EXHIBIT 10.2

TELLABS, INC.

2008 DEFERRED INCOME PLAN

Effective as of January 1, 2008

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

TABLE OF CONTENTS

 

         

Page

Purpose       1 ARTICLE 1    Definitions    1 ARTICLE 2    Selection,
Enrollment, Eligibility    8

2.1

   Selection by Committee    8

2.2

   Enrollment Requirements    8

2.3

   Eligibility; Commencement of Participation    8

2.4

   Termination of Participation and/or Deferrals    8 ARTICLE 3    Deferral
Commitments/Credit to Accounts/Vesting/Measurement Funds/Taxes    9

3.1

   Minimum Deferrals    9

3.2

   Maximum Deferral    9

3.3

   Election to Defer; Effect of Election Form    10

3.4

   Withholding of Annual Deferral Amounts    10

3.5

   Annual Company Contribution Amount    10

3.6

   Annual Restricted Stock Amount    10

3.7

   Annual Restoration Contribution Amount    11

3.8

   Investment of Trust Assets    11

3.9

   Sources of Stock    11

3.10

   Vesting    11

3.11

   Crediting/Debiting of Account Balances    12

3.12

   FICA and Other Taxes    14

3.13

   Distributions    14 ARTICLE 4    In-Service Benefits; Unforeseeable Financial
Emergencies; Withdrawal Election    14

4.1

   In-Service Benefit    14

4.2

   Payment of In-Service Benefit    14

4.3

   Other Benefits Take Precedence Over In-Service    15

4.4

   Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies    15
ARTICLE 5    Retirement Benefit    15

5.1

   Retirement Benefit    15

5.2

   Payment of Retirement Benefit    15

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

5.3

   Settlement in Stock    15

5.4

   Death Prior to Completion of Retirement Benefit    15 ARTICLE 6   
Pre-Retirement Survivor Benefit    16

6.1

   Pre-Retirement Survivor Benefit    16 ARTICLE 7    Termination Benefit    16

7.1

   Termination Benefit    16

7.2

   Payment of Termination Benefit    16 ARTICLE 8    Disability Waiver and
Benefit    16

8.1

   Disability Benefit; Continued Eligibility    16 ARTICLE 9    Changing Payment
Elections    16

9.1

   Permissible Changes    16

9.2

   409A Transition Elections    16 ARTICLE 10    Beneficiary Designation    17

10.1

   Beneficiary    17

10.2

   Acknowledgement    17

10.3

   No Beneficiary Designation    17

10.4

   Doubt as to Beneficiary    17

10.5

   Discharge of Obligations    17 ARTICLE 11    Leave of Absence    18

11.1

   Paid Leave of Absence    18

11.2

   Unpaid Leave of Absence    18 ARTICLE 12    Termination, Amendment or
Modification    18

12.1

   Termination    18

12.2

   Amendment    19

12.3

   Effect of Change in Control    19

12.4

   Plan Agreement    19

12.5

   Effect of Payment    19 ARTICLE 13    Administration    20

13.1

   Committee Duties    20

13.2

   Agents    20

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

13.3

   Binding Effect of Decisions    20

13.4

   Indemnity of Committee    20

13.5

   Employer Information    20 ARTICLE 14    Other Benefits and Agreements    20

14.1

   Coordination with Other Benefits    20 ARTICLE 15    Claims Procedures    21

15.1

   Presentation of Claim    21

15.2

   Notification of Decision    21

15.3

   Review of a Denied Claim    21

15.4

   Decision of Review    21

15.5

   Legal Action    22 ARTICLE 16    Trust    22

16.1

   Establishment of the Trust    22

16.2

   Interrelationship of the Plan and the Trust    22

16.3

   Distributions From the Trust    22 ARTICLE 17    Miscellaneous    22

17.1

   Status of Plan    22

17.2

   Unsecured General Creditor    22

17.3

   Employer’s Liability    23

17.4

   Nonassignability    23

17.5

   Not a Contract of Employment    23

17.6

   Furnishing Information    23

17.7

   Terms    23

17.8

   Captions    23

17.9

   Governing Law    23

17.10

   Notice    23

17.11

   Successors    24

17.12

   Spouse’s Interest    24

17.13

   Validity    24

17.14

   Incompetent    24

17.15

   Court Order    24

17.16

   Distribution in the Event of Taxation    24

17.17

   Insurance    25

17.18

   Legal Fees To Enforce Rights After Change in Control    25

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

TELLABS DEFERRED INCOME PLAN

Effective as of January 1, 2008

Purpose

The purpose of this Plan is to provide specified benefits to a select group of
management and highly compensated Employees and Directors who contribute
materially to the continued growth, development and future business success of
Tellabs, Inc., a Delaware corporation, its subsidiary, Tellabs Operations, Inc.,
and its other subsidiaries, if any, that sponsor this Plan. This Plan shall be
unfunded for tax purposes and for other purposes of Title I of ERISA, and is
intended to comply with the requirements of Code Section 409A and to enable
Participants to take advantage of certain transition rules relating thereto.
This Plan shall supersede in its entirety the Tellabs, Inc. Deferred Income
Plan, effective as of September 2, 2001, as amended. Effective January 1, 2008,
any and all balances accrued by a Participant under such predecessor plan shall
be subject to the terms and conditions of this Plan and shall be referred to as
the “Initial Account Balances.”

ARTICLE 1

Definitions

For purposes of this Plan, unless otherwise clearly apparent from the context,
the following phrases or terms shall have the following indicated meanings:

 

1.1 “Account(s)” shall mean the Account or Accounts maintained on the books of
the Company used solely as a device for the measurement and determination of the
amounts to be paid to a Participant, or his or her designated Beneficiary,
pursuant to this Plan and shall not constitute a separate fund of assets. The
Accounts available for each Participant shall be identified as the Retirement
Account and the In-Service Account.

 

1.2 “Account Balance” shall mean the total amount of money (excluding stock) a
Participant has in an Account or Accounts under the Plan. For a Participant with
both an In-Service Account and a Retirement Account his Account Balance is the
sum of the amounts credited to his Retirement Account and In-Service Account
under this Plan. Participant’s election of a Valuation Fund shall apply to a
Participant’s entire Account Balance unless Participant specifically designates
certain Valuation Funds for the Retirement Account and other Valuation Funds for
the In-Service Account.

 

1.3 “Annual Bonus” shall mean any compensation, in addition to Base Annual
Salary, relating to services performed during any calendar year, whether or not
paid in such calendar year or included on the Federal Income Tax Form W-2 for
such calendar year, payable to a Participant as an Employee under any Employer’s
annual bonus and cash incentive plans, excluding stock options and restricted
stock.

 

1.4 “Annual Company Contribution Amount” shall mean, for any one Plan Year, the
amount determined in accordance with Section 3.5.

 

1.5

“Annual Deferral Amount” shall mean that portion of a Participant’s Base Annual
Salary, Annual Bonus and Directors Fees

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

that a Participant elects to have, and is deferred, in accordance with Article
3, for any one Plan Year. In the event of a Participant’s Retirement, Disability
(if deferrals cease in accordance with Section 8.1), death or a Termination of
Employment prior to the end of a Plan Year, such year’s Annual Deferral Amount
shall be the actual amount withheld prior to such event.

 

1.6

“Annual Installment Method” shall be an annual installment payment over the
number of years selected by the Participant in accordance with this Plan,
calculated as follows: The Account Balance of the Participant shall be
calculated as of the close of business on the last business day of the Plan Year
immediately preceding any annual payment. The amount of the annual installment
shall be calculated by multiplying this balance by a fraction, the numerator of
which is one, and the denominator of which is the remaining number of annual
payments due the Participant. By way of example, if the Participant elects a
10-year Annual Installment Method, the first payment shall be  1/10 of the
Account Balance, calculated as described in this definition. The following year,
the payment shall be 1/9 of the Account Balance, calculated as described in this
definition. Each annual installment shall be paid on or as soon as practical
after the last business day of the applicable year. The Annual Restricted Stock
Amount shall be distributable in shares of actual Stock in the same manner
previously described. However, the Committee may, in its sole discretion, adjust
the annual installments in order to distribute whole shares of actual Stock.

 

1.7 “Annual Restoration Contribution Amount” shall mean, for any one Plan Year,
the amount determined in accordance with Section 3.7.

 

1.8 “Annual Restricted Stock Amount” shall mean, with respect to a Participant
for any one Plan Year, the amount of Restricted Stock Units deferred in
accordance with Section 3.6 of this Plan, calculated using the closing price of
Stock at the end of the business day closest to the date such Restricted Stock
Units would otherwise vest, but for the election to defer.

 

1.9 “Base Annual Salary” shall mean the annual cash compensation relating to
services performed during any calendar year, whether or not paid in such
calendar year or included on the Federal Income Tax Form W-2 for such calendar
year, excluding bonuses, non-standard commissions, overtime, fringe benefits,
stock options, restricted stock, relocation expenses, unused and unpaid excess
vacation days, incentive payments, non-monetary awards, directors fees and other
fees, automobile and other allowances paid to a Participant for employment
services rendered (whether or not such allowances are included in the Employee’s
gross income). Base Annual Salary shall be calculated before reduction for
compensation voluntarily deferred or contributed by the Participant pursuant to
all qualified or non-qualified plans of any Employer, including this Plan, and
shall be calculated to include amounts not otherwise included in the
Participant’s gross income under Code Sections 125, 402(e)(3), 402(h), or 403(b)
pursuant to plans established by any Employer; provided, however, that all such
amounts will be included in compensation only to the extent that, had there been
no such plan, the amount would have been payable in cash to the Employee.

 

1.10 “Beneficiary” shall mean one or more persons, trusts, estates or other
entities, designated in accordance with Article 9, that are entitled to receive
benefits under this Plan upon the death of a Participant.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

1.11 “Beneficiary Designation Form” shall mean the form that may be established
from time to time by the Committee that a Participant completes, signs and
returns to the Committee to designate one or more Beneficiaries.

 

1.12 “Board” shall mean the Board of Directors of the Company.

 

1.13 “Change in Control” shall mean the first to occur of any of the following
events:

 

  (a) Any “person” (as defined in Section 13(d) and 14(d) of the Securities
Exchange Act as amended from time to time, or any successor act thereto,
hereinafter referred to as the “Exchange Act”), excluding for this purpose, the
Company or any Subsidiary of the Company, or any employee benefit plan of the
Company or any Subsidiary of the Company, or any person or entity organized,
appointed or established by the Company for or pursuant to the terms of any such
plan which acquires beneficial ownership of voting securities of the Company, is
or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly of securities of the Company representing twenty
percent (20%) or more of the combined voting power of the Company’s then
outstanding securities; provided, however, that no Change in Control will be
deemed to have occurred as a result of a change in ownership percentage
resulting solely from an acquisition of securities by the Company; and provided
further that no Change in Control will be deemed to have occurred if a person
inadvertently acquires an ownership interest of twenty percent (20%) or more but
then promptly reduces that ownership interest below twenty percent (20%); or

 

  (b) During any two (2) consecutive years (not including any period beginning
prior to the Effective Date), individuals who at the beginning of such two
(2) year period constitute the Board of Directors of the Company and any new
director (except for a director designated by a person who has entered into an
agreement with the Company to effect a transaction described elsewhere in this
definition of Change in Control) whose election by the Board or nomination for
election by the Company’s stockholders was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the period or whose election or nomination for election was
previously so approved (such individuals and any such new director, the
“Incumbent Board”) cease for any reason to constitute at least a majority of the
Board; or

 

  (c)

Consummation of a reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
“Business Combination”), in each case, unless, following such Business
Combination, (i) all or substantially all of the individuals and entities who
were the beneficial owners of outstanding voting securities of the Company
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than fifty percent (50%) of the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the company resulting from such Business
Combination (including, without limitation, a company which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets
either directly or through one or more subsidiaries) in substantially the

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

same proportions as their ownership, immediately prior to such Business
Combination of the outstanding voting securities of the Company; (ii) no person
(excluding any company resulting from such Business Combination or any employee
benefit plan (or related trust) of the Company or such company resulting from
such Business Combination) beneficially owns, directly or indirectly, twenty
percent (20%) or more of, respectively, the then combined voting power of the
then outstanding voting securities of such company except to the extent that
such ownership existed prior to the Business Combination; and (iii) at least a
majority of the members of the board of directors of the company resulting from
such Business Combination were members of the Incumbent Board at the time of the
execution of the initial agreement, or of the action of the Board, providing for
such Business Combination; or,

 

  (d) Approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company; or,

 

  (e) A tender offer (for which a filing has been made with the Securities and
Exchange Commission (“SEC”)) which purports to comply with the requirements of
Section 14(d) of the Exchange Act and the corresponding SEC rules) is made for
the outstanding voting securities of the Company, then the first to occur of:
(i) any time during the offer when the person making the offer owns or has
accepted for payment securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company’s then outstanding
securities, or (ii) three business days before the offer is to terminate unless
the offer is withdrawn first if the person making the offer could own, by the
terms of the offer plus any securities owned by such person, securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company’s then outstanding securities when the offer terminates.

Notwithstanding the foregoing, for purposes of any provision of this Plan for
which a Change in Control is an event which triggers a payment or a change in
the time or form of payments under the Plan, including but not limited to
Article 12 hereof, then solely for such purpose, an event shall not constitute a
Change in Control unless such event is also a “change in control event” as such
term is defined in Treasury Regulation 1.409A-3(i)(5).

 

1.14 “Claimant” shall have the meaning set forth in Section 15.1.

 

1.15 “Code” shall mean the Internal Revenue Code of 1986, as it may be amended
from time to time.

 

1.16 “Code Section 409A” shall mean Section 409A of the Code and applicable
rules, regulations, and guidance issued thereunder.

 

1.17 “Committee” shall mean the committee described in Article 12.

 

1.18 “Company” shall mean Tellabs, Inc., a Delaware corporation, and any
successor to all or substantially all of the Company’s assets or business.

 

1.19

“Deduction Limitation” shall mean the following described limitation on a
benefit that may otherwise be distributable pursuant to the provisions of this
Plan. Except as otherwise provided, this limitation shall be applied to all
distributions that are “subject to the Deduction Limitation” under this Plan. If
an Employer determines in good faith prior to a Change in

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

Control that there is a reasonable likelihood that any compensation paid to a
Participant for a taxable year of the Employer would not be deductible by the
Employer solely by reason of the limitation under Code Section 162(m), then to
the extent deemed necessary by the Employer to ensure that the entire amount of
any distribution to the Participant pursuant to this Plan prior to the Change in
Control is deductible, the Employer may defer all or any portion of a
distribution under this Plan. Any amounts deferred pursuant to this limitation
shall continue to be credited/debited with additional amounts in accordance with
Section 3.11 below, even if such amount is being paid out in installments. The
amounts so deferred and amounts credited thereon shall be distributed to the
Participant or his or her Beneficiary (in the event of the Participant’s death)
at the earliest possible date, as determined by the Employer in good faith, on
which the deductibility of compensation paid or payable to the Participant for
the taxable year of the Employer during which the distribution is made will not
be limited by Section 162(m), or if earlier, the effective date of a Change in
Control. Notwithstanding anything to the contrary in this Plan, the Deduction
Limitation shall not apply to any distributions made after a Change in Control.

 

1.20 “Director” shall mean any member of the Board of Directors of the Employer
who is not also an Employee.

 

1.21 “Director Fees” shall mean the annual fees paid by any Employer, including
retainer fees and meeting fees, as compensation for serving on the Board of
Directors.

 

1.22 “Disability” shall mean when a Participant is (i) unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than twelve (12) months; or (ii) by
reason of any medically determinable physical or mental impairment that can be
expected to result in death or can be expected to last for a continuous period
of not less than twelve (12) months, receiving income replacement benefits for a
period of not less than three (3) months under an accident and health plan
covering employees of the Employer(s).

 

1.23 “Disability Benefit” shall mean the benefit set forth in Article 8.

 

1.24 “Election Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
make an election under the Plan, identifying the element of compensation to
deferred under the terms of this Plan and the appropriate Account to be credited
with respect to such deferral.

 

1.25 “Employee” shall mean a person who is an employee of any Employer.

 

1.26 “Employer(s)” shall mean the Company, Tellabs Operations, Inc. and/or any
other subsidiaries (now in existence or hereafter formed or acquired) that have
been selected by the Board to participate in the Plan and have adopted the Plan
as a sponsor.

 

1.27 “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time.

 

1.28 “Excess/Qualified Benefit Limitations” shall mean the limits set forth in
Code Section 401(a)(17), 401(k) (3) and 402(g), as amended from time to time,
which limit the amount of contributions the Company may make to the Qualified
Program on behalf of a given Participant.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

1.29 “Hourly Salary Rate” shall be determined by dividing the bi-weekly salary
of the Participant on the last day of the Plan Year by eighty (80).

 

1.30 “Initial Account Balance” shall mean, with respect to those Participants
who participated in the Predecessor Deferred Income Plan, the amount initially
credited as of the effective date of this Plan to a Participant’s Retirement
Account and In-Service Account as reasonably determined by the Committee, in its
sole discretion. The sum of the amounts credited to a Participant’s Retirement
Account and the In-Service Account as the Initial Account Balances shall be
equal to the Account Balance as of that same date in the Predecessor Deferred
Income Plan. The Initial Account Balances shall be subject to the terms and
conditions of this Plan and any Participant with an Initial Account Balance
shall have no right to demand distribution of such amounts other than as
provided for herein.

 

1.31 “In-Service Account” shall mean, with respect to each Participant, the
credit on the records of the Employer equal to the Initial Account balance
assigned to the In-Service Account, plus amounts deferred from Base Annual
Salary, and Annual Bonus, or Director Fees, if applicable, except that no
deferral amount shall be credited to an In-Service Account during a Plan Year in
which a distribution is to be made, plus amounts credited in accordance with all
the applicable crediting provisions of this Plan, less any distributions made to
the Participant pursuant to this Plan.

 

1.32 “In-Service Benefit” shall mean the benefit set forth in Section 4.1.

 

1.33 “Key Employee” shall have the meaning set forth in Code Section 409A.

 

1.34 “Participant” shall mean any Employee or Director (i) who is selected to
participate in the Plan, (ii) who elects to participate in the Plan, (iii) who
signs a Plan Agreement, an Election Form and a Beneficiary Designation Form,
(iv) whose signed Plan Agreement, Election Form and Beneficiary Designation Form
are accepted by the Committee, (v) who commences participation in the Plan, and
(vi) whose Plan Agreement has not terminated. A spouse or former spouse of a
Participant shall not be treated as a Participant in the Plan or have an account
balance under the Plan, even if he or she has an interest in the Participant’s
benefits under the Plan as a result of applicable law or property settlements
resulting from legal separation or divorce.

 

1.35 “Plan” shall mean the Tellabs Deferred Income Plan, which shall be
evidenced by this instrument and by each Plan Agreement, as they may be amended
from time to time.

 

1.36 “Plan Agreement” shall mean a written agreement, as may be amended from
time to time, which is entered into by and between an Employer and a
Participant. Each Plan Agreement executed by a Participant and the Participant’s
Employer shall provide for the entire benefit to which such Participant is
entitled under the Plan; should there be more than one Plan Agreement, the Plan
Agreement bearing the latest date of acceptance by the Employer shall supersede
all previous Plan Agreements in their entirety and shall govern such
entitlement. The terms of any Plan Agreement may be different for any
Participant, and any Plan Agreement may provide additional benefits not set
forth in the Plan or limit the benefits otherwise provided under the Plan;
provided, however, that any such additional benefits or benefit limitations must
be agreed to by both the Employer and the Participant.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

1.37 “Plan Year” shall mean a period beginning on January 1 of each calendar
year and continuing through December 31 of such calendar year.

 

1.38 “Pre-Retirement Survivor Benefit” shall mean the benefit set forth in
Article 6.

 

1.39 “Predecessor Deferred Income Plan” shall mean the Tellabs, Inc. Deferred
Income Plan, effective as of September 2, 2001, as amended.

 

1.40 “Qualified Program” shall be the Tellabs Advantage Program, adopted by
Tellabs Operations, Inc., as may be further amended and/or any successor program
thereto.

 

1.41 “Restricted Stock Units” shall mean unvested restricted stock units as
awarded to the Participant under any Company stock incentive or bonus plan
identified therein or by the Committee as being eligible for deferral under the
provisions of this Plan.

 

1.42 “Retirement”, “Retire(s)” or “Retired” shall mean, with respect to an
Employee, severance from employment from all Employers, on or after the
attainment of age fifty-five (55) or such earlier date as approved by the
Committee, for any reason other than death or Disability; and shall mean with
respect to a Director who is not an Employee, severance of his or her
directorships with all Employers on or after such date as determined in the sole
discretion of the Committee.

 

1.43 “Retirement Account” shall mean, with respect to each Participant, a credit
on the records of the Employer equal to the Initial Account balance assigned to
the Retirement Account, plus amounts deferred or credited from Base Annual
Salary, Annual Bonus, Annual Company Contributions Amounts, Annual Restoration
Contribution Amounts, Annual Restricted Stock Amount, or Director Fees, if
applicable, plus amounts credited in accordance with all the applicable
crediting provisions of this Plan, less any distributions made to the
Participant pursuant to this Plan.

 

1.44 “Retirement Benefit” shall mean the benefit set forth in Article 5.

 

1.45 “Stock” shall mean the common stock, $.01 par value per share of Tellabs,
Inc., or any other equity securities of the Company designated by the Committee.

 

1.46 “Termination Benefit” shall mean the benefit set forth in Article 7.

 

1.47 “Termination of Employment” shall mean the severing of employment with all
Employers, or service as a Director of all Employers, voluntarily or
involuntarily, for any reason other than Retirement, Disability, or death. If a
Participant is both an Employee and a Director, a Termination of Employment
shall be determined in the sole discretion of the Committee by reference to the
Participant’s employment status with respect to those accounts attributable to
compensation relating to such employment and separately as a Director for those
accounts attributable to compensation relating to service as a Director.
References herein to “Termination of Employment” are intended to mean a
termination of employment or service as a Director which constitutes a
“separation from service” under Code Section 409A and Treasury Regulation
1.409A-1(h).

 

1.48 “Trust” shall mean the Master Trust Agreement associated with the plan
document as entered into between the Company and the trustee named therein and
as amended from time to time.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

1.49 “Unforeseeable Financial Emergency” shall be determined in accordance with
Treasury Regulation 1.409A-3(i)(3).

 

1.50 “Years of Service” shall mean the total number of years in which a
Participant has been employed by one or more Employers. For purposes of this
definition, “Service” shall have the meaning provided for such term for purposes
of vesting under the Qualified Program, whether or not the Participant is a
participant in such plan.

ARTICLE 2

Selection, Enrollment, Eligibility

 

2.1 Selection by Committee. Participation in the Plan shall be limited to a
select group of management and highly compensated Employees, as determined by
the Committee in its sole discretion. From that group, the Committee shall
select, in its sole discretion, Employees eligible to participate in the Plan.
Directors shall also be Participants in the Plan.

 

2.2 Enrollment Requirements. As a condition to participation, each selected
Employee or Director shall complete, execute and return to the Committee a Plan
Agreement, an Election Form and a Beneficiary Designation Form, all within
thirty (30) days after he or she is selected to participate in the Plan. In
addition, the Committee shall establish from time to time such other enrollment
requirements as it determines in its sole discretion are necessary.

 

2.3 Eligibility; Commencement of Participation. Provided an Employee or Director
selected to participate in the Plan has met all enrollment requirements set
forth in this Plan and required by the Committee, including returning all
required documents to the Committee within the specified time period, that
Employee or Director shall commence participation in the Plan on the first day
of the month following the month in which the Employee or Director completes all
enrollment requirements. If an Employee or a Director fails to meet all such
requirements within the period required, in accordance with Section 2.2, that
Employee or Director shall not be eligible to participate in the Plan until the
first day of the Plan Year following the delivery to and acceptance by the
Committee of the required documents.

 

2.4 Termination of Participation and/or Deferrals. If the Committee determines
in good faith that an Employee no longer qualifies as a member of a select group
of management or highly compensated employees, as membership in such group is
determined in accordance with Sections 201(2), 301(a)(3) and 401(a)(1) of ERISA,
the Committee shall have the right, in its sole discretion, to (i) terminate any
deferral election the Participant has made for the remainder of the Plan Year in
which the Participant’s membership status changes, (ii) prevent the Participant
from making future deferral elections and/or (iii) immediately distribute the
Participant’s then Account Balances as a Termination Benefit and terminate the
Participant’s participation in the Plan.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

ARTICLE 3

Deferral Commitments/Credit to Accounts/Vesting/Valuation Funds/Taxes

 

3.1 Minimum Deferrals.

 

  (a) Base Annual Salary, Annual Bonus and Director Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, Base
Annual Salary, Annual Bonus and/or Director Fees in the following minimum
amount:

 

Deferral

   Minimum
Percentage  

Base Annual Salary and/or Annual Bonus

   1 %

Director Fees

   1 %

If an election is made for less than such minimums, the amount deferred shall be
zero.

 

  (b) Annual Restricted Stock Amount. For each grant of Restricted Stock Units,
a Participant eligible to defer Restricted Stock Units may elect to defer, as
his or her Annual Restricted Stock Amount, Restricted Stock Units in the
following minimum amount:

 

Deferral

   Minimum
Percentage  

Restricted Stock Units

   10 %

If an election is made for less than stated minimum amount, the amount deferred
shall be zero.

 

  (c) Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year of the Plan itself, the
minimum Annual Deferral Percentage shall apply to any Base Annual Salary to be
paid during the remainder of the Plan Year.

 

3.2 Maximum Deferral.

 

  (a) Base Annual Salary, Annual Bonus and Directors Fees. For each Plan Year, a
Participant may elect to defer, as his or her Annual Deferral Amount, Base
Annual Salary, Annual Bonus and/or Directors Fees up to the following maximum
percentages for each deferral elected:

 

Deferral

   Maximum
Amount  

Base Annual Salary

   75 %

Annual Bonus

   100 %

Directors Fees

   100 %

 

  (b) Annual Restricted Stock Amount. For each Plan Year, a Participant who is
eligible to defer Restricted Stock Units may elect to defer, as his or her
Annual Restricted Stock Amount, Restricted Stock Units in the following maximum
percentage:

 

Deferral

   Maximum
Percentage  

Restricted Stock Units

   100 %

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

  (c) Short Plan Year. Notwithstanding the foregoing, if a Participant first
becomes a Participant after the first day of a Plan Year the maximum Annual
Deferral Amount with respect to Base Annual Salary, and/or Director Fees shall
be limited to the amount to be paid during the remainder of the Plan Year.
Annual Bonus deferrals may be done only during open enrollment periods for the
Plan.

 

3.3 Election to Defer; Effect of Election Form.

 

  (a) Plan Years. Subject to Section 9, for each Plan Year, an irrevocable
deferral election for that Plan Year, and such other elections as the Committee
deems necessary or desirable under the Plan, may be made by timely delivering to
the Committee, in accordance with its rules and procedures, before the end of
the Plan Year preceding the Plan Year for which the election is made, a new
Election Form.

 

  (b) Restricted Stock Units. For those Participants eligible to defer
Restricted Stock Units, for an election to defer Restricted Stock Units to be
valid: (i) a separate irrevocable Election Form must be completed and signed by
the Participant, with respect to such Restricted Stock Units during the open
enrollment period for the following Plan Year; and (ii) such Election Form must
be timely delivered to the Committee and accepted by the Committee at least six
(6) months prior to the date such Restricted Stock vests Units vest under the
terms of the award thereof.

 

3.4 Withholding of Annual Deferral Amounts. For each Plan Year, the Base Annual
Salary portion of the Annual Deferral Amount shall be withheld from each
regularly scheduled Base Annual Salary payroll in equal amounts, as adjusted
from time to time for increases and decreases in Base Annual Salary. The Annual
Bonus and/or Directors Fees portion of the Annual Deferral Amount shall be
withheld at the time the Annual Bonus or Directors Fees are or otherwise would
be paid to the Participant, whether or not this occurs during the Plan Year
itself.

 

3.5 Annual Company Contribution Amount. For each Plan Year, an Employer, in its
sole discretion, may, but is not required to, credit any amount it desires to
any Retirement Account under this Plan, which amount shall be for that
Participant the Annual Company Contribution Amount for that Plan Year. The
amount so credited to a Participant may be smaller or larger than the amount
credited to any other Participant, and the amount credited to any Participant
for a Plan Year may be zero, even though one or more other Participants receive
an Annual Company Contribution Amount for that Plan Year. The Annual Company
Contribution Amount, if any, shall be credited as of the last day of the Plan
Year. If a Participant is not employed by an Employer as of the last day of a
Plan Year other than by reason of his or her Retirement or death while employed,
the Annual Company Contribution Amount for that Plan Year shall be zero.

 

3.6 Annual Restricted Stock Unit Amount. Subject to any terms and conditions
imposed by the Committee, eligible Participants may elect to defer, under the
Plan, Restricted Stock Units, which amount shall be for that Participant the
Annual Restricted Stock Amount for that Plan Year. The portion of any Restricted
Stock Units deferred shall, at the time the Restricted Stock Units would
otherwise vest under the terms of the award thereof, but for the election to
defer, be reflected on the books of the Company as an unfunded, unsecured
promise to deliver to the Participant a specific number of actual shares of
Stock in the future.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

3.7 Annual Restoration Contribution Amount. For each Plan Year during which the
Company maintains the Qualified Program, an Employer shall credit a
Participant’s Retirement Account an amount equal to the difference between
(i) the amount the Employer contributed on behalf of such Employee Participant
under the Qualified Program during such Plan Year and (ii) the amount that would
have been contributed by the Employer under the Qualified Program during such
Plan Year without regard to the Excess/Qualified Benefit Limitations, which
amount shall be for that Participant the Annual Restoration Contribution Amount
for that Plan Year. The amount so credited to a Participant may be smaller or
larger than the amount credited to any other Participant, and the amount
credited to any Participant for a Plan Year may be zero, even though one or more
other Participants receive an Annual Restoration Contribution Amount for that
Plan Year. The Annual Restoration Contribution Amount, if any, shall be credited
as soon as practical, but in no event later than the last day of the second
month immediately following the close of the Plan Year. If a Participant is not
employed by an Employer, or is no longer providing services as a Director, as of
the last day of a Plan Year other than by reason of his or her Retirement or
death while employed, the Annual Restoration Contribution Amount for that Plan
Year shall be zero.

 

3.8 Investment of Trust Assets. The Trustee of the Trust shall be authorized,
upon written instructions received from the Committee or investment manager
appointed by the Committee, to invest and reinvest the assets of the Trust in
accordance with the applicable Trust Agreement, including the disposition of
Stock and reinvestment of the proceeds in one or more investment vehicles
designated by the Committee.

 

3.9 Sources of Stock. If Stock is credited under the Plan in the Trust pursuant
to Section 3.6 in connection with a deferral of Restricted Stock Units, the
shares so credited shall be deemed to have originated, and shall be counted
against the number of shares reserved, under such other plan, program or
arrangement.

 

3.10 Vesting.

 

  (a) A Participant shall at all times be 100% vested in his or her Annual
Deferral Amount, and Annual Restricted Stock Amount, and amounts credited
thereon pursuant to Section 3.11.

 

  (b) The Committee, in its sole discretion, will determine over what period of
time and in what percentage increments a Participant shall vest in his or her
Annual Company Contribution Amount and amounts credited thereon pursuant to
Section 3.11. The Committee may credit some Participants with larger or smaller
vesting percentages than other Participants, and the vesting percentage credited
to any Participant for a Plan Year may be zero, even though one or more other
Participants have a greater vesting percentage credited to them for that Plan
Year.

 

  (c) A Participant shall at all times be 100% vested in his or her Annual
Restoration Contribution Amount, and amounts credited thereon pursuant to
Section 3.11.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

  (d) Notwithstanding anything to the contrary contained in this Section 3.10,
in the event of a Change in Control and/or the Participant’s attainment of age
sixty-five (65), a Participant’s Annual Company Contribution Amount, and amounts
credited thereon pursuant to Section 3.11, shall immediately become 100% vested
(if it is not already vested in accordance with the above vesting schedules).

 

3.11 Crediting/Debiting of Account Balances. In accordance with, and subject to,
the rules and procedures that are established from time to time by the
Committee, in its sole discretion, amounts shall be credited or debited to a
Participant’s Account Balance in accordance with the following rules:

 

  (a) Election of Valuation Funds. Subject to the restrictions found in Sections
3.11(d) and 3.11(e) below, a Participant, in connection with his or her initial
deferral election in accordance with Section 3.3(a) above, shall elect, on the
Election Form, one or more Valuation Fund(s) (as described in this
Section 3.11(c) below) to be used to determine the amounts to be credited or
debited to his or her Account Balance for the first day on which the Participant
commences participation in the Plan and continuing thereafter for each
subsequent day in which the Participant participates in the Plan, unless changed
in accordance with the next sentence. Commencing with the first business day
that follows the Participant’s commencement of participation in the Plan and
continuing thereafter for each subsequent day in which the Participant
participates in the Plan, no later than the close of business on such day, the
Participant may (but is not required to) elect, by submitting an Election Form
to the Committee that is accepted by the Committee, to add or delete one or more
Valuation Fund(s) to be used to determine the amounts to be credited or debited
to his or her Account Balance, or to change the portion of his or her Account
Balance allocated to each previously or newly elected Valuation Fund. If an
election is made in accordance with the previous sentence, it shall apply no
later than the close of business on the next business day and continue
thereafter for each subsequent day in which the Participant participates in the
Plan, unless changed in accordance with the previous sentence.

 

  (b) Proportionate Allocation. In making any election described in
Section 3.11(a) above, the Participant shall specify on the Election Form, in
increments of one percentage point (1%), the percentage of his or her Account
Balance to be allocated to a Valuation Fund (as if the Participant was making an
investment in that Valuation Fund with that portion of his or her Account
Balance).

 

  (c) Valuation Funds. The Committee shall designate one or more valuation funds
based on certain mutual or other collective investment funds which, along with
the fund described in Sections 3.11(d) and Section 3.11(e) below, shall
constitute the Valuation Funds. Subject to Sections 3.11(d) and 3.11(e) below,
the Participant may elect one or more of the Valuation Funds for purposes of
crediting additional amounts to his or her Account Balance. As necessary, the
Committee may, in its sole discretion, discontinue, substitute or add a
Valuation Fund. Each such action will take effect as of date determined by the
Committee.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

  (d) Conversion of Restricted Fixed Rate Valuation Fund. For each Participant
who has been credited with an Initial Account Balance in either his or her
Retirement Account or In-Service Account, such portion, if any, of such Initial
Account Balance with respect to which the Restricted Fixed Rate Valuation Fund
under the predecessor Deferred Income Plan was the Valuation Fund as of
December 31, 2007, shall be converted from such Valuation Fund to one or more
other Valuation Funds as the participant may elect; provided, however, that in
the event a Participant shall fail to elect such other Valuation Fund(s), then
the amounts allocated to the Restricted Fixed Rate Fund shall be allocated to
other Valuation Funds (other than the Tellabs, Inc. Stock Unit Fund) as the
Committee shall have determined and communicated to the Participants prior to
January 1, 2008.

 

  (e) Tellabs, Inc. Stock Unit Fund. A Participant’s Annual Restricted Stock
Amount will be automatically reflected in the Tellabs, Inc. Stock Unit Fund as
the Valuation Fund. Participants may not select any other Valuation Fund to be
used with respect to their Annual Restricted Stock Amount, and no other portion
of the Participant’s Accounts can be either initially allocated or re-allocated
to the Tellabs, Inc. Stock Unit Fund.

 

  (f) Crediting or Debiting Method. The performance of each elected Valuation
Fund (either positive or negative) will be determined by the Committee, in its
reasonable discretion, based on the performance of the Valuation Funds
themselves. A Participant’s Account Balance(s) shall be credited or debited on a
daily basis based on the performance of each Valuation Fund selected by the
Participant, as though (i) a Participant’s Account Balance(s) were invested in
the Valuation Fund(s) selected by the Participant, at the closing price on such
date; (ii) the portion of the Annual Deferral Amount, Company Contribution
Amount, Qualifying Gain, Restricted Stock, Units, and/or Annual Restoration
Contribution Amounts, that was actually deferred or contributed during any
business day was invested in the Valuation Fund(s) selected by the Participant
or as otherwise provided by this Section 3.11, in the percentages applicable to
such business day, no later than the close of business on the first business day
after the day on which such amounts are actually deferred or contributed, at the
closing price on such date; and (iii) any distribution made to a Participant
that decreases such Participant’s Account Balance ceased being invested in the
Valuation Fund(s), in the percentages applicable to such business day, no
earlier than one business day prior to the distribution, at the closing price on
such date.

 

  (g) No Actual Investment. Notwithstanding any other provision of this Plan
that may be interpreted to the contrary, the Valuation Funds are to be used for
measurement purposes only, and a Participant’s election of any such Valuation
Fund, the allocation to his or her Account Balance(s) thereto, the calculation
of additional amounts and the crediting or debiting of such amounts to a
Participant’s Account Balance shall not be considered or construed in any manner
as an actual investment of his or her Account Balance in any such Valuation
Fund. In the event that the Company or the Trustee (as that term is defined in
the Trust), in its own discretion, decides to invest funds in any or all of the
Valuation Funds, no Participant shall have any rights in or to such investments
themselves. Without limiting the foregoing, a Participant’s Account Balance(s)
shall at all times be a bookkeeping entry only and shall not represent any
investment made on his or her behalf by the Company or the Trust; the
Participant shall at all times remain an unsecured creditor of the Company.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

3.12 FICA and Other Taxes.

 

  (a) Annual Deferral Amounts. For each Plan Year in which an Annual Deferral
Amount is being withheld from an Employee Participant, the Participant’s
Employer(s) shall withhold from that portion of the Participant’s Base Annual
Salary and Annual Bonus that is not being deferred, in a manner determined by
the Employer(s), the Participant’s share of FICA and other employment taxes on
such Annual Deferral Amount. If necessary, the Committee may reduce the Annual
Deferral Amount in order to comply with this Section 3.12.

 

  (b) Other Amounts. When an Employee Participant becomes vested in a portion of
his or her Annual Company Contribution Amounts, and/or Annual Restoration
Contribution Amounts the Participant’s Employer(s) shall withhold from the
Participant’s Base Annual Salary and/or Annual Bonus that is not deferred, in a
manner determined by the Employer(s), the Participant’s share of FICA and other
employment taxes. If necessary, the Committee may reduce the vested portion of
the Participant’s aforementioned amounts in order to comply with this
Section 3.12.

 

  (c) Annual Restricted Stock Amounts. For each Plan Year in which an Annual
Restricted Stock Amount is being first withheld from an Employee Participant,
the Participant’s Employer(s) shall withhold from that portion of the
Participant’s Base Annual Salary, Bonus, and Restricted Stock Units that are not
being deferred, in a manner determined by the Employer(s), the Participant’s
share of FICA and other employment taxes on such Annual Restricted Stock Amount.
If necessary, the Committee may reduce the Annual Restricted Stock Amount in
order to comply with this Section 3.12.

 

3.13 Distributions. The Participant’s Employer(s), or the trustee of the Trust,
shall withhold from any payments made to a Participant under this Plan all
federal, state and local income, employment and other taxes required to be
withheld by the Employer(s), or the trustee of the Trust, in connection with
such payments, in amounts and in a manner to be determined in the sole
discretion of the Employer(s) and the trustee of the Trust.

ARTICLE 4

In-Service Benefits; Unforeseeable Financial Emergencies;

Withdrawal Election

 

4.1 In-Service Benefit. Subject to the Deduction Limitation, a Participant shall
receive, as an In-Service Benefit, his or her In-Service Account Balance, at the
date specified by the Participant in an Election Form. Notwithstanding the
foregoing, the Participant may subsequently amend one time the intended date of
payment provided that such change complies with Article 9.

 

4.2

Payment of In-Service Benefit. A Participant, in connection with his or her
deferral into the In-Service Account, shall elect

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

on an Election Form to receive the In-Service Benefit in a lump sum or pursuant
to the Annual Installment Method of up to 5 years. The Participant may change
his or her election to an allowable alternative payout period by submitting a
new Election Form to the Committee, provided that any such changes comply with
Article 9. If a Participant does not make any election with respect to the
payment of the In-Service Benefit, then such benefit shall be payable in a lump
sum. The lump sum payment shall be made, or installment payments shall commence,
no later than sixty (60) days after the first day of the month of the Plan Year
selected by the Participant or otherwise provided by this Plan. Any payment made
shall be subject to the Deduction Limitation.

 

4.3 Other Benefits Take Precedence Over In-Service. Should an event occur that
triggers a benefit under Article 5, 6, 7 or 8, the In-Service Account shall not
be paid in accordance with Section 4.1 but shall be paid in accordance with the
other applicable Article.

 

4.4 Withdrawal Payout/Suspensions for Unforeseeable Financial Emergencies. If
the Participant experiences an Unforeseeable Financial Emergency, the
Participant may petition the Committee to (i) suspend any deferrals required to
be made by a Participant to his or her Accounts and/or (ii) receive a partial or
full payout from the Plan. The payout shall not exceed the lesser of the
Participant’s Account Balance(s), calculated as if such Participant were
receiving a Termination Benefit, or the amount reasonably needed to satisfy the
Unforeseeable Financial Emergency. If, subject to the sole discretion of the
Committee, the petition for a suspension and/or payout is approved, suspension
shall take effect upon the date of approval and any payout shall be made within
sixty (60) days of the date of approval. The payment of any amount under this
Section 4.4 shall not be subject to the Deduction Limitation.

ARTICLE 5

Retirement Benefit

 

5.1 Retirement Benefit. Subject to the Deduction Limitation, a Participant who
Retires shall receive, as a Retirement Benefit, his or her Account Balance.

 

5.2 Payment of Retirement Benefit. A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form to
receive the Retirement Benefit in a lump sum or pursuant to the Annual
Installment Method of up to 10 years, or as may otherwise be permitted by the
Committee. The Participant may change his or her election to an allowable
alternative payout period by submitting a new Election Form to the Committee,
provided that any such changes comply with Article 9. If a Participant does not
make any election with respect to the payment of the Retirement Benefit, then
such benefit shall be payable in a lump sum. The lump sum payment shall be made,
or installment payments shall commence, no later than sixty (60) days after the
last day of the Plan Year in which the Participant Retires. Any payment made
shall be subject to the Deduction Limitation.

 

5.3 Settlement in Stock. The portion of the Retirement Account attributable to
the Annual Restricted Stock Amount shall only be satisfied by the distribution
of actual shares of stock.

 

5.4

Death Prior to Completion of Retirement Benefit. If a Participant dies after
Retirement but before the Retirement Benefit is paid in full, the Participant’s
unpaid Retirement Benefit payments shall continue and shall be paid to the
Participant’s

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

Beneficiary over the remaining number of years and in the same amounts as that
benefit would have been paid to the Participant had the Participant survived.

ARTICLE 6

Pre-Retirement Survivor Benefit

 

6.1 Pre-Retirement Survivor Benefit. Subject to the Deduction Limitation, the
Participant’s Beneficiary shall receive a lump sum, Pre-Retirement Survivor
Benefit equal to the Participant’s Account Balance(s) if the Participant dies
before he or she Retires, experiences a Termination of Employment or suffers a
Disability.

ARTICLE 7

Termination Benefit

 

7.1 Termination Benefit. Subject to the Deduction Limitation, the Participant
shall receive a Termination Benefit, which shall be equal to the Participant’s
Account Balance(s) if a Participant experiences a Termination of Employment
prior to his or her Retirement, death or Disability.

 

7.2 Payment of Termination Benefit. The Participant shall receive his or her
Termination Benefit in a lump sum payment no later than thirty (30) days after
the date on which the Committee determines that the Participant is owed such
benefits. Any payment made shall be subject to the Deduction Limitation. If
Participant is a Key Employee payment of his or her Termination Benefit will be
paid no earlier than six months from Termination of Employment.

ARTICLE 8

Disability Waiver and Benefit

 

8.1 Disability Benefit. A Participant who becomes Disabled prior to the
occurrence of an event described in Articles 4, 5, 6 or 7 shall receive his or
her Account Balance in the form of a lump sum within sixty (60) days of the
determination that the Participant is Disabled. Any payment made shall be
subject to the Deduction Limitation.

ARTICLE 9

Changing Payment Elections

 

9.1 Permissible Changes. Subject to Section 9.2, a Participant may make a
one-time change to his or her payment elections under Sections 4.1 (In-Service
Benefit), 4.2 (Payment of In-Service Benefit) and 5.2 (Payment of Retirement
Benefit) by submitting a new Election Form to the Committee provided that
(a) any such Election Form will not be effective for twelve (12) months after
the date the Election Form is submitted to and accepted by the Committee and
(b) the date benefit payments commence to the Participant must be at least five
(5) years after the date benefits would have otherwise commenced under the
payment election in effect prior to such change.

 

9.2

409A Transition Elections. Notwithstanding anything in the Plan to the contrary,
effective through December 31, 2008, each Participant (or Beneficiary) shall be
permitted to make a new payment elections provided that with respect to such

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

 

Participant’s (or Beneficiary’s) Accounts under the Plan, notwithstanding the
timing requirements of Section 9.1 above. Any election pursuant to this
Section 9.2 shall be made at such time and on such Election Form as the
Committee shall determine. With respect to elections made prior to December 31,
2007, any such election shall only apply to benefits amounts that would not
otherwise be payable in 2007 and may not cause an amount to be paid in 2007 that
would not otherwise be payable in 2007. The Committee may permit an election
prior to December 31, 2007 to receive a lump sum payment of the balance of a
Participant’s entire Account as of January 1, 2008 during January 2008. The
Committee may extend to Participants (or Beneficiaries) the opportunity to make
a similar election during 2008, provided any such elections made after
December 31, 2007 but before January 1, 2009, any such elections may only apply
to benefits that would not otherwise be payable in 2008 and may not cause a
benefit to be paid in 2008 that would not otherwise be payable in 2008, and
shall be subject to such other limitations and provisions as the Committee shall
determine.

ARTICLE 10

Beneficiary Designation

 

10.1 Beneficiary. Each Participant shall have the right, at any time, to
designate his or her Beneficiary(ies) (both primary as well as contingent) to
receive any benefits payable under the Plan to a beneficiary upon the death of a
Participant. The Beneficiary designated under this Plan may be the same as or
different from the Beneficiary designation under any other plan of an Employer
in which the Participant participates. The Committee shall be entitled to rely
on the last Beneficiary Designation Form filed by the Participant and accepted
by the Committee (or its designee) prior to his or her death.

 

10.2 Acknowledgment. No designation or change in designation of a Beneficiary
shall be effective until received and acknowledged in writing by the Committee
or its designated agent.

 

10.3 No Beneficiary Designation. If a Participant fails to designate a
Beneficiary as provided in Sections 10.1 and 10.2 above or, if all designated
Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, then the Participant’s designated Beneficiary
shall be deemed to be his or her surviving spouse. If the Participant has no
surviving spouse, the benefits remaining under the Plan to be paid to a
Beneficiary shall be payable to the executor or personal representative of the
Participant’s estate.

 

10.4 Doubt as to Beneficiary. If the Committee has any doubt as to the proper
Beneficiary to receive payments pursuant to this Plan, the Committee shall have
the right, exercisable in its discretion, to cause the Participant’s Employer to
withhold such payments until this matter is resolved to the Committee’s
satisfaction.

 

10.5 Discharge of Obligations. The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the Committee
from all further obligations under this Plan with respect to the Participant,
and that Participant’s Plan Agreement shall terminate upon such full payment of
benefits.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

ARTICLE 11

Leave of Absence

 

11.1 Paid Leave of Absence. If a Participant is authorized by the Participant’s
Employer for any reason to take a paid leave of absence from the employment of
the Employer, the Participant shall continue to be considered employed by the
Employer and the Annual Deferral Amount shall continue to be withheld during
such paid leave of absence in accordance with Section 3.3, unless the Committee
allows an exception pursuant to Section 8.1.

 

11.2 Unpaid Leave of Absence. If a Participant is authorized by the
Participant’s Employer for any reason to take an unpaid leave of absence from
the employment of the Employer, the Participant shall continue to be considered
employed by the Employer and the Participant shall be excused from making
deferrals until the earlier of the date the leave of absence expires or the
Participant returns to a paid employment status. Upon such expiration or return,
deferrals shall resume for the remaining portion of the Plan Year in which the
expiration or return occurs, based on the deferral election, if any, made for
that Plan Year. If no election was made for that Plan Year, no deferral shall be
withheld.

ARTICLE 12

Termination, Amendment or Modification

 

12.1

Termination. Although each Employer anticipates that it will continue the Plan
for an indefinite period of time, there is no guarantee that any Employer will
continue the Plan or will not terminate the Plan at any time in the future.
Accordingly, each Employer reserves the right to discontinue its sponsorship of
the Plan and/or to terminate the Plan at any time with respect to any or all of
its participating Employees and Directors, by action of its board of directors.
Upon the termination of the Plan with respect to any Employer, the Plan
Agreements of the affected Participants who are employed by that Employer, or in
the service of that Employer as Directors, shall terminate and their Account
Balances, determined as if they had experienced a Termination of Employment on
the date of Plan termination or, if Plan termination occurs after the date upon
which a Participant was eligible to Retire, then with respect to that
Participant as if he or she had Retired on the date of Plan termination, shall
be paid to the Participants as follows: Prior to a Change in Control, if the
Plan is terminated with respect to all of its Participants, an Employer shall
have the right, in its sole discretion, and notwithstanding any elections made
by the Participant, to pay such benefits in a lump sum or pursuant to the Annual
Installment Method of up to 10 years, but not longer than as the Participant may
have elected previously, with amounts credited and debited during the
installment period as provided herein. If the Plan is terminated with respect to
less than all of its Participants, an Employer shall be required to pay such
benefits in a lump sum. After a Change in Control, the Employer shall be
required to pay such benefits in a lump sum. The termination of the Plan shall
not adversely affect any Participant or Beneficiary who has become entitled to
the payment of any benefits under the Plan as of the date of termination;
provided however, that the Employer shall have the right to accelerate
installment payments without a premium or prepayment penalty by paying the
balance of the Account(s) in a lump sum or pursuant to the Annual Installment
Method using fewer years (provided that the present value of all payments that
will have been received by a Participant at any given point of time under the
different payment schedule shall equal or exceed the

 

 

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present value of all payments that would have been received at that point in
time under the original payment schedule). After a Change in Control, the effect
of termination of the Plan shall be governed by Section 11.3 below.

 

12.2 Amendment. Subject to Section 12.3 below relating to amendments made after
a Change in Control, any Employer may, at any time, amend or modify the Plan in
whole or in part with respect to that Employer by the action of its board of
directors; provided, however, that: (i) no amendment or modification shall be
effective to decrease or restrict the value of a Participant’s Account Balance
in existence at the time the amendment or modification is made, calculated as if
the Participant had experienced a Termination of Employment as of the effective
date of the amendment or modification or, if the amendment or modification
occurs after the date upon which the Participant was eligible to Retire, the
Participant had Retired as of the effective date of the amendment or
modification, and (ii) no amendment or modification of this Section 12.1 or
Section 11.3 of the Plan shall be effective. The amendment or modification of
the Plan shall not affect any Participant or Beneficiary who has become entitled
to the payment of benefits under the Plan as of the date of the amendment or
modification; provided, however, that the Employer shall have the right to
accelerate installment payments by paying the balance of the Account(s) in a
lump sum or pursuant to the Annual Installment Method using fewer years
(provided that the present value of all payments that will have been received by
a Participant at any given point of time under the different payment schedule
shall equal or exceed the present value of all payments that would have been
received at that point in time under the original payment schedule).

 

12.3 Effect of Change in Control. Despite the provisions of Sections 12.1 and
12.2 above, following a Change in Control, the provisions of this Plan or any
Participant’s Plan Agreement may not be amended or terminated in any manner with
respect to a Participant or Beneficiary if such amendment or termination would
have an adverse effect in any way upon the computation or amount of or
entitlement to benefits of such Participant or Beneficiary under the Plan as in
effect immediately prior to the Change in Control, including, but not limited
to, any adverse change in or to the crediting or debiting of amounts to the
Account Balances or the time or manner of payment of the Account Balances to any
Participant or Beneficiary, unless the Participant or Beneficiary has given
written consent to such amendment or termination. An “adverse effect” for
purposes of this Section 12.3 shall include, but not be limited to, any
acceleration of the payment of the Account Balances payable to the Participant
or Beneficiary or a change in the composition of the risk and return
characteristics represented by the available Valuation Funds or the
Participant’s or Beneficiary’s ability to allocate his or her Account Balances
among such Valuation Funds.

 

12.4 Plan Agreement. Despite the provisions of Sections 12.1 and 12.2 above, if
a Participant’s Plan Agreement contains benefits or limitations that are not in
this Plan document, the Employer may only amend or terminate such provisions
with the consent of the Participant.

 

12.5 Effect of Payment. The full payment of the applicable benefit under
Articles 4, 5, 6, 7 or 8 of the Plan shall completely discharge all obligations
to a Participant and his or her designated Beneficiaries under this Plan and the
Participant’s Plan Agreement shall terminate.

 

 

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2008 Deferred Income Plan

 

 

ARTICLE 13

Administration

 

13.1 Committee Duties. Except as otherwise provided in this Article 13, this
Plan shall be administered by a Committee, which shall consist of the Committee
appointed by the Board. Members of the Committee may be Participants under this
Plan. The Committee shall also have the discretion and authority to (i) make,
amend, interpret, and enforce all appropriate rules and regulations for the
administration of this Plan and (ii) decide or resolve any and all questions
including interpretations of this Plan, as may arise in connection with the
Plan. Any individual serving on the Committee who is a Participant shall not
vote or act on any matter relating solely to himself or herself. When making a
determination or calculation, the Committee shall be entitled to rely on
information furnished by a Participant or the Company.

 

13.2 Agents. In the administration of this Plan, the Committee may, from time to
time, employ agents and delegate to them such administrative duties as it sees
fit (including acting through a duly appointed representative) and may from time
to time consult with counsel who may be counsel to any Employer.

 

13.3 Binding Effect of Decisions. The decision or action of the Committee, and
any Employee to whom the duties of the Committee may be delegated, with respect
to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and conclusive and binding upon all persons
having any interest in the Plan.

 

13.4 Indemnity of Committee. All Employers shall indemnify and hold harmless the
members of the Committee, and any Employee to whom the duties of the Committee
may be delegated against any and all claims, losses, damages, expenses or
liabilities arising from any action or failure to act with respect to this Plan,
except in the case of willful misconduct by the Committee, any of its members,
any such Employee.

 

13.5 Employer Information. To enable the Committee to perform its functions, the
Company and each Employer shall supply full and timely information to the
Committee as the case may be, on all matters relating to the compensation of its
Participants, the date and circumstances of the Retirement, Disability, death or
Termination of Employment of its Participants, and such other pertinent
information as the Committee may reasonably require.

ARTICLE 14

Other Benefits and Agreements

 

14.1 Coordination with Other Benefits. The benefits provided for a Participant
and Participant’s Beneficiary under the Plan are in addition to any other
benefits available to such Participant under any other plan or program for
employees of the Participant’s Employer. The Plan shall supplement and shall not
supersede, modify or amend any other such plan or program except as may
otherwise be expressly provided.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

ARTICLE 15

Claims Procedures

 

15.1 Presentation of Claim. Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan. If
such a claim relates to the contents of a notice received by the Claimant, the
claim must be made within sixty (60) days after such notice was received by the
Claimant. All other claims must be made within 180 days of the date on which the
event that caused the claim to arise occurred, or such claim is waived. The
claim must state with particularity the determination desired by the Claimant.

 

15.2 Notification of Decision. The Committee shall consider a Claimant’s claim
within a reasonable time, and shall notify the Claimant in writing:

 

  (a) that the Claimant’s requested determination has been made, and that the
claim has been allowed in full; or

 

  (b) that the Committee has reached a conclusion contrary, in whole or in part,
to the Claimant’s requested determination, and such notice must set forth in a
manner calculated to be understood by the Claimant:

 

  (i) the specific reason(s) for the denial of the claim, or any part of it;

 

  (ii) specific reference(s) to pertinent provisions of the Plan upon which such
denial was based;

 

  (iii) 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

 

  (iv) an explanation of the claim review procedure set forth in Section 15.3
below.

 

15.3 Review of a Denied Claim. Within sixty (60) days after receiving a notice
from the Committee that a claim has been denied, in whole or in part, a Claimant
(or the Claimant’s duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim. Thereafter, but not
later than thirty (30) days after the review procedure began, the Claimant (or
the Claimant’s duly authorized representative):

 

  (a) may review pertinent documents;

 

  (b) may submit written comments or other documents; and/or

 

  (c) may request a hearing, which the Committee, in its sole discretion, may
grant.

 

15.4 Decision on Review. The Committee shall render its decision on review
promptly, and not later than sixty (60) days after the filing of a written
request for review of the denial, unless a hearing is held or other special
circumstances require additional time, in which case the Committee’s decision
must be rendered within 120 days after such date. Such decision must be written
in a manner calculated to be understood by the Claimant, and it must contain:

 

  (a) specific reasons for the decision;

 

 

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2008 Deferred Income Plan

 

 

  (b) specific reference(s) to the pertinent Plan provisions upon which the
decision was based; and

 

  (c) such other matters as the Committee deems relevant.

 

15.5 Legal Action. A Claimant’s compliance with the foregoing provisions of this
Article 15 is a mandatory prerequisite to a Claimant’s right to commence any
legal action with respect to any claim for benefits under this Plan.

ARTICLE 16

Trust

 

16.1 Establishment of the Trust. The Company shall establish the Trust, and each
Employer shall at least annually transfer over to the Trust such assets as the
Employer determines, in its sole discretion, are necessary to provide, on a
present value basis, for its respective future liabilities created with respect
to the Annual Company Contribution Amounts, Annual Deferral Amounts, Annual
Restoration Contribution Amounts, and Annual Restricted Stock Amounts for such
Employer’s Participants for all periods prior to the transfer, as well as any
debits and credits to the Participants’ Account Balances for all periods prior
to the transfer, taking into consideration the value of the assets in the trust
at the time of the transfer.

 

16.2 Interrelationship of the Plan and the Trust. The provisions of the Plan and
the Plan Agreement shall govern the rights of a Participant to receive
distributions pursuant to the Plan. The provisions of the Trust shall govern the
rights of the Employers, Participants and the creditors of the Employers to the
assets transferred to the Trust. Each Employer shall at all times remain liable
to carry out its obligations under the Plan.

 

16.3 Distributions From the Trust. Each Employer’s obligations under the Plan
may be satisfied with Trust assets distributed pursuant to the terms of the
Trust, and any such distribution shall reduce the Employer’s obligations under
this Plan.

ARTICLE 17

Miscellaneous

 

17.1 Status of Plan. The Plan is intended to be a plan that is not qualified
within the meaning of Code Section 401(a) and that “is unfunded and is
maintained by an employer primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employee”
within the meaning of ERISA Sections 201(2), 301(a)(3) and 401(a)(1). The Plan
shall be administered and interpreted to the extent possible in a manner
consistent with that intent.

 

17.2 Unsecured General Creditor. Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable rights, interests or
claims in any property or assets of an Employer. For purposes of the payment of
benefits under this Plan, any and all of an Employer’s assets shall be, and
remain, the general, un-pledged unrestricted assets of the Employer. An
Employer’s obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

17.3 Employer’s Liability. An Employer’s liability for the payment of benefits
shall be defined only by the Plan and the Plan Agreement, as entered into
between the Employer and a Participant. An Employer shall have no obligation to
a Participant under the Plan except as expressly provided in the Plan and his or
her Plan Agreement.

 

17.4 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate, alienate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be, unassignable
and non-transferable. No part of the amounts payable shall, prior to actual
payment, be subject to seizure, attachment, garnishment or sequestration for the
payment of any debts, judgments, alimony or separate maintenance owed by a
Participant or any other person, be transferable by operation of law in the
event of a Participant’s or any other person’s bankruptcy or insolvency or be
transferable to a spouse as a result of a property settlement or otherwise.

 

17.5 Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between any Employer and
the Participant. Such employment is hereby acknowledged to be an “at will”
employment relationship that can be terminated at any time for any reason, or no
reason, with or without cause, and with or without notice, unless expressly
provided in a written employment agreement. Nothing in this Plan shall be deemed
to give a Participant the right to be retained in the service of any Employer,
either as an Employee or a Director, or to interfere with the right of any
Employer to discipline or discharge the Participant at any time.

 

17.6 Furnishing Information. A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as the
Committee may deem necessary.

 

17.7 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were in the feminine in all cases where they would so
apply; and whenever any words are used herein in the singular or in the plural,
they shall be construed as though they were used in the plural or the singular,
as the case may be, in all cases where they would so apply.

 

17.8 Captions. The captions of the articles, sections and paragraphs of this
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.

 

17.9 Governing Law. Subject to ERISA, the provisions of this Plan shall be
construed and interpreted according to the internal laws of the State of
Delaware without regard to its conflicts of laws principles.

 

17.10 Notice. Any notice or filing required or permitted to be given to the
Committee under this Plan shall be sufficient if in writing and hand-delivered,
or sent by registered or certified mail, to the address below:

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

  Deferred Income Plan Committee     Attention: Legal Department     1415 W.
Diehl Road     Naperville, Illinois 60563  

Such notice shall be deemed given as of the date of delivery or, if delivery is
made by mail, as of the date shown on the postmark on the receipt for
registration or certification.

Any notice or filing required or permitted to be given to a Participant under
this Plan shall be sufficient if in writing and hand-delivered, or sent by mail,
to the last known address of the Participant.

 

17.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Participant’s Employer and its successors and assigns and the
Participant and the Participant’s designated Beneficiaries.

 

17.12 Spouse’s Interest. The interest in the benefits hereunder of a spouse of a
Participant who has predeceased the Participant shall automatically pass to the
Participant and shall not be transferable by such spouse in any manner,
including but not limited to such spouse’s will, nor shall such interest pass
under the laws of intestate succession.

 

17.13 Validity. In case any provision of this Plan shall be illegal or invalid
for any reason, said illegality or invalidity shall not affect the remaining
parts hereof, but this Plan shall be construed and enforced as if such illegal
or invalid provision had never been inserted herein.

 

17.14 Incompetent. If the Committee determines in its discretion that a benefit
under this Plan is to be paid to a minor, a person declared incompetent or to a
person incapable of handling the disposition of that person’s property, the
Committee may direct payment of such benefit to the guardian, legal
representative or person having the care and custody of such minor, incompetent
or incapable person. The Committee may require proof of minority, incompetence,
incapacity or guardianship, as it may deem appropriate prior to distribution of
the benefit. Any payment of a benefit shall be a payment for the account of the
Participant and the Participant’s Beneficiary, as the case may be, and shall be
a complete discharge of any liability under the Plan for such payment amount.

 

17.15 Court Order. The Committee is authorized to make any payments directed by
court order in any action in which the Plan or the Committee has been named as a
party. In addition, if a court determines that a spouse or former spouse of a
Participant has an interest in the Participant’s benefits under the Plan in
connection with a property settlement or otherwise, the Committee, in its sole
discretion, shall have the right, notwithstanding any election made by a
Participant, to immediately distribute the spouse’s or former spouse’s interest
in the Participant’s benefits under the Plan to that spouse or former spouse.

 

17.16 Distribution in the Event of Taxation.

 

  (a)

In General. If, for any reason, all or any portion of a Participant’s benefits
under this Plan becomes taxable to the Participant prior to receipt, a
Participant may petition the Committee before a Change in Control, or the
trustee of the Trust after a Change in Control, for a distribution of that
portion of his or her benefit that has become taxable.

 

 

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Upon the grant of such a petition, which grant shall not be unreasonably
withheld (and, after a Change in Control, shall be granted), a Participant’s
Employer shall distribute to the Participant immediately available funds in an
amount equal to the taxable portion of his or her benefit (which amount shall
not exceed a Participant’s unpaid Account Balance under the Plan). If the
petition is granted, the tax liability distribution shall be made within ninety
(90) days of the date when the Participant’s petition is granted. Such a
distribution shall affect and reduce the benefits to be paid under this Plan.

 

  (b) Trust. If the Trust terminates in accordance with the terms of the Trust
Agreement and benefits are distributed from the Trust to a Participant in
accordance with the terms thereof, the Participant’s benefits under this Plan
shall be reduced to the extent of such distributions.

 

17.17 Insurance. The Employers, on their own behalf or on behalf of the trustee
of the Trust, and, in their sole discretion, may apply for and procure insurance
on the life of the Participant, in such amounts and in such forms as the Trust
may choose. The Employers or the trustee of the Trust, as the case may be, shall
be the sole owner and beneficiary of any such insurance. The Participant shall
have no interest whatsoever in any such policy or policies, and at the request
of the Employers shall submit to medical examinations and supply such
information and execute such documents as may be required by the insurance
company or companies to whom the Employers have applied for insurance.

 

17.18 Legal Fees To Enforce Rights After Change in Control. The Company and each
Employer is aware that upon the occurrence of a Change in Control, the Board or
the board of directors of a Participant’s Employer (which might then be composed
of new members) or a shareholder of the Company or the Participant’s Employer,
or of any successor corporation might then cause or attempt to cause the
Company, the Participant’s Employer or such successor to refuse to comply with
its obligations under the Plan and might cause or attempt to cause the Company
or the Participant’s Employer to institute, or may institute, litigation seeking
to deny Participants the benefits intended under the Plan. In these
circumstances, the purpose of the Plan could be frustrated. Accordingly, if,
following a Change in Control, it should appear to any Participant that the
Company, the Participant’s Employer or any successor corporation has failed to
comply with any of its obligations under the Plan or any agreement thereunder
or, if the Company, such Employer or any other person takes any action to
declare the Plan void or unenforceable or institutes any litigation or other
legal action designed to deny, diminish or to recover from any Participant the
benefits intended to be provided, then the Company and the Participant’s
Employer irrevocably authorize such Participant to retain counsel of his or her
choice at the expense of the Company and the Participant’s Employer (who shall
be jointly and severally liable) to represent such Participant in connection
with the initiation or defense of any litigation or other legal action, whether
by or against the Company, the Participant’s Employer or any director, officer,
shareholder or other person affiliated with the Company, the Participant’s
Employer or any successor thereto in any jurisdiction. Any such expenses shall
be paid within sixty (60) days of the date evidence that such expenses were
incurred is provided to the Company or Employer and in all events no later than
the December 31 of the calendar year following the calendar year in which such
expenses were incurred.

 

 

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Tellabs, Inc.

2008 Deferred Income Plan

 

 

IN WITNESS WHEREOF, the Company has signed this Plan document effective
January 1, 2008.

 

“Company” Tellabs, Inc., a Delaware corporation By:  

/s/ Kyle K. Matthews

Title:   VP–Human Resources

 

 

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