EX-10.42 4 advantageplan.htm ADVANTAGE PLAN Tellabs Advantage Program - NEW

TELLABS

ADVANTAGE PROGRAM

Amended and Restated Effective January 1, 1997
Except as Specifically Provided Otherwise

 

 

 

TABLE OF CONTENTS

  Page

ARTICLE 1GENERAL 1    1.1Purpose 1    1.2Source of Funds 1    1.3Scope of Plan
Coverage 1    1.4Definititions 1          Account 1          Accounts
1         Active Participant 1         Actual Deferral Percentage
2         Administrative Committee 2         Affiliate 2         After-Tax
Contribution 2         Aggregate Limit 2         Alternative Payee
2         Annual Addition 2         Annuity Starting Date 2         Basic
before-Tax Contribution 2         Board of Directors 2         Business Day
3         Code 3         Coherent Accounts 3         Coherent Acquisition Date
3         Coherent Participant 3         Coherent Plan 3         Committees
3         Company 3         Compensation 4         Contribution Percentage
4         Defined Contribition Dollar Limitation 4         Dependent
4         Designated Before-Tax Contribution 4         Determination Period
4         Disability Plan 4         Election Period 4         Eligible Employee
4         Eligible Individual 5         Eligible Limited Participant
5         Eligible Participant 5         Eligible Retiree 5         Eligible
Retirement Plan 5          Eligible Rollover Distribution 5          Eligibility
Period 5          Employer 6          Entry Date 6          ERISA 6
         Employer Excess Contribution 6          Excess Forfeiture Suspense
Account 6          Excess Tentative Employer Contribution 6
         Five-Percent Owner 6          Funds 6          Health Plan 6
         Highly Compensated Employee 6          Hours of Service 7
         Individual Beneficiary 7          Intern Employee 8          Investment
Committee 8          Investment Manager 8          Key Employee 8
         Leased Employee 8          Limited Term Employee 8          Limitation
Year 8          Matching Contribution 8          Maximum Annual Addition 8
         Medical Benefits 8          Medical Benefits Account 8          Member
of a Collective Bargaining Unit 9          Multiple Use 9          Non-Highly
Compensated Employee 9          Normal Retirement Date 9          One-Percent
Owner 9          Participant 9          Plan 9          Permissive Aggregation
Group 9          Plan Year 9          Pre-Retirement Survivor Annuity 9
         Present Value 9          Prior Plan 10          Profit Sharing
Contribution 10          Provisional Annual Addition 10          Qualified
Domestic Relations Order 10          Qualified Joint and Survivor Annuity 10
         Qualified Military Service 10          Required Aggregation Group 10
         Required Beginning Date 10          Retirement Contribution 11
         Retirement Program 11          Rollover Contribution 11          Salix
Accounts 11          Salix Acquisition Date 11          Salix Participant 11
         Salix Plan 11          Savings Program 12          Service 12
         Simplified Employee Pension Plan 13          Supplemental Before-Tax
Contribution 13          Tellabs Stock Fund 13          Tentative Employer
Contribution 13          Top-Heavy 13          Top-Heavy Determination Date 13
         Top-Heavy Ratio 14          Trust 14          Trustee 14          Unit
14          Valuation Date14    1.5EGTRRA Compliance 14      ARTICLE
2ELIGIBILITY AND PARTICIPATION 15    2.1Eligibility Requirements 15
   2.2Continued Participaton; Reemployment 16    2.3Transfers and Changes in
Status 16    2.4Leaves of Absence 17    2.5Qualifed Military Service 17     
ARTICLE 3CONTRIBUTIONS 18    3.1Employer Contributions 18    3.2Retirement
Contribution Under the Retirement Program 18    3.3Profit Sharing Contribution
Under the Savings Program 18    3.4Before-Tax Contributions Under the Savings
Program 19    3.5Limitations On Before-Tax Contributions Under the Savings
Program 19    3.6Matching Contribution Under the Savings Program 22
   3.7Limitations on Matching Contributions Under the Savings Program 23
   3.8Multiple Use 25      ARTICLE 4CONTRIBUTIONS BY EMPLOYEE 27    4.1No
After-Tax Contributions 27    4.2Rollover Contribution 27      ARTICLE
5ACCOUNTING PROVISIONS AND ALLOCATIONS 28    5.1Participant’s Accounts 28
   5.2Common Fund 28    5.3Unit Values 31    5.4Eligibility to Share in Employer
Contributions and Forfeitures 31    5.5Allocation of Before-Tax Contributions 32
   5.6Allocation of Matching Contributions 32    5.7Allocation of After-Tax
Contributions 32    5.8Allocation of Retirement Contribution and Forfeitures 32
   5.9Allocation of Profit Sharing Contribution and Forfeitures 32
   5.10Crediting Accounts 32    5.11Provisional Annual Addition 33
   5.12Limitation on Annual Additions 33      ARTICLE 6AMOUNT OF PAYMENTS TO
PARTICIPANTS 36    6.1General Rule 36    6.2Normal Retirement 36    6.3Death 36
   6.4Disability 36    6.5Vesting 36    6.6Resignation or Dismissal 36
   6.7Treatment of Forfeitures 37      ARTICLE 7DISTRIBUTIONS 38
   7.1Commencement and Form of Distributions 38    7.2Qualified Joint and
Survivor Annuity - Retirement Account, Salix Accounts and Coherent Accounts 41
   7.3Pre-Retirement Survivor Annuity - Retirement Account, Salix Accounts and
Coherent Accounts 43    7.4Distributions to Beneficiaries 44    7.5Beneficiary
Designations 45    7.6Installment or Deferred Distributions 46    7.7Form of
Elections and Applications for Benefits 46    7.8Unclaimed Distributions 46
   7.9Distributions in Kind 47    7.10Distributions of Participant's After-Tax
Account, Rollover Account, Salix Rollover Account and Coherent Rollover Accounts
Prior to Termination of Employment 47    7.11Loans 48    7.12Withdrawals Prior
to Termination of Employment and After Age 59-1/2 50    7.13Pre-59-1/2 Coherent
Account Withdrawals; Hardship Withdrawals 51    7.14Eligible Rollover
Distributions 53    7.15Facility of Payment 54    7.16Claims Procedure 55     
ARTICLE 8TOP-HEAVY PLAN REQUIREMENTS 57    8.1Top-Heavy Definitions 57
   8.2Top-Heavy Plan Requirements 60      ARTICLE 9POWERS AND DUTIES OF
COMMITTEES 62    9.1Appointment of Committees 62    9.2Powers and Duties of
Administrative Committee 62    9.3Powers and Duties of the Investment Committee
63    9.4Committee Procedures 64    9.5Consultation with Advisors 65
   9.6Committee Members as Participants 65    9.7Records and Reports 65
   9.8Investment Policy 65    9.9Designation of Other Fiduciaries 66
   9.10Obligations of Each Committee 66    9.11Indemnification of Each Committee
67      ARTICLE 10TRUSTEE AND TRUST FUND 68    10.1Trust Fund 68    10.2Payments
to Trust Fund and Expenses 68    10.3Trustee’s Responsibilities 68
   10.4Reversion to the Employer 68      ARTICLE 11AMENDMENT OR TERMINATION 69
   11.1Amendment 69    11.2Termination 69    11.3Form of Amendment,
Discontinuance of Employer Contributions, and Termination 69    11.4Limitations
on Amendments 69    11.5Level of Benefits Upon Merger 70    11.6Vesting Upon
Termination or Discontinuance of Employer Contributions; Liquidation of Trust 70
     ARTICLE 12MISCELLANEOUS 72    12.1No Guarantee of Employment, Etc. 72
   12.2Nonalienation 72    12.3Qualified Domestic Relations Order 72
   12.4Controlling Law 72    12.5Severability 73    12.6Notification of
Addresses 73    12.7Gender and Number 73      ARTICLE 13ADOPTION BY AFFILIATES
74    13.1Adoption of Plan 74    13.2The Company as Agent for Employer 74
   13.3Termination of Amendments 74    13.4Termination 74    13.5Date to Be
Furnished by Employers 74    13.6Joint Employers 74    13.7Expenses 75
   13.8Withdrawal 75    13.9Prior Plans 75      ARTICLE 14RETIREE MEDICAL
BENEFITS 76    14.1Medical Benefits Account 76    14.2Retiree Medical Benefits
Definitions 76    14.3Separate Account 76    14.4Impossibility of Diversion
Prior to Satisfaction of All Liabilities 77    14.5Reversion upon Satisfaction
of All Liabilities 77    14.6Medical Benefits 77    14.7Coordination with Health
Plan 77    14.8Employer Contributions 77    14.9Reservation of Right to
Terminate Medical Benefits 77

ARTICLE 1

General

   SECTION 1.1      Purpose.    It is the intention of the Employer to continue
to provide for the administration of the Tellabs Retirement Plan, a money
purchase pension plan, together with a retiree medical benefits account under
the provisions of Code Section 401(h) and the Tellabs Profit Sharing and Savings
Plan, a profit sharing and Code Section 401(k) savings program as parts of this
Tellabs Advantage Program (the “Plan”) and a Trust Fund in conjunction therewith
for the benefit of eligible employees of an Employer, in accordance with the
provisions of Code Sections 401 and 501 and in accordance with other provisions
of law relating to money purchase pension plans and profit sharing plans
containing a Code Section 401(k) arrangement. Except as otherwise provided in
this Plan or the Trust, upon the transfer by an Employer of any funds to the
Trust Fund in accordance with the provisions of this Plan, all interest of the
Employer therein shall cease and terminate, and no part of the Trust Fund shall
be used for, or diverted to, purposes other than the exclusive benefit of
Participants and their beneficiaries.

   SECTION 1.2      Source of Funds.    The Trust Fund shall be created, funded
and maintained by contributions of an Employer, by contributions of the
Participants, and by such net earnings as are obtained from the investment of
the funds of the Trust Fund.

   SECTION 1.3      Scope of Plan Coverage.    The provisions of the Plan as
herein restated shall be effective as of January 1, 1997, except for certain
provisions the effective dates of which are set forth therein. However, the
rights and benefits of any Participant whose employment with an Employer prior
to the Effective Date shall be determined in accordance with the corresponding
provisions of the Prior Plan documents as in effect upon the Participant’s
termination of employment and, to the extent necessary, the provisions of the
Prior Plan documents are hereby specifically incorporated by reference into this
Plan. Except as may be required by ERISA or the Code, the rights of any person
whose status as an employee of the Employer and all Affiliates has terminated
shall be determined pursuant to the Plan as in effect on the date such
employment terminated, unless a subsequently adopted provision of the Plan is
made specifically applicable to such person.

   SECTION 1.4      Definitions.    Certain terms are capitalized and have the
respective meanings set forth in the Plan.

“Account” means each of the individual accounts established pursuant to
Article 5 (Accounting Provisions and Allocations) representing a Participant’s
allocable share of the Trust Fund.

“Accounts” means the collective individual accounts established pursuant to
Article 5 (Accounting Provisions and Allocations).

“Active Participant” means a Participant who, on a given date, is employed by an
Employer as an Eligible Employee.

“Actual Deferral Percentage” and “Actual Deferral Percentage Tests” are
described in Section 3.5 (Limitations on Before Tax Contributions Under the
Savings Program).

“Administrative Committee” is the Committee so appointed in accordance with
Article 9 (Powers and Duties of Committees) as the administrator and named
fiduciary of the Plan.

“Affiliate” means any corporation or enterprise, other than the Company, which,
as of a given date, is a member of the same controlled group of corporations,
the same group of trades or businesses under common control or the same
affiliated service group, determined in accordance with Code Sections 414(b),
(c), (m) or (o), as is the Company. For purposes of determining the amount of a
Participant’s Annual Addition or Total Compensation and applying the limitations
of Code Section 415 set forth in Article 5 (Accounting Provisions and
Allocations), “Affiliate” shall include any corporation or enterprise, other
than the Company, which, as of a given date, is a member of the same controlled
group of corporations or the same group of trades or businesses under common
control, determined in accordance with Code Sections 414(b) or (c) as modified
by Code Section 415(h), as is the Company.

“After-Tax Contribution” means after-tax employee contributions made by
Participants under the Plan prior to January 1, 1994.

“Aggregate Limit” is described in Section 3.8 (Multiple Use).

“Alternate Payee” means the person, other than the Participant, designated by a
court to receive benefits under the Plan in a Qualified Domestic Relations Order
as further described in Section 12.3 (Qualified Domestic Relations Order).

“Annual Addition” means for any Limitation Year, the sum of (a) all Before-Tax
Contributions, Matching Contributions, Profit Sharing Contributions (including
forfeitures allocated as a part thereof), Retirement Contributions (including
forfeitures allocated as a part thereof) and, for Limitation Years beginning
prior to January 1, 1994, After-Tax Contributions, allocated to the Accounts of
a Participant under this Plan; (b) any employer contributions, forfeitures and
employee after-tax contributions allocated to such Participant under this or any
other defined contribution plan maintained by the Employer or an Affiliate; and
(c) amounts allocated to an individual medical account as defined in Code
Section 415(l)(2) and amounts attributable to post-retirement medical benefits
allocated to the separate account of a “key employee,” as described in Code
Section 419A(d)(3) maintained by the Employer or an Affiliate.

“Annuity Starting Date” means the first day of the first period for which a
benefit is payable in the form of an annuity or any other form.

“Basic Before-Tax Contribution” means, for any period, with respect to a
Participant, the portion of the Before-Tax Contribution made on his behalf by an
Employer during such period equal to the lesser of 3% of the Participant’s
Considered Compensation paid during such period or the Participant’s Before-Tax
Contribution for such period. For any period, “Basic Before-Tax Contribution”
means, with respect to the Employer, the sum of such contributions.

“Before-Tax Contribution” means, with respect to a Participant, the contribution
by an Employer on his behalf described in Section 3.4 (Before-Tax Contribution
Under the Savings Program) and, with respect to the Employer, means the sum of
such contributions.

“Board of Directors” means the Board of Directors of the Company.

“Business Day” means each day on which the Federal Reserve, the New York Stock
Exchange and the Trustee are open for business, or if different and to the
extent applicable, each day as of which trades are recognized under the rules
governing an investment fund of the Plan.

“Code” means the Internal Revenue Code of 1986 and the regulations promulgated
thereunder, as from time to time amended.

“Coherent Accounts” means the separate Coherent Before-Tax Account, Coherent
Employer Account and Coherent Rollover Account of Coherent Participants
described in Section 5.1 (Participant Accounts).

“Coherent Acquisition Date” means the date of the acquisition of Coherent
Communications Systems Corporation by Tellabs, Inc.

“Coherent Participant” means employees of Coherent Communications Systems
Corporation or any subsidiary thereof who were participants in the Coherent Plan
on December 31, 1998 and (a) became Participants in the Plan on January 1, 1999,
or (b) whose Coherent Accounts were subsequently transferred from the Coherent
Plan to the Trust Fund as a result of the merger of the Coherent Plan into the
Plan effective April 1, 1999.

“Coherent Plan” means the Coherent Communications Systems Corporation Savings
Incentive Plan as in effect on the Coherent Acquisition Date, and as amended
from time to time thereafter up to and including its merger into the Plan
effective April 1, 1999.

“Committees” means the Administrative Committee and the Investment Committee
appointed pursuant to Article 9 (Powers and Duties of the Committees).

“Company” means Tellabs Operations, Inc., a Delaware corporation, a predecessor
of such corporation, or any successor to it in ownership of all or substantially
all of its assets.

“Compensation” means a Participant’s “Considered Compensation” or “Total
Compensation,” as follows:

“Considered Compensation” is the Participant’s Total Compensation for the Plan
Year paid while he was an Active Participant but excluding reimbursements or
other expense allowances, fringe benefits (cash and noncash), moving or
education expenses, income from participation in any stock purchase plan, income
from stock awards, income from the exercise of stock appreciation rights,
dividends on restricted stock or other extraordinary remuneration, provided,
however, beginning with the 1998 Plan Year Considered Compensation shall include
amounts excluded from the Participant’s income for the period under Code
Sections 125, 132(f)(4), 402(g)(3) or 457 including before-tax contributions and
elective contributions to a plan of the Employer established under Code
Section 125.

“Total Compensation” for a period is the Participant’s compensation (as
described in Treasury Regulation Section 1.415-2(d)(2)) paid during the period
for personal services actually rendered in the course of employment with the
Employer and all Affiliates, excluding contributions made by an Employer (other
than the Before-Tax Contribution) to a plan to the extent that such are not
included in the gross income of the Participant in the year made and other
amounts which receive special tax treatment (as described in Treasury Regulation
Section 1.415-2(d)(3)); effective with the 1998 Plan Year, plus amounts excluded
from the Participant’s income for the period under Code Sections 125, 132(f)(4),
402(g)(3) or 457; provided, however, that the Total Compensation for any
Participant taken into account for determining all benefits provided under the
Plan for any Plan Year shall not include any amount in excess of $160,000 (for
any Plan Year beginning after December 31, 2001, shall not include any amount in
excess of $200,000) as adjusted by the Commissioner of the Internal Revenue
Service for increases in the cost of living in accordance with Code
Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar
year applies to any period, not exceeding 12 months, over which compensation is
determined (determination period) beginning in such calendar year. If a
determination period consists of fewer than 12 months, the annual compensation
limit will be multiplied by a fraction, the numerator of which is the number of
months in the determination period, and the denominator of which is 12.

“Contribution Percentage” and “Contribution Percentage Tests” are described in
Section 3.7 (Limitations on Matching Contributions Under the Savings Program).

“Defined Contribution Dollar Limitation” effective for Limitation Years
beginning after December 31, 1994, means an amount equal to $30,000 ($40,000
beginning with the 2002 Limitation Year), as adjusted by the Secretary of the
Treasury pursuant to Code Section 415(d), prorated for any Limitation Year of
less than 12 months; provided that for purposes of Code Section 511(a)(ii), such
amount shall be reduced by the amounts allocated to any medical accounts
described in subsection (c) of the definition of “Annual Addition.”

“Dependent” means an individual entitled to medical benefits as a dependent of
an Eligible Retiree, as described in Section 14.2 (Retiree Medical Benefits
Definitions).

“Designated Before-Tax Contributions” means the contributions referred to in
Section 3.7 (Limitations on Matching Contributions Under the Savings Program).

“Determination Period” means the Plan Year containing the Top-Heavy
Determination Date and the 4 preceding Plan Years, as further referenced in
Article 8 (Top-Heavy Plan Requirements).

“Disability Plan” with respect to any Participant means the long term disability
plan maintained by the Employer and covering such Participant.

“Election Period” means the period defined in Section 7.2 (Qualified Joint and
Survivor Annuity — Retirement Account, Salix Accounts and Coherent Accounts)
relating to the period during which a Participant may elect to have the
Participant’s Retirement Account distributed in a form other than a Qualified
Joint and Survivor Annuity.

“Eligible Employee” means any employee of the Employer but excluding any
employee who is (1) a Member of a Collective Bargaining Unit; (2) an individual
providing services to the Employer in the capacity of, or who is or was
designated by the Employer as, a Leased Employee, an independent contractor,
Intern Employee or a Limited Term Employee; or (3) are non-resident aliens who
receive no earned income from the Employer which constitutes income from
services within the United States. Notwithstanding the foregoing, any employee
of Salix Technologies, Inc. or any subsidiary thereof who was eligible to
participate in the Salix Plan as of May 19, 2000 will be considered an Eligible
Employee as of May 19, 2000. Notwithstanding the foregoing, any individual
employed by Coherent Communications Systems Corporation or any subsidiary
thereof as of the Coherent Acquisition Date, or thereafter until December 31,
1998, shall not become an Eligible Employee until January 1, 1999.

“Eligible Individual” means an individual entitled to Medical Benefits, as
described in Section 14.2 (Retiree Medical Benefits Definitions).

“Eligible Limited Participant” means an individual eligible to make Before-Tax
Contributions under the Savings Program, but not entitled to receive the
matching contribution portions of the Profit Sharing Contribution and the
Retirement Contribution provisions of the Plan, as further described in
subsection 2.1(d).

“Eligible Participant” means an Active Participant who has completed his
Eligibility Period making him eligible to share in the Matching Contribution
bi-weekly, and share in the Profit Sharing Contribution and forfeitures and
Retirement Contribution and forfeitures for a given quarter of the Plan Year as
of the last day of the quarter for which such contribution or forfeitures are
being allocated if he is then employed by the Employer as an Eligible Employee
and as further defined in Section 5.4 (Eligibility to Share in Employer
Contributions and Forfeitures).

“Eligible Retiree” means an individual entitled to receive retiree medical
benefits under the Health Plan, as described in Section 14.2 (Retiree Medical
Benefits Definitions).

“Eligible Retirement Plan” with respect to a Participant, the surviving spouse
of a Participant or a former spouse of the Participant who is an Alternate Payee
under a Qualified Domestic Relations Order is (a) an individual retirement
account described in Code Section 408(a) or individual retirement annuity
described in Code Section 408(b), and, with respect to a Participant, is also
(b) an annuity plan described in Code Section 403(a) or a qualified trust
described in Code Section 401(a).

“Eligible Rollover Distribution” means any rollover distribution of the Accounts
distributable to a Participant, the surviving spouse of a Participant or the
former spouse of the Participant who is an Alternate Payee under a Qualified
Domestic Relations Order; provided, however, (a) the portion of any distribution
required to be made under Code Section 401(a)(9), (b) the portion of any
distribution that is not includable in the gross income of the recipient
(determined without regard to the exclusion for net unrealized appreciation with
respect to Employer securities), shall not constitute an Eligible Rollover
Distribution and (c) the portion of the Account distributed to a Participant as
a hardship withdrawal pursuant to subsection 7.13(b) (Pre-59-1/2 Coherent
Account Withdrawals; Hardship Withdrawals) shall not constitute an Eligible
Rollover Distribution.

“Eligibility Period” is a rolling one-year period used for the purpose of
determining when an employee is eligible to share in the Matching Contribution,
the Profit Sharing Contribution and forfeitures and the Retirement Contribution
and forfeitures. An employee’s first Eligibility Period shall commence on the
date on which he first completes an Hour of Service. Subsequent Eligibility
Periods shall commence on the first day of each month following such date.
Notwithstanding the foregoing, the initial Eligibility Period of a former
employee who is reemployed after incurring a Period of Severance of one year or
more and who is not eligible for immediate participation pursuant to
Section 2.1(c) (Eligibility Requirements) shall commence on the date on which he
first performs duties for an Employer or an Affiliate after such Period of
Severance and subsequent Eligibility Periods shall commence on the Entry Date
following such date.

“Employer” means the Company and any Affiliate which adopts this Plan pursuant
to Article 13 (Adoption by Affiliates).

“Entry Date” means the first day of each Plan Year, the first day of the fourth
month of each Plan Year, the first day of the seventh month of each Plan Year
and the first day of the tenth month of the Plan Year shall be an “Entry Date.”
Solely for purposes of subsection 2.1(d) (Eligibility Requirements) and the
ability to participate in the Savings Program as an Eligible Limited Participant
commencing April 1, 1999, each business day shall also be an “Entry Date.”

“ERISA” means the Employee Retirement Income Security Act of 1974 and the
regulations promulgated thereunder, as from time to time amended.

“Employer Excess Contribution” is the contribution defined in Section 3.1
(Employer Contributions).

“Excess Forfeiture Suspense Account” means the Account described in Section 5.12
(Limitations on Annual Additions).

“Excess Tentative Employer Contribution” means the excess contribution described
in Section 5.12 (Limitations on Annual Additions).

“Five-Percent Owner” means an employee described in Code Section 416(i)(1).

“Funds” means the separate investment funds as described in Section 5.2 (Common
Fund).

“Health Plan” means a retiree medical plan maintained by an Employer, as
described in Section 14.2 (Retiree Medical Benefits Definitions).

“Highly Compensated Employee” means an employee of the Employer or an Affiliate
who was a Participant eligible during the Plan Year to make Before-Tax
Contributions and who:

was a Five-Percent Owner at any time during the Plan Year or the preceding Plan
Year; or

received Total Compensation in excess of $80,000 (as adjusted for increases in
the cost of living by the Secretary of the Treasury) during the preceding Plan
Year and was among the top 20% of the employees (disregarding those employees
excludable under Code Section 414(q)(5)) when ranked on the basis of Total
Compensation paid for that year.

To the extent required by Code Section 414(q)(6), a former employee who was a
Highly Compensated Employee when he separated from service with the Employer and
all Affiliates or at any time after attaining age 55 shall be treated as a
Highly Compensated Employee.

“Hour of Service” is:

each hour for which an employee is paid or entitled to payment for the
performance of duties for the Employer or an Affiliate;

each hour for which back pay, irrespective of mitigation of damages, is either
awarded or agreed to by the Employer or an Affiliate; and

each hour for which an employee is paid or entitled to payment for a period
during which no duties are performed (irrespective of whether the employment
relationship has terminated) due to vacation, holiday, illness, incapacity,
layoff, jury duty, military duty, or leave of absence. In crediting Hours of
Service pursuant to this subparagraph (c), all payments made or due shall be
taken into account, whether such payments are made directly by the Employer or
an Affiliate or indirectly (e.g., through a trust fund or insurer to which the
Employer or an Affiliate makes payments, or otherwise), except that:

no more than 501 such Hours of Service shall be credited for any continuous
period during which the employee performs no duties;

no such Hours of Service shall be credited if payments are made or due under a
plan maintained solely for the purpose of complying with any workers’
compensation, unemployment compensation or disability insurance laws; and

no such Hours of Service shall be credited for payments which are made solely to
reimburse the employee for medical or medically related expenses.

The Hours of Service, if any, for which an employee is credited for a period in
which he performs no duties shall be computed and credited to computation
periods in accordance with 29 C.F.R. 2530.200b-2 and other applicable
regulations promulgated by the Secretary of Labor. For purposes of computing the
Hours of Service to be credited to an employee for whom a record of hours worked
is not maintained, an employee shall be credited with 45 Hours of Service for
each week in which he completes at least one Hour of Service. In addition, an
employee shall be credited with Hours of Service for each week the employee is
on a leave of absence in accordance with Section 2.4 (Leaves of Absence);
provided however, that except as provided in Section 2.4 (Leaves of Absence), no
more than 501 Hours of Service shall be credited with respect to any continuous
period of a leave of absence.

“Individual Beneficiary” means a natural person designated by the Participant in
accordance with Section 7.5 (Beneficiary Designations) to receive all or any
portion of the amounts remaining in the Participant’s Accounts at the time of
the Participant’s death. “Individual Beneficiary” also means a natural person
who is a beneficiary of a trust designated by the Participant in accordance with
Section 7.5 (Beneficiary Designations) to receive all or a portion of such
amount, provided the trust complies with the requirements of Code
Section 401(a)(9) and the regulations promulgated thereunder, including that the
trust is irrevocable, the beneficiaries with respect to the trust’s interest in
the Participant’s Accounts are identifiable from the trust agreement, and a copy
of the trust agreement is provided to the Administrative Committee prior to the
date distributions commence to such trust.

“Intern Employee” means an employee who is hired on a temporary basis in
connection with an intern program established by the Employer. If an Intern
Employee is later offered a full-time position with Employer, such employee will
become an Eligible Employee, at that time, and will receive credit, for purposes
of determining eligibility to participate under Section 2.1 (Eligibility
Requirements), for Hours of Service accumulated as an Intern Employee. However,
such employee will not be entitled to share in any benefits under the Program
while he was classified as an Intern Employee.

“Investment Committee” is the Committee so appointed in accordance with
Article 9 (Powers and Duties of Committees).

“Investment Manager” means a registered investment adviser or other entity, as
described in Section 9.8 (Investment Policy).

“Key Employee” means an employee described in Section 8.1 (Top-Heavy
Definitions).

“Leased Employee” means any individual who is not carried on the payroll of the
Employer or an Affiliate and who, pursuant to an agreement between the Employer
or an Affiliate and any other person (“leasing organization”), has performed
services for the Employer or an Affiliate (or a related person as determined in
accordance with Code Section 414(n)(6)) on a substantially full-time basis for a
period of at least one year, and such services are performed under primary
direction or control by the Employer or Affiliate. Contributions or benefits
provided a leased employee by the leasing organization which are attributable to
services performed for the Employer shall be treated as provided by the
Employer.

“Limited Term Employee” means an employee whose employment is for a temporary
basis and is classified as a limited term employee or a coop employee under the
records of his Employer.

“Limitation Year” means the relevant Plan Year.

“Matching Contribution” is the contribution referred to in Section 3.6 (Matching
Contribution Under the Savings Program).

“Maximum Annual Addition” is the amount defined in Section 5.12 (Limitations on
Annual Additions).

“Medical Benefits” means the benefits described in Section 14.2 (Retiree Medical
Benefits Definitions).

“Medical Benefits Account” means the account established in accordance with Code
Section 401(h) as part of the Retirement Program for the purpose of providing
retiree medical benefits, as described in Article 14 (Retiree Medical Benefits).

“Member of a Collective Bargaining Unit” means any employee who is included in a
collective bargaining unit and whose terms and conditions of employment are or
were covered by a collective bargaining agreement if there is evidence that
retirement benefits were the subject of good-faith bargaining between
representatives of such employee and the Employer, unless such collective
bargaining agreement makes this Plan applicable to such employee.

“Multiple Use” is described in Section 3.8 (Multiple Use).

“Non-Highly Compensated Employee” means, for any Plan Year, any employee of the
Employer or Affiliate who:

at any time during the Plan Year was a Participant eligible to make Before-Tax
Contributions, and

was not a Highly Compensated Employee for such Plan Year.

“Normal Retirement Date” means a Participant’s 65th birthday.

“One-Percent Owner” means an employee described in Code Section 416(i)(1).

“Participant” means:

a current employee of the Employer or an Affiliate who has become a Participant
in the Plan pursuant to subsections (a), (b), (c), (f), or (g) of Section 2.1
(Eligibility Requirements) or;

a former employee of the Employer or an Affiliate for whose benefit an Account
in the Trust Fund is maintained.

“Plan” means the Tellabs Advantage Program set forth herein, including all
Appendices hereto.

“Permissive Aggregation Group” means the Required Aggregation Group of plans
plus any other plan or plans of the Employer which, when considered as a group
with the Required Aggregation Group, would continue to satisfy the requirements
of Code Sections 401(a)(4) and 410, as further referenced in Article 8
(Top-Heavy Plan Requirements).

“Plan Year” means a 12-month period beginning on January 1 and ending on
December 31.

“Pre-Retirement Survivor Annuity” means the surviving spouse survivor annuity
defined in Section 7.3 (Pre-Retirement Survivor Annuity — Retirement Account,
Salix Account and Coherent Accounts).

“Present Value” means the present value of accrued benefits under the aggregated
defined benefit plan or plans for all Participants as of the Top-Heavy
Determination Date(s), as determined in accordance with Code Section 416 and the
regulations thereunder, as further defined in Article 8 (Top-Heavy Plan
Requirements).

“Prior Plan” means prior versions of the Plan.

“Profit Sharing Contribution” means the contribution referred to in Section 3.3
(Profit Sharing Contribution under the Savings Program)

“Provisional Annual Addition” is the amount described in Section 5.11
(Provisional Annual Addition).

“Qualified Domestic Relations Order” means any domestic relations order that
creates, recognizes or assigns to an Alternate Payee the right to receive all or
a portion of Participant’s benefits payable hereunder and meets the requirements
of Code Section 414(p).

“Qualified Joint and Survivor Annuity” for a married Participant, means an
annuity for the life of a Participant with a survivor annuity for the life of
the Participant’s surviving spouse equal to fifty percent (50%) of in the amount
of the annuity which is payable during the joint lives of the Participant and
his surviving spouse. The Qualified Joint and Survivor Annuity shall be the
actuarial equivalent of the Participant’s vested Account Balance.

“Qualified Military Service” means the performance of duty on a voluntary or
involuntary basis in the Uniformed Services of the United States by an Eligible
Employee provided he is re-employed by the Employer or an Affiliate within the
applicable time period specified in Chapter 43 of Title 38 of the United States
Code (Employment and Reemployment Rights of Members of the Uniformed Services)
and the total length of all such absences does not exceed the maximum specified
by law for the retention of reemployment rights. The term “Uniformed Services of
the United States” means the Armed Forces, the Army National Guard and the Air
National Guard when engaged in active duty for training, inactive duty training,
or full-time National Guard duty, or full-time duty in the commissioned corps of
the Public Health Service as defined in Chapter 43 of Title 38 of the United
States Code.

“Required Aggregation Group” means (i) each qualified plan of the Employer in
which at least one Key Employee participates or participated at any time during
the Determination Period (regardless of whether the plan has terminated), and
(ii) any other qualified plan of the Employer which enables a plan described in
subsection (i) above to meet the requirements of Code Sections 401(a)(4) or 410
as further referenced in Article 8 (Top-Heavy Plan Requirements).

“Required Beginning Date” means:

for a Participant who is not a Five-Percent Owner, the April 1 following the
later of the calendar year in which the Participant attains age 70-1/2 or the
calendar year in which the Participant terminates employment; or

for a Participant who is a Five-Percent Owner with respect to the Plan Year in
which he attains age 70-1/2, the April 1 following the calendar year in which he
attained age 70-1/2.

“Retirement Contribution” means the contribution referred to in Section 3.2
(Retirement Contribution Under the Retirement Program).

“Retirement Program” means the provisions of this Plan relating to the Tellabs
Retirement Plan, the money purchase pension plan which forms a part hereof.

“Rollover Contribution” means:

all or a portion of a distribution received by an employee from another
qualified plan which is eligible for tax-free rollover to a qualified plan and
which is rolled over by the employee to this Plan within 60 days following his
receipt thereof;

amounts rolled over to this Plan from a conduit individual retirement account
which has no assets other than assets (and the earnings thereon) which were

previously distributed to the employee by another qualified plan as a
distribution which is eligible for tax-free rollover to a qualified plan and

deposited in such conduit individual retirement account within 60 days of
receipt thereof;

amounts distributed to the employee from a conduit individual retirement account
meeting the requirements of (b) above, and rolled over by the employee to this
Plan within 60 days of his receipt thereof from such conduit individual
retirement account;

amounts rolled over directly to this Plan by the trustee of another qualified
plan pursuant to the provisions of Code Section 401(a)(31) and to any other
related laws and regulations as in effect at the time of such direct rollover;
and

any amounts distributed from another qualified plan will not be eligible as a
Rollover Contribution if such money had been contributed to that plan as an
after-tax contribution.

“Salix Accounts” means the separate Salix Before-Tax Account, Salix Employer
Account and Salix Rollover Account of Salix Participants described in
Section 5.1 (Participant Accounts).

“Salix Acquisition Date” means the date of the acquisition of Salix
Technologies, Inc. by Tellabs, Inc.

“Salix Participant” means employees of Salix Technologies, Inc. or any
subsidiary thereof who were participants in the Salix Plan on May 19, 2000 and
(a) became Participants in the Plan on May 19, 2000, or (b) whose Salix Accounts
were subsequently transferred from the Salix Plan to the Trust Fund as a result
of the merger of the Salix Plan into the Plan effective May 19, 2000.

“Salix Plan” means the Salix Technologies, Inc. 401(k) Plan as in effect on the
Salix Acquisition Date, and as amended from time to time thereafter up to and
including its merger into the Plan effective May 19, 2000.

“Savings Program” means the provisions of the Plan relating to the Tellabs
Profit Sharing and Savings Plan, a profit sharing and Code Section 401 savings
and matching contribution plan which forms a part hereof.

“Service” means the period credited to an Eligible Employee or Participant for
purposes of determining the level of a Participant’s nonforfeitable benefits
under the Tellabs Retirement Program. A Participant’s or Eligible Employee’s
Service shall be the period beginning on his Employment Commencement Date (or
Re-employment Commencement Date, if applicable) and ending on his Termination
Date, computed in accordance with the following rules:

Special Definitions.

“Employment Commencement Date” means the date an employee first performs an Hour
of Service.

“Termination Date” means the earlier of:

The date on which an employee quits, retires, is discharged or dies; or

The first anniversary of the first day of a period in which an employee remains
absent from service (with or without pay) for any reason other than a quit,
retirement, discharge or death, such as vacation, holiday, sickness, disability,
leave of absence or layoff, except that this clause (B) shall not apply to an
employee on leave of absence for service in the United States armed forces or
the Family and Medical Leave Act of 1993.

“Re-employment Commencement Date” means the date on which an employee first
performs an Hour of Service following a Period of Severance.

“Period of Severance” means the period beginning on an employee’s Termination
Date and ending on his Re-employment Commencement Date.

“Year of Service” means each full year (on the basis that 365 days equal a full
year) in the employee’s period of Service.

Aggregation Rule. All of an employee’s periods of Service with any Affiliate
shall be aggregated on the basis that 365 days equal a full year, except that if
an employee has a Period of Severance of five years or more:

The prior period of Service shall be disregarded unless (A) his Retirement
Account was nonforfeitable at the time the Period of Severance began or (B) the
Period of Severance is less than the prior period of Service, and

Any period of Service after such Period of Severance shall be disregarded in
determining the vested percentage of his Retirement Account which accrued before
the Period of Severance.

Service Spanning Rule. If an employee’s Re-employment Commencement Date occurs
within 12 months after his Termination Date, his Service shall include the
intervening Period of Severance.

Service with Predecessor and Related Employers. An employee’s period of service,

with another employer before the acquisition of that employer’s business by the
Employer shall, to the extent provided in the agreement pertaining to such
acquisition or as approved by the Board of Directors, be included in his Service
to the same extent as if such service was performed for the Employer, provided
however, that in no event shall any service prior to January 6, 1975 be deemed
Service hereunder; and

with any employer while such employer is an Affiliate shall be included in his
Service to the same extent as if such service was performed for the Employer,
provided however, that in no event shall any service prior to January 6, 1975 be
deemed Service hereunder.

Recognition of Services under Salix Plan and Coherent Plan. Solely with respect
to former Salix Participants and Coherent Participants, each such Participant’s
period of service shall include such period or periods of employment previously
credited to that Participant under the Salix Plan or Coherent Plan, as
applicable; provided, however, that in no event shall any service prior to
January 6, 1975 be deemed Service hereunder.

“Simplified Employee Pension Plan” means a plan designed to meet the
requirements of a simplified pension plan pursuant to Code Section 408(k), as
further referenced in Article 8 (Top-Heavy Plan Requirements) and
subsection 11.6(c).

“Supplemental Before-Tax Contribution” means for any period, with respect to a
Participant, the portion of the Before-Tax Contribution made on his behalf by an
Employer during such period which exceeds such Participant’s Basic Before-Tax
Contribution for such period. For any period, “Supplemental Before-Tax
Contribution” means, with respect to the Employer, the sum of such
contributions.

“Tellabs Stock Fund” is the Fund described in Section 5.2 (Common Fund).

“Tentative Employer Contribution” is the contribution described in Section 3.3
(Profit Sharing Contribution Under the Savings Program).

“Top-Heavy” describes a plan which is determined to be Top-Heavy in accordance
with Code Section 416 as further detailed in Section 8.1 (Top-Heavy
Definitions).

“Top-Heavy Determination Date” means, for any Plan Year subsequent to the first
Plan Year, the last day of the preceding Plan Year or, for the first Plan Year
of the Plan, the last day of that year as further described in Section 8.1
(Top-Heavy Definitions).

“Top-Heavy Ratio” means the ratio set forth in Code Section 416, as further
described in Section 8.1 (Top-Heavy Definitions).

“Trust” or “Trust Fund” means the Tellabs, Inc. Profit Sharing and Savings Trust
or such other trust established in accordance with Article 9 (Powers and Duties
of Committees).

“Trustee” means the Trustee or Trustees under the Trust referred to in Article 9
(Powers and Duties of Committees).

“Unit” means the unit of measure (determined as provided in Article 5
(Accounting Provisions and Allocations) of the proportionate measure, if any, of
the Accounts of a Participant in the investment Funds established pursuant to
Section 5.2 (Common Fund).

“Valuation Date” means each Business Day as of which the Administrative
Committee shall determine the value of each Account.

   SECTION 1.5      EGTRRA Compliance.    This Plan reflects certain provisions
of the Economic Growth and Tax Relief Reconciliation Act of 2001 (“EGTRRA”). The
provisions of the Plan relating to EGTRRA are intended to demonstrate good faith
compliance with the requirements of EGTRRA and are to be construed in accordance
with EGTRRA and guidance issued thereunder, including but not limited to IRS
Notice 2001-57. Except as otherwise provided, the provisions of the Plan
relating to EGTRRA shall be effective as of the first day of the 2002 Plan Year,
and shall supercede other provisions of the Plan to the extent such provisions
are inconsistent therewith.

ARTICLE 2

Eligibility and Participation

   SECTION 2.1      Eligibility Requirements.

Every Participant on January 1, 1997 shall continue as such subject to the
provisions of the Plan.

Every other Eligible Employee shall first be eligible to participate in the
Matching Contribution, the Profit Sharing Contribution and the Retirement
Contribution provisions of the Plan, if he is then employed by an Employer, on
the Entry Date coinciding with or next following his first nine (9) months of
continuous employment, if he has completed 1,000 Hours of Service during such
nine (9) month period and attained his 21st birthday (18th birthday, commencing
with the April 1, 1999 Entry Date) on or before such Entry Date. An Eligible
Employee who does not become a Participant pursuant to the preceding sentence
shall first be eligible to participate, if he is then employed by an Employer,
on the Entry Date coinciding with or next following the later of (i) the end of
the first Eligibility Period in which he completes 1,000 Hours of Service or
(ii) his 21st birthday (18th birthday, commencing with the April 1, 1999 Entry
Date).

Any former employee of the Employer or an Affiliate who was a Participant or
could have become a Participant under subsection (b) above had he been employed
on a prior Entry Date, and is reemployed by the Employer as an Eligible
Employee, shall be eligible to participate on the first Entry Date after
reemployment.

Notwithstanding any provisions of this Section 2.1 to the contrary, an Eligible
Employee who does not meet the requirements of paragraph (a), (b) or (c) above
and who is reasonably expected to meet the requirements of paragraph (b) shall
first be eligible to participate in the Plan as an Eligible Limited Participant
on the Entry Date coinciding with or next following the later of his Employment
Commencement Date or 21st birthday (18th birthday, commencing with the April 1,
1999 Entry Date), solely for purposes of making a Before-Tax Contribution
pursuant to Section 3.4 (Before-Tax Contributions under the Savings Program)
(but not for purposes of receiving a Matching Contribution with respect thereto)
and/or a Participant Rollover Contribution pursuant to Section 4.2 (Rollover
Contribution), and exercising rights with respect to the Account(s) established
thereby.

Notwithstanding any provisions of this Plan to the contrary, any individual who
was providing services to the Employer in the capacity of, or who was designated
by the Employer as, an independent contractor, a Leased Employee, or a Limited
Term Employee and who is subsequently re-classified as an Eligible Employee for
the purposes of this Plan (regardless of whether such re-classification is
retrospective or prospective), shall be eligible to participate in the Plan on a
prospective basis only from the date of the re-classification and shall not have
any retroactive claim for benefits.

Notwithstanding the foregoing provisions of this Section 2.1 (Eligibility
Requirements) a Coherent Participant who is an Eligible Employee on January 1,
1999 shall become a Participant as of that date. Any other individual who was an
employee of Coherent Communications Systems Corporation or any subsidiary
thereof and first became an Eligible Employee on January 1, 1999, shall become a
Participant on the first Entry Date on which such Eligible Employee’s satisfies
the requirements of paragraph (b), (c), or (d) above, as the case may be.

Notwithstanding the foregoing provisions of this Section 2.1 (Eligibility
Requirements) a Salix Participant who is an Eligible Employee on May 19, 2000
shall become a Participant as of that date.

   SECTION 2.2      Continued Participation; Reemployment.

Except as provided in Section 2.3 (Transfers and Changes in Status), once an
Eligible Employee has become a Eligible Limited Term Participant eligible to
elect to make Before-Tax Contributions pursuant to subsection 2.1(d), he shall
continue to be eligible to make such Contributions, subject to the conditions
and limitations in the Plan, until he incurs his Termination Date.<

Except as provided in Section 2.3 (Transfer and Changes in Status), once an
Eligible Employee becomes a Participant for purposes of determining the amount
of the Matching Contribution, the Profit Sharing Contribution and the Retirement
Contribution and eligibility to share in the Matching Contribution, the Profit
Sharing Contribution and the Retirement Contribution, he shall continue to be
eligible to share in the Matching Contribution, the Profit-Sharing Contribution
and the Retirement Contribution, subject to the conditions and limitations in
the Plan, for each Plan Year as provided in Section 5.4 (Eligibility to Share in
the Employer Contributions and Forfeiture).

In the event an Eligible Employee who has become a Participant incurs his
Termination Date and he is subsequently reemployed, he shall be eligible to
elect to make Before-Tax Contributions as of the first business day following
such Re-Employment Commencement Date and to share in the Matching Contribution,
the Profit Sharing Contribution and the Retirement Contribution for the Plan
Year in which his Re-Employment Commencement Date occurs, provided the
Participant is an Eligible Employee and, with respect to the Matching
Contribution, the Profit Sharing Contribution and the Retirement Contribution,
satisfies the requirements of Section 5.4 as of the first Entry Date after he
becomes eligible - (Eligibility to Share in the Employer Contributions and
Forfeiture).

   SECTION 2.3      Transfers and Changes in Status.

As provided in Section 1.4 (Definitions), an Eligible Employee’s Service with

an Employer while a Member of a Collective Bargaining Unit before his transfer
to an employment status outside of the collective bargaining unit, or

another employer before the acquisition of that employer’s business by an
Employer (but only to the extent approved by the Board of Directors and
exclusive of any period prior to January 6, 1975), or

another employer while such employer is a Related Employer prior to the date the
Employee is transferred to an Employer,

shall be taken into account (applying the principles of Sections 2.1
(Eligibility Requirements) and 2.2 (Continued Participation Reemployment)) for
purposes of determining the Eligible Employee’s eligibility to participate in
the Plan. In the event that based upon such service, the Eligible Employee would
have become a Participant as of an Entry Date had he been an Eligible Employee
of the Employer, then such Eligible Employee shall become a Participant for
purposes of Section 2.1 (Eligibility Requirements) as of the date of such
acquisition or transfer provided he is an Eligible Employee as of such date.

If a Participant is transferred to a position with an Employer such that he no
longer is an Eligible Employee, or is transferred to employment with an
Affiliate which is not an Employer, he shall be treated for all purposes under
this Plan as if he were on a leave of absence without Compensation while in that
position.

   SECTION 2.4      Leaves of Absence.    An employee shall be credited with 45
Hours of Service for each full week the employee is on a leave of absence,
including, but not limited to a leave of absence required to be recognized under
the provisions of the Retirement Equity Act of 1984 or the Family and Medical
Leave Act of 1993, if he is not otherwise credited with such Hours of Service,
provided that other than with respect to a leave of absence for service in the
United States armed forces, not more than 501 Hours of Service shall be credited
with respect to any continuous period of leave of absence. Any leave of absence
under this Section 2.4 must be granted in writing and pursuant to the Employer’s
established leave policy, which shall be administered in a uniform and
nondiscriminatory manner to similarly situated employees.

   SECTION 2.5      Qualified Military Service. Notwithstanding any provision of
this Plan to the contrary, effective on and after December 12, 1994,
contributions, benefits and service credit with respect to Qualified Military
Service will be provided in accordance with Code Section 414(u).

ARTICLE 3

Contributions

   SECTION 3.1      Employer Contributions.    Subject to the right reserved to
the Company to alter, amend or discontinue this Plan and the Trust, each
Employer shall for each Plan Year contribute to the Trust Fund an amount equal
to the sum of:

the Retirement Contribution;

the Profit Sharing Contribution;

the Before-Tax Contribution; and

the Matching Contribution.

Such sum, which is known as the Tentative Employer Contribution, shall be
reduced by an amount equal to the Excess Tentative Employer Contribution (as
provided in Section 5.12 (Limitation on Annual Additions)); provided that in no
event shall the Tentative Employer Contribution, as reduced by the Excess
Tentative Employer Contribution, exceed the amount deductible by the Employer
for said year for federal income tax purposes.

In addition, each Employer shall contribute to the Medical Benefits Account
maintained as part of the Trust Fund such amounts as may be determined in
accordance with Article 14 (Retiree Medical Benefits) hereof.

   SECTION 3.2      Retirement Contribution Under the Retirement
Program.    Subject to the provisions of Section 3.1 (Employer Contributions),
each Employer shall pay to the Trustee for each quarter of each Plan Year an
amount which, together with the forfeitures allocable for such quarter, shall be
equal to:

4.5% (four and five-tenths percent) effective January 1, 1999; or

3.6% (three and six-tenths percent) effective January 1, 1994;

of the Considered Compensation of each Eligible Participant for such quarter.
Such contribution is known as the “Retirement Contribution.”

   SECTION 3.3      Profit Sharing Contribution Under the Savings
Program.    Subject to the provisions of Section 3.1 (Employer Contributions):

Each Employer shall pay to the Trustee for each quarter of each Plan Year an
amount which, together with the forfeitures allocable for such quarter, shall be
equal to .5% (five-tenths of one percent) of the Considered Compensation of each
Eligible Participant for such quarter; and

Each Employer shall also pay to the Trustee for each Plan Year such additional
amounts, if any, as the Board of Directors shall determine.

Such contributions are, collectively, known as the “Profit Sharing
Contribution.”

   SECTION 3.4      Before-Tax Contributions Under the Savings Program.

Subject to the provisions of Sections 3.1 (Employer Contributions) and 3.3
(Profit Sharing Contributions Under the Savings Program), each Active
Participant may for each payroll period elect to have the Employer make a Basic
Before-Tax Contribution on his behalf in an amount 1% up to 15% (effective
January 1, 2002, up to 20%) of his Considered Compensation (rounded to the
nearest cent). Such elections (other than a complete suspension of Before-Tax
Contributions under this Section) shall be subject to change effective on any
Entry Date in accordance with procedures established by the Administrative
Committee from time to time. A Participant may elect to have his Employer
suspend all Before-Tax Contributions to be made on his behalf under this
Section 3.4 as of the beginning of any payroll period provided he notifies such
Employer within such time and in accordance with such procedures as may from
time to time be established by the Administrative Committee.

The Administrative Committee may establish procedures whereby each Eligible
Participant on whose behalf the total contribution made under Section 3.4(a) is
less than 15% (effective January 1, 2002, less than 20%) of his Considered
Compensation for the Plan Year may, subject to the provisions of Section 3.1
(Employer Contributions) and 3.5 (Limitations on Before-Tax Contributions Under
the Savings Program), elect to have his Employer make an additional contribution
on his behalf in an amount not exceeding his annual incentive cash bonus for
such Plan Year so long as the sum of such additional contribution and the
contributions made on his behalf under subsection 3.4(a) above does not exceed
15% (effective January 1, 2002, does not exceed 20%) of his Considered
Compensation for the Plan Year.

The amount of the Before-Tax Contributions to be made pursuant to a
Participant’s election shall reduce the compensation otherwise payable to him by
the Employer.

   SECTION 3.5      Limitations on Before-Tax Contributions Under the Savings
Program.

In no event shall a Participant’s Before-Tax Contributions during any calendar
year exceed the dollar limitation in effect under Code Section 402(g) at the
beginning of such calendar year; provided, however that:

contributions made under Section 2.5 (Qualified Military Service) shall be
subject to such limitation for the year to which they relate instead of the year
they are actually made; and

effective as of the first day of the first Plan Year beginning after December
31, 2001, all employees who are eligible to make elective deferrals under this
Plan and who have attained age 50 before the close of the Plan Year shall be
eligible to make catch-up contributions in accordance with, and subject to the
limitations of, Code Section 414(v). Such catch-up contributions shall not be
taken into account for purposes of the provisions of the Plan implementing the
required limitations of Code Sections 402(g) and 415. The Plan shall not be
treated as failing to satisfy the provisions of the Plan implementing the
requirements of Code Sections 401(k)(3), 401(k)(11), 401(k)(12), 410(b), or 416,
as applicable, by reason of any such catch-up contributions.

If a Participant’s Before-Tax Contributions, together with any additional
elective contributions to any other qualified cash or deferred arrangement, and
any elective deferrals under a tax-sheltered annuity program or a simplified
employee pension plan, exceed such dollar limitation for any calendar year, such
excess, and any earnings allocable thereto, shall be distributed to the
Participant by April 15 of the following year; provided that, if such excess
contributions were made to a plan or arrangement not maintained by the Employer
or an Affiliate, the Participant must first notify the Administrative Committee
of the amount of such excess allocable to this Plan by March 1 of the following
year.

Notwithstanding any other provision of this Plan to the contrary, the Before-Tax
Contributions for the Highly Compensated Employees for the Plan Year shall be
reduced in accordance with the following provisions:

The Before-Tax Contributions of the Highly Compensated Employees shall be
reduced if neither of the Actual Deferral Percentage Tests set forth in (A) or
(B) below is satisfied after taking into account the provisions of subsection
(f) below:

The 1.25 Test. The Actual Deferral Percentage of the Highly Compensated
Employees is not more than the Actual Deferral Percentage of the Non-Highly
Compensated Employees multiplied by 1.25.

The 2.0 Test. The Actual Deferral Percentage of the Highly Compensated Employees
is not more than 2 percentage points greater than the Actual Deferral Percentage
of the Non-Highly Compensated Employees and the Actual Deferral Percentage of
the Highly Compensated Employees is not more than the Actual Deferral Percentage
of the Non-Highly Compensated Employees multiplied by 2.0.

The provisions of this subsection (b) shall apply separately with respect to
each group of employees who are Members of a Collective Bargaining Unit (if any)
and the group of employees who are not Members of a Collective Bargaining Unit.

As used in this subsection, “Actual Deferral Percentage” means:

With respect to Non-Highly Compensated Employees, the average of the ratios of
each Non-Highly Compensated Employee’s Before-Tax Contributions with respect to
the prior Plan Year, to each such Participant’s Considered Compensation for such
Plan Year; and

With respect to Highly Compensated Employees, the average of the ratios of each
Highly Compensated Employee’s Before-Tax Contributions with respect to the
current Plan Year, to each such Participant’s Considered Compensation for such
Plan Year.

All Before-Tax Contributions made under this Plan and all before-tax
contributions made under any other plan that is aggregated with this Plan for
purposes of Code Sections 401(a)(4) and 410(b) shall be treated as made under a
single plan. If any plan is permissively aggregated with this Plan for purposes
of Code Section 401(k), the aggregated plans must also satisfy Code
Sections 401(a)(4) and 410(b) as though they were a single plan. The Actual
Deferral Percentage ratios of any Highly Compensated Employee will be determined
by treating all plans subject to Code Section 401(k) under which the Highly
Compensated Employee is eligible as a single plan. Notwithstanding the
foregoing, Before-Tax Contributions made under Section 2.5 (Qualified Military
Service) corresponding to a preceding Plan Year shall not be included in the
Actual Deferral Percentage Test.

If neither Actual Deferral Percentage Test is satisfied as of the end of the
Plan Year, the Administrative Committee shall cause the Before-Tax Contributions
for Highly Compensated Employees to be reduced and refunded to each such Highly
Compensated Employee in accordance with this subsection (iv) and subsection (v),
respectively, until either Actual Deferral Percentage Test is satisfied. The
sequence for determining the amount of such reductions shall begin with Highly
Compensated Employees who elected to defer the greatest percentage of Considered
Compensation, assuming that Supplemental Before-Tax Contributions represent the
last contribution made to the Participant’s Account, then the second greatest
percentage amount, continuing until either Actual Deferral Percentage Test is
satisfied. This process shall continue through the remaining Supplemental
Before-Tax Contributions and continuing with the Basic Before-Tax Contributions
until either Actual Deferral Percentage Test is satisfied.

Once the total amount of reductions has been determined under subsection (iv)
above, the Administrative Committee shall direct the Trustee to distribute as a
refund to the appropriate Highly Compensated Employees an allocable portion of
such reduction attributable to excess Before-Tax Contributions, together with
the net earnings or losses allocable thereto. The sequence for determining and
refunding a Highly Compensated Employee’s allocable portion of excess Before-Tax
Contributions shall begin with the Highly Compensated Employee who elected to
defer the greatest dollar amount of Before-Tax Contributions. The Before-Tax
Contributions of such Participant shall be reduced by the amount required to
cause that Participant’s Before-Tax Contributions to equal the dollar amount of
the Before-Tax Contributions of the Highly Compensated Employee with the next
highest dollar amount of Before-Tax Contributions. If the total amount
distributed is less than the total excess contributions, this process shall
continue until all excess Before-Tax Contributions are distributed and excess
Matching Contributions are forfeited. However, notwithstanding anything in the
foregoing to the contrary, if a lesser reduction, when added to the total dollar
amount previously reduced, would equal the total excess contributions, such
lesser reduction shall be utilized. The Administrative Committee shall designate
such distribution and forfeiture as a distribution of excess Before-Tax
Contributions and forfeiture of excess Matching Contributions, determine the
amount of the allocable net earnings or losses to be distributed and forfeited
in accordance with subsections (c) and (d) below, and cause such distributions
and forfeitures to occur prior to the end of the Plan Year following the Plan
Year in which the excess Before-Tax Contributions and excess Matching
Contributions were made.

Net earnings or losses to be distributed with the excess Before-Tax
Contributions shall be equal to the net earnings or losses on such contributions
for the Plan Year in which the contributions were made. The net earnings or
losses allocable to the excess Before-Tax Contributions for the Plan Year shall
be determined in the manner set forth in Article 5 (Accounting Provisions and
Allocations).

Net earnings or losses to be treated as forfeitures together with the Matching
Contributions shall be equal to the net earnings or losses on such contributions
for the Plan Year in which the contributions were made. Net earnings or losses
on Matching Contributions shall be determined in the same manner as in
subsection (c) above.

Any excess Matching Contribution treated as a forfeiture pursuant to
subsection (b) above shall be used to reduce the Profit Sharing Contribution in
Section 3.3 (Profit Sharing Contribution Under the Savings Program).

For the purpose of avoiding the necessity of adjustments pursuant to this
Section or Section 5.12 (Limitations on Annual Additions), or to comply with any
applicable laws or regulations:

The Administrative Committee may adopt such rules as it deems necessary or
desirable to:

impose limitations during a Plan Year on the percentage or amount of Before-Tax
Contributions elected by Participants pursuant to Section 3.2 (Retirement
Contribution Under the Retirement Plan); or

increase during a Plan Year the percentage of Considered Compensation with
respect to which a Participant may elect a Before-Tax Contribution for the
purpose of providing Participants with the opportunity to increase their
Before-Tax Contributions within the limitations of Section 3.3 (Profit Sharing
Contribution Under the Savings Program).

The Employer may at its sole discretion make fully vested contributions to the
Plan which will be allocated to the Before-Tax Accounts of one or more
Participants who are Non-Highly Compensated Employees in such amounts as the
Employer directs for the purpose of complying with the applicable limits on
Before-Tax Contributions in the Code. Such contributions will not be taken into
account in the allocation of Matching Contributions.

The amount of each Participant’s Basic Before-Tax Contributions and Supplemental
Before-Tax Contributions as determined under this Section 3.5 is also subject to
the provisions of Sections 5.12 (Limitations on Annual Additions).

   SECTION 3.6      Matching Contribution Under the Savings Plan.    Subject to
the provisions of Section 3.1 (Employer Contributions), each Employer shall each
payroll period of the Plan Year contribute to the Trust Fund 1 cent for each
cent of Basic Before-Tax Contribution made on behalf of each Eligible
Participant for such payroll period. Each Employer shall also contribute as of
the last day of the Plan Year on behalf of each Eligible Participant employed by
the Employer on the last day of such Plan Year an amount equal to each such
Participant’s Basic Before-Tax Contribution for the Plan Year less the amount of
the payroll period contributions made during such Plan Year pursuant to the
first sentence of this Section 3.6 on behalf of each such Participant. The sum
of such contributions is known as the “Matching Contribution.”

   SECTION 3.7      Limitations on Matching Contributions Under the Savings
Program

Notwithstanding any other provision to the contrary, the share of Matching
Contributions of the Highly Compensated Employees shall be reduced in accordance
with the following provisions:

The share of Matching Contributions of the Highly Compensated Employees shall be
reduced if neither of the Contribution Percentage Tests set forth in (A) or (B)
below is satisfied after taking into account the provisions of subsection (f)
below:

The 1.25 Test. The Contribution Percentage of the Highly Compensated Employees
is not more than the Contribution Percentage of all Non-Highly Compensated
Employees multiplied by 1.25.

The 2.0 Test. The Contribution Percentage of the Highly Compensated Employees is
not more than 2 percentage points greater than the Contribution Percentage of
all Non-Highly Compensated Employees, and the Contribution Percentage of the
Highly Compensated Employees is not more than the Contribution Percentage of all
Non-Highly Compensated Employees multiplied by 2.0.

The provisions of this subsection (a) shall not apply to any group of employees
who are Members of a Collective Bargaining Unit.

As used in this Section 3.7, “Contribution Percentage” means:

With respect to Non-Highly Compensated Employees, the average of the ratios of
each Non-Highly Compensated Employee’s share of Matching Contributions, plus
Designated Before-Tax Contributions (as defined in subsection (b) below), with
respect to the prior Plan Year, to each such Participant’s Considered
Compensation for such Plan Year; and

With respect to Highly Compensated Employees, the average of the ratios of each
Highly Compensated Employee’s share of Matching Contributions, plus Designated
Before-Tax Contributions (as defined in subsection (b) below), with respect to
the current Plan Year, to each such Participant’s Considered Compensation for
such Plan Year.

All Matching Contributions made under this Plan and all employee contributions
and matching contributions made under any other plan that is aggregated with
this Plan for purposes of Code Sections 401(a)(4) and 410(b) shall be treated as
made under a single plan. If any plan is permissively aggregated with this Plan
for purposes of Code Section 401(m), the aggregated plans must also satisfy Code
Sections 401(a)(4) and 410(b) as though they were a single plan. The
Contribution Percentage ratio of any Highly Compensated Employee will be
determined by treating all plans subject to Code Section 401(m) under which the
Highly Compensated Employee is eligible as a single plan. Notwithstanding the
foregoing, Matching Contributions made under Section 2.5 (Qualified Military
Service) corresponding to a preceding Plan Year shall not be included in the
Contribution Percentage Test.

To the extent necessary, and solely for the exclusive purpose of satisfying the
Contribution Percentage Test in subsection 3.7(a), all or part of the Before-Tax
Contributions of Participants and/or Matching Contributions may be treated by
the Committee as After-Tax Contributions (“Designated Before-Tax
Contributions”), provided that each of the following is satisfied:

The Before-Tax Contributions, including Designated Before-Tax Contributions,
satisfy the requirements of subsection 3.5(b); and

The Before-Tax Contributions, excluding Designated Before-Tax Contributions,
satisfy the requirements of subsection 3.5(b).

If neither Contribution Percentage Test is satisfied as of the end of the Plan
Year, the Committee shall first cause the Matching Contributions of the Highly
Compensated Employees to be reduced and refunded or forfeited, as the case may
be, in accordance with this subsection (c) and subsection (d) below until either
Contribution Percentage Test is satisfied. The sequence for determining the
amount of such reductions shall begin with Highly Compensated Employees who
received the greatest amount of Matching Contributions as a percentage of
Considered Compensation, then the second greatest percentage amount, continuing
until either Contribution Percentage Test is satisfied. This process shall
continue through the remaining Matching Contributions for Highly Compensated
Employees until either Contribution Percentage Test is satisfied.

Once the total amount of reductions has been determined under subsection (c)
above, the Committee shall direct the Trustee to distribute as a refund to the
appropriate Highly Compensated Employees an allocable portion of such reduction
attributable to any excess vested Matching Contribution, and to treat as a
forfeiture an allocable portion of such reduction attributable to any excess
nonvested Matching Contributions, together with the net earnings or losses
allocable thereto. The sequence for determining and refunding a Highly
Compensated Employee’s allocable portion of excess vested Matching Contributions
or forfeiture of nonvested Matching Contributions shall begin with the Highly
Compensated Employee who elected and received the greatest dollar amount of such
contributions. The Matching Contributions of such Participant shall be reduced
by the amount required to cause that Participant’s Matching Contribution to
equal the dollar amount of the Matching Contributions of the Highly Compensated
Employee with the next highest dollar amount of such contributions. If the total
amount distributed or forfeited is less than the total excess contributions,
this process shall continue until all such excess Matching Contributions have
been distributed or forfeited. However, notwithstanding anything in the
foregoing to the contrary, if a lesser reduction, when added to the dollar
amount previously reduced, would equal the total excess contribution, such
lesser amount shall be utilized. The Committee shall designate such distribution
and forfeiture as a distribution and forfeiture of excess contributions,
determine the amount of the allocable net earnings or losses to be distributed
in accordance with subsection (e) below, and cause such distributions and
forfeitures to occur prior to the end of the Plan Year following the Plan Year
in which such excess Matching Contributions were made.

Net earnings or losses to be distributed with the excess vested Matching
Contribution or to be treated as forfeitures together with the excess nonvested
Matching Contributions shall be equal to the net earnings or losses on such
contributions for the Plan Year in which the contributions were made. Net
earnings or losses shall be determined and allocated in the same manner as in
subsection 3.5(c) above.

Any Matching Contributions which are treated as forfeitures pursuant to
subsection 3.7(d) above shall be used to reduce the Profit-Sharing Contribution
in Section 3.3 (Profit-Sharing Contribution Under the Savings Plan) and Matching
Contribution in Section 3.6 (Matching Contribution Under the Savings Plan).

For the purpose of avoiding the necessity of adjustments pursuant to this
Section 3.7 or Section 5.12 (Limitations on Annual Additions), or to comply with
any applicable laws or regulations:

The Employer may in its sole discretion make fully vested contributions to the
Plan, which will be allocated to the Matching Accounts of one or more
Participants who are Non-Highly Compensated Employees, in such amounts as the
Employer directs for the purpose of complying with applicable limits on Matching
Contributions in the Code.

The Committee, in its sole discretion, may elect for a Plan Year to perform the
test under subsection (b) above separately for those Active Participants who
have not yet attained age 21 and completed one Year of Service or,
alternatively, for Plan Years beginning after December 31, 1998, exclude such
Active Participants who are Non-Highly Compensated Employees from testing under
subsection (c) above.

   SECTION 3.8      Multiple Use. The multiple use test described in Treasury
Regulation Section 1.401(m)-2 and this Section 3.8 shall not apply for Plan
Years beginning after December 31, 2001.

This Section 3.8 will be applicable if The 2.0 Test is used to satisfy both the
Actual Deferral Percentage Test and the Contribution Percentage Test. If this
Section 3.8 is applicable, the Committee shall determine whether a “Multiple
Use” has occurred, and if such a Multiple Use has occurred, the Matching
Contributions of the Highly Compensated Employees shall be reduced in accordance
with the provisions of subsection (c) below.

A Multiple Use occurs when for the Highly Compensated Employees, the sum of the
Actual Deferral Percentage used to satisfy The 2.0 Test plus the Contribution
Percentage used to satisfy The 2.0 Test exceeds the “Aggregate Limit.” The
Aggregate Limit is the greater of subsection (i) or (ii) below, determined as
follows:

First, multiply 1.25 by the greater of:

the Actual Deferral Percentage, or

the Contribution Percentage of the Non-Highly Compensated Employees;

Second, add 2.0 to the lesser of (A) or (B) above provided that such sum shall
not exceed 2 times the lesser of (A) or (B) above; and

Finally, add the results from the first and second steps above to determine the
Aggregate Limit; or

First, multiply 1.25 by the lesser of

the Actual Deferral Percentage, or

the Contribution Percentage of the Non-Highly Compensated Employees;

Second, add 2.0 to the greater of (A) or (B) above provided that such sum shall
not exceed 2 times the greater of (A) or (B) above; and

Third, add the results from the first and second steps above to determine the
Aggregate Limit.

If a Multiple Use has occurred, such Multiple Use shall be corrected by reducing
the Contribution Percentage of Highly Compensated Employees in accordance with
the provisions of subsection 3.7(b) above until the sum of the Actual Deferral
Percentage plus the Contribution Percentage for the Highly Compensated Employees
equals the Aggregate Limit.

Net earnings or losses to be refunded or to be treated as forfeitures together
with the excess Matching Contributions shall be equal to the net earnings or
losses on such contributions for the Plan Year in which the contributions were
made. Net earnings or losses shall be determined and allocated in the same
manner as in subsection 3.5(c) above.

ARTICLE 4

Contributions by Employee

   SECTION 4.1      No After-Tax Contributions.    No Participant shall be
required or permitted to make any after-tax contributions to this Plan.

   SECTION 4.1      Rollover Contribution.

A Rollover Contribution may be rolled over in cash to the Trust Fund for the
benefit of a Participant with the permission of the Administrative Committee.
Prior to accepting any contribution which is intended to be a Rollover
Contribution, the Administrative Committee may require the Participant to
establish that the amount to be rolled over meets the definition of a Rollover
Contribution and any other limitations of the Code applicable to such rollovers.

An Eligible Employee who is not eligible to participate in the Plan solely by
reason of failing to meet the eligibility requirements of Article 2 (Eligibility
and Participation) and who reasonably expects to become a Participant when such
requirements are met, may be a Participant in the Plan solely for the limited
purposes of making a Rollover Contribution, and taking actions with respect to
his Rollover Account for the purposes of loans in accordance with Article 7
(Distributions), investment options in accordance with this Section 4.2, and the
withdrawal of Rollover Contributions in accordance with subsection (e) below,
subject to the same conditions as any other Participant.

If the Administrative Committee determines after a Rollover Contribution has
been made that such Rollover Contribution did not in fact constitute a Rollover
Contribution as defined in Section 1.4 (Definitions), the amount of such
Rollover Contribution and any earnings thereon shall be returned to the
employee.

Each Participant’s Rollover Contribution shall be allocated to his Rollover
Account as of the Valuation Date coinciding with or next succeeding the date on
which such amount is received by the Trustee, and invested in accordance with
Section 5.2 (Common Fund). A Participant’s Rollover Account shall be fully
vested and nonforfeitable.

ARTICLE 5

Accounting Provisions and Allocations

   SECTION 5.1       Participant’s Accounts.

For each Participant there shall be maintained as appropriate a separate
Retirement Account, a separate Profit Sharing Account (which shall, if
applicable, consist of separate pre-1993 and post-1992 sub-accounts as
prescribed by the Administrative Committee), a separate Matching Account, a
separate After-Tax Account (which shall, if applicable, consist of a separate
pre-1987 After-Tax sub-account and a separate post-1986 After-Tax sub-account as
prescribed by the Administrative Committee), a separate Before-Tax Account
(which shall, if applicable, consist of separate basic and supplemental
sub-accounts as prescribed by the Administrative Committee), and a separate
Rollover Account. Effective April 1, 1999, for each Coherent Participant, there
shall also be maintained as appropriate a separate Coherent Before-Tax Account
(which shall consist of a balance of the Coherent Participant’s pre-tax
contribution account under the Coherent Plan), a separate Coherent Employer
Account (which shall consist of the balance of the Coherent Participant’s
matching and profit sharing accounts under the Coherent Plan) and a separate
Coherent Rollover Account (such separate Accounts of the Coherent Participant
sometimes referred to collectively as “Coherent Accounts”). Effective May 19,
2000, for each Salix Participant, there shall also be maintained as appropriate
a separate Salix Before-Tax Account (which shall consist of a balance of the
Salix Participant’s pre-tax contribution account under the Salix Plan), a
separate Salix Employer Account (which shall consist of the balance of the Salix
Participant’s matching and profit sharing accounts under the Salix Plan) and a
separate Salix Rollover Account (such separate Accounts of the Salix Participant
sometimes referred to collectively as “Salix Accounts”). Each Account (including
any sub-accounts) shall be credited with the amount of contributions, interest
and earnings of the Trust Fund allocated to such Account and shall be charged
with all distributions, withdrawals and losses of the Trust Fund allocated to
such Account.

The post-1986 After-Tax sub-account shall be a “separate contract” for the
purposes of Code Section 72(e).

   SECTION 5.2      Common Fund.

The Trust Fund shall be a common fund divided into separate investment funds
(“Funds”) as provided in this Section 5.2. Each Fund as may from time to time be
established shall be a common fund in which each Participant shall have an
undivided interest in the respective assets of the Fund, provided that all
accounts segregated and all loans made to Participants pursuant to the
provisions of Section 7.11 (Loans) shall together with any income or expense of
such Accounts or loans be accounted for separately and will not be included in
any of the adjustments resulting from the application of this Section 5.2.
Except as otherwise provided, the value of each Participant’s Accounts in such
Funds shall be measured by the value of the shares or Units of such Fund
credited to his Accounts as of the date that such valuation is being determined.
For purposes of allocation of income and valuation, each Fund shall be
considered separately. No Fund shall share in the gains and losses of any other,
and no Fund shall be valued by taking into account any assets or distributions
from any other.

Each Fund shall be established and invested by the Trustee in accordance with
investment policies determined, or as the Trustee may be directed, from time to
time by the Investment Committee. The Investment Committee may from time to time
also direct that Funds be terminated or that Funds with similar investment
objectives be consolidated. Subject to the Investment Committee’s authority to
consolidate, Funds shall be maintained for the various types of Accounts as
follows:

At least one Fund shall be established, maintained and invested with the
objective of minimizing the effect of market fluctuations while producing a rate
of return consistent with such objective.

A second Fund shall be established, maintained and invested in common stock of
Tellabs, Inc., the Company’s parent holding company (“Tellabs Stock Fund”).

An additional Fund or Funds shall be established, maintained and invested as the
Investment Committee may from time to time direct.

Participant investment elections shall be made as follows:

Subject to subsection (iii) below, the Investment Committee shall direct the
Trustee to invest each Participant’s Accounts from time to time among the Funds
as the Participant may elect. A Participant may elect to have a uniform
percentage of his Retirement Account, Profit Sharing Account, After-Tax Account,
Matching Account, Before-Tax Account, Rollover Account, effective as of April 1,
1999, each of his Coherent Accounts (excluding the value of any loan credited to
any such Account), and effective as of May 19, 2000, each of his Salix Accounts
(excluding the value of any loan credited to any such Account) credited in
increments of 1% to one or more of the Funds. All contributions to his
Retirement Account, Profit Sharing Account, After-Tax Account, Before-Tax
Account, and Rollover Account shall be credited to such Funds in accord with
such election.

Subject to subsection (iii) and (vi) below and to any restriction on transfer
which result from the investment medium chosen for a Fund, a Participant may
elect to transfer in multiples of 1% a uniform percentage of his Retirement
Account, Profit Sharing Account, Matching Account, After-Tax Account, Before-Tax
Account, Rollover Account, effective as of April 1, 1999, each of his Coherent
Accounts (excluding the value of any loan credited to any such Account), and
effective as of May 19, 2000, each of his Salix Accounts (excluding the value of
any loan credited to any such Account) held in any Fund to one or more different
Funds. Any such election shall not affect any prior election under
subsection (i) above. Loans made pursuant to Section 7.11 (Loans) shall be
treated as segregated investments from the Participant’s applicable Accounts,
transferred to and from various Funds in accord with uniform rules established
by the Administrative Committee.

Investment of amounts allocated to a Participant’s Retirement Account and Profit
Sharing Account shall be subject to the restrictions set forth in this
subsection (iii). No amount attributable to the Retirement Account of any
Participant shall be transferred to the Tellabs Stock Fund pursuant to
subsection (ii) above. Amounts contributed to a Participant’s Profit Sharing
Account after 1992 shall be invested in the Tellabs Stock Fund and no amount
attributable thereto shall be transferred by a Participant from the Tellabs
Stock Fund to any other Fund pursuant to subsection (ii) above prior to the date
such Participant attains age 55. No amount attributable to the Profit Sharing
Account which is transferred from the Tellabs Stock Fund pursuant to the
preceding sentence shall thereafter be transferred to the Tellabs Stock Fund.

Elections under this Section shall be made at such times in accordance with
procedures established by the Administrative Committee. Such elections shall be
effective as of the Entry Date following timely receipt by the Administrative
Committee.

To the extent provided in the Trust, or as may be prescribed by the Investment
Committee, a Participant may direct the Trustee with respect to the voting or
exercise of any other rights with respect to the Funds. Any such directions
shall be made in the manner set forth in the trust agreement or as prescribed by
the Administrative Committee.

Transfer elections to or from the Tellabs Stock Fund (including, for this
purpose, liquidation of amounts held in the Tellabs Stock Fund to fund loans or
in-service withdrawals pursuant to Sections 7.10 (Distribution of Participants’
After-Tax Account and Rollover Account), 7.11 (Loans), 7.12 (Withdrawals Prior
to Termination of Employment and After Age 59-1/2) or 7.13 (Hardship
Withdrawals) below (other than distributions or transactions made in connection
with death, disability, retirement or termination of employment)) made by a
Participant who is subject to the liability provisions of Section 16 of the
Securities Exchange Act of 1934, as amended (the “1934 Act”), shall not be
effective unless such transfer election is made at least six months following
the date of the most recent transfer election made by such Participant under
this Plan, or under any other plan maintained by the Employer, that effected a
“discretionary transaction” within the meaning of Rule 16b-3 promulgated under
Section 16 of the 1934 Act that was an “opposite way” transaction. For this
purpose, a transfer into the Tellabs Stock Fund (or similar fund under another
plan) is an “opposite way” transaction from a transfer or distribution out of
the Tellabs Stock Fund (or similar fund under another plan), and vice versa.

Notwithstanding anything in this Article 5 (Accounting Provisions and
Allocations) to the contrary, amounts contributed by the Employers pursuant to
Article 14 (Retiree Medical Benefits) shall be allocated, invested and
distributed in accordance with the provisions of Article 14 (Retiree Medical
Benefits).

Wherever in this Section 5.2 the term “Participant” is used, it shall be deemed
to include, where applicable, (i) the beneficiary of a deceased Participant who
is entitled to any portion of the deceased Participant’s Accounts, and (ii) an
Alternate Payee under a Qualified Domestic Relations Order described in Code
Section 414(p).

The Plan is intended to constitute a plan described in ERISA Section 404(c) and
Title 29 of Federal Regulations Section 2550.404c-1. To the extent permitted by
law, the fiduciary of the Plan shall be relieved of liability for any losses
which are the direct and necessary result of investment instructions given by
any Participant.

   SECTION 5.3      Unit Values.

The value of a Unit in each Fund on any Valuation Date shall be the quotient
obtained by dividing the sum of (i) the cash and (ii) the fair market value (as
determined by the Trustee) of all securities and other property held in such
Fund, less any charges and expenses accrued and properly chargeable to such Fund
as of said Valuation Date by the aggregate number of Units credited to the
Accounts of all Participants with respect to such Fund. The Trustee will furnish
to the Committees a report with respect to the fair market value of all
securities and other property held in any Fund as of any Valuation Date. To the
extent that any assets of a Fund have been invested in one or more separate
investment trusts, mutual funds, investment contracts or similar investment
media, the net earnings or losses attributable to such investments shall be
determined in accordance with the procedures of such investment media.

The value of each Unit in a Segregated Loan Account shall be equal to one
dollar. The value of any note as of each Valuation Date shall be the amount of
any outstanding principal.

   SECTION 5.4      Eligibility to Share in Employer Contributions and
Forfeitures.

Under the Retirement Program. An Active Participant shall be eligible to share
in the Retirement Contribution and forfeitures for a given quarter of the Plan
Year as of the last day of the quarter for which such contribution or
forfeitures are being allocated if he is then employed by the Employer as an
Eligible Employee. A Participant who, during such quarter, retires on or after
his Normal Retirement Date, dies or is initially deemed to be totally and
permanently disabled in accordance with the Disability Plan shall also be
eligible to share in the Retirement Contribution and forfeitures for such
quarter.

Profit Sharing Contribution Under the Savings Program. An Active Participant
shall be eligible to share in the Profit Sharing Contribution and forfeitures
for a given quarter of the Plan Year as of the last day of the quarter for which
such contribution or forfeitures are being allocated if he is then employed by
the Employer as an Eligible Employee. An Active Participant who, during a Plan
Year, retires on or after his Normal Retirement Date, dies or is initially
deemed to be totally and permanently disabled in accordance with the Disability
Plan, shall also be eligible to share in the Profit Sharing Contribution and
forfeitures for said Plan Year. The Participants eligible to share in the Profit
Sharing Contribution for a given Plan Year under subsection 3.3(b) above shall
be as the Board of Directors shall determine in connection with its
determination of the amount of the Profit Sharing Contribution to be made under
subsection 3.3(b) above.

Matching Contribution Under the Savings Program. An Active Participant shall be
eligible to share in the Matching Contribution for a given quarter of the Plan
Year as of the first pay period of the quarter for which such contribution is
being allocated. Eligibility to share in and sharing in the Matching
Contribution shall be subject to the conditions and limitations of Sections 3.6
(Matching Contributions Under the Savings Plan) and 3.7 (Limitations on Matching
Conditions Under the Savings Plan).

A Participant eligible to share in the Matching Contribution, the Retirement
Contribution and/or Profit Sharing Contribution pursuant to the above
subsections (a), (b) and/or (c) shall for purposes of such paragraphs be known
as an “Eligible Participant.”

   SECTION 5.5      Allocation of Before-Tax Contributions. The Before-Tax
Contributions made on behalf of a Participant shall be allocated to such
Participant’s Before-Tax Account as soon as practicable after the Trustee
receives such contribution.

   SECTION 5.6      Allocation of Matching Contributions. The portion of
Matching Contributions made on a bi-weekly payroll basis shall on behalf of a
Participant be allocated to the Matching Account of such Participant as soon as
practicable after the Trustee receives such contribution.

   SECTION 5.7      Allocation of After-Tax Contributions. While After-Tax
Contributions are not allowed after January 1, 1994, for those Participants who
still have an After-Tax Account then as of each Valuation Date, the earnings and
interest on the After-Tax Contributions of a Participant received since the
prior Valuation Date shall be allocated to such Participant’s After-Tax Account.

   SECTION 5.8      Allocation of Retirement Contribution and Forfeitures. As of
the last day of a Plan Year, the Retirement Contribution (together with the
forfeitures taken into account in determining the Retirement Contribution under
Section 3.2 (Retirement Contribution Under the Retirement Program), shall be
allocated among the Retirement Accounts of all Eligible Participants under
subsection 5.4(a) in the ratio that the Considered Compensation of each such
Participant for such Plan Year bears to the Considered Compensation of all such
Participants for such Plan Year.

   SECTION 5.9      Allocation of Profit Sharing Contribution and Forfeitures.
As of the last day of each quarter of a Plan Year, the Profit Sharing
Contribution (together with the forfeitures taken into account in determining
the Profit Sharing Contribution under subsection 3.3(a)) above shall be
allocated among the Profit Sharing Accounts of all Eligible Participants under
subsection 5.4(b) above in the ratio that the Considered Compensation of each
such Participant for such quarter bears to the Considered Compensation of all
such Participants for such quarter of the Plan Year. As of the last day of each
Plan Year, the portion of the Profit Sharing Contribution under subsection
3.3(b) above, if any, to be allocated for the Plan Year shall be allocated among
the Profit Sharing Accounts of all Eligible Participants under subsection 5.4(b)
above in the manner prescribed by the Board of Directors with respect to such
Profit Sharing Contribution.

   SECTION 5.10      Crediting Accounts.

All contributions or Rollover Amounts to the Trust made by or on behalf of a
Participant shall be deposited in the form of cash or other assets acceptable to
the Trustee and consistent with the investment Funds then maintained, including,
but not limited to, securities of Tellabs, Inc. and shall be credited to the
appropriate Accounts of such Participant as of the date received by the Trust
Fund; provided, however, any contributions made with respect to a Plan Year
shall be credited to the appropriate Accounts of such Participant as of the last
day of such Plan Year.

For each amount allocable to the Accounts of any Participant with respect to any
Fund, his Accounts with respect thereto shall be credited with a number of Units
equal to the quotient obtained by dividing such amount by the value of a Unit,
determined as of the applicable Valuation Date.

The Administrative Committee shall also establish and maintain an Account with
respect to each Segregated Loan made to a Participant pursuant to Section 7.11
(Loans). The Participant’s Segregated Loan Account shall be credited with a
number of Units determined in accordance with Section 5.3 (Unit Values) and
equal to the value of any notes held by the Account. A number of Units equal to
the value of any principal payments by the Participant to the Segregated Loan
Account shall be promptly charged to the Segregated Loan Account and transferred
along with any interest payments to the separate investment Funds in accordance
with the Participant’s investment election then in effect under Section 5.2
(Common Fund).

   SECTION 5.11      Provisional Annual Addition.    The sum of the amounts
allocated to the Accounts of each Participant pursuant to Sections 5.5
(Allocation of Before-Tax Contributions), 5.6 (Allocation of Matching
Contributions), 5.7 (Allocation of After-Tax Contributions), 5.8 (Allocation of
Retirement Contribution and Forfeitures) and 5.9 (Allocation of Profit Sharing
Contribution and Forfeitures) for a Plan Year shall be known as the “Provisional
Annual Addition” and shall be subject to the limitation on Annual Additions in
Section 5.12 (Limitation on Annual Additions).

   SECTION 5.12      Limitation on Annual Additions.

For the purpose of complying with the restrictions on Annual Additions to
defined contribution plans imposed by Code Section 415, for each Active
Participant during the Plan Year, there shall be computed a Maximum Annual
Addition, which:

for Plan Years effective prior to January 1, 2002, shall be the lesser of:

25% of his Total Compensation for the Plan Year; or

the Defined Contribution Dollar Limitation for the Plan Year.

for Plan Years effective on or after January 1, 2002, except as permitted under
subsection 3.5(a)(ii) above and Code Section 414(v), if applicable, shall be the
lesser of:

100% of his Total Compensation for the Plan Year; or

the Defined Contribution Dollar Limitation for the Plan Year.

The compensation limit referred to in subsection (A) above shall not apply to
any contribution for medical benefits after separation from service (within the
meaning of Code Section 401(h) or Code Section 419A(f)(2)) which is otherwise
treated as an Annual Addition.

If a short Limitation Year is created because of an amendment changing the
Limitation Year to a different 12 consecutive month period, the Maximum Annual
Addition will not exceed the Defined Contribution Dollar Limitation multiplied
by the following fraction:

Number of months in the short Limitation Year

12

The limitation under subsection (a) above shall not apply to any contribution
for medical benefits within the meaning of Code Section 419A(f)(2) after
separation from service which is otherwise treated as an Annual Addition, or any
amount otherwise treated as an Annual Addition under Code Section 415(l)(2).

If the Maximum Annual Addition for a Participant equals or exceeds the
Provisional Annual Addition for that Participant, an amount equal to the
Provisional Annual Addition shall be allocated to the Participant’s respective
Accounts.

If the Provisional Annual Addition exceeds the Maximum Annual Addition for that
Participant, the Provisional Annual Addition shall be reduced as set forth below
until the Provisional Annual Addition as so reduced equals the Maximum Annual
Addition for such Participant:

first, the Tentative Employer Contribution allocable to such Participant’s
respective Accounts shall be reduced by reducing (A) the Supplemental Before-Tax
Contributions, and (B) the Basic Before-Tax Contributions and Matching
Contributions, proportionately, in that order;

second, the Tentative Employer Contribution allocable to such Participant’s
respective Accounts shall be reduced by reducing the Profit Sharing
Contribution; and

third, the Tentative Employer Contribution allocable to such Participant’s
respective Accounts shall be reduced by reducing the Retirement Contribution.

The Provisional Annual Addition remaining after such reductions shall be
allocated to the Participant’s respective Accounts.

Any forfeiture which cannot be allocated under the Plan because of the
application of the above limit shall be carried in the Excess Forfeiture
Suspense Account for such Plan Year. In the next succeeding Plan Year the
amounts included in such Account shall be treated as a forfeiture for such Plan
Year and shall be used to reduce Employer Contributions (as defined in Section
3.1 (Employer Contributions)) for such plan year. Amounts which are included in
the Excess Forfeiture Suspense Account as of the end of a Plan Year shall be
treated as a liability of the Trust Fund. Upon termination of the Plan, amounts
then held in the Excess Forfeiture Suspense Account which cannot be allocated
pursuant to this Section shall revert to the Employer.

The Excess Tentative Employer Contribution is an amount equal to the sum of the
reductions in the Tentative Employer Contribution allocable to the Accounts of
Participants pursuant to subsection (b) above.

Contributions made under Section 2.5 (Qualified Military Service) shall be
treated as Annual Additions for the Plan Year to which they relate instead of
the Plan Year when they are actually made.

ARTICLE 6

Amount of Payments to Participants

   SECTION 6.1       General Rule.    Upon the retirement, disability,
resignation or dismissal of a Participant, he, or in the event of his death, his
beneficiary, shall be entitled to receive from his respective Accounts in the
Trust Fund:

an amount equal to the value of the Units credited to the Participant’s Profit
Sharing Account attributable to pre-1993 contributions, Before-Tax Account,
Matching Account, After-Tax Account, Rollover Account, Coherent Before-Tax
Account, Coherent Rollover Account, Salix Before-Tax Account, Salix Employer
Account and Salix Rollover Account, plus any of the Participant’s Before-Tax
Contributions and After-Tax Contributions made to the Trust Fund but not
included in the Participant’s Units as of such Valuation Date; and

an amount equal to the value of the Units credited to the nonforfeitable portion
of the Participant’s Retirement Account, Post-1992 Profit Sharing Account and
Coherent Employer Account determined as hereafter set forth.

The time and manner of distribution of a Participant’s Accounts shall be
determined in accordance with Article 7 (Distributions).

   SECTION 6.2      Normal Retirement. Any Participant may retire on or after
his Normal Retirement Date, at which date the forfeitable portion, if any, of
his Retirement Account and Post-1992 Profit Sharing Account shall become
nonforfeitable. If the retirement of a Participant is deferred beyond his Normal
Retirement Date, he shall continue in full participation in the Plan and Trust
Fund.

   SECTION 6.3      Death. As of the date any Participant dies while employed by
the Employer or an Affiliate, the forfeitable portion, if any, of his Retirement
Account and Post-1992 Profit Sharing Account shall become nonforfeitable.

   SECTION 6.4      Disability. As of the date any Participant shall be
determined by the Administrative Committee to have become totally and
permanently disabled because of physical or mental infirmity in accordance with
the Disability Plan while in the employ of the Employer or an Affiliate and his
employment shall have terminated, the forfeitable portion, if any, of his
Retirement Account and Post-1992 Profit Sharing Account shall become
nonforfeitable.

   SECTION 6.5      Vesting. A Participant’s interest in his Accounts, other
than his Retirement Account and Post-1992 Profit Sharing Account (and Coherent
Employer Account in accordance with Section 6.6 (Resignation or Dismissal),
shall be nonforfeitable at all times. A Participant who has completed five (5)
or more Years of Service shall have a nonforfeitable interest in his Retirement
Account, and his Post-1992 Profit Sharing Account.

   SECTION 6.6      Resignation or Dismissal. If any Participant shall incur a
Termination Date, prior to the date his Retirement Account and Post-1992 Profit
Sharing Account shall become nonforfeitable in accordance with Section 6.5
(Vesting), other than in circumstances described in Section 6.2 (Normal
Retirement), 6.3 (Death) or 6.4 (Disability), then the Retirement Account and
Post-1992 Profit Sharing Account of such Participant shall be treated as a
forfeiture pursuant to Section 6.7 (Treatment of Forfeitures). The Coherent
Employer Account of any Coherent Participant who shall have incurred a
Termination Date prior to April 1, 1999 and who incurred a forfeiture because
such Account was not 100% nonforfeitable as of such Termination Date shall be
treated as a forfeiture pursuant to Section 6.7 (Treatment of Forfeitures) as if
the Coherent Participant’s termination of employment occurred on April 1, 1999.

   SECTION 6.7      Treatment of Forfeitures.

Upon termination of a Participant’s employment with the Company and all
Affiliates, if his Retirement Account and Post-1992 Profit Sharing Account
become a forfeiture pursuant to Section 6.6 (Resignation or Dismissal), each
Account shall become allocable pursuant to Sections 5.8 (Allocation of
Retirement Contribution and Forfeitures) and 5.9 (Allocation of Profit Sharing
Contribution and Forfeitures), as applicable, at the end of the last day of the
quarter of the Plan Year in which the termination of employment occurred if the
Participant is not then reemployed by the Employer or an Affiliate. Any Coherent
Employer Account treated as a forfeiture on April 1, 1999 pursuant to
Section 6.6 (Resignation or Dismissal) shall be allocable pursuant to
Section 5.9 (Allocation of Profit Sharing Contribution and Forfeitures) as of
June 30, 1999.

If the Participant is reemployed by the Employer or an Affiliate without
incurring a Period of Severance of five consecutive years, the amount of the
forfeitures shall be restored to his Retirement Account, Profit Sharing Account
and Coherent Employer Account as of the last day of the quarter of the Plan Year
in which he is reemployed and shall be deducted from the forfeitures which
otherwise would be allocable as of such date or, to the extent such forfeitures
are insufficient, shall require a supplemental contribution from the Employer.

ARTICLE 7

Distributions

   SECTION 7.1       Commencement and Form of Distributions.

Except as otherwise provided in subsection (g) below a Participant (and, when
applicable for distributions from the Retirement Account, the Participant’s
spouse) must consent, in writing to any distribution of the Participant’s
Accounts in the Trust Fund. Distribution of a Participant’s Accounts in the
Trust Fund shall commence not later than the first to occur of:

the 60th day after the close of the later of the Plan Year in which the
Participant attains his Normal Retirement Date or terminates employment with the
Company and all Affiliates, unless the Participant has requested to defer the
distribution to a later date; or

on or as soon as practicable after the date set forth in the Participant’s
request for distribution, provided the Administrative Committee informs the
Participant, as outlined in subsection 7.1(i) below, that the Participant has a
right for a period of at least 30 days after receiving the notice to consider
the decision of whether or not to elect a distribution (and a particular
distribution option).

A Participant who continues employment after his Normal Retirement Date may
elect to receive distribution of his Accounts in the manner described in
subsection (a)(i) above. A Participant employed by an Employer after his Normal
Retirement Date will be deemed to have requested a deferral, unless he
specifically requests a distribution.

In all events, distribution shall commence no later than the Required Beginning
Date, and subsequent distributions required to be made each year for compliance
with Code Section 401(a)(9) and the regulations promulgated thereunder shall be
made no later than December 31 of such year. However, in the event that a
domestic relations order is received by the Administrative Committee, required
distributions on or after the required beginning date may be postponed until the
order is determined to be qualified or not pursuant to Section 12.3 (Qualified
Domestic Relations Order).

Form of Distribution for Accounts other than the Retirement Account:

Effective for distributions made on or after February 1, 2002, the Accounts
distributable to a Participant, other than the Retirement Account, shall be
distributed in one or more of the following ways, as the Participant may request
by filing such notice as shall be prescribed by the Administrative Committee,
and in accordance with applicable laws and regulations:

by payment in a single sum; or

by a direct rollover to an employee’s trust in which he is a participant, which
is described in Code Section 401(a) and which is exempt from tax under Code
Section 501(a), or to an individual retirement arrangement described in Code
Section 408, in accordance with Section 7.14 (Eligible Rollover Distributions).

Effective for distributions prior to February 1, 2002, the Accounts
distributable to a Participant, other than the Retirement Account, shall be
distributed in one or more of the following ways, as the Participant may request
by filing such notice as shall be prescribed by the Administrative Committee,
and in accordance with applicable laws and regulations:

by payment in a single sum;

in substantially equal monthly, quarterly, semi-annual or annual installments
which, except for the final payment, shall not be less than $100; or

by a direct rollover to an employee’s trust in which he is a participant, which
is described in Code Section 401(a) and which is exempt from tax under Code
Section 501(a), or to an individual retirement arrangement described in Code
Section 408, in accordance with Section 7.14 (Eligible Rollover Distributions).

The Retirement Account distributable to a Participant shall be distributed
pursuant to Section 7.2 (Qualified Joint and Survivor Annuity) and 7.3
(Pre-Retirement Survivor Annuity — Retirement Account, Salix Accounts and
Coherent Accounts) of this Article, unless the Qualified Joint and Survivor
Annuity or Survivor Annuity form of distribution are waived and such Account is
distributed pursuant to the Participant’s or Surviving Spouse’s election under
subsection 7.1(d) above.

The value of the Participant’s Accounts shall be paid to the Participant over a
period not to exceed his life expectancy or the joint life expectancy of the
Participant and his Individual Beneficiary. The minimum amount of any
installment distribution and determination of the life expectancy of a
Participant and the joint life expectancy of a Participant and his Individual
Beneficiary shall be determined in accordance with the regulations prescribed
under Code Section 401(a)(9); provided that the life expectancy of a Participant
or his spouse shall be re-determined annually.

In no event shall the amount distributable in any year be less than the amount
determined in accordance with the minimum distribution incidental benefit
requirements of Treasury Regulation Section 1.401(a)(9)-2.

However, with respect to all distributions under the Plan made for calendar
years beginning on or after January 1, 2001, the Plan will apply the minimum
distribution requirements of Code Section 401(a)(9) in accordance with the
regulations under Code Section 401(a)(9) that were proposed on January 17, 2001,
notwithstanding any provision of the Plan to the contrary. This amendment shall
continue in effect until the end of the last calendar year beginning before the
effective date of final regulations under Code Section 401(a)(9) or such other
date as may be specified in guidance published by the Internal Revenue Service.

Notwithstanding anything in this Section 7.1 to the contrary, if the present
value of the nonforfeitable portion of the Participant’s Retirement Account, or
if the vested balance of the Participant’s remaining Accounts does not exceed
$3,500 at the time a distribution is to be made from the Plan (or at the time of
any prior distributions did not exceed $3,500) and distribution pursuant to this
Section 7.1 has not otherwise commenced, the Administrative Committee shall
direct the Trustee to distribute such amount in a single sum payment to the
individual so entitled and the payment thereof shall be in full satisfaction of
any liability of the Trust to such individual. Any Participant whose vested
balance of his Employer Account is 0% shall be deemed to have received a single
sum payment upon termination of employment. Effective with the 1998 Plan Year,
$5,000 shall be substituted wherever $3,500 appears in this subsection (g).
Effective for distributions made on or after March 22, 1999, the $5,000 cash out
amount shall apply at the time a distribution is made, regardless of whether the
Participant’s vested Account balances exceeded $5,000 at the time of any prior
distribution. Effective for distributions made after December 31, 2001, the
present value of a Participant’s nonforfeitable accrued benefit may be
determined without regard to the portion of the benefit that is attributable to
Rollover Contributions (and any earnings allocable to the rollover
contributions). Rollover Contributions are defined as any rollover contribution
under Code Sections 402(c), 403(a)(4), 403(b)(8), 438(d)(3)(A)(ii) and
457(e)(16).

Notwithstanding anything in this Section 7.1 to the contrary, if the amount of
any distribution required to commence on a certain date cannot be ascertained by
such date, a payment retroactive to such date may be made no later than 60 days
after the earliest date on which such amount can be ascertained.

The Administrative Committee shall furnish each Participant who has a vested
interest in a Retirement Account a general written explanation, in a manner that
would satisfy the notice requirements of Sections 1.411(a)-11(c) and
1.417(e)-1(b) of the income tax regulations, of the terms and conditions of the
Qualified Joint and Survivor Annuity, the Participant’s right to make and the
effect of an election to waive it, the rights of the Participant’s spouse, the
Participant’s right to revoke an election to waive the Qualified Joint and
Survivor Annuity and the effect of such a revocation. This general explanation
shall be furnished to a Participant within 90 days before the Participant’s
Annuity Starting Date.

General written explanations under this subsection 7.1(i) shall satisfy the
following requirements:

the Committee informs the Participant that the Participant has a right for a
period of at least 30 days after receiving the general explanation to consider
the decision of whether to waive the Qualified Joint and Survivor Annuity and
consent to another form of distribution,

the Participant may revoke an election to waive the Qualified Joint and Survivor
Annuity until the later of his Annuity Starting Date or the seventh day
following the date the general explanation is provided to the Participant,

the Participant’s Annuity Starting Date is after the date that the general
explanation is given to the Participant, and

the Participant, after receiving the general explanation, affirmatively elects a
form of distribution (with appropriate spousal consent as provided in
subsection 7.2(c) below), and the actual distribution begins more than seven
days after the date the general explanation is provided to the Participant;

However, notwithstanding the foregoing, a Participant may elect an Annuity
Starting Date that is before the date on which the general explanation is
provided to the Participant if the following conditions are met:

the actual distribution begins more than seven days after the date the general
explanation is provided to the Participant; and

the Plan makes retroactive payments to make up for any payments that would have
been made since the Annuity Starting Date.

   SECTION 7.2      Qualified Joint and Survivor Annuity — Retirement Account,
Salix Accounts and Coherent Accounts.

Distributions from a Participant’s Retirement Account and prior to February 1,
2002, his Coherent Accounts shall be made in the form of a Qualified Joint and
Survivor Annuity unless the Participant has elected not to receive a Qualified
Joint and Survivor Annuity pursuant to subsection (c) below. Prior to February
1, 2002, distributions from a Participant’s Salix Accounts may be made in the
form of a Qualified Joint and Survivor Annuity if the Participant makes a
written election requesting such form of distribution to the Administrative
Committee. Distributions from a Participant’s Coherent Accounts or his Salix
Accounts made on or after February 1, 2002, will only be offered in the form of
a lump sum distribution.

Benefits payable in the form of a Qualified Joint and Survivor Annuity shall be
paid by distributing to the Participant an annuity contract purchased by the
Trustee at the direction of the Administrative Committee with the nonforfeitable
balance of the Participant’s Retirement Account, Salix Accounts and Coherent
Accounts determined on the Valuation Date preceding the date of purchase. Any
such annuity contract shall be nonassignable and noncommutable and shall be
subject to the election, consent, written explanation and Survivor Annuity
requirements of this Article 7 (Distributions). Delivery of such contract shall
be in full satisfaction of the rights of the Participant hereunder with respect
to such Account, and upon delivery of any such contract, the Participant shall
not have any interest in the Trust Fund but shall look solely to the insurer
issuing such contract for the payment of benefits.

Elections and revocations of a Qualified Joint and Survivor Annuity shall be
made as follows:

A Participant may, within 90 days before his Annuity Starting Date elect not to
receive a Qualified Joint and Survivor Annuity and, in lieu thereof, elect to
receive distribution of such Account in the same time and manner as distribution
of his other Accounts. Such elections may be revoked and elections and
revocations made at a time after the general explanation in
subsection 7.1(a)(ii) above has been provided, and if so revoked the
Participant’s benefit shall automatically be paid in the form of a Qualified
Joint and Survivor Annuity unless he has elected another form of payment
pursuant to subsection 7.1(d) above.

If a Participant is married on his Annuity Starting Date, to be effective, any
elections hereunder and under subsection 7.3(e) or 7.7(b) below must have the
consent of the Participant’s spouse unless the Participant establishes to the
satisfaction of the Administrative Committee that the consent of the spouse
cannot be obtained because there is no spouse, such spouse cannot be located or
by reason of such other circumstances as may be prescribed by regulations. Any
consent (or establishment that the consent cannot be obtained) shall be
effective only with respect to such spouse. Such consent shall be in writing,
witnessed by a Plan representative or notary public, acknowledging the effect of
the election and any nonspouse beneficiary, including any class of beneficiary
or any contingent beneficiary, designated under the form of benefit elected, and
shall be irrevocable with respect to such form and beneficiary designation.

Notwithstanding the above, the consent of a Participant’s spouse to the waiver
of a Qualified Joint and Survivor Annuity shall not be required if the
Participant was not married throughout the one-year period ending on his Annuity
Starting Date. A Participant who marries within one year before his Annuity
Starting Date and is married to such spouse for a one-year period ending prior
to his death shall be deemed to have been married throughout the one-year period
ending on his Annuity Starting Date.

If the spouse of a Participant dies, or is divorced from the Participant before
the Participant’s Annuity Starting Date, the Participant’s retirement benefit
shall not be reduced in accordance with this Section. If a Participant’s spouse
dies or is divorced from the Participant on or after the Participant’s Annuity
Starting Date, but prior to the death of the Participant, the Qualified Joint
and Survivor Annuity shall continue to be paid in the same reduced amount
determined under this Section.

If the Participant dies before his Annuity Starting Date, no annuity shall be
payable to his spouse pursuant to this Section and the benefit payable to such
spouse, if any, shall be determined under Sections 7.3 (Pre-Retirement Survivor
Annuity — Retirement Account, Salix Accounts and Coherent Accounts), 7.4
(Distributions to Beneficiaries) or 7.6 (Installment or Deferred Distributions).
If the Participant dies after his Annuity Starting Date and while receiving
benefits in the form of a Qualified Joint and Survivor Annuity, the spouse to
whom the Participant was married on his Annuity Starting Date shall, except as
may be otherwise provided in any Qualified Domestic Relations Order, be entitled
to receive the survivor annuity benefit whether or not the Participant and such
spouse are married on the date of the Participant’s death.

   SECTION 7.3      Pre-Retirement Survivor Annuity — Retirement Account, Salix
Accounts and Coherent Accounts

The Retirement Account and prior to February 1, 2002, the Coherent Accounts and
Salix Accounts in the Trust Fund distributable to a Participant who dies prior
to his Annuity Starting Date and who is married on the date of his death shall
be distributed in the form of an annuity for the life of his surviving spouse
(“Pre-Retirement Survivor Annuity”) unless such Participant has elected not to
have benefits paid in the form of a Pre-Retirement Survivor Annuity pursuant to
subsection (e) below or the surviving spouse elects otherwise pursuant to
subsection (d) below. For distributions made from a Participant’s Coherent
Accounts or his Salix Accounts on or after February 1, 2002, only a lump sum
distribution will be offered.

Benefits payable in the form of a Pre-Retirement Survivor Annuity shall be paid
by distributing to the surviving spouse of the Participant an annuity contract
purchased by the Administrative Committee with the nonforfeitable balance of the
Participant’s Retirement Account, Salix Accounts and Coherent Accounts on the
Valuation Date preceding the date of purchase. Such annuity contract shall
provide for level monthly payments for the life of the surviving spouse of the
Participant commencing as soon as practicable thereafter. Any such annuity
contract shall be nonassignable and noncommutable. Delivery of any such contract
shall be in full satisfaction of the rights of the Participant’s spouse.

Payment of the Pre-Retirement Survivor Annuity shall commence as of the first
day of the month coinciding with or next following the latest of:

the date the Participant dies; or

the date the Participant’s surviving spouse elects, but not later than the
Participant’s Normal Retirement Date.

Notwithstanding subsection (b) above, the surviving spouse of a Participant may
elect to receive a distribution of the balance of the deceased Participant’s
Retirement Account, Salix Accounts and Coherent Accounts in a single sum by
filing an election with the Administrative Committee at such time and in such
manner as the Administrative Committee shall provide.

A Participant may elect not to have a Pre-Retirement Survivor Annuity paid to
his surviving spouse. Such election may be made at any time during the Election
Period described in subsection (f) below. In addition, a Participant may elect
to waive the Pre-Retirement Survivor Annuity prior to the Election Period,
provided he has been given the information described in subsection (g) below
prior to making such election, and further provided that such election shall
become invalid as of the first day of the Plan Year in which the Participant
attains age 35. To be effective, any such election shall require the consent of
the Participant’s spouse as provided in subsection 7.2(c). Any such election may
be revoked by the Participant within the Election Period.

The Election Period shall commence on the first day of the Plan Year in which
the Participant attains age 35 and end on the earlier of:

the date of the Participant’s death, or

his Annuity Starting Date.

provided that, in the case of a Participant who separates from service prior to
attaining age 35 and who has a nonforfeitable right to any portion of his
Accounts, the Election Period shall commence on the date of his separation from
service with respect to his Accounts as of such date.

The Administrative Committee shall furnish each Participant a general written
explanation of the terms and conditions of the Pre-Retirement Survivor Annuity,
the Participant’s right to make and the effect of an election to waive it, the
rights of the Participant’s spouse, the Participant’s right to revoke an
election to waive the Pre-Retirement Survivor Annuity and the effect of such
revocation. Such information shall be provided within the period beginning on
the first day of the Plan Year in which the Participant attains age 32, and
ending with the last day of the Plan Year preceding the Plan Year in which the
Participant attains age 35, provided however, that:

If an individual becomes a Participant after attaining age 32, the information
described above shall be provided no later than the close of the second Plan
Year following the date he became a Participant; and

If a Participant separates from service prior to attaining age 35 and has a
nonforfeitable right to any portion of his Retirement Account, Salix Accounts
and Coherent Accounts, the information described above shall be provided to
him/her no later than one year after his separation from service.

   SECTION 7.4      Distributions to Beneficiaries

Except as otherwise provided in this Section 7.4, the balance of a deceased
Participant’s Accounts other than the Retirement Account and prior to February
1, 2002, his Salix Accounts and Coherent Accounts which are distributable to a
beneficiary shall be distributed in one or more of the forms described in
subsection 7.1(d)(i) or 7.1(d)(ii) above, in accordance with an effective
designation filed by the Participant with the Administrative Committee or, if no
such designation has been filed, in one of such forms as the beneficiaries shall
request.

If the distribution of the Participant’s Accounts has begun in accordance with
Section 7.1 (Commencement and Form of Distribution), any form of distribution to
a beneficiary under this Section 7.4 shall be designed to distribute the balance
of the deceased Participant’s Accounts at least as rapidly as under the method
of distribution in effect at the time of the Participant’s death.

If the distribution of a Participant’s Accounts has not commenced at the time of
his death, any form of distribution to a beneficiary shall be designed to
distribute the balance of the deceased Participant’s Accounts as follows:

Any portion of the Accounts payable to or for the benefit of an Individual
Beneficiary may be distributed over a period not to exceed the life expectancy
of such Individual Beneficiary if such payments commence not later than the
December 31 coinciding with or next following the first anniversary of the
Participant’s death, unless such Individual Beneficiary is the surviving spouse
of the Participant, in which case such payments need not commence until the
later of:

the December 31 coinciding with or next following the first anniversary of the
Participant’s death, or

the December 31 of the calendar year in which the Participant would have
attained age 70-1/2.

If the Participant’s surviving spouse is an Individual Beneficiary and dies
prior to the commencement of benefit payments to such spouse, subsection (i)
above shall be applied as if the Participant’s death had occurred on the date of
such spouse’s death.

Unless distribution is made in accordance with subsection (i) or (ii) above, the
balance of the Participant’s Accounts shall be distributed in full no later than
the December 31 coinciding with or next following the 5th anniversary of the
Participant’s death.

If a beneficiary to whom payments have commenced dies prior to receipt of all
such payments, the remaining balance of the Participant’s Accounts shall be
distributed as described in subsection 7.5(d) at least as rapidly as under the
method of distribution in effect at the time of the beneficiary’s death.

The life expectancy of an Individual Beneficiary who is the surviving spouse of
the Participant shall be re-determined annually in accordance with regulations
prescribed under Code Section 401(a)(9).

   SECTION 7.5      Beneficiary Designations.

Unless a Participant has effectively elected otherwise in accordance with this
Section 7.5, the distributable balance of a deceased Participant’s Accounts
shall be paid to his surviving spouse.

The distributable balance of a deceased Participant’s Accounts shall be
distributed to the persons effectively designated by the Participant as his
beneficiaries. To be effective, the designation shall be filed with the
Administrative Committee in such written form as the Administrative Committee
requires and may include contingent or successive beneficiaries; provided that
any designation by a Participant who is married at the time of his death or, if
earlier, the date his benefit payments commence, which fails to name his
surviving spouse as the sole primary beneficiary shall not be effective unless
such surviving spouse has consented to the designation in writing, witnessed by
a Plan representative or notary public, acknowledging the effect of the
designation and the specific non-spouse beneficiary, including any class of
beneficiaries or any contingent beneficiary. Such consent shall be irrevocable
with respect to such beneficiary designation. Such consent shall not be required
if the Participant establishes to the satisfaction of the Administrative
Committee that the consent of the Participant’s spouse cannot be obtained
because there is no spouse, such spouse cannot be located or by reason of such
other circumstances as may be prescribed by regulations. Any consent (or
establishment that the consent cannot be obtained) shall be effective only with
respect to such spouse. Any Participant may change his beneficiary designation
at any time by filing with the Administrative Committee a new beneficiary
designation (with such spousal consent as may be required). Notwithstanding the
foregoing, designation of a beneficiary by a Participant who did not have an
Hour of Service after August 22, 1984, shall not require the consent of his
surviving spouse to be effective.

If a Participant dies, and to the knowledge of the Administrative Committee
after reasonable inquiry leaves no surviving spouse, has not filed an effective
beneficiary designation or has revoked all such designations, or has filed an
effective designation but the beneficiary or beneficiaries predeceased him, the
distributable portion of the Participant’s Accounts shall be paid to the
executor or administrator of the Participant’s estate.

If the beneficiary, having survived the Participant, dies prior to the final and
complete distribution of the Participant’s Accounts, then the distributable
portion of said Accounts shall be paid:

to the beneficiary named in the most recent effective beneficiary designation
filed by the Participant’s original beneficiary in accordance with such
designation; or

if no such beneficiary has been named, to the executor or administrator of the
beneficiary’s estate.

   SECTION 7.6      Installment or Deferred Distributions.    If distribution is
made to a Participant or to the beneficiary of a deceased Participant in
installments or is deferred, the undistributed vested balance shall share in the
net earnings or losses (including the net adjustments in the value of the Trust
Fund) as provided in Section 5.3 (Unit Values) and such Participant or
beneficiary shall be entitled to make elections with respect to the transfer of
such balance among the investment Funds in accordance with Section 5.2 (Common
Fund).

   SECTION 7.7      Form of Elections and Applications for Benefits. Any
election, revocation of an election or application for benefits pursuant to the
Plan shall not be effective unless it is:

made on such form, if any, as the Administrative Committee may prescribe for
such purpose;

signed by the Participant and, if required by subsection 7.2(c) above or Section
7.5 (Beneficiary Designations), by the Participant’s spouse; and

filed with the Administrative Committee.

   SECTION 7.8      Unclaimed Distributions.    In the event any distribution
cannot be made because the person entitled thereto cannot be located and the
distribution remains unclaimed for 2 years after the distribution date
established by the Administrative Committee, then such amount shall be treated
as a forfeiture as of the last day of the Plan Year in which such 2-year period
ended, shall reduce the Retirement Contribution and Profit Sharing Contribution
of such person’s Employer for said Plan Year, and shall be allocated as part of
such Contributions to the Trust Fund in accordance with Section 5.8 (Allocation
of Retirement Contribution and Forefeitures). In the event such person
subsequently files a valid claim for such amount, such amount treated as a
forfeiture (without any earnings thereon) shall be restored to the Participant’s
Accounts by an additional Employer Contribution (as defined in Section 3.1
(Employer Contribution)) allocable to such Accounts.

   SECTION 7.9      Distributions in Kind.    The Administrative Committee
shall, upon request of a Participant or beneficiary, distribute amounts from the
Fund invested in common stock of the Company in shares of such stock, provided
that cash in lieu of any fractional shares shall be distributed. In the event
any distributions to a Participant or beneficiary are made in kind, the assets
so distributed shall be valued at their fair market value as of the distribution
date established by the Administrative Committee.

   SECTION 7.10      Distribution of Participant’s After-Tax Account, Rollover
Account, Salix Rollover Account and Coherent Rollover Accounts Prior to
Termination of Employment.    A Participant, with the written consent of his
spouse if applicable, may direct the Administrative Committee to make the
following payments:

An amount equal to the balance in the Participant’s After-Tax Account as
determined on the Valuation Date coinciding with or immediately preceding such
direction (less any distribution made to the Participant from the Valuation Date
to the date of payment).

An amount not to exceed his After-Tax Account on the Valuation Date coinciding
with or immediately preceding such action provided the Participant limits such
payments to one withdrawal for each Plan Year.

An amount not to exceed the balance in the Participant’s Rollover Contribution
Account, Salix Rollover Account and Coherent Rollover Account, provided that no
such distribution shall reduce the Participant’s Accounts to an amount equal to
the amount of any unpaid loan made pursuant to Section 7.11 (Loans).

Notwithstanding the foregoing:

No distribution pursuant to this Section 7.10 shall be made which reduces the
aggregate balance of the Participant’s Accounts below the amount of the unpaid
balance of any loan pursuant to Section 7.11 (Loans); and

Only one distribution from a Participant’s Rollover Account pursuant to this
Section 7.10 shall be permitted for each Plan Year; and

No more than an aggregate of two distributions from a Coherent Participant’s
Coherent Rollover Account under this Section 7.10 and from any Coherent Account
under Sections 7.12 (Withdrawals Prior to Termination of Employment and After
Age 59-1/2) and 7.13 (Pre-59-1/2 Coherent Account Withdrawals; Hardship
Withdrawals) shall be permitted for each Plan Year. This subsection (iii) shall
expire December 31, 2001.

Distributions pursuant to this Section 7.10 shall be made from the respective
Account invested in the separate Funds. The amounts distributed from such
separate Funds shall be determined pursuant to procedures established by the
Administrative Committee and subject to the limitations or restrictions thereon
imposed by the sponsor(s) of the respective Fund.

Any distribution of a Participant’s After-Tax Account shall be deemed to be made
in the following order:

contributions allocated to the pre-1987 After-Tax sub-account then earnings on
the pre-1987 After-Tax sub-account;

contributions allocated to the post-1986 After-Tax sub-account then earnings on
the post-1986 After-Tax sub-account.

Withdrawals made pursuant to this Section 7.10 from a Coherent Participant’s
Coherent Rollover Account or a Salix Participant’s Salix Rollover Account shall
be subject to the provisions of Section 7.2 (Qualified Joint and Survivor
Annuity - Retirement Account, Salix Accounts and Coherent Accounts.)

Any distribution from a Participant’s Rollover Account, Salix Rollover Account
and Coherent Rollover Account shall be deemed to be made first from the Rollover
Account and then from the Salix Rollover Account or Coherent Rollover Account.

   SECTION 7.11      Loans.

Upon the submission by the Participant of a written loan application form as
prescribed by the Administrative Committee, or any other process approved by the
Administrative Committee, a Participant shall be able to obtain a loan from his
Accounts other than the Retirement Account and his Profit Sharing Account
attributable to post-1992 Profit Sharing Contributions; provided, however, that
if the Administrative Committee reasonably believes that the Participant either
does not intend to repay the loan or lacks proper financial ability to repay the
loan, it shall not grant such a loan. A Participant shall have no more than
three loans outstanding at any time.

Loans shall be an asset of the Participant’s Accounts and shall be treated in
the manner of a segregated account.

The amount of any loan shall not be less than $1,000 and shall not exceed 50% of
the amount which the Participant would be entitled to receive from his Accounts
other than his Retirement Account and his Profit Sharing Account attributable to
post-1992 Profit Sharing Contributions, if he had resigned from the service of
the Employer and all Affiliates on the Valuation Date immediately preceding the
date of such authorization; provided, however, that the Administrative Committee
may, in its sole discretion, approve a loan in an amount less than $1,000 in the
event that a Participant demonstrates financial hardship; provided further,
however, that the amount of such loan shall not exceed $50,000 reduced by the
greater of:

the highest outstanding balance of loans to the Participant from the Trust Fund
during the one-year period ending on the day before the date on which such loan
is made or modified; or

the outstanding balance of loans to the Participant from the Trust Fund on the
date on which such loan is made or modified.

Such loans shall be made available on a reasonably equivalent basis to all
Participants and beneficiaries who have vested Account balances in the Plan and
who either:

are active employees; or

are determined by the Administrative Committee to be “parties in interest” as
that term is defined in ERISA Section 3(14), so long as the making of such loans
does not discriminate in favor of Highly Compensated Employees.

Loans shall be made on such terms as the Administrative Committee may prescribe,
provided that any such loan shall be evidenced by a note, shall bear interest on
the unpaid balance thereof at a reasonable rate per annum to be set from time to
time by the Administrative Committee which is commensurate with the interest
rates charged by persons in the business of lending money for loans which would
be made under similar circumstances, shall bear the loan processing fee as the
Administrative Committee shall from time to time approve and shall be secured by
the Participant’s segregated loan account and such other security as the
Administrative Committee in its discretion deems appropriate.

Repayment:

Loans shall be repaid by the Participant by payroll deduction or any other
method approved by the Administrative Committee that requires level amortization
of principal and the loan fee (which amounts shall be applied to defray the
administrative expenses of the Plan) and repayments not less frequently than
quarterly. Such loans shall be repaid over a period not to exceed 5 years or a
reasonable amount of time as established by the Administrative Committee, not to
exceed 15 years, for loans used to acquire a dwelling unit which within a
reasonable time is to be used as the principal residence of the Participant as
determined under the applicable Code provisions in accordance with procedures
established by the Administrative Committee from time to time. The loan shall be
amortized in substantially equal payments over the term of the loan.

Loan repayments may, however, be suspended during a leave of absence of up to
one year if a Participant’s pay from the Employer is insufficient to service the
debt, but only if the loan is repaid by the latest date permitted under Code
Section 72(p)(2)(B) (which is usually 5 years). The loan will not be considered
in default as provided below during this one year period.

Loan repayments may, as determined by the Administrative Committee, be suspended
under this Plan as permitted under Code Section 414(u) during periods of
Qualified Military Service.

If, at the time benefits are to be distributed (or to commence being
distributed) to a Participant with respect to a separation from service or the
death of the Participant, there remains any unpaid balance of a loan hereunder,
such unpaid balance shall, to the extent consistent with Department of Labor
Regulations, become immediately due and payable in full. Such unpaid balance,
together with any accrued but unpaid interest on the loan, shall be deducted
from the Participant’s Accounts, subject to the default provisions below, before
any distribution of benefits is made, unless the Participant pays back the loan
in full. No loan shall be made or remain outstanding with respect to a
Participant under this Section 7.11 after the time distributions to the
Participant with respect to a separation from service are to be paid.

Default:

Default occurs when any payment of principal or interest is not made as set
forth in the promissory note. In the event of a default, the Participant shall
be given a reasonable opportunity to cure such default. The cure period shall
end not later than the last day of the calendar quarter following the calendar
quarter in which the required installment payment was due.

After the cure period has expired, if such default is not cured, the unpaid
balance of the loan shall become due and payable, will be treated as a deemed
distribution to the Participant. Further, the unpaid balance of such loan,
together with any accrued but unpaid interest on the loan, may in the
Administrative Committee’s discretion be charged against the Participant’s
segregated loan account.

If after the Participant’s segregated loan account has been so charged, there
remains an unpaid balance of any such loan and interest, then the remaining
unpaid balance of such loan shall be charged against any property pledged as
security with respect to such loan.

For any period of time after default during which the Participant’s outstanding
loan balance has not been charged against his segregated loan account, the loan
will be considered to be outstanding for purposes of determining the amount
available for subsequent loans under subsection 7.11(c) above.

   SECTION 7.12      Withdrawals Prior to Termination of Employment and After
Age 59-1/2.

A Participant who has attained age 59-1/2 may elect to withdraw amounts from his
Before-Tax Account, After-Tax Account, Rollover Account, Matching Account, Salix
Before-Tax Account, Salix Rollover Account, Coherent Before-Tax Account and
Coherent Rollover Account as of the Valuation Date coinciding with or
immediately preceding the date of such withdrawal; provided, however, that
during a Plan Year not more than one withdrawal shall be made pursuant to this
Section 7.12; provided, further, for Plan Years starting before December 31,
2001, that during a Plan Year, not more than an aggregate of two withdrawals
shall be made by a Coherent Participant from his Coherent Accounts under this
Section 7.12, Section 7.10 (Distribution of Participants’ After-Tax Account,
Rollover Accounts and Coherent Rollover Account) and Section 7.13 (Pre-59-1/2
Coherent Account Withdrawals; Hardship Withdrawals).

Withdrawals made pursuant to this Section 7.12 shall be charged against the
Participant’s Accounts in the following order:

Pre-1987 After-Tax Account;

Post-1986 After-Tax Account;

Rollover Account;

Matching Account;

Before-Tax Account;

Salix Before-Tax Account or Coherent Before-Tax Account;

Salix Rollover Account or Coherent Rollover Account.

and made from the separate Funds in which such Accounts are invested pursuant to
procedures established by the Administrative Committee, subject to the
limitations or restrictions thereon imposed by the sponsor(s) of the respective
Funds or by Section 5.2 (Common Fund).

   SECTION 7.13      Pre-59-1/2 Coherent Account Withdrawals; Hardship
Withdrawals.

Withdrawals Prior to Age 59-1/2. Effective for Plan Years starting on or after
December 31, 2001, no withdrawals will be allowed for Participants prior to the
age of 59-1/2, except as provided in subsection (b) below. For Plan Years prior
to January 1, 2002, a Coherent Participant who has completed at least five (5)
Years of Services may elect to withdraw all or a portion of his Coherent
Employer Account and Coherent Rollover Account. Withdrawals made pursuant to
this subsection 7.13(a) shall be charged against the Coherent Participants
Coherent Accounts in the following order; provided, however, that during a Plan
Year not more than two withdrawals from a Coherent Participant’s Coherent
Accounts shall be made pursuant to this Section 7.13, Section 7.10 (Distribution
of Participant’s After-Tax Account, Rollover Accounts, Salix Rollover Accounts
and Coherent Rollover Accounts Prior to Termination of Employment) and
Section 7.12 (Withdrawals Prior to Termination of Employment and After Age
59-1/2).

Hardship. A Participant who has not attained age 59-1/2 may, upon the
determination by the Administrative Committee that he has incurred a financial
hardship, make a hardship withdrawal from his Before-Tax Contributions and
Employer Matching Contributions (together with any income allocated to his
Before-Tax Account and Matching Account as of December 31, 1988), After-Tax
Account, Rollover Account, Salix Before-Tax Account, Salix Rollover Account,
Coherent Before-Tax Account and Coherent Rollover Account (but only to the
extent of the pre-tax contributions made and pre-1989 earnings allocated
thereto).

In any case where the Participant claims financial hardship, he shall submit a
written request for such distribution in accordance with procedures prescribed
by the Administrative Committee. The Administrative Committee shall determine
whether the Participant has a financial hardship on the basis of such written
request in accordance with this Section 7.10, and such determination shall be
made in a uniform and nondiscriminatory manner. The Administrative Committee
shall only make a determination of financial hardship if the distribution is
requested on account of an immediate and heavy financial need of the Participant
and the funds to be distributed are necessary to satisfy the Participant’s need,
taking into account any amounts necessary to pay any Federal, state or local
income taxes or penalties reasonably anticipated to result from the
distribution.

The determination of whether a Participant has an immediate and heavy financial
need is to be made by the Administrative Committee on the basis of all the
relevant facts and circumstances. The following expenses shall be deemed to
constitute an immediate and heavy financial need:

expenses for medical care (as described in Code Section 213(d)) previously
incurred by the Participant, the Participant’s spouse or any dependents of the
Participant (as defined in Code Section 152) or necessary for these persons to
obtain such medical care;

the purchase (excluding mortgage payments) of a principal residence for the
Participant;

tuition and related educational fees (including room and board) due for the next
12 months of post-secondary education for the Participant, the Participant’s
spouse, children or dependents;

the need to prevent the eviction of the Participant from his principal residence
or foreclosure on the mortgage of the Participant’s principal residence; or

payments necessary to prevent utility shut off or similar immediate housing
needs, of the Participant, or the Participant’s spouse, children or dependents
(as defined in Code Section 152), payments for child custody or dependent
sponsorship fees and expenses, payments for emergency travel expenses, and other
similar events or expenses determined to be an immediate and heavy financial
need by the Administrative Committee.

The determination of whether a distribution is necessary to satisfy the
immediate and heavy financial need of the Participant shall be made by the
Administrative Committee on the basis of all relevant facts and circumstances.
The Administrative Committee may determine that a distribution is necessary to
satisfy the immediate and heavy financial need of the Participant if the
Participant reasonably demonstrates that all of the following requirements are
satisfied:

the distribution is not in excess of the amount of the immediate and heavy
financial need of the Participant, taking into account any amounts necessary to
pay any federal, state or local income taxes or penalties reasonably anticipated
to result from the distribution;

the Participant has obtained all distributions (other than hardship
distributions), and all nontaxable loans that would not cause a financial
hardship under all of the plans maintained by the Employer or any Affiliate;

the Participant will not make any contributions to any retirement plan (other
than mandatory employee contributions to a defined benefit plan) maintained by
the Employer or any Affiliate for 12 months (6 months effective for hardship
distributions made after December 31, 2001) after receiving the hardship
distribution; and

the Participant’s Before-Tax Contributions to this Plan and to all plans
maintained by the Employer or any Affiliate in the calendar year following the
calendar year of the hardship distribution do not exceed the limitation in Code
Section 402(g)(1) applicable to such following calendar year, minus the amount
of his Before-Tax Contributions for the calendar year of the hardship
distribution.

Any withdrawals under this Section 7.13 shall not reduce the Participant’s
Before-Tax Account below the amount of twice the balance of any outstanding loan
made pursuant to Section 7.11 (Loans).

Withdrawals made pursuant to this Section 7.13 shall be charged against the
respective Accounts invested in the separate Funds. The amounts withdrawn from
such separate Funds shall be determined pursuant to procedures established by
the Administrative Committee and subject to the limitations or restrictions
thereon imposed by the sponsor(s) of the respective Funds.

Withdrawals made pursuant to this Section 7.13 shall be charged against the
Participant’s Accounts in the order provided in subsection 7.12(b) above.

Withdrawals made pursuant to this Section 7.13 from a Coherent Participant’s
Coherent Accounts shall be subject to the provisions of Section 7.2 (Qualifying
Joint and Survivor Annuity — Retirement Account, Salix Accounts and Coherent
Accounts).

   SECTION 7.14      Eligible Rollover Distributions.

Notwithstanding any provision of the Plan to the contrary that would otherwise
limit a distributee’s election under Article 6 (Amount of Payments to
Participants), a distributee may elect, at the time and in the manner prescribed
by the Administrative Committee, to have any portion of an eligible rollover
distribution paid directly to an eligible retirement plan specified by the
distributee in a direct rollover.

Eligible rollover distribution: an eligible rollover distribution is any
distribution of all or any portion of the balance to the credit of the
distributee, except that an eligible rollover distribution does not include: any
distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee’s designated beneficiary, or for a specified
period of ten years or more; any distribution to the extent such distribution is
required under Code Section 401(a)(9); the portion of any distribution that is
not includible in gross income (determined without regard to the exclusion for
net unrealized appreciation with respect to employer securities), beginning with
the 2000 Plan Year, any distribution that is a hardship distribution described
in Code Section 401(k)(2)(B)(i)(IV); and beginning with the 2002 Plan Year, any
distribution which is made upon hardship of the employee.

Eligible retirement plan: an eligible retirement plan is an individual
retirement account described in Code Section 408(a), an individual retirement
annuity described in Code Section 408(b), an annuity plan described in Code
Section 403(a), or a qualified trust described in Code Section 401(a), that
accepts the distributee’s eligible rollover distribution. However, in the case
of an eligible rollover distribution made on or before December 31, 2001 to the
surviving spouse, an eligible retirement plan is an individual retirement
account or individual retirement annuity.

For distributions made on or after January 1, 2002, an eligible retirement plan
shall also mean an annuity contract described in Code Section 403(b) and an
eligible plan under Code Section 457(b) which is maintained by a state,
political subdivision of a state, or any agency or instrumentality of a state or
political subdivision of a state and which agrees to separately account for
amounts transferred into such plan from this Plan. The definition of eligible
retirement plan shall also apply in the case of a distribution to a surviving
spouse, or to a spouse or former spouse who is the Alternate Payee under a
Qualified Domestic Relation Order, as defined in Code Section 414(p).

For distributions made on or after January 1, 2002, a portion of a distribution
shall not fail to be an eligible rollover distribution merely because the
portion consists of After-Tax Contributions which are not includible in gross
income. However, such portion may be transferred only to an individual
retirement account or annuity described in Code Section 408(a) or (b), or to a
qualified defined contribution plan described in Code Section 401(a) or 403(a)
that agrees to separately account for amounts so transferred, including
separately accounting for the portion of such distribution which is includible
in gross income and the portion of such distribution which is not so includible.

Distributee: a distributee includes an employee or former employee. In addition,
the employee’s or former employee’s surviving spouse and the employee’s or
former employee’s spouse or former spouse who is the Alternate Payee under a
Qualified Domestic Relations Order, as defined in Code Section 414(p), are
distributees with regard to the interest of the spouse or former spouse.

Direct rollover: a direct rollover is a payment by the Plan to the eligible
retirement plan specified by the distributee.

   SECTION 7.15      Facility of Payment.    When, in the Administrative
Committee’s opinion, a Participant or beneficiary is under a legal disability or
is incapacitated in any way so as to be unable to manage his affairs, the
Administrative Committee may direct the Trustee to make payments:

directly to the Participant or beneficiary;

to a duly appointed guardian or conservator of the Participant or beneficiary;

to a custodian for the Participant or beneficiary under the Uniform Gifts to
Minors Act;

to an adult relative of the Participant or beneficiary; or

directly for the benefit of the Participant or beneficiary.

Any such payment shall constitute a complete discharge therefor with respect to
the Trustee and the Administrative Committee.

   SECTION 7.16      Claims Procedure.

Any person who believes that he is then entitled to receive a benefit under the
Plan, including one greater than that initially determined by the Administrative
Committee, may file a claim in writing with the Administrative Committee.

The Administrative Committee shall within 90 days of the receipt of a claim
either allow or deny the claim in writing. A denial of a claim shall be written
in a manner calculated to be understood by the claimant and shall include:

the specific reason or reasons for the denial;

specific references to pertinent Plan provisions on which the denial is based;

a description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; and

an explanation of the Plan’s claim review procedure.

A claimant whose claim is denied (or his duly authorized representative) may,
within 60 days after receipt of denial of his claim:

submit a written request for review to the Administrative Committee;

review pertinent documents; and

submit issues and comments in writing.

The Administrative Committee shall notify the claimant of its decision on review
within 60 days of receipt of a request for review. The decision on review shall
be written in a manner calculated to be understood by the claimant and shall
include specific reasons for the decision and specific references to the
pertinent Plan provisions on which the decision is based.

The 90-day and 60-day periods described in subsections (b) and (d) above,
respectively, may be extended at the discretion of the Administrative Committee
for a second 90- or 60-day period, as the case may be, provided that written
notice of the extension is furnished to the claimant prior to the termination of
the initial period, indicating the special circumstances requiring such
extension of time and the date by which a final decision is expected.

Participants and beneficiaries shall not be entitled to challenge the
Administrative Committee’s determinations in judicial or administrative
proceedings without first complying with the procedures in this Article. The
Administrative Committee’s decisions made pursuant to this Section are intended
to be final and binding on Participants, beneficiaries and others. Further, no
legal actions may be commenced with respect to a request by Participant or
Participant’s beneficiary for benefits later than two (2) years after the
Participant or Participant’s beneficiary originally filed his claim for
benefits.

ARTICLE 8

Top-Heavy Plan Requirements

   SECTION 8.1      Top-Heavy Definitions.    For purposes of this Article 8:

For Plan Years prior to January 1, 2002, a “Key Employee” is any current or
former employee (and the beneficiaries of such employee) who at any time during
the Determination Period was an officer of the Employer or an Affiliate if such
individual’s annual compensation exceeds 50% of the defined benefit dollar
limitation in Code Section 415(b)(1)(A), an owner (or considered an owner under
Code Section 318) of one of the 10 largest interests in the Employer if such
individual’s compensation exceeds 100% of the Defined Contribution Dollar
Limitation, a Five-Percent Owner, or a One-Percent Owner of the Employer who has
an annual compensation of more than $150,000. Annual compensation means Total
Compensation plus amounts contributed by the Employer pursuant to a salary
reduction agreement which are excludable from the employee’s gross income under
Code Section 125, 402(e)(3), 402(h)(1)(B) or 403(b).

For Plan Years beginning on or after January 1, 2002, a “Key Employee” is any
employee or former employee (including any deceased employee) who at any time
during the Determination Period was an officer of the Employer having annual
compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for
Plan Years beginning after December 31, 2002), a 5-percent owner of the
Employer, or a 1-percent owner of the Employer having annual compensation of
more than $150,000. For this purpose, annual compensation means compensation
within the meaning of Code Section 415(c)(3).

The determination of who is a Key Employee will be made in accordance with Code
Section 416(i)(1) and the regulations thereunder.

For any Plan Year beginning after December 31, 1983, this Plan is “Top-Heavy” if
any of the following conditions exists:

The Top-Heavy Ratio for this Plan exceeds 60% and this Plan is not part of any
Required Aggregation Group or Permissive Aggregation Group of plans;

This Plan is a part of a Required Aggregation Group of plans but not part of a
Permissive Aggregation Group and the Top-Heavy Ratio for the group of plans
exceeds 60%;

This Plan is a part of a Required Aggregation Group and part of a Permissive
Aggregation Group of plans and the Top-Heavy Ratio for the Permissive
Aggregation Group exceeds 60%.

The “Top-Heavy Ratio” shall be determined as follows:

If the Employer maintains one or more defined contribution plans (including any
Simplified Employee Pension Plan) and the Employer has not maintained any
defined benefit plan which during the 5-year period ending on the Top-Heavy
Determination Date(s) has or has had accrued benefits, the Top-Heavy Ratio for
this Plan alone or for the Required or Permissive Aggregation Group as
appropriate is a fraction, the numerator of which is the sum of the Account
balances of all Key Employees as of the Top-Heavy Determination Date(s)
(including any part of any Account balance distributed in the 5-year period
ending on the Top-Heavy Determination Date(s)), and the denominator of which is
the sum of all Account balances (including any part of any Account balance
distributed in the 5-year period ending on the Top-Heavy Determination Date(s)),
both computed in accordance with Code Section 416 and the regulations
thereunder. Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of the Top-Heavy
Determination Date, but which is required to be taken into account on that date
under Code Section 416 and the regulations thereunder.

If the Employer maintains one or more defined contribution plans (including any
Simplified Employee Pension Plan) and the Employer maintains or has maintained
one or more defined benefit plans which during the 5-year period ending on the
Top-Heavy Determination Date(s) has or has had any accrued benefits, the
Top-Heavy Ratio for any Required or Permissive Aggregation Group as appropriate
is a fraction, the numerator of which is the sum of Account balances under the
aggregated defined contribution plan or plans for all Key Employees, determined
in accordance with subsection (i) above, and the Present Value of accrued
benefits under the aggregated defined benefit plan or plans for all Key
Employees as of the Top-Heavy Determination Date(s), and the denominator of
which is the sum of the Account balances under the aggregated defined
contribution plan or plans for all Participants, determined in accordance with
subsection (i) above, and the Present Value of accrued benefits under the
aggregated defined benefit plan or plans for all Participants as of the
Top-Heavy Determination Date(s), all determined in accordance with Code
Section 416 and the regulations thereunder. The accrued benefits under a defined
benefit plan in both the numerator and denominator of the Top-Heavy Ratio are
increased for any distribution of an accrued benefit made in the 5-year period
ending on the Top-Heavy Determination Date.

For purposes of subsections (i) and (ii) above the value of Account balances and
the Present Value of accrued benefits will be determined as of the most recent
Valuation Date that falls within or ends with the 12-month period ending on the
Top-Heavy Determination Date, except as provided in Code Section 416 and the
regulations thereunder for the first and second plan years of a defined benefit
plan. The Account balances and accrued benefits of a Participant:

who is not a Key Employee but who was a Key Employee in a prior year; or

who has not been credited with at least one Hour of Service with any Employer
maintaining the Plan at any time during the 5-year period ending on the
Top-Heavy Determination Date

will be disregarded. The calculation of the Top-Heavy Ratio, and the extent to
which distributions, rollovers, and transfers are taken into account, will be
made in accordance with Code Section 416 and the regulations thereunder.
Deductible employee contributions will not be taken into account for purposes of
computing the Top-Heavy Ratio. When aggregating plans the value of Account
balances and accrued benefits will be calculated with reference to the Top-Heavy
Determination Date(s) that fall within the same calendar year. The accrued
benefit of a Participant other than a Key Employee shall be determined under
(1) the method, if any, that uniformly applies for accrual purposes under all
defined benefit plans maintained by the Employer, or (2) if there is no such
method, as if such benefit accrued not more rapidly than the slowest accrual
rate permitted under the fractional rule of Code Section 411(b)(1)(C).

The “Present Value” shall be based on an interest assumption of 5% and a
post-retirement mortality assumption based on the UP-1984 Mortality Table.
However, for Plan Years beginning on or after January 1, 2002, see subsection
(f) below.

“Employer” for the purposes of this Article 8 (Top-Heavy Plan Requirements)
means the Employer and all Affiliates except for purposes of determining
ownership under Code Section 416(i)(1).

For Plan Years beginning on or after January 1, 2002, this subsection (f) shall
apply for purposes of determining the present values of accrued benefits and the
amounts of account balances of employees as of the determination date.

Distributions during year ending on the determination date. The present values
of accrued benefits and the amounts of Account balances of an employee at any
time during the Determination Period shall be increased by the distributions
made with respect to the employee under the Plan and any plan aggregated with
the Plan under Code Section 416(g)(2) during the 1-year period ending on the
last day of the Determination Period. The preceding sentence shall also apply to
distributions under a terminated plan which, had it not been terminated, would
have been aggregated with the Plan under Code Section 416(g)(2)(A)(i). In the
case of a distribution made for a reason other than separation from service,
death, or disability, this provision shall be applied by substituting “5-year
period” for “1-year period.”

Employees not performing services during the year ending on the Top Heavy
Determination Date. The accrued benefits and Accounts of any individual who has
not performed services for the Employer during the 1-year period ending on the
Top Heavy Determination Date shall not be taken into Account.

Minimum Benefits. For Plan Years beginning on or after January 1, 2002, Employer
Matching Contributions shall be taken into account for purposes of satisfying
the minimum contribution requirements of Code Section 416(c)(2) and the Plan.
The preceding sentence shall apply with respect to Matching Contributions under
the Plan or, if the Plan provides that the minimum contribution requirement
shall be met in another plan, such other plan. Employer Matching Contributions
that are used to satisfy the minimum contribution requirements shall be treated
as Matching Contributions for purposes of the actual contribution percentage
test and other requirements of Code Section 401(m).

   SECTION 8.2      Top-Heavy Plan Requirements.

Except as otherwise provided in subsections (b) and (c) below, the Profit
Sharing Contributions (exclusive of any Before-Tax Contributions) and
forfeitures allocated on behalf of any Participant who is not a Key Employee
shall not be less than the lesser of three percent of such Participant’s Total
Compensation, or in the case where the Employer has no defined benefit plan
which designates this Plan to satisfy Code Section 401, the largest percentage
of Profit Sharing Contributions (inclusive of any Before-Tax Contributions) and
forfeitures, as a percentage of the Key Employee’s Total Compensation, allocated
on behalf of any Key Employee for that year. The minimum allocation is
determined without regard to any Social Security contribution. This minimum
allocation shall be made even though, under other Plan provisions, the
Participant would not otherwise be entitled to receive an allocation, or would
have received a lesser allocation for the year because of:

the Participant’s failure to complete 1,000 Hours of Service (or any equivalent
provided in the Plan);

the Participant’s failure to make mandatory employee contributions to the Plan;
or

Total Compensation less than a stated amount.

The provision in subsection (a) above shall not apply to any Participant who was
not employed by the Employer or an Affiliate on the last day of the Plan Year.

The provision in subsection (a) above shall not apply to any Participant to the
extent the Participant is covered under any other plan or plans of the Employer
and the Employer’s contribution and forfeitures allocated under such plan or
plans are equal to or exceed the amount required to be allocated under
subsection (a) above.

The minimum allocation required (to the extent required to be nonforfeitable
under Code Section 416(b)) may not be forfeited under Code Section 411(a)(3)(B)
or 411(a)(3)(D).

For any Plan Year in which this Plan is Top-Heavy, the following schedule shall
be substituted for the schedule set forth in Section 6.5 (Vesting), provided
that Section 6.5 (Vesting) shall apply to the extent that the nonforfeitable
percentage thereunder is greater than the following schedule:

Years of Service

Nonforfeitable Percentage

Less than 2

0

2 but less than 3

20

3 but less than 4

40

4 but less than 5

60

5 or more

100

The minimum vesting schedule applies to all benefits within the meaning of Code
Section 411(a)(7) except those attributable to employee contributions, including
benefits accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became Top-Heavy. Further, no decrease in a
Participant’s nonforfeitable percentage may occur in the event the Plan’s status
as Top-Heavy changes for any Plan Year. However, this Section does not apply to
the Account balances of any employee who does not have an Hour of Service after
the Plan has initially become Top-Heavy and such employee’s Account balance
attributable to Profit Sharing Contributions and forfeitures will be determined
without regard to this Section 8.2.

If a Participant has 3 or more Years of Service as of the last day of the Plan
Year for which the vested percentage of his Employer Account was subject to
subsection (e) above, he may elect to have the vested percentage of his Employer
Account determined under subsection (e) above in any subsequent Plan Year when
this Section 8.2 is not applicable.

ARTICLE 9

Powers and Duties of Committees

   SECTION 9.1      Appointment of Committees.

The Board of Directors of the Company shall name an Administrative Committee to
consist of not less than 3 persons to serve as administrator and named fiduciary
of the Plan. The Board of Directors shall also name an Investment Committee
hereunder to review investment performance of the Trust Fund, to establish the
investment policy for the Trustee, to direct investment of the assets of the
Trust Fund and to take such other action provided in this Plan. Any person,
including directors, shareholders, officers and employees of the Employer, shall
be eligible to serve on the Committees. Every person appointed a member of the
Committees shall signify his acceptance in writing to the Board of Directors. In
the event the Board of Directors does not appoint an Administrative Committee
pursuant to this Section 9.1, the Company shall act as the administrator and a
named fiduciary of the Plan and all references to the Administrative Committee
shall mean references to the Company so acting as administrator and a named
fiduciary of the Plan.

Members of the Committees shall serve at the pleasure of the Board of Directors
and may be removed by the Board of Directors at any time with or without cause.
Any member of the Committees may resign by giving ten days advanced written
notice to the Company and other Committee members. Such resignation shall become
effective at delivery or at any later date specified therein. While there is a
vacancy in the membership on a Committee the remaining Committee members shall
have the same powers as the full Committee until the vacancy is filled.

Usual and reasonable expenses of the Committees may be paid in whole or in part
by the Employer and any such expenses not paid by the Employer shall be paid by
the Trustee out of the principal or income of the Trust Fund. The members of the
Committees shall not receive any compensation for their services as such.

   SECTION 9.2      Powers and Duties of Administrative Committee. Except as
otherwise provided in this Article 9, the Administrative Committee shall have
final and binding discretionary authority to control and manage the operation
and administration of the Plan, including all rights and powers necessary or
convenient to the carrying out of its functions hereunder, whether or not such
rights and powers are specifically enumerated herein. In exercising its
responsibilities hereunder, the Administrative Committee may manage and
administer the Plan through the use of agents who may include employees of the
Employer.

Without limiting the generality of the foregoing, and in addition to the other
powers set forth in this Article 9, the Administrative Committee shall have the
following discretionary authorities:

To construe and interpret the Plan, decide all questions of eligibility and
determine the amount, manner and time of payment of any benefits hereunder.

To prescribe procedures and regulations to be followed by Participants or
beneficiaries with respect to the filing of elections, requests, applications
for benefits, consents and waivers, which procedures and regulations may include
the utilization of telephone voice response, internet or intranet systems or
other electronic media as an equivalent means for filing written paper
documents.

To prepare and distribute, in such manner as the Administrative Committee
determines to be appropriate, information explaining the Plan and a
Participant’s or beneficiary’s rights hereunder, which manner may include
utilization of a telephone voice response, internet or intranet system, or other
electronic media as an equivalent means for filing written paper documents.

To request and receive from each Employer, Participants and others such
information as shall be necessary for the proper administration of the Plan.

To furnish the Company upon request such annual and other reports with respect
to the administration of the Plan as are reasonable and appropriate.

To receive, review and maintain on file reports of the financial condition and
of the receipts and disbursements of the Trust Fund from the Trustee.

To fix and determine the respective amounts payable by the Employers pursuant to
Article 3 (Contributions).

To take such action not included within responsibilities allocated to the Board
of Directors, the Investment Committee, or the Trustee under the provisions of
the Plan as may be needed to carry out the orderly administration of the Plan.

To determine all questions relating to the eligibility, benefits and other
rights of employees, Participants and beneficiaries under the Plan.

To allocate fiduciary responsibilities (other than Trustee responsibilities)
among its members and to designate other persons to carry out nonfiduciary and
fiduciary responsibilities (other than Trustee responsibilities).

To take such action as it deems appropriate to correct any errors or omissions
with respect to the administration of the Plan, including but not limited to
causing to be allocated from future Contributions to the Trust Fund or causing
distributions from the Trust Fund to be withheld, accelerated or adjusted in
order to accord to a Participant or beneficiary the allocations to his Accounts
or distributions therefrom to which he is entitled under the Plan.

   SECTION 9.3      Powers and Duties of the Investment Committee.

Except for responsibilities retained by the Board of Directors of the Company,
the Investment Committee shall have the responsibility to (i) review investment
performance of the Trust Fund; (ii) establish investment Funds pursuant to
Section 5.2 (Common Fund); (iii) direct the Trustee with regard to the
investment of assets; and (iv) such other responsibilities as may be delegated
to it by the Board of Directors or pursuant to the Plan or trust agreement.

In connection with these responsibilities, the Investment Committee shall have
the following powers and duties:

to establish investment guidelines and objectives for the investment of the
Trust Fund and each investment Fund as a part thereof, including, but not by way
of limitation, the establishment of additional investment funds or the
consolidation of one or more of the existing funds;

to review the performance of and appoint and dismiss the Trustee;

to receive, review and retain (as it deems convenient or proper) reports of the
investments and the receipts and disbursements of the Trust Fund from the
Trustee and/or any Investment Managers; and

to manage the investment of any assets for which the Investment Committee serves
as investment advisor.

The Investment Committee may, subject to periodic review, (i) allocate or
delegate among its members certain powers, (ii) authorize one or more of its
members or an agent to execute or deliver any instruments or make payment on the
Investment Committee’s behalf, and (iii) utilize the services of agents and
employ persons to perform ministerial, clerical, record-keeping, consulting or
legal services to assist the Investment Committee in the performance of its
duties.

The Investment Committee shall maintain records and accounts showing the fiscal
transactions and performance evaluations of the Trust Fund. At least annually,
the Investment Committee shall submit to the Board a report regarding the
operation of the Trust during the past year and shall also submit such other
reports as the Board shall request.

   SECTION 9.4      Committee Procedures.

Each Committee may adopt such bylaws and regulations as it deems desirable for
the conduct of its affairs.

A majority of the members of each Committee at the time in office shall
constitute a quorum for the transaction of business. All resolutions or other
actions taken by the Committees at any meeting shall be by the vote of the
majority of the members of the Committees present at the meeting. Each Committee
may act without a meeting by written consent of a majority of its members.

Each Committee may elect one of its members as chairman and may appoint a
secretary, who may or may not be a Committee member, and shall advise the
Trustee and the Company of such actions in writing. The secretary shall keep a
record of all actions of the Committees and shall forward all necessary
communications to the Company or the Trustee.

Filing or delivery of any document with or to the secretary of a Committee in
person or by registered or certified mail, addressed in care of the Company,
shall be deemed a filing with or delivery to the Committee.

   SECTION 9.5      Consultation with Advisors.    Each Committee (or any
fiduciary designated by a Committee pursuant to Section 9.9 (Designation of
Other Fiduciaries)) may employ or consult with counsel, actuaries, accountants,
physicians or other advisors (who may be counsel, actuaries, accountants,
physicians or other advisors for the Employer).

   SECTION 9.5      Committee Members as Participants.    Each Committee member
may also be a Participant, but no Committee member shall have power to take part
in any discretionary decision or action affecting his own interest as a
Participant under this Plan unless such decision or action is upon a matter
which affects all other Participants similarly situated and confers no special
right, benefit or privilege not simultaneously conferred upon all other such
Participants.

   SECTION 9.7      Records and Reports.    Each Committee shall take all such
action as it deems necessary or appropriate to comply with governmental laws and
regulations relating to the maintenance of records, notifications to
Participants, registrations with the Internal Revenue Service, reports to the
U.S. Department of Labor and all other requirements applicable to the Plan. At
the end of each Plan Year and such other periods as the Administrative Committee
may determine, the Administrative Committee will provide each Participant with a
statement of the balances in his Accounts.

   SECTION 9.7      Investment Policy.

As provided in Section 9.3 (Powers and Duties of the Investment Committee), the
Investment Committee from time to time shall determine the Plan’s short-term and
long-term financial needs, with which the investment policy of the Trust shall
be appropriately coordinated, and such needs shall be communicated from time to
time to the Trustee, Investment Managers or others having any responsibility for
management and control of the Trust assets.

Subject to the provisions of Section 5.2 (Common Fund) relating to the
investment direction of Participants, and to subsection (c) below, the Trustee
shall have exclusive authority and discretion to manage and control the assets
of the Trust pursuant to an investment policy coordinated with the needs of the
Plan as determined by the Investment Committee.

The Investment Committee may in its discretion manage or may appoint one or more
Investment Managers to manage (including the power to acquire and dispose of)
any assets of the Plan pursuant to an investment policy coordinated with the
needs of the Plan as determined by the Investment Committee, in which event the
Trustee shall not be liable for the acts or omissions of the Investment
Committee or any such Investment Manager or be under an obligation to invest or
otherwise manage any asset of the Plan which is subject to the management of the
Investment Committee or any such Investment Manager except as directed. Any such
Investment Manager shall acknowledge in writing that he is a fiduciary with
respect to the Plan.

The term “Investment Manager” shall mean:

a registered investment adviser under the Investment Advisers Act of 1940, as
amended;

a bank as defined in the Investment Advisers Act of 1940, as amended; or

an insurance company qualified under the laws of more than one state to manage,
acquire and dispose of plan assets.

   SECTION 9.9      Designation of Other Fiduciaries.    Each Committee may
designate in writing other persons to carry out a specified part or parts of its
responsibilities hereunder (including the power to designate other persons to
carry out a part of such designated responsibility), but not including the power
to appoint Investment Managers. Any such designation shall be accepted by the
designated person, who shall acknowledge in writing that he is a fiduciary with
respect to the Plan.

   SECTION 9.10      Obligations of Each Committee.

Each Committee or its properly authorized delegate shall make such
determinations as are necessary to accomplish the purposes of the Plan with
respect to individual Participants or classes of such Participants. The Company
shall notify each Committee of facts relevant to such determinations, including,
without limitation, length of Service, compensation for services, dates of
death, permanent disability, granting or terminating of leaves of absence, ages,
retirement and termination of Service for any reason (but indicating such
reason), and termination of participation. The Company shall also be responsible
for notifying each Committee of any other facts which may be necessary for the
Committee to discharge its responsibilities hereunder.

Each Committee is hereby authorized to act solely upon the basis of such
notifications from the Company and to rely upon any document or signature
believed by the Committee to be genuine and shall be fully protected in so
doing. For the purpose of this Section 9.10, a letter or other written
instrument signed in the name of the Company by any officer thereof shall
constitute a notification from the Company; except that any action by the
Company or its Board of Directors with respect to the appointment or removal of
a member of a Committee or the amendment of the Plan and Trust or the
designation of a group of employees to which the Plan is applicable shall be
evidenced by an instrument in writing, signed by a duly authorized officer or
officers, certifying that said action has been authorized and directed by a
resolution of the Board of Directors of the Company.

Each Committee shall notify the Trustee of its actions and determinations
affecting the responsibilities of the Trustee and shall give the Trustee
directions as to payments or other distributions from the Trust Fund to the
extent they may be necessary for the Trustee to fulfill the terms of the trust
agreement.

Each Committee shall be under no obligation to enforce payment of contributions
hereunder or to determine whether contributions delivered to the Trustee comply
with the provisions hereof relating to contributions, and is obligated only to
administer this Plan pursuant to the terms hereof.

   SECTION 9.11      Indemnification of Each Committee. Each Employer shall
indemnify members of each Committee and its authorized delegates who are
employees of an Employer for any liability or expenses, including attorneys’
fees, incurred in the defense of any threatened or pending action, suit or
proceeding by reason of their status as members of the Committee or its
authorized delegates, to the full extent permitted by the law of the Employer’s
state of incorporation.

ARTICLE 10

Trustee and Trust Fund

   SECTION 10.1      Trust Fund.    A Trust Fund to be known as the Tellabs,
Inc. Profit Sharing and Savings Trust has been established by the execution of a
trust agreement with one or more Trustees and is maintained for the purposes of
this Plan. The assets of the Trust will be held, invested and disposed of by the
Trustee, in accordance with the terms of the Trust, for the benefit of the
Participants and their beneficiaries.

   SECTION 10.2      Payments to Trust Fund and Expenses.    All contributions
hereunder will be paid into and credited to the Trust Fund and all benefits
hereunder and expenses chargeable thereto will be paid from the Trust Fund and
charged thereto.

   SECTION 10.3      Trustee’s Responsibilities.    The powers, duties and
responsibilities of the Trustee shall be as set forth in the trust agreement and
nothing contained in this Plan, either expressly or by implication, shall impose
any additional powers, duties or responsibilities upon the Trustee.

   SECTION 10.4      Reversion to the Employer.    An Employer has no beneficial
interest in the Trust Fund and no part of the Trust Fund shall ever revert or be
repaid to the Employer, directly or indirectly, except that an Employer shall
upon written request have a right to recover:

within one year of the date of payment of a contribution by an Employer, any
amount (less any losses attributable thereto) contributed through a mistake of
fact;

within one year of the date on which any deduction for a contribution by an
Employer under Code Section 404 is disallowed, an amount equal to the amount
disallowed (less any losses attributable thereto);

at the termination of the Plan, any amounts remaining in the Excess Forfeiture
Suspense Account;

upon satisfaction of all liabilities for Medical Benefits arising out of the
operation of Article 14 (Retiree Medical Benefits), any amounts remaining in the
Medical Benefits Account.

ARTICLE 11

Amendment or Termination

   SECTION 11.1      Amendment.    The Company reserves the right to amend this
Plan at any time to take effect retroactively or otherwise, in any manner which
it deems desirable including, but not by way of limitation, the right to
increase or diminish contributions to be made by an Employer hereunder, to
change or modify the method of allocation of its contributions, to change any
provision relating to the distribution or payment, or both, of any assets of the
Trust.

   SECTION 11.2      Termination.    The Company further reserves the right to
terminate this Plan at any time.

   SECTION 11.3      Form of Amendment, Discontinuance of Employer
Contributions, and Termination    Any such amendment, discontinuance of Employer
Contributions (as defined in Section 3.1 (Employer Contributions)) or
termination shall be made only by resolution of the Board of Directors or by an
officer of the Company or by any person so duly authorized by resolution of the
Board of Directors.

   SECTION 11.4      Limitations on Amendments.    The provisions of this
Article 11 are subject to the following restrictions:

Except as provided in Section 10.4 (Reversion to the Employer), no amendment
shall operate either directly or indirectly to give an Employer any interest
whatsoever in any funds or property held by the Trustee under the terms hereof,
or to permit corpus or income of the Trust to be used for or diverted to
purposes other than the exclusive benefit of the Participants and their
beneficiaries.

Except to the extent necessary to conform to the laws and regulations or to the
extent permitted by any applicable law or regulation, no amendment shall operate
either directly or indirectly to deprive any Participant of his nonforfeitable
beneficial interest in his Accounts as they are constituted at the date of the
amendment.

No amendment shall change any vesting schedule unless each Participant who has
completed 3 or more Years of Service is permitted to elect to have the
nonforfeitable percentage of his Employer Account and Matching Account computed
under the Plan without regard to such amendment. The period for making such
election shall commence no later than the date of the adoption of such amendment
and shall expire no earlier than 60 days after the latest of the following
dates:

the date the Plan amendment is adopted; or

the date the Plan amendment becomes effective; or

the date the Participant is issued written notice of the Plan amendment by the
Administrative Committee.

Notwithstanding the foregoing, no election need be offered to a Participant
whose nonforfeitable percentage of his Employer Account and Matching Account
cannot at any time be lower than such percentage determined without regard to
such amendment.

Except as permitted by applicable law, no amendment shall eliminate or reduce an
early retirement benefit or a retirement-type subsidy or eliminate an optional
form of benefit.

   SECTION 11.5      Level of Benefits Upon Merger.    This Plan shall not merge
or consolidate with, or transfer assets or liabilities to, any other plan,
unless each Participant shall be entitled to receive a benefit immediately after
said merger, consolidation or transfer (if such other plan were then terminated)
which shall be not less than the benefit he would have been entitled to receive
immediately before said merger, consolidation or transfer (if this Plan were
then terminated).

   SECTION 11.6      Vesting Upon Termination or Discontinuance of Employer
Contributions; Liquidation of Trust.

This Plan shall be deemed terminated if and only if the Plan terminates by
operation of law or pursuant to Section 11.2 (Termination). In the event of any
termination or partial termination within the meaning of the Code, or in the
event an Employer permanently discontinues the making of contributions to the
Plan, the Retirement Account and Post-1992 Profit Sharing Account of each
affected Participant who is employed by such Employer on the date of the
occurrence of such event shall be nonforfeitable; provided, however, that in no
event shall any Participant or beneficiary have recourse to other than the Trust
Fund for the satisfaction of benefits hereunder.

In the event an Employer permanently discontinues the making of contributions to
the Plan, the Trustee shall make or commence distribution to each Participant or
his beneficiaries of the value of such Participant’s Accounts as provided herein
within the time prescribed in Article 7 (Distributions). However, if, after such
discontinuance, the Company shall determine it to be impracticable to continue
the Trust any longer, the Company may, in its discretion, declare a date to be
the Valuation Date for all Participants whose Valuation Date has not yet
occurred, and the Trustee shall thereupon, as promptly as shall then be
reasonable under the circumstances, liquidate the Trust assets and distribute to
each such Participant his Accounts in the Trust Fund. Such date shall also
constitute the final distribution date for each Participant or beneficiary whose
Accounts are being distributed in installments. Upon completion of such
liquidation and distribution, the Trust shall finally and completely terminate.

The liquidation of the Trust, if any, in connection with any Plan termination
shall be accomplished by the Administrative Committee acting on behalf of the
Company. After directing that sufficient funds be set aside to provide for the
payment of all expenses incurred in the administration of the Plan and the
Trust, to the extent not paid or provided for by the Employer, the
Administrative Committee shall, as promptly as shall then be reasonable under
the circumstances, liquidate the Trust assets and distribute to each Participant
or beneficiary his Accounts in the Trust Fund. Notwithstanding the foregoing, if
the Employer or an Affiliate maintains another defined contribution plan, other
than an employee stock ownership plan (as defined in Code Section 4975(e) or
409) or a Simplified Employee Pension Plan, the Accounts of all Participants
shall be transferred to the other plan; provided, however, that if fewer than 2%
of the Participants in this Plan at the time this Plan is terminated are or were
eligible to participate under such other defined contribution plan at any time
during the 24-month period beginning 12 months before the time of termination, a
Participant’s Accounts shall be transferred to the other plan only if the vested
balance of the Participant’s Accounts exceeds $3,500 and the Participant does
not consent to the distribution of such Accounts. Upon completion of such
liquidation and distribution, the Trust shall finally and completely terminate.
In the event the Administrative Committee is no longer in existence, the actions
to be taken by the Administrative Committee pursuant to this Section shall be
taken by the Trustee. Effective with the 1998 Plan Year, $5,000 shall be
substituted for $3,500 in this subsection (c).

ARTICLE 12

Miscellaneous

   SECTION 12.1      No Guarantee of Employment, Etc.    Neither the creation of
the Plan nor anything contained in the Plan or trust agreement shall be
construed as a contract of employment between the Employer and the Participant
or as giving any Participant hereunder or other employee of the Employer any
right to remain in the employ of an Employer, any equity or other interest in
the assets, business or affairs of the Employer, or any right to complain about
any action taken or any policy adopted or pursued by the Employer.

   SECTION 12.2      Nonalienation.

Except as may be provided in the Plan with respect to loans to Participants, no
Participant shall have any right to sell, assign, pledge, hypothecate,
anticipate or in any way create a lien upon any part of the Trust Fund. Except
to the extent required by law or provided in the Plan, no interest in the Trust
Fund, or any part thereof, shall be assignable in or by operation of law, or be
subject to liability in any way for the debts or defaults of Participants, their
beneficiaries, spouses or heirs-at-law, whether to the Employer or to others.

Prior to the time that distributions are to be made hereunder, the Participants,
their spouses, beneficiaries, heirs-at-law or legal representatives shall have
no right to receive cash or other things of value from an Employer or the
Trustee from or as a result of the Plan and Trust.

   SECTION 12.3      Qualified Domestic Relations Order.    Notwithstanding
anything in this Plan to the contrary, the Administrative Committee shall
distribute a Participant’s Accounts, or any portion thereof, in accordance with
the terms of any domestic relations order entered on or after January 1, 1985,
which the Administrative Committee determines to be a Qualified Domestic
Relations Order described in Code Section 414(p). Further notwithstanding any
other provision of this Plan to the contrary, such distribution of a
Participant’s Accounts, or any portion thereof, to an Alternate Payee under a
Qualified Domestic Relations Order shall, unless such order otherwise provides,
be made in a single sum as soon as administratively practicable after the
Administrative Committee has determined that a domestic relations order is a
Qualified Domestic Relations Order described in Code Section 414(p). No
Qualified Domestic Relations Order shall permit the payment of any benefit in
any amount, form of benefit, time of payment or any option not otherwise
provided; however, to the extent provided in Code Section 414(p), benefits may
be paid to an Alternate Payee in any form in which benefits may be paid to the
Participant (even though the Participant has not separated from Service) as if
he had retired on the date payment is to begin under such Qualified Domestic
Relations Order. The account of any Alternate Payee shall be paid to such
Alternate Payee immediately if the Qualified Domestic Relations Order so states.

   SECTION 12.4      Controlling Law.    To the extent not preempted by the laws
of the United States of America, the laws of the State of Illinois shall be
controlling state law in all matters relating to the Plan.

   SECTION 12.5      Severability. If any provision of this Plan shall be held
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts of this Plan, but this Plan shall be construed and
enforced as if said illegal or invalid provision had never been included herein.

   SECTION 12.6      Notification of Addresses. Each Participant and each
beneficiary eligible for benefits under this Plan shall file with the
Administrative Committee from time to time in writing his post-office address
and each change of post-office address. Any communication, statement or notice
addressed to the last post-office address filed with the Administrative
Committee, or if no such address was filed with the Administrative Committee,
then to the last post-office address of the Participant or beneficiary as shown
on an Employer’s records, will be binding on the Participant and his beneficiary
for all purposes of this Plan and neither the Administrative Committee nor the
Employer shall be obliged to search for or ascertain the whereabouts of any
Participant or beneficiary, nor shall any Employer, Committee, director,
officer, employee or agent of any of them be liable for any loss, cost or
expense associated with any Participant’s or beneficiary’s failure to so file
such Participant’s or beneficiary’s address with the Administrative Committee.

   SECTION 12.7      Gender and Number. Whenever the context requires or
permits, the gender and number of words shall be interchangeable.

ARTICLE 13

Adoption by Affiliates

   SECTION 13.1      Adoption of Plan.    Subject to any resolution or terms of
any agreement approved by the Board of Directors of the Company or a Committee
thereof to the contrary, any Affiliate may adopt this Plan for the benefit of
its eligible employees if authorized to do so by the Board of Directors of the
Company. Such adoption shall be by resolution of such Affiliate’s board of
directors, a certified copy of which shall be filed with the Company, the
Administrative Committee and the Trustee. Upon such adoption, such Affiliate
shall become an “Employer.”

   SECTION 13.2      The Company as Agent for Employer    Each Employer which
has adopted this Plan pursuant to Section 13.1 (Adoption of Plan) hereby
irrevocably gives and grants to the Company full and exclusive power conferred
upon it by the terms of the Plan and Trust to take or refrain from taking any
and all action which such Employer might otherwise take or refrain from taking
with respect to the Plan, including sole and exclusive power to exercise,
enforce or waive any rights whatsoever which such Employer might otherwise have
with respect to the Trust, and each such Employer, by adopting this Plan,
irrevocably appoints the Company its agent for such purposes. Neither the
Trustee nor any Committee nor any other person shall have any obligation to
account to any such Employer or to follow the instructions of or otherwise deal
with any such Employer, the intention being that all persons shall deal solely
with the Company as if it were the sole company which had adopted this Plan.
Each such Employer shall contribute such amounts as determined under Article 3
(Contributions).

   SECTION 13.3      Adoption of Amendments.

Any Employer which adopts this Plan pursuant to Section 13.1 (Adoption of Plan)
may amend this Plan with respect to its own employees by resolution of its board
of directors, if authorized to do so by the Board of Directors of the Company or
any person so duly authorized by the Board of Directors of the Company.

Any Employer shall be deemed conclusively to have assented to any amendment of
this Plan by the Company without the necessity of any affirmative action on the
part of such Employer.

   SECTION 13.4      Termination.    Any Employer which adopts this Plan
pursuant to Section 13.1 (Adoption of Plan) may terminate this Plan with respect
to its own employees by resolution of its board of directors, if authorized to
do so by the Board of Directors of the Company, or any person so duly authorized
by the Board of Directors of the Company.

   SECTION 13.5      Data to Be Furnished by Employers.    Each Employer which
adopts this Plan pursuant to Section 13.1 (Adoption of Plan) shall furnish
information and maintain such records with respect to its Participants as called
for hereunder, and its determinations and notifications with respect thereto
shall have the same force and effect as comparable determinations by the Company
with respect to its Participants.

   SECTION 13.6      Joint Employers.    If a Participant receives Considered
Compensation during a Plan Year from more than one Employer, the total amount of
such Considered Compensation shall be considered for the purposes of the Plan,
and the respective Employers shall share in contributions to the Plan on account
of said Participant based on the Considered Compensation paid to such
Participant by the Employer.

   SECTION 13.7      Expenses.    Except to the extent paid by the Employers,
all expenses of the Plan shall be paid from the Trust Fund as the Administrative
Committee from time to time may direct in accordance with the trust agreement.

   SECTION 13.8      Withdrawal.    An Employer may withdraw from the Plan by
giving 60 days’ written notice of its intention to the Company and the Trustee,
unless a shorter notice shall be agreed to by the Company.

   SECTION 13.9      Prior Plans.    If an Employer adopting the Plan already
maintains a defined contribution plan covering employees who will be covered by
this Plan, it may, with the consent of the Company, provide in its resolution
adopting this Plan for the termination of its own plan or for the merger,
restatement and continuation, of its own plan by this Plan. In either case, such
Employer may, subject to the approval of the Company, provide in its resolution
of adoption of this Plan for the transfer of the assets of such plan to the
Trust for this Plan for the payment of benefits accrued under such other plan.

ARTICLE 14

Retiree Medical Benefits

   SECTION 14.1      Medical Benefits Account.    Effective April 1, 1999, there
is created, established and maintained a separate Medical Benefits Account as
part of the Retirement Program for the purposes of providing certain medical
benefits to Eligible Individuals in accordance with this Article 14 and Code
Section 401(h).

   SECTION 14.2      Retiree Medical Benefits Definitions.    For purposes of
this Article 14, the following definitions shall apply:

Dependent. The term “Dependent” shall mean any individual who is entitled to
benefits under the Health Plan as a dependent of an eligible retiree provided
that such individual is a “dependent” within the meaning of Code Section 152.

Eligible Individual. The term “Eligible Individual” shall mean an Eligible
Retiree or a Dependent.

Eligible Retiree. The term “Eligible Retiree” shall mean an individual who:

is a Participant in the Retirement Program and who retires under circumstances
which entitle the Participant to receive retiree medical benefits under the
Health Plan; and

is not a Key Employee (as defined in Code Section 416(i)(1)) at any time during
the current Plan Year and has not been a Key Employee at any time during any
previous Plan Year for which contributions were made to the Medical Benefits
Account.

Health Plan. The term “Health Plan” shall mean Tellabs Retiree Medical Plan, or
such other medical plan maintained by an Employer, but only as such plan relates
to retired individuals and dependents, as such Retiree Medical Plan or plans may
be amended from time to time, and the provisions of such Retiree Medical Plan or
plans are incorporated herein by reference.

Medical Benefits. The term “Medical Benefits” shall mean the benefits specified
and payable under Section 14.6 (Medical Benefits) from the Medical Benefits
Account.

Medical Benefits Account. The term “Medical Benefits Account” shall mean the
separate account established pursuant to Section 14.3 (Separate Account) for
contributions to fund Medical Benefits payable under this Article 14.

   SECTION 14.3      Separate Account.    A Medical Benefits Account shall be
maintained with respect to contributions to fund the benefits payable under this
Article 14, which shall be kept separate (for record-keeping purposes only) from
the amounts contributed to the Retirement Program to fund all other benefits.
The funds in the Medical Benefits Account shall be invested as the Investment
Committee shall determine, and may, but need not be, invested in one or more of
the Funds; provided, however, that in no event shall amounts allocable to the
Medical Benefits Account be invested in the Tellabs Stock Fund.

   SECTION 14.4      Impossibility of Diversion Prior to Satisfaction of All
Liabilities.    Prior to the satisfaction of all liabilities under this
Article 14 to provide for the payment of Medical Benefits, no part of the corpus
or income of the Medical Benefits Account may be used for, or diverted to, any
purpose other than the providing of Medical Benefits or the payment of any
necessary or appropriate expenses attributable to the administration thereof.

   SECTION 14.5      Reversion upon Satisfaction of All Liabilities.    Any
amounts which are contributed to fund Medical Benefits and that remain in the
Medical Benefits Account upon the satisfaction of all liabilities arising out of
the operation of this Article 14 are to be returned to the Employer in
accordance with Section 10.4 (Reversion to the Employer).

   SECTION 14.6      Medical Benefits.    The Medical Benefits payable from the
Medical Benefits Account shall be limited to the payment of medical benefits for
Eligible Individuals under the Health Plan. Notwithstanding any other provision
of this Article 14, the Medical Benefits paid out of the Medical Benefits
Account at any time shall be limited to the amount in such Account. The Medical
Benefits provided under the Health Plan and the contributions by the Employers
to fund said Medical Benefits shall not discriminate in favor of Highly
Compensated Employees.

   SECTION 14.7      Coordination with Health Plan.    Medical Benefits under
the Medical Benefits Account shall be provided by reimbursing, no less
frequently than annually, the Employers or other paying agent under the Health
Plan for amounts not to exceed the aggregate Medical Benefits, as defined in
Section 14.6 (Medical Benefits), for Eligible Individuals.

   SECTION 14.8      Employer Contributions.      All contributions to fund
Medical Benefits provided under the Medical Benefits Account shall be made by
the Employers. The Employers may, in their discretion, contribute to the Medical
Benefits Account amounts which in the aggregate shall not exceed the amount
reasonably estimated to cover the total cost of the Medical Benefits to be
provided hereunder. Such total cost shall be determined in accordance with any
generally accepted actuarial method which is reasonable in view of the
provisions and coverage of the Health Plan, the investment of the Medical
Benefits Account and other applicable considerations. Notwithstanding the
foregoing, Employer contributions to the Medical Benefits Account shall be
limited so that the aggregate actual contributions made to the Medical Benefits
Account shall not exceed 25% of the total aggregate actual contributions made
after April 1, 1999 under the Retirement Program to the Retirement Accounts of
Participants and the Medical Benefit Account. At the time an Employer makes a
contribution to the Retirement Program, it shall designate the portion allocable
to the Medical Benefits Account.

   SECTION 14.9      Reservation of the Right to Terminate Medical
Benefits.    In addition to the rights set forth in Article 11 (Amendment or
Termination), the Employers reserve the right to amend, suspend, curtail or
terminate the Medical Benefits provided hereunder or under the Health Plan at
any time.