EMPLOYMENT AGREEMENT-CHAIRMAN OF THE BOARD




EXHIBIT 10.3 




EMPLOYMENT AGREEMENT 




(Chairman of the Board)


        THIS  AGREEMENT,  made and entered  into as of February  12,  2004,  by and between  Michael J.  Birck (the  "Executive")  and
Tellabs, Inc., a Delaware corporation (the "Company");



        W
I T N E S S E T H   T
H A T: 



        WHEREAS,
the parties desire to enter into this Agreement pertaining to the continuing employment of
the Executive by the Company as the Chairman of the Board; 



        WHEREAS,
this Agreement replaces and supersedes the employment agreement dated June 16, 2002,
between the Executive and the Company; 



        NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth below, it is
hereby covenanted and agreed by the Executive and the Company as follows: 



          	1. 	  	
               Employment. Subject to the terms of this Agreement, the Company hereby
               agrees to employ the Executive as its Chairman of the Board of Directors during
               the Agreement Term (as defined below), with such additions or modifications
               thereto which are consistent with his authority, responsibilities and duties
               hereunder, as the Board of Directors of the Company (the “Board”) may,
               from time to time, in its discretion and after consultation with the Executive,
               adopt. The “Agreement Term” shall be the period beginning on February
               12, 2004 (the “Effective Date”) and ending on the first anniversary of
               the Effective Date, subject to earlier termination as provided herein; provided,
               however, that the Agreement Term will be automatically extended by twelve months
               on the first anniversary of the Effective Date and on each anniversary thereof,
               unless one party to this Agreement provides written notice of non-renewal to the
               other party at least 30 days prior to the date of such automatic extension. 



               



          	2. 	  	
               Performance of Duties. The Executive agrees that during his employment
               with the Company, he shall devote his full business time, energies and talents
               to serving as its Chairman of the Board of Directors and that he shall perform
               his duties faithfully and efficiently subject to the directions of the Board.
               Notwithstanding the foregoing provisions of this Section 2, the Executive
               may (i) serve as a director, trustee or officer or otherwise participate in
               not-for-profit educational, welfare, social, religious and civic organizations;
               (ii) after consultation with, and approval by, the Board, serve as a
               director of any for-profit business which does not compete with the Company or
               any of its subsidiaries or affiliates, and (iii) acquire passive investment
               interests in one or more entities; provided, that such activities described in
               clauses (i), (ii) and (iii) are not prohibited under the Company’s
               Integrity Policy and do not inhibit or interfere with the performance of the
               Executive’s duties under this Agreement. 



               


 





          	3. 	  	
               Compensation. Subject to the terms of this Agreement, during the
               Agreement Term, while the Executive is employed by the Company, the Company
               shall compensate him for his services as follows: 



               



          	 	(a) 	  	
               Base Salary. The Executive shall receive a Base Salary of $500,000 per
               annum payable in 26 bi-weekly installments. The Executive’s Base Salary
               shall be reviewed and subject to increase or decrease annually by the Board
               pursuant to its normal performance review policies for senior executives, with
               the first such review occurring in 2005. 



               



          	 	(b) 	  	
               Annual Bonus. For each calendar year, the Executive shall be eligible to
               receive an Annual Bonus payment in accordance with the Company’s annual
               bonus plans as in effect from time to time. The target level for each Annual
               Bonus shall not be less than 50% of the Executive’s Base Salary for the
               year, provided that the Company achieves the applicable financial and strategic
               objectives established for the year. Commencing with calendar year 2004, such
               objectives will be established by the Compensation Committee of the Board, in
               consultation with the Executive and other senior officers. 



               



          	 	(c) 	  	
               Employee Benefits, Fringe Benefits and Perquisites. The Executive shall
               be provided with employee benefits, fringe benefits and perquisites on a basis
               no less favorable than such benefits and perquisites are provided by the Company
               from time to time to the Company’s other senior executives. In the event of
               the Executive’s termination of employment with the Company for any reason
               other than termination by the Company for Cause, the Executive shall be entitled
               to reimbursement of tax and financial planning costs and an office and
               secretarial assistance on the same basis as provided during the Agreement Term
               through the tenth anniversary of the date of termination of employment. 



               



          	 	(d) 	  	
               Expense Reimbursement. The Company will reimburse the Executive for all
               reasonable expenses incurred by him in the performance of his duties in
               accordance with the Company’s policies applicable to senior executives. 



               



          	 	(e) 	  	
               Change in Control Benefits. Following the Effective Date, the Executive
               and the Company shall continue to be a party to the change of control agreement
               which the Company has entered into with Executive, it being understood that the
               Executive shall only receive whatever incremental payments or benefits are
               provided under such change of control agreement and that there shall be no
               duplication of payments or benefits under this Agreement and such change of
               control agreement. 



               


2





          	 	(f) 	  	
               Additional Payments. If any payments or benefits received or to be
               received by the Executive in connection with the Executive’s employment
               (whether pursuant to the terms of this Agreement or any other plan, arrangement
               or agreement with the Company, or any person affiliated with the Company) (the
               “Payments”), will be subject to the tax (the “Excise Tax”)
               imposed by Section 4999 of the Internal Revenue Code of 1986, as amended
               (the “Code”) (or any similar tax that may hereafter be imposed), the
               Company shall pay to the Executive prior to the time any such Excise Tax is
               payable, an additional amount (the “Gross-Up Payment”) such that the
               net amount retained by the Executive, after deduction of any Excise Tax on the
               Payments and any federal, state and local income or other applicable tax and
               Excise Tax upon the payment provided for by this paragraph, shall be equal to
               the Payments. For purposes of determining the amount of the Gross-Up Payment,
               the Executive shall be deemed to pay federal income taxes at the
               Executive’s highest marginal rate of federal income taxation in the
               calendar year in which the Gross-Up Payment is to be made and state and local
               income taxes at the Executive’s highest marginal rate of taxation in the
               state and locality of the Executive’s residence on the date on which the
               Excise Tax is determined, net of the maximum reduction in federal income taxes
               which could be obtained from deduction of such state and local taxes. The
               determination of whether the Payments are subject to the Excise Tax, and, if so,
               the Gross-Up Payment to be provided to the Executive and the time of the payment
               pursuant to this paragraph, shall be made by independent public accountants not
               then regularly retained by the Company, in consultation with tax counsel
               selected by them and acceptable to the Executive. The Company shall provide the
               Executive with sufficient tax and compensation data to enable the Executive or
               his tax advisor to verify such computations and shall reimburse the Executive
               for reasonable fees and expenses incurred with respect thereto. In the event
               that the Excise Tax is subsequently determined to be less than the amount taken
               into account hereunder, the Executive shall repay to the Company at the time
               that the amount of such reduction in Excise Tax is finally determined the
               portion of the Gross-Up Payment attributable to such reduction (plus the portion
               of the Gross-Up Payment attributable to the Excise Tax and federal and state and
               local income tax imposed on the Gross-Up Payment being repaid by the Executive)
               plus interest on the amount of such repayment from the date the Gross-Up Payment
               was initially made to the date of repayment at the rate provided in
               Section 1274(b)(2)(B) of the Code (the “Applicable Rate”). In the
               event that the Excise Tax is determined by the Internal Revenue Service or by
               such independent public accountants to exceed the amount taken into account
               hereunder (including by reason of any payment the existence or amount of which
               cannot be determined at the time of the Gross-Up Payment), the Company shall
               make an additional Gross-Up Payment in respect of such excess (plus any
               interest, penalties, fines or additions to tax payable with respect to such
               excess) at the time that the amount of such excess is finally determined. Any
               payment to be made under this paragraph shall be payable within five (5) days of
               the determination of the accountants that such a payment is required hereunder. 



               



          	4. 	  	
               Indemnification. The Company agrees that if the Executive is made a
               party, or is threatened to be made a party, to any action, suit or proceeding,
               whether civil, criminal, administrative or investigative (a
               “Proceeding”), by reason of the fact that he is or was a director,
               officer or employee of the Company or is or was serving at the request of the
               Company as a director, officer, member, employee or agent of another
               corporation, partnership, joint venture, trust or other enterprise, including
               service with respect to employee benefit plans, whether or not the basis of such
               Proceeding is the Executive’s alleged action in an official capacity while
               serving as a director, officer, member, employee or agent, the Executive shall
               be indemnified and held harmless by the Company to the fullest extent legally
               permitted or authorized by the Company’s certificate of incorporation or
               bylaws or resolutions of the Company’s Board of Directors or, if greater,
               by the laws of the State of Delaware, against all cost, expense, liability and
               loss (including, without limitation, attorneys’ fees, judgments, fines,
               ERISA excise taxes or other liabilities or penalties and amounts paid or to be
               paid in settlement) reasonably incurred or suffered by the Executive in
               connection therewith, and such indemnification shall continue as to the
               Executive even if he has ceased to be a director, member, employee or agent of
               the Company or other entity, with respect to acts or omissions which occurred
               prior to his cessation of employment with the Company, and shall inure to the
               benefit of the Executive’s heirs, executors and administrators. The Company
               shall advance to the Executive all reasonable costs and expenses incurred by him
               in connection with a Proceeding within 20 calendar days after receipt by the
               Company of a written request for such advance. Such request shall include an
               undertaking by the Executive to repay the amount of such advance if it shall
               ultimately be determined that he is not entitled to be indemnified against such
               costs and expenses. 



               


3





          	5. 	  	
               Termination of Employment. Upon termination of the Executive’s
               employment for any reason, the Executive or, in the event of death, the
               Executive’s estate shall be entitled to the Executive’s Base Salary
               prorated through the date of termination. Any Annual Bonus awarded to the
               Executive for a prior award period, but not yet paid to the Executive, and any
               employee benefits to which the Executive is entitled by reason of his employment
               shall be paid to the Executive or his estate at such time as is provided by the
               terms of the applicable Company plan or policy. If the Executive’s
               employment is terminated during the Agreement Term, the Executive’s right
               to additional payments and benefits under this Agreement for periods after his
               date of termination shall be determined in accordance with the following
               provisions of this Section 5. 



               



          	 	(a) 	  	
               Death or Disability. If the Executive’s employment is terminated by
               reason of death or by reason of the Executive’s Disability, the Executive,
               or, in the event of his death, his estate, shall be entitled to a prompt cash
               payment of a prorated Annual Bonus for the year in which such termination
               occurs, based on the target Annual Bonus for such year. The Executive or the
               Company shall be entitled to terminate the Executive’s employment because
               of the Executive’s Disability during the Agreement Term.
               “Disability” means that the Executive is disabled within the meaning
               of the Company’s long-term disability policy or, if there is no such policy
               in effect, that (i) the Executive has been substantially unable, for 120
               business days within a period of 180 consecutive business days, to perform the
               Executive’s duties under this Agreement, as a result of physical or mental
               illness or injury, and (ii) a physician selected by the Company or its
               insurers, and reasonably acceptable to the Executive or the Executive’s
               legal representative, has determined that the Executive is disabled. A
               termination of the Executive’s employment by the Company for Disability
               shall be communicated to the Executive by written notice, and shall be effective
               on the 30th day after receipt of such notice by the Executive (the
               “Disability Effective Time”), unless the Executive returns to
               full-time performance of the Executive’s duties before the Disability
               Effective Time. 



               



          	 	(b) 	  	
               Termination for Cause or Voluntary Resignation. If the Executive’s
               employment is terminated by the Company for Cause or if the Executive
               voluntarily resigns from the employ of the Company, other than pursuant to a
               Constructive Discharge, all payments and benefits to which the Executive would
               otherwise be entitled under this Agreement shall immediately cease, except as
               otherwise specifically provided above in this Section 5 with respect to his
               prorated Base Salary through the date of termination, his Annual Bonus, if any,
               awarded for a prior award period but not yet paid and his previously earned
               employee benefits. For purposes of this Agreement, the term “Cause”
               shall mean: 



               


4





          	 	 	(i) 	  	
               The Executive is convicted of a felony or any crime involving moral turpitude,
               dishonesty, fraud, theft or financial impropriety; or 



               



          	 	 	(ii) 	  	
               A reasonable determination by a vote of directors comprising two-thirds of the
               entire Board, after giving the Executive notice and an opportunity to be heard,
               that, 



               



          	 	 	 	(A) 	  	
               Executive has willfully and continuously failed to perform substantially his
               duties as contemplated by Section 2 above (other than such failure
               resulting from incapacity due to physical or mental illness), after a written
               demand for corrected performance is delivered to Executive by the Board which
               specifically identifies the manners in which the Board believes the Executive
               has not substantially performed his duties, or 



               



          	 	 	 	(B) 	  	
               the Executive has engaged in gross neglect or gross misconduct, or 



               



          	 	 	 	(C) 	  	
               the Executive has knowingly violated a material requirement of the
               Company’s Integrity Policy, code of conduct, the Sarbanes Oxley Act of 2002
               or other material provision of federal securities law. 



               



          	 	(c) 	  	
               Termination Without Cause. If the Company terminates the Executive
               without Cause, the Executive shall be entitled to a prompt lump sum cash payment
               equal to the Base Salary and Annual Bonus to which he would otherwise would have
               been entitled if he had remained in the employ of the Company through the last
               day of the Term of this Agreement. For purposes of the preceding sentence, the
               Annual Bonus component shall be based upon the target bonus for the year of
               termination and shall include a prorated bonus for the partial year ending on
               the last day of the Agreement Term. 



               



          	 	(d) 	  	
               Resignation for Constructive Discharge. The Executive’s voluntary
               resignation for Constructive Discharge shall be treated for all purposes of this
               Agreement as a termination by the Company without Cause. For purposes of this
               Agreement, “Constructive Discharge” shall mean the occurrence of any
               of the following circumstances: 



               



          	 	 	(i) 	  	
               A reduction by the Company in the Executive’s Base Salary or Annual Bonus
               target to an amount that is less than required under Section 3 above; 



               


5





          	 	 	(ii) 	  	
               The removal of the Executive from the position of Chairman of the Board of
               Directors or the failure of the Executive to be nominated or reelected to the
               Company’s Board of Directors; 



               



          	 	 	(iii) 	  	
               Any action by the Company which results in significant diminution in the
               Executive’s authority, power, responsibilities or duties from those
               contemplated by Sections 1 and 2 above, or the assignment to Executive
               without his written consent of any duties inconsistent with the Executive’s
               position and status as Chairman of the Board of Directors, as contemplated by
               Sections 1 and 2 above, which action or assignment continues after written
               notice thereof and a reasonable opportunity to cure of not less than fifteen
               (15) days has been given by Executive to the Company; or 



               



          	 	 	(iv) 	  	
               Any other breach by the Company of any of its material obligations to the
               Executive under this Agreement, which breach continues after written notice
               thereof and a reasonable opportunity to cure of not less than thirty (30) days
               has been given by Executive to the Company. 



               



          	 	(e) 	  	
               Change in Control. The term “Change in Control” of the Company
               means the first to occur of: 



               



          	 	 	(i) 	  	
               Any “person” (as defined in Section 13(d) and 14(d) of the
               Securities Exchange Act of 1934, as amended (the “Exchange Act”)),
               excluding for this purpose, the 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 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 20% or more
               but then promptly reduces that ownership interest below 20%; 



               



          	 	 	(ii) 	  	
               During any two consecutive years, individuals who at the beginning of such
               two-year period constitute the Board 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; 



               


6





          	 	 	(iii) 	  	
               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, (1) 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 50% of the combined voting power of the then outstanding
               voting securities entitled to vote generally in the election of directors, as
               the case may be, of the corporation resulting from such Business Combination
               (including, without limitation, a corporation which as a result of such
               transaction owns the Company or all or substantially all of the Company’s
               assets either directly or through one or more subsidiaries) (“Resulting
               Company”) in substantially the same proportions as their ownership,
               immediately prior to such Business Combination of the outstanding voting
               securities of the Company; (2) no person (as defined in Section 13(d) and
               14(d) of the Exchange Act)(other than the Company, the Resulting Company or any
               employee benefit plan (or related trust) of the Company or such Resulting
               Company) beneficially owns, directly or indirectly, 20% or more of,
               respectively, the then combined voting power of the then outstanding voting
               securities of the Resulting Company except to the extent that such ownership
               resulted solely from ownership of securities of the Company prior to the
               Business Combination; and (3) at least a majority of the members of the
               board of directors of the Resulting Company 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; 



               



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



               



          	 	 	(v) 	  	
               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 Securities Exchange Act of 1934 and
               the corresponding SEC rules) is made for the stock of the Company, then the
               first to occur of: 



               



          	 	 	 	(A) 	  	
               Any time during the offer when the person making the offer owns or has accepted
               for payment stock of the Company with 25% or more of the total voting power of
               the Company’s securities, or 



               



          	 	 	 	(B) 	  	
               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 shares owned by this person, stock with 50% or more of total
               voting power of the Company’s securities when the offer terminates. 



               



          	6. 	  	
               No Mitigation; No Offset. In the event of any termination of employment,
               the Executive shall be under no obligation to seek other employment and there
               shall be no offset against amounts due the Executive under this Agreement on
               account of any remuneration attributable to any subsequent employment that he
               may obtain. 



               


7





          	7. 	  	
               Confidential Information. The Executive agrees that, during his
               employment by the Company and at all times thereafter, he shall hold in a
               fiduciary capacity for the benefit of the Company all secret or confidential
               information, knowledge or data relating to the Company or any of its
               subsidiaries or affiliates, and their respective businesses, which shall have
               been obtained by the Executive during the Executive’s employment by the
               Company or during his consultation with the Company after his termination of
               employment, and which shall not be or become public knowledge (other than by
               acts by the Executive or representatives of the Executive in violation of this
               Agreement). Except in the good faith performance of his duties for the Company,
               the Executive shall not, without the prior written consent of the Company or as
               may otherwise be required by law or legal process, communicate or divulge any
               such information, knowledge or data to anyone other than the Company and those
               designated by it. 



               



          	8. 	  	
               Protective Covenants. For a period of two years following the termination
               of Executive’s employment for any reason, the Executive shall not, without
               the written consent of the Board, directly or indirectly, 



               



          	 	(a) 	  	
               engage or be interested in (as owner, partner, stockholder, employee, director,
               officer, agent, consultant or otherwise), with or without compensation, any
               business which is in direct competition with the Company or of any of its
               subsidiaries in providing data, voice or video transport, switching/routing,
               network access system and/or voice quality enhancement solutions to service
               providers or end users; 



               



          	 	(b) 	  	
               hire any person who was employed by the Company or any of its subsidiaries or
               affiliates (other than persons employed in a clerical or other non-professional
               position) within the six-month period preceding the date of such hiring; or 



               



          	 	(c) 	  	
               solicit, entice, persuade or induce any person or entity doing business with the
               Company and its subsidiaries or affiliates, to terminate such relationship or to
               refrain from extending or renewing the same. 



               



Nothing in subparagraph (a) above,
will prohibit the Executive from acquiring or holding not more than one percent of any
class of publicly traded securities of any such business; provided that such securities
entitle the Executive to no more than one percent of the total outstanding votes entitled
to be cast by security holders of such business in matters on which such security holders
are entitled to vote. 



      	9. 	  	
          Remedies. The Executive agrees that the restrictions set forth in
          Sections 7 and 8 hereof are reasonably and necessary to protect the legal
          interests of the Company. The Executive further agrees that the Company shall be
          entitled to injunctive relief in the event of any actual or threatened breach of
          such restrictions.  



               


8





     	10. 	  	
          Assignability, Binding Nature. This Agreement shall be binding upon and
          inure to the benefit of the Parties and their respective successors, heirs (in
          the case of the Executive) and assigns. No rights or obligations of the Company
          under this Agreement may be assigned or transferred by the Company except that
          such rights or obligations may be assigned or transferred pursuant to a merger
          or consolidation in which the Company is not the continuing entity, or the sale
          or liquidation of all or substantially all of the assets of the Company,
          provided that the assignee or transferee is the successor to all or
          substantially all of the assets of the Company and such assignee or transferee
          assumes the liabilities, obligations and duties of the Company, as contained in
          this Agreement, either contractually or as a matter of law. The Company further
          agrees that, in the event of a sale of assets or liquidation as described in the
          preceding sentence, it shall take whatever action it legally can in order to
          cause such assignee or transferee to expressly assume the liabilities,
          obligations and duties of the Company hereunder. No rights or obligations of the
          Executive under this Agreement may be assigned or transferred by the Executive
          other than his rights to compensation and benefits, which may be transferred
          only by will or operation of law.  



               



      	11. 	  	
          Amendment. This Agreement may be amended or canceled only by mutual
          agreement of the parties in writing without the consent of any other person. So
          long as the Executive lives, no person, other than the parties hereto, shall
          have any rights under or interest in this Agreement or the subject matter hereof
          except that in the event of the Executive’s Disability so as to render him
          incapable of such action, his legal representative may be substituted for
          purposes of such amendment. 



               



      	12. 	  	
          Applicable Law. The provisions of this Agreement shall be construed in
          accordance with the internal laws of the State of Illinois, without regard to
          the conflict of law provisions of any state.  



               



      	13. 	  	
          Severability. The invalidity or unenforceability of any provision of this
          Agreement will not affect the validity or enforceability of any other provision
          of this Agreement, and this Agreement will be construed as if such invalid or
          unenforceable provision were omitted (but only to the extent that such provision
          cannot be appropriately reformed or modified).  



               



      	14. 	  	
          Waiver of Breach. No waiver by any party hereto of a breach of any
          provision of this Agreement by any other party, or of compliance with any
          condition or provision of this Agreement to be performed by such other party,
          will operate or be construed as a waiver of any subsequent breach by such other
          party of any similar or dissimilar provisions and conditions at the same or any
          prior or subsequent time. The failure of any party hereto to take any action by
          reason of such breach will not deprive such party of the right to take action at
          any time while such breach continues.  



               



      	15. 	  	
          Notices. Notices and all other communications provided for in this
          Agreement shall be in writing and shall be delivered personally or sent by
          registered or certified mail, return receipt requested, postage prepaid, or
          prepaid overnight courier to the parties at the addresses set forth below (or
          such other addresses as shall be specified by the parties by like notice):  



               


9






      to
the Company:




     
          Tellabs, Inc.

               
One Tellabs Center
             
  1415 W. Diehl Road
           
    Naperville, Illinois 60563
        
       Attention: General Counsel



        or
to the Executive: 




     
          Michael J.
Birck
               
One Tellabs Center
             
  1415 W. Diehl Road
          
     Naperville, Illinois 60563



Each party, by written notice
furnished to the other party, may modify the applicable delivery address, except that
notice of change of address shall be effective only upon receipt. Such notices, demands,
claims and other communications shall be deemed given in the case of delivery by overnight
service with guaranteed next day delivery, the next day or the day designated for
delivery; or in the case of certified or registered U.S. mail, five days after deposit in
the U.S. mail; provided, however, that in no event shall any such communications be deemed
to be given later than the date they are actually received. 



     	16. 	  	
          Arbitration of Disputes and Reimbursement of Legal Costs. Any dispute
          between the Company and the Executive, whether arising out of or relating to
          this Agreement, the breach thereof, or otherwise, shall be resolved by final and
          binding arbitration in the Chicago, Illinois metropolitan area administered by
          the American Arbitration Association (the “Association”) in accordance
          with its Commercial Arbitration Rules then in effect, and judgment on the award
          rendered by the arbitrator may be entered in any court having jurisdiction
          thereof. Any arbitration shall be held before a single arbitrator who shall be
          selected by the mutual agreement of the Company and the Executive, unless the
          parties are unable to agree on an arbitrator, in which case, the arbitrator will
          be selected under the procedures of the Association. The arbitrator shall be
          experienced in the resolution of disputes under employment agreements for CEOs
          of major corporations and shall have the authority to award any remedy or relief
          that a court of competent jurisdiction could order or grant, including without
          limitation, the issuance of an injunction, and the parties hereby agree to the
          emergency procedures of the Association. However, either party may, without
          inconsistency with this arbitration provision, apply to any court having
          jurisdiction over such dispute or controversy and seek interim provisional,
          injunctive or other equitable relief until the arbitration award is rendered or
          the controversy is otherwise resolved. Except as necessary in court proceedings
          to enforce this arbitration provision or an award rendered hereunder, or to
          obtain interim relief, neither a party nor an arbitrator may disclose the
          existence, content or results of any arbitration hereunder without the prior
          written consent of the Company and the Executive. In the event of any such
          proceeding, the losing party shall reimburse the prevailing party upon entry of
          a final award resolving the subject of the dispute for all reasonable legal
          expenses incurred, unless the arbitrator determines that to do so would be
          unjust. Otherwise, each party shall be responsible for its own expenses relating
          to the conduct of the arbitration (including reasonable attorneys’ fees and
          expenses) and shall share the fees of the Association equally.  



               


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     	17. 	  	
          Survivorship. Upon the expiration or other termination of this Agreement,
          the respective rights and obligations of the parties hereto shall survive such
          expiration or other termination to the extent necessary to carry out the
          intentions of the parties under this Agreement.  



               



     	18. 	  	
          Entire Agreement. Except as otherwise noted herein, this Agreement
          constitutes the entire agreement between the parties concerning the subject
          matter hereof and supersedes all prior and contemporaneous agreements, if any,
          between the parties relating to the subject matter hereof.  



               



     	19. 	  	
          Counterparts. This Agreement may be executed in separate counterparts,
          each of which is deemed to be an original and all of which taken together
          constitute one and the same agreement.  



               



        IN
WITNESS THEREOF, the Executive has hereunto set his hand, and the Company has caused this
Agreement to be executed in its name and on its behalf, and its corporate seal to be
hereunto affixed, all as of the day and year first above written. 


	 	 	 
	EXECUTIVE:	 	COMPANY:
	 	 	TELLABS, INC,. a Delaware
	 	 	corporation
	

     
                    
                    
                    	 	

By:     
                    
                    
                    
	Michael J. Birck	 	     
        Krish A. Prabhu

	 	 	Its:   
President and Chief Executive Officer
	 	 	

ATTEST:
	 	 	

     
                    
                    
                    
           
	 	 	James M. Sheehan
	 	 	Secretary

























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