acts or omissions while employed
by Company.

        7. Notices

           All notices or other communications required or permitted hereunder
shall be made in writing and shall be deemed to have been duly given if
delivered by hand or mailed, postage prepaid, by certified or registered mail,
return receipt requested, and addressed to Company:

               JDS Uniphase Corporation
               163 Baypointe Parkway
               San Jose, California 94134

and to Employee at:

               [Employee's Home Address]




                                       4
<PAGE>   5

               -----------------------------

               -----------------------------


        Employee and the Company shall be obligated to notify the other party of
any change in address. Notice of change of address shall be effective only when
made in accordance with this Section.

        8. Entire Agreement

           Subject to the last sentence of this paragraph, the terms of this
Agreement are intended by the parties to be the final and exclusive expression
of their agreement with respect to the employment of Employee by Company and may
not be contradicted by evidence of any prior or contemporaneous statements or
agreements. Subject to the last sentence of this paragraph, the parties further
intend that this Agreement shall constitute the complete and exclusive statement
of its terms and that no extrinsic evidence whatsoever may be introduced in any
judicial, administrative, or other legal proceeding involving this Agreement. To
the extent that the practices, policies, or procedures of Company, now or in the
future, apply to Employee and are inconsistent with the terms of this Agreement,
the provisions of this Agreement shall control. Notwithstanding the foregoing,
nothing in this agreement shall limit or modify, in any manner, any existing or
future agreement between the Employee and the Company relating to proprietary
information, inventions, treatment of confidential information, non-competition
or employee benefits or incentive plans or any agreement between the Company and
Employee set forth in Exhibit A attached hereto.

        9. Amendments, Waivers

           This Agreement may not be modified, amended, or terminated except by
an instrument in writing, signed by Employee and by a duly authorized
representative of Company other than Employee. No failure to exercise and no
delay in exercising any right, remedy, or power under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, remedy, or power under this Agreement preclude any other or further
exercise thereof, or the exercise of any other right, remedy, or power provided
herein.

           Employee and the Company each specifically agree and acknowledge that
they each waive recourse to any remedies in tort, and further agree and
acknowledge their intent that all rights and liabilities pertaining to the
cessation of the employment relationship between them, where such cessation
occurs on or before the Expiration Date, be as set out in this Agreement (or in
any subsequent modification of this Agreement, provided that the modification is
in writing and signed by both parties).

       10. Assignment; Successors and Assigns

           Employee agrees that Employee will not assign, sell, transfer,
delegate or otherwise dispose of, whether voluntarily or involuntarily, or by
operation of law, any rights or obligations under this Agreement, nor shall
Employee's rights be subject to encumbrance or the




                                       5
<PAGE>   6

claims of creditors. Any purported assignment, transfer, or delegation shall be
null and void. Nothing in this Agreement shall prevent the consolidation of the
Company with, or its merger into, any other corporation, or the sale by the
Company of all or substantially all of its properties or assets, or the
assignment by the Company of this Agreement and the performance of its
obligations hereunder to any successor in interest. Subject to the foregoing,
this Agreement shall be binding upon and shall inure to the benefit of the
parties and their respective heirs, legal representatives, successors, and
permitted assigns, and shall not benefit any person or entity other than those
enumerated above.

        11. Severability; Enforcement

            If any provision of this Agreement, 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
Agreement and such provisions as applied to other persons, places, and
circumstances shall remain in full force and effect.

        12. Governing Law

            The validity, interpretation, enforceability, and performance of
this Agreement, other than Section 4, shall be governed by and construed in
accordance with the law of the State of California.

        13. Employee Acknowledgment

            The parties acknowledge (a) that they have consulted with or have
had the opportunity to consult with independent counsel of their own choice
concerning this Agreement, and (b) that they have read and understand the
Agreement, are fully aware of its legal effect, and have entered into it freely
based on their own judgment and not on any representations or promises other
than those contained in this Agreement.

        14. Date of Agreement

            The parties have duly executed this Agreement as of the date first
written above.


  JDS UNIPHASE CORPORATION



By:  Anthony R. Muller                                  Mike Phillips
Its:   Chief Financial Officer                             Employee




                                       6
<PAGE>   7

                                    EXHIBIT A


Employee Name:     Mike Phillips

Base Salary:       $225,000

Target Bonus:      $90,000 (40%)

Bonus is contingent and based upon such individual, division and company-wide
performance parameters as determined by the Company from time to time.


Severance Period:       2 Years

Other Agreements:      Change of Control Agreement, as previously executed
                       with the Company.

Senior Vice President, Business Development and General Counsel




                                       7



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.13
<SEQUENCE>6
<FILENAME>f75587ex10-13.txt
<DESCRIPTION>EXHIBIT 10.13
<TEXT>
<PAGE>   1
                                                                   EXHIBIT 10.13


                              EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between
Don Scifres ("Scifres") and Spectra Diode Laboratories, Inc. (the "Company"),
and is effective as of the 17th day of July, 1992.
        The parties hereby agree as follows:

        1.     Period of Employment.

               The company will employ Scifres to render services to the company
in the position and with the duties and responsibilities described in Section 2,
for the compensation specified in Sections 3 and 4 and for the period commencing
on the effective date of this Agreement and ending on termination as provided in
Section 5.

        2.     Position and Duties.

               Scifres accepts employment with the Company as its President,
Chief Executive Officer and Chairman of the Board of Directors. As such, Scifres
shall have overall responsibility for the management and operations of the
Company, subject to the supervision and responsibilities of the Board of
Directors. In addition, Scifres shall have the duties and responsibilities of
the foregoing positions as set forth in the Bylaws of the Company. Any change in
Scifres' position and/or duties hereunder or a change in the location at which
he is to perform services hereunder which results in a commute for Scifres from
his current residence in excess of 25 miles shall constitute a termination of
this Agreement by the Company. Scifres shall report directly to the Board of
Directors.

<PAGE>   2

        3.     Compensation.

               (a)    Base Salary. Scifres shall receive a base salary of
                      $170,684 per year, payable in equal installments in
                      accordance with the Company's current practices. The
                      foregoing base salary shall be subject to annual increases
                      on January 1 of each year during the term of this
                      Agreement, as determined by the Board of Directors in its
                      sole discretion.

               (b)    Bonuses. The Board of Directors shall approve an annual
                      operating plan for the Company. Scifres shall receive cash
                      bonuses in connection with each audit of the Company's
                      results of operations conducted by the Company's
                      independent certified public accountants. Such audits
                      shall be conducted at least annually. Scifres' bonuses
                      shall be computed as follows, adjusted pro rata to reflect
                      any audit period less than twelve (12) months (provided
                      that the first audit conducted after the effective date of
                      this Agreement shall be deemed to exclude the period
                      October 1, 1991 0 December 31, 1991):

                      (i)    18.75% of Scifres' then-current base salary if the
                             Company achieves at least 100% of the revenues
                             specified in the operating plan(s) for the fiscal
                             period covered by the audit;

<PAGE>   3

                      (ii)   18.75% of his then-current base salary if the
                             Company achieves at least 100% of the operating
                             income before interest and taxes (excluding
                             extraordinary items) specified in the operating
                             plan(s) for the fiscal period covered by the audit;

                      (iii)  12.5% of his then-current base salary in the sole
                             discretion of the Board of Directors. The Company's
                             results of operations shall be determined by the
                             Company's independent certified public accountants
                             in accordance with generally accepted accounting
                             principles applied consistent with the practice for
                             prior periods and shall be accompanied by an audit
                             report of such accountants, which shall be
                             reasonably acceptable to the Company's Board of
                             Directors. Such bonuses shall be calculated and
                             paid within thirty (30 days following delivery of
                             the audit report. If the Company achieves revenues
                             and/or net income before taxes (excluding
                             extraordinary items) of at least 70% of the levels
                             specified in the operating plan(s) for the fiscal
                             period covered by the audit, the foregoing bonuses
                             shall be paid, reduced on a straight-line basis to
                             a zero bonus at 70% of plan. Bonuses shall be
                             deemed earned with respect to each fiscal year (or
                             portion thereof) during which Scifres has been
                             employed hereunder as of the end of the fiscal
                             period covered by the audit; such bonuses shall
                             thereafter be paid on the dates set forth above,
                             subject only to the determination of the Company's
                             results of operations, whether or not employment
                             hereunder has terminated.

<PAGE>   4


               (c)    Stock Option Grants. Scifres will be granted stock options
under the Company's 1992 Stock Option Plan as follows: options for 183,550
shares of Common Stock vesting in equal monthly installments over one year from
the date of consummation of the transaction described in Section 5(d); and
options for 100,000 shares of Common Stock vesting in equal monthly installments
over four years from such date; provided, however, that the number or four-year
options shall be increased, in the event all one-year options budgeted by the
Company (487,320 shares) are not awarded, by an amount (rounded to the nearest
whole share) equal to 24.61% of the one-year options not awarded, up to a
maximum of 22,500 additional shares. The foregoing options will have an exercise
price of an exercise price of $1.75 per share and will otherwise have the terms
and conditions prescribed under the Company's 1992 Stock Option Plan.

        4.     Benefits.

               (a)    General. Scifres will continue to receive all employee
benefits to which he is currently entitled, consisting of (i) those benefits
made generally available to the Company's employees, and (ii) the benefits
described in the attachments to the letter dated January 3, 1991 from Scifres to
Frank Squires (a copy of which is attached hereto). In addition, Scifres shall
receive in the future any and all benefits generally made available to the
Company's executive personnel. The foregoing shall include, without limitation,
stock purchase and stock option plan grants, with the number of shares, if any,
covered by such grants determined by the Board of Directors in its sole
discretion. The Company shall reimburse Scifres for reasonable travel and other
business expenses incurred by him in the performance of his duties hereunder in
accordance with the Company's policies in this regard.

               (b)    Life Insurance. During the term of this Agreement and for
a period of twenty-four (24) months thereafter (subject to reduction as provided
in section 5), the Company will maintain an insurance policy on Scifres' life in
an

<PAGE>   5

amount equal to two (2) times his then-current base salary. The proceeds of the
foregoing insurance policy shall be payable to such beneficiaries as Scifres may
designate from time to time or, in the absence of a designation, to his estate.

               (c)    Board Seat. During the term of Scifres' employment
hereunder, Scifres shall be entitled to serve as a member of the Company's Board
of Directors pursuant to the terms of the Voting Agreement of even date
herewith.

               (d)    Post-Termination. For a period of twenty-four (24) months
(subject to reduction as provided in Section 5) following the termination of
Scifres' employment pursuant to this Agreement: (i) during the COBRA period, the
Company will reimburse Scifres (including a gross-up to compensate Scifres for
any taxes payable with respect to such reimbursement) for all amounts payable by
Scifres to retain medical benefits under COBRA, provided that during the COBRA
period Scifres will (as defined below), Scifres shall be entitled to the
following benefits (subject to reduction as provided below):

<PAGE>   6

                      (i)    A lump sum payment (payable within thirty (30) days
of termination) of twenty-four (24) months' salary based on his then-current
base salary;

                      (ii)   Acceleration of vesting, by twenty-four (24)
additional months from such date of termination, under all outstanding stock
options and stock purchase, stock appreciation and similar rights then held by
Scifres; and

                      (iii)  An amount, payable for twenty-four (24) months
commencing on the effective date of termination of Scifres' employment, equal to
4.1666% of his then-current base salary.

               For each full month occurring after the effective date of this
Agreement and prior to the first anniversary thereof, the time periods in
clauses (i), (ii) and (iii) above and in Sections 4(b) and 4(d) shall each be
reduced by one (1) month. As a result of this Agreement, the time periods in
clauses (i), (ii) and (iii) above and in Sections 4(b) and 4(d) shall be reduced
to twelve (12) months. The reduction in the time periods set forth in the
preceding sentence to twelve (12) months shall also come effect as of the
closing of the Company's initial underwritten offering of shares of its Common
Stock to the general public.

               (c)    Subsequent to the termination of Scifres' employment
thereunder, the payments and benefits provided for in

<PAGE>   7

Sections 4 (b) and 4 (d) and subsection 5 (b) (iii) shall terminate at such
time, if any, as Scifres commences full-time employment whereby he can obtain
group health and disability benefits (including coverage for preexisting
conditions) and life insurance benefits comparable to those to which he is
entitled hereunder. The Company's obligations and Scifres' rights under
subsections 5 (b) (i) and 5 (b) (ii) shall not be affected by Scifres'
commencement of new employment.

               (d)    In the event the Company terminates Scifres' employment
pursuant to subsection (a) above for cause, the Company's repurchase rights
under the stock option (183,550 shares) with a one-year vesting period
referenced in Section 3 (c) shall lapse in full. "Cause" shall be limited solely
to (i) Scifres' gross abdication of his duties hereunder (other than due to
illness or personal family problems), which conduct remains uncured for a period
of at least 30 days following written notice thereof to Scifres.

               (e)    This Agreement shall terminate upon Scifres' death or
permanent disability. In such event, and in addition to all other benefits to
which Scifres is then entitled under this Agreement or the Company's benefits
plans, Scifres (or his estate) shall be entitled to receive the benefits
provided for under Section 5 (b).

<PAGE>   8
               (f)    In  the event there is a "change of control" of the
Company, and if Scifres shall thereafter terminate this Agreement, Scifres shall
be entitled to receive the benefits provided for under Section 5 (b). For
purposes of this Section 5 (d), a "change of control" of the Company shall be
deemed to have occurred if, after the effective date of this Agreement, any
person or entity, including a "group" as defined in Section 13 (d) (3) of the
Securities Exchange Act of 1934, as amended, becomes the beneficial owner of
more than 50% of the securities of the Company having the right to vote for the
election of directors. Neither (a) the acquisition by Sprout Group and/or
Brinson Partnars, Inc., or their affiliates or entities managed or advised by
them (the "Investors"), of securities of the Company in accordance with the
Letter of Intent dated June 22, 1992, nor (b) the transfer of such shares to the
limited or general partners or shareholders, as applicable, of any of the
Investors shall be deemed to be a "change of control" of the Company. The
provisions of this section 5 (f) shall terminate on the closing of the Company's
initial underwritten offering of shares of its Common Stock to the general
public.

6.  Miscellaneous.

        (a)  Notices under this Agreement shall be in writing and shall be
             deemed given when delivered in person or three (3) days following
             deposit in the United States Mail, postage prepaid, certified or
             return receipt requested, and addressed as follows:

<PAGE>   9


           If to Scifres:      XXXXXXXXXXX

           If to the Company:  80 Rose Orchard Way
                               San Jose, California  95134
                               Attention: Corporate Secretary

The foregoing addresses may be changed by notice in accordance with this
subsection (a).

        (b)  The prevailing party in any action to enforce the terms of this
             Agreement shall be entitled to reimbursement from the other party
             for its costs and expenses (including reasonable attorneys' fees)
             in connection therewith.

        (c)  The terms of this Agreement are intended by the parties to be the
             final expression of their agreement with respect to the employment
             of Scifres by the Company and may not be contradicted by evidence
             of any prior or contemporaneous agreement. The offer letter dated
             June 13, 1983 is superseded by this Agreement and shall be of no
             further force or effect. The parties further intend that this
             Agreement shall constitute the complete and exclusive statement of
             its terms (except that Scifres shall be bound by his Invention and
             Confidential Information Agreement with the Company in accordance
             with its terms) and that no extrinsic evidence whatsoever may be
             produced in any legal proceeding involving this Agreement. This
             Agreement may be amended, and the observance of any of its terms
             may be waived, only by a writing signed by the party to be charged
             with such amendment or waiver.

<PAGE>   10

        (d)  If any prevision of this Agreement, 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 Agreement and such provisions as applied to other
             persons, places and circumstances shall remain in full force and
             effect.

        (e)  The validity, interpretation, enforceability and performance of
             this Agreement shall be governed by and construed in accordance
             with the laws of the State of California, without regard to its
             rules regarding conflicts of laws.

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth above.

EMPLOYEE                                SPECTRA DIODE LABORATORIES, INC.


By   /S/ Don Scifres                    By    /S/ John Melton
   ---------------------------             ------------------------------

<PAGE>   11

                                    AMENDMENT

                                       TO

                              EMPLOYMENT AGREEMENT

               THIS AMENDMENT ("Amendment") is entered into with respect to the
Employment Agreement by and between Don Scifres and Spectra Diode Laboratories,
Inc., dated as of July 17, 1992 (the "Agreement").

        The parties hereby agree as follows:

        A.  Amendment. There is added to Section 3 (c) of the Agreement the
            following:

                  "In the event that the accelerated venting of Scifres' option
                  shares in connection with a change in the control of the
                  company (as defined in Section 5 (f) below), results in the
                  imposition of excise taxes on Scifres under Section 4999 of
                  the Internal Revenue Code ("Code") (and corresponding
                  provisions of applicable state tax law), the Company agrees to
                  pay Scifres a cash bonus calculated as follows: (a) if more
                  than 75% of the voting power of all outstanding stock of the
                  Company is held, as of the record date on which the approval
                  of the Company's shareholders is solicited with respect to
                  such transaction, by the Investors (as defined in Section 5
                  (f) below), then the cash bonus shall equal the excise taxes
                  imposed on Scifres under Section 4999 of Code (and
                  corresponding provisions of applicable state tax law) as a
                  result of the accelerated vesting of the option shares and
                  other "parachute payments" (as that term is defined by Code
                  Section 280G (b) (2)) received by Scifres in connection with
                  such change in control (including, without limitation, the
                  bonus provided for in this Section 3 (c)), or (b) if the
                  Investors hold 75% or less of the voting powers of all
                  outstanding stock of the company at that time, then the cash
                  bonus shall equal the lesser of (i) the amount determined
                  under clauses (a), or (ii) $100,000.

        2.  Continuing Effect. Except as provide in this Amendment, the
Agreement shall continue in full force and effect in accordance with its terms.

<PAGE>   12


               IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be duly executed as of February 17, 1993.


                                        SPECTRA DIODE LABORATORIES, INC.



                                        By:  /s/ John P. Melton
                                             -----------------------------------


                                             /s/ Don Scifres
                                        ----------------------------------------
                                                 Don Scifres

<PAGE>   13

                                SECOND AMENDMENT

                                       TO

                              EMPLOYMENT AGREEMENT

THIS SECOND AMENDMENT ("Amendment") is entered into with respect to the
Employment Agreement by and between Don Scifres and SDL, Inc., dated as of July
17, 1992, as amended as of February 1993 (as amended, the "Agreement").

        The parties hereby agree as follows:

        1.  Amendment. Section 3(b) of the Agreement is amended to read in its
            entirety as follows:

            "Bonuses. The Board of Directors shall approve an annual operating
            plan for the Company. Scifres has shall receive cash bonuses in
            connection with each audit of the Company's results of operations
            conducted by the Company's independent certified public accountants.
            Such audits shall be conducted at least annually. Scifres' bonuses
            shall be computed as provided in the matrix attached to this
            Amendment as Exhibit A, provided that (i) such bonuses shall be
            adjusted pro rata to reflect any audit period less than twelve (12)
            months, and (ii) with respect to Note 3 of Exhibit A, Scifres' bonus
            will be 50% of his then current base salary times the matrix factor.
            The Company's results of operations shall be determined by the
            Company's independent certified public accountants in accordance
            with general accepted accounting principles applied consistent with
            the practice for prior periods and shall be accompanied by an audit
            report of such accountants, which shall be reasonably acceptable to
            the Company's Board of Directors. Such bonuses shall be calculated
            and paid within thirty (30) days following delivery of the audit
            report. Bonuses shall be deemed earned with respect to each fiscal
            year (or portion thereof) during which Scifres has been employed
            hereunder as of the end of the fiscal period covered by the audit;
            such bonuses shall thereafter be paid on the dates set forth above,
            subject only to the determination of the company's results of
            operations, whether or not employment hereunder has terminated."

        2.  Effectiveness. The foregoing amendment of the Agreement shall be
            effective as of January 1, 1994.

<PAGE>   14

        3.  Continuing Effect. Except as provided in this Amendment, the
            Agreement shall continue in full force and effect in accordance with
            its terms.

           IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of July 29, 1994.


                                    SDL, INC.


                                    BY     /S/  John P. Melton
                                        ----------------------------------


                                    Don Scifres

                                           /S/ Don Scifres
                                    --------------------------------------

<PAGE>   15


<TABLE>
<S>      <C>   <C>   <C>    <C>   <C>   <C>    <C>   <C>   <C>    <C>   <C>   <C>    <C>
------------------------------------------------------------------------------------------
         80    84    88     92    96    100    104   108   112    116   120   124    128
------------------------------------------------------------------------------------------
70       0     0.1   0.2    0.3   0.4   0.5    0.6   0.7   0.7    0.7   0.7   0.7    0.7
------------------------------------------------------------------------------------------
76       0.1   0.2   0.3    0.4   0.5   0.6    0.7   0.8   0.9    0.9   0.9   0.9    0.9
------------------------------------------------------------------------------------------
82       0.2   0.3   0.4    0.5   0.6   0.7    0.8   0.9   1.0    1.1   1.1   1.1    1.1
------------------------------------------------------------------------------------------
88       0.3   0.4   0.5    0.6   0.7   0.8    0.9   1.0   1.1    1.2   1.3   1.3    1.3
------------------------------------------------------------------------------------------
94       0.4   0.5   0.6    0.7   0.8   0.9    1.0   1.1   1.2    1.3   1.4   1.5    1.6
------------------------------------------------------------------------------------------
100      0.5   0.6   0.7    0.8   0.9   1.0    1.1   1.2   1.3    1.4   1.5   1.6    1.7
------------------------------------------------------------------------------------------
106      0.6   0.7   0.8    0.9   1.0   1.1    1.2   1.3   1.4    1.5   1.6   1.7    1.8
------------------------------------------------------------------------------------------
112      0.7   0.8   0.9    1.0   1.1   1.2    1.3   1.4   1.5    1.6   1.7   1.8    1.9
------------------------------------------------------------------------------------------
118      0.7   0.9   1.0    1.1   1.2   1.3    1.4   1.5   1.6    1.7   1.8   1.9    2.0
------------------------------------------------------------------------------------------
124      0.7   0.9   1.1    1.2   1.3   1.4    1.5   1.6   1.7    1.8   1.9   2.0    2.1
------------------------------------------------------------------------------------------
130      0.7   0.9   1.1    1.3   1.4   1.5    1.6   1.7   1.8    1.9   2.0   2.1    2.2
------------------------------------------------------------------------------------------
136      0.7   0.9   1.1    1.3   1.5   1.6    1.7   1.8   1.9    2.0   2.1   2.2    2.3
------------------------------------------------------------------------------------------
142      0.7   0.9   1.1    1.3   1.5   1.7    1.8   1.9   2.0    2.1   2.2   2.3    2.4
------------------------------------------------------------------------------------------
148      0.7   0.9   1.1    1.3   1.5   1.7    1.9   2.0   2.1    2.2   2.3   2.4    2.5
------------------------------------------------------------------------------------------
154      0.7   0.9   1.1    1.5   1.5   1.7    1.9   2.1   2.2    2.3   2.4   2.5    2.6
------------------------------------------------------------------------------------------
</TABLE>


NOTE

1.  Payments will be made on a continuous linear scale between points to avoid
    trying to meet arbitrary increments in the above matrix.

2.  Operating income is defined as "Income Before Interest and Taxes" as Greg
    Lindholm has provided in the past (excluding non-operating expense, e.g.,
    stock option extension, comp. expense).

3.  Vice Presidents' bonus will be 15% of salary times the matrix factor and up
    to 10% of salary at the discretion of the Board.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.14
<SEQUENCE>7
<FILENAME>f75587ex10-14.txt
<DESCRIPTION>EXHIBIT 10.14
<TEXT>
<PAGE>   1
                                                                   Exhibit 10.14



                                    SDL, INC.

                           CHANGE OF CONTROL AGREEMENT

        This Agreement, dated as of February 10, 2000, is entered into between
SDL, Inc., a corporation organized under the laws of the State of Delaware
("SDL") and Don Scifres (the "Executive").

        WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereafter defined) exists and
that the threat of the occurrence of a Change in Control can result in
significant distractions to its key management personnel because of the
uncertainties inherent in such a situation;

        WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure the Executive's continued dedication and efforts in such event without
undue concern for the Executive's personal, financial and employment security;
and

        WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
supplement the terms of the employment agreement between the Company and the
Executive, dated July 17, 1992, and to provide the Executive with certain
benefits in the event that the Executive's employment is terminated as a result
of, or in connection with, a Change in Control.

        NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:

        1. TERM OF AGREEMENT. This Agreement shall commence as of February 10,
2000 (the "Effective Date") and shall continue in effect until the third
anniversary of the Effective Date, provided, that commencing on the second
anniversary of the Effective Date and on each subsequent anniversary thereof,
the term of this Agreement shall be automatically extended for one (1) year
unless either the Company or Executive shall have given written notice to the
other at least ninety (90) days prior thereto that the term of this Agreement
shall not be so extended; and provided, further, that notwithstanding any such
notice by the



<PAGE>   2

Company not to extend, the term of this Agreement shall not expire prior to the
expiration of four (4) years after the occurrence of a Change in Control.

        2. DEFINITIONS.

a.  ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued Compensation"
    shall mean an amount which shall include all amounts earned or accrued
    through the "Termination Date" (as hereinafter defined) but not paid as of
    the Termination Date, including (i) base salary, (ii) reimbursement for
    reasonable and necessary expenses incurred by the Executive on behalf of the
    Company during the period ending on the Termination Date, (iii) vacation pay
    and (iv) bonuses and incentive compensation.

b.  BASE AMOUNT. For purposes of this Agreement, "Base Amount" shall mean
    Executive's annual base salary at the rate in effect on the Termination
    date, including all amounts of base salary that are deferred under the
    employee benefit plans of the Company or any other agreement or arrangement.

c.  BONUS AMOUNT. For purposes of this Agreement, "Bonus Amount" shall mean the
    average of the annual bonuses paid or payable to the Executive under the
    Company's cash bonus incentive plan during the two (2) full fiscal years
    ended prior to the fiscal year during which the Termination Date occurred.

d.  EMPLOYMENT AGREEMENT. For purposes of this Agreement, "Employment Agreement"
    shall mean the employment agreement executed between the Company and
    Executive, dated July 17, 1992, and the amendments to that agreement dated
    February 19, 1993 and July 29, 1994.

e.  CAUSE. For purposes of this Agreement, "Cause" shall mean Executive's (i)
    conviction of a felony involving moral turpitude (from which no further
    appeals have been or can be taken), or (ii) gross abdication of his duties
    as an employee and office of the Company (other than due to Executive's
    illness or personal family problems), which conduct remains uncured by
    Executive for a period of at least 30 days following written notice thereof
    to Executive by the Company, in each case as determined in good faith by the
    Company.

f.  CHANGE IN CONTROL. For purposes of this Agreement, a "Change in Control"
    shall mean any of the following events:

(i)     An acquisition (other than directly from the Company) of any voting
    securities of the Company (the "Voting Securities") by any "Person" (as the
    term is used for purposes of Section 13(d) or 14(d) of the Securities
    Exchange Act of 1934, as amended (the "1934 Act")) immediately after which
    such



<PAGE>   3

    Person has `Beneficial Ownership" (within the meaning of Rule 13d-3
    promulgated under the 1934 Act), directly or indirectly, of securities of
    the Company representing fifty percent (50%) or more of the combined voting
    power of the Company's then outstanding Voting Securities;

(ii)    The individuals who are members of the Board as of the date this
    Agreement is approved by the Board (the "Incumbent Board") cease for any
    reason to constitute at least a majority of the Board; PROVIDED, HOWEVER,
    that if the appointment, election or nomination for election by the
    Company's stockholders, of any new director is approved by a vote of at
    least two-thirds of the Incumbent Board, such new director shall, for
    purposes of this Agreement, be considered a member of the Incumbent Board;
    PROVIDED, FURTHER, HOWEVER, that no individual shall be considered a member
    of the Incumbent Board if such individual initially assumed office as a
    result of either an actual or threatened "Election Contest" (as described in
    Rule 14a-11 promulgated under the 1934 Act) or other actual or threatened
    solicitation of proxies or consents by or on behalf of a Person other than
    the Board (a "Proxy Contest") including by reason of any agreement intended
    to avoid or settle any Election Contest or Proxy Contest;

(iii)   Approval by stockholders of the Company of a merger, consolidation or
    reorganization involving the Company, unless such merger, consolidation or
    reorganization would result in the voting securities of the Company
    outstanding immediately prior thereto continuing to represent (either by
    remaining outstanding or by being converted into voting securities of the
    surviving entity) more than fifty percent (50%) of the total voting power
    represented by the voting securities of the Company or such surviving entity
    outstanding immediately after such merger, consolidation, or reorganization;

(iv)    A complete liquidation or dissolution of the Company, or

(v)     An agreement for the sale or other disposition of all or substantially
    all of the assets of the Company to any Person (other than a transfer to a
    Subsidiary).

g.  COMPANY. For purposes of this Agreement, the "Company" shall mean SDL, Inc.
    and its Subsidiaries and shall include SDL's "Successors and Assigns" (as
    hereinafter defined).

h.  DISABILITY. For purposes of this Agreement, "Disability" shall mean a
    physical or mental infirmity which impairs the Executive's ability to
    substantially perform the Executive's duties with the Company for a period
    of one hundred eighty (180) consecutive days and the Executive has not
    returned to full time employment prior to the Termination Date as stated in
    the "Notice



<PAGE>   4

    of Termination".

i.  GOOD REASON. For purposes of this Agreement, "Good Reason" shall mean the
    occurrence after a Change in Control of any events or conditions described
    in subsections (i) through (vi) below, PROVIDED, HOWEVER, that the Executive
    gives the Company thirty (30) days Notice Termination (as defined below)
    (during which time the Company will have an opportunity to correct the
    condition constituting "Good Reason"), and PROVIDED, FURTHER, that such
    notice is submitted by Executive no later than six (6) months after the
    occurrence of the event that is the basis for "Good Reason";

(i)     a change in the Executive's status, title, position or responsibilities
    which represents a material and adverse change from the Executive's status,
    title, position or responsibilities as in effect immediately prior to such
    change; the assignment to the Executive of any duties or responsibilities
    which are substantially inconsistent with the Executive's status, title,
    position or responsibilities as in effect immediately prior to such
    assignment; or any removal of the Executive from or failure to reappoint or
    reelect the Executive to any of such offices or positions, except in
    connection with the termination of the Executive's employment for
    Disability, Cause, as a result of the Executive's death or by the Executive
    other than for Good Reason;

(ii)    a reduction in the Executive's base salary;

(iii)   the Company's requiring the Executive to be based at any place which
    results in Executive having to commute more than 25 miles from his
    residence, except for reasonably required travel on the Company's
    business which is not materially greater than such travel requirements prior
    to the Change in Control;

(iv)    a material reduction by the Company in the kind or level of employee
    benefits (other than salary) to which the Executive is entitled at any time
    within ninety (90) days preceding the date of a Change in Control or at any
    time thereafter, (other than any such reduction which is part of, and
    generally consistent with, a general reduction applicable to officers of the
    Company);

(v)     any material breach by the Company of any provision of this Agreement
    or the Employment Agreement between Company and Executive;

(vi)    the failure of the Company to obtain an agreement from any Successors
    and Assigns to assume and agree to perform this Agreement, as contemplated
    in Section 6 hereof.

j.  NOTICE OF TERMINATION. For purposes of this Agreement, following a Change in
    Control, "Notice of Termination" shall mean a written notice of



<PAGE>   5

    termination of the Executive's employment from the Company, which notice
    indicates the Termination Date (as defined below), the specific termination
    provision in this Agreement relied upon and which sets forth in reasonable
    detail the facts and circumstances claimed to provide a basis for
    termination of the Executive's employment under the provision so indicated.

k.  SUCCESSORS AND ASSIGNS. For purpose of this Agreement, "Successors and
    Assigns" shall mean a corporation or other entity acquiring all or
    substantially all of the assets and business of the Company (including this
    Agreement) whether by operation of law or otherwise.

l.  TERMINATION DATE. For purposes of this Agreement, "Termination Date" shall
    mean, in the case of the Executive's death the Executive's date of death, in
    the case of Good Reason, the last day of the Executive's employment (which
    shall be no sooner than thirty (30) days after Executive submits his Notice
    of Termination), and, in all other cases, the date specified in the Notice
    of Termination; PROVIDED, HOWEVER, that if the Executive's employment is
    terminated by the Company due to Disability, the date specified in the
    Notice of Termination shall be at least 30 days from the date the Notice of
    Termination is given to the Executive, provided that, in the case of
    Disability, the Executive shall not have returned to the full-time
    performance of the Executive's duties during such period of at least 30
    days.


<PAGE>   6

3.  TERMINATION OF EMPLOYMENT

a.  If, during the term of this Agreement, the Executive's employment with the
    Company shall be terminated within four (4) years following a Change in
    Control, the Executive shall bc entitled to the following compensation and
    benefits:

(i)     If the Executive's employment with the Company shall be terminated
    (1) by thc Company for Cause or Disability, (2) by reason of the Executive's
    death or (3) by the Executive other than for Good Reason, the Company shall
    pay to the Executive the Accrued Compensation. Additionally, the Company
    shall reimburse Executive for any amounts paid by Executive to retain
    medical insurance coverage under COBRA and shall provide Executive with
    disability insurance benefits for a period of twelve (12) months following
    the Termination Date, pursuant to the provisions of paragraph 4 (c) of the
    Employment Agreement. If such termination is other than by reason of
    Executive's death, the Company also shall continue to maintain a life
    insurance policy on Executive's life for a period of twelve (12) months
    following the Termination Date, subject to the provisions of paragraph 4(b)
    of the Employment Agreement. In the event Executive's employment is
    terminated by reason of Executive's death or Disability, Executive (or his
    estate) also shall be entitled to receive the severance benefits set forth
    in paragraph 5(b) of the Employment Agreement. However, the life and
    disability insurance benefits and/or payments provided to Executive for
    purposes of retaining medical insurance coverage under COBRA under this
    paragraph 3(a)(i) shall terminate at such time, if any, Executive commences
    employment whereby he can obtain comparable benefits.

(ii)    If the Executive's employment with the Company shall be terminated for
    any reason other than as specified in Section 3(a)(i), the Executive shall
    be entitled to the following:

                 (1)  the Company shall pay the Executive all Accrued
                      Compensation;

                 (2)  the Company shall pay the Executive as severance pay and
                      in lieu of any further compensation for periods subsequent
                      to the Termination Date, in a single payment, an amount in
                      cash equal to two (2) times the sum of (A) the Base
                      Amount, and the greater of (B) the Bonus Amount, or (C)
                      the amount equivalent to twelve (12) times the sum of 5%
                      of Executive's then-current annual base salary;



<PAGE>   7

                 (3)  for a number of months equal to twenty-four (24) months
                      (the "Continuation Period"), the Company shall, at its
                      expense, continue on behalf of the Executive and the
                      Executive's dependants and beneficiaries the life
                      insurance, disability, medical, dental and hospitalization
                      benefits provided (A) to the Executive at any time during
                      the 90-day period prior to the Change in Control at any
                      time thereafter or (B) to other similarly situated
                      executives who continue in the employ of the Company
                      during the Continuation Period. The coverage and benefits
                      (including deductibles and costs) provided in this Section
                      3(a)(ii)(3) during the Continuation Period shall be no
                      less favorable to the Executive and the Executive's
                      dependents and beneficiaries, than the most favorable of
                      such coverage and benefits during any of the periods
                      referred to in clauses (A) and (B) above. The Company's
                      obligation hereunder with respect to the foregoing
                      benefits shall be limited to the extent that the Executive
                      obtains any such benefits pursuant to a subsequent
                      employer's benefit plans, in which case the Company may
                      reduce the coverage of any benefits it is required to
                      provide the Executive hereunder as long as the aggregate
                      coverage and benefits of the combined benefit plans are no
                      less favorable to the Executive than the coverage and
                      benefits required to bc provided hereunder. This
                      subsection (3) shall not be interpreted so as to limit any
                      benefits to which the Executive or the Executive's
                      dependents or beneficiaries may be entitled under any of
                      the Company's employee benefit plans, programs or
                      practices following the Executive's termination of
                      employment, including without limitation, retiree medical
                      and life insurance benefits;

                 (4)  the restrictions on any outstanding equity incentive
                      awards, including stock options and restricted stock,
                      granted to the Executive under the Company's stock option
                      and other stock incentive plans, or under any other
                      incentive plan or arrangement shall lapse and such
                      incentive award shall become 100% vested and, in the case
                      of stock options, immediately exercisable;

b.  The amounts provided for in Sections 3(a)(1) and (2) shall be paid in a
    single lump sum cash payment within forty five (45) days after the
    Executive's Termination Date (or earlier, if required by applicable law).



<PAGE>   8

c.  The Executive shall not be required to mitigate the amount of any payment
    provided for in this Agreement by seeking other employment or otherwise, and
    no such payment shall be offset or reduced by the amount of any compensation
    or benefits provided to the Executive in any subsequent employment except as
    provided in Sections 3(a)(i) and (a)(ii)(3).

d.  The severance pay and benefits provided for in this Section 3 shall br in
    lieu of any other severance or termination pay to which the Executive may be
    entitled under any employment agreement (including the Employment
    Agreement). Nothing in this Agreement shall prevent or limit Executive's
    continuing or future participation in any benefit, bonus, incentive, or
    other plan or program provided by the Company (except for any severance or
    termination policies, plans, programs or practices) and for which Executive
    may quality, nor shall anything herein limit or reduce such rights as
    Executive may have under any other agreements with the Company (except for
    any severance or termination agreement). Executive's entitlement to amounts
    which are vested benefits or any other compensation or benefits (including
    but not limited to any deferred compensation distributions) shall be
    determined in accordance with the Company's employee benefit plans and other
    applicable programs, policies and practices then in effect, except as
    explicitly modified by this Agreement.

4.  NOTICE OF TERMINATION. Following a Change in Control, any purported
    termination of the Executive's employment shall be communicated by Notice of
    Termination to the Executive. For purposes of this Agreement, no such
    purported termination shall be effective without such Notice of Termination.

5.  LIMITATION ON PAYMENTS.

a.  In the event that the severance and other benefits provided for in this
    Agreement to the Executive (i) constitute "parachute payments" within the
    meaning of Section 280G of the Internal Revenue Code of 1986, as amended
    (the "Code") and (ii) but for this Section, would be subject to the excise
    tax imposed by Section 4999 of the Code (the "Excise Tax"), then the
    Executive's severance benefits under Sections 3(a)(ii)(1)-(4) (the
    "Payments") shall be payable either:

(i)     in full, or

(ii)    as to such lesser amount which would result in no portion of such
    severance benefits being subject to excise tax under Section 4999 of the
    Code (the "Limited Payment Amount"),



<PAGE>   9

        whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by the Executive on an after-tax basis of the
greatest amount of severance benefits under Sections 3(a)(ii)(1)-(4),
notwithstanding that all or some portion of such severance benefits may be
taxable under Section 4999 of the Code. Unless Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
Limited Payment Amount, the Company shall reduce or eliminate the Payments by
(i) first reducing or eliminating those payments or benefits which are payable
in cash and then (ii) by reducing or eliminating non-cash payments or benefits,
in each case in reverse order beginning with payments or benefits which are to
he paid the farthest in time from the Determination (as hereinafter defined).
Any notice given by Executive pursuant to the preceding sentence shall take
precedent over the provisions of any other plan, arrangement or agreement
governing Executive's rights and entitlements to any benefits or compensation.

b.  An initial determination as to whether the Payments shall be reduced to the
    Limited Payment Amount and the amount of such Limited Payment Amount shall
    be made at the Company's expense, by the accounting firm that is the
    Company's independent accounting firm as of the date of the Change of
    Control (the "Accounting Firm"). Thc Accounting Firm shall provide its
    determination (the "Determination"), together with detailed supporting
    calculations and documentation, to the Company and Executive within ten (10)
    days of the Termination Date, if applicable, or such other time as requested
    by the Company or by Executive (provided Executive reasonably believes that
    any of the Payments may be subject to the Excise Tax) and, if the Accounting
    Firm determines that no Excise Tax is payable by Executive with respect to a
    Payment or Payments, it shall furnish Executive with an opinion reasonably
    acceptable to Executive that no Excise Tax will he imposed with respect to
    any such Payment or Payments. Within ten (10) days of the delivery of the
    Determination to Executive, Executive shall have the right to dispute the
    Determination (the "Dispute"). If there is no Dispute, the Determination
    shall be binding, final and conclusive upon the Company and Executive,
    subject to the application of Section 5(c) below.



<PAGE>   10

c.  As a result of the uncertainty in the application of Sections 4999 and 280G
    of the Code, it is possible that the Payments to be made to, or provided for
    the benefit of, Executive either will be greater (an "Excess Payment") or
    less (an "Underpayment") than the amounts provided for by the limitations
    contained in Section 5(a). If it is established, pursuant to a final
    determination of a court of an Internal Revenue Service (the "IRS")
    proceeding which has been finally and conclusively received, than an Excess
    Payment has been made, such Excess Payment shall be deemed for all purposes
    to be a loan to Executive made on the date Executive received the Excess
    Payment, which loan Executive must repay to thc Company together with
    interest at the applicable federal rate under Code Section 7872(f)(2);
    provided that no loan shall be deemed to have been made and no amount will
    be payable by Executive to the Company unless, and only to the extent that,
    the deemed loan and payment would either reduce the amount on which
    Executive is subject to tax under Code Section 4999 or generate a refund of
    tax imposed under Code Section 4999. In the event that it is determined, by
    (i) the Accounting Firm, the Company (which shall include the position taken
    by the Company, or together with its consolidated group, on its federal
    income tax return) or the IRS, (ii) pursuant to a determination by a court,
    or (iii) upon the resolution to Executive's satisfaction of the Dispute,
    that an underpayment has occurred, the Company shall pay an amount equal to
    the Underpayment to Executive within ten (10) days of such determination or
    resolution, together with interest on such amount at the applicable federal
    rate under Code Section 7872(f)(2) from the date such amount would have been
    paid to Executive until the date of payment.

6.  EMPLOYMENT TAXES. All payments made pursuant to this Agreement will be
    subject to applicable withholdings of income and employment taxes.

7.  SUCCESSORS: BINDING AGREEMENT. This Agreement shall be binding upon and
    shall inure to the benefit of the Company, its Successors and Assigns and
    the Company shall require any Successors and Assigns to expressly assume and
    agree to perform this Agreement in the sama manner and to the same extent
    that the Company would be required to perform if no such succession or
    assignment had taken place. Neither this Agreement nor any right or interest
    hereunder shall be assignable or transferable by the Executive or the
    Executive's beneficiaries or legal representatives, except by will or by the
    laws of descent and distribution. This Agreement shall inure to the benefit
    of and be enforceable by the Executive's legal representative.

8.  NOTICE. For the purposes of this Agreement, notices and all other
    communications provided for in the Agreement (including the Notice of
    Termination) shall be in writing and shall be deemed to have been duty given
    when personally delivered or sent by certified mail, return receipt
    requested,



<PAGE>   11

    postage prepaid, addressed to the respective addresses last given by each
    party to the other, provided that all notices to the Company shall bc
    directed to the attention of the Board with a copy to the Secretary of the
    Company. All notices and communications shall be denied to have been
    received on the date of delivery thereof or on the third business day after
    the mailing thereof, except that notice of change of address shall be
    effective only upon receipt.

9.  NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or limit
    the Executive's continuing or future participation in any benefit, bonus,
    incentive or other plan or program provided by the Company (except for any
    severance or termination policies, plans, programs or practices) and for
    which the Executive may qualify, nor shall anything herein limit or reduce
    such rights as the Executive may have under any other agreements with the
    Company (except for any severance or termination agreement). Amounts which
    are vested benefits or which the Executive is otherwise entitled to receive
    under any plan or program of the Company shall be payable in accordance with
    such plan or program, except as modified by this Agreement.

10. NO IMPLIED EMPLOYEE RIGHTS. Nothing in this Agreement shall alter
    Executive's status as an "at will" employee of the Company or bc construed
    to imply that Executive's employment is guaranteed for any period of time
    except as otherwise agreed in a written agreement signed by a duly
    authorized officer of the Company.

11. MISCELLANEOUS. No provision of this agreement may be modified, waived or
    discharged, unless such waiver, modification or discharge is agreed to in
    writing and signed by the Executive and the Company. No waiver by either
    party hereto at any time of any breach by the other party hereto, or
    compliance with any condition or provision of this Agreement to be performed
    by the other party shall be deemed a waiver of similar or dissimilar
    provisions or conditions at the or at any prior or subsequent time. No
    agreement or representation, oral or otherwise, express or implied, with
    respect to the subject matter hereof have been made by either party which
    are not expressly set forth in this Agreement.

12. GOVERNING LAW. This Agreement shall be governed by and construed and
    enforced in accordance with the laws of the State of California without
    giving effect to the conflict of laws principles thereof.

13. ARBITRATION. Any dispute or controversy arising under or in conjunction with
    the subject matter, the interpretation, the application, or alleged breach
    of this Agreement ("Arbitrable Claims") shall be resolved by binding
    arbitration in the County of Santa Clara, California, in accordance with the
    then-current



<PAGE>   12

    National Rules for the Resolution of Employment Disputes of the American
    Arbitration Association. Arbitration shall be final and binding upon the
    parties and shall be the exclusive remedy for all Arbitration Claims.
    Notwithstanding the foregoing, either party may bring an action in court to
    compel arbitration under this Agreement to enforce an arbitration award, or
    to seek injunctive relief pursuant to section 1281.8 of the California Code
    of Civil Procedure. THE PARTIES WAIVE ANY RIGHT TO JURY TRIAL AS TO
    ARBITRABLE CLAIMS.

14. LEGAL FEES AND EXPENSES. The parties shall each bear their own expenses,
    legal fees and other fees incurred in connection with this Agreement.

15. SEVERABILITY. The provisions of this Agreement shall be deemed severable and
    the invalidity or unenforceability of any provision shall not affect the
    validity or enforceability of the other provisions hereof.

16. ENTIRE AGREEMENT. The parties agree that the terms of this Agreement are
    intended to be the final expression of their agreement with respect to the
    subject matter of this Agreement and may not be contradicted by evidence of
    any prior or contemporaneous Agreement, except to the extent that the
    provisions of any such agreement (i.e., the Employment Agreement) have been
    expressly referred to in this Agreement as having continued effect.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Executive has executed this Agreement as of the
day and year first above written.



               SDL, INC.

               By:       /s/ Don Scifres
                      ------------------------

               Title:
                      ------------------------






</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.16
<SEQUENCE>8
<FILENAME>f75587ex10-16.txt
<DESCRIPTION>EXHIBIT 10.16
<TEXT>
<PAGE>   1
                                                                   EXHIBIT 10.16



                              TRANSITION AGREEMENT

        THIS AGREEMENT (the "Agreement"), made as of the 9th day of July, 2000,
by and between JDS Uniphase Corporation, a Delaware corporation (the "Company"),
with its principal U.S. offices located at San Jose, California, and Donald R.
Scifres (the Executive").


                                 WITNESSETH THAT

        WHEREAS, the Company and SDL, Inc., a Delaware corporation ("SDL"), are
parties to an Agreement and Plan of Merger (the "Merger Agreement") pursuant to
which, at the Effective Time, Merger Sub (as such terms are defined in the
Merger Agreement) shall be merged with and into SDL and the separate existence
of Merger Sub shall thereupon cease, and SDL shall continue as the surviving
corporation as a wholly-owned subsidiary of the Company (the "Merger"),

        WHEREAS, in connection with and as a condition of its willingness to
consummate the Merger, the Company desires to retain the Executive as the
Co-Chairman of the Board of Directors of the Company, and President of the
Actives Group reporting to the Chief Executive Officer of the Company, on the
terms hereinafter set forth, and to induce the Executive to enter into a
covenant against competition and certain other restrictive covenants intended to
protect the goodwill of SDL and the Company;

        WHEREAS, the Executive has a significant financial interest in the
Merger, will be converting all of his shares in SDL (options to acquire shares
of SDL) into Company shares and options pursuant to the Merger and wishes to be
employed by SDL in such capacity on the terms hereinafter set forth, and

        WHEREAS, the Company would not have entered into the Merger Agreement or
agreed to issue shares of the Company (or options for shares of the Company) for
the Executive's SDL shares and options if the Executive had not executed this
Agreement (and, in particular, the noncompete and nonsolicitation agreement
incorporated herein);

        WHEREAS, the Executive is a party to an Employment Agreement dated July
17, 1992, as subsequently amended on February 19, 1993 and again on July 29,
1994, and a Change of Control Agreement dated February 10, 2000 (collectively,
the "Executive Agreements").

        NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:

        1. Assumption of Agreements. Except as noted below and as amended
hereby, the Executive Agreements shall be assumed by the Company. All references
to SDL, Inc. or the Company in the Executive Agreements shall become "Company"
as referenced in this Agreement.




<PAGE>   2
                                                                               2



        2. Modification of Change of Control Agreement.

           (a) The definition of "Good Reason" of clause (i) of Section 2(i) in
the Change of Control Agreement dated February 10, 2000 (the "Change of Control
Agreement"), shall be amended by removing the words "a material and", inserting
the word "an" and by the addition of the following at the end thereof:

        provided, however, that the changes in the Executive's status, title,
        positions, responsibilities, duties and offices which occur immediately
        after the Change of Control effected by the Company shall not constitute
        Good Reason, and provided further, that no payment will be due Executive
        under this Agreement or the Employment Agreement solely as a result of
        the Merger as defined in the Transition Agreement between the Executive
        and JDS Uniphase Corporation, dated July 9, 2000 (the "Transition
        Agreement")

           (b) The "Good Reason" definition in the Change of Control Agreement
is further amended by the addition of the following at the end thereof:

        (vii) failure to be appointed or reappointed, or his removal as, a
        member of the board of directors of SDL or the failure to be elected or
        re-elected, or his removal as, a member of the board of directors of the
        Company,

        (viii) material breach by the Company of the Transition Agreement,

        (ix) a Change of Control of JDS Uniphase Corporation or of SDL following
        the Merger, and

        (x) a change in Executive's reporting structure

        3. Noncompete and Nonsolicitation Agreement. Executive will enter into a
noncompete and nonsolicitation agreement with the Company. This noncompete and
nonsolicitation agreement is attached as Appendix A of this Agreement, and is
incorporated herein by reference.

        4. Period of Employment. Section 1 of Executive's Employment Agreement
is amended and restated in its entirety to read as follows

        The Company hereby employs Scifres as the Co-Chairman of the Board of
        Directors of the Company and President of the Actives Group, which
        position will result in Scifres being an "Executive Officer" of the
        Company for purposes of Section 16 of the Securities Exchange Act of
        1934, as amended, with the duties and responsibilities described in
        Section 2, for the compensation specified in Section 2, for the
        compensation specified in Sections 3 and 4 and for the period commencing
        at the Effective Time (as defined in the Agreement; and Plan of Merger
        between JDS Uniphase Corporation and SDL) and ending on termination as
        provided in Section 5. Scifres hereby accepts employment by the Company
        in such capacity, upon the terms and conditions set forth in this
        Agreement.




<PAGE>   3
                                                                               3


        5. Position and Duties. Section 2 of Executive's Employment Agreement is
amended and restated in its entirety to read as follows:

        Scifres accepts employment with the Company and shall, during the term
        of this Agreement, have overall responsibility for the management and
        operations of the Actives Group, including responsibility for decisions
        regarding compensation and benefits matters at the Actives Group, as
        Co-Chairman of the Board of Directors of the Company and President of
        the Actives Group. Scifres shall report to Jozef Straus, Chief Executive
        Officer and shall have duties and responsibilities that are commensurate
        with his title and reporting structure. Scifres shall, during the term
        of this Agreement, devote his best effort and entire working time,
        attention and skill exclusively to the business and affairs of SDL and
        the Actives Group, provided that Scifres's participation on board of
        directors of other companies and other activities Scifres currently
        participates in as identified in Exhibit 1 hereto, as amended with the
        consent of the Company, shall not be deemed a violation of this
        provision unless such activities materially interfere with Scifres's
        duties hereunder. The location of employment, headquarters and travel
        responsibilities will be consistent with 2(i)(iii) of the Change of
        Control Agreement with the Company, dated February 10, 2000 (the "Change
        of Control Agreement"), regardless of whether such Change of Control
        Agreement is then in effect.

        6. Compensation. Section 3 of Executive's Employment Agreement is
amended and restated in its entirety to read as follows:

        "For all services rendered by Scifres to the Company and for all
        obligations assumed by him pursuant to this Agreement, the Company
        shall, subject to Scifres's performance of such obligations, pay to
        Scifres the compensation set forth in this Section 3 and provide the
        other benefits set forth in this Agreement

           (a) Salary. Scifres shall receive a base salary on a per annum basis
("Base Salary") equal to Three Hundred Thousand Dollars ($300,000) commencing as
of the Effective Time. The foregoing Base Salary shall be subject to annual
increases on July 1 of each year during the term of this Agreement, commencing
July 1, 2001, as determined by the Company in its sole discretion.

           (b) Bonuses. Scifres shall be eligible to receive a bonus each year
equal to an amount of up to one hundred and twenty percent (120%) of his Base
Salary, which bonus shall be paid to Scifres on an annual basis upon his
reaching the performance goals mutually established from time to time hereafter
by Scifres and the Company. Under the plan to be established, the target bonus
each year will be 60% of Scifres' Base Salary (the "Target Bonus"), with an
opportunity to earn from 0% to 200% of the Target Bonus based on actual
performance compared to the annual goals to be established for the plan.

           (c) Stock Options. Within 10 days of the Effective Time, Scifres
shall be granted 200,000 nonqualified Company stock options (the "Initial
Options"). Such Initial



<PAGE>   4
                                                                               4



Options will be subject to the terms of a stock option agreement which will
provide for an option term of no more than 10 years, vesting 50% after one (1)
year and 100% after two (2) years and an exercise price equal to the fair market
value of Company common stock an the date of grant. If the employment of Scifres
is terminated without Cause or terminates for Good Reason (as such terms are
defined in Scifres's Change of Control Agreement, as amended by the Transition
Agreement, made as of July 9, 2000, between Scifres and JDS Uniphase Corporation
(the "Transition Agreement"), regardless of whether such Change of Control
Agreement is then in effect), then such Initial Options shall become immediately
vested and exercisable. If Scifres's employment terminates for any reason, all
vested Initial Options shall remain exercisable for the remainder of their
10-year term.

        Scifres will also be eligible for annual grants of stock options,
consistent with SDL past practices, or if more favorable, with grants made to
other similarly situated executives of the Company.

           (d) Outstanding Stock Options. Notwithstanding anything to the
contrary, in the event that Scifres's employment with the Company is terminated
without Cause or for Good Reason (as such terms are defined in the Change of
Control Agreement, as amended by the Transition Agreement, regardless of whether
such Change of Control Agreement is then in effect), or in the event of
Scifres's death, disability or retirement at or after age 55, all unvested stock
options granted to Scifres before the Effective Time (the "Prior Options") shall
become immediately vested and exercisable and, together with all vested stock
options granted before the Effective Time, may be exercised for the balance of
the full remaining life of the options (i.e., full 10-year term).

           (e) For purposes of clarification, if Executive's employment
Terminates for Cause or without Good Reason, then all vested Initial Options and
all vested Prior Options shall remain exercisable for the remainder of their
10-year term, however unvested options shall not accelerate and shall be
forfeited.

        7. Employee Benefits. The first sentence of Section 4(a) Executive's
Employment Agreement is amended and restated in its entirety to read as follows:


        The Company shall provide Scifres with health, disability, life
        insurance and other welfare benefits, vacation, stock purchase and 401
        (k) plans which are no less favorable than those provided to Scifres at
        the Effective Time, or if more favorable, under employee benefit plans
        provided to similarly situated executives of the Company of similar rank
        and responsibility.

        8. Additional Cash Payments.

           (a) Within 10 days of the Effective Time and in consideration for
Executive accepting the terms of the attached Noncompetition and Nonsolicitation
Agreement and the amendments to the Executive Agreements, the Executive shall
receive a cash payment of $75 Million.



<PAGE>   5
                                                                               5



           (b) Notwithstanding anything in the Executive Agreements to the
contrary, in the event that any of the payments or benefits provided under this
Agreement or the Executive Agreements result in Executive being subject to the
golden parachute excise tax imposed by Section 4999 of the Internal Revenue
Code, the Company shall make such additional payment as will make executive
whole for such tax obligation, as set forth in Appendix B, which is incorporated
herein by reference.

        9. Current Board Participation and Other Activities. Executive's
Employment Agreement is amended by the addition of Exhibit 1 at the end thereof.

        10. Board of Directors. Section 4(c) of Executive's Employment Agreement
shall be amended to refer to the Board of the Company and the Board of SDL.

        Executive acknowledges and agrees that the Voting Agreement referenced
in his July 17, 1992 Employment Agreement at Section 4(c) is no longer in force
and effect.

        11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and any affiliate thereof, their perspective
successors, permitted assigns and legal representatives.

        12. Construction/Interpretation. The Executive acknowledges that the
Executive has been advised by the Company to review the terms of this Agreement
with legal counsel of the Executive's choice and that the Executive has been
given reasonable opportunity to seek such legal advice. The parties hereto
acknowledge and agree that: (i) each party and their counsel have (or had the
opportunity to) reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement, and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.

        13. Disputes/Reimbursement of Expenses. If any contest or dispute shall
arise under this Agreement, the Employment Agreement or the Change of Control
Agreement, not withstanding any provisions thereof to the contrary, involving
termination of Executive's employment with the Company or involving the failure
or refusal of the Company to perform fully in accordance with the terms hereof,
the Company shall reimburse Executive, on a current basis, for all reasonable
legal fees and expenses, if any, incurred by Executive in connection with such
contest or dispute (regardless of the result thereof), together with interest in
an amount equal to the prime rate of Citibank N.A. from time to time in effect,
but in no event higher than the maximum legal rate permissible under applicable
law, such interest to accrue from the date the Company receives Executive's
statement for such fees and expenses through the date of payment thereof,
regardless of whether or not Executive's claim is upheld by a court of competent
jurisdiction, provided, however, Executive shall be required to repay any such
amounts to the Company to the extent that a court issues a final and
non-appealable order setting



<PAGE>   6
                                                                               6



forth the determination that the position taken by Executive was frivolous or
advanced by Executive in bad faith.

        In addition, the Company shall reimburse the Executive for legal and
consulting fees and expenses arising in connection with entering into this
Agreement.

        14. Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and enforced with the laws
of the State of California without giving effect to the conflict of laws
principle thereof.

        15. Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be declared invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the fullest extent permitted by law.

        16. Amendments to Agreement. No amendment or alteration of the terms of
this Agreement shall be valid or binding unless made in writing signed by
parties to this Agreement specifically referring to this Agreement.

        17. Voiding Agreement. This Agreement will be null and void and given no
effect if the Merger contemplated by the Merger Agreement is not consummated.

        18. Integration. The parties understand and agrees that this Agreement,
along with the Executive Agreements, represent the entire agreement between the
parties; that no representation or promise has been made by the Company
concerning the subject matter of those agreements, except as expressly set forth
in those agreements, and that all agreements and understandings between the
parties concerning the subject matter of those agreements are embodied and
expressed in those agreements. This Agreement and the Executive Agreements shall
supercede all prior or contemporaneous agreements and understandings between
Executive and the Company, whether written or oral, expressed or implied, with
respect to the subject matter of those agreements.

        IN WITNESS WHEREOF, the parties have executed this Agreement, under
seal, as of the date first above written



EXECUTIVE:                                  JDS UNIPHASE CORPORATION



By  /s/ DONALD R. SCIFRES                   By  /s/ MICHAEL PHILLIPS
   -------------------------------             -------------------------------
    Donald R. Scifres                           Senior Vice President





<PAGE>   7
                                                                               7



                                   APPENDIX A

                  NONCOMPETITION AND NONSOLICITATION AGREEMENT

        A. Non-Competition.

           (a) During the Executive's employment by, or relationship with, the
Company and for a period of one (1) year following the Effective Time of the
Merger, the Executive will not directly or indirectly, either as principal,
agent, employee, consultant, officer, director, or stockholder of the Company,
engage in any business which is competitive with the photonics or optics
networking businesses of SDL or the Company (collectively, the "Business"),
provided, however, that nothing contained herein shall preclude the Executive
from purchasing or owning less than five percent (5%) of the stock or other
securities of (1) any company with securities Traded on a nationally recognized
securities exchange or (ii) any venture capital fund passive interest,

           (b) For the purposes of this Section A, a business will be deemed
competitive with the Business if it involves the performing of services and/or
the production, manufacture, distribution, sale or development of any product
similar to services performed or products produced, manufactured, distributed,
sold or developed or being developed by the Business and/or the licensing of any
process or technology concerning production similar to those utilized, developed
or being developed by the Business during the period in which the Executive is
employed or otherwise affiliated with the Company.

           (c) The Executive acknowledges that the Business has been and will be
conducted on a global basis by SDL and the Company, and that, accordingly, time
restrictions contained in this Section A shall apply in (i) any city, county or
other political subdivision of the State of California (including, without
limitation, the counties listed on Exhibit II hereto), and (ii) any city, county
or other political subdivision of any other state in the United States or any
country or other territory in the world, where the Company is selling or
delivering any of the Business' products or services or is otherwise carrying on
business or selling activities with respect to the Business or (y) has engaged
in any of the activities described in clause (x) within the most recent 12-month
period.

           (d) The Executive acknowledges and agrees that strict enforcement of
the terms of this Agreement is necessary for the purpose of ensuring the
preservation, protection and continuity of the business, trade secrets and
goodwill of the Company and that, in furtherance of such purpose, the
prohibition against competition imposed by this Section A is narrow, reasonable
and fair. The Executive further agrees that, given the Executive's experience,
knowledge and skills, substantial opportunities for employment outside of the
areas restricted by this Agreement are and will remain available to the
Executive. If any part of this Section A should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this Agreement is intended to and shall extend only for such period
of time, in such area and with respect to such activities as are determined to
be reasonable.



<PAGE>   8
                                                                               8



(e) Notwithstanding anything contained in this Section A to the contrary, the
Executive shall be permitted to serve as a director of, or an investor in, each
of the corporations set forth on Exhibit 1, which may be amended from time to
time by the mutual consent of the Executive and the Company.

        A. Non-Solicitation

        During the Executive's employment or relationship with the Company and
for a period of one (1) year following the Effective Time, the Executive will
not directly or indirectly, either as principal, agent, employee, consultant,
officer, director or stockholder, solicit any employee, consultant, independent
contractor or agent of the Business with the intention or effect of encouraging
such party to terminate his or her employment, agency or other relationship, as
applicable, with the Business.




<PAGE>   9
                                                                               9



                                    EXHIBIT 1


HomeFiber - approximately 10% interest
DMISI - approximately 10% interest





<PAGE>   10
                                                                              10



                                   EXHIBIT II


<TABLE>
                ----------------------------------------------------------
                               CALIFORNIA COUNTIES
                ----------------------------------------------------------
                <S>                            <C>
                Alameda                        Placer
                ----------------------------------------------------------
                Alpine                         Plumas
                ----------------------------------------------------------
                Amador                         Riverside
                ----------------------------------------------------------
                Butt                           Sacramento
                ----------------------------------------------------------
                Calaveras                      San Benito
                ----------------------------------------------------------
                Colusa                         San Bernardino
                ----------------------------------------------------------
                Contra Costa                   San Diego
                ----------------------------------------------------------
                Del Norte                      San Francisco
                ----------------------------------------------------------
                El Dorado                      San Joaquin
                ----------------------------------------------------------
                Fresno                         San Luis Obispo
                ----------------------------------------------------------
                Glenn                          San Mateo
                ----------------------------------------------------------
                Humboldt                       Santa Barbara
                ----------------------------------------------------------
                Imperial                       Santa Clara
                ----------------------------------------------------------
                Inyo                           Santa Cruz
                ----------------------------------------------------------
                Kern                           Shasta
                ----------------------------------------------------------
                Kings                          Sierra
                ----------------------------------------------------------
                Lake                           Siskiyou
                ----------------------------------------------------------
                Lassen                         Solano
                ----------------------------------------------------------
                Los Angeles                    Sonoma
                ----------------------------------------------------------
                Madera                         Stanislaus
                ----------------------------------------------------------
                Marin                          Sutter
                ----------------------------------------------------------
                Mariposa                       Tehama
                ----------------------------------------------------------
                Mendocino                      Trinity
                ----------------------------------------------------------
                Merced                         Tulare
                ----------------------------------------------------------
                Modoc                          Tuolumne
                ----------------------------------------------------------
                Mono                           Ventura
                ----------------------------------------------------------
                Monterey                       Yolo
                ----------------------------------------------------------
                Napa                           Yuba
                ----------------------------------------------------------
                Nevada
                ----------------------------------------------------------
                Orange
                ------------------------------ ---------------------------
</TABLE>




<PAGE>   11
                                                                              11



                                   APPENDIX B

                   Certain Additional Payments by the Company


(a)     Anything in this Agreement or the Executive Agreements to the contrary
        notwithstanding, in the event it shall be determined that any payment,
        award, benefit or distribution (or any acceleration of any payment,
        award, benefit or distribution) by the Company (or any of its affiliated
        entities) or any entity which effectuates a Change of Control (or any of
        its affiliated entities) to or for the benefit of Executive (whether
        pursuant to the terms of this Agreement or otherwise, but determined
        without regard to any additional payments required under this Appendix
        B) (the "Payments") would be subject to the excise tax imposed by
        Section 4999 of the Internal Revenue Code of 1986, as amended (the
        "Code"), or any interest or penalties are incurred by Executive with
        respect to such excise tax (such excise tax together with any such
        interest and penalties, are hereinafter collectively referred to as the
        "Excise Tax"), then the Company shall pay to Executive an additional
        payment (a "Gross-Up Payment") in an amount such that after payment by
        Executive of all taxes (including any Excise Tax) imposed upon the
        Gross-Up Payment, Executive retains an amount of the Gross-Up Payment
        equal to the sum of (x) the Excise Tax imposed upon the Payments and (y)
        the product of any deductions disallowed because of the inclusion of the
        Gross-up Payment in Executive's adjusted gross income and the highest
        applicable marginal rate of federal income taxation for the calendar
        year in which the Gross-up Payment is to be made. For purposes of
        determining the amount of the Gross-up Payment, the Executive shall be
        deemed to (i) pay federal income taxes at the highest marginal rates of
        federal income taxation for the calendar year in which the Gross-up
        Payment is to be made, (ii) pay applicable state and local income taxes
        at the highest marginal rate of taxation for the calendar year in which
        the Gross-up Payment is to be made, net of the maximum reduction in
        federal income taxes which could be obtained from deduction of such
        state and local taxes and (iii) have otherwise allowable deductions for
        federal income tax purposes at least equal to those which could be
        disallowed because of the inclusion of the Gross-up Payment in the
        Executive's adjusted gross income. Notwithstanding the foregoing
        provisions of this Appendix B(a), if it shall be determined that
        Executive is entitled to a Gross-Up Payment, but that the Payments would
        not be subject to the Excise Tax if the Payments were reduced by an
        amount that is less than 10% of the portion of the Payments that would
        be treated as "parachute payments" under Section 280G of the Code, then
        the amounts payable to Executive under this Agreement shall be reduced
        (but not below zero) to the maximum amount that could be paid to
        Executive without giving rise to the Excise Tax (the "Safe Harbor Cap"),
        and no Gross-Up Payment shall be made to Executive. The reduction of the
        amounts payable hereunder, if applicable, shall be made by reducing any
        cash payments, unless an alternative method of reduction is elected by
        Executive. For purposes of reducing the Payments to the Safe Harbor Cap,
        only amounts payable under this Agreement (and no other Payments) shall
        be reduced. If the reduction of the amounts



<PAGE>   12
                                                                              12



        payable hereunder would not result in a reduction of the Payments to the
        Safe Harbor Cap, no amounts payable under this Agreement shall be
        reduced pursuant to this provision.



<PAGE>   13
                                                                              13



        (b) Subject to the provisions of this Appendix B (a), all determinations
required to be made under this Appendix B, including whether and when a Gross-Up
Payment is required, the amount of such Gross-Up Payment, the reduction of the
Payments to the Safe Harbor Cap and the assumptions to be utilized in arriving
at such determinations, shall be made by the public accounting firm that is
retained by the Company as of the date immediately prior to the Change of
Control (the "Accounting firm") which shall provide detailed supporting
calculations both to the Company and Executive within fifteen (15) business days
of the receipt of notice from the Company or the Executive that there has been a
Payment, or such earlier time as is requested by the Company (collectively, the
"Determination"). In the event that the Accounting firm is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control,
Executive may appoint another nationally recognized public accounting firm to
make the determinations required hereunder (which accounting firm shall then be
referred to as the Accounting Firm hereunder). All fees and expenses of the
Accounting Firm shall be borne solely by the Company and the Company shall enter
into any agreement requested by the Accounting Firm in connection with the
performance of the services hereunder. The Gross-up Payment under this Appendix
B with respect to any Payments shall be made no later than thirty (30) days
following such Payment. If the Accounting Firm determines that no Excise Tax is
payable by Executive, it shall furnish Executive with a written opinion to such
effect, and to the effect that failure to report the Excise Tax, if any, on
Executive's applicable federal income tax return will not result in the
imposition of a negligence or similar penalty. In the event the Accounting Firm
determines that the Payments shall be reduced to the Safe Harbor Cap, it shall
furnish Executive with a written opinion to such effect. The Determination by
the Accounting Firm shall be binding upon the Company and Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the Determination, it is possible that Gross-Up Payments which will not have
been made by the Company should have been made ("Underpayment") or Gross-up
Payments are made by the Company which should not have been made
("Overpayment"), consistent with the calculations required to be made hereunder.
In the event that the Executive thereafter is required to make payment of any
Excise Tax or additional, Excise Tax, the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such Underpayment (together
with interest, to the extent not already within the Excise Tax, at the rate
provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by the
Company to or for the benefit of Executive. In the event the amount of the
Gross-up Payment exceeds the amount necessary to reimburse the Executive for his
Excise Tax, the Accounting Firm shall determine the amount of the Overpayment
that has been made and any such Overpayment (together with interest at the rate
provided in Section 1274(b)(2) of the Code) shall be promptly paid by Executive
(to the extent he has received a refund if the applicable Excise Tax has been
paid to the Internal Revenue Service) to or for the benefit of the Company.
Executive shall cooperate, to the extent his expenses are reimbursed by the
Company, with any reasonable requests by the Company in connection with any
contests or disputes with the Internal Revenue Service in connection with the
Excise Tax.




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.17
<SEQUENCE>9
<FILENAME>f75587ex10-17.txt
<DESCRIPTION>EXHIBIT 10.17
<TEXT>
<PAGE>   1
                                                                             1


                                                                   EXHIBIT 10.17


                              EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is entered into by and between Gregory
P. Dougherty ("Employee") and SDL, Inc. (the "Company"), and is effective as of
the 1st day of October, 1998 and supercedes any/all previous employment
agreements. The parties hereby AGREE AS FOLLOWS:

1. Period of Employment

The Company will employ Employee to render services to the Company in the
position and with the duties and responsibilities described in Section 2, for
the compensation specified in Sections 3 and 4 and for the period commencing on
the effective date of this Agreement and ending on termination as provided in
Section 5.

2. Position and Duties

Employee accepts employment with the Company as its Chief Operating Officer. As
such, Employee shall have the responsibilities for the management and operations
of the Company established for him from time to time by the Board of Directors.

3. Compensation

(a) Base Salary. Employee shall receive a base salary of $209,204 per year,
payable in equal installments in accordance with the Company's current practices
or as they may be amended. The foregoing base salary shall be subject to annual
reviews each year during the term of the Agreement, as determined by the Board
of Directors in its sole discretion.

(b) Annual Bonuses. The Board of Directors shall approve an annual operating
plan for the Company. Employee shall receive cash bonuses in connection with
each audit of the Company's results of operations conducted by the Company's
independent certified public accountants. Such audits shall be conducted at
least annually. Employee's bonuses shall be computed as provided in the matrix
attached to this agreement as Exhibit A or other such criteria as determined by
the SDL Board of Directors, provided that such bonuses shall be adjusted pro
rata to reflect any audit period less than twelve (12) months. The Company's
results of operations shall be determined by the Company's independent certified
public accountants in accordance with generally accepted accounting principles
applied consistent with the practice for prior periods and shall be accompanied
by an audit report of such accountants, which shall be reasonably acceptable to
the Company's Board of Directors. Such bonuses shall be calculated and paid
within thirty (30) days following delivery of the audit report. Bonuses shall be
deemed earned with respect to each fiscal year (or portion thereto) during which
Employee has been employed hereunder as of the end of the fiscal period covered
by the audit; such bonuses shall thereafter be paid on the dates set forth
above, subject only to the determination of the Company's results of operations.

(e) Option Appreciation Guarantee. Offer letter dated February 21, 1997 states:
"If at the end of your second complete year with SDL the options that you have
been granted do not yield you $200,000 appreciation, SDL will make up the
difference in cash. That is, if the options are below water SDL

<PAGE>   2
                                                                               2


will pay $200,000 in cash less taxes. If the options are above water but their
value is less than $200,000 above the exercise price, SDL will pay you the
difference in cash less taxes. SDL will calculate the appreciation on the second
anniversary of your option grant date based on a 3 day average of the last trade
price as reported in the Wall Street Journal; day before, anniversary date, and
day after." This agreement amends the above paragraph by adding the following
sentence: Any such payout will actually occur on your tenth anniversary or
termination from the Company for any reason, whichever comes first.

4. Benefits

(a) Employee will continue to receive benefits made generally available to
employees of the Company. In addition, Employee shall receive in the future
benefits generally made available to the Company's executives at a similar
reporting level. The foregoing shall include stock option plan grants, with the
number of shares, if any, covered by such grants determined by the Board of
Directors in its sole discretion. The Company shall reimburse Employee for
reasonable travel and other business expenses incurred by him in the performance
of his duties hereunder in accordance with the Company's policies in this
regard.

(b) During the term of this Agreement and for a period of six (6) months
thereafter, the Company will maintain an insurance policy on Employee's life in
an amount equal to his then-current base salary. The proceeds of the foregoing
insurance policy shall be payable to such beneficiaries as Employee may
designate from time to time or, in the absence of a designation, to his estate.

(c) New Loan. In the event Employee sells the Property and purchases a new
residence, the Company agrees to enter into a new housing assistance loan (the
"New Loan"), the terms of which will be the same in all material respects to the
terms of Housing Assistance Loan, including but not limited to the terms related
to the on-going loan repayment obligations of Employee and the repayment
obligations of Employee in the event of termination by the Company, provided,
however, that (i) at the time of the close of escrow for the new residence, the
Employee must be currently employed at the Company, (ii) the amount of the New
Loan will be equal to the price of the new residence minus $228,000, but in no
event shall it exceed the amount outstanding under the Note at the time such
amount became due and payable and (iii) the New Loan will be due and payable on
the tenth anniversary of the date of the Note.

(d) See attached "Addendum, Terms of Employment Offer" Section 1)(d)(iii) under
"Relocation Package" in the attached "Addendum, Terms of Employment Offer" dated
February 21, 1997 is amended to read as follows: Dollar forgiveness on the
anniversary of your employment date

<TABLE>
                  <S>       <C>         <C>     <C>
                  1999      $40,000      -      2nd Anniversary
                  2000      $40,000      -      3rd Anniversary
                  2001      $40,000      -      4th Anniversary
                  2002      $80,000      -      5th Anniversary
                  2003      $40,000      -      6th Anniversary
                  2004      $40,000      -      7th Anniversary
                  2005      $40,000      -      8th Anniversary
                  2006      $40,000      -      9th Anniversary
                  2007      $40,000      -     10th Anniversary
</TABLE>

<PAGE>   3
                                                                               3


5. Termination In addition to the terms of termination defined in the "Addendum,
Terms of Employment Offer" (see attached) the following will apply.

(a) Employee's employment by the Company hereunder shall be TERMINABLE BY EITHER
EMPLOYEE OR the Company at any time and for any reason, with or without cause,
effective upon written notice to the other party. Upon termination of employment
the employee shall be deemed to have resigned from all offices and directorships
then held with the Company or any affiliate.

(b) In the event the Company terminates Employee's employment pursuant to
subsection (a) above other than for cause (as defined below), or the Employee
resigns following a reduction in base pay and bonus when said reduction is not
in conjunction with similar reductions in base pay and bonus with other Senior
Executives or employee is no longer in the role of Chief Operating Officer or at
least equivalent position, Employee shall be entitled to the following benefits:

(i) An amount, payable monthly for six (6) months, commencing on the effective
date of termination of the Employee's employment equal to his then current
monthly base salary;

(ii) Accelerated vesting, for six (6) additional months from the effective date
of termination, under all outstanding stock options then held by Employee; and

(iii) An amount, payable monthly for six (6) months commencing on the effective
date of termination of Employee's employment equal to 4.1667% of his then
current annual base salary

(iv) For a period of six (6) months following the termination of Employee's
employment pursuant to this Agreement, the Company will pay the cost to maintain
medical benefits under COBRA, provided that Employee will continue to pay the
amount he paid for medical insurance prior to such termination and provided the
employee adheres to the terms of COBRA.

(v) $200,000 of "Housing Assistance Loan" described in the Terms of Offer dated
February 21, 1997 will be forgiven if termination occurs during the first 5
years of employment at SDL and the balance of the loan is due upon close of
escrow on the house repurchase or within 1 year which ever comes first,

(vi) At your option, SDL can repurchase your CA house, within 1 year of your
termination date, at the higher of original purchase price or appraised value at
the time of termination or you will need to pay the balance of the loan within
1 year.

(c) If Employee terminates his employment pursuant to this Agreement in
accordance with Section 5 (a), or if the Company terminates Employee's
employment pursuant to Section 5(a) for cause (defined as willful breach of duty
in the course of employment or habitual neglect of duty or continued inability
to perform it), continued inability to perform it shall not include performance
results, unwillingness to move (more than 100 miles)/accept transfer or
unwillingness to accept excessive travel or any reasons/circumstances resulting
from illness in family or child care, the following shall apply:

(i) No further salary shall be payable to Employee, except for amounts accruing
prior to the termination date;

<PAGE>   4
                                                                               4


(ii) No further vesting of Employee's stock options or stock purchase, or
similar rights shall occur; and

(iii) No further bonuses shall be payable pursuant to Section 3(b).

(iv) No forgiveness of the $200,000 "Housing Assistance Loan" will be provided,

(v) "Housing Assistance Loan" balance in full is payable with 1 year, or upon
sale of house whichever occurs first.

(d) Subsequent to the termination of Employee's employment hereunder, the
payments and benefits provided for in Sections 4(b) and subsections 5 (b) (i),
(ii), (iii) and (iv) shall terminate at such time, if any, as Employee commences
employment.

(e) This Agreement shall terminate upon Employee's death or permanent
disability. In such event, Employee (or his estate) shall be entitle to receive
the benefits provided for under Section 5(b).

6. Miscellaneous

(a) Notices under this Agreement shall be in writing and shall be deemed given
when delivered in person or three (3) days after deposit in the United States
Mail, postage prepaid, certified or return receipt requested, and addressed as
follows:

             If to Employee:       NAME
                                   STREET ADDRESS
                                   CITY, STATE, ZIP
             If to the Company:    80 Rose Orchard Way
                                   San Jose, California 95134
                                   Attention: Corporate Secretary

The foregoing addresses may be CHANGED BY NOTICE IN ACCORDANCE WITH THIS
SUBSECTION (a).

(b) The prevailing party in any action to enforce the terms of this Agreement
shall be entitled to reimbursement from the other party for its costs and
expenses (including reasonable attorneys' fees) in connection therewith.

(c) The terms of this Agreement are intended by the parties to be the final
expression of their agreement with respect to the employment of Employee by the
Company and may not be contradicted by evidence of any prior or contemporaneous
agreement. The parties further intend that this Agreement shall constitute the
complete and exclusive statement of its terms and that no extrinsic evidence
whatsoever may be produced in any legal proceeding involving this Agreement.
This Agreement may be amended, and the observance of any of its terms may be
waived, only by a writing signed by the party to be charged with such amendment
or waiver.

(d) If any provision of this Agreement, 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
Agreement and such provisions as applied to other persons, places and

<PAGE>   5
                                                                               5


circumstances shall remain in full force and effect.

(e) The validity, interpretation, enforceability and performance of this
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without regard to its rules regarding conflicts of laws.

(f) Employee agrees THAT ALL DISPUTES between him and the Company (including all
affiliates, shareholders, directors, officers, employees, consultants, agents,
successors and assigns), which arise during Employee's employment or after, will
be resolved by arbitration. The arbitration will be conducted by a single
arbitrator. The arbitrator will be selected and the arbitration conducted
pursuant to the Employment Dispute Resolution rules of the American Arbitration
Association (AAA). The arbitration agreement covers all disputes arising from
Employee's employment, including (1) claims for wages, benefits or compensation,
(2) all tort and contract claims of any kind, including disputes concerning this
Agreement, and (3) claims based on any federal or state law, including
discrimination, harassment or retaliation laws. For example, this arbitration
agreement includes claims arising under Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, and the California Fair Employment and Housing Act. The only claims not
covered by this arbitration agreement are workers' compensation and unemployment
compensation claims, and the Company may, at its option, seek injunctive relief,
equitable relief and damages in court for any breach of this Invention and
Proprietary Information Agreement, any other agreement, or any federal or state
law, concerning Proprietary Information or Inventions. Except as provided in the
previous sentence, arbitration is the exclusive remedy for all disputes covered
by this arbitration agreement, including whether a particular dispute is covered
by this agreement, and shall be final and binding on both parties, which means
that BOTH EMPLOYEE AND THE COMPANY WAIVE ANY RIGHT TO A JURY TRIAL. Either
Employee or the Company may bring an action in court to compel arbitration and
to enforce an arbitration award. Otherwise, neither party shall initiate or
prosecute any lawsuit or administrative action in any way related to any dispute
covered by the arbitration agreement. The Federal Arbitration Act shall govern
the interpretation and enforcement of this arbitration agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first set forth above.

     EMPLOYEE                                SDL, INC.
     By /s/ Gregory P. Dougherty             By /s/ Donald R. Scifres

<PAGE>   6
                                                                               6


Mr. Gregory P. Dougherty
Addendum, Terms of Employment Offer
February 21, 1997


Stock Options:

1)      A second grant approximately 2 years after the initial grant (exact date
        to be concurrent with appropriate quarterly reload schedule) of 14,000
        options in accordance with the terms of SDL's stock option plan, as long
        as:

            i)   You are still employed with SDL and,

            ii)  SDL's option plan is still in effect

Relocation Package:

1)      "Housing Assistance Loan: secured 2nd mortgage on house:

        a)  The amount of this loan is equivalent to the price of California
            house less $228,000 not exceed $700,000

        b)  Term: 10 years

        c)  Interest rate 0%

        d)  On-going loan repayment:

            i)   100 % of net after tax proceeds of any payment made under
                 option appreciation guarantee, see Employment Offer Letter.

            ii)  50% of net after tax proceeds of all bonus payments, see
                 Employment Offer Letter.

            iii) $200,000 of loan will be forgiven after 5 years and an
                 additional $200,000 of loan will be forgiven after 10 years of
                 SDL service and any remaining loan balance will be due and
                 payable at end of term of the loan.

        e)  Repayment in the event of termination:

            i)   Voluntarily termination - balance in full within 1 year.

            ii)  Termination due to death or disability - balance in full due
                 upon close of escrow on the house repurchase.

            iii) Involuntarily termination - $200,000 of loan will be forgiven
                 if termination occurs during the first 5 years of employment,
                 balance is due upon close of escrow on the house repurchase.

<PAGE>   7
                                                                               7


        f)  In the event of involuntary termination or termination due to death
            or disability, SDL will give you the option of SDL repurchasing your
            CA house within 1 year at the higher of original purchase price or
            appraised value at the time of termination or pay the balance of the
            loan with 1 year.

        g)  SDL is advised that there is no imputed interest on this loan, if
            that advice is incorrect, SDL will reimburse the federal and state
            income tax on any imputed interest if it is due under present tax
            law.

2)      Relocation Assistance:

        a)  Pennsylvania house - SDL will contract with a relocation assistance
            firm to purchase the PA house for $228,000. SDL will reimburse you
            for any Federal and State income taxes which you pay as a result of
            this transaction.

        b)  Lump sum payment:

            I)   Total lump sum payment for relocation is $200,000 which will be
                 split between current compensation and a "Relocation Loan".

            II)  Loan:

                 i) Loan amount equal to the price of the California house minus
                 amount of first mortgage obtained by employee (which will not
                 exceed the amount of the 1st mortgage on the Pennsylvania
                 house) minus amount of housing assistance loan per Relocation
                 Package Section 1a).

                 ii) Repayment of "Relocation Loan" - 20% of the loan portion of
                 the $200,000 amount will be forgiven annually for 5 years on
                 the loan anniversary date if employment continues, iii) In the
                 event of involuntary termination or termination for any reason
                 after 12 months of continuous employment with SDL this loan
                 will be forgiven completely.

            III) Non-loan amount equal to $200,000 minus loan amount per
                 Relocation Package Section 2b) II) which will be paid
                 concurrent with signing the loan agreements.

            IV)  Should you voluntarily terminate your employment with SDL
                 during the first 12 months of your employment, you will be
                 required to repay SDL on a pro rata basis for the lump sum
                 payment.

Vacation:

1)      20 days of vacation will be credited to your account on your hire date
        for your use in 1997.

2)      Additional vacation will accrue at the rate of 20 days per year.

Indemnification of Legal Costs

1)      In the event that Lucent Technologies brings suit against you, not
        related to a violation of law or breach of contract by you, SDL will
        provide a legal defense on your behalf.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.18
<SEQUENCE>10
<FILENAME>f75587ex10-18.txt
<DESCRIPTION>EXHIBIT 10.18
<TEXT>
<PAGE>   1
                                                                   Exhibit 10.18


                                    SDL, INC.

                           CHANGE OF CONTROL AGREEMENT

        This Agreement, dated as of February 10, 2000, is entered into between
SDL, Inc., a corporation organized under the laws of the State of Delaware
("SDL") and Gregory P. Dougherty (the "Executive").

        WHEREAS, the Board of Directors of the Company (the "Board") recognizes
that the possibility of a Change in Control (as hereafter defined) exists and
that the threat of the occurrence of a Change in Control can result in
significant distractions to its key management personnel because of the
uncertainties inherent in such a situation;

        WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure the Executive's continued dedication and efforts in such event without
undue concern for the Executive's personal, financial and employment security;
and

        WHEREAS, in order to induce the Executive to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change in
Control, the Company desires to enter into this Agreement with the Executive to
supplement the terms of the employment agreement between the Company and the
Executive, dated October 1, 1998, and to provide the Executive with certain
benefits in the event that the Executive's employment is terminated as a result
of, or in connection with, a Change in Control.

        NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:

        1. TERM OF AGREEMENT. This Agreement shall commence as of February 10,
2000 (the "Effective Date") and shall continue in effect until the second
anniversary of the Effective Date, provided, that commencing on the second
anniversary of the Effective Date and on each subsequent anniversary thereof,
the term of this Agreement shall be automatically extended for one (1) year
unless either the Company or Executive shall have given written notice to the
other at least ninety (90) days prior thereto that the term of this Agreement
shall not be so extended; and provided, further, that notwithstanding any such
notice by the Company not to extend, the term of this Agreement shall not expire
prior to the expiration of eighteen (18) months after the occurrence of a Change
in Control.

        2. DEFINITIONS.

           a. ACCRUED COMPENSATION. For purposes of this Agreement, "Accrued
Compensation" shall mean an amount which shall include all amounts earned or
accrued through the "Termination Date" (as hereinafter defined) but not paid as
of the Termination Date, including (i) base salary, (ii) reimbursement for
reasonable and necessary expenses incurred by the Executive on behalf of the
Company during the period ending on the Termination Date, (iii) vacation pay and
(iv) bonuses and incentive compensation.

           b. BASE AMOUNT. For purposes of this Agreement, "Base Amount" shall
mean Executive's annual base salary at the rate in effect on the Termination
date, including all amounts of base salary that are deferred under the employee
benefit plans of the Company or any other agreement or arrangement.

           c. BONUS AMOUNT. For purposes of this Agreement, "Bonus Amount" shall
mean the average of the annual bonuses paid or payable to the Executive under
the Company's cash bonus incentive plan during the two (2) full fiscal years
ended prior to the fiscal year during which the Termination Date occurred.


           d. EMPLOYMENT AGREEMENT. For purposes of this Agreement, "Employment
Agreement" shall mean the employment agreement executed between the Company and
Executive, dated October 1, 1998.

<PAGE>   2

           e. CAUSE. For purposes of this Agreement, "Cause" shall mean
Executive's (i) willfully engaging in any act or omission which is a breach of
his duties as an employee and officer of the Company; (ii) habitual neglect of
such duties; or (iii) continued inability to perform such duties (which shall
not include performance results), unless such inability is due to Executive's
unwillingness to relocate or transfer to a location more than 100 miles from his
current residence, Executive's unwillingness to perform excessive travel
requirements which are materially greater than his travel requirements at the
time of the Change of Control, or due to reasons or circumstances resulting from
an illness in the family or child care-related issues, in each case as
determined in good faith by the Company.

           f. CHANGE IN CONTROL. For purposes of this Agreement, a "Change in
Control: shall mean any of the following events:

              (i) An acquisition (other than directly from the Company) of any
voting securities of the Company (the "Voting Securities") by any "Person" (as
the term is used for purposes of Section 13(d) or 14(d) of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company's then outstanding Voting Securities:

              (ii) The individuals who are members of the Board as of the date
this Agreement is approved by the Board (the "Incumbent Board") cease for any
reason to constitute at least a majority of the Board; PROVIDED, HOWEVER, that
if the appointment, election or nomination for election by the Company's
stockholders, of any new director is approved by a vote of at least two-thirds
of the Incumbent Board, such new director shall, for purposes of this Agreement,
be considered a member of the Incumbent Board; PROVIDED, FURTHER, HOWEVER, that
no individual shall be considered a member of the Incumbent Board if such
individual initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11 under the 1934 Act)
or other actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including by reason
of any agreement intended to avoid or settle any Election Contest or Proxy
Contest;

              (iii) Approval by stockholders of the Company of a merger,
consolidation or reorganization involving the Company, unless such merger,
consolidation or reorganization would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the total voting power
represented by the voting securities of the Company or such surviving entity
outstanding immediately after such merger, consolidation, or reorganization;

              (iv) A complete liquidation or dissolution of the Company, or

              (v) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any Person (other than a
transfer to a Subsidiary).

           g. COMPANY. For purposes of this Agreement, the "Company" shall mean
SDL, Inc. and its Subsidiaries and shall include SDL's "Successors and Assigns"
(as hereinafter defined).

           h. DISABILITY. For purposes of this Agreement, "Disability" shall
mean a physical or mental infirmity which impairs the Executive's ability to
substantially perform the Executive's duties with the Company for a period of
one hundred eighty (180) consecutive days and the Executive has not returned to
full time employment prior to the Termination Date as stated in the "Notice of
Termination".

           i. GOOD REASON. For purposes of this Agreement, "Good Reason" shall
mean the occurrence after a Change in Control of any events or conditions
described in subsections (i) through (vi) below, PROVIDED, HOWEVER, that the
Executive gives the Company thirty (30) days Notice Termination (as defined
below) (during which time the Company will have an opportunity to correct the
condition constituting "Good Reason"), and PROVIDED, FURTHER, that such notice
is submitted by Executive no later than six (6) months after the occurrence of
the event that is the basis for "Good Reason";

<PAGE>   3

              (i) a change in the Executive's status, title, position or
responsibilities which represents a material and adverse change from the
Executive's status, title, position or responsibilities as in effect immediately
prior to such change; the assignment to the Executive of any duties or
responsibilities which are substantially inconsistent with the Executive's
status, title, position or responsibilities as in effect immediately prior to
such assignment; or any removal of the Executive from or failure to reappoint or
reelect the Executive to any of such offices or positions, except in connection
with the termination of the Executive's employment for Disability, Cause, as a
result of the Executive's death or by the Executive other than for Good Reason;

              (ii) a material reduction in the Executive's base salary (other
than any such reduction which is part of, and generally consistent with, a
general reduction of officer salaries);

              (iii) the Company's requiring the Executive to be based at any
place outside a 30-mile radius from San Jose, California, except for reasonably
required travel on the Company's business which is not materially greater than
such travel requirements prior to the Change in Control;

              (iv) a material reduction by the Company in the kind or level of
employee benefits (other than salary) to which the Executive is entitled at any
time within ninety (90) days preceding the date of a Change in Control or at any
time thereafter, (other than any such reduction which is part of, and generally
consistent with, a general reduction applicable to officers of the Company);

              (v) any material breach by the Company of any provision of this
Agreement or the Employment Agreement between Company and Executive;

              (vi) the failure of the Company to obtain an agreement from any
Successors and Assigns to assume and agree to perform this Agreement, as
contemplated in Section 6 hereof.

           j. NOTICE OF TERMINATION. For purposes of this Agreement, following a
Change in Control, "Notice of Termination" shall mean a written notice of
termination of the Executive's employment from the Company, which notice
indicates the Termination Date (as defined below), the specific termination
provision in this Agreement relied upon and which sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.

           k. SUCCESSORS AND ASSIGNS. For purpose of this Agreement, "Successors
and Assigns" shall mean a corporation or other entity acquiring all or
substantially all of the assets and business of the Company (including this
Agreement) whether by operation of law or otherwise.

           l. TERMINATION DATE. For purposes of this Agreement, "Termination
Date" shall mean, in the case of the Executive's death the Executive's date of
death, in the case of Good Reason, the last day of the Executive's employment
(which shall be no sooner than thirty (30) days after Executive submits his
Notice of Termination; and, in all other cases, the date specified in the Notice
of Termination; PROVIDED, HOWEVER, that if the Executive's employment is
terminated by the Company due to Disability, the date specified in the Notice of
Termination shall be at least 30 days from the date the Notice of Termination is
given to the Executive, provided that, in the case of Disability, the Executive
shall not have returned to the full-time performance of the Executive's duties
during such period of at least 30 days.

        3. TERMINATION OF EMPLOYMENT

           a. If, during the term of this Agreement, the Executive's employment
with the Company shall be terminated within eighteen (18) months following a
Change in Control, the Executive shall be entitled to the following compensation
and benefits:

              (i) If the Executive's employment with the Company shall be
terminated (1) by the Company for Cause or Disability, (2) by reason of the
Executive's death or (3) by the Executive other than for Good Reason, the
Company

<PAGE>   4

shall pay to the Executive Accrued Compensation. Additionally, if such
termination is other than by reason of Executive's death, the Company also shall
continue to maintain a life insurance policy on Executive's life for a period of
twelve (12) months following the Termination Date, as set forth in paragraph
4(b) of the Employment Agreement. In the event Executive's employment is
terminated by reason of Executive's death or Disability, Executive (or his
estate) shall be entitled to receive the severance benefits set forth in
paragraph 5(b) of the Employment Agreement. However, the life insurance benefits
and/or payments provided to Executive for purposes of retaining medical
insurance coverage under COBRA under this paragraph 3(a)(i) shall terminate at
such time, if any, Executive commences employment whereby he can obtain
comparable benefits.

              (ii) If the Executive's employment with the Company shall be
terminated for any reason other than as specified in Section 3(a)(i), the
Executive shall be entitled to the following:

                   (1) the Company shall pay the Executive all Accrued
Compensation;

                   (2) the Company shall pay the Executive as severance pay and
in lieu of any further compensation for periods subsequent to the Termination
Date, in a single payment, an amount in cash equal to the sum of (A) the Base
Amount, and the greater of (B) the Bonus Amount, or (C) the amount equivalent to
twelve (12) times the sum of 4.1667% of Executive's then-current annual base
salary;

                   (3) for a number of months equal to twelve (12) months (the
"Continuation Period"), the Company shall, at its expense, continue on behalf of
the Executive and the Executive's dependents and beneficiaries the life
insurance, disability, medical, dental and hospitalization benefits provided (A)
to the Executive at any time during the 90-day period prior to the Change in
Control at any time thereafter or (B) to other similarly situated executives who
continue in the employ of the Company during the Continuation Period. The
coverage and benefits (including deductibles and costs) provided in this Section
3(a)(ii)(3) during the Continuation Period shall be no less favorable to the
Executive and the Executive's dependents and beneficiaries, than the most
favorable of such coverage and benefits during any of the periods referred to in
clauses (A) and (B) above. The Company's obligation hereunder with respect to
the foregoing benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer's benefit plans, in which
case the Company may reduce the coverage of any benefits it is required to
provide the Executive hereunder as long as the aggregate coverage and benefits
of the combined benefit plans are no less favorable to the Executive than the
coverage and benefits required to be provided hereunder. This subsection (3)
shall not be interpreted so as to limit any benefits to which the Executive or
the Executive's dependents or beneficiaries may be entitled under any of the
Company's employee benefit plans, programs or practices following the
Executive's termination of employment, including without limitation, retiree
medical and life insurance benefits;

                   (4) the restrictions on any outstanding equity incentive
awards, including stock options and restricted stock, granted to the Executive
under the Company's stock option and other stock incentive plans, or under any
other incentive plan or arrangement shall lapse and such incentive award shall
become 100% vested and, in the case of stock options, immediately exercisable;

                   (5) if the Termination Date occurs prior to the fifth year
anniversary of Executive's employment with the Company. $200,000 of the "Housing
Assistance Loan" (as defined in the Employment Agreement) will be forgiven and,
at Executive's option, the Company will purchase Executive's residence within
one (1) year of the Termination Date at the higher of (a) the original purchase
price paid by Executive, or (b) the appraised value of the residence at the time
of the Termination Date. The balance of the Housing Assistance Loan shall be due
and payable on the first year anniversary of the Termination Date or the date
escrow closes (if the Company purchases Executive's California residence),
whichever comes first.

           b. The amounts provided for in Sections 3(a)(i) and 3(a)(ii) shall be
paid in a single lump sum cash payment within forty-five (45) days after the
Executive's Termination Date (or earlier, if required by applicable law).

           c. The Executive shall not be required to mitigate the amount of any
payment provided for in this Agreement by seeking other employment or otherwise,
and no such payment shall be offset or reduced by the amount of any compensation
or benefits provided to the Executive in any subsequent employment except as
provided in Sections 3(a)(i) and (a)(ii)(3).

<PAGE>   5

           d. The severance pay and benefits provided for in this Section 3
shall be in lieu of any other severance or termination pay to which the
Executive may be entitled under any employment agreement (including the
Employment Agreement) or any other Company severance or termination plan,
program, practice or arrangement. Notwithstanding the foregoing, nothing in this
Agreement shall prevent or limit Executive's continuing or future participation
in any benefit, bonus, incentive, or other plan or program provided by the
Company (except for any severance or termination policies, plans, programs or
practices) and for which Executive may quality, nor shall anything herein limit
or reduce such rights as Executive may have under any other agreements with the
Company (except for any severance or termination agreement). Executive's
entitlement to amounts which are vested benefits or any other compensation or
benefits (including but not limited to any deferred compensation distributions)
shall be determined in accordance with the Company's employee benefit plans and
other applicable programs, policies and practices then in effect, except as
explicitly modified by this Agreement.

        4. NOTICE OF TERMINATION. Following a Change in Control, any purported
termination of the Executive's employment shall be communicated by Notice of
Termination to the Executive. For purposes of this Agreement, no such purported
termination shall be effective without such Notice of Termination.

        5. LIMITATION ON PAYMENTS.

           a. In the event that the severance and other benefits provided for in
this Agreement to the Executive (i) constitute "parachute payments" within the
meaning of Section 280G of the Internal Revenue Code of 1986, as amended (the
"Code") and (ii) but for this Section, would be subject to the excise tax
imposed by Section 4999 of the Code (the "Excise Tax"), then the Executive's
severance benefits under Sections 3(a)(ii)(1)-(5) (the "Payments") shall be
payable either:

              (i) in full, or

              (ii) as to such lesser amount which would result in no portion of
such severance benefits being subject to excise tax under Section 4999 of the
Code (the "Limited Payment Amount"),

        whichever of the foregoing amounts, taking into account the applicable
federal, state and local income taxes and the excise tax imposed by Section
4999, results in the receipt by the Executive on an after-tax basis of the
greatest amount of severance benefits under Sections 3(a)(ii)(1)-(4),
notwithstanding that all or some portion of such severance benefits may be
taxable under Section 4999 of the Code. Unless Executive shall have given prior
written notice specifying a different order to the Company to effectuate the
Limited Payment Amount, the Company shall reduce or eliminate the Payments by
(i) first reducing or eliminating those payments or benefits which are payable
in cash and then (ii) by reducing or eliminating non-cash payments or benefits,
in each case in reverse order beginning with payments or benefits which are to
be paid the farthest in time from the Determination (as hereinafter defined).
Any notice given by Executive pursuant to the preceding sentence shall take
precedence over the provisions of any other plan, arrangement or agreement
governing Executive's rights and entitlements to any benefits or compensation.

           b. An initial determination as to whether the Payments shall be
reduced to the Limited Payment Amount and the amount of such Limited Payment
Amount shall be made, at the Company's expense, by the accounting firm that is
the Company's independent accounting firm as of the date of the Change in
Control (the "Accounting Firm"). The Accounting Firm shall provide its
determination (the "Determination"), together with detailed supporting
calculations and documentation, to the Company and Executive within ten (10)
days of the Termination Date, if applicable, or such other time as requested by
the Company or by Executive (provided Executive reasonably believes that any of
the Payments may be subject to the Excise Tax) and, if the Accounting Firm
determines that no Excise Tax is payable by Executive with respect to a Payment
or Payments, it shall furnish Executive with an opinion reasonably acceptable to
Executive that no Excise Tax will be imposed with respect to any such Payment or
Payments. Within ten (10) days of the delivery of the Determination to
Executive, Executive shall have the right to dispute the Determination (the
"Dispute"). If there is no Dispute, the Determination shall be binding, final
and conclusive upon the Company and Executive, subject to the application of
Section 5(c) below.

<PAGE>   6
As a result of the uncertainty in the application of Sections 4999 and 280 of
the Code, it is possible that the Payments to be made to, or provided for the
benefit of Executive either will be greater (an "Excess Payment") or less (an
"Underpayment") than the amounts provided for by the limitations contained in
Section 5(a). If it is established, pursuant to a final determination of a court
of an Internal Revenue Service (the "IRS") proceeding which has been finally and
conclusively received, than an Excess Payment has been made, such Excess Payment
shall be deemed for all purposes to be a loan to Executive made on the date
Executive received the Excess Payment, which loan Executive must repay to the
Company together with interest at the applicable federal rate under Code Section
7872(f)(2); provided that no loan shall be deemed to have been made and no
amount will be payable by Executive to the Company unless, and only to the
extent that, the deemed loan and payment would either reduce the amount on which
Executive is subject to tax under Code Section 4999 or generate a refund of tax
imposed under Code Section 4999. In the event that it is determined, by (i) the
Accounting Firm, the Company (which shall include the position taken by the
Company, or together with its consolidated group, on its federal income tax
return) or the IRS, (ii) pursuant to a determination by a court, or (iii) upon
the resolution to Executive's satisfaction of the Dispute, that an underpayment
has occurred, the Company shall pay an amount equal to the Underpayment to
Executive within ten (10) days of such determination or resolution, together
with interest on such amount at the applicable federal rate under Code Section
7872(f)(2) from the date such amount would have been paid to Executive until the
date of payment.

        6. EMPLOYMENT TAXES. All payments made pursuant to this Agreement will
be subject to applicable withholdings of income and employment taxes.

        7. SUCCESSORS: BINDING AGREEMENT. This Agreement shall be binding upon
and shall inure to the benefit of the Company, its Successors and Assigns and
the Company shall require any Successors and Assigns to expressly assume and
agree to perform this Agreement in the same manner and to the same extent that
the Company would be required to perform if no such succession or assignment had
taken place. Neither this Agreement nor any right or interest hereunder shall be
assignable or transferable by the Executive or the Executive's beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable by
the Executive's legal representative.

        8. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duty given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses as given by each party to
the other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be denied to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.

        9. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices) and for which
the Executive may qualify, nor shall anything herein limit or reduce such rights
as the Executive may have under any other agreements with Company (except for
any severance or termination agreement). Amounts which are vested benefits or
which the Executive is otherwise entitled to receive under any plan or program
of the Company shall be payable in accordance with such plan or program, except
as modified by this Agreement.

        10. NO IMPLIED EMPLOYEE RIGHTS. Nothing in this Agreement shall alter
Executive's status as an "at will" employee of the Company or be construed to
imply that Executive's employment is guaranteed for any period of time except as
otherwise agreed in a written agreement signed by a duly authorized Officer of
the Company.

        11. MISCELLANEOUS. No provision of this agreement may be modified,
waived or discharged, unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto, or compliance with any condition or provision of this Agreement to
be performed by the other party shall be deemed a waiver of similar or
dissimilar provisions or conditions at the or at any prior or subsequent time.
No agreement or representation, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either party which are
not expressly set forth in this Agreement.

<PAGE>   7

        12. GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of California without giving
effect to the conflict of laws principles thereof.

        13. ARBITRATION. Any dispute or controversy arising under or in
conjunction with the subject matter, the interpretation, the application, or
alleged breach of this Agreement ("Arbitrable Claims") shall be resolved by
binding arbitration in the County of Santa Cruz, California, in accordance with
the then-current National Rules for the Resolution of Employment Disputes of the
American Arbitration Association. Arbitration shall be final and binding upon
the parties and shall be the exclusive remedy for all Arbitration Claims.
Notwithstanding the foregoing, either party may bring an action in court to
compel arbitration under this Agreement to enforce an arbitration award, or to
seek injunctive relief pursuant to section 1281.8 of the California Code of
Civil Procedure. THE PARTIES WAIVE ANY RIGHT TO JURY TRIAL AS TO ARBITRABLE
CLAIMS.

        14. LEGAL FEES AND EXPENSES. The parties shall each bear their own
expenses, legal fees and other fees incurred in connection with this Agreement.

        15. SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

        16. ENTIRE AGREEMENT. The parties agree that the terms of this Agreement
are intended to be the final expression of their agreement with respect to the
subject matter of this Agreement and may not be contradicted by evidence of any
prior or contemporaneous Agreement, except to the extent that the provisions of
any such agreement (i.e., the Employment Agreement) have been expressly referred
to in this Agreement as having continued effect.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer and the Executive has executed this Agreement as of the
day and year first above written.

                     SDL, INC.

                     By:    /s/ Gregory P. Dougherty
                         -------------------------------

                     Title:
                            ----------------------------





</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.19
<SEQUENCE>11
<FILENAME>f75587ex10-19.txt
<DESCRIPTION>EXHIBIT 10.19
<TEXT>
<PAGE>   1
                                                                               1



                                                                   Exhibit 10.19



                              TRANSITION AGREEMENT

        THIS AGREEMENT (the "Agreement"), made as of the 9th day of July, 2000,
by and between JDS Uniphase Corporation, a Delaware corporation (the "Company"),
with its principal U.S. offices located at San Jose, California, and Greg
Dougherty (the "Executive"),


                                WITNESSETH THAT:

        WHEREAS, the Company and SDL, Inc., a Delaware corporation ("SDL"), are
parties to an Agreement and Plan of Merger (the "Merger Agreement") pursuant to
which, at the Effective Time, Merger Sub (as such items are defined in the
Merger Agreement) shall be merged with and into SDL and the separate existence
of Merger Sub shall thereupon cease, and SDL shall continue as the surviving
corporation ("SDL") as a wholly-owned subsidiary of the Company (the "Merger");

        WHEREAS, in connection with and as a condition of its willingness to
consummate the Merger, the Company desires to retain the Executive as the
Executive Vice-President of the Company and Chief Operating Officer of the
Actives Group reporting to the President on the terms hereinafter set forth, and
to induce the Executive to enter into a covenant against competition and certain
other restrictive covenants intended to protect the goodwill of SDL and the
Company;

        WHEREAS, the Executive has a significant financial interest in the
Merger, will be converting all of his shares in SDL (and options to acquire
shares of SDL) into Company shares and options pursuant to the Merger and wishes
to be employed by SDL in such capacity on the terms hereinafter set forth; and

        WHEREAS, the Company would not have entered into the Merger Agreement or
agreed to issue shares of the Company (or options for shares of the Company) for
the Executive's SDL shares and options if the Executive had not executed this
Agreement (and, in particular, the noncompete and nonsolicitation agreement
incorporated herein);

        WHEREAS, the Executive is a party to an Employment Agreement dated
October 29, 1998, and a Change of Control Agreement dated February 10, 2000
(collectively, the "Executive Agreements"').

        NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Executive
hereby agree as follows:

        1. Assumption of Agreements. Except as noted below and as amended



<PAGE>   2
                                                                               2



hereby, the Executive Agreements shall be assumed by the Company. All references
to SDL, Inc, or the Company in the Executive Agreements shall become the
"Company" as referenced in this Agreement.

        2. Modification of Change of Control Agreement.

           (a) The definition of "Good Reason" of clause (i) of Section 2(i) in
the Change of Control Agreement dated February 10, 2000 (the "Change of Control
Agreement"), shall be amended by removing the words "a material and", and
inserting in their place the word "an" and by the addition of the following at
the end thereof:

        provided, however, that the changes in the Executive's status, title,
        positions, responsibilities, duties and offices which occur immediately
        after the Change of Control effected by JDS Uniphase Corporation shall
        not constitute Good Reason; and provided further, that no payment will
        be due Executive under this Agreement or the Employment Agreement solely
        as a result of the Merger, as defined in the Transition Agreement
        between the Executive and JDS Uniphase Corporation dated July 9, 2000
        (the "Transition Agreement),

           (b) The "Good Reason" definition in the Change of Control Agreement
is further amended by the addition of the following at the end thereof:

        (vii) material breach of the Transition Agreement by the Company; or

        (viii) a Change of Control of JDS Uniphase Corporation or of SDL
        following the Merger, or

        (ix) a change in Executive's reporting structure.

           (c) For purposes of clarification, Executive agrees that any
severance payments paid as a result of a termination of employment during the 18
months following a Change of Control will be governed solely by the terms of the
Change of Control Agreement dated February 10, 2000 (as amended by this
Agreement) and not by the Executive's Employment Agreement.

        3. Noncompete and Nonsolicitation Agreement. Executive will enter into a
noncompete and nonsolicitation agreement with the Company. This noncompete and
nonsolicitation agreement is attached as Appendix A of this Agreement, and is
incorporated herein by reference.

        4. Period of Employment. Section 1 of Executive's Employment Agreement
is amended and restated in its entirety to read as follows:

        The Company hereby employs the Employee as the Executive Vice President
        of the Company and Chief Operating Officer of the Actives Group, with
        the duties and responsibilities described in Section 2, for the



<PAGE>   3
                                                                               3



        compensation specified in Sections 3 and 4 and for the period commencing
        at the Effective Time (as defined in the Agreement and Plan of Merger
        between JDS Uniphase Corporation, K-2 Acquisition, Inc. and

        SDL, Inc,) and ending on termination as provided in Section 5. The
        Employee hereby accepts employment by the Company in such capacity, upon
        the terms and conditions set forth in this Agreement.

        5. Position and Duties. Section 2 of Executive's Employment Agreement is
amended and restated in its entirety to read as follows:

        The Employee shall, during the term of this Agreement, devote his best
        efforts and entire working time, attention and skill exclusively to the
        business and affairs of SDL, provided that Employee's participation on
        the board of directors of other companies and other activities Employee
        currently participates in as. identified in Exhibit 1 hereto, as amended
        with the consent of the Company, shall not be deemed a violation of this
        provision unless such activities materially interfere with Employee's
        duties hereunder, The Employee shall have duties and responsibilities
        that are commensurate with his title and corporate reporting structure.
        The location of employment, headquarters and travel responsibilities
        will be consistent with 2(i)(iii) of the Change of Control Agreement
        with the Company, dated February 10, 2000 (the "Change of Control
        Agreement"), regardless of whether such Change of Control Agreement is
        then in effect.

        6. Compensation. Section 3 of Executive's Employment Agreement is
amended and restated in its entirety to read as follows:

        For all services rendered by the Employee to the Company and for all
        obligations assumed by him pursuant to this Agreement, the Company
        shall, subject to the Employee's performance of such obligations, pay to
        the Employee the compensation set forth in this Section 3 and provide
        the other benefits set forth in this Agreement.

           (a) Salary. Employee shall receive a base salary on a per annum basis
("Base Salary") equal to Three Hundred Thousand Dollars ($300,000) commencing as
of the Effective Time. The foregoing Base Salary shall be subject to annual
increases on July 1 of each year during the term of this Agreement, commencing
July 1, 2001, as determined by the Company in its sole discretion.

           (b) Bonuses. Employee shall be eligible to receive a bonus each year
equal to an amount of up to one hundred percent (100%) of his Base Salary, which
bonus shall be paid to Employee on an annual basis upon his reaching the
performance goals mutually established from time to time hereafter by Employee
and the Company. Under the plan to be established, the target bonus each year
will be 50% of Employee's Base



<PAGE>   4
                                                                               4



Salary (the "Target Bonus"), with an opportunity to earn from 0% to 200% of the
Target Bonus based on actual performance compared to the annual goals to be
established for the plan.

           (c) Stock Options. Within 10 days of the Effective Time, Employee
shall be granted 135,000 nonqualified Company stock options (the "Initial
Options"). Such Initial Options will be subject to the terms of a stock option
agreement which will provide for an option term of no more than 10 years,
vesting 50% after one (1) year and 100% after two (2) years and an exercise
price equal to the fair market value of Company common stock on the date of
grant. If the employment of Employee is terminated without Cause or terminates
for Good Reason (as such terms are defined in the Employee's Change of Control
Agreement, as amended by the Transition Agreement, made as of July 9, 2000,
between Employee and JDS Uniphase Corporation (the "Transition Agreement"),
regardless of whether such Change of Control Agreement is then in effect), then
such Initial Options shall become immediately vested and exercisable. If
Employee's employment terminates for any reason, all vested Initial Options
shall remain exercisable for the remainder of their 10-year term.

        Employee will also be eligible for annual grants of stock options,
consistent with SDL past practices or, if more favorable, with grants made to
other similarly situated executives of the Company.

           (d) Outstanding Stock Options. Notwithstanding anything to the
contrary, in the event that Employee's employment with the Company is terminated
without Cause or for Good Reason (as such terms are defined in the Change of
Control Agreement, as amended by the Transition Agreement, regardless of whether
such Change of Control Agreement is then in effect), or in the event of the
Employee's death, disability or retirement at or after age 55, all unvested
stock options granted to the Employee before the Effective Time (the "Prior
Options") shall become immediately vested and exercisable, and, together with
all vested stock options granted before the Effective Time, may be exercised for
the balance of the full remaining life of the options (i.e., full 10-year term).

           (e) For purposes of clarification, if Executive's employment
terminates for Cause or without Good Reason, then all vested Initial Options and
all vested Prior Options shall remain exercisable for the remainder of their
10-year terms; however, unvested options shall not accelerate and shall be
forfeited."

        7. Employee Benefits. The first sentence of Section 4(a) of Executive's
Employment Agreement is amended and restated in its entirety to read its
follows:

        The Company shall provide Employee with health, disability, life
        insurance and other welfare benefits, vacation, stock purchase and
        401(k) plans which are no less favorable than those provided to Employee
        at the Effective Time, or if more favorable, under employee benefit
        plans provided to similarly situated executives of the Company of
        similar rank and responsibility."



<PAGE>   5
                                                                               5



        8. Additional Cash Payments.

           (a) Within 10 days of the Effective Time and in consideration for
Executive accepting the terms of the attached Noncompetition and Nonsolicitation
Agreement and the amendments to the Executive Agreements, the Executive shall
receive a cash payment of $75 million.

           (b) Notwithstanding anything in the Executive Agreements to the
contrary, in the event that any of the payments or benefits provided under this
Agreement or the Executive Agreements result in Executive being subject to the
golden parachute excise tax imposed by Section 4999 of the Internal Revenue
Code, the Company shall make such additional payment as will make executive
whole for such tax obligation, as set forth in Appendix B, which is incorporated
herein by reference.

        9. Current Board Participation and Other Activities. Executive's
Employment Agreement is amended by the addition of Exhibit 1 hereto to become
Exhibit 1 at the end thereof.

        10. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and any affiliate thereof, their respective
successors, permitted assigns and legal representatives.

        11. Construction/Interpretation. The Executive acknowledges that the
Executive has been advised by the Company to review the terms of this Agreement
with legal counsel of the Executive's choice and that the Executive has been
given reasonable opportunity to seek such legal advice. The parties hereto
acknowledge and agree that: (i) each party and their counsel have (or had the
opportunity to) reviewed and negotiated the terms and provisions of this
Agreement and have contributed to its revision; (ii) the rule of construction to
the effect that any ambiguities are resolved against the drafting party shall
not be employed in the interpretation of this Agreement, and (iii) the terms and
provisions of this Agreement shall be construed fairly as to all parties hereto
and not in favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.

        12. Disputes/Reimbursement of Expenses. If any contest or dispute shall
arise under this Agreement, the Employment Agreement or the Change of Control
Agreement, not withstanding any provisions thereof to the contrary, involving
termination of Executive's employment with the Company or involving the failure
or refusal of the Company to perform fully in accordance with the terms hereof,
the Company shall reimburse Executive, on a current basis, for all reasonable
legal fees and expenses, if any, incurred by Executive in connection with such
contest or dispute (regardless of the result thereof), together with interest in
an amount equal to the prime rate of Citibank N.A. from time to time in effect,
but in no event higher than the maximum legal rate permissible under applicable
law, such interest to accrue from the date the Company receives Executive's
statement for such fees and expenses through the date of payment



<PAGE>   6
                                                                               6



thereof, regardless of whether or not Executive's claim is upheld by a court of
competent jurisdiction; provided, however, Executive shall be required to repay
any such amounts to



<PAGE>   7
                                                                               7



the Company to the extent that a court issues a final and non-appealable order
setting forth the determination that the position, taken by Executive was
frivolous or advanced by Executive in bad faith.

        In addition, the Company shall reimburse the Executive for legal and
consulting fees and expenses arising in connection with entering into this
Agreement.

        13. Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by and construed and enforced with the laws
of the State of California without giving effect to the conflict of laws
principle thereof.

        14. Severability. If any term or provision of this Agreement, or the
application thereof to any person or circumstance, shall, for any reason and to
any extent, be declared invalid or unenforceable by a court of competent
jurisdiction, the remainder of this Agreement and the application of such
provisions to other persons or circumstances shall not be affected thereby, but
rather shall be enforced to the fullest extent permitted by law.

        15. Amendments to Agreement. No amendment or alteration of the terms of
this Agreement shall be valid or binding unless made in writing signed by
parties to this Agreement specifically referring to this Agreement.

        16. Voiding Agreement. This Agreement will be null and void and given no
effect if the Merger contemplated by this Agreement is not consummated.

        17. Integration. The parties understand and agrees that this Agreement,
along with the Executive Agreements, represent the entire agreement between the
parties; that no representation or promise has been made by the Company
concerning the subject matter of those agreements, except as expressly set forth
in those agreements; and that all agreements and understandings between the
parties concerning the subject matter of those agreements are embodied and
expressed in those agreements. This Agreement and the Executive Agreements shall
supercede all prior or contemporaneous agreements and understandings between
Executive and the Company, whether written or oral, expressed or implied, with
respect to the subject matter of those agreements.

        IN WITNESS WHEREOF, the parties have executed this Agreement, under
seal, as of the date first above written.



EXECUTIVE:     JDS UNIPHASE CORPORATION:



By:  /s/ GREG DOUGHERTY                  By:  /s/ MICHAEL PHILLIPS
    ---------------------------              ---------------------------
         Greg Dougherty                  Senior Vice President



<PAGE>   8
                                                                               8



                                   Appendix A

                  Noncompetition and Nonsolicitation Agreement

        A. Non-Competition.

           (a) During the Executive's employment by, or relationship with, the
Company and for a period of one (1) year following the Effective Time of the
Merger, the Executive will not directly or indirectly, either as principal,
agent, employee, consultant, officer, director, or stockholder of the Company,
engage in any business which is competitive with the photonics or optics
networking businesses of SDL or the Company (collectively, the "Business"),
provided, however, that nothing contained herein shall preclude the Executive
from purchasing or owning less than five percent (5%) of the stock or other
securities of (i) any company with securities traded on a nationally recognized
securities exchange or (ii) any venture capital fund passive interest;

           (b) For the purposes of this Section A, a business will be deemed
competitive with the Business if it involves the performing of services and/or
the production, manufacture, distribution, sale or development of any product
similar to services performed or products produced, manufactured, distributed,
sold or developed or being developed by the Business and/or the licensing of any
process or technology concerning production similar to those utilized, developed
or being developed by the Business during the period in which the Executive is
employed or otherwise affiliated with the Company.

           (c) The Executive acknowledges that the Business has been and will be
conducted an a global basis by SDL and the Company, and that, accordingly, time
restrictions contained in this Section A shall apply in, (i) any city, county or
other political subdivision of the State of California (including, without
limitation, the counties listed on Exhibit 2 hereto), and (ii) any city, county
or other political subdivision of any other state in the United States or any
country or other territory in the world, where the Company is selling or
delivering any of the Business' products or services or is otherwise carrying on
business or selling activities with respect to the Business or (y) has engaged
in any of the activities described in clause (x) within the most recent 12-month
period.

           (d) The Executive acknowledges and agrees that strict enforcement of
the terms of this Agreement is necessary for the purpose of ensuring the
preservation, protection and continuity of the business, trade secrets and
goodwill of the Company and that, in furtherance of such purpose, the
prohibition against competition imposed by this Section A is narrow, reasonable
and fair. The Executive further agrees that, given the Executive's experience,
knowledge and skills, substantial opportunities for employment outside of the
areas restricted by this Agreement are and will remain available to the
Executive. If any part of this Section A should be determined by a court of
competent jurisdiction to be unreasonable in duration, geographic area, or
scope, then this Agreement is intended to and shall extend only for such period
of time, in such area and with respect to such activities as are determined to
be reasonable.



<PAGE>   9
                                                                               9



           (e) Notwithstanding anything contained in this Section A to the
contrary, the Executive shall be permitted to serve as a director of, or an
investor in, each of the corporations set forth on Exhibit 1, which may be
amended from time to time by the mutual consent of the Executive and the
Company.

        B. Non-Solicitation.

        During the Executive's employment or relationship with the Company and
for a period of one (1) year following the Effective Time, the Executive will
not directly or indirectly, either as principal, agent, employee, consultant,
officer, director or stockholder, solicit any employee, consultant, independent
contractor or agent of the Business with the intention or effect of encouraging
such party to terminate his or her employment, agency or other relationship, as
applicable, with the Business.




<PAGE>   10
                                                                              10



                                    EXHIBIT 1

                       ADVISOR - GLOBAL CATALYST PARTNERS

                             ADVISOR - SPROUT GROUP




<PAGE>   11
                                                                              11



                                    EXHIBIT 2



<TABLE>
                ----------------------------------------------------------
                               California Counties
                ----------------------------------------------------------
                <S>                            <C>
                Alameda                        Placer
                ----------------------------------------------------------
                Alpine                         Plumas
                ----------------------------------------------------------
                Amador                         Riverside
                ----------------------------------------------------------
                Butt                           Sacramento
                ----------------------------------------------------------
                Calaveras                      San Benito
                ----------------------------------------------------------
                Colusa                         San Bernardino
                ----------------------------------------------------------
                Contra Costa                   San Diego
                ----------------------------------------------------------
                Del Norte                      San Francisco
                ----------------------------------------------------------
                El Dorado                      San Joaquin
                ----------------------------------------------------------
                Fresno                         San Luis Obispo
                ----------------------------------------------------------
                Glenn                          San Mateo
                ----------------------------------------------------------
                Humboldt                       Santa Barbara
                ----------------------------------------------------------
                Imperial                       Santa Clara
                ----------------------------------------------------------
                Inyo                           Santa Cruz
                ----------------------------------------------------------
                Kern                           Shasta
                ----------------------------------------------------------
                Kings                          Sierra
                ----------------------------------------------------------
                Lake                           Siskiyou
                ----------------------------------------------------------
                Lassen                         Solano
                ----------------------------------------------------------
                Los Angeles                    Sonoma
                ----------------------------------------------------------
                Madera                         Stanislaus
                ----------------------------------------------------------
                Marin                          Sutter
                ----------------------------------------------------------
                Mariposa                       Tehama
                ----------------------------------------------------------
                Mendocino                      Trinity
                ----------------------------------------------------------
                Merced                         Tulare
                ----------------------------------------------------------
                Modoc                          Tuolumne
                ----------------------------------------------------------
                Mono                           Ventura
                ----------------------------------------------------------
                Monterey                       Yolo
                ----------------------------------------------------------
                Napa                           Yuba
                ----------------------------------------------------------
                Nevada
                ----------------------------------------------------------
                Orange
                ----------------------------------------------------------
</TABLE>




<PAGE>   12
                                                                              12



                                   Appendix B

        A. Certain Additional Payments by the Company

           (a) Anything in this Agreement or the Executive Agreements to the
contrary notwithstanding, in the event it shall be determined that any payment,
award, benefit or distribution (or any acceleration of any payment, award,
benefit or distribution) by the Company (or any of its affiliated entities) or
any entity which effectuates a Change of Control (or any of its affiliated
entities) to or for the benefit of Executive (whether pursuant to the terms of
this Agreement or otherwise, but determined without regard to any additional
payments required under this Appendix B) (the "Payments") would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended (the "Code"), or any interest or penalties are incurred by Executive
with respect to such excise tax (such excise tax together with any such interest
and penalties, are hereinafter collectively referred to as the "Excise Tax"),
then the Company shall pay to Executive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by Executive of all taxes
(including any Excise Tax) imposed upon the Gross-Up Payment, Executive retains
an amount of the Gross-Up Payment equal to the sum of (x) the Excise Tax imposed
upon the Payments and (y) the product of any deductions disallowed because of
the inclusion of the Gross-up Payment in Executive's adjusted gross income and
the highest applicable marginal rate of federal income taxation for the calendar
year in which the Gross-up Payment is to be made. For purposes of determining
the amount of the Gross-up Payment, the Executive shall be deemed to (i) pay
federal income taxes at the highest marginal rates of federal income taxation
for the calendar year in which the Gross-up Payment is to be made, (ii) pay
applicable state and local income taxes at the highest marginal rate of taxation
for the calendar year in which the Gross-up Payment is to be made, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes and (iii) have otherwise allowable deductions for
federal income tax purposes at least equal to those which could be disallowed
because of the inclusion of the Gross-up Payment in the Executive's adjusted
gross income. Notwithstanding the foregoing provisions of this Appendix B(a), if
it shall be determined that Executive is entitled to a Gross-Up Payment, but
that the Payments would not be subject to the Excise Tax if the Payments were
reduced by an amount that is less than 10% of the portion of the Payments that
would be treated as "parachute payments" under Section 280G of the Code, then
the amounts payable to Executive under this Agreement shall be reduced (but not
below zero) to the maximum amount that could be paid to Executive without giving
rise to the Excise Tax (the "Safe Harbor Cap"), and no Gross-Up Payment shall be
made to Executive. The reduction of the amounts payable hereunder, if
applicable, shall be made by reducing any cash payments, unless an alternative
method of reduction is elected by Executive. For purposes of reducing the
Payments to the Safe Harbor Cap, only amounts payable under this Agreement (and
no other Payments) shall be reduced. If the reduction of the amounts payable
hereunder would not result in a reduction of the Payments to the Safe Harbor
Cap, no amounts payable under this Agreement shall be reduced pursuant to this
provision.



<PAGE>   13
                                                                              13



           (b) Subject to the provisions of this Appendix B (a), all
determinations required to be made under this Appendix B, including whether and
when a Gross-Up Payment is required, the amount of such Gross-Up Payment, the
reduction of the Payments to the Safe Harbor Cap and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change of Control (the "Accounting firm") which shall provide detailed
supporting calculations both to the Company and Executive within fifteen (15)
business days of the receipt of notice from the Company or the Executive that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the "Determination"). In the event that the Accounting firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, Executive may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement requested by the Accounting Firm
in connection with the performance of the services hereunder. The Gross-up
Payment under this Appendix B with respect to any Payments shall be made no
later than thirty (30) days following such Payment. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall furnish
Executive with a written opinion to such effect, and to the effect that failure
to report the Excise Tax, if any, on Executive's applicable federal income tax
return will not result in the imposition of a negligence or similar penalty. In
the event the Accounting Firm determines that the Payments shall be reduced to
the Safe Harbor Cap, it shall furnish Executive with a written opinion to such
effect. The Determination by the Accounting Firm shall be binding upon the
Company and Executive. As a result of the uncertainty in the application of
Section 4999 of the Code at the time of the Determination, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made ("Underpayment") or Gross-up Payments are made by the Company which should
not have been made ("Overpayment"), consistent with the calculations required to
be made hereunder. In the event that the Executive thereafter is required to
make payment of any Excise Tax or additional, Excise Tax, the Accounting Firm
shall determine the amount of the Underpayment that has occurred and any such
Underpayment (together with interest, to the extent not already within the
Excise Tax, at the rate provided in Section 1274(b)(2)(B) of the Code) shall be
promptly paid by the Company to or for the benefit of Executive. In the event
the amount of the Gross-up Payment exceeds the amount necessary to reimburse the
Executive for his Excise Tax, the Accounting Firm shall determine the amount of
the Overpayment that has been made and any such Overpayment (together with
interest at the rate provided in Section 1274(b)(2) of the Code) shall be
promptly paid by Executive (to the extent he has received a refund if the
applicable Excise Tax has been paid to the Internal Revenue Service) to or for
the benefit of the Company. Executive shall cooperate, to the extent his
expenses are reimbursed by the Company, with any reasonable requests by the
Company in connection with any contests or disputes with the Internal Revenue
Service in connection with the Excise Tax.



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-21.1
<SEQUENCE>12
<FILENAME>f75587ex21-1.txt
<DESCRIPTION>EXHIBIT 21.1
<TEXT>
<PAGE>   1
                                                                    Exhibit 21.1


                               JDS UNIPHASE CORP.
                            WHOLLY OWNED SUBSIDIARIES
                             UNLESS OTHERWISE NOTED

JDS Uniphase GmbH

(Incorporated in Germany)

Uniphase Limited

(Incorporated in UK)

Uniphase International Limited

(Incorporated in Bermuda)

Uniphase Laser Limited

(Incorporated in UK)

UFP Fiberoptics Limited

(Incorporated in UK)

JDS Uniphase Australia  Ltd

(Incorporated in Australia)

Uniphase Netherlands BV

(Incorporated in Netherlands)

Uniphase International C.V.

(Incorporated in Netherlands)

Uniphase International BV

(Incorporated in Netherlands)

JDS Uniphase UK Holdings Limited

(Incorporated in UK)

JDS Uniphase (Packaging) Limited

(Incorporated in UK)

Sifam Fibre Optics Limited

(Incorporated in UK)

Sifam Ltd.

<PAGE>   2

(Incorporated in UK)

JDS Uniphase Nova Scotia
(Incorporated in Canada)

JDS Uniphase Singapore

(Incorporated in Singapore)

JDS Uniphase Israel Ltd

(Incorporated in Israel)

Optical Coating Laboratory Eurl

(Incorporated in France)

Optical Coating Laboratory Gmbh

(Incorporated in Germany)

Optical Coating Laboratory B.V.

(Incorporated in Netherlands)

Flex Co., Ltd.

(Incorporated in China)

Optical Coating Laboratory SRL

(Incorporated in Italy)

JDSU Asia K.K.

(Incorporated in Japan)

OCLI Optical Coatings, Limited

(Incorporated in Japan)

JDS Uniphase Canada Ltd

(Incorporated in Canada)

JDS Uniphase Inc. (Canada)

(Incorporated in Canada)

Fujian Casix Laser Inc.

(Incorporated in China)

JDS Uniphase Photonics Inc.

(Incorporated in Canada)

<PAGE>   3

JDS Uniphase China Holdings

(Incorporated in Mauritius)

JDS Fitel (Barbados) Inc.

(Incorporated in Barbados)

IOT Integrierte Optik Beteiligungs Gmbh

(Incorporated in Germany)

JDS Uniphase Photonics C.V

(Incorporated in Netherlands)

JDS Uniphase Holding Gmbh

(Incorporated in Germany)

IOT Integrierte Optik Gmbh & Co.KG

(Incorporated in Germany)

VitroCom, Inc.

(Incorporated in Canada)

Iridian Spectral Technologies

(Incorporated in Canada)

AFC Technologies Inc.

(Incorporated in Canada)

Oprel Technologies Inc.

(Incorporated in Canada)

Fibx Corporation

(Incorporated in Taiwan)

Fibx Shenzen Wofe (China)

(Incorporated in China)

SMC Kaifa (Holdings) Limited

(Incorporated in British Virgin Islands)

Shunde SMC Kaifi Optics

<PAGE>   4

(Incorporated in China)

Lundy Tech Co.

(Incorporated in Canada)

E-Tek Electro Photonics Solutions

(Incorporated in Canada)

JDS Uniphase Technology, Ltd(Cayman)

(Incorporated in Cayman)

JDS Uniphase Asia Ltd

(Incorporated in Hong Kong)

SDL Optics, Inc.

(Incorporated in Canada)

SDL (UK) Limited

(Incorporated in UK)

SDL Integrated Optics, Inc

(Incorporated in UK)

Queensgate Instruments Limited

(Incorporated in UK)

IC Optical Systems Limited

(Incorporated in UK)

Q I Research Ltd.

(Incorporated in UK)

Queensgate Instruments, Inc.

(Incorporated in UK)

LOT-Oriel Limited (25% ownership)

(Incorporated in UK)

Epion Japan K.K. (99.5% ownership)

(Incorporated in Japan)

Uniphase Telecommunications Products, Inc.

<PAGE>   5

(Incorporated in Delaware)

Epitaxx, Inc.

(Incorporated in Delaware)

Cronos Integrated Microsystems

(Incorporated in Delaware)

Uniphase Broadband Products, Inc.

(Incorporated in Florida)

JDS Uniphase Holdings, Inc.

(Incorporated in Delaware)

Opto Electronics, Inc.

(Incorporated in Delaware)

Uniphase Opto Holdings, Inc.

(Incorporated in Delaware)

Uniphase CV GP1, Inc.

(Incorporated in Delaware)

Uniphase CV GP2, Inc.

(Incorporated in Delaware)

JDS U.S. Holdings Inc.

(Incorporated in Delaware)

JDS Lightwave Products Group, Inc.

(Incorporated in Delaware)

Vitrocom, Inc.

(Incorporated in Delaware)

JDS FITEL International, Inc.

(Incorporated in Texas)

Fibercell, Inc.

(Incorporated in Jew Jersey)

<PAGE>   6

Optical Coating Laboratory, Inc.

(Incorporated in Delaware)

Opkor, Inc

(Incorporated in New York)

Flex Products

(Incorporated in Delaware)

OCLI International Service Corporation

(Incorporated in California)

E-TEK Dynamics, Inc.

(Incorporated in Delaware)

E-TEK Dynamics USA, Inc.

(Incorporated in California)

E-TEK Dynamics Group, Inc.

(Incorporated in Delaware)

U.S.A. Kaifa Technology, Inc.

(Incorporated in California)

FibX, Inc

(Incorporated in Delaware)

Ultrapointe Corporation

(Incorporated in California)

Ramar Corporation

(Incorporated in Massachusetts)

SDL, Inc.

(Incorporated in Delaware)

SDL Laser, Inc.

(Incorporated in California)

SDL International Holdings, Inc.

<PAGE>   7

(Incorporated in Delaware)

Epion Corporation

(Incorporated in Delaware)

Veritech, Inc

(Incorporated in Delaware)

Queensgate Instruments, Inc.

(Incorporated in Delaware)

Optical Process Automation

(Incorporated in Florida)

SDL FSC, Inc.
(Incorporated in Barbados)

OCLI Foreign Sales Corporation
(Incorporated in Guam)

SDL Piri, Inc.
(Incorporated in Delaware)

E-tek Dynamics International Inc.
(Incorporated in Delaware)

Nanolase, S.A
(Incorporated in France)



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>13
<FILENAME>f75587ex23-1.txt
<DESCRIPTION>EXHIBIT 23.1
<TEXT>
<PAGE>   1
                                                                    Exhibit 23.1


               CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to incorporation by reference in the Registration Statement (Form S-8
No. 33-74716) pertaining to the Uniphase Corporation 1984 Amended and Restated
Stock Plan, the 1993 Flexible Stock Incentive Plan, and the 1993 Amended and
Restated Employee Stock Purchase Plan; the Registration Statement (Form S-8 No.
33-31722) pertaining to the Uniphase Corporation Amended and Restated 1993
Flexible Stock Incentive Plan; the Registration Statement (Form S-8 No.
333-09937) pertaining to the Uniphase Telecommunications Products, Inc. 1995
Flexible Stock Incentive Plan; the Registration Statement (Form S-8 No.
333-39423) pertaining to the Uniphase Corporation Amended and Restated 1993
Flexible Stock Incentive Plan and the 1996 Nonqualified Stock Option Plan; the
Registration Statement (Form S-8 No. 333-62465) pertaining to the Uniphase
Corporation 1998 Employee Stock Purchase Plan and the Uniphase Corporation
Amended and Restated 1993 Flexible Stock Incentive Plan; the Registration
Statement (Form S-8 No. 333-70339) pertaining to the Broadband Communications
Products, Inc. 1992 Key Employee Incentive Stock Option Plan, the 1997 Employee
Stock Option Plan and the 1997 Nonqualified Stock Option Plan; the Registration
Statement (Form S-8 No. 333-81911) pertaining to the JDS FITEL Inc. 1994 Stock
Option Plan and 1996 Stock Option Plan; the Registration Statement (Form S-8 No.
333-81909) pertaining to the Uniphase Corporation Amended and Restated 1993
Flexible Stock Incentive Plan, the 1996 Nonqualified Stock Option Plan, and the
1998 Employee Stock Purchase Plan; the Registration Statement (Form S-8 No.
333-90301) pertaining to the JDS Uniphase Corporation 1999 Canadian Employee
Stock Purchase Plan; the Registration Statement (Form S-8 No. 333-91313)
pertaining to the EPITAXX, Inc. Amended and Restated 1996 Employee, Director and
Consultant Stock Option Plan; the Registration Statement (Form S-8 No.
333-96481) pertaining to the Optical Coating Laboratory, Inc. 1993 Incentive
Compensation Plan, the 1995 Incentive Compensation Plan, the 1996 Incentive
Compensation Plan, the 1998 Incentive Compensation Plan, the 1999 Incentive
Compensation Plan, the 1999 Director Stock Plan and the 1999 Employee Stock
Purchase Plan; the Registration Statement (Form S-8 No. 333-36114) pertaining to
the Cronos Integrated Microsystems, Inc. 1999 Stock Plan; the Registration
Statement (Form S-8 No. 333-40696) pertaining to the E-TEK Dynamics, Inc. 1997
Executive Equity Incentive Plan, the 1997 Equity Incentive Plan, the 1998
Director Option Plan and the 1998 Stock Plan; the Registration Statement (Form
S-8 No. 333-46846) pertaining to the Epion Corporation 1996 Stock Option Plan;
the Registration Statement (Form S-8 No. 333-50176) pertaining to the Epion
Corporation 1996 Stock Option Plan; the Registration Statement (Form S-8 No.
333-50502) pertaining to the JDS Uniphase Corporation Amended and Restated 1993
Flexible Stock Incentive Plan and the 1999 Canadian Employee Stock Purchase
Plan; the Registration Statement (Form S-8 No. 333-53642) pertaining to the JDS
Uniphase Corporation 1998 Employee Stock Purchase Plan; the Registration
Statement (Form S-8 No. 333-55182) pertaining to the Epion Corporation 1996
Stock Option Plan; the Registration Statement (Form S-8 No. 333-55560)
pertaining to the SDL, Inc. 1992 Stock Option Plan and the 1995 Stock Option
Plan; the Registration Statement (Form S-8 No. 333-55796) pertaining to the
Optical Process Automation, Inc. 2000 Stock Option and Incentive Plan and the
2000 Series B Preferred Stock Option Plan; the Registration Statement (Form S-8
No. 333-58718) pertaining to the JDS Uniphase Corporation Amended and Restated
1993 Flexible Stock Incentive Plan; the Registration Statement (Form S-3 Nos.
333-27931, 333-70351, 333-91827, 333-39436, 333-48930) of JDS Uniphase
Corporation (formerly Uniphase Corporation) of our report dated September 12,
2001, with respect to the consolidated financial statements and schedule of JDS
Uniphase included in this Annual Report (Form 10-K) for the year ended June 30,
2001.

                                                        /S/ Ernst & Young LLP

San Jose, California
September 17, 2001

</TEXT>
</DOCUMENT>
</SUBMISSION>
