TELLABS OPERATIONS, INC.

(formerly Tellabs, Inc., an Illinois corporation)

Deferred Income Plan

Amendment

 

	Effective July 13, 2000, and pursuant to Article XII, Paragraph 35 of the Tellabs Operations,Inc. Deferred Income Plan dated April 1, 1992, as previously amended, the Plan is hereby further amended as follows:

	Article XIV Paragraphs 44-51 :  A new Article IX "Directors Deferred CompensationPlan" shall be added.  Paragraphs 44 through 51 shall be added to Article XIV to read as follows:

	44.	Establishment; Purpose.  Tellabs, Inc. ("Tellabs") establishesthis Directors Deferred Compensation Plan as part of the Plan for the benefit of those members of its Board ofDirectors who are not employees of the Company or any of its affiliates.  To the extent required to obtain anexemption under Rule 16b-3 promulgated under the Securities Exchange Act of 1934 or as may be required by otherapplicable laws, this Directors Deferred Compensation Plan shall be administered by the Compensation Committee ofthe Board of Directors of Tellabs, which may delegate certain functions to the Committee or to officers of Tellabsor the Company.

	45.	Election to Participate.  An eligible director may elect to participate in thePlan by filing an election as prescribed by the Committee.  Elections to participate shall apply to a calendar year.Once an election has been filed, the eligible director shall participate in the Plan for the entire year in which heor she has elected to participate and for all subsequent years until the director files a notice of revocation forelection.  To be effective, any election or revocation must be filed by November 30th immediately preceding thecalendar year on which it is to take effect; provided that elections for the portion of the 2000 calendar yearoccurring after the effective date of  this  Directors Deferred Compensation Plan, elections shall be made byOctober 31, 2000.

	46.	Deferral Account.  Commencing as of the effective date of a director's electionto participate, 100%  of the director fees earned by the Director shall be deferred.  Tellabs shall establish adeferral "Account" in the name of each director who elects to participate.  Except to the extent thedirector has elected to have his or her Account credited as deferred stock units, Tellabs shall annually creditthe Account with earnings in the same manner as applicable to participant Accounts under Article IV of the Plan.

	47.	Deferred Stock Units.  A director may, in lieu of the earnings credit describedabove, elect to have Tellabs maintain all or a portion of the director fees deferred into the Account as deferredstock units ("Units"), each of which shall represent the right to receive a share of Tellabs common stock.Units shall be credited to the Account at the time and in the amount in accordance with this paragraph 47.  Thenumber of Units to be credited shall be computed by dividing the total amount of fees earned by the Director ina given period by the fair market value of one share of common stock as of the last business day on which tradesin common stock were reported during the calendar quarter immediately preceding the quarter in which the periodoccurs.  Fair market value as of any date means the closing price of the Common Stock on the NASDAQ Stock Market.Amounts credited to the Account as Units shall be distributed in shares of common stock only and may not be payablein cash or otherwise be credited with earnings as described in paragraph 46 above.

	48.	Available Shares. Subject to this paragraph 48 (relating to adjustments uponchanges in capitalization), as of any date, the maximum number of shares of Tellabs common stock issuable under thisDirectors Defined Compensation Plan shall be 25,000.  Shares of Tellabs common stock paid to directors under the Planshall be paid with newly issued shares or treasury shares.  No fractional shares shall be issued.  Whenever thecomputation of the number of shares to be paid results in a fractional amount of one-half or greater, such amountshall be rounded up to the next greater whole number of shares and in all other cases such amount shall be roundeddown to the next lower whole number of shares.  In the event that any change in the outstanding shares of common stockoccurs by reason of a stock dividend, stock split, recapitalization, merger, consolidation, combination, share exchangeor similar corporate change, the number of shares of common stock which may be issued under this Plan shall beappropriately adjusted.

	49.	Payments and Benefits.  The Account of a director shall become distributableupon termination of his or her service as a director for any reason, including death or disability.  Within 30 daysafter the date of such termination, Tellabs shall issue in a lump sum to the director (or his or her beneficiary)one share of Tellabs common  stock for each Unit credited to his or her Account and shall pay the balance of theAccount which has not been designated in Units in a lump sum or in such number of installments as the director electedat the time his or her election to defer director fees was made; provided, however, that in the event of the director'sdeath any undistributed balance shall be paid in the lump sum.  The provisions of paragraph 15 relating to interimdistributions shall also apply to the director's Account.

	50.	Nonassignment.  Neither a director nor his or her duly designated beneficiaryshall have any right to assign, transfer, pledge or otherwise convey the right to receive any amounts hereunder, andany such attempted assignment, transfer, or other conveyance shall not be recognized by Tellabs.

	51.	Designation of Beneficiary.  A director may designate the beneficiary which is toreceive any unpaid amounts credited to his or her Account at the director's death. Such designation shall be effectiveby filing a written notification with the Committee and may be changed from time to time by similar action.  If no suchdesignation is made by a director, any such balance shall be paid to the director's estate.

	52.	Amendment.  This Directors Deferred Compensation Plan portion of the Plan may beamended or terminated at any time by action of the Board of Directors of Tellabs, but no amendment shall adverselyaffect a director's rights with respect to fees earned but not yet paid without the director's written consent.

	Effective as of July 13, 2000 and signed this 13th day of 2000, with the approval andauthorization of the Board of Directors.

TELLABS OPERATIONS, INC.

/s Carol C. Gavin

By:  Carol C. Gavin
	

Title:  V.P., General Counsel, and Secretary
	

Effective as of July 13, 2000, and signed this 13th day of 2000, Tellabs, Inc., a Delaware corporation, hereby adopts the Plan for purposes of the benefits providedpursuant to Article IX "Directors Deferred Compensation Plan."

TELLABS, INC.

/s Carol C. Gavin

By:  Carol C. Gavin
Title:  V.P., General Counsel, and Secretary