Sandell Releases Letter to the Board of Directors of JDS Uniphase

NEW YORK--(BUSINESS WIRE)--

Sandell Asset Management Corp. (“Sandell”), a shareholder of JDS Uniphase Corporation JDSU (“JDSU” or the “Company”), has publicly released the following letter to the Board of Directors (the “Board”) of JDSU. In such letter, Sandell calls for the immediate amendment of the Company's Bylaws to remedy changes made in May 2014 that were detrimental to shareholder rights. Additionally, Sandell reiterates the need for JDSU to pursue further strategic actions to maximize shareholder value. The text of the letter is as follows:

January 13, 2015

The Board of Directors
JDS Uniphase Corporation
430 North McCarthy Boulevard
Milpitas, CA 95035
Attention: Chairman of the Board
c/o Andrew Pollack, Secretary

Ladies and Gentlemen:

As you are well aware, Sandell Asset Management Corp. (“Sandell”) has been vocal in its concerns regarding the troubling governance practices at JDS Uniphase Corporation (“JDSU” or the “Company”) as well its desire to see maximum value delivered to the shareholders of JDSU. With the encouragement of Sandell, more than 34% of the shares represented at the Company's recent Annual Meeting voted “AGAINST” the re-election of current Director and Chairman of the Governance Committee Martin Kaplan, which reflects in our view the deep frustration of the Company's shareholder base to the entrenchment actions taken by the Board of Directors (the “Board”) as well as the Board's continued refusal to conduct a more fulsome process to unlock shareholder value.

Inexplicably, and in spite of the negative attention surrounding the Company's troubling governance practices and, specifically, the recent adoption of Bylaws that we believe may have been designed to frustrate the ability of shareholders to hold the Board accountable for its actions, the Board has yet to amend its Bylaws so that they no longer create a risk of disenfranchising shareholders. To wit, we refer to the passage governing notice provisions for the nomination of Directors in Article II, Section 11 in the Bylaws (and parallel language in Article II, Section 10), which reads:

“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 60 days nor more than 90 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.” (emphasis added)

The fundamental impropriety of such notice provision is self-evident. Compliance with this provision is impossible when the date of the meeting is disclosed to stockholders 40 to 60 days before the meeting because in that event the Bylaw purports to require that the stockholder deliver notice of nomination of Directors on or before the day it learns of the meeting date. This gives the Company tremendous latitude to “game the system” and frustrate the ability for shareholders to effectively act upon their most essential of rights, namely the nomination of Directors. Indeed, this is exactly what happened recently when the Company provided notice of its Annual Meeting exactly 60 days prior to the meeting. According to the Bylaw, a stockholder notice was required to be delivered that same day in order to be timely. We formally call upon the Company to immediately take action to amend its Bylaws so that they no longer impinge upon this most fundamental of shareholder rights. Such amendment could easily be effected by changing the term “40 days” to “75 days,” thus allowing shareholders a 15 day window to nominate Directors should the Company once again give 60 days' notice of its annual meeting.

The continued existence of what we believe are the Company's improper Bylaws is an even greater concern given the continued refusal of JDSU to pursue additional strategic alternatives to maximize shareholder value, including conducting a formal sale process for the CCOP business. Based on very recent discussions with industry participants, we are highly confident that there are parties interested in acquiring the Company's CCOP business in an expeditious manner. It is thus paramount that JDSU open a comprehensive data room so that interested parties may conduct due diligence as soon as possible. Furthermore, investors have received little comfort that the Company is creatively exploring all options to unlock the value associated with the Company's extensive net operating loss carryforwards (NOLs), which together have a tax-effected book value in excess of $2.3 billion.

Given the need for the Company to take further actions to maximize shareholder value, it is imperative that the Company amend its improper and entrenching Bylaws as soon as possible, as the best mechanism through which to hold a board of directors truly accountable to shareholders is through the democratic process of director elections. In their current form, the Bylaws may be enabling the Board to operate with an unfounded sense of impunity. While shareholders are presumably hopeful that the Board “does the right thing” and eliminates the need to seek the replacement of some or all of the Directors, the actions by the Company to date force shareholders to consider all available options, including the very real possibility of a proxy contest aimed at replacing Directors in 2015. In such eventuality, any shareholder seeking to nominate Directors might be forced to first mount a legal challenge to the Bylaws as currently written.

While we would much prefer to resolve these matters amicably, we are prepared to take further, affirmative steps to ensure that the Company's Bylaws no longer have a chilling effect on the exercise of shareholder rights. Given the relative ease with which the Company can amend its Bylaws, we would like formal evidence of such amendment to be filed publicly within the next two weeks, as such action is wholly within control of the Company's Board of Directors.

Sincerely,

Thomas Sandell
Chief Executive Officer

About Sandell Asset Management Corp.

Sandell Asset Management Corp. is a leading private, alternative asset management firm specializing in global corporate event-driven, multi-strategy investing with a strong focus on equity special situations and credit opportunities. Sandell Asset Management Corp. was founded in 1998 by Thomas E. Sandell and has offices in New York and London, including a global staff of investment professionals, traders and infrastructure specialists.