<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________________________
SCHEDULE 13D
Under the Securities Exchange Act of 1934
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
(Name of Issuer)
Common Stock, $.01 Par Value
(Title of Class of Securities)
192478105
(CUSIP Number)
Carol Coghlan Gavin
Secretary
Tellabs, Inc.
4951 Indiana Avenue
Lisle, Illinois 60532-1698
(630) 378-8800
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 16, 1998
(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box:
( ).
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities
of that section of the Act but shall be subject to all other provisions
of the Act (however, see the Notes).
(Continued on following pages)
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SCHEDULE 13D
CUSIP No. 192478105
1 NAME OF
REPORTING
PERSON
Tellabs, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a)( ) (b)( )
3 SEC USE ONLY
4 SOURCE OF FUNDS
NA
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e)
(a)( ) (b)( )
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 6,031,391*
REPORTING
PERSON WITH 9 SOLE DISPOSITIVE POWER
10 SHARED DISPOSITIVE POWER
6,031,391*
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,031,391*
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES
(a)( ) (b)( )
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
38.9%
14 TYPE OF REPORTING PERSON
CO
*Reporting Person disclaims beneficial ownership of all shares.
<PAGE>
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Item 1. Security and Issuer
-------------------
The class of equity securities to which this Statement
relates is the common stock, $.01 par value per share
("Coherent Common Stock"), of Coherent Communications
Systems Corporation, a Delaware corporation ("Coherent").
Coherent's principal executive offices are located at 45085
University Drive, Ashburn, Virginia 20147.
Item 2. Identity and Background
-----------------------
This Statement is filed by Tellabs, Inc., a Delaware
corporation ("Tellabs"), whose principal business address is
4951 Indiana Avenue, Lisle, Illinois 60532-1698. Tellabs'
principal business is to design, manufacture, market and
service voice and data transport and network access systems.
During the past five years, Tellabs has not been convicted
in a criminal proceeding (excluding traffic violations or
similar misdemeanors), nor has it been a party to a civil
proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is
subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any
violation with respect to such laws.
Set forth below are the names, principal occupations and
business addresses of the executive officers and directors
of Tellabs. With the exception of Jukka Harju, who is a
citizen of Finland, each executive officer and director
listed below is a citizen of the United States of America.
During the past five years, none of the executive officers
or directors has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors), or
has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a
result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect
to such laws.
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Executive Officers of Tellabs:
NAME POSITION WITH TELLABS
- ---- ---------------------
Michael J. Birck(1) President, Chief Executive Officer and Director,
Tellabs, Inc.
Charles C. Cooney(1) Vice President, Sales and Service, Tellabs
Operations, Inc.
Carol Coghlan Gavin(1) Vice President, General Counsel and Secretary,
Tellabs Operations, Inc.; Secretary, Tellabs,
Inc.
J. Thomas Gruenwald(2) Vice President, Strategic Resources, Tellabs
Operations, Inc.
Peter A. Guglielmi(2) Executive Vice President, Chief Financial
Officer and Treasurer, Tellabs, Inc., and
Tellabs Operations, Inc. and Director, Tellabs,
Inc.
Jukka Harju(3) Vice President and General Manager, Tellabs Oy;
Vice President, Tellabs International, Inc.
Brian J. Jackman(1) President, Tellabs Operations, Inc; Executive
Vice President and Director, Tellabs, Inc.
J. Peter Johnson(2) Vice President, Finance and Treasury, Assistant
Secretary and Controller, Tellabs, Inc., and
Tellabs Operations, Inc.
John C. Kohler(2) Vice President, Manufacturing, Tellabs
Operations, Inc.
Harvey R. Scull(1) Vice President, Advanced Business Development,
Tellabs Operations, Inc.
Richard T. Taylor(1) Senior Vice President and General Manager,
Digital Systems Division, Tellabs Operations,
Inc.
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John E. Vaughan(1) President, Tellabs International, Inc.;
Executive Vice President, Tellabs, Inc.
(1) The business address of each of these executive officers is 4951
Indiana Avenue Lisle, Illinois 60532-1698.
(2) The business address of each of these executive officers is 1000
Remington Boulevard, Bolingbrook, Illinois 60440.
(3) The business address of this executive officer is Sinikalliontie 7,
FIN-02630, Espoo, Finland.
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Directors of Tellabs:
- --------------------
PRINCIPAL OCCUPATION, ADDRESS OF
NAME EMPLOYER AND BUSINESS ADDRESS OF DIRECTOR
- ---- -----------------------------------------
Michael J. Birck President and Chief Executive Officer of
Tellabs, Inc., 4951 Indiana Avenue Lisle,
Illinois 60532-1698.
John D. Foulkes, Ph.D. Director of Engineering Studies
(retired) University of Puget Sound;
Professor (retired) University of
Washington, 1256 S. Halsey Drive,
Coupeville, Washington 98239.
Peter A. Guglielmi Executive Vice President, Chief
Financial Officer and Treasurer,
Tellabs, Inc., and Tellabs Operations,
Inc., 1000 Remington Boulevard,
Bolingbrook, Illinois 60440.
Brian J. Jackman President, Tellabs Operations, Inc,
Executive Vice President, Tellabs, Inc.,
4951 Indiana Avenue Lisle, Illinois
60532-1698.
Frederick A. Krehbiel Chief Executive Officer and Chairman
of the Board, Molex Incorporated, 2222
Wellington Court, Lisle, Illinois 60532.
Stephanie Pace Marshall, Ph.D. President, Illinois Mathematics and
Science Academy, 1500 W. Sullivan Road,
Aurora, Illinois 60506-1000.
William F. Souders Chairman and Chief Executive Officer
(retired), Emery Air Freight
Corporation, formerly Executive Vice
President, Xerox Corporation, 100 First
Stamford Place, Suite 402, Stamford,
Connecticut 06904-2340.
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Jan H. Suwinski Professor of Strategy and Operations
Management-Johnson School, Cornell
University; Executive Vice President
(retired), Opto-Electronics Group,
Corning Incorporated; Chairman (retired)
Siecor Corporation, 451 Sheffield Road,
Ithaca, New York 14850.
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Item 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
The Stockholder Agreements described in Item 4 of this
Statement were entered into by Tellabs and the Stockholders
listed in Item 4 as an inducement to Tellabs to enter into
the Merger Agreement described in Item 4. Except as set
forth in the preceding sentence, Tellabs has paid no
consideration in connection with entering into the
Stockholder Agreements.
Item 4. Purpose of Transaction
----------------------
On February 16, 1998, Tellabs, Inc., a Delaware corporation
("Tellabs"), Cardinal Merger Co., a Delaware corporation and
a wholly-owned subsidiary of Tellabs ("Sub"), and Coherent
Communications Systems Corporation, a Delaware corporation
("Coherent"), entered into an Agreement and Plan of Merger
(the "Merger Agreement"), providing for the merger of Sub
with and into Coherent (the "Merger"), with Coherent
surviving the Merger and becoming a wholly- owned subsidiary
of Tellabs. Pursuant to the Merger Agreement, by virtue of
the Merger each outstanding share of Coherent Common Stock
(other than shares held by Coherent or its subsidiaries,
Tellabs, Sub or any other wholly-owned subsidiaries of
Tellabs) will be converted into the right to receive .72 of
a share of common stock, $.01 par value per share, of
Tellabs. Pursuant to the Merger Agreement, the directors of
Sub immediately prior to the consummation of the Merger and
Lawrence J.Gallick, Charles A. Root, Charles M. Skibo and
Ernst Volgenau, current directors of Coherent, will become
the directors of Coherent upon the effectiveness of the
Merger. At the effective time of the Merger, in accordance
with the Merger Agreement, the Certificate of Incorporation
of Coherent shall be amended to provide that the authorized
capital stock of Coherent will be 1,000 shares of Coherent
Common Stock and the present Bylaws of Sub will become the
Bylaws of Coherent. It is anticipated that, following the
consummation of the Merger, the Coherent Common Stock will
be delisted from the Nasdaq National Market and the Coherent
Common Stock will be terminated from registration pursuant
to Section 12(g)(4) of the Securities Exchange Act of 1934,
as amended. A copy of the Merger Agreement is included as
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Exhibit 1 hereto and the description of the Merger Agreement
contained herein is qualified in its entirety by reference
to such exhibit, which is incorporated herein by reference.
Concurrently with the execution of the Merger Agreement, in
order to induce Tellabs to enter into the Merger Agreement,
Safeguard Scientifics, Inc. ("Safeguard"), the owner of
4,843,342 (approximately 31.2%) of the outstanding shares of
Coherent Common Stock, and Daniel L. McGinnis, Lawrence J.
Gallick, Warren V. Musser, Charles A. Root, Charles Skibo
and Ernst Volgenau, who are all of the current directors of
Coherent (together with Safeguard, the "Stockholders") and
who own an aggregate of 1,188,049 (approximately 7.7%) of
the outstanding shares of Coherent Common Stock, entered
into stockholder agreements (the "Stockholder Agreements")
with Tellabs.
The Stockholder Agreements provide, among other things,
that: (a) at the stockholders meeting of Coherent to be held
to approve and adopt the Merger Agreement (or at any
adjournment thereof) or in any other circumstances upon
which a vote, consent or other approval with respect to the
Merger or the Merger Agreement is sought, the Stockholder
shall vote (or cause to be voted) the shares of Coherent
Common Stock owned by such Stockholder as of the date of the
Stockholder Agreement and any other shares of capital stock
of Coherent acquired by such Stockholder after the date of
the Stockholder Agreement and during the term of the
Stockholder Agreement (the "Subject Shares") in favor of the
Merger, the adoption of the Merger Agreement and the
approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement; (b) at
any meeting of stockholders of Coherent or at any
adjournment thereof or in any other circumstances upon which
the Stockholder's vote, consent or other approval is sought,
the Stockholder shall vote (or cause to be voted) the
Subject Shares against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets,
reorganization, recapitalization, dissolution, liquidation
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or winding up of or by Coherent or any subsidiary thereof or
any other Takeover Proposal (as defined in the Merger
Agreement) or (ii) any amendment of the Certificate of
Incorporation of Coherent or the Bylaws of Coherent or other
proposal or transaction involving Coherent or any of its
subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent
or nullify the Merger, the Merger Agreement or any of the
other transactions contemplated by the Merger Agreement or
change in any manner the voting rights of any class of
capital stock of Coherent; (c) the Stockholder agrees not to
(i) sell, transfer, pledge, assign or otherwise dispose of
(including by gift) (collectively, "Transfer"), or enter
into any contract, option or other arrangement (including
any profit-sharing arrangement) with respect to the Transfer
of the Subject Shares to any person or (ii) enter into any
voting arrangement, whether by proxy, voting agreement or
otherwise, in relation to the Subject Shares, and agrees not
to commit or agree to take any of the foregoing actions; and
(d) the Stockholder agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with Tellabs in
doing, all things necessary, proper or advisable to
consummate and make effective, in the most expeditious
manner practicable, the Merger and the other transactions
contemplated by the Merger Agreement.
The obligations of the Stockholders under the Stockholder
Agreements terminate upon the earlier of the termination of
the Merger Agreement or the effective time of the Merger,
except that if the Merger Agreement is terminated pursuant
to certain sections of the Merger Agreement that may result
in a termination fee being paid to Tellabs by Coherent after
the date of such termination pursuant to the Merger
Agreement, the Stockholder Agreements shall not terminate
until 60 days following the termination of the Merger
Agreement.
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A copy of the Stockholder Agreement entered into between
Tellabs and Safeguard and the form of Stockholder Agreement
entered into between Tellabs and each such other Stockholder
are filed as Exhibits 2 and 3 hereto, respectively, and the
description of the Stockholder Agreements contained herein
is qualified in its entirety by reference to such exhibits,
which are incorporated herein by reference.
Item 5. Interest in Securities of the Issuer.
------------------------------------
(a) - (c) By reason of the Stockholder Agreements, Tellabs
may be deemed to be the beneficial owner of, in
the aggregate, 6,031,391 shares (the "Shares") of
Coherent Common Stock and may be deemed to have
shared power to vote or direct the vote of the
Shares or shared power to dispose or direct the
disposition of the Shares. The Shares represent
approximately 38.9% of the outstanding shares of
Coherent Common Stock, based upon the number of
shares outstanding as of February 12, 1998. By
virtue of the limited nature of the Stockholder
Agreements, Tellabs expressly disclaims
beneficial ownership of the Shares. Except as
described in this Schedule 13D, neither Tellabs
nor, to the best knowledge of Tellabs, any of the
persons listed in Item 2 above beneficially owns
any shares of Coherent Common Stock. Except as
described in this Schedule 13D, neither Tellabs
nor, to the best of its knowledge, any of the
persons listed in Item 2 above has effected any
transactions in Coherent Common Stock during the
past 60 days.
(d) Not applicable.
(e) Not applicable
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Item 6. Contracts, Arrangements, Understanding or Relationships with
Respect to Securities of the Issuer.
-----------------------------------
As described in Item 4, Tellabs presently anticipates that
it will acquire the entire equity interest in Coherent
pursuant to the Merger Agreement.
Other than the Merger Agreement and the Stockholder
Agreements described in Item 4 and attached as Exhibits to
this Statement, to the best knowledge of Tellabs, there are
no contracts, arrangements, understandings or relationships
(legal or otherwise) between the persons listed in Item 2 of
this Statement and any person with respect to Coherent
Common Stock.
Item 7. Material to be Filed as Exhibits.
--------------------------------
1 Agreement and Plan of Merger dated as of February 16,
1998 among Tellabs, Inc., Cardinal Merger Co. and
Coherent Communications Systems Corporation
(Incorporated by reference to Exhibit 2.1 of Tellabs,
Inc.'s Current Report on Form 8-K (filed on February
20, 1998)).
2 Safeguard Stockholder Agreement dated as of February
16, 1998 between Tellabs, Inc. and Safeguard
Scientifics, Inc.
3 Form of Stockholder Agreement dated as of February 16,
1998 entered into between Tellabs, Inc. and certain
stockholders of Coherent Communications Systems
Corporation (including a schedule listing each such
stockholder and the number of shares of common stock of
Coherent Communications Systems Corporation owned by
such stockholder as set forth in the Stockholder
Agreement entered into by such stockholder).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
TELLABS, INC.
Dated: February 26, 1998 By: /s/ Carol Coghlan Gavin
------------------------------------
Carol Coghlan Gavin
Secretary
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EXHIBIT INDEX
- -------------
Exhibit No. Description
- -----------------------
1 Agreement and Plan of Merger dated as of February 16, 1998 among
Tellabs, Inc., Cardinal Merger Co. and Coherent Communications
Systems Corporation (Incorporated by reference to Exhibit 2.1 of
Tellabs, Inc.'s Current Report on Form 8-K (filed on February 20,
1998)).
2 Safeguard Stockholder Agreement dated as of February 16, 1998
between Tellabs, Inc. and Safeguard Scientifics, Inc.
3 Form of Stockholder Agreement dated as of February 16, 1998 entered
into between Tellabs, Inc. and certain stockholders of Coherent
Communications Systems Corporation (including a schedule listing
each such stockholder and the number of shares of common stock of
Coherent Communications Systems Corporation owned by such
stockholder as set forth in the Stockholder Agreement entered into
by such stockholder).
<PAGE> 1
Exhibit 2
SAFEGUARD STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of February 16, 1998 (this "Agreement")
by the undersigned stockholder (the "Stockholder") of Coherent
Communications Systems Corporation, a Delaware corporation (the
"Company"), for the benefit of Tellabs, Inc., a Delaware corporation
("Parent").
WHEREAS, Parent, Cardinal Merger Co., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company are entering
into an Agreement and Plan of Merger, dated as of February 16, 1998 (the
"Merger Agreement"), whereby, upon the terms and subject to the
conditions set forth in the Merger Agreement, each issued and
outstanding share of the Common Stock, par value $.01 per share, of the
Company ("Company Common Stock") not owned directly or indirectly by
Parent or the Company, will be converted into shares of Common Stock,
par value $.01 per share, of Parent ("Parent Common Stock");
WHEREAS, stockholder owns 4,843,342 shares of Company Common Stock (such
shares of Company Common Stock, together with any other shares of
capital stock of the Company acquired by such Stockholder after the date
hereof and during the term of this Agreement, being collectively
referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement the Stockholder has
agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as
follows:
1. Capitalized Terms.
-----------------
Capitalized terms used in this Agreement that are not defined herein
shall have such meanings as set forth in the Merger Agreement.
2. Covenants of Stockholder.
------------------------
Until the termination of this Agreement in accordance with Section
5, Stockholder agrees as follows:
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(a) At the Stockholders Meeting (or at any adjournment thereof) or
in any other circumstances upon which a vote, consent or other
approval with respect to the Merger or the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the
Subject Shares in favor of the Merger, the adoption of the
Merger Agreement and the approval of the terms thereof and each
of the other transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against (i) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or
any subsidiary thereof or any other Takeover Proposal or (ii)
any amendment of the Company's Certificate of Incorporation or
Bylaws or other proposal or transaction involving the Company or
any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement or change in
any manner the voting rights of any class of capital stock of
the Company. The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
(c) The Stockholder agrees not to (i) sell, transfer, pledge, assign
or otherwise dispose of (including by gift) (collectively,
"Transfer"), or enter into any contract, option or other
arrangement (including any profit-sharing arrangement) with
respect to the Transfer of the Subject Shares to any person or
(ii) enter into any voting arrangement, whether by proxy, voting
agreement or otherwise, in relation to the Subject Shares, and
agrees not to commit or agree to take any of the foregoing
actions.
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(d) The Stockholder shall not, nor shall the Stockholder permit any
affiliate, director, officer, employee, investment banker,
attorney or other advisor or representative of the Stockholder
to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations
regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be
expected to lead to, any Takeover Proposal.
(e) The Stockholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with Parent in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by the Merger Agreement.
Stockholder makes the covenants and agreements contained in this
Section 2 solely in Stockholder's capacity as a stockholder of the
Company and nothing contained in this Agreement shall limit the
ability of Stockholder, to the extent Stockholder is a director of
the Company, to discharge Stockholder's fiduciary duties as a
director of the Company under applicable law.
3. The Subject Shares.
------------------
The Stockholder represents and warrants to Parent that (i) the
Stockholder is the record and beneficial owner of, and has good and
marketable title to, the Subject Shares, (ii) the Stockholder does
not own, of record or beneficially, any shares of capital stock of
the Company other than the Subject Shares and (iii) the Stockholder
has the sole right to vote, and the sole power of disposition with
respect to, the Subject Shares, and none of the Subject Shares is
subject to any voting trust, proxy or other agreement, arrangement
or restriction with respect to the voting or disposition of such
Subject Shares, except as contemplated by this Agreement.
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4. Affiliates Letter.
-----------------
Stockholder agrees to execute and deliver on a timely basis an
Affiliate Letter in the form of Exhibit A to the Merger Agreement,
when and if requested by Parent.
5. Termination.
-----------
The obligations of the Stockholder hereunder shall terminate upon
the earlier of the termination of the Merger Agreement pursuant to
Section 8.1 thereof or the Effective Time; provided, however, that
if the Merger Agreement is terminated pursuant to Sections 8.1(d),
8.1(e) or 8.1(f) of the Merger Agreement, this Agreement shall not
terminate until 60 days following the termination of the Merger
Agreement.
6. Further Assurances.
------------------
Stockholder will, from time to time, execute and deliver, or cause
to be executed and delivered, such additional or further consents,
documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Successors, Assigns and Transferees Bound.
-----------------------------------------
Any successor, assignee or transferee (including a successor,
assignee or transferee as a result of the death of the Stockholder,
such as an executor or heir) shall be bound by the terms hereof, and
the Stockholder shall take any and all actions necessary to obtain
the written confirmation from such successor, assignee or transferee
that it is bound by the terms hereof.
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<PAGE> 5
8. Remedies.
--------
The Stockholder acknowledges that money damages would be both
incalculable and an insufficient remedy for any breach of this
Agreement by it, and that any such breach would cause Parent
irreparable harm. Accordingly, the Stockholder agrees that in the
event of any breach or threatened breach of this Agreement, Parent,
in addition to any other remedies at law or in equity it may have,
shall be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and
specific performance.
9. Severability.
------------
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such
jurisdiction, or the validity or enforceability of any provision of
this Agreement in any other jurisdiction. If in the opinion of
Parent's independent accountants, any provision hereof would cause
the Merger to be ineligible for "pooling of interest" accounting
treatment, it shall be deemed to be ineffective and inapplicable.
10. Amendment.
---------
This Agreement may be amended only by means of a written instrument
executed and delivered by both the Stockholder and Parent.
11. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance in
accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
12. Counterparts.
------------
For the convenience of the parties, this Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
<PAGE>
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13. Termination of Loan Agreement.
-----------------------------
The loan agreement between the Stockholder and the Company
referenced in the Company's Proxy Statement for its 1997 Annual
Meeting of Stockholders has been terminated and is of no force or
effect and no amounts are owing to the Stockholder or the Company
thereunder.
14. Termination of Administrative Services Agreement.
--------------------------------------------------
The Stockholder agrees to take all necessary action to cause the
Administrative Services Agreement dated as of May 7, 1997 between
the Company and the Stockholder (the "Services Agreement") to be
terminated effective immediately before the Effective Time (or such
later time thereafter as may be requested by Parent, not to exceed
one hundred eighty (180) days following the Effective Time) on terms
that are reasonably satisfactory to Parent, which terms shall
include that the Company shall have no continuing obligations under
the such agreements following such termination and that the
Stockholder shall not be entitled to receive any consideration in
connection with such termination other than a termination fee,
payable by the Company at the time of such termination, equal to the
Services Fee (as defined in Section 3 of the Services Agreement)
payable with respect to the period commencing on the date of such
termination and ending on December 31, 1998. The Stockholder
represents to Parent that a true and complete copy of such agreement
has been delivered to Parent and that all amounts due to Stockholder
from the Company thereunder up to and including January 1, 1998 have
been paid in full.
<PAGE>
<PAGE> 7
SAFEGUARD SCIENTIFICS, INC.
By: /s/ James A. Ounsworth
------------------------------------------
Name: James A. Ounsworth
Title: Senior Vice President,
General Counsel and Secretary
Accepted and Agreed to
as of the date noted above:
TELLABS, INC.
By: /s/ Michael J. Birck
------------------------------------------
Name: Michael J. Birck
Title: President and Chief Executive Officer
<PAGE> 1
Exhibit 3
FORM OF STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT, dated as of February 16, 1998 (this "Agreement")
by the undersigned stockholder (the "Stockholder") of Coherent
Communications Systems Corporation, a Delaware corporation (the
"Company"), for the benefit of Tellabs, Inc., a Delaware corporation
("Parent").
WHEREAS, Parent, Cardinal Merger Co., a Delaware corporation and a
wholly-owned subsidiary of Parent ("Sub"), and the Company are entering
into an Agreement and Plan of Merger, dated as of February 16, 1998 (the
"Merger Agreement"), whereby, upon the terms and subject to the
conditions set forth in the Merger Agreement, each issued and
outstanding share of the Common Stock, par value $.01 per share, of the
Company ("Company Common Stock") not owned directly or indirectly by
Parent or the Company, will be converted into shares of Common Stock,
par value $.01 per share, of Parent ("Parent Common Stock");
WHEREAS, stockholder owns [__________________]* shares of Company Common
Stock (such shares of Company Common Stock, together with any other
shares of capital stock of the Company acquired by such Stockholder
after the date hereof and during the term of this Agreement, being
collectively referred to herein as the "Subject Shares"); and
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Parent has required that the Stockholder agree, and in order
to induce Parent to enter into the Merger Agreement the Stockholder has
agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the promises and the mutual
covenants and agreements set forth herein, the Stockholder agrees as
follows:
1. Capitalized Terms.
-----------------
Capitalized terms used in this Agreement that are not defined herein
shall have such meanings as set forth in the Merger Agreement.
<PAGE>
<PAGE> 2
2. Covenants of Stockholder.
------------------------
Until the termination of this Agreement in accordance with Section
5, Stockholder agrees as follows:
(a) At the Stockholders Meeting (or at any adjournment thereof) or
in any other circumstances upon which a vote, consent or other
approval with respect to the Merger or the Merger Agreement is
sought, the Stockholder shall vote (or cause to be voted) the
Subject Shares in favor of the Merger, the adoption of the
Merger Agreement and the approval of the terms thereof and each
of the other transactions contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Stockholder's vote, consent or other approval is sought, the
Stockholder shall vote (or cause to be voted) the Subject Shares
against (i) any merger agreement or merger (other than the
Merger Agreement and the Merger), consolidation, combination,
sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or
any subsidiary thereof or any other Takeover Proposal or (ii)
any amendment of the Company's Certificate of Incorporation or
Bylaws or other proposal or transaction involving the Company or
any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or
nullify the Merger, the Merger Agreement or any of the other
transactions contemplated by the Merger Agreement or change in
any manner the voting rights of any class of capital stock of
the Company. The Stockholder further agrees not to commit or
agree to take any action inconsistent with the foregoing.
(c) The Stockholder agrees not to (i) sell, transfer, pledge,
assign or otherwise dispose of (including by gift)
(collectively, "Transfer"), or enter into any contract, option
or other arrangement (including any profit-sharing arrangement)
with respect to the Transfer of the Subject Shares to any person
or (ii) enter into any voting arrangement, whether by proxy,
voting agreement or otherwise, in relation to the Subject
Shares, and agrees not to commit or agree to take any of the
foregoing actions.
<PAGE>
<PAGE> 3
(d) The Stockholder shall not, nor shall the Stockholder permit any
affiliate, director, officer, employee, investment banker,
attorney or other advisor or representative of the Stockholder
to, (i) directly or indirectly solicit, initiate or encourage
the submission of, any Takeover Proposal or (ii) directly or
indirectly participate in any discussions or negotiations
regarding, or furnish to any person any information with respect
to, or take any other action to facilitate any inquiries or the
making of any proposal that constitutes or may reasonably be
expected to lead to, any Takeover Proposal.
(e) The Stockholder shall use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done,
and to assist and cooperate with Parent in doing, all things
necessary, proper or advisable to consummate and make effective,
in the most expeditious manner practicable, the Merger and the
other transactions contemplated by the Merger Agreement.
Stockholder makes the covenants and agreements contained in this
Agreement solely in Stockholder's capacity as a stockholder of the
Company and nothing contained in this Agreement shall limit the
ability of Stockholder, to the extent Stockholder is a director of
the Company, to discharge Stockholder's fiduciary duties as a
director of the Company under applicable law.
3. The Subject Shares.
------------------
The Stockholder represents and warrants to Parent that (i) the
Stockholder is the record and beneficial owner of, and has good and
marketable title to, the Subject Shares, (ii) the Stockholder does
not own, of record or beneficially, any shares of capital stock of
the Company other than the Subject Shares and (iii) the Stockholder
has the sole right to vote, and the sole power of disposition with
respect to, the Subject Shares, and none of the Subject Shares is
subject to any voting trust, proxy or other agreement, arrangement
or restriction with respect to the voting or disposition of such
Subject Shares, except as contemplated by this Agreement.
4. Affiliates Letter.
-----------------
Stockholder agrees to execute and deliver on a timely basis an
Affiliate Letter in the form of Exhibit A to the Merger Agreement,
when and if requested by Parent.
<PAGE>
<PAGE> 4
5. Termination.
-----------
The obligations of the Stockholder hereunder shall terminate upon
the earlier of the termination of the Merger Agreement pursuant to
Section 8.1 thereof or the Effective Time; provided, however, that
if the Merger Agreement is terminated pursuant to Sections 8.1(d),
8.1(e) or 8.1(f) of the Merger Agreement, this Agreement shall not
terminate until 60 days following the termination of the Merger
Agreement.
6. Further Assurances.
------------------
Stockholder will, from time to time, execute and deliver, or cause
to be executed and delivered, such additional or further consents,
documents and other instruments as Parent may reasonably request for
the purpose of effectively carrying out the transactions
contemplated by this Agreement.
7. Successors, Assigns and Transferees Bound.
-----------------------------------------
Any successor, assignee or transferee (including a successor,
assignee or transferee as a result of the death of the Stockholder,
such as an executor or heir) shall be bound by the terms hereof, and
the Stockholder shall take any and all actions necessary to obtain
the written confirmation from such successor, assignee or transferee
that it is bound by the terms hereof.
8. Remedies.
--------
The Stockholder acknowledges that money damages would be both
incalculable and an insufficient remedy for any breach of this
Agreement by it, and that any such breach would cause Parent
irreparable harm. Accordingly, the Stockholder agrees that in the
event of any breach or threatened breach of this Agreement, Parent,
in addition to any other remedies at law or in equity it may have,
shall be entitled, without the requirement of posting a bond or
other security, to equitable relief, including injunctive relief and
specific performance.
<PAGE>
<PAGE> 5
9. Severability.
------------
The invalidity or unenforceability of any provision of this
Agreement in any jurisdiction shall not affect the validity or
enforceability of any other provision of this Agreement in such
jurisdiction, or the validity or enforceability of any provision of
this Agreement in any other jurisdiction. If in the opinion of
Parent's independent accountants, any provision hereof would cause
the Merger to be ineligible for "pooling of interest" accounting
treatment, it shall be deemed to be ineffective and inapplicable.
10. Amendment.
---------
This Agreement may be amended only by means of a written instrument
executed and delivered by both the Stockholder and Parent.
11. Governing Law.
-------------
This Agreement shall be governed by, and construed in accordance in
accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
12. Counterparts.
------------
For the convenience of the parties, this Agreement may be executed
in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
<PAGE>
<PAGE> 6
[_______________________________]*
Name:
Accepted and Agreed to
as of the date noted above:
TELLABS, INC.
By: /s/ Michael J. Birck
-------------------------------------
Name: Michael J. Birck
Title: President and Chief Executive Officer
* See attached schedule.
<PAGE>
<PAGE> 7
Schedule
--------
List of Parties to the Stockholder Agreements and Shares Held as
Described in Exhibit 3 to this Schedule 13D
Stockholder Shares Currently Owned(1)
----------- ----------------------
Lawrence J. Gallick 8,868
Daniel L. McGinnis 824,421
Warren V. Musser 230,022
Charles A. Root 124,738
Charles Skibo 0
Ernst Volgenau 0
(1) The number of shares is as reported by each stockholder in his
respective Stockholder Agreement.
