AMENDMENT TO THE TELLABS, INC.

1987 STOCK OPTION PLAN FOR

NON-EMPLOYEE CORPORATE DIRECTORS

(As Amended and Restated Effective June 26, 1992)

 

WHEREAS, Tellabs, Inc. (the "Corporation") has heretofore established the
Tellabs, Inc. 1987 Stock Option Plan for Non-Employee Corporate Directors (the
"Plan") for the benefit of non-employee corporate directors of the Corporation;

WHEREAS, the Corporation deems it desirable to make certain amendments to the
Plan relating to the vesting of options and/or the post-directorship exercise
period in the event of the death, disability, or retirement of an option holder,
or a change in control of the Corporation; and

WHEREAS, the Board of Directors of the Corporation has considered the
recommendations and has approved this Amendment to the Plan.

NOW, THEREFORE, BE IT RESOLVED, that the Plan is hereby amended, effective
June 30, 2000, as follows :

 I.   Under Article 2 of the Plan, the following definition of "Change in
      Control" shall be added:
      
      
      
      

      (o) "Change in Control" means the first to occur of:
      
      (i) Any "person" (as defined in Section 13(d) and 14(d) of the Securities
      Exchange Act of 1934, as amended (the "Exchange Act")), excluding for this
      purpose, the Corporation or any subsidiary of the Corporation, or any
      employee benefit plan of the Corporation or any subsidiary of the
      Corporation, or any person or entity organized, appointed or established
      by the Corporation for or pursuant to the terms of any such plan which
      acquires beneficial ownership of voting securities of the Corporation, is
      or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
      Exchange Act), directly or indirectly, of securities of the Corporation
      representing 20% or more of the combined voting power of the Corporation's
      then outstanding securities; provided, however, that no Change in Control
      will be deemed to have occurred as a result of a change in ownership
      percentage resulting solely from an acquisition of securities by the
      Corporation; and provided further that no Change in Control will be deemed
      to have occurred if a person inadvertently acquires an ownership interest
      of 20% or more but then promptly reduces that ownership interest below
      20%;

      (ii) During any two consecutive years (not including any period beginning
      prior to June 30, 2000), individuals who at the beginning of such two-year
      period constitute the Board of Directors of the Corporation and any new
      director (except for a director designated by a person who has entered
      into an agreement with the Corporation to effect a transaction described
      elsewhere in this definition of Change in Control) whose election by the
      Board or nomination for election by the Corporation's stockholders was
      approved by a vote of at least two-thirds of the directors then still in
      office who either were directors at the beginning of the period or whose
      election or nomination for election was previously so approved (such
      individuals and any such new director, the "Incumbent Board") cease for
      any reason to constitute at least a majority of the Board;
      
      (iii) Consummation of a reorganization, merger or consolidation or sale or
      other disposition of all or substantially all of the assets of the
      Corporation (a "Business Combination"), in each case, unless, following
      such Business Combination, (A) all or substantially all of the individuals
      and entities who were the beneficial owners of outstanding voting
      securities of the Corporation immediately prior to such Business
      Combination beneficially own, directly or indirectly, more than 50% of the
      combined voting power of the then outstanding voting securities entitled
      to vote generally in the election of directors, as the case may be, of the
      corporation resulting from such Business Combination (including, without
      limitation, a corporation which as a result of such transaction owns the
      Corporation or all or substantially all of the Corporation's assets either
      directly or through one or more subsidiaries) in substantially the same
      proportions as their ownership, immediately prior to such Business
      Combination of the outstanding voting securities of the Corporation; (B)
      no person (excluding any corporation resulting from such Business
      Combination or any employee benefit plan (or related trust) of the
      Corporation or such corporation resulting from such Business Combination)
      beneficially owns, directly or indirectly, 20% or more of, respectively,
      the then combined voting power of the then outstanding voting securities
      of such corporation except to the extent that such ownership existed prior
      to the Business Combination; and (C) at least a majority of the members of
      the board of directors of the corporation resulting from such Business
      Combination were members of the Incumbent Board at the time of the
      execution of the initial agreement, or of the action of the Board,
      providing for such Business Combination; or
      
      (iv) Approval by the stockholders of the Corporation of a complete
      liquidation or dissolution of the Corporation.

      
      
 II.  Under Article 2 of the Plan, the following definition of "Disability"
      shall be added:
      
      
      
      

      (r) "Disability" shall have the meaning ascribed to such term in
      Section 22(e)(3) of the Code.

      
      
 III. Article 11 shall be amended in its entirety to read as follows:
      
      
      
      

      11. Termination of Directorship.
      
      Except as set forth in Article 11A with respect to the effect of a Change
      in Control or except as the Board may otherwise expressly provide in the
      Option Agreement, the following rules shall apply upon termination of the
      Grantee's directorship with the Corporation:
      
      (a) Except as set forth in subsections (b), (c) and (d) below, in the
      event a Grantee ceases to be a director of the Corporation for any reason,
      any Option or unexercised portion thereof granted under this Plan may be
      exercised, to the extent such Option would have been exercisable by the
      Grantee hereunder on the date on which the Grantee ceased to be a
      director, within three months of such date (seven months in the event such
      termination occurs after the occurrence of a Change in Control), but in no
      event later than the date of expiration of the term of the Option.
      
      (b) In the event of termination of directorship due to the death the
      Grantee, each Option held by the Grantee shall become exercisable in full
      and may be exercised at any time prior to the expiration date of the
      Option or within one year after the date of the Grantee's death, whichever
      period is shorter.
      
      (c) In the event of termination of directorship due to the Disability of
      the Grantee, each Option held by the Grantee may, to the extent
      exercisable at the time of termination of directorship, be exercised at
      any time prior to the expiration date of the Option or within three years
      after the date of the Grantee's termination of directorship, whichever
      period is shorter.

      (d) In the event of the Grantee's death or Disability during the first
      three months of the period described in subsection (a) above, then each
      unexercised Option held by the Grantee may, to the extent exercisable at
      the time of Grantee's death or Disability, be exercised at any time prior
      to the expiration date of the Option or within one year of the date the
      Grantee ceased to be a director, whichever period is shorter.

      
      
 IV.  The Plan shall hereby be amended by adding a new Article 11A to read:
      
      
      
      

      11A. Change in Control.
      
      Upon the occurrence of a Change in Control, all Options granted hereunder
      shall become immediately exercisable and remain exercisable until such
      Options expire or terminate under the provisions of this Plan.

      
      
 V.   Article 12 of the Plan shall be amended in its entirety to read as
      follows:

12. Effect of Change in Stock Subject to Plan.

Except as provided below, the Board shall make equitable adjustments in the
number and class of shares of stock subject to the Plan, and to the Option
rights granted hereunder and the exercise prices of such Option rights, in the
event of a stock dividend, stock split, reverse stock split, recapitalization,
reorganization, merger, consolidation, acquisition, separation or other change
in the capital structure of the Corporation.

IN WITNESS WHEREOF, the foregoing amendments to the Tellabs, Inc. 1987 Stock
Option Plan for Non-Employee Corporate Directors are hereby adopted as of the
30th day of June, 2000, by the undersigned officer duly authorized by
resolutions adopted by the written consent of the Board of Directors dated
June 30, 2000.

 

TELLABS, INC.

 

By: /s Michael J. Birck

Name: Michael J. Birck

Its: President and Chief Executive Officer