AMENDMENT TO THE

COHERENT COMMUNICATIONS SYSTEMS CORPORATION

AMENDED AND RESTATED 1993 EQUITY COMPENSATION PLAN

 

WHEREAS, Coherent Communications Systems Corporation Coherent has heretofore
established the Coherent Communications Systems Corporation Amended and Restated
1993 Equity Compensation Plan (the "Plan") for the benefit of employees,
non-employee directors, and eligible independent contractors of Coherent
Communications Systems Corporation and its subsidiaries;

WHEREAS, Coherent was acquired by Tellabs, Inc. ("Tellabs") in a merger on
August 3, 1998, and Coherent subsequently merged into Tellabs Operations, Inc.
(the "Corporation");

WHEREAS, the Board of Directors of Tellabs deems it desirable to make certain
amendments to the Plan relating to the vesting of options and stock appreciation
rights ("SARs") and/or the post-employment exercise period in the event of the
death, disability, or retirement of an option or SAR holder, or a change in
control of Tellabs;

WHEREAS, the Board of Directors has considered the recommendations; and

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

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

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

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

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

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

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

      
      
 III. Section 10 shall be amended in its entirety to read as follows:
      
      
      
      

      SECTION 10. Termination of Employment.
      
      Except as set forth in Section 10A with respect to the effect of a Change
      in Control or except as the Committee may otherwise expressly provide in
      the Stock Option Agreement, the following rules shall apply upon
      termination of the Optionee's employment with the Corporation and all
      Subsidiaries:
      
      (a) Except as set forth in subsections (b), (c), (d) and (e) below, in the
      event of termination (voluntary or involuntary) for any reason of the
      holder's employment by the Corporation, any unexercised Option shall be
      exercisable by the Optionee at any time within 30 days after the date of
      such termination but only to the extent such Option was exercisable on the
      date of such termination. In no event shall such unexercised Option be
      exercisable after the expiration of its term.
      
      (b) In the event of termination of employment due to the death the
      Optionee, each Option held by the Optionee shall become exercisable in
      full and may be exercised at any time prior to the expiration date of the
      Option or within one year after the date of the Optionee's death,
      whichever period is shorter.
      
      (c) In the event of termination of employment due to the Disability of the
      Optionee, each Option held by the Optionee may, to the extent exercisable
      at the time of termination of employment, be exercised at any time prior
      to the expiration date of the Option or within three years after the date
      of the Optionee's termination of employment, whichever period is shorter.
      
      (d) In the event of termination of employment due to the retirement of the
      Optionee on or after attaining age 55, all or a portion of each Option
      held by the Optionee, to the extent not then exercisable, shall become
      exercisable in accordance with the schedule set forth below based upon one
      point for the Optionee's attained age and one point for each year of
      continuous service with the Corporation or its Subsidiaries as of the date
      of retirement (including for this purpose, continuous service with an
      entity prior to the date such entity was acquired by the Corporation or a
      Subsidiary of the Corporation, but excluding any service prior to January
      1, 1975),

      
      
      
      At least 70 but less than 80 points          50% of each unvested option
      shall vest
      At least 80 but less than 90 points          75% of each unvested option
      shall vest
      At least 90 points                                  100% of each unvested
      option shall vest

      
      

      and all Options held by the Optionee to the extent then exercisable may be
      exercised at any time prior to the expiration date of the Option or within
      three years after the date of the Optionee's retirement, whichever period
      is shorter.
      
      (e) Notwithstanding anything in this Plan to the contrary, any ISO which
      is exercised after the expiration of three months following the cessation
      of employment for any reason other than Disability or death or one year
      after the date of termination of employment due to Disability or death,
      shall be treated as a NQSO.

      
      
 IV.  Section 5(h) shall be amended in its entirety to read as follows:
      
      
      
      

      (h) Termination of Employment. Except as set forth in Section 5(k) with
      respect to the effect of a Change in Control or except as the Committee
      may otherwise expressly provide in the Agreement evidencing an Option or
      Stock Appreciation Right the following rules shall apply upon termination
      of the Participant's employment with the Company and all Subsidiaries:
      
      (i) Except as set forth in subsections (ii), (iii), (iv), and (v) below,
      unless otherwise determined by the Committee at or after grant, in the
      event of a Participant's termination of employment (voluntary or
      involuntary) for any reason other than as provided below, any Stock Option
      or Stock Appreciation Right held by such Participant may thereafter be
      exercised by the Participant, to the extent it was exercisable at the time
      of such termination or on such accelerated basis as the Committee may
      determine at or after grant, for a period of three months (or shorter
      period as the Committee may specify at grant) from the date of such
      termination of employment or until the expiration of the stated term of
      such Grant, whichever period is shorter.
      
      (ii) Unless otherwise determined by the Committee at or after grant, if
      any Participant ceases to be employed by the Company on account of a
      Termination for Cause by the Company, any Stock Option held by such
      Participant shall terminate as of the date the Participant ceases to be
      employed by the Company, and the Participant shall automatically forfeit
      all Stock underlying any exercised portion of an Option for which the
      Company has not yet delivered the share certificates, upon refund by the
      Company of the Exercise Price paid by the Participant for such Stock.
      
      (iii) In the event of termination of employment due to the death the
      Participant, each Option and Stock Appreciation Right held by the
      Participant shall become exercisable in full and may be exercised at any
      time prior to the expiration date of the Grant or within one year after
      the date of the Participant's death, whichever period is shorter, and in
      the event of death within three months after the date on which the
      Participant ceases to be employed by the Company on account of termination
      of employment specified in Section 5(h)(i) above, the Grant may be
      exercised prior to the expiration date or within one year after the date
      of termination, whichever is shorter.
      
      (iv) In the event of termination of employment due to the Disability of
      the Participant, each Option or Stock Appreciation Right held by the
      Participant may, to the extent exercisable at the time of termination of
      employment, be exercised at any time prior to the expiration date of the
      Grant or within three years after the date of the Participant's
      termination of employment, whichever period is shorter.
      
      (v) In the event of termination of employment due to the retirement of the
      Participant on or after attaining age 55, all or a portion of each Option
      and Stock Appreciation Right held by the Participant, to the extent not
      then exercisable, shall become exercisable in accordance with the schedule
      set forth below based upon one point for the Participant's attained age
      and one point for each year of continuous service with the Company or its
      Subsidiaries as of the date of retirement (including for this purpose,
      continuous service with an entity prior to the date such entity was
      acquired by the Company or a Subsidiary of the Company, but excluding any
      service prior to January 1, 1975),
      
      
      At least 70 but less than 80 points          50% of each unvested Grant
      shall vest
      At least 80 but less than 90 points          75% of each unvested Grant
      shall vest
      At least 90 points                                  100% of each unvested
      Grant shall vest
      
      
      and all Options and Stock Appreciation Rights held by the Participant to
      the extent then exercisable may be exercised at any time prior to the
      expiration date of the Grant or within three years after the date of the
      Participant's retirement, whichever period is shorter.
      
      (vi) Notwithstanding anything in this Plan to the contrary, any Incentive
      Stock Option which is exercised after the expiration of three months
      following the cessation of employment for any reason other than Disability
      or death or one year after the date of termination of employment due to
      Disability or death, shall be treated as a Non-Qualified Stock Option.

      
      
 V.   The Plan shall hereby be amended by adding a new Section 5(k) to read:

(k) Change in Control.

(i) Upon the occurrence of a Change in Control, any and all Options and Stock
Appreciation Rights granted hereunder shall become immediately exercisable and
remain exercisable until such Options and Stock Appreciation Rights expire or
terminate under the provisions of this Plan.

(ii) Upon the occurrence of a Change in Control not approved by the Incumbent
Board, any and all Options and Stock Appreciation Rights granted hereunder shall
become immediately exercisable, and shall remain exercisable throughout their
entire term without regard to termination of employment subsequent to such
Change in Control.

IN WITNESS WHEREOF, the foregoing amendments to the Coherent Communications
Systems Corporation Amended and Restated 1993 Stock Option Plan are hereby
adopted as of the 30th day of June, 2000, by the undersigned officer duly
authorized by resolutions adopted by the written consent of the Board of
Directors dated June 30, 2000.

TELLABS OPERATIONS, INC.

 

By: /s Brian J. Jackman

Name: Brian J. Jackman

Its: President