Document:

Letter Agreement with Steve McCarthy

 Exhibit 10.43 
 August 27, 2007 
 Mr. Stephen M. McCarthy 
 Re:    Agreement and General Release 
 Dear Steve, 
 This Letter Agreement, including the General Release contained in Attachment A (collectively, the “Agreement”), confirms our understanding concerning your retirement from Tellabs, Inc. and any and all of its
subsidiaries (hereinafter collectively referred to as “Tellabs”). The parties are entering into this Agreement as a final and complete resolution of all matters relating to your employment at Tellabs. In consideration of the mutual
covenants and promises herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, and to avoid any dispute, it is agreed by and between the parties as follows: 
  

	1.	We mutually agree that you are voluntarily retiring from Tellabs as Executive Vice President Global Sales & Services, Tellabs, Inc., effective December 28, 2007
(Retirement Date). Tellabs has agreed that your last day of work will be August 22, 2007 and you have agreed that you are resigning your officer positions with Tellabs effective August 22, 2007. You will remain on payroll through the
Retirement Date and may be called upon during this time to assist the Company transition your duties and responsibilities. 

  

	2.	Tellabs will provide you with a total lump sum payment of $344,500.00 (the equivalent of your annual base salary) subject to appropriate taxes and withholdings which will be
deducted from this payment. The lump sum payment will be made on December 28, 2007, so long as you have delivered an executed copy of this Agreement to Tellabs and not exercised your right of revocation as described in paragraph 17 below.

  

	3.	The value of any earned but not taken vacation time as of your Retirement Date will be paid in a lump sum after your Retirement Date. 

  

	4.	 Provided you execute and do not revoke the Agreement, you will be credited with additional service for the purpose of determining your benefits under the Tellabs
Stock Option Plan. Pursuant to the Tellabs Stock Option Plan, 50% of your 

  

 Confidential – Agreement and General Release – Page 1 of 8 

	 	 
unvested equity (RSU’s and stock options) will vest as of the Retirement Date and you will have 3 years to exercise all of your vested options, or until
the original option expiration date, whichever is earlier. No PSU’s will vest. You will, however, continue to remain bound by all laws relating to transactions involving company stock, including but not limited to laws prohibiting the sale of
stock while in the possession of material non-public inside information. In the event of any conflict between this paragraph and the provisions of the Tellabs Stock Option Plan, the terms of the Tellabs Stock Option Plan shall govern; provided,
however, that nothing in the Tellabs Stock Option Plan shall be construed to conflict with the credit of additional service for purposes of vesting 50% of your unvested equity. 

  

	5.	You will cease to be eligible for any Tellabs benefits (other than those specifically described herein) as of the Retirement Date. Provided you execute and do not revoke the
Agreement, you will treated for the purpose of determining your eligibility and benefits under the Tellabs Retiree Medical Plan, as accumulating 70 points. Based on this status, you understand that you have the following options: (a) You have
met the eligibility requirements for and may therefore enroll in the Retiree Medical Plan. Information regarding this plan will be sent to you by the Benefits Department under separate cover. You must complete the enrollment form and return it to
Deb Ragusa within 31 days of your Retirement Date to enroll in the Plan. (b) You may elect, in accordance with the federal statute (COBRA), to continue your medical, dental and/or vision benefits for up to 18 months following your Retirement
Date. You have the option of enrolling in the Retiree Medical Plan for your medical benefits and, enrolling in dental and/or vision through COBRA. If you choose to enroll in medical benefits through COBRA rather than Retiree Medical, you will not
be eligible to enroll in the Retiree Medical Plan at a later date. Tellabs will pay the cost of Retiree Medical for you through December 31, 2008. Cost associated with continuation of coverage after December 31, 2008 and for all dental
and/or vision coverage will be your responsibility. Please contact Deb Ragusa, Manager, Benefits, for information on the COBRA and Retiree Medical Plans. 

  

	6.	Your Tellabs Advantage Program vesting will be calculated based on your Retirement Date. 

  

	7.	You are required to submit a final expense report, settle any company advances, and return all Tellabs property, including credit cards and files, prior to September 7, 2007.

  

 Confidential – Agreement and General Release – Page 2 of 8 

	8.	You have agreed that you will not criticize or in any way disparage Tellabs, its subsidiaries and any of their officers, directors, employees or agents. Tellabs agrees that it will
comply with company guidelines regarding standard references. 

  

	9.	You agree to continue to be bound by the terms of the Confidentiality Agreement and Intellectual Property Agreement signed by you during your employment with Tellabs. You agree to
keep all company proprietary information confidential. 

  

	10.	You acknowledge that the benefits provided in this Agreement exceed the benefits you would normally receive and that those extra benefits are provided by Tellabs in exchange for you
agreeing to the terms and conditions of this Agreement, including the General Release contained in Attachment A. 

  

	11.	You agree that without written consent of Tellabs, you will not disclose, disseminate or publicize or cause or permit to be disclosed, disseminated or publicized, any of the terms
of this Agreement or the fact that you have entered into this Agreement to any person, corporation, association, governmental agency or other entity other than your legal counsel, accountants, immediate family members and bona fide potential
employers and except as required by law and as necessary to enforce the terms of this Agreement. You agree that any such legal counsel, accountants, family members and/or bona fide potential employers shall be bound by this confidentiality
provision. 

  

	12.	You agree to cooperate with Tellabs in any current or future litigation or potential litigation or other legal matters in any reasonable manner as Tellabs may request, including but
not limited to meeting with and fully and truthfully answering the questions of Tellabs or its representatives or agents, and testifying and preparing to testify at any deposition or trial, subject to reimbursement for reasonable expenses incurred
as a result of such cooperation. 

  

	13.	You agree that for a period of twelve months following the Retirement Date, you will not, directly or indirectly, on your own behalf or on behalf of any other person or entity,

  

	 	(i)	perform any services or acts for yourself or any person or entity who is in competition with any business, services or products being offered for sale or produced by Tellabs or of
any of its subsidiaries (including but not limited to, data, voice or video transport, switching/routing, network access system and/or voice quality enhancement products or solutions to service providers or end users); 

  

 Confidential – Agreement and General Release – Page 3 of 8 

	 	(ii)	own an interest in participate in or be connected as an owner, partner, stockholder, employee, director, officer, agent, consultant or otherwise, with or without compensation, any
corporation, partnership, proprietorship, firm, association, person, or other entity producing, providing, or soliciting business which directly or indirectly competes with the services and business of Tellabs or any subsidiary;

  

	 	(iii)	solicit for employment, or employ or retain, any person who was employed by Tellabs or any of its subsidiaries (other than persons employed in a clerical or other non-professional
position) within the twelve-month period preceding the date of such hiring; or 

  

	 	(iv)	call upon or solicit any entity which, as of the Retirement Date, is or during the preceding twelve months was, a customer of Tellabs or its subsidiaries, or any entity which was
not such a customer but with respect to which Tellabs or its subsidiaries has within the twelve months preceding the Retirement Date, made a proposal for such entity to become a customer, for the purpose of providing products or services (including
but not limited to data, voice or video transport, switching/routing, network access system and/or voice quality enhancement products or solutions). 

 Nothing in subparagraph (ii) above, will prohibit you 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 you
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. 
 Nothing contained in this paragraph 13 shall invalidate or affect any non-disclosure, assignment of intellectual property, non-competition,
non-solicitation or other similar covenant or agreement that currently exists between you and Tellabs or a subsidiary and any such covenants and agreements shall continue in full force and effect. 
 You agree that the protective covenants set forth in this paragraph 13 are reasonable and necessary to protect the legal interests of Tellabs. You further
agree that in addition to any other remedies Tellabs may have, Tellabs shall be entitled to injunctive relief in the event of any actual or threatened breach of such covenants. 
  

 Confidential – Agreement and General Release – Page 4 of 8 

	14.	You acknowledge and agree that no promises or representations were made which do not appear written herein and that this Agreement contains the entire agreement of the parties as to
the subject matter hereof. The Executive Continuity and Protection Program is expressly superseded by this Agreement and will no longer have any force or effect and will be null and void after the effective date of this Agreement.

  

	15.	The internal law (and not the law of conflicts) of the State of Illinois will govern all questions concerning the construction, validity, and interpretation of this Agreement. In
the event that part or all of this Agreement or the attached General Release is found to be invalid, you recognize that Tellabs shall have the right to discontinue any payments made in accordance with the Agreement and to seek repayment of any and
all amounts paid to you hereunder, in addition to any other amounts to which Tellabs may be entitled as a matter of law. 

  

	16.	Notwithstanding any provision herein to the contrary, you agree that all benefits and payments described herein will cease if you become employed by Tellabs or any of its affiliates
while you are still entitled to any such benefits or payments. 

  

	17.	You are being provided with twenty-one days to consider the terms and conditions of this Agreement, including the General Release contained in Attachment A. You will have seven days
following the execution of this Agreement to revoke this Agreement. The Agreement shall not become effective or enforceable until the revocation period has expired. If you choose to revoke your signature, you must do so in writing and deliver it to
the attention of Linda Pfluger, Director Human Resources, One Tellabs Center, 1415 West Diehl Road, MS 16, Naperville, IL 60563, no later than 5:00 PM (CST) on the seventh day after signing the Agreement and General Release.

  

	18.	You acknowledge that you have thoroughly read and understand all of the provisions of this Agreement (including the General Release contained in Attachment A), that you have been
advised to consult with an attorney prior to signing this Agreement, and that you are signing this Agreement knowingly and voluntarily. 

  

 Confidential – Agreement and General Release – Page 5 of 8 

					
	Sincerely,	 	 	 	 
			
	 /s/ James M. Sheehan
	 	 	 	  

	James M. Sheehan	 		 	Date
	EVP and General Counsel, Tellabs, Inc	 		 	
			
	AGREED:	 		 	
			
	 /s/ Stephen M. McCarthy
	 		 	  

	Stephen M. McCarthy	 		 	Date

 The undersigned certifies that Stephen M. McCarthy appeared before me and signed this document and verified that
he signed this document voluntarily. 
  

					
	  
	 		 	  

	Witness	 		 	Date

  

 Confidential – Agreement and General Release – Page 6 of 8 

 Attachment A 
 GENERAL RELEASE 
 THIS AGREEMENT CONTAINS A GENERAL RELEASE 
 YOU ARE ADVISED TO CONSULT AN ATTORNEY 
 READ CAREFULLY BEFORE YOU SIGN! 
 I acknowledge that the benefits provided in the Agreement dated August 27, 2007 exceed the benefits I
would normally receive and that those extra benefits are provided by Tellabs in exchange for my signing the Agreement, including this General Release. 
 In
consideration for the benefits I will receive, I agree to release Tellabs, Inc., its affiliated companies and their officers, directors, agents and employees from any claims or actions of any kind, arising on or before the effective date of the
Agreement, that I might have against them regarding or relating in any way to my employment with Tellabs or the termination of that employment. I understand that this release applies to all claims and actions I might have for wrongful discharge,
breach of contract, violations of Title VII of the Civil Rights Act of 1964, the Age Discrimination Employment Act of 1967 (as amended by various congressional enactments, including the Older Workers Benefit Protection Act of 1990), and any and all
claims under any other statute, regulation, Executive Order, Ordinance, or common law, and all other claims and actions related to my employment with Tellabs or the termination of that employment. 
 I represent that I have not filed any complaints, claims or actions against Tellabs with any state, federal or local agency or court and that I will not do so at any
time hereafter, except as provided in the last sentence of the preceding paragraph. Provided, nothing in this Agreement shall be construed to prohibit me from filing a charge or complaint, including a challenge to the validity of this Agreement,
with the Equal Employment Opportunity Commission (“EEOC”) or participating in any investigation or proceeding conducted by the EEOC. 
 I
acknowledge that I have been advised to consult with an attorney prior to signing this Agreement, including this General Release, and that I have been provided at least 21 days in which to consider the terms of the Agreement and this General
Release. Once I have signed the Agreement and this General Release, I understand that I shall have until 7 days after the execution date to revoke my agreement to the terms of the Agreement and this General Release (the “Revocation
Period”). In the event that I elect to revoke within the Revocation Period, I will return this Agreement to Linda Pfluger, Director, Human Resources, Tellabs, 1415 W. Diehl Road, 

  

 Confidential – Agreement and General Release – Page 7 of 8 

 
MS16, Naperville, Illinois, along with my decision in writing to revoke the Agreement. I understand that the Agreement, including this General Release, will
become effective after the Revocation Period has expired, provided I have not revoked my agreement. 
 I acknowledge that I have read the Agreement,
including this General Release, and that I have full knowledge and understanding of the terms and conditions contained in the Agreement and General Release, and that I am signing them voluntarily. 
  

					
	 /s/ Stephen M. McCarthy
	 	 	 	  

	Stephen M. McCarthy	 	 	 	Date

  

 Confidential – Agreement and General Release – Page 8 of 8Executive Performance Stock Units Award Statement

 Exhibit 10.44 
 TELLABS, INC. 20     Executive Performance Stock Units Award Statement for: 
 %%FIRST_NAME%-% %%MIDDLE_NAME%-% %%LAST_NAME%-% 
 Congratulations, you were granted a
         Executive Performance Stock Units (PSU) Award on              by the Compensation Committee of the Tellabs, Inc. (the
“Company”) Board of Directors. The following summarizes your PSU Award: 
  

			
	PERFORMANCE STOCK UNITS AWARD
		
	 PSUs Awarded:
	  	             PSUs (subject to the vesting and payout terms provided for in the Terms of the
             Executive Performance Stock Units Award Agreement)
	
	PERFORMANCE TARGETS/PAYOUT/VESTING:
		  	
	 Performance Targets:
	  	             operating earnings and revenue, as detailed in the Terms of the
             Executive Performance Stock Units Award Agreement attached to this PSU Statement.
		
	 Payout Range:
	  	Up to two (2) shares of Tellabs common stock may be earned for each PSU based upon levels of 2008 operating earnings and revenue achieved, as detailed in the Terms of the
             Executive Performance Stock Units Agreement attached to this PSU Statement.
		
	 Vesting and Payout Dates:
	  	Except in limited circumstances, earned shares will vest and be issued to you in equal annual installments in March
            , March              and March
            , if you are continually employed by the Company or its subsidiaries through those vesting dates. The vesting and payment provisions are detailed in the Terms of the
             Executive Performance Stock Units Award Agreement attached to this PSU Statement.

 This PSU Award is issued under the Tellabs, Inc. 2004 Incentive Compensation Plan (“Plan”) in
consideration of you remaining an employee of the Company and/or one of its subsidiaries. If you accept the terms of this PSU Award, you consent to be bound by all of the terms and conditions of this PSU Award Statement, which includes the
accompanying Terms of the 2008 Executive Performance Stock Units Award Agreement, and the Plan. You also acknowledge that you have been given access to the summary description of the Plan and a copy of the Plan. 
 To the extent not otherwise defined herein, capitalized terms shall have the meaning ascribed to them in the Plan. 
 This Award Statement, including the accompanying Terms of the 2008 Executive Performance Stock Units Award Agreement, constitutes part of a prospectus covering
securities that have been registered under the Securities Act of 1933, as amended. 
  

 1 

 TELLABS, INC. Terms of the 20__ Executive Performance Stock Units Award Agreement 
  

			
	Type of Award:	  	 Performance Stock Units (“PSUs”), representing an opportunity to earn shares of common stock of Tellabs, Inc. (the “Company”
or “Tellabs”).
  
 The number of shares, if any, earned with respect to the PSUs
will depend upon the Company’s certified financial results during the              fiscal year as compared to the Performance Targets described below, and, except as provided
below, your right to receive any shares earned will depend on your continued employment through the vesting dates.

		
	Performance Targets:	  	 The performance targets will be achieved if the Company’s             
certified operating earnings exceed a minimum of $145.0 million or the Company’s              total revenue exceeds a minimum of
             million, respectively (“Performance Targets”).
  
 “Operating earnings” and “revenue” for the measurement period and the resulting
             operating earnings and              revenue shall be the amounts certified by the Company’s
Compensation Committee based upon the Company’s published financial results for              determined on a GAAP basis, with operating earnings adjusted to exclude the effects
of (a) purchased intangible asset amortization, (b) acquisition-related charges (such as in-process R&D, amortization of deferred compensation, closing costs), (c) equity-based compensation award expenses under SFAS 123R, (d) restructuring
charges and certain asset impairment charges, and (e) expenses related to employee bonus accrual for fiscal year             . The amounts as certified are referred to below as
“             Operating Earnings” and “             Revenue,” respectively. The financial
statements contained in the Company’s Form 10-K filed with the United States Securities and Exchange Commission for the Company’s              fiscal year shall qualify as
certified financial results for the Company’s Compensation Committee to certify PSUs earned.

  

 2 

											
	Shares Earned:	  	The number of shares of Tellabs stock earned with respect to each PSU granted is determined based on the certified levels of 2008 Operating Earnings and 2008 Revenue achieved, and
the weighting factor and payout rate set forth in the following table (with straightline extrapolation between performance levels):
				
	 	  	 	  	 	  	 PERFORMANCE ($M)

	 	  	 	  	 WEIGHTING
	  	 MINIMUM
	  	 PLAN
	  	 MAXIMUM

		  	         Operating Earnings	  		  		  		  	
		  	         Revenue	  		  		  		  	
		  	Payout Rate	  		  	.5x	  	1.0x	  	2.0x
		
		  	The “payout rate” reflects the number of shares earned per PSU as a result of the corresponding financial performance achieved, adjusted to reflect the applicable
weighting factor. The maximum payout rate is 2.0x, or two (2) shares per PSU.
		
		  	For example, if              Operating Earnings is
$             million and              Revenues is
$             million, then the “payout rate” will be 1.5x, or 1.5 shares of common stock for each PSU, determined as follows:
	  	  	 PERFORMANCE
	  	 RESULTS
 ($M)
	  	 PAYOUT
 RATE
	  	 WEIGHTING
	  	 WEIGHTED
PAYOUT RATE

		  	          Operating earnings
	  		  		  		  	
		  	          Revenue
	  		  		  		  	
		  	 Total “Payout Rate”
	  	1.5x
		
	Vesting and Issuance of Shares:	  	 Subject to the provisions below relating to termination of employment or Change in Control, your right to receive any earned shares
will vest as follows, provided you remain continuously employed by Tellabs through the applicable vesting date:
  
 •        One-third will vest on March 1, 2009;
  
 •        One-third will vest on March 1, 2010; and
  
 •        One-third will vest on March 1, 2011
  
 Once vested, the earned shares of Tellabs stock will be issued to you no later than March 15th
following the vesting date. Once vested, those shares are no longer at risk of forfeiture.

  

 3 

			
	Effect of Termination of Employment and Change in Control:	  	Except as provided below, all PSUs held by you and your right to receive unvested earned shares will be forfeited and/or cancelled if you cease to be an employee of the Company and/or one of
its subsidiaries.
		
		  	 In the event of termination of your employment due to death, disability or involuntary termination by the Company without cause (referred to as a
“qualifying termination”), a prorated portion of your PSUs, or if applicable, a prorated portion of your earned but unvested shares, will not be forfeited and cancelled, but instead may vest and be issued as described below.
  
 The prorated amount of shares that will not be forfeited or cancelled will be a portion of the total
number of shares scheduled to vest on the next vesting date multiplied by a fraction (not greater than one), the numerator of which is the number of full months of employment you completed during the 12 months immediately preceding the vesting date
through the date of your qualifying termination and the denominator of which is 12. By way of example:
  
 If you have a qualifying termination on December 1,         , the prorated amount which would not be
forfeited would be 9/12ths of the earned shares, if any, that would otherwise have become vested and issued at the March 1,          vesting date; any other earned shares will be forfeited. The prorated
amount, if any, will be issued at the time vested shares otherwise issuable on March 1,          are issued.
  
 If the qualifying termination occurs on February 1,          the prorated amount would be 11/12ths and
you would become fully vested and receive 11/12ths of the unvested earned shares, if any, scheduled to vest on the March 1,          vesting date; all other unvested earned shares will be forfeited or
cancelled. The prorated earned shares that become vested will be issued as promptly as practicable and in no event later than thirty (30) days after termination of employment.
  
 Your employment will be deemed to have been terminated by the Company with “cause” in the
event the Compensation Committee determines that the termination was due to your willful failure to perform your duties after written notice and chance to cure, your gross negligence or willful misconduct with respect to your duties, your knowing
violation of a material requirement of the Company’s Integrity Policy, code of conduct, the Sarbanes-Oxley Act of 2002 or other material provision of securities law or your conviction for a felony or crime involving moral turpitude, dishonesty,
fraud, theft or similar acts.

  

 4 

			
	Effect of Change in Control:	  	 In the event of a Change in Control prior to certification by the Compensation Committee of the number of shares earned based on certified
             Operating Earnings and              Revenue, shares of Tellabs stock will be deemed to be earned with
respect to the outstanding PSUs at a payout rate of 1.0 shares for each PSU or, if greater, the payout rate determined by the Compensation Committee based on the Committee’s assessment of the Company’s financial performance as of the
Change of Control taking into account the Performance Targets as of such Change of Control, but in no event greater than the maximum payout rate, and such earned shares shall be fully vested as of the date of the Change of Control.
  
 In the event of a Change in Control after the number of shares earned has been certified, all
unvested earned shares shall be fully vested as of the date of the Change in Control.
  
 Earned shares that become vested due to a Change in Control shall be issued on or as promptly as practicable, and in no event later than thirty (30) days after date of the Change of Control.

		
	No Voting or Dividend Rights; Adjustments:	  	 Since PSUs and unvested earned shares do not represent actual shares, you do not have any voting rights or dividend rights under the PSUs or with
respect to any unvested earned shares.
  
 The number of PSUs and/or number of shares of
stock issuable with respect to a PSU or unvested earned shares shall be adjusted in the event of a stock dividend, split or other corporate event as more fully set forth in the Plan.

		
	Tax Considerations:	  	Refer to the accompanying Summary of Tax Considerations.
		
	Transferability:	  	No PSUs or unvested earned shares granted under the Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, otherwise than by will or by the laws of descent
and distribution.

  

 5 

 TELLABS, INC. 
 Summary of Tax Considerations 
 Relating to Executive Performance Stock Units Awards under the
Plan 
 Set forth below is a summary of certain tax consequences relating to the Executive Performance Stock Units Awards
(“PSUs) and unvested earned shares relating thereto, under the Tellabs, Inc. 2004 Incentive Compensation Plan, as amended. This discussion does not purport to be complete and does not cover, among other things, state, provincial and local tax
treatment, and should not be considered tax advice by the Company. This summary is provided merely to inform you of certain potential tax consequences. The taxes applicable to you may vary depending on your personal situation, and the Company
strongly recommends that you consult with your own tax advisors regarding the actual tax consequences to you. 
 UNITED STATES 
 Federal Income Tax Considerations: No income is recognized upon receipt of an award of PSUs or the determination of the number of earned shares
relating to the PSU award. At the time vested earned shares are issued, income equal to the then fair market value of stock issued is recognized. The capital gain or loss holding period for any stock begins when ordinary income is recognized. Any
subsequent capital gain or loss is measured by the difference between the fair market value of the stock upon which the ordinary income recognized was based and the amount received upon sale or exchange of the shares. 
 Tax Withholding: Any income or other tax withholding which applies at the time shares are issued will be satisfied by the Company withholding from
the shares of stock issuable, a number of shares of stock then having a fair market value equal to the amount sufficient to satisfy the minimum statutory Federal, state and local tax (including the FICA and Medicare tax obligation) withholding
required by law. 
  

 6

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