S-8

As filed with the Securities and Exchange Commission on June 5, 2003
	Registration No. 333-

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
(including a Form S-3 Prospectus for the Resale of Shares)

TEKELEC

(Exact name of registrant as specified in its charter)

California	95-2746131
State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
26580 West Agoura Road
Calabasas, California	91302
(Address of Principal Executive Offices)	(Zip Code)

2003 STOCK OPTION PLAN
AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN
(Full titles of the plans)

RONALD W. BUCKLY, ESQ.
Vice President and General Counsel
Tekelec
26580 West Agoura Road
Calabasas, California 91302
(818) 880-5656
(Name, address and telephone number of agent for service)

Copy to:

KATHERINE F. ASHTON, ESQ.
Bryan Cave LLP
120 Broadway, Suite 300
Santa Monica, California 90401

CALCULATION OF REGISTRATION FEE

							Proposed
Title of	Amount			Proposed			Maximum
Securities	of Shares			Maximum			Aggregate			Amount of
to be	to be			Offering Price			Offering			Registration
Registered	Registered(1)			per Share			Price			Fee
Common Stock, without par value		3,000,000	(1)(2)	$	13.10	(3)	$	39,300,000	(3)	$	3,180
Common Stock, without par value		800,000	(1)(4)	$	11.14	(5)	$	8,912,000	(5)	$	721
							TOTAL:			$	3,901

(1)	This Registration Statement also covers such additional shares of Common Stock of the Registrant as may be issuable pursuant to anti-dilution provisions of these plans. Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the “Securities Act”), this Registration Statement shall also cover any additional shares of the Registrant’s Common Stock that become issuable under the 1994 Stock Option Plan, the Employee Stock Purchase Plan and the other options covered hereby by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration that increases the number of the Registrant’s outstanding shares of Common Stock.
(2)	Represents shares issuable upon exercise of options granted or to be granted pursuant to the Company’s 2003 Stock Option Plan.
(3)	Estimated pursuant to Rule 457(h) under the Securities Act solely for the purpose of calculating the amount of the registration fee on the basis of the average of the high and low reported sale prices of a share of the Registrant’s Common Stock on May 29, 2003, as reported on the Nasdaq National Market.
(4)	Represents shares issuable upon exercise of options granted or to be granted pursuant to the Company’s Amended and Restated Employee Stock Purchase Plan.
(5)	Estimated pursuant to Rule 457(h) solely for the purpose of calculating the amount of the registration fee on the basis of the average of 85% (see explanation in the following sentence) of the average of the high and low reported sale prices of a share of the Registrant’s Common Stock on May 29, 2003, as reported on the Nasdaq National Market. Under the Amended and Restated Employee Stock Purchase Plan, the purchase price of a share of Common Stock is equal to 85% of the fair market value of the Common Stock on the offering date (i.e., the first day of a six-month purchase period) or the exercise date (i.e., the last day of a six-month purchase period), whichever is less.

(i)

TABLE OF CONTENTS

PART I: INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
	Item 3. Incorporation of Documents by Reference.
	Item 4. Description of Securities.
	Item 5. Interests of Named Experts and Counsel.
	Item 6. Indemnification of Directors and Officers.
	Item 8. Exhibits.
	Item 9. Undertakings.
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 5.1
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 23.1

PART I: INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

          The documents containing the information specified in Items 1 and 2 of Part I of Form S-8 will be sent or given to plan participants as specified in Rule 428(b)(1), under the Securities Act. In accordance with the instructions to Part I, those documents are not filed with the Commission as part of this registration statement or a prospectus under Rule 424 of the Securities Act.

PART II: INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.     Incorporation of Documents by Reference.

                     The following documents and information previously filed with the Securities and Exchange Commission are hereby incorporated by reference:

               Item 3(a)

The Registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2002.

The Registrant’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2003.

The Registrant’s Current Reports on Form 8-K filed with the Commission on April 23, 2003, April 30, 2003 and May 7, 2003.

               Item 3(b)

None.

               Item 3(c)

Item 1 of the Registrant’s Registration Statement on Form 8-A (Registration No. 0-15135) filed with the Commission on November 12, 1986, pursuant to Section 12 of the Securities Exchange Act of 1934.

               All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this Registration Statement and to be part hereof from the date of filing such documents.

Item 4.     Description of Securities.

               Not Applicable.

Item 5.     Interests of Named Experts and Counsel.

               The validity of the shares of the Company’s Common Stock registered hereunder will be passed upon for the Company by Bryan Cave LLP, Santa Monica, California. Ronald W. Buckly, the

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Company’s Vice President and General Counsel, is of counsel to Bryan Cave LLP, which firm has provided legal services to the Company since March 1996.

Item 6.      Indemnification of Directors and Officers.

               Section 317 of the California Corporations Code provides that a corporation may indemnify corporate “agents” (including directors, officers and employees of the corporation) against expenses, judgments, fines, settlements and other amounts actually and reasonably incurred in connection with defending non-derivative actions if such person acted in good faith and in a manner such person reasonably believed to be in the best interests of the corporation and, in the case of a criminal proceeding, had no reasonable cause to believe the conduct of such person was unlawful, and against expenses actually and reasonably incurred in connection with defending derivative actions if such person acted in good faith and in a manner such person believed to be in the best interests of the corporation and its shareholders. Indemnification is obligatory to the extent that an agent of a corporation has been successful on the merits in defense of any such proceeding against such agent, but otherwise may be made only upon a determination in each instance either by a majority vote of a quorum of the Board of Directors (other than directors involved in such proceeding), by independent legal counsel if such a quorum of directors is not obtainable, by the shareholders (other than shareholders to be indemnified), or by the court, that indemnification is proper because the agent has met the applicable statutory standards of conduct. Corporations may also advance expenses incurred in defending proceedings against corporate agents, upon receipt of an undertaking that the agent will reimburse the corporation unless it is ultimately determined that the agent is entitled to be indemnified against expenses reasonably incurred.

               The indemnification provided by Section 317 of the California Corporations Code is not deemed to be exclusive of any other rights to which agents of the Company seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office, to the extent such additional rights are authorized in the articles of the corporation. Article V of the Company’s Restated Articles of Incorporation authorizes the Company to provide for indemnification of its agents for breach of duty to the Company and its shareholders, through bylaw provisions or through agreements with such agents, or both, in excess of the indemnification otherwise permitted by Section 317, subject to the limits on such excess indemnification set forth in Section 204 of the California General Corporation Law.

               Article VI of the Company’s bylaws provides for the indemnification of all past and current directors to the maximum extent and in the manner permitted by Section 317. Additionally, the Company has entered into Indemnification Agreements with its directors under which the Company has undertaken to indemnify each such agent to the fullest extent permitted by its Articles of Incorporation, bylaws and applicable law against all expenses, liability and loss (which are not paid by insurance or otherwise by the Company) reasonably incurred or suffered by such agent in connection with the defense of any action or proceeding to which the agent was or is a party or is threatened to be made a party by reason of conduct in his capacity as an officer or director, or in which the agent is or may be involved by reason of the fact that he is or was serving as an officer or director of the Company, not including actions brought for violation of Section 16 of the Securities Exchange Act of 1934, as amended, or for failure to qualify for an exemption under Section 4 of the Securities Act of 1933, as amended.

               The Company also maintains on behalf of its directors and officers insurance protection against certain liabilities arising out of the discharge of their duties.

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Item 8.      Exhibits.

Exhibit
Number
5.1	Opinion of Bryan Cave LLP.
10.1	2003 Stock Option Plan, including form of stock option agreement.
10.2	Amended and Restated Employee Stock Purchase Plan.
23.1	Consent of PricewaterhouseCoopers LLP.
23.2	Consent of Bryan Cave LLP (included in Exhibit 5.1).
24.1	Power of Attorney (see page 5 of this Registration Statement).

Item 9.     Undertakings.

          (a) The undersigned Registrant hereby undertakes:

               (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

                    (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

                    (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement;

                    (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

               Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

               (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

               (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (b) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be

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deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

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SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Calabasas, State of California, on June 5, 2003.

TEKELEC

By:	/s/ Frederick M. Lax
	Frederick M. Lax, Chief Executive Officer and President

POWER OF ATTORNEY

          KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Frederick M. Lax and Ronald W. Buckly, or either of them, his attorneys-in-fact and agents, each with full power of substitution for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, and to file the same with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto each of said attorneys-in-fact and agents full power and authority to do so and perform each and every act and thing requisite and necessary to be done in connection with this Registration Statement, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that either of said attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

          Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

Signature		Title	Date
/s	Frederick M. Lax Frederick M. Lax	Director, Chief Executive Officer and President (Principal Executive Officer)	June 5, 2003
/s/	Paul J. Pucino Paul J. Pucino	Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	June 5, 2003
/s/	Jean-Claude Asscher Jean-Claude Asscher	Chairman of the Board	June 5, 2003
/s/	Robert V. Adams Robert V. Adams	Director	June 5, 2003
/s/	Daniel L. Brenner Daniel L. Brenner	Director	June 5, 2003
/s/	Howard Oringer Howard Oringer	Director	June 5, 2003
/s/	Jon F. Rager Jon F. Rager	Director	June 5, 2003

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INDEX TO EXHIBITS

Exhibit
Number	Exhibit
5.1	Opinion of Bryan Cave LLP.
10.1	2003 Stock Option Plan.
10.2	Amended and Restated Employee Stock Purchase Plan.
23.1	Consent of PricewaterhouseCoopers LLP.

EX-5.1 3 v90685exv5w1.txt EXHIBIT 5.1 EXHIBIT 5.1 Bryan Cave LLP 120 Broadway, Suite 300 Santa Monica, CA 90401-2386 Telephone: (310) 576-2100 Facsimile: (310) 576-2200 June 5, 2003 Tekelec 26580 West Agoura Road Calabasas, California 91302 Re: Tekelec - Registration Statement on Form S-8 Ladies and Gentlemen: We have acted as securities counsel for Tekelec, a California corporation (the "Company"), in connection with the preparation of a registration statement on Form S-8 (the "Registration Statement") under the Securities Act of 1933, as amended (the "Act"), to be filed with the Securities and Exchange Commission (the "Commission") on June 5, 2003 in connection with the registration under the Act of an aggregate of 3,800,000 shares of Common Stock, without par value, of the Company (collectively, the "Shares") consisting of: (i) 3,000,000 shares of Common Stock issuable upon exercise of options granted or to be granted pursuant to the Company's 2003 Stock Option Plan and (ii) 800,000 shares of Common Stock issuable upon exercise of options granted or to be granted under the Company's Amended and Restated Employee Stock Purchase Plan (the aforementioned 2003 Stock Option Plan and Amended and Restated Employee Stock Purchase Plan are referred to together herein as the "Plans"). In connection with the preparation of the Registration Statement, we have made certain legal and factual examinations and inquiries and examined, among other things, such documents, records, instruments, agreements, certificates and matters as we have considered appropriate and necessary for the rendering of this opinion. We have assumed for the purpose of this opinion the authenticity of all documents submitted to us as originals and the conformity with the originals of all documents submitted to us as copies, and the genuineness of the signatures thereon. As to various questions of fact material to this opinion, we have, when relevant facts were not independently established, relied, to the extent deemed proper by us, upon certificates and statements of officers and representatives of the Company. Based on the foregoing and in reliance thereon and upon our review of applicable statutes and case law, it is our opinion that: (i) the Shares have been duly authorized and (ii) the Shares, after the Registration Statement becomes effective and after any post-effective amendment required by law is duly completed, filed and becomes effective, and when the applicable provisions of "Blue Sky" and other state securities laws shall have been complied with, and when the Shares are issued and sold in accordance with the Plans and the Form S-8 prospectuses to be delivered to participants in the Plans, will be validly issued, fully paid and non-assessable. 9 We hereby consent to the inclusion of our opinion as Exhibit 5.1 to the Registration Statement and further consent to the reference to this firm in the Registration Statement. In giving this consent, we do not hereby admit that we are in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission thereunder. This opinion is rendered solely for your benefit in accordance with the subject transaction and is not to be otherwise used, circulated, quoted or referred to without our prior written consent. We are opining herein as to the effect on the subject transaction only of United States federal law and the internal (and not the conflict of law) laws of the State of California, and we assume no responsibility as to the applicability thereto, or the effect thereon, of the laws of any other jurisdiction. Very truly yours, /s/ BRYAN CAVE LLP BRYAN CAVE LLP EX-10.1 4 v90685exv10w1.htm EXHIBIT 10.1

Exhibit 10.1

2003 STOCK OPTION PLAN

1. Establishment and Purposes of the Plan.

          Tekelec hereby establishes this 2003 Stock Option Plan to promote the interests of the Company and its shareholders by (i) helping to attract and retain the services of selected key employees of the Company who are in a position to make material contributions to the successful operation of the Company’s business, (ii) motivating such persons, by means of performance-related incentives, to achieve the Company’s business goals and (iii) enabling such persons to participate in the long-term growth and financial success of the Company by providing them with an opportunity to purchase stock of the Company.

2. Definitions.

          The following definitions shall apply throughout the Plan:

          a. “Affiliate” shall mean any entity that directly or indirectly through one or more intermediaries controls or is controlled by, or is under common control with, the Company.

          b. “Board” shall mean the Board of Directors of the Company.

          c. “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. References in the Plan to any section of the Code shall be deemed to include any amendment or successor provisions to such section and any regulations issued under such section.

          d. “Common Stock” shall mean the common stock, without par value, of the Company.

          e. “Company” shall mean Tekelec, a California corporation, any “subsidiary” corporation, whether now or hereafter existing, as defined in Sections 424(f) and (g) of the Code, and any Affiliate, whether now or hereafter existing.

          f. “Committee” shall mean the committee of the Board appointed in accordance with Section 4(a) of the Plan or, if no such committee shall be appointed or in office the Board.

          g. “Continuous Status as an Employee” shall mean the absence of any interruption or termination of employment by the Company. Continuous Status as an Employee shall not be considered interrupted in the case of sick leave, military leave or any other leave of absence approved by the Committee or in the case of transfers between locations of the Company.

          h. “Employee” shall mean any employee of the Company, including officers and directors who are also employees and, for purposes of eligibility for Nonstatutory Stock Options, any consultant to the Company, whether or not employed by the Company.

          i. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

          j. “Fair Market Value” shall mean, with respect to Shares, the fair market value per Share on the date an option is granted (or in connection with the Company’s right to repurchase the Shares, the date of termination) as determined by the Board in its sole discretion, exercised in good faith; provided, however, that where there is a public market for the Common Stock, the fair market value per Share shall be the average of the closing bid and asked prices of the Common Stock on the date of grant (or, if there are no such prices for such date, on the first preceding day on which there were such reported prices) as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by the National Association of Securities Dealers Automated Quotations System) or, in the event the Common Stock is listed on a stock exchange or quoted on the Nasdaq National Market System (“Nasdaq”), the fair market value per Share shall be the closing price on the exchange or on the Nasdaq National Market System on the date of grant of the Option (or, if there are no sales on such date, on the first preceding day on which there were reported sales), as reported in The Wall Street Journal.

          k. “Incentive Stock Option” shall mean an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.

          l. “Nonstatutory Stock Option” shall mean an Option which is not an Incentive Stock Option.

          m. “Option” shall mean a stock option to purchase Common Stock granted to an Optionee pursuant to the Plan.

          n. “Option Agreement” means a written agreement substantially in one of the forms attached hereto as Exhibit A, or such other form or forms as the Committee (subject to the terms and conditions of the Plan) may from time to time approve, evidencing and reflecting the terms of an Option.

          o. “Optioned Stock” shall mean the Common Stock subject to an Option granted pursuant to the Plan.

          p. “Optionee” shall mean any Employee who is granted an Option.

          q. “Plan” shall mean this Tekelec 2003 Stock Option Plan.

          r. “Securities Act” shall mean the Securities Act of 1933, as amended.

          s. “Shares” shall mean shares of the Common Stock or any shares into which such Shares may be converted in accordance with Section 9 of the Plan.

3. Shares Reserved.

          The maximum aggregate number of Shares reserved for issuance pursuant to the Plan shall be 3,000,000 Shares or the number of shares of stock to which such Shares shall be adjusted as provided in Section 9 of the Plan. Such number of Shares may be set aside out of authorized but

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unissued Shares not reserved for any other purpose, or out of issued Shares acquired for and held in the treasury of the Company from time to time.

          Shares subject to, but not sold or issued under, any Option terminating, expiring or canceled for any reason prior to its exercise in full shall again become available for Options thereafter granted under the Plan and the same shall not be deemed an increase in the number of Shares reserved for issuance under the Plan.

4. Administration of the Plan.

          a. The Plan shall be administered by a Committee designated by the Board to administer the Plan and consisting of not less than two directors and subject to such terms and conditions as the Board may prescribe. Members of the Committee who are eligible for Options or have been granted Options may vote on any matters affecting the administration of the Plan or the grant of any Options pursuant to the Plan, except that no such member shall act upon the granting of an Option to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Committee during which action is taken with respect to the granting of Options to him or her. Each director designated by the Board to administer the Plan shall be a “non-employee” director for purposes of Rule 16b-3 under the Exchange Act and an “outside director” as defined in the Treasury regulations issued pursuant to Section 162(m) of the Code. Members of the Committee shall serve for such period of time as the Board may determine. From time to time the Board may increase the size of the Committee and appoint additional members thereto, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies however caused or remove all members of the Committee and thereafter directly administer the Plan.

          b. Subject to the provisions of the Plan, the Committee shall have the authority in its sole discretion to in accordance with Section 6(c) of the Plan: (i) grant either Incentive Stock Options in accordance with Section 422 of the Code or Nonstatutory Stock Options, (ii) determine the Fair Market Value per Share in accordance with Section 6(c) of the Plan, (iii) determine the exercise price of the Options to be granted to Employees in accordance with Section 6(c) of the Plan, (iv) determine the Employees to whom, and the time or times at which, Options shall be granted and the number of Shares subject to each Option, (v) prescribe, amend and rescind rules and regulations relating to the Plan, subject to the limitations set forth in Section 11 of the Plan, (vi) determine the terms and provisions of each Option granted to Optionees under the Plan and each Option Agreement (which need not be identical with the terms of other Options and Option Agreements) and, with the consent of the Optionee, to modify or amend an outstanding Option or Option Agreement; provided, however, that the Committee shall not have the authority to amend or adjust the exercise price of any Options previously granted to an Optionee under the Plan, whether through amendment, cancellation, replacement grant or otherwise, without the approval of the shareholders of the Company obtained in the manner provided in Section 10 of the Plan, (vii) accelerate the exercise date of any Option, (viii) determine whether any Optionee will be required to execute a stock purchase agreement or other agreement as a condition to the exercise of an Option, and to determine the terms and provisions of any such agreement (which need not be identical with the terms of any other such agreement) and, with the consent of the Optionee, to

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amend any such agreement, (ix) interpret the Plan or any agreement entered into with respect to the grant or exercise of Options, (x) determine the eligibility of an Employee for benefits hereunder and the amount thereof, (xi) authorize any person to execute on behalf of the Company any instrument required to effectuate the grant of an Option previously granted or to take such other actions as may be necessary or appropriate with respect to the Company’s rights pursuant to Options or agreements relating to the grant or exercise thereof and (xii) make such other determinations and establish such other procedures as it deems necessary or advisable for the administration of the Plan.

          c. All decisions, determinations and interpretations of the Committee shall be final and binding on all Optionees and any other holders of any Options granted under the Plan.

          d. The Committee shall keep minutes of its meetings and of the actions taken by it without a meeting. A majority of the Committee shall constitute a quorum and the actions of a majority at a meeting, including a telephone meeting, at which a quorum is present or acts approved in writing by a majority of the members of the Committee without a meeting shall constitute acts of the Committee.

          e. The Company shall pay all original issue and transfer taxes with respect to the grant of Options and/or the issue and transfer of Shares pursuant to the exercise thereof and all other fees and expenses necessarily incurred by the Company in connection therewith; provided, however, that the person exercising an Option shall be responsible for all payroll, withholding, income and other taxes incurred by such person on the date of exercise of an Option or transfer of Shares.

5. Eligibility.

          Options may be granted under the Plan only to Employees; provided, however, that consultants shall only be eligible to receive Nonstatutory Stock Options. An Employee who has been granted an Option may, if he or she is otherwise eligible, be granted additional Options.

6. Terms and Conditions of Options.

          Options granted pursuant to the Plan by the Committee shall be either Incentive Stock Options or Nonstatutory Stock Options and shall be evidenced by an Option Agreement providing, in addition to such other terms as the Board may deem advisable, the following terms and conditions:

          a. Time of Granting Options. The date of grant of an Option shall for all purposes be the date on which the Committee makes the determination granting such Option; provided, however, that if the Committee determines that such grant shall be made as of some future date, the date of grant shall be such future date. Notice of the determination shall be given to each Optionee within a reasonable time after the date of such grant.

          b. Number of Shares. Each Option Agreement shall state the number of Shares to which it pertains and whether such Option is intended to constitute an Incentive Stock Option or a Nonstatutory Stock Option. The maximum number of Shares which may be awarded as Options under the Plan during any calendar year to any Optionee is 1,000,000 (as may be adjusted pursuant

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to Section 9 herein) Shares. If an Option held by an Employee or consultant of the Company is canceled, the canceled Option shall continue to be counted against the maximum number of Shares for which Options may be granted to such Employee or consultant and any replacement Option granted to such Employee or consultant shall also count against such limit.

          c. Exercise Price. The exercise price per Share for the Shares to be issued pursuant to the exercise of an Option shall be such price as is determined by the Board; provided, however, that such price shall in no event be less than 100% of the Fair Market Value per Share on the date of grant of an Option.

                 In the case of any Option granted to an Employee who at the time of grant owns or is deemed to own (by reason of the attribution rules applicable under Section 424(d) of the Code or otherwise) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporations of the Company, the exercise price per Share shall be no less than 110% of the Fair Market Value per Share on the date of grant.

          d. Medium and Time of Payment. The consideration to be paid for the Shares to be issued upon exercise of an Option shall consist entirely of cash or check payable to the Company or such other consideration and method of payment permitted under any laws to which the Company is subject and which is approved by the Committee, including without limitation (i) by delivery of a promissory note, (ii) by tendering previously acquired Shares (valued at Fair Market Value as of the date of tender) that have been owned for a period of at least six months (or such other period as is necessary to avoid accounting charges against the Company’s earnings), (iii) if Shares are traded on a national securities exchange or Nasdaq, through the delivery of irrevocable instructions to a broker to deliver promptly to the Company an amount equal to the exercise price, or (iv) any combination of (i), (ii) and (iii). In connection with all exercises of Options and regardless of the medium of payment, the Optionee shall pay in cash any amount necessary to satisfy the Company’s withholding obligations.

          e. Term of Options. The term of each Option may be up to ten years from the date of grant thereof; provided, however, that the term of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company, shall be five years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

                 The term of any Option may be less than the maximum term provided for herein as specified by the Committee upon grant of the Option and as set forth in the Option Agreement.

          f. Maximum Amount of Incentive Stock Options. To the extent that the aggregate Fair Market Value (determined at the time an Incentive Stock Option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by an Optionee during any calendar year under all incentive stock option plans of the Company exceeds $100,000, the Options in excess of such limit shall be treated as Nonstatutory Stock Options.

5

7. Exercise of Option.

          a. In General. Any Option granted hereunder to an Employee shall be exercisable at such times and under such conditions as may be determined by the Committee and as shall be permissible under the terms of the Plan, including any performance criteria with respect to the Company and/or the Optionee as may be determined by the Committee.

                 An Option may be exercised in accordance with the provisions of the Plan as to all or any portion of the Shares then exercisable thereunder from time to time during the term of the Option. However, an Option may not be exercised for a fraction of a Share.

          b. Procedure. An Option shall be deemed to be exercised when written notice of such exercise has been given to the Company at its principal business office in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and full payment for the Shares with respect to which the Option is exercised has been received by the Company, together with (i) any other agreements required by the terms of the Plan and/or Option Agreement or as required by the Committee and (ii) payment by the Optionee of all payroll, withholding or income taxes incurred in connection with such Option exercise (or arrangements for the collection or payment of such tax satisfactory to the Board are made).

          c. Decrease in Available Shares. Exercise of an Option in any manner shall result in a decrease in the number of Shares which thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised, except if the Option is exercised by tendering Shares, either actually or by attestation.

          d. Exercise of Shareholder Rights. Until the Option is properly exercised in accordance with the terms of this Section 7, no right to vote or receive dividends or any other rights as a shareholder shall exist with respect to the Optioned Stock. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Option is exercised, except as provided in Section 10 of the Plan.

          e. Termination of Eligibility. If an Optionee ceases to serve as an Employee for any reason other than death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code) and thereby terminates his or her Continuous Status as an Employee, he or she may, but only within 90 days following the date he or she ceases his or her Continuous Status as an Employee (subject to any earlier termination of the Option as provided by its terms), exercise his or her Option to the extent that he or she was entitled to exercise it at the date of such termination. To the extent that he or she was not entitled to exercise the Option at the date of such termination, or if he or she does not exercise such Option (which he or she was entitled to exercise) within the time specified herein, the Option shall terminate. Notwithstanding anything to the contrary herein, the Committee may at any time and from time to time prior to the termination of a Nonstatutory Stock Option, with the consent of the Optionee, extend the period of time during which the Optionee may exercise his or her Nonstatutory Stock Option following the date he or she ceases his or her Continuous Status as an Employee; provided, however, that the maximum period of time during which a Nonstatutory Stock Option shall be exercisable following the date on which an Optionee terminates his or her Continuous Status as an Employee shall not exceed the original term of such

6

Option as set forth in the Option Agreement and that notwithstanding any extension of time during which a Nonstatutory Stock Option may be exercised, such Option, unless otherwise amended by the Committee, shall only be exercisable to the extent the Optionee was entitled to exercise the Option on the date he or she ceased his or her Continuous Status as an Employee.

          f. Death or Disability of Optionee. If an Optionee’s Continuous Status as an Employee ceases due to death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code) of the Optionee, the Option may be exercised within 180 days (or such other period of time not exceeding one year as is determined by the Committee at the time of granting the Option) following the date of death or termination of employment due to permanent or total disability (subject to any earlier termination of the Option as provided by its terms), by the Optionee in the case of permanent or total disability, or in the case of death by the Optionee’s estate or by a person who acquired the right to exercise the Option by bequest or inheritance, but in any case (unless otherwise determined by the Committee at the time of granting the Option) only to the extent the Optionee was entitled to exercise the Option at the date of his or her termination of employment by death or permanent and total disability. To the extent that he or she was not entitled to exercise such Option at the date of his or her termination of employment by death or permanent and total disability, or if he or she does not exercise such Option (which he or she was entitled to exercise) within the time specified herein, the Option shall terminate. Notwithstanding anything to the contrary herein, the Committee may at any time and from time to time prior to the termination of a Nonstatutory Stock Option, with the consent of the Optionee, extend the period of time during which the Optionee may exercise his or her Nonstatutory Stock Option following the date he or she ceases his or her Continuous Status as an Employee; provided, however, that the maximum period of time during which a Nonstatutory Stock Option shall be exercisable following the date on which an Optionee terminates his or her Continuous Status as an Employee shall not exceed the original term of such Option as set forth in the Option Agreement and that notwithstanding any extension of time during which a Nonstatutory Stock Option may be exercised, such Option, unless otherwise amended by the Committee, shall only be exercisable to the extent the Optionee was entitled to exercise the Option on the date he or she ceased his or her Continuous Status as an Employee.

          g. Expiration of Option. Notwithstanding any provision in the Plan, including but not limited to the provisions set forth in Sections 7(e) and 7(f), an Option may not be exercised, under any circumstances, after the expiration of its term.

          h. Conditions on Exercise and Issuance. As soon as practicable after any proper exercise of an Option in accordance with the provisions of the Plan, the Company shall (i) deliver to the Optionee at the principal executive office of the Company or such other place as shall be mutually agreed upon between the Company and the Optionee, a certificate or certificates representing the Shares for which the Option shall have been exercised or (ii) otherwise arrange for such Shares to be issued to the Optionee. The time of issuance and, if applicable, delivery of the certificate or certificates representing the Shares for which the Option shall have been exercised may be postponed by the Company for such period as may be required by the Company, with reasonable diligence, to comply with any law or regulation applicable to the issuance or delivery of such Shares.

7

                 Options granted under the Plan are conditioned upon the Company obtaining any required permit or order from the appropriate governmental agencies authorizing the Company to issue such Options and Shares issuable upon exercise thereof. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act, the Exchange Act, applicable state law, the rules and regulations promulgated thereunder and the requirements of any stock exchange upon which the Shares may then be listed. Any such issuance may be further subject to the approval of counsel for the Company with respect to such compliance.

                 i. Withholding or Deduction for Taxes. The grant of Options hereunder and the issuance of Shares pursuant to the exercise thereof is conditioned upon the Company’s reservation of the right to withhold, in accordance with any applicable law, from any compensation or other amounts payable to the Optionee, any taxes required to be withheld under Federal, state or local law as a result of the grant or exercise of such Option or the sale of the Shares issued upon exercise thereof. To the extent that compensation and other amounts, if any, payable to the Optionee are insufficient to pay any taxes required to be so withheld, the Company may, in its sole discretion, require the Optionee, as a condition of the exercise of an Option, to pay in cash to the Company an amount sufficient to cover such tax liability or otherwise to make adequate provision for the delivery to the Company of cash necessary to satisfy the Company’s withholding obligations under Federal and state law.

8. Nontransferability of Options.

          Options granted under the Plan may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner, either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or distribution or transfers between spouses incident to a divorce.

9. Adjustment Upon Change in Corporate Structure.

          a. Subject to any required action by the shareholders of the Company, the number and type of Shares covered by each outstanding Option, and the number and type of Shares which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the exercise or purchase price per Share covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split or combination or the payment of a stock dividend (but only on the Common Stock) or reclassification of the Common Stock or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company (other than stock awards to Employees); provided, however, that the conversion of any convertible securities of the Company shall not be deemed to have been effected without the receipt of consideration. Any such adjustment shall be determined in good faith by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, and the Committee’s determination in that respect shall be final, binding and

8

conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to the Plan or an Option.

          b. In the event of the proposed dissolution or liquidation of the Company, or in the event of a proposed sale of all or substantially all of the assets of the Company (other than in the ordinary course of business), or the merger or consolidation of the Company with or into another corporation, as a result of which the Company is not the surviving and controlling corporation, the Board shall (i) make provision for the assumption of all outstanding options by the successor corporation, (ii) declare that any Option shall terminate as of a date fixed by the Board which is at least 30 days after the notice thereof to the Optionee and shall give each Optionee the right to exercise his or her Option as to all or any part of the Optioned Stock, including Shares as to which the Option would not otherwise be exercisable provided such exercise does not violate Section 7(h) of the Plan or (iii) cause any Options outstanding as of the effective date of any such event to be cancelled in consideration of a cash payment or grant of an alternative option or award (whether by the Company or any entity that is a party to the transaction), or a combination thereof, to the holder of the cancelled Option, provided that such payment and/or grant are substantially equivalent in value to the fair market value of the cancelled Options as determined by the Committee.

          c. No fractional shares of Common Stock shall be issuable on account of any action aforesaid, and the aggregate number of shares into which Shares then covered by the Option, when changed as the result of such action, shall be reduced to the largest number of whole shares resulting from such action, unless the Board, in its sole discretion, shall determine to issue scrip certificates in respect to any fractional shares, which scrip certificates shall be in a form and have such terms and conditions as the Board in its discretion shall prescribe.

10. Shareholder Approval.

          Effectiveness of the Plan shall be subject to approval by the shareholders of the Company within 12 months before or after the date the Plan is adopted by the Board; provided, however, that Options may be granted pursuant to the Plan subject to subsequent approval of the Plan by such shareholders. Any option exercised before shareholder approval is obtained must be rescinded if shareholder approval is not obtained within 12 months before or after the Plan is adopted. Such shares shall not be counted in determining whether such approval is obtained. Shareholder approval shall be obtained (i) by the affirmative vote of the holders of a majority of the Shares present or represented and entitled to vote thereon at a meeting of shareholders duly held in accordance with the laws of the State of California or (ii) by written consent of the holders of the outstanding Shares having not less than the minimum number of votes that would be necessary to authorize the approval at a meeting of the shareholders duly held in accordance with the laws of the State of California.

11. Amendment and Termination of the Plan.

          a. Amendment and Termination. The Board may amend or terminate the Plan from time to time in such respects as the Board may deem advisable and shall make any amendments

9

which may be required so that Options intended to be Incentive Stock Options shall at all times continue to be Incentive Stock Options for the purpose of Section 422 of the Code; provided, however, that without approval of the holders of a majority of the voting Shares represented or present and entitled to vote at a valid meeting of shareholders, no such revision or amendment shall (i) materially increase the benefits accruing to participants under the Plan; (ii) increase the number of Shares which may be issued under the Plan, other than in connection with an adjustment under Section 9 of the Plan; (iii) materially modify the requirements as to eligibility for participation in the Plan; (iv) materially change the designation of the class of Employees eligible to be granted Options; (v) remove the administration of the Plan from the Board or its Committee; or (vi) extend the term of the Plan beyond the maximum term set forth in Section 14 hereunder.

          b. Effect of Amendment or Termination. Except as otherwise provided in Section 9 of the Plan, any amendment or termination of the Plan shall not affect Options already granted and such Options shall remain in full force and effect as if the Plan had not been amended or terminated, unless mutually agreed otherwise between the Optionee and the Company, which agreement must be in writing and signed by the Optionee and the Company. Notwithstanding anything to the contrary herein, this 2003 Stock Option Plan shall not adversely affect, unless mutually agreed in writing by the Company and an Optionee, the terms and provisions of any Option granted prior to the date the Plan was approved by shareholders as provided in Section 10 of the Plan.

12. Indemnification.

          No member of the Board or its Committee shall be liable for any act or action taken, whether of commission or omission, except in circumstances involving willful misconduct, or for any act or action taken, whether of commission or omission, by any other member or by any officer, agent or Employee. In addition to such other rights of indemnification they may have as members of the Board, or as members of the Committee, the Board and the Committee shall be indemnified by the Company against reasonable expenses, including attorneys’ fees actually and necessarily incurred in connection with the defense of any action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken, by commission or omission, in connection with the Plan or any Option granted thereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by independent legal counsel selected by the Company) or paid by them in satisfaction of a judgment in any action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such action, suit or proceeding that a Board or Committee member is liable for willful misconduct in the performance of his or her duties; provided that within 60 days after institution of any such action, suit or proceeding, such Board or Committee member shall in writing have offered the Company the opportunity, at its own expense, to handle and defend the same.

13. General Provisions.

          a. Other Plans. Nothing contained in the Plan shall prohibit the Company from establishing additional incentive compensation arrangements.

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          b. No Enlargement of Rights. Neither the Plan, nor the granting of Options, nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Company will retain an Employee for any period of time, or at any particular rate of compensation. Nothing in the Plan shall be deemed to limit or affect the right of the Company to discharge any Employee at any time for any reason or no reason.

                 No Employee shall have any right to or interest in Options authorized hereunder prior to the grant thereof to such eligible person, and upon such grant he or she shall have only such rights and interests as are expressly provided herein and in the related Option Agreement, subject, however, to all applicable provisions of the Company’s Articles of Incorporation, as the same may be amended from time to time.

                 c.     Notice. Any notice to be given to the Company pursuant to the provisions of the Plan shall be addressed to the Company in care of its Secretary (or such other person as the Company may designate from time to time) at its principal office, and any notice to be given to an Optionee to whom an Option is granted hereunder shall be delivered personally or addressed to him or her at the address given beneath his or her signature on his or her Stock Option Agreement, or at such other address as such Optionee or his or her transferee (upon the transfer of the Optioned Stock) may hereafter designate in writing to the Company. Any such notice shall be deemed duly given when enclosed in a properly sealed envelope or wrapper addressed as aforesaid, registered or certified, and deposited, postage and registry or certification fee prepaid, in a post office or branch post office regularly maintained by the United States Postal Service. It shall be the obligation of each Optionee holding Shares purchased upon exercise of an Option to provide the Secretary of the Company, by letter mailed as provided hereinabove, with written notice of his or her direct mailing address.

                 d.     Applicable Law. To the extent that Federal laws do not otherwise control, the Plan shall be governed by and construed in accordance with the laws of the State of California, without regard to the conflict of laws rules thereof.

                 e.     Incentive Stock Options. The Company shall not be liable to an Optionee or other person if it is determined for any reason by the Internal Revenue Service or any court having jurisdiction that any Incentive Stock Options are not incentive stock options as defined in Section 422 of the Code.

                 f.     Information to Optionees. The Company shall provide without charge to each Optionee copies of its annual financial statements (which need not be audited), which may be included within such annual and periodic reports as are provided by the Company to its shareholders generally.

                 g.     Availability of Plan. A copy of the Plan shall be delivered to the Secretary of the Company and shall be shown by him or her to any eligible person making reasonable inquiry concerning it.

                 h.     Severability. In the event that any provision of the Plan is found to be invalid or otherwise unenforceable under any applicable law, such invalidity or unenforceability shall not be

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construed as rendering any other provisions contained herein as invalid or unenforceable, and all such other provisions shall be given full force and effect to the same extent as though the invalid or unenforceable provision was not contained herein.

14. Effective Date and Term of Plan.

          The Plan shall become effective upon shareholder approval as provided in Section 10 of the Plan. Options may be granted under the Plan prior to securing such shareholder approval provided that such Options shall be expressly subject to securing such shareholder approval and may not be exercised in whole or in part unless such shareholder approval has been duly obtained. The Plan shall continue in effect for a term of ten years following shareholder approval unless sooner terminated under Section 11 of the Plan.

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CERTIFICATE OF SECRETARY

          The undersigned Secretary of Tekelec, a California corporation (the “Company”), hereby certifies that the foregoing is a true and correct copy of the Company’s 2003 Stock Option Plan.

          IN WITNESS WHEREOF, the undersigned has executed this document as of the date set forth below.

Date:	, 2003
		Ronald W. Buckly, Secretary

2003 STOCK OPTION PLAN
Stock Option Agreement

Tekelec hereby grants to you an Option under the Tekelec 2003 Stock Option Plan (the “Plan”), to purchase the number of shares of Tekelec Common Stock set forth below.

Name:
Employee ID #:
Date of Grant:
Type of Option:
Number of Shares:
Exercise Price:
Payment:	Payment of the exercise price and applicable taxes may be made (i) by cash or check and/or (ii) pursuant to a “Cashless” exercise (see Option Terms and Conditions attached hereto).
Vesting Schedule:	16 equal quarterly installments; the first installment will vest on M/D/Y, and one additional installment will vest on the last day of each calendar quarter thereafter, as long as you remain an employee of the Company.
Expiration Date:	M/D/Y; provided, however, that in the event of your termination of employment with the Company or your disability or death, the provisions of Sections 6 and 7 of the Option Terms and Conditions attached hereto shall apply to your right to exercise the Option.

This Stock Option Agreement consists of this page and the Option Terms and Conditions and the Notice of Exercise of Stock Option attached hereto. By signing below, you accept the grant of this Option and agree that this Option is subject in all respects to the terms and conditions of the Plan located on Tekelec’s internal website at Teksource. Copies of the Plan and Prospectus containing information concerning the Plan are available upon request to          at          or      @tekelec.com.

You further acknowledge and agree that (i) you have carefully reviewed this Stock Option Agreement (including the Option Terms and Conditions attached hereto) and the Plan and (ii) this Stock Option Agreement and the Plan set forth the entire understanding between you and the Company regarding this Option and supersede all prior oral and written agreements with respect thereto.

TEKELEC
By:
Print Name:	Date
Title:
Optionee	Date

TEKELEC 2003 STOCK OPTION PLAN
Stock Option Agreement — Option Terms and Conditions

The following Terms and Conditions apply to the nonstatutory stock option granted by Tekelec to the Optionee whose name appears on the Stock Option Agreement to which these Terms and Conditions are attached.

1.	2003 Stock Option Plan. This Option is in all respects subject to the terms, definitions and provisions of the Tekelec 2003 Stock Option Plan (the “Plan”) adopted by the Company and incorporated herein by reference. The terms defined in the Plan shall have the same meanings herein.
2.	Nature of the Option. This Option is intended to be a nonstatutory stock option and is not intended to be an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), or to otherwise qualify for any special tax benefits to the Optionee.
3.	Method of Payment. The aggregate exercise price of the Shares purchased upon an exercise, in whole or in part, of the Option may be paid in one or both of the following forms:

(a)	Check made payable to the Company or its designated agent; and/or
(b)	Through a special sale and remittance procedure commonly referred to as a “cashless exercise” pursuant to which the Optionee (or any other person(s) entitled to exercise the Option) shall concurrently provide irrevocable written instructions:

(i)

to a brokerage firm to effect the immediate sale of a sufficient number of the Shares purchased upon the exercise of the Option to enable such brokerage firm to remit out of the sales proceeds available upon the settlement date, sufficient funds to Tekelec to cover the aggregate exercise price payable for the purchased Shares plus all applicable Federal, state and local income and employment taxes required to be withheld by Tekelec by reason of such exercise and/or sale; and

(ii)

to Tekelec to deliver the certificate(s) for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.

Except to the extent the sale and remittance procedure is utilized in connection with the Option exercise, payment of the aggregate exercise price must accompany the Notice of Exercise delivered by the Optionee to Tekelec in connection with the Option exercise.

4. Exercise of Option. This Option shall be exercisable during its term only in accordance with the terms and provisions of the Plan and this Option as follows:

(a)

This Option shall vest and be exercisable cumulatively as set forth on the first page of the Stock Option Agreement. An Optionee who has been in continuous employment with the Company since the grant of this Option may exercise the exercisable portion of his or her Option in whole or in part at any time during his or her employment; provided, however, that an Option may not be exercised for a fraction of a Share. In the event of the Optionee’s termination of employment with the Company or Optionee’s disability or death, the provisions of Sections 6 or 7 below shall apply to the right of the Optionee to exercise the Option.

(b)

This Option shall be exercisable by written notice (in the form of the Notice of Exercise of Stock Option attached hereto, as amended from time to time) which shall state the Optionee’s election to exercise this Option and the number of Shares being purchased and set forth such other information as may be required by the Company in connection with the exercise of the Option. Such written notice shall be signed by the Optionee and shall be delivered in person or by facsimile (818.880.0176) or certified mail to the Secretary of the Company or such other person as may be designated by the Company. The written notice shall specify the method of payment of the aggregate exercise price in accordance with Section 3 above. The certificate or certificates for the

	purchased Shares shall be registered in the name of the Optionee unless otherwise specified by the Optionee in the Notice of Exercise.
(c)	No rights of a shareholder shall exist with respect to the Shares under this Option as a result of the mere grant of this Option or the exercise of this Option. Such rights shall exist only after issuance of a stock certificate in accordance with Section 7(h) of the Plan.

5.	Restrictions on Exercise. This Option may not be exercised if the issuance of Shares upon Optionee’s exercise or the method of payment of consideration for such Shares would constitute a violation of any applicable Federal or state securities law or other applicable law or regulation. As a condition to the exercise of this Option, the Company may require the Optionee to make any representation and warranty to the Company as may be required by any applicable law or regulation.
6.	Termination of Employment. If the Optionee ceases to serve as an Employee for any reason other than death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code) and thereby terminates his or her Continuous Employment, the Optionee shall have the right to exercise this Option at any time within 90 days after the date of such termination to the extent that the Optionee was entitled to exercise this Option at the date of such termination. To the extent that the Optionee was not entitled to exercise this Option at the date of termination, or to the extent this Option is not exercised within the time specified herein, this Option shall terminate. Notwithstanding the foregoing, this Option shall not be exercisable after the expiration of the term set forth in Section 8 hereof.
7.	Death or Disability. If the Optionee ceases to serve as an Employee due to death or permanent and total disability (within the meaning of Section 22(e)(3) of the Code), this Option may be exercised at any time within 180 days after the date of death or termination of employment due to disability, in the case of death, by the Optionee’s estate or by a person who acquired the right to exercise this Option by bequest or inheritance, or, in the case of disability, by the Optionee, but in any case only to the extent the Optionee was entitled to exercise this Option at the date of such termination. To the extent that the Optionee was not entitled to exercise this Option at the date of termination, or to the extent this Option is not exercised within the time specified herein, this Option shall terminate. Notwithstanding the foregoing, this Option shall not be exercisable after the expiration of the term set forth in Section 8 hereof.
8.	Term of Option. This Option may not be exercised more than ten (10) years from the date of grant of this Option and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement. Notwithstanding any provision in the Plan with respect to the post-employment exercise of an Option, an Option may not be exercised after the expiration of its term.
9.	Withholding upon Exercise of Option. The Company reserves the right to withhold, in accordance with any applicable laws, from any consideration payable to Optionee any taxes required to be withheld by Federal, state or local law as a result of the grant or exercise of this Option or the sale or other disposition of the Shares issued upon exercise of this Option. If the amount of any consideration payable to the Optionee is insufficient to pay such taxes or if no consideration is payable to the Optionee, upon the request of the Company, the Optionee shall pay to the Company in cash an amount sufficient for the Company to satisfy any Federal, state or local tax withholding requirements it may incur as a result of the grant or exercise of this Option or the sale or other disposition of the Shares issued upon the exercise of this Option.
10.	Nontransferability of Option. This Option may not be sold, pledged, assigned, hypothecated, gifted, transferred or disposed of in any manner either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent or distribution or transfer between spouses incident to a divorce. Subject to the foregoing and the terms of the Plan, the terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee.
11.	No Right of Employment. Neither the Plan nor this Option shall confer upon the Optionee any right to continue in the employment of the Company or limit in any respect the right of the Company to discharge the Optionee at any time, with or without cause and with or without notice.

12. Miscellaneous.

(a)	Successors and Assigns. This Option Agreement shall bind and inure only to the benefit of the parties to this Option Agreement (the “Parties”) and their respective successors and assigns.
(b)	No Third-Party Beneficiaries. Nothing in this Option Agreement is intended to confer any rights or remedies on any persons other than the Parties and their respective successors or assigns. Nothing in this Option Agreement is intended to relieve or discharge the obligation or liability of third persons to any Party. No provision of this Option Agreement shall give any third person any right of subrogation or action over or against any Party.
(c)	Amendments.

(i)

The Committee reserves the right to amend the terms and provisions of this Option without the Optionee’s consent to comply with any Federal or state securities law.

(ii)

Except as specifically provided in subsection (i) above, this Option Agreement shall not be changed or modified, in whole or in part, except by supplemental agreement signed by the Parties. Either Party may waive compliance by the other Party with any of the covenants or conditions of this Option Agreement, but no waiver shall be binding unless executed in writing by the Party making the waiver. No waiver or any provision of this Option Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. Any consent under this Option Agreement shall be in writing and shall be effective only to the extent specifically set forth in such writing.

(d)	Governing Law. To the extent that Federal laws do not otherwise control, the Plan and all determinations made or actions taken pursuant hereto shall be governed by the laws of the state of California, without regard to the conflict of laws rules thereof.
(e)	Severability. If any provision of this Option Agreement or the application of such provision to any person or circumstances is held invalid or unenforceable, the remainder of this Option Agreement, or the application of such provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby.

* * * *

EX-10.2 5 v90685exv10w2.txt EXHIBIT 10.2 EXHIBIT 10.2 TEKELEC AMENDED AND RESTATED EMPLOYEE STOCK PURCHASE PLAN The following constitutes the provisions of the Amended and Restated Employee Stock Purchase Plan (the "Plan") of Tekelec (the "Company"). 1. Purpose. The purpose of the Plan is to provide employees of the Company and its Subsidiaries with an opportunity to purchase Common Stock of the Company through payroll deductions. It is the intention of the Company that the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code, as amended from time to time. 2. Definitions. (a) "Compensation," unless otherwise determined by the Board of Directors of the Company, means total cash compensation from employment reportable on Form W-2 including, without limitation, regular straight-time gross earnings, overtime pay, shift premium, incentive compensation, bonuses, commissions and automobile allowances, but expressly excluding relocation benefits, expense reimbursements, gains realized in connection with the exercise of stock options or participation in a stock option or purchase program and contributions by the Company to qualified deferred compensation plans. (b) "Employee" means any person, including an officer, who is customarily employed for more than 20 hours per week by the Company or its Subsidiaries. (c) "Subsidiary" means any corporation described in Section 424 of the Code in which the Company owns, directly or indirectly, 50% or more of the voting shares. (d) "Offering Date" means the first business day of an offering period of the Plan. (e) "Termination Date" means the last business day of an offering period of the Plan. 3. Eligibility. (a) General Rule. Any Employee, as defined in Section 2, who shall have completed at least 30 days of continuous employment by the Company or its Subsidiaries on the date his or her participation in the Plan is effective shall be eligible to participate in the Plan, subject to the limitations imposed by Section 423(b) of the Code. For purposes of this Section 3(a) only, qualifying employment with a newly acquired Subsidiary prior to an Offering Date will be considered employment with the Company or its Subsidiaries. (b) Exceptions. Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan if: (i) immediately after the grant, such Employee (or any other person whose stock ownership would be attributed to such Employee pursuant to Section 424(d) of the Code) would own shares and/or hold outstanding options to purchase shares possessing five percent or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary of the Company; or (ii) such option would permit the Employee's rights to purchase shares under all employee stock purchase plans of the Company and its Subsidiaries to accrue (i.e., become exercisable) at a rate which exceeds $25,000 of fair market value of such shares (determined at the time such option is granted) for each calendar year in which such option is outstanding at any time. 4. Offerings. The Plan shall be implemented by two offerings during each 12-month period of the Plan commencing on July 1, 1996. Each offering shall be of six months duration. Offering I shall commence on July 1 and end on December 31 of each year of the Plan; Offering II shall commence on January 1 and end on June 30 of each year of the Plan. Participation in one offering under the Plan shall neither limit nor require participation in any other offering. 5. Participation. An eligible Employee may become a participant in one or more offerings under the Plan by completing and signing a subscription agreement authorizing payroll deductions on a form provided by the Company (the "Subscription Agreement") authorizing payroll deductions and by filing it with the Company's payroll office not less than three days prior to the start of the offering period with respect to which it is to be effective unless a later time for filing the Subscription Agreement has been set by the Company with respect to a given offering. An Employee's authorization and participation in the Plan shall become effective on the first Offering Date following the timely filing of his or her Subscription Agreement and shall remain effective until revoked by the participant by the filing of a Payroll Deduction Authorization Change or Withdrawal form as described in Section 10(a) hereof or until changed by the filing of a Payroll Deduction Authorization Change or Withdrawal form providing for a change in the participant's payroll deduction rate. An Employee who becomes eligible to participate in the Plan after the commencement of an offering period may not become a participant in the Plan until the commencement of the next offering. An Employee who is an officer or director who ceases participation in the Plan may not participate again for at least six months following such cessation of participation. 6. Payroll Deductions. (a) At the time a participant files his or her Subscription Agreement, he or she shall elect to have payroll deductions made on each payday during the next offering period at a percentage rate equal to a positive whole number not exceeding 10%, or such other maximum rate 2 as may be determined from time to time by the Company's Board of Directors (herein sometimes referred to as the "Board") subject to the provisions of Section 19 hereof, of the Compensation which would otherwise be payable to such participant on each such payday; provided, however, that the maximum amount withheld on behalf of a participant with respect to an offering period shall not exceed the maximum amount that a participant might be required to pay upon the exercise of his or her option determined as of the first day of an offering period. (b) Payroll deductions for a participant shall commence on the first payday following the date when a participant's payroll deduction authorization becomes effective and shall automatically continue from offering period to offering period until changed or terminated by the participant in accordance with the terms hereof. (c) All payroll deductions authorized by a participant shall be credited to the participant's individual account under the Plan. A participant may not make any additional payments into such account. (d) A participant may terminate his or her participation in the Plan at any time prior to the termination of the offering period as provided in Section 10, but may not change the rate of his or her payroll deductions with respect to an offering period during such offering period. 7. Grant of Option. (a) On each Offering Date with respect to which a participant's payroll authorization is effective, each participant in the Plan shall automatically be granted an option to purchase (at the option price as provided in Section 7(b) hereof) up to the number of whole shares of the Company's Common Stock arrived at by dividing (i) $12,500 by (ii) 100% of the fair market value of one share of the Company's Common Stock at the Offering Date, subject to the limitations set forth in Sections 3(b) and 12 hereof. The fair market value of a share of the Company's Common Stock shall be determined as provided in Section 7(c) hereof. (b) The option price per share of the shares to be sold during each offering shall be the lesser of (i) 85% of the fair market value of one share of the Common Stock of the Company at the Offering Date or (ii) 85% of the fair market value of one share of the Common Stock of the Company at the Termination Date. (c) The fair market value of the Company's Common Stock shall be determined by the Company's Board of Directors, acting in its sole discretion, and based upon such factors as the Board determines relevant; provided, however, that if there is a public market for the Common Stock, the fair market value of a share of Common Stock on a given date shall be the mean of the closing bid and asked prices for the Common Stock on such date, as reported in The Wall Street Journal (or, if not so reported, as otherwise reported by The Nasdaq Stock Market), or, in the event the Common Stock is listed on a national securities exchange or on the Nasdaq National Market, the fair market value per share shall be the closing price on such exchange or on The Nasdaq Stock Market as of the date of grant of the option, as reported in The Wall Street Journal. 3 8. Exercise of Option. Unless a participant cancels his or her option and withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares shall be exercised automatically at the Termination Date of the offering period, and the accumulated payroll deductions credited to a participant's account on the Termination Date will be applied to purchase whole shares of the Company's Common Stock (up to the maximum number subject to option as determined in Section 7(a) hereof) at the applicable option price. Any amount credited to a participant's account and not applied to the purchase of Common Stock by reason of the limitation on the number of shares subject to option shall be refunded promptly to such participant after the Termination Date, provided that any amount remaining in a participant's account and representing a fractional share shall be carried over and applied to the purchase of shares in the subsequent offering period if the participant participates in the subsequent offering. During his or her lifetime, a participant's option to purchase shares hereunder is exercisable only by such participant. 9. Delivery. As promptly as practicable after the end of each offering period, the Company shall arrange for the issuance and delivery to, or credit to the account of, each participant, as appropriate, of the shares purchased upon exercise of his or her option. At the election of the Company, the issuance and delivery of the shares purchased upon exercise of a participant's option may be effected by transfer (electronic or otherwise in the discretion of the Company) of such shares to a securities account maintained in such participant's name. The shares purchased upon exercise of any option granted to a participant on or after July 1, 2003 may not be assigned, transferred, pledged or otherwise disposed of in any way (other than by will or by the laws of descent and distribution) for a period of six months following the exercise of the option; provided, however, that that the Compensation Committee of the Board of Directors may, in its sole discretion, permit an assignment, transfer, pledge or other disposition of such shares at such other time as the Company's Board of Directors may determine in the event that the participant has suffered a hardship, as determined by the Company's Board of Directors in its sole discretion. Shares purchased upon exercise of any option granted to a participant on or after July 1, 2003 and subject to the above restrictions may include a legend indicating that such shares may not be transferred, pledged or otherwise disposed of for six months from the date of issue. 10. Withdrawal; Termination of Employment. (a) A participant may terminate his or her participation in an offering under the Plan and withdraw all, but not less than all, the payroll deductions credited to his or her account under the Plan at any time prior to a Termination Date by giving written notice of withdrawal to the Company on a Payroll Deduction Authorization Change or Withdrawal form provided for such purpose. In such case, all of the participant's payroll deductions credited to his or her account shall be paid to him or her promptly after receipt of his or her notice of withdrawal, his or her option for the current period shall be automatically cancelled, and no further payroll deductions for the purchase of shares shall be made except pursuant to a new Subscription Agreement filed in accordance with Section 5 hereof. A participant may terminate his or her participation in the Plan effective as of the first day of the next offering period by giving written notice of withdrawal to the Company on a Payroll Deduction Authorization Change or Withdrawal form provided for such purpose. In such 4 case, the participant's payroll deductions will continue through the end of the offering period in which the notice of withdrawal is given, all amounts deducted from the participant's Compensation during such offering period will be applied to the purchase of Common Stock pursuant to the Plan, and following the completion of such offering period no further payroll deductions for the purchase of shares shall be made except pursuant to a new Subscription Agreement filed in accordance with Section 5 hereof. (b) Upon termination of a participant's employment for any reason, including retirement or death, as soon as practicable after such termination the payroll deductions credited to his or her account shall be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto under Section 14, and his or her option shall be automatically cancelled. (c) In the event an Employee fails to remain in the continuous employ of the Company or its Subsidiaries for more than 20 hours per week during the offering period in which the Employee is a participant, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to his or her account will be returned to him or her and his or her option will be cancelled. (d) A participant's withdrawal from an offering shall not have any effect upon his eligibility to participate in a subsequent offering or in any similar plan which may hereafter be adopted by the Company. 11. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan. 12. Stock. (a) The maximum number of shares of the Company's Common Stock which shall be made available for sale under the Plan shall be 1,800,000 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18. The shares to be sold to participants in the Plan will be authorized but unissued shares. Upon the cancellation of any option granted under the Plan, the shares subject thereto shall return to the Plan and become available for options thereafter granted under the Plan. If the total number of shares which would otherwise be subject to options granted pursuant to Section 7(a) hereof at the Offering Date exceeds the number of shares then available under the Plan (after deduction of all shares for which options have been exercised or are then outstanding), the Company shall make a pro rata allocation of the shares remaining available for option grant in as uniform and equitable a manner as is practicable. In such event, the Company shall give written notice of such reduction of the number of shares subject to the options to each participant affected thereby and shall reduce the rate of payroll deductions, if necessary. (b) A participant will have no interest or voting right in shares covered by his or her option until such option has been exercised. 5 (c) Shares to be delivered to a participant under the Plan shall, as specified in the participant's Subscription Agreement, be registered in the name of the participant or in the name of the participant and his or her spouse. 13. Administration. The Plan shall be administered by the Board or a committee of members of the Board appointed by the Board, as necessary to comply with Rule 16b-3 under the Securities Exchange Act of 1934. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan; provided, however, that to the extent necessary to comply with Rule 16b-3, no discretion concerning decisions regarding the Plan shall be afforded to a person who is not a "disinterested person" as that term is defined and interpreted under Rule 16b-3. Every finding, decision and determination made by the Board or its committee shall, to the fullest extent permitted by law, be final and binding upon all parties. 14. Designation of Beneficiary. (a) A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant's account under the Plan in the event of such participant's death subsequent to the Termination Date of an offering period but prior to delivery to him or her of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant's account under the Plan in the event of such participant's death prior to the Termination Date of an offering period. (b) Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a valid designation of a beneficiary who is living at the time of such participant's death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant; or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant; or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate. 15. Transferability. Neither payroll deductions credited to a participant's account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds in accordance with Section 10 hereof. 16. Use of Funds. All payroll deductions received or held by the Company on behalf of a participant under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions. 6 17. Reports. Individual accounts will be maintained for each participant in the Plan. Individual statements of account will be given to participating Employees semiannually as promptly as practicable following the Termination Date of an offering period, which statements shall set forth the amounts of payroll deductions, the per share option price, the number of shares purchased and the remaining cash balance, if any, in a participant's account. 18. Adjustments upon Changes in Capitalization or Control. (a) Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and the number of shares of Common Stock which has been authorized for issuance under the Plan but has not yet been placed under option or which has been returned to the Plan upon the cancellation of an option, as well as the option price per share of Common Stock covered by each option under the Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, stock dividend, spin-off, reorganization, recapitalization, merger, consolidation, exchange of shares or the like. Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to option. (b) In the event of the proposed dissolution or liquidation of the Company, or in the event of a proposed sale of substantially all of the assets of the Company, or the merger or consolidation of the Company with or into another corporation, the Board shall (i) make provision for the assumption of all outstanding options by the successor corporation or (ii) declare that any option shall terminate as of a date fixed by the Board which is at least 30 days after the notice thereof and, unless a participant terminates his or her participation in the Plan prior to such date, his or her option for the purchase of shares will be exercised automatically on such date and the accumulated payroll deductions credited to a participant's account on such date will be applied to purchase whole shares of the Company's Common Stock (up to the maximum number subject to option as determined in accordance with Section 7(a) hereof) at the applicable option price. (c) No fractional shares of Common Stock shall be issuable on account of any adjustment described herein, and the aggregate number of shares into which shares then covered by an option, when changed as the result of such adjustment, shall be reduced to the largest number of whole shares resulting from such adjustment, unless the Board, in its sole discretion, shall determine to issue scrip certificates in respect to any fractional shares, which scrip certificates, in such event, shall be in a form and have such terms and conditions as the Board in its discretion shall prescribe. 19. Amendment or Termination. The Board of Directors of the Company may at any time terminate or amend the Plan in such respects as the Board may deem advisable. No such termination will affect options previously granted, nor may an amendment make any change in any option theretofore granted which adversely affects the rights of any participant without the prior 7 written consent of such participant, nor may an amendment be made without prior approval of the shareholders of the Company if such amendment would: (a) Increase the number of shares that may be issued under the Plan; (b) Materially modify the requirements as to eligibility for participation in the Plan; or (c) Materially increase the benefits which accrue to participants under the Plan. 20. Term of Plan. The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by vote of a majority of the outstanding shares of the Company entitled to vote on the adoption of the Plan. The Plan shall continue in effect for a term of ten years unless sooner terminated under Sections 19 or 22 of the Plan. 21. Notices. All notices or other communications (i) by a participant to the Company in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof and (ii) by the Company to a participant in connection with the Plan shall be deemed to have been duly given when received by the participant or, if earlier, five days after deposit in the United States mail by certified or registered mail, return receipt requested, first class postage prepaid, addressed to the participant at his or her address as shown on the records of the Company or as such participant may request by written notice to the Company hereunder. 22. Shareholder Approval. Notwithstanding anything to the contrary herein, the continuance of the Plan and the effectiveness of any option granted hereunder shall be subject to approval by the affirmative vote of the holders of a majority of the outstanding shares of stock of the Company present or represented and entitled to vote thereon at a meeting of shareholders duly held in accordance with the laws of the State of California, within 12 months before or after the date the Plan is adopted by the Board. No options granted before such shareholder approval has been obtained shall be exercisable unless such shareholder approval is obtained. If the Plan is not approved by the shareholders of the Company within the above-referenced 12-month period, the Plan and any options granted hereunder shall terminate and all payroll deductions credited to a participant's account shall be promptly returned to him or her. 23. No Enlargement of Employee Rights. The Plan is purely voluntary on the part of the Company, and the continuance of the Plan shall not be deemed to constitute a contract between the Company and any Employee, or to be consideration for or a condition of the employment of any Employee. Nothing contained in this Plan shall be deemed to give any Employee the right to be retained in the employ of the Company, its parent, Subsidiary or a successor corporation, or to interfere with the right of the Company or any such corporations to discharge or retire any Employee thereof at any time. No Employee shall have any right to or interest in options authorized hereunder prior to the grant of an option to such Employee, and upon such grant he or she shall have only such rights and interests as are expressly provided herein, subject, however, to all applicable provisions of the Company's Articles of Incorporation, as the same may be amended from time to time. 8 24. Information to Participants. The Company shall provide without charge to each participant in the Plan copies of such annual and periodic reports as are provided by the Company to its shareholders generally. 25. Governing Law. To the extent that Federal laws do not otherwise control, the Plan and all determinations made or actions taken pursuant hereto shall be governed by the laws of the state of California, without regard to the conflicts of laws rules thereof. 26. Tax Withholding. If at any time the Company or any Subsidiary is required, under applicable laws and regulations, to withhold, or to make any deduction of, any taxes or take any other action in connection with any exercise of an option made hereunder or transfer of shares of Common Stock, the Company or such Subsidiary shall have the right to deduct from all amounts paid in cash any taxes required by law to be withheld therefrom, and in the case of shares of Common Stock, the participant or his or her estate or beneficiary shall be required to pay the Company or such Subsidiary the amount of taxes required to be withheld or, in lieu thereof, the Company or such Subsidiary shall have the right to retain, or sell without notice, a sufficient number of shares of Common Stock to cover the amount required to be withheld, or to make other arrangements with respect to withholding as it shall deem appropriate. 27. Securities Law Compliance. No shares of Common Stock may be issued upon the exercise of any option under the Plan until all requirements of applicable Federal, state, foreign or other securities laws with respect to the purchase, sale and issuance of shares of Common Stock shall have been satisfied. If any action must be taken because of such requirements, then the purchase, sale and issuance of shares shall be postponed until such action can reasonably be taken. Upon request by the Company, an Employee shall deliver to the Company such information, representations or undertakings as the Company may reasonably request in order to comply with any registration requirements or exemptions therefrom of applicable securities laws. The Company may require any securities so issued to bear a legend, may give its transfer agent instructions, and may take such other steps as in its judgment are reasonably required to prevent any violation of applicable securities laws. * * * 9 TEKELEC EMPLOYEE STOCK PURCHASE PLAN FORM OF SUBSCRIPTION AGREEMENT Instructions: Please print or type all information except your signature. NAME: __________________________________________________________________________ First Middle Last ADDRESS: _______________________________________________________________________ SOCIAL SECURITY NO.: ______ ________ _________ ________ _______ ________ _______ EMPLOYEE NO.:_____________________ EMPLOYMENT START DATE: ____________________ ORIGINAL APPLICATION 1. I hereby elect to participate in the Tekelec Employee Stock Purchase Plan (the "Plan") in accordance with this Subscription Agreement and subject to the terms and conditions of the Plan. 2. I hereby authorize Tekelec to make regular payroll deductions, at the rate indicated below and in accordance with the terms of the Plan, from the Compensation (as defined in the Plan) including overtime, bonuses, commissions and other earnings, if any, paid to me during each offering period during which I remain a participant in the Plan: (CIRCLE ONE) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% OF COMPENSATION 3. I understand that payroll deductions at the indicated rate will continue from offering period to offering period unless I become ineligible to participate in the Plan or I file the Notice of Change in Payroll Deduction Rate or Withdrawal (in the form attached hereto). 4. I understand that the deducted amounts will be applied automatically to the purchase of shares of Tekelec Common Stock at the end of each offering period unless I elect to cancel my option and withdraw from the Plan by filing the Notice of Change in Payroll Deduction Rate or Withdrawal (in the form attached hereto). 5. I understand that I may not sell, transfer, gift or otherwise dispose of any shares purchased by me under the Plan within six months following their purchase. 6. I hereby acknowledge that I have received and read a copy of Tekelec's most recent Prospectus describing the terms and provisions of the Plan and understand the information therein and the risks of participating in the Plan. 7. Shares purchased for me under the Plan should be issued in the name(s) of (please print): 8. I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan. 9. At the request of Tekelec, I will promptly (a) notify Tekelec if I have sold, transferred, gifted or otherwise disposed of any shares purchased for me under the Plan at any time within 18 months after the end of the offering period in which such shares were purchased and (b) provide Tekelec with all requested information regarding such transaction. 10. In the event of my death before the end of an offering period, I hereby designate as my beneficiary(ies) to receive all payments and shares due me under the Plan: Name: (Please print) __________________________________________________________ First Middle Last __________________________ _________________________________________________ Relationship Address _________________________________________________ City State Zip Code Name: (Please print) __________________________________________________________ First Middle Last __________________________ _________________________________________________ Relationship Address _________________________________________________ City State Zip Code DATE: ______________________ _______________________ SIGNATURE OF EMPLOYEE ELECTION NOT TO PARTICIPATE I hereby acknowledge receipt of a copy of Tekelec's most recent Prospectus which describes the Tekelec Employee Stock Purchase Plan and elect not to participate in the Plan. I understand that my decision not to participate in the next offering under the Plan will not affect my eligibility to participate in subsequent offerings under the Plan. DATE: _______________________ _______________________ SIGNATURE OF EMPLOYEE (To be completed by Tekelec) Date Received: __________________ Approved by: _______________ TEKELEC EMPLOYEE STOCK PURCHASE PLAN NOTICE OF CHANGE IN PAYROLL DEDUCTION RATE OR WITHDRAWAL I am now a participant in the Tekelec Employee Stock Purchase Plan (the "Plan") and I wish to make the change indicated below (check one): [ ] A. CHANGE IN PAYROLL DEDUCTION RATE: I hereby authorize the following new rate of payroll deduction, effective as of the first payday of the next offering period (such change must be filed with the Company at least three days prior to the start of the offering period with respect to which it is to be effective): (CIRCLE ONE) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% OF COMPENSATION [ ] B. WITHDRAWAL FROM PLAN AND CANCELLATION OF OPTION: I hereby elect to cancel my participation in the Plan effective immediately and to cancel my option to purchase Tekelec Common Stock under the Plan and request that all amounts withheld from me through payroll deductions relating to the cancelled option be refunded to me. I understand that cancellation of my option will be effective only if this form is filed with the Company prior to the close of the current offering period. I understand that if I wish to participate in the Plan following my cancellation and withdrawal from the Plan, I must re-enroll by filing a new Subscription Agreement with the Company at least three days prior to the start of the offering period with respect to which it is to be effective. [ ] C. WITHDRAWAL FROM PLAN WITHOUT CANCELLATION OF OPTION. I hereby elect to cancel my participation in the Plan effective as of the first day of the next offering period. However, I request that my previously authorized payroll deductions continue through the end of the current offering period and that all amounts deducted from my Compensation during the current offering period be applied to the purchase of Tekelec Common Stock pursuant to the Plan. I understand that if I wish to participate in the Plan following my cancellation and withdrawal from the Plan, I must re-enroll by filing a new Subscription Agreement with the Company at least three days prior to the start of the offering period with respect to which it is to be effective. DATE: _______________________ __________________________ SIGNATURE OF EMPLOYEE PRINT NAME: ___________________________ (To be completed by Tekelec) Date Received: ________________________ Approved by: _____________ EX-23.1 6 v90685exv23w1.txt EXHIBIT 23.1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this Registration Statement of Tekelec on Form S-8 of our report dated January 29, 2003, relating to the consolidated financial statements of Tekelec as of December 31, 2002 and 2001 and for each of the three years in the period ended December 31, 2002, which report appears in Tekelec's Annual Report on Form 10-K for the year ended December 31, 2002. We also consent to the incorporation by reference of our report dated January 29, 2003, relating to the financial statement schedule which appears in such Annual Report on Form 10-K. 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EX-5.1

                                                                     EXHIBIT 5.1

                                 Bryan Cave LLP
                             120 Broadway, Suite 300
                           Santa Monica, CA 90401-2386
                            Telephone: (310) 576-2100
                            Facsimile: (310) 576-2200

                                  June 5, 2003

Tekelec
26580 West Agoura Road
Calabasas, California  91302

            Re: Tekelec - Registration Statement on Form S-8

Ladies and Gentlemen:

                  We have acted as securities counsel for Tekelec, a California
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-8 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), to be filed with the Securities
and Exchange Commission (the "Commission") on June 5, 2003 in connection with
the registration under the Act of an aggregate of 3,800,000 shares of Common
Stock, without par value, of the Company (collectively, the "Shares") consisting
of: (i) 3,000,000 shares of Common Stock issuable upon exercise of options
granted or to be granted pursuant to the Company's 2003 Stock Option Plan and
(ii) 800,000 shares of Common Stock issuable upon exercise of options granted or
to be granted under the Company's Amended and Restated Employee Stock Purchase
Plan (the aforementioned 2003 Stock Option Plan and Amended and Restated
Employee Stock Purchase Plan are referred to together herein as the "Plans").

                  In connection with the preparation of the Registration
Statement, we have made certain legal and factual examinations and inquiries and
examined, among other things, such documents, records, instruments, agreements,
certificates and matters as we have considered appropriate and necessary for the
rendering of this opinion. We have assumed for the purpose of this opinion the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us as copies, and the
genuineness of the signatures thereon. As to various questions of fact material
to this opinion, we have, when relevant facts were not independently
established, relied, to the extent deemed proper by us, upon certificates and
statements of officers and representatives of the Company.

                  Based on the foregoing and in reliance thereon and upon our
review of applicable statutes and case law, it is our opinion that: (i) the
Shares have been duly authorized and (ii) the Shares, after the Registration
Statement becomes effective and after any post-effective amendment required by
law is duly completed, filed and becomes effective, and when the applicable
provisions of "Blue Sky" and other state securities laws shall have been
complied with, and when the Shares are issued and sold in accordance with the
Plans and the Form S-8 prospectuses to be delivered to participants in the
Plans, will be validly issued, fully paid and non-assessable.

                                       9



                  We hereby consent to the inclusion of our opinion as Exhibit
5.1 to the Registration Statement and further consent to the reference to this
firm in the Registration Statement. In giving this consent, we do not hereby
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission thereunder.

                  This opinion is rendered solely for your benefit in accordance
with the subject transaction and is not to be otherwise used, circulated, quoted
or referred to without our prior written consent. We are opining herein as to
the effect on the subject transaction only of United States federal law and the
internal (and not the conflict of law) laws of the State of California, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.

                                             Very truly yours,

                                             /s/ BRYAN CAVE LLP

                                             BRYAN CAVE LLP

EX-10.1

Tekelec Exhibit 10.1

EX-10.2

                                                                    EXHIBIT 10.2

                                     TEKELEC

                              AMENDED AND RESTATED
                          EMPLOYEE STOCK PURCHASE PLAN

         The following constitutes the provisions of the Amended and Restated
Employee Stock Purchase Plan (the "Plan") of Tekelec (the "Company").

         1.       Purpose. The purpose of the Plan is to provide employees of
the Company and its Subsidiaries with an opportunity to purchase Common Stock of
the Company through payroll deductions. It is the intention of the Company that
the Plan qualify as an "Employee Stock Purchase Plan" under Section 423 of the
Internal Revenue Code of 1986, as amended (the "Code"). The provisions of the
Plan shall, accordingly, be construed so as to extend and limit participation in
a manner consistent with the requirements of that section of the Code, as
amended from time to time.

         2.       Definitions.

                  (a)      "Compensation," unless otherwise determined by the
Board of Directors of the Company, means total cash compensation from employment
reportable on Form W-2 including, without limitation, regular straight-time
gross earnings, overtime pay, shift premium, incentive compensation, bonuses,
commissions and automobile allowances, but expressly excluding relocation
benefits, expense reimbursements, gains realized in connection with the exercise
of stock options or participation in a stock option or purchase program and
contributions by the Company to qualified deferred compensation plans.

                  (b)      "Employee" means any person, including an officer,
who is customarily employed for more than 20 hours per week by the Company or
its Subsidiaries.

                  (c)      "Subsidiary" means any corporation described in
Section 424 of the Code in which the Company owns, directly or indirectly, 50%
or more of the voting shares.

                  (d)      "Offering Date" means the first business day of an
offering period of the Plan.

                  (e)      "Termination Date" means the last business day of an
offering period of the Plan.

         3.       Eligibility.

                  (a)      General Rule. Any Employee, as defined in Section 2,
who shall have completed at least 30 days of continuous employment by the
Company or its Subsidiaries on the date his or her participation in the Plan is
effective shall be eligible to participate in the Plan, subject to the
limitations imposed by Section 423(b) of the Code. For purposes of this Section
3(a) only,



qualifying employment with a newly acquired Subsidiary prior to an Offering Date
will be considered employment with the Company or its Subsidiaries.

                  (b)      Exceptions. Any provisions of the Plan to the
contrary notwithstanding, no Employee shall be granted an option under the Plan
if:

                           (i)      immediately after the grant, such Employee
         (or any other person whose stock ownership would be attributed to such
         Employee pursuant to Section 424(d) of the Code) would own shares
         and/or hold outstanding options to purchase shares possessing five
         percent or more of the total combined voting power or value of all
         classes of shares of the Company or of any Subsidiary of the Company;
         or

                           (ii)     such option would permit the Employee's
         rights to purchase shares under all employee stock purchase plans of
         the Company and its Subsidiaries to accrue (i.e., become exercisable)
         at a rate which exceeds $25,000 of fair market value of such shares
         (determined at the time such option is granted) for each calendar year
         in which such option is outstanding at any time.

         4.       Offerings. The Plan shall be implemented by two offerings
during each 12-month period of the Plan commencing on July 1, 1996. Each
offering shall be of six months duration. Offering I shall commence on July 1
and end on December 31 of each year of the Plan; Offering II shall commence on
January 1 and end on June 30 of each year of the Plan. Participation in one
offering under the Plan shall neither limit nor require participation in any
other offering.

         5.       Participation. An eligible Employee may become a participant
in one or more offerings under the Plan by completing and signing a subscription
agreement authorizing payroll deductions on a form provided by the Company (the
"Subscription Agreement") authorizing payroll deductions and by filing it with
the Company's payroll office not less than three days prior to the start of the
offering period with respect to which it is to be effective unless a later time
for filing the Subscription Agreement has been set by the Company with respect
to a given offering. An Employee's authorization and participation in the Plan
shall become effective on the first Offering Date following the timely filing of
his or her Subscription Agreement and shall remain effective until revoked by
the participant by the filing of a Payroll Deduction Authorization Change or
Withdrawal form as described in Section 10(a) hereof or until changed by the
filing of a Payroll Deduction Authorization Change or Withdrawal form providing
for a change in the participant's payroll deduction rate. An Employee who
becomes eligible to participate in the Plan after the commencement of an
offering period may not become a participant in the Plan until the commencement
of the next offering. An Employee who is an officer or director who ceases
participation in the Plan may not participate again for at least six months
following such cessation of participation.

         6.       Payroll Deductions.

                  (a)      At the time a participant files his or her
Subscription Agreement, he or she shall elect to have payroll deductions made on
each payday during the next offering period at a percentage rate equal to a
positive whole number not exceeding 10%, or such other maximum rate

                                       2



as may be determined from time to time by the Company's Board of Directors
(herein sometimes referred to as the "Board") subject to the provisions of
Section 19 hereof, of the Compensation which would otherwise be payable to such
participant on each such payday; provided, however, that the maximum amount
withheld on behalf of a participant with respect to an offering period shall not
exceed the maximum amount that a participant might be required to pay upon the
exercise of his or her option determined as of the first day of an offering
period.

                  (b)      Payroll deductions for a participant shall commence
on the first payday following the date when a participant's payroll deduction
authorization becomes effective and shall automatically continue from offering
period to offering period until changed or terminated by the participant in
accordance with the terms hereof.

                  (c)      All payroll deductions authorized by a participant
shall be credited to the participant's individual account under the Plan. A
participant may not make any additional payments into such account.

                  (d)      A participant may terminate his or her participation
in the Plan at any time prior to the termination of the offering period as
provided in Section 10, but may not change the rate of his or her payroll
deductions with respect to an offering period during such offering period.

         7.       Grant of Option.

                  (a)      On each Offering Date with respect to which a
participant's payroll authorization is effective, each participant in the Plan
shall automatically be granted an option to purchase (at the option price as
provided in Section 7(b) hereof) up to the number of whole shares of the
Company's Common Stock arrived at by dividing (i) $12,500 by (ii) 100% of the
fair market value of one share of the Company's Common Stock at the Offering
Date, subject to the limitations set forth in Sections 3(b) and 12 hereof. The
fair market value of a share of the Company's Common Stock shall be determined
as provided in Section 7(c) hereof.

                  (b)      The option price per share of the shares to be sold
during each offering shall be the lesser of (i) 85% of the fair market value of
one share of the Common Stock of the Company at the Offering Date or (ii) 85% of
the fair market value of one share of the Common Stock of the Company at the
Termination Date.

                  (c)      The fair market value of the Company's Common Stock
shall be determined by the Company's Board of Directors, acting in its sole
discretion, and based upon such factors as the Board determines relevant;
provided, however, that if there is a public market for the Common Stock, the
fair market value of a share of Common Stock on a given date shall be the mean
of the closing bid and asked prices for the Common Stock on such date, as
reported in The Wall Street Journal (or, if not so reported, as otherwise
reported by The Nasdaq Stock Market), or, in the event the Common Stock is
listed on a national securities exchange or on the Nasdaq National Market, the
fair market value per share shall be the closing price on such exchange or on
The Nasdaq Stock Market as of the date of grant of the option, as reported in
The Wall Street Journal.

                                       3



         8.       Exercise of Option. Unless a participant cancels his or her
option and withdraws from the Plan as provided in Section 10, his or her option
for the purchase of shares shall be exercised automatically at the Termination
Date of the offering period, and the accumulated payroll deductions credited to
a participant's account on the Termination Date will be applied to purchase
whole shares of the Company's Common Stock (up to the maximum number subject to
option as determined in Section 7(a) hereof) at the applicable option price. Any
amount credited to a participant's account and not applied to the purchase of
Common Stock by reason of the limitation on the number of shares subject to
option shall be refunded promptly to such participant after the Termination
Date, provided that any amount remaining in a participant's account and
representing a fractional share shall be carried over and applied to the
purchase of shares in the subsequent offering period if the participant
participates in the subsequent offering. During his or her lifetime, a
participant's option to purchase shares hereunder is exercisable only by such
participant.

         9.       Delivery. As promptly as practicable after the end of each
offering period, the Company shall arrange for the issuance and delivery to, or
credit to the account of, each participant, as appropriate, of the shares
purchased upon exercise of his or her option. At the election of the Company,
the issuance and delivery of the shares purchased upon exercise of a
participant's option may be effected by transfer (electronic or otherwise in the
discretion of the Company) of such shares to a securities account maintained in
such participant's name. The shares purchased upon exercise of any option
granted to a participant on or after July 1, 2003 may not be assigned,
transferred, pledged or otherwise disposed of in any way (other than by will or
by the laws of descent and distribution) for a period of six months following
the exercise of the option; provided, however, that that the Compensation
Committee of the Board of Directors may, in its sole discretion, permit an
assignment, transfer, pledge or other disposition of such shares at such other
time as the Company's Board of Directors may determine in the event that the
participant has suffered a hardship, as determined by the Company's Board of
Directors in its sole discretion. Shares purchased upon exercise of any option
granted to a participant on or after July 1, 2003 and subject to the above
restrictions may include a legend indicating that such shares may not be
transferred, pledged or otherwise disposed of for six months from the date of
issue.

         10.      Withdrawal; Termination of Employment.

                  (a)      A participant may terminate his or her participation
in an offering under the Plan and withdraw all, but not less than all, the
payroll deductions credited to his or her account under the Plan at any time
prior to a Termination Date by giving written notice of withdrawal to the
Company on a Payroll Deduction Authorization Change or Withdrawal form provided
for such purpose. In such case, all of the participant's payroll deductions
credited to his or her account shall be paid to him or her promptly after
receipt of his or her notice of withdrawal, his or her option for the current
period shall be automatically cancelled, and no further payroll deductions for
the purchase of shares shall be made except pursuant to a new Subscription
Agreement filed in accordance with Section 5 hereof.

                  A participant may terminate his or her participation in the
Plan effective as of the first day of the next offering period by giving written
notice of withdrawal to the Company on a Payroll Deduction Authorization Change
or Withdrawal form provided for such purpose. In such

                                       4



case, the participant's payroll deductions will continue through the end of the
offering period in which the notice of withdrawal is given, all amounts deducted
from the participant's Compensation during such offering period will be applied
to the purchase of Common Stock pursuant to the Plan, and following the
completion of such offering period no further payroll deductions for the
purchase of shares shall be made except pursuant to a new Subscription Agreement
filed in accordance with Section 5 hereof.

                  (b)      Upon termination of a participant's employment for
any reason, including retirement or death, as soon as practicable after such
termination the payroll deductions credited to his or her account shall be
returned to him or her or, in the case of his or her death, to the person or
persons entitled thereto under Section 14, and his or her option shall be
automatically cancelled.

                  (c)      In the event an Employee fails to remain in the
continuous employ of the Company or its Subsidiaries for more than 20 hours per
week during the offering period in which the Employee is a participant, he or
she will be deemed to have elected to withdraw from the Plan and the payroll
deductions credited to his or her account will be returned to him or her and his
or her option will be cancelled.

                  (d)      A participant's withdrawal from an offering shall not
have any effect upon his eligibility to participate in a subsequent offering or
in any similar plan which may hereafter be adopted by the Company.

         11.      Interest. No interest shall accrue on the payroll deductions
of a participant in the Plan.

         12.      Stock.

                  (a)      The maximum number of shares of the Company's Common
Stock which shall be made available for sale under the Plan shall be 1,800,000
shares, subject to adjustment upon changes in capitalization of the Company as
provided in Section 18. The shares to be sold to participants in the Plan will
be authorized but unissued shares. Upon the cancellation of any option granted
under the Plan, the shares subject thereto shall return to the Plan and become
available for options thereafter granted under the Plan. If the total number of
shares which would otherwise be subject to options granted pursuant to Section
7(a) hereof at the Offering Date exceeds the number of shares then available
under the Plan (after deduction of all shares for which options have been
exercised or are then outstanding), the Company shall make a pro rata allocation
of the shares remaining available for option grant in as uniform and equitable a
manner as is practicable. In such event, the Company shall give written notice
of such reduction of the number of shares subject to the options to each
participant affected thereby and shall reduce the rate of payroll deductions, if
necessary.

                  (b)      A participant will have no interest or voting right
in shares covered by his or her option until such option has been exercised.

                                       5



                  (c)      Shares to be delivered to a participant under the
Plan shall, as specified in the participant's Subscription Agreement, be
registered in the name of the participant or in the name of the participant and
his or her spouse.

         13.      Administration. The Plan shall be administered by the Board or
a committee of members of the Board appointed by the Board, as necessary to
comply with Rule 16b-3 under the Securities Exchange Act of 1934. The Board or
its committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan; provided, however, that to
the extent necessary to comply with Rule 16b-3, no discretion concerning
decisions regarding the Plan shall be afforded to a person who is not a
"disinterested person" as that term is defined and interpreted under Rule 16b-3.
Every finding, decision and determination made by the Board or its committee
shall, to the fullest extent permitted by law, be final and binding upon all
parties.

         14.      Designation of Beneficiary.

                  (a)      A participant may file a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
participant's account under the Plan in the event of such participant's death
subsequent to the Termination Date of an offering period but prior to delivery
to him or her of such shares and cash. In addition, a participant may file a
written designation of a beneficiary who is to receive any cash from the
participant's account under the Plan in the event of such participant's death
prior to the Termination Date of an offering period.

                  (b)      Such designation of beneficiary may be changed by the
participant at any time by written notice. In the event of the death of a
participant and in the absence of a valid designation of a beneficiary who is
living at the time of such participant's death, the Company shall deliver such
shares and/or cash to the executor or administrator of the estate of the
participant; or if no such executor or administrator has been appointed (to the
knowledge of the Company), the Company, in its discretion, may deliver such
shares and/or cash to the spouse or to any one or more dependents or relatives
of the participant; or if no spouse, dependent or relative is known to the
Company, then to such other person as the Company may designate.

         15.      Transferability. Neither payroll deductions credited to a
participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution, pursuant to a qualified domestic relations order as defined by the
Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, or as provided in Section 14 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may treat such act as an election to withdraw
funds in accordance with Section 10 hereof.

         16.      Use of Funds. All payroll deductions received or held by the
Company on behalf of a participant under the Plan may be used by the Company for
any corporate purpose, and the Company shall not be obligated to segregate such
payroll deductions.

                                       6



         17.      Reports. Individual accounts will be maintained for each
participant in the Plan. Individual statements of account will be given to
participating Employees semiannually as promptly as practicable following the
Termination Date of an offering period, which statements shall set forth the
amounts of payroll deductions, the per share option price, the number of shares
purchased and the remaining cash balance, if any, in a participant's account.

         18.      Adjustments upon Changes in Capitalization or Control.

                  (a)      Subject to any required action by the shareholders of
the Company, the number of shares of Common Stock covered by each option under
the Plan which has not yet been exercised and the number of shares of Common
Stock which has been authorized for issuance under the Plan but has not yet been
placed under option or which has been returned to the Plan upon the cancellation
of an option, as well as the option price per share of Common Stock covered by
each option under the Plan which has not yet been exercised, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split, stock dividend, spin-off,
reorganization, recapitalization, merger, consolidation, exchange of shares or
the like. Such adjustment shall be made by the Board, whose determination in
that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issue by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to option.

                  (b)      In the event of the proposed dissolution or
liquidation of the Company, or in the event of a proposed sale of substantially
all of the assets of the Company, or the merger or consolidation of the Company
with or into another corporation, the Board shall (i) make provision for the
assumption of all outstanding options by the successor corporation or (ii)
declare that any option shall terminate as of a date fixed by the Board which is
at least 30 days after the notice thereof and, unless a participant terminates
his or her participation in the Plan prior to such date, his or her option for
the purchase of shares will be exercised automatically on such date and the
accumulated payroll deductions credited to a participant's account on such date
will be applied to purchase whole shares of the Company's Common Stock (up to
the maximum number subject to option as determined in accordance with Section
7(a) hereof) at the applicable option price.

                  (c)      No fractional shares of Common Stock shall be
issuable on account of any adjustment described herein, and the aggregate number
of shares into which shares then covered by an option, when changed as the
result of such adjustment, shall be reduced to the largest number of whole
shares resulting from such adjustment, unless the Board, in its sole discretion,
shall determine to issue scrip certificates in respect to any fractional shares,
which scrip certificates, in such event, shall be in a form and have such terms
and conditions as the Board in its discretion shall prescribe.

         19.      Amendment or Termination. The Board of Directors of the
Company may at any time terminate or amend the Plan in such respects as the
Board may deem advisable. No such termination will affect options previously
granted, nor may an amendment make any change in any option theretofore granted
which adversely affects the rights of any participant without the prior

                                       7



written consent of such participant, nor may an amendment be made without prior
approval of the shareholders of the Company if such amendment would:

                  (a)      Increase the number of shares that may be issued
under the Plan;

                  (b)      Materially modify the requirements as to eligibility
for participation in the Plan; or

                  (c)      Materially increase the benefits which accrue to
participants under the Plan.

         20.      Term of Plan. The Plan shall become effective upon the earlier
to occur of its adoption by the Board or its approval by vote of a majority of
the outstanding shares of the Company entitled to vote on the adoption of the
Plan. The Plan shall continue in effect for a term of ten years unless sooner
terminated under Sections 19 or 22 of the Plan.

         21.      Notices. All notices or other communications (i) by a
participant to the Company in connection with the Plan shall be deemed to have
been duly given when received in the form specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof
and (ii) by the Company to a participant in connection with the Plan shall be
deemed to have been duly given when received by the participant or, if earlier,
five days after deposit in the United States mail by certified or registered
mail, return receipt requested, first class postage prepaid, addressed to the
participant at his or her address as shown on the records of the Company or as
such participant may request by written notice to the Company hereunder.

         22.      Shareholder Approval. Notwithstanding anything to the contrary
herein, the continuance of the Plan and the effectiveness of any option granted
hereunder shall be subject to approval by the affirmative vote of the holders of
a majority of the outstanding shares of stock of the Company present or
represented and entitled to vote thereon at a meeting of shareholders duly held
in accordance with the laws of the State of California, within 12 months before
or after the date the Plan is adopted by the Board. No options granted before
such shareholder approval has been obtained shall be exercisable unless such
shareholder approval is obtained. If the Plan is not approved by the
shareholders of the Company within the above-referenced 12-month period, the
Plan and any options granted hereunder shall terminate and all payroll
deductions credited to a participant's account shall be promptly returned to him
or her.

         23.      No Enlargement of Employee Rights. The Plan is purely
voluntary on the part of the Company, and the continuance of the Plan shall not
be deemed to constitute a contract between the Company and any Employee, or to
be consideration for or a condition of the employment of any Employee. Nothing
contained in this Plan shall be deemed to give any Employee the right to be
retained in the employ of the Company, its parent, Subsidiary or a successor
corporation, or to interfere with the right of the Company or any such
corporations to discharge or retire any Employee thereof at any time. No
Employee shall have any right to or interest in options authorized hereunder
prior to the grant of an option to such Employee, and upon such grant he or she
shall have only such rights and interests as are expressly provided herein,
subject, however, to all applicable provisions of the Company's Articles of
Incorporation, as the same may be amended from time to time.

                                       8



         24.      Information to Participants. The Company shall provide without
charge to each participant in the Plan copies of such annual and periodic
reports as are provided by the Company to its shareholders generally.

         25.      Governing Law. To the extent that Federal laws do not
otherwise control, the Plan and all determinations made or actions taken
pursuant hereto shall be governed by the laws of the state of California,
without regard to the conflicts of laws rules thereof.

         26.      Tax Withholding. If at any time the Company or any Subsidiary
is required, under applicable laws and regulations, to withhold, or to make any
deduction of, any taxes or take any other action in connection with any exercise
of an option made hereunder or transfer of shares of Common Stock, the Company
or such Subsidiary shall have the right to deduct from all amounts paid in cash
any taxes required by law to be withheld therefrom, and in the case of shares of
Common Stock, the participant or his or her estate or beneficiary shall be
required to pay the Company or such Subsidiary the amount of taxes required to
be withheld or, in lieu thereof, the Company or such Subsidiary shall have the
right to retain, or sell without notice, a sufficient number of shares of Common
Stock to cover the amount required to be withheld, or to make other arrangements
with respect to withholding as it shall deem appropriate.

         27.      Securities Law Compliance. No shares of Common Stock may be
issued upon the exercise of any option under the Plan until all requirements of
applicable Federal, state, foreign or other securities laws with respect to the
purchase, sale and issuance of shares of Common Stock shall have been satisfied.
If any action must be taken because of such requirements, then the purchase,
sale and issuance of shares shall be postponed until such action can reasonably
be taken. Upon request by the Company, an Employee shall deliver to the Company
such information, representations or undertakings as the Company may reasonably
request in order to comply with any registration requirements or exemptions
therefrom of applicable securities laws. The Company may require any securities
so issued to bear a legend, may give its transfer agent instructions, and may
take such other steps as in its judgment are reasonably required to prevent any
violation of applicable securities laws.

                                      * * *

                                       9



                                     TEKELEC
                          EMPLOYEE STOCK PURCHASE PLAN

                                     FORM OF
                             SUBSCRIPTION AGREEMENT

    Instructions: Please print or type all information except your signature.

NAME: __________________________________________________________________________
         First                     Middle                           Last

ADDRESS: _______________________________________________________________________

SOCIAL SECURITY NO.: ______ ________ _________ ________ _______ ________ _______

EMPLOYEE NO.:_____________________   EMPLOYMENT START DATE: ____________________

                              ORIGINAL APPLICATION

1.       I hereby elect to participate in the Tekelec Employee Stock Purchase
         Plan (the "Plan") in accordance with this Subscription Agreement and
         subject to the terms and conditions of the Plan.

2.       I hereby authorize Tekelec to make regular payroll deductions, at the
         rate indicated below and in accordance with the terms of the Plan, from
         the Compensation (as defined in the Plan) including overtime, bonuses,
         commissions and other earnings, if any, paid to me during each offering
         period during which I remain a participant in the Plan:

         (CIRCLE ONE) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% OF COMPENSATION

3.       I understand that payroll deductions at the indicated rate will
         continue from offering period to offering period unless I become
         ineligible to participate in the Plan or I file the Notice of Change in
         Payroll Deduction Rate or Withdrawal (in the form attached hereto).

4.       I understand that the deducted amounts will be applied automatically to
         the purchase of shares of Tekelec Common Stock at the end of each
         offering period unless I elect to cancel my option and withdraw from
         the Plan by filing the Notice of Change in Payroll Deduction Rate or
         Withdrawal (in the form attached hereto).

5.       I understand that I may not sell, transfer, gift or otherwise dispose
         of any shares purchased by me under the Plan within six months
         following their purchase.

6.       I hereby acknowledge that I have received and read a copy of Tekelec's
         most recent Prospectus describing the terms and provisions of the Plan
         and understand the information therein and the risks of participating
         in the Plan.



7.       Shares purchased for me under the Plan should be issued in the name(s)
         of (please print):

8.       I hereby agree to be bound by the terms of the Plan. The effectiveness
         of this Subscription Agreement is dependent upon my eligibility to
         participate in the Plan.

9.       At the request of Tekelec, I will promptly (a) notify Tekelec if I have
         sold, transferred, gifted or otherwise disposed of any shares purchased
         for me under the Plan at any time within 18 months after the end of the
         offering period in which such shares were purchased and (b) provide
         Tekelec with all requested information regarding such transaction.

10.      In the event of my death before the end of an offering period, I hereby
         designate as my beneficiary(ies) to receive all payments and shares due
         me under the Plan:

Name:  (Please print) __________________________________________________________
                               First             Middle                    Last

__________________________     _________________________________________________
Relationship                   Address

                               _________________________________________________
                               City              State                  Zip Code

Name:  (Please print) __________________________________________________________
                               First             Middle                    Last

__________________________     _________________________________________________
Relationship                   Address

                               _________________________________________________
                               City              State                  Zip Code

DATE: ______________________                             _______________________
                                                         SIGNATURE OF EMPLOYEE

                           ELECTION NOT TO PARTICIPATE

         I hereby acknowledge receipt of a copy of Tekelec's most recent
Prospectus which describes the Tekelec Employee Stock Purchase Plan and elect
not to participate in the Plan. I understand that my decision not to participate
in the next offering under the Plan will not affect my eligibility to
participate in subsequent offerings under the Plan.

DATE: _______________________                       _______________________
                                                    SIGNATURE OF EMPLOYEE

                          (To be completed by Tekelec)

Date Received: __________________                   Approved by: _______________



                                     TEKELEC
                          EMPLOYEE STOCK PURCHASE PLAN

                                    NOTICE OF
                 CHANGE IN PAYROLL DEDUCTION RATE OR WITHDRAWAL

         I am now a participant in the Tekelec Employee Stock Purchase Plan (the
"Plan") and I wish to make the change indicated below (check one):

[ ]      A.   CHANGE IN PAYROLL DEDUCTION RATE: I hereby authorize the following
              new rate of payroll deduction, effective as of the first payday of
              the next offering period (such change must be filed with the
              Company at least three days prior to the start of the offering
              period with respect to which it is to be effective):

         (CIRCLE ONE) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% OF COMPENSATION

[ ]      B.   WITHDRAWAL FROM PLAN AND CANCELLATION OF OPTION: I hereby elect
              to cancel my participation in the Plan effective immediately and
              to cancel my option to purchase Tekelec Common Stock under the
              Plan and request that all amounts withheld from me through
              payroll deductions relating to the cancelled option be refunded
              to me. I understand that cancellation of my option will be
              effective only if this form is filed with the Company prior to
              the close of the current offering period. I understand that if I
              wish to participate in the Plan following my cancellation and
              withdrawal from the Plan, I must re-enroll by filing a new
              Subscription Agreement with the Company at least three days prior
              to the start of the offering period with respect to which it is
              to be effective.

[ ]      C.   WITHDRAWAL FROM PLAN WITHOUT CANCELLATION OF OPTION. I hereby
              elect to cancel my participation in the Plan effective as of the
              first day of the next offering period. However, I request that my
              previously authorized payroll deductions continue through the end
              of the current offering period and that all amounts deducted from
              my Compensation during the current offering period be applied to
              the purchase of Tekelec Common Stock pursuant to the Plan. I
              understand that if I wish to participate in the Plan following my
              cancellation and withdrawal from the Plan, I must re-enroll by
              filing a new Subscription Agreement with the Company at least
              three days prior to the start of the offering period with respect
              to which it is to be effective.

DATE: _______________________                         __________________________
                                                      SIGNATURE OF EMPLOYEE
PRINT NAME: ___________________________

                          (To be completed by Tekelec)

Date Received: ________________________               Approved by: _____________

EX-23.1

                                                                    EXHIBIT 23.1

                       CONSENT OF INDEPENDENT ACCOUNTANTS

         We consent to the incorporation by reference in this Registration
Statement of Tekelec on Form S-8 of our report dated January 29, 2003, relating
to the consolidated financial statements of Tekelec as of December 31, 2002 and
2001 and for each of the three years in the period ended December 31, 2002,
which report appears in Tekelec's Annual Report on Form 10-K for the year ended
December 31, 2002. We also consent to the incorporation by reference of our
report dated January 29, 2003, relating to the financial statement schedule
which appears in such Annual Report on Form 10-K.

PricewaterhouseCoopers LLP

/s/ PRICEWATERHOUSECOOPERS LLP

Los Angeles, California
June 5, 2003