Document:

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                                                                Exhibit 10.2

                                     TEKELEC
                              AMENDED AND RESTATED
                             2003 STOCK OPTION PLAN

1.    ESTABLISHMENT AND PURPOSES OF THE PLAN.

      Tekelec hereby establishes this Amended and Restated 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.    "AWARD" shall mean any Option, Restricted Stock Award or Restrict
Stock Unit granted pursuant to the provisions of the Plan.

      c.    "AWARD AGREEMENT" shall mean any written agreement, contract or
other instrument or document, including without limitation an Option Agreement,
evidencing and reflecting the terms of any Award granted by the Committee
hereunder in such form or forms as the Committee (subject to the terms and
conditions of the Plan) may from time to time approve.

      d.    "BOARD" shall mean the Board of Directors of the Company.

      e.    "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.

      f.    "COMMON STOCK" shall mean the common stock, without par value, of
the Company.

      g.    "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.

      h.    "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.

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      i.    "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.

      j.    "DIVIDEND EQUIVALENT" shall mean any right granted under Section
9(b) of this Plan.

      k.    "EMPLOYEE" shall mean any employee of the Company, including
officers and directors who are also employees and, for purposes of eligibility
for Awards other than Incentive Stock Options, shall mean any consultant to the
Company, whether or not employed by the Company.

      l.    "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

      m.    "FAIR MARKET VALUE" shall mean, with respect to Shares, the fair
market value per Share on the date an award 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 Award (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.

      n.    "INCENTIVE STOCK OPTION" shall mean an Option intended to qualify as
an incentive stock option within the meaning of Section 422 of the Code.

      o.    "NONSTATUTORY STOCK OPTION" shall mean an Option which is not an
Incentive Stock Option.

      p.    "OPTION" shall mean a stock option to purchase Common Stock granted
to a Participant pursuant to the Plan.

      q.    "OPTION AGREEMENT" means a written agreement substantially in the
form 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.

      r.    "OPTIONED STOCK" shall mean the Common Stock subject to an Option
granted pursuant to the Plan.

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      s.    "ORIGINAL PLAN" shall mean the Tekelec 2003 Stock Option Plan, as
amended prior to the amendment and restatement provided for herein.

      t.    "PARTICIPANT" shall mean any Employee who is granted an Award.

      u.    "PERMITTED TRANSFEREE" shall have the meaning set forth in
Section 10.

      v.    "PLAN" shall mean this Tekelec Amended and Restated 2003 Stock
Option Plan.

      w.    "RESTRICTED STOCK AWARD" shall mean any Shares granted under Section
8 of this Plan and issued with the restriction that the holder may not sell,
transfer, pledge or assign such Shares and with such other vesting and other
restrictions as the Committee, in its sole discretion, may impose, which
restrictions may lapse separately or in combination at such time or times, in
installments or otherwise, as the Committee may deem appropriate.

      x.    "RESTRICTED STOCK UNIT" shall mean any unit granted under Section 9
of this Plan evidencing the right to receive one Share at some future date.

      y.    "SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

      z.    "SHARES" shall mean shares of the Common Stock, any shares into
which such Shares may be converted in accordance with Section 11 of the Plan and
such other securities or property as may become subject to Awards pursuant to
this Plan.

3.    SHARES RESERVED.

      The maximum aggregate number of Shares reserved for issuance pursuant to
the Plan shall be 8,000,000 Shares or the number of shares of stock to which
such Shares shall be adjusted as provided in Section 11 of the Plan. Such number
of Shares may be set aside out of authorized but 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 Award terminating,
expiring, forfeited or canceled for any reason prior to issuance of such Shares
shall again become available for Awards 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 Awards or have been granted Awards may vote on
any matters affecting the administration of the Plan or the grant of any Awards
pursuant to the Plan, except that no such member shall act upon the granting of
an Award 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

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the granting of Awards 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: (i) determine the type or types of Awards
(i.e., Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock
Awards or Restricted Stock Units) to be granted to each Participant in the Plan,
(ii) determine the Fair Market Value per Share in accordance with the terns of
the Plan, (iii) determine the exercise price of Options to be granted to
Employees in accordance with the terms of the Plan, (iv) determine the Employees
to whom, and the time or times at which, Awards shall be granted and the number
of Shares subject to each Award, (v) prescribe, amend and rescind rules and
regulations relating to the Plan, subject to the limitations set forth in
Section 13 of the Plan, (vi) determine the terms and provisions of each Award
granted to Participants under the Plan and each Award Agreement (which need not
be identical with the terms of other Awards and Award Agreements) and, with the
consent of the Participant, to modify or amend an outstanding Award Agreement;
provided, however, that the Committee shall not have the authority to amend or
adjust the exercise price of any Options previously granted to a Participant
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 12 of the Plan, (vii) accelerate the exercise
date of any Option or the vesting of any Restricted Stock Award or Restricted
Stock Unit, (viii) determine whether any Participant will be required to execute
a stock purchase agreement or other agreement as a condition to the issuance of
Shares pursuant to an Award, 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 Participant, to amend any such
agreement, (ix) interpret the Plan or any agreement entered into with respect to
the grant of Awards and the issuance of Shares upon exercise of Options or the
vesting of Restricted Stock Units, (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 Award previously granted or to take such other actions as may be necessary
or appropriate with respect to the Company's rights pursuant to Awards 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 Participants and any other holders of any
Awards 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

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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 Awards and/or the issue and transfer of Shares pursuant
to the exercise of Options or the vesting of Restricted Stock Awards or
Restricted Stock Units and all other fees and expenses necessarily incurred by
the Company in connection therewith; provided, however, that the person
exercising an Option or to whom an Award is granted or to whom Shares are
otherwise issued pursuant to the Plan shall be responsible for all payroll,
withholding, income and other taxes incurred by such person on the date of
exercise of the Option or of issuance or vesting of Shares, as applicable.

5.    ELIGIBILITY.

      Awards may be granted under the Plan only to Employees; provided, however,
that consultants shall not be eligible to receive Incentive Stock Options. An
Employee who has been granted Awards may, if he or she is otherwise eligible, be
granted additional Awards.

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 to Section 11 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

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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.

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.

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      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.

      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 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

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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.

            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.

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8.       TERMS AND CONDITIONS OF RESTRICTED STOCK AWARDS.

      a.    Grant. Restricted Stock Awards may be granted hereunder by the
Committee to Employees either alone or in addition to other Awards granted under
the Plan. A Restricted Stock Award shall be subject to such terms and conditions
as may be determined by the Committee and may be subject to vesting conditioned
upon the satisfaction of such requirements, conditions (such as a condition that
the Participant's right to the Shares shall vest in installments over a period
of time during which services are to be provided to the Company by the
Employee), restrictions or performance criteria as shall be established by the
Committee and set forth in the Award Agreement. During any period during which
Shares acquired pursuant to a Restricted Stock Award are subject to vesting
conditions, such Shares may not be sold, exchanged, transferred, pledged,
assigned or otherwise disposed of by the Participant. The provisions of
Restricted Stock Awards need not be the same with respect to each Participant
receiving such awards. The Committee has absolute discretion to determine
whether any consideration is to be received by the Company as a condition
precedent to the issuance of Restricted Stock Awards. The terms of any
Restricted Stock Award granted under this Plan shall be set forth in a written
Award Agreement which shall contain provisions determined by the Committee which
are not inconsistent with the Plan.

      b.    Rights of Holders of Restricted Stock. Beginning on the date of
grant of a Restricted Stock Award and subject to execution of the Award
Agreement, the Participant shall become a shareholder of the Company with
respect to all Shares subject to the Restricted Stock Award and shall have all
of the rights of a shareholder, including the right to vote the Shares subject
to the Restricted Stock Award and the right to receive distributions made with
respect to such Shares; provided, however, that any Shares or any other property
(other than cash) distributed as a dividend or otherwise with respect to any
such Shares as to which the restrictions have not yet lapsed shall be subject to
the same restrictions as the Shares subject to the Restricted Stock Award.

      c.    Delivery of Shares. Shares issued upon the grant of Restricted Stock
Awards shall, unless otherwise determined by the Committee, be maintained in the
custody of or on behalf of the Company until all applicable vesting conditions
have been satisfied. Shares subject to Restricted Stock Awards that are no
longer subject to restrictions shall be delivered to the Participant promptly
after the applicable restrictions lapse or are waived.

      d.    Termination of Continuous Status as an Employee. Unless otherwise
determined by the Committee or unless otherwise provided in the Award Agreement
evidencing the Award, in the event of the termination of a Participant's
Continuous Status as an Employee, Shares which are subject to a Participant's
Restricted Stock Award which are not vested as of the date of such termination
shall be automatically forfeited by the Participant and cancelled by the Company
for no value.

      e.    Waiver of Forfeiture. The Committee may, when it finds that a waiver
would be in the best interests of the Company and subject to such terms and
conditions as the Committee shall deem appropriate, waive in whole or in part
any remaining vesting restrictions with respect to any Restricted Stock Award or
any other conditions set forth in any Award Agreement.

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9.    TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS.

      a.    Grant. Restricted Stock Units may be issued hereunder to Employees
either alone or in addition to other Awards granted under the Plan. A Restricted
Stock Unit is a bookkeeping entry that represents the right to receive one Share
to be issued and delivered at the end of the applicable vesting period, subject
to a risk of cancellation and to the other terms and conditions set forth in the
Plan and in any Award Agreement evidencing the Restricted Stock Unit and subject
to any additional terms and conditions established by the Committee. The Company
shall establish and maintain accounts for Participants in which the Company
shall record Restricted Stock Units and the transactions and events affecting
such units. Restricted Stock Units and other items reflected in the account will
represent only bookkeeping entries by the Company to evidence the Company's
unfunded obligations. The provisions of Restricted Stock Units need not be the
same with respect to each Participant receiving such Awards. The Committee has
absolute discretion to determine whether any consideration is to be received by
the Company as a condition precedent to the grant of a Restricted Stock Unit.
The terms of any Restricted Stock Unit granted under this Plan shall be set
forth in a written Award Agreement which shall contain provisions determined by
the Committee which are not inconsistent with the Plan.

      b.    Rights of Holders of Restricted Stock Units; Dividend Equivalents.
Unless the Committee otherwise provides in an Award Agreement for Restricted
Stock Units, any Participant holding Restricted Stock Units shall have no rights
as a shareholder of the Company with respect to such Restricted Stock Units. The
Committee shall be authorized to establish procedures pursuant to which the
Company's payment of any Restricted Stock Unit may be deferred. Subject to the
provisions of the Plan and any Award Agreement, the recipient of a Restricted
Stock Unit may, if so determined by the Committee, be entitled to receive,
currently or on a deferred basis and with respect to the number of Shares
covered by the Award, payments ("Dividend Equivalents") in amounts equivalent to
cash, stock or other property paid by the Company as dividends on the Company's
Common Stock prior to the vesting of the Restricted Stock Units.

      c.    Delivery of Shares in Settlement of Restricted Stock Units.
Restricted Stock Units (if not previously cancelled) will be automatically
settled on or about the vesting date or dates set forth in the Award Agreement
evidencing the Award. The Company may make delivery of Shares in settlement of
Restricted Stock Units by either delivering one or more stock certificates
representing such Shares to the Participant, registered in the name of the
Participant, or by depositing such Shares into an account maintained for the
Participant and established in connection with any Company plan or arrangement
providing for investment in Common Stock of the Company.

      d.    Termination of Continuous Status as an Employee. Unless otherwise
determined by the Committee or unless otherwise provided in the Award Agreement
evidencing the Award, in the event of the termination of a Participant's
Continuous Status as an Employee, the Participant's Restricted Stock Units which
are not vested as of the date of such termination shall not vest and shall
automatically be cancelled for no value and without issuance of any Shares.

      e.    Waiver of Forfeiture. The Committee may, when it finds that a waiver
would be in the best interests of the Company and subject to such terms and
conditions as the Committee shall

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deem appropriate, waive in whole or in part any remaining vesting restrictions
with respect to any Restricted Stock Units or any other conditions set forth in
any Award Agreement.

10.   NONTRANSFERABILITY OF AWARDS.

      No Awards granted under the Plan, and no Shares subject to any such
Awards, that have not been issued or as to which any applicable vesting
restriction, performance or deferral period has not lapsed, may 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. Options may be exercised during the life of the Optionee
only by the Optionee or the Optionee's guardian or legal representative.
Notwithstanding the foregoing, a Participant may assign or transfer an Award
with the consent of the Committee (each transferee thereof, a "Permitted
Transferee"), which consent may be granted or withheld in the Committee's sole
discretion, provided that such Permitted Transferee shall be bound by and
subject to all of the terms and conditions of the Plan and the Award Agreement
relating to the transferred Award and shall execute an agreement satisfactory to
the Company evidencing such obligations; and, provided further, that such
Participant shall remain bound by the terms and conditions of the Plan. The
Company shall cooperate with any Permitted Transferee and the Company's transfer
agent in effectuating any transfer permitted under this Section 10.

11.   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 Award, and the number
and type of Shares which have been authorized for issuance under the Plan but as
to which no Awards have yet been granted or which have been returned to the Plan
upon cancellation, expiration or forfeiture of an Award, as well as the exercise
or purchase price per Share, as applicable, covered by outstanding Awards, 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 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 Award.

      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

                                       11
<PAGE>

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 outstanding Awards 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, (iii)
accelerate the vesting of Restricted Stock Awards and Restricted Stock Units, or
(iv) cause any Award 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 Award,
provided that such payment and/or grant are substantially equivalent in value to
the fair market value of the cancelled Award 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 an Award, 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.

12.   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.

13.   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, subject to
any requirement for shareholder approval imposed by applicable law, including
the rules and regulations of The Nasdaq Stock Market or any stock exchange on
which Shares are listed or quoted, and shall make any amendments 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 Company's
shareholders, no such revision or amendment shall (i) materially increase the
benefits accruing to participants under the Plan;

                                       12
<PAGE>

(ii) increase the number of Shares which may be issued under the Plan, other
than in connection with an adjustment under Section 11 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 Awards; (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 16 hereunder.

      b.    Effect of Amendment or Termination. Except as otherwise provided in
Section 11 of the Plan, any amendment or termination of the Plan shall not
affect Awards already granted, and such Awards shall remain in full force and
effect as if the Plan had not been amended or terminated, unless mutually agreed
otherwise between the Participant and the Company, which agreement must be in
writing and signed by the Participant and the Company. Notwithstanding anything
to the contrary herein, this Plan shall not adversely affect, unless mutually
agreed in writing by the Company and a Participant, the terms and provisions of
any Award granted prior to the date the Plan was approved by shareholders as
provided in Section 12 of the Plan.

14.   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 Award
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.

15.   GENERAL PROVISIONS.

      a.    Withholding or Deduction for Taxes. The grant of Awards hereunder
and the issuance of Shares and all payments and distributions pursuant to this
Plan are 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 Participant, any taxes required to be withheld under Federal,
state or local law as a result of the: (i) grant of any Award, (ii) exercise of
any Option, (iii) sale of Shares issued upon exercise of Options, (iv) delivery
of Shares, cash or other property, (v) lapse of restrictions in connection with
any Award, or (vi) any other event occurring pursuant to the Plan. To the extent
that compensation and other amounts, if any, payable to the Participant are

                                       13
<PAGE>

insufficient to pay any taxes required to be so withheld, the Company may, in
its sole discretion, require the Participant, including without limitation, as a
condition of the exercise of any 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. The Committee shall be
authorized to establish procedures for election by Participants to satisfy such
obligations for the payment of such taxes by tendering previously acquired
Shares (either actually or by attestation, valued at their then Fair Market
Value) that have been owned for a period of at least six months (or such other
period as may be necessary to avoid accounting charges against the Company's
earnings), or by directing the Company to retain Shares (up to the Participant's
minimum required tax withholding rate) otherwise deliverable in connection with
the Award.

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

      c.    No Enlargement of Rights. Neither the Plan, nor the granting of
Awards, 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 Awards 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 Award Agreement, subject, however, to all
applicable provisions of the Company's Articles of Incorporation, as the same
may be amended from time to time.

      d.    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 a Participant to whom an
Award 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 Award
Agreement, or at such other address as such Participant or his or her transferee
(upon any permitted transfer) 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 Participant holding Shares purchased upon
exercise of an Option or otherwise issued pursuant to Awards hereunder to
provide the Secretary of the Company, by letter mailed as provided hereinabove,
with written notice of his or her direct mailing address.

      e.    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.

                                       14
<PAGE>

      f.    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.

      g.    Information to Participants. The Company shall provide without
charge to each Participant 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.

      h.    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.

      i.    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 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.

      j.    Form of Shares and Restricted Stock Awards; Stop Transfer Orders.
Shares issued or delivered under the Plan, including Shares subject to any
Restricted Stock Award, may be evidenced in such manner as the Committee in its
sole discretion shall deem appropriate, including, without limitation,
book-entry registration or issuance of a stock certificate or certificates. In
the event any stock certificate is issued in respect of a Restricted Stock
Award, such certificate shall bear an appropriate legend referring to the terms,
conditions and restrictions applicable to such Award. All certificates for
Shares delivered under the Plan pursuant to any Award shall be subject to such
stop transfer orders and other restrictions as the Committee may deem advisable
under the rules, regulations and other requirements of the Securities and
Exchange Commission, any stock exchange or quotation system upon which the
Shares are then listed or quoted, and any applicable federal or state securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions.

      k.    Unfunded Status of the Plan. The Plan is intended to constitute an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant by the Company, nothing contained herein shall give any
such Participant any rights that are greater than those of a general creditor of
the Company. In its sole discretion, the Committee may authorize the creation of
trusts or other arrangements to meet the obligations created under the Plan to
deliver the Shares or payments in lieu of or with respect to Awards hereunder;
provided, however, that the existence of such trusts or other arrangements is
consistent with the unfunded status of the Plan.

16.   EFFECTIVE DATE AND TERM OF PLAN.

      The Original Plan became effective upon shareholder approval as provided
in Section 12 of the Plan, and this Plan shall become effective upon shareholder
approval at the 2004 Annual Meeting of Shareholders of the Company in accordance
with the shareholder approval provisions of

                                       15
<PAGE>

Section 12. This Plan shall continue in effect for a term of ten years following
the date of shareholder approval of the Original Plan unless sooner terminated
under Section 13 of the Plan. This Plan shall not become effective if not
approved by the shareholders of the Company at the Company's 2004 Annual Meeting
of Shareholders and, in such case, the Original Plan shall continue in full
force and effect.

                                       16
<PAGE>

                            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 Amended and Restated 2003 Stock Option Plan.

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

Date: ___________________, 2004        _________________________________________
                                       Ronald W. Buckly, Secretary

<PAGE>

[TEKELEC LOGO]

                              AMENDED AND RESTATED
                             2003 STOCK OPTION PLAN
                             STOCK OPTION AGREEMENT

Tekelec hereby grants to you an Option under the Tekelec Amended and Restated
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

<PAGE>

                          TEKELEC AMENDED AND RESTATED
                             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.    AMENDED AND RESTATED 2003 STOCK OPTION PLAN. This Option is in all
      respects subject to the terms, definitions and provisions of the Tekelec
      Amended and Restated 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

<PAGE>

            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.

<PAGE>

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.

                                     * * * *

<PAGE>

TEKELEC  NOTICE OF EXERCISE OF STOCK OPTION

I hereby notify Tekelec that I elect to exercise the options listed below to
purchase the number of shares of Tekelec Common Stock indicated below. In
connection with the exercise of my options and the purchase of such shares, I
have received and carefully reviewed a copy of the Company's Prospectus
containing information about the Amended and Restated 2003 Stock Option Plan and
the shares of Tekelec Common Stock issuable thereunder.

Section I: Personal Data  (Please print legibly)

Name:            _________________________  Employee ID #: _____________________
Address:         _________________________  SSN: _______________________________
City, State, Zip:_________________________  Phone: (___________)________________

Section II:  Statement of Intent to Exercise

<TABLE>
<S>                                 <C>                                        <C>
Type of Option: (check one)         [ ] Incentive Stock Option (ISO)           [ ] Nonstatutory Stock Option (NSO)
</TABLE>

<TABLE>
<CAPTION>
                                                            Exercise Price                                  Total Exercise
Option #     Option Grant Date  # Shares Exercise             per Share            Taxes (NSO only)           Price
<S>          <C>                <C>                 <C>     <C>                <C> <C>               <C>    <C>
_______         __________         __________       X        $__________       +        TBD          =      $__________
_______         __________         __________       X        $__________       +        TBD          =      $__________
_______         __________         __________       X        $__________       +        TBD          =      $__________
                                                                            Total amount due to TEKELEC:    $__________
</TABLE>

NSO EXERCISES ONLY: I understand that for NSO exercises I am required to pay
Federal and state income and employment taxes on the gain, as measured, as of
the date of exercise, by the difference between the option exercise price and
the fair market value of the shares purchased. Tax calculations will be provided
by the Stock Plan Administrator.

ISO EXERCISES ONLY: I will promptly notify Tekelec if I sell, transfer, gift or
otherwise dispose of any or all of the shares acquired upon the exercise of an
ISO at any time (a) within one year after the date hereof; or (b) within two
years after the ISO grant date.

Section III:  Method of Exercise  (Please check one)

<TABLE>
<S>                        <C>                                           <C>
[ ] Exercise and hold      [ ] Same day sale of all shares exercised     [ ] Same day sale of __________ shares exercised
</TABLE>

Section IV:  Method of Payment  (Please check one)

<TABLE>
<S>                                                                      <C>
[ ]  Cashless Exercise - - proceeds from sale of stock                   [ ] Check made payable to Tekelec
</TABLE>

Section V:  Broker Information

Name of Broker: _________________________   Address:   _________________________
Contact Name:   _________________________   Fax No.:   _________________________
Account No.:    _________________________   Phone No.: _________________________

Section VI:  Certificate Registration  (Please check one)

[ ] Issue stock in my name individually and mail stock certificate to the above
address.

[ ] Issue stock in street name and send directly to my Broker at the above
address.

Employee signature:_______________________  Date: _______________, 200_____

Please return your completed Notice of Exercise to _________________________,
Tekelec Stock Plan Administrator.

Received by ___________ on behalf of Tekelec on ___________, 200___. ___________
                                                                      Signatureexv10w1

 

EXHIBIT 10.1

EMPLOYMENT AGREEMENT

     This Employment Agreement (the “Agreement”), by and among Quanta Services,
Inc., a Delaware corporation (“Employer” or “the Company”), and Kenneth W.
Trawick (“Employee”), is hereby entered into as of this 1st day of June, 2004.

R E C I T A L S

     A. As of the date of this Agreement, Employer is engaged primarily in the
business of specialty electrical contracting for electric utilities,
telecommunications and cable television providers, and transportation,
commercial and industrial customers.

     B. Employee is employed hereunder by Employer in a confidential
relationship wherein Employee, in the course of Employee’s employment with
Employer, has and will continue to become familiar with and aware of non-public
information of Employer, including but not limited to, Employer’s customers,
specific manner of doing business, including the processes, techniques and
trade secrets utilized by Employer, and future plans with respect thereto
(collectively, “Confidential Information”), all of which has been and will be
established and maintained at great expense to Employer; this information is a
trade secret and constitutes the valuable goodwill of Employer.

A G R E E M E N T S

     In consideration of the mutual promises, terms, covenants and conditions
set forth herein and the performance of each, the parties hereto hereby agree
as follows:

     1. Employment and Duties.

     (a) Employer hereby employs Employee as President-Telecom and Cable
Division of Employer. As such, Employee shall have responsibilities,
duties and authority reasonably accorded to and expected of a
President-Telecom and Cable Division of Employer and will report
directly to the Chief Executive Officer of Employer. Employee hereby
accepts this employment upon the terms and conditions herein contained
and, subject to Paragraph 1(c) hereof, agrees to devote Employee’s time,
attention and efforts to promote and further the business of Employer.

     (b) Employee shall faithfully adhere to, execute and fulfill all
reasonable policies established by the Board of Directors of Employer
(the “Board”).

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     (c) Employee shall not, during the term of his employment
hereunder, be engaged in any other business activity pursued for gain,
profit or other pecuniary advantage if such activity interferes with
Employee’s duties and responsibilities hereunder. The foregoing
limitations shall not be construed as prohibiting Employee from making
personal investments in such form or manner as will neither require
Employee’s services in the operation or affairs of the companies or
enterprises in which such investments are made nor violate the terms of
paragraph 4 hereof.

     2. Compensation. For all services rendered by Employee, Employer shall
compensate Employee as follows:

     (a) Base Salary. The base salary payable to Employee shall be
$300,000 per year, payable on a regular basis in accordance with
Employer’s standard payroll procedures but not less than monthly. On at
least an annual basis, the management and/or Board will review
Employee’s performance and may make increases to such base salary if, in
its discretion, any such increase is warranted. Such recommended
increase would, in all likelihood, require approval by the Board or a
duly constituted committee thereof.

     (b) Incentive Bonus Plan. Employee shall participate in Employer’s
Management Incentive Bonus Plan for the fiscal year ending December 31,
2004. The maximum bonus for which Employee will be eligible pursuant to
such plan will be one hundred percent (100%) of Employee’s base salary.
Employee will participate in future incentive bonus plans as determined
by the Board or a duly constituted committee thereof.

     (c) Restricted Stock. Employer shall issue to Employee $100,000
worth of restricted common stock of the Company pursuant to the
Company’s 2001 Stock Incentive Plan, as amended from time to time, which
shall vest in equal installments over three years beginning on May 28,
2005. The number of shares of restricted stock to be issued will be
determined using the closing price for the Company’s common stock as
quoted on the New York Stock Exchange on the date the issuance is
approved by the Compensation Committee of the Board of Directors of the
Company.

     (d) Living Expenses. Employer will reimburse Employee for the
reasonable cost of renting an apartment in Houston, Texas.

     (e) Executive Perquisites, Benefits, and Other Compensation.
Employee shall be entitled to receive additional benefits and
compensation from Employer in such form and to such extent as specified
below:

     (i) Payment of all premiums for coverage for
Employee and Employee’s dependent family members under
health, hospitalization, disability, dental, life and
other insurance plans that Employer may have in effect
from time to time.

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     (ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in
the performance of Employee’s services pursuant to this
Agreement. Employee shall appropriately document, in
reasonable detail, all reimbursable expenses upon
submission of any request for reimbursement, and in a
format and manner consistent with Employer’s expense
reporting policy.

     (iii) Employer shall provide Employee with other
executive perquisites as may be available to or deemed
appropriate for Employee by the Board and Employee shall
be eligible to participate in all other Employer-wide
employee benefits as available from time to time at a
level generally consistent with that of other peer
employees of Employer.

     3. [Intentionally left blank.]

     4. Non-Competition.

     (a) Employee hereby agrees that Employee will not (without
Employer’s consent), during the period of Employee’s employment with
Employer, and for a period of one (1) year following the date Employee
ceases to be employed by Employer or any direct or indirect subsidiary
of Employer, for any reason whatsoever, directly or indirectly, for
himself or on behalf of or in conjunction with any other person,
persons, company, partnership, corporation or business of whatever
nature:

     (i) engage, as an officer, director, shareholder,
owner, partner, joint venturer or in a managerial
capacity, whether as an employee, independent contractor,
consultant or advisor or as a sales representative, in
any specialty electrical contracting business for
electric utilities, telecommunications and cable
television providers, and transportation, commercial and
industrial customers, within the United States or within
100 miles of any other geographic area in which Employer
or any of Employer’s direct or indirect subsidiaries
conducts business, including any territory serviced by
Employer or any of its subsidiaries (the “Territory”);

-3-

 

     (ii) call upon any person who is, at that time,
within the Territory, an employee of Employer (including
the subsidiaries thereof) for the purpose or with the
intent of enticing such employee away from or out of the
employ of Employer (including the direct or indirect
subsidiaries thereof);

     (iii) call upon any person or entity that is, at
that time, or that has been, within one (1) year prior to
that time, a customer of Employer (including the direct
or indirect subsidiaries thereof) within the Territory
for the purpose of soliciting or selling products or
services in direct competition with Employer or any
subsidiary of Employer within the Territory; or

     (iv) call upon any prospective acquisition
candidate, on Employee’s own behalf or on behalf of any
competitor, which candidate was, to Employee’s actual
knowledge after due inquiry, either called upon by
Employer (including the direct or indirect subsidiaries
thereof) or for which Employer made an acquisition
analysis, for the purpose of acquiring such entity.

     Notwithstanding the above, the foregoing covenant
shall not be deemed to prohibit Employee from acquiring
as an investment not more than two percent (2%) of the
capital stock of a competing business, whose stock is
traded on a national securities exchange or
over-the-counter.

     (b) Because of the difficulty of measuring economic losses to
Employer as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to Employer
for which it would have no other adequate remedy, Employee agrees that
the foregoing covenant may be enforced by Employer in the event of
breach by him, by injunctions and restraining orders.

     (c) It is agreed by the parties that the foregoing covenants in
this Paragraph 4 impose a reasonable restraint on Employee in light of
the activities and business of Employer (including Employer’s direct and
indirect subsidiaries) on the date of the execution of this Agreement
and the current plans of Employer (including Employer’s direct and
indirect subsidiaries); but it is also the intent of Employer and
Employee that such covenants be construed and enforced in accordance
with the changing activities, business and locations of Employer
(including Employer’s direct and indirect subsidiaries) throughout the
term of this Agreement, whether before or after the date of termination
of the employment of Employee. For example, if,

-4-

 

during the term of this Agreement, Employer (including Employer’s direct
and indirect subsidiaries) engages in new and different activities,
enters a new business or establishes new locations for its current
activities or business in addition to or other than the activities or
business enumerated under the Recitals above or the locations currently
established therefor, then Employee will be precluded from soliciting
the customers or employees of such new activities or business or from
such new location and from directly competing with such new business
within 100 miles of its then-established operating location(s) through
the term of this Agreement.

          It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a
business or pursue other activities not in competition with Employer
(including Employer’s direct and indirect subsidiaries), or similar
activities, or business in locations the operation of which, under such
circumstances, does not violate clause (a)(i) of this Paragraph 4, and
in any event such new business, activities or location are not in
violation of this Paragraph 4 or of employee’s obligations under this
Paragraph 4, if any, Employee shall not be chargeable with a violation
of this Paragraph 4 if Employer (including Employer’s direct and
indirect subsidiaries) shall thereafter enter the same, similar or a
competitive (i) business, (ii) course of activities or (iii) location,
as applicable.

     (d) The covenants in this Paragraph 4 are severable and separate,
and the unenforceability of any specific covenant shall not affect the
provisions of any other covenant. Moreover, in the event any court of
competent jurisdiction shall determine that the scope, temporal or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent that the court deems reasonable, and the Agreement shall
be reformed in accordance therewith.

     (e) All of the covenants in this Paragraph 4 shall be construed as
an agreement independent of any other provision in this Agreement, and
the existence of any claim or cause of action of Employee against
Employer, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement by Employer of such covenants.

     (f) Notwithstanding any other provision of this Agreement, if
Employee’s employment is terminated by Employer for other than good
cause, then no non-competition provision shall be enforceable for any
period of time during which or for which the Employee is not receiving
or has not received severance compensation.

     (g) Employee and Employer acknowledge and agree that it would be
difficult to measure any damages caused to Employer that might result

-5-

 

from any breach by Employee of any of the promises set forth in
Paragraph 4 of this Agreement, and that, in any event, money damages
would be an inadequate remedy for any such breach. Accordingly,
Employee acknowledges and agrees that if he breaches or threatens to
breach, any of the promises set forth in Paragraph 4 of this Agreement,
Employer shall be entitled, in addition to all other remedies that it
may have, to equitable relief, including a temporary restraining order,
preliminary injunction, permanent injunction, and/or other appropriate
equitable relief to restrain any such breach without showing or proving
any actual damage to Employer. Accordingly, Employer and Employee
hereby consent to the jurisdiction and venue of the District Court of
Harris County, Texas, for any and all claims arising out of, or to
enforce the terms of, Paragraph 4 of this Agreement.

     5. Place of Performance. Nothing contained herein shall be deemed to
require Employee to relocate from Employee’s present residence to another
geographic location in order to carry out Employee’s duties and
responsibilities under this Agreement.

     6. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the date hereof and continue for three (3) years (the “Term”),
and, unless terminated sooner as herein provided, shall continue thereafter on
a year-to-year basis on the same terms and conditions contained herein in
effect as of the time of renewal. This Agreement and Employee’s employment may
be terminated in any one of the following ways:

     (a) Death. The death of Employee shall immediately terminate this
Agreement with no severance compensation due to Employee’s estate.

     (b) Disability. If, as a result of incapacity due to physical or
mental illness or injury, Employee shall have been absent from
Employee’s full-time duties hereunder for four (4) consecutive months,
then thirty (30) days after receiving written notice (which notice may
occur before or after the end of such four (4) month period, but which
shall not be effective earlier than the last day of such four (4) month
period), Employer may terminate Employee’s employment hereunder provided
Employee is unable to resume Employee’s full-time duties at the
conclusion of such notice period. Also, Employee may terminate
Employee’s employment hereunder if his health should become impaired to
an extent that makes the continued performance of Employee’s duties
hereunder hazardous to Employee’s physical or mental health or life,
provided that Employee shall have furnished Employer with a written
statement from a qualified doctor to such effect and provided, further,
that, at Employer’s request made within thirty (30) days of the date of
such written statement, Employee shall submit to an examination by a
doctor selected by Employer who is reasonably acceptable to Employee or
Employee’s doctor and such doctor shall have concurred in the conclusion
of Employee’s doctor. In the event this Agreement is terminated as a
result of

-6-

 

Employee’s disability, Employee shall receive from Employer, in a
lump-sum payment due within ten (10) days of the effective date of
termination, the base salary at the rate then in effect for whatever
time period is remaining under the Term of this Agreement or for one (1)
year, whichever amount is greater.

     (c) Good Cause; Good Reason. Employer may terminate the Agreement
ten (10) days after delivery of written notice to Employee for good
cause, which shall be: (1) Employee’s willful, material and irreparable
breach of this Agreement; (2) Employee’s gross negligence in the
performance or intentional nonperformance or inattention continuing for
ten (10) days after receipt of written notice of need to cure of any of
Employee’s material duties and responsibilities hereunder; (3)
Employee’s willful dishonesty, fraud or material misconduct with respect
to the business or affairs of Employer; (4) Employee’s conviction of a
felony crime; or (5) chronic alcohol abuse or illegal drug abuse by
Employee. In the event of a termination for good cause, as enumerated
above, Employee shall have no right to any severance compensation.

Employee may terminate his employment under this Agreement ten (10) days
after delivery of written notice to Employer for “good reason”, which
shall exist if, within twelve (12) months following a “Change in Control
of Employer” (as defined in Paragraph 13 below), Employee (i) is offered
a Lesser Position (as defined below), or (ii) is required to relocate
in violation of Paragraph 5 of this Agreement. “Lesser Position” shall
mean a new position or a change in the Employee’s position, which,
compared with Employee’s position with Employer immediately prior to the
Change in Control, (i) offers a lower level of compensation (including
base salary, fringe benefits and target bonuses under any
corporate-performance based bonus or incentive programs), or (ii)
materially reduces Employee’s duties or level of responsibility. In the
event of such a termination of his employment, Employee shall be
entitled to receive severance benefits as provided in Paragraph 13(d)
below.

     (d) Without Good Cause. At any time after the commencement of
employment, either Employee or Employer may, without good cause,
terminate this Agreement and Employee’s employment, effective thirty
(30) days after written notice is provided to the other party. Should
Employee be terminated by Employer without good cause during the Term,
Employee shall receive from Employer, in a lump-sum payment due on the
effective date of termination, the base salary at the rate then in
effect for whatever time period is remaining under the Term of this
Agreement or for one (1) year, whichever amount is greater. If Employee
resigns or otherwise terminates Employee’s employment without cause
pursuant to this Paragraph 6(d), Employee shall receive no severance
compensation.

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     (e) Change in Control of Employer. In the event of a Change in
Control during the Term, refer to Paragraph 13 below.

          Upon termination of this Agreement for any reason provided above,
Employee shall be entitled to receive all compensation earned and all
benefits and reimbursements due through the effective date of
termination. Additional compensation subsequent to termination, if any,
will be due and payable to Employee only to the extent and in the manner
expressly provided above or in Paragraph 13 hereof. All other rights and
obligations of Employer and Employee under this Agreement shall cease as
of the effective date of termination, except that Employer’s obligations
under Paragraph 10 hereof and Employee’s obligations under Paragraphs 4,
7, 8, 9, 11 and 17 hereof shall survive such termination in accordance
with their terms.

          If termination of Employee’s employment arises out of Employer’s
failure to pay Employee on a timely basis the amounts to which he is
entitled under this Agreement or as a result of any other material
breach of this Agreement by Employer, as determined by a court of
competent jurisdiction or pursuant to the provisions of Paragraph 17
below, Employer shall pay all amounts and damages to which Employee may
be entitled as a result of such material breach, including interest
thereon and all reasonable legal fees and expenses and other costs
incurred by Employee to enforce Employee’s rights hereunder.

     7. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of Employer, or its
representatives, vendors or customers that pertain to the business of Employer
shall be and remain the property of Employer, and be subject at all times to
its discretion and control. Likewise, all correspondence, reports, records,
charts, advertising materials, and other similar data pertaining to the
business, activities or future plans of Employer that is collected by Employee
shall be delivered promptly to Employer without request by it upon termination
of Employee’s employment.

     8. Inventions. Employee shall disclose promptly to Employer any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, that are conceived or made by Employee,
solely or jointly with another, during the period of employment or within one
(1) year thereafter, and that are directly related to the business or
activities of Employer and that Employee conceives as a result of Employee’s
employment by Employer. Employee hereby assigns and agrees to assign all of
Employee’s interests therein to Employer or its nominee. Whenever requested to
do so by Employer, Employee shall execute any and all applications, assignments
or other instruments that Employer shall deem necessary to apply for and obtain
Letters Patent of the United States or any foreign country or to otherwise
protect Employer’s interest therein.

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     9. Trade Secrets. Employee agrees that he will not, during or after the
Term of this Agreement with Employer, disclose the specific terms of Employer’s
or its subsidiaries’ relationships or agreements with its significant vendors
or customers or any other significant and material trade secret of Employer or
its subsidiaries, whether in existence or proposed, to any person, firm,
partnership, corporation or business for any reason or purpose whatsoever other
than in the course of performing Employee’s duties hereunder.

     10. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by Employer
against Employee), by reason of the fact that Employee is or was performing
services under this Agreement, then Employer shall indemnify Employee against
all expenses (including attorneys’ fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and Employer are made a party to the
same third-party action, complaint, suit or proceeding, Employer agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by Employer shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and Employer shall pay all attorneys’ fees
of such separate counsel. Further, while Employee is expected at all times to
use Employee’s best efforts to faithfully discharge his duties under this
Agreement, Employee cannot be held liable to Employer for errors or omissions
made in good faith where Employee has not exhibited gross, willful or wanton
negligence or misconduct or performed criminal and fraudulent acts that
materially damage the business of Employer.

     11. No Prior Agreements. Employee hereby represents and warrants to
Employer that the execution of this Agreement by Employee and his employment by
Employer and the performance of Employee’s duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify Employer for any claim,
including but not limited to attorneys’ fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come
to have against Employer based upon or arising out of any noncompetition
agreement, invention or secrecy agreement between Employee and such third party
which was in existence as of the date of this Agreement.

     12. Assignment; Binding Effect. Employee understands that Employer has
selected him for employment on the basis of Employee’s personal qualifications,
experience and skills. Employee, therefore, shall not assign all or any portion
of Employee’s performance under this Agreement. Subject to the preceding two
(2) sentences and the express provisions of Paragraph 13 below, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties hereto and their respective heirs, legal representatives, successors
and assigns.

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     13. Change in Control.

     (a) Employee understands and acknowledges that Employer may be
merged or consolidated with or into another entity and that such entity
shall automatically succeed to the rights and obligations of Employer
hereunder or that Employer may undergo another type of Change in
Control. In the event such a merger or consolidation or other Change in
Control is initiated prior to the end of the Term, then the provisions
of this Paragraph 13 shall be applicable.

     (b) In the event of a pending Change in Control wherein Employer
and Employee have not received written notice at least five (5) business
days prior to the anticipated closing date of the transaction giving
rise to the Change in Control from the successor to all or a substantial
portion of Employer’s business and/or assets that such successor is
willing as of the closing to assume and agree to perform Employer’s
obligations under this Agreement in the same manner and to the same
extent that Employer is hereby required to perform, then such Change in
Control shall be deemed to be a termination of this Agreement by
Employer without good cause during the Term and (i) the noncompetition
provision of Paragraph 4 shall not apply; (ii) Employee shall receive
from Employer, in a lump-sum payment due on the effective date of such
termination, an amount equal to three times the sum of (A) the
Employee’s annual Base Salary and (B) the higher of (x) the highest
annual bonus paid to Employee under the Company’s Annual Incentive Plan
in effect on the date hereof or a direct predecessor thereto or
replacement thereof, for the past three fiscal years and (y) the
Employee’s annual bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred, under the Company’s Annual
Incentive Plan in effect on the date hereof or a direct predecessor
thereto or replacement thereof (and annualized for any fiscal year
during which the Employee was employed for less than 12 full months),
for the most recently completed or current fiscal year during the Term;
and (iii) until the third anniversary of the effective date of such
termination, Employee and, if applicable, Employee’s dependents shall be
eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by the
Employer and its affiliated companies (including, without limitation,
medical, prescription, dental, disability, employee life, group life,
accidental death and travel accident insurance plans and programs)
(collectively, “Employer Welfare Programs”) to the extent applicable
generally to other peer executives of Employer and its affiliated
companies at the same after-tax cost to Employee as if Employee was
employed by Employer, but in no event shall such Employer Welfare
Programs provide Employee with benefits that are less favorable, in the
aggregate, than the most favorable of such Employer Welfare Programs in
effect for Employee at any time during the 120-day period immediately
preceding the date of such termination; provided,

-10-

 

however, if Employer is unable to provide Employee and/or, if
applicable, any of Employee’s dependents, with any benefits to which
Employee or such dependent is entitled pursuant to the terms of this
Section 13(b)(iii) under any of the Employer Welfare Programs, Employer
shall at its cost provide such benefit at a level no less favorable to
Executive than would have been provided under the Employer Welfare
Programs under another plan or arrangement, including an individual
policy purchased by Employer for Employee or such dependent(s).
Employee agrees that if any benefit to be provided under the Employer
Welfare Programs is subject to the provisions of Part 6 of Subtitle B of
Title I of the Employee Retirement Income Security Act of 1974, as
amended (“COBRA”), Employee shall make a timely COBRA election to
continue such benefit under COBRA during the applicable COBRA
continuation period and Employer shall reimburse Employee for the amount
of the COBRA premiums, if any, required to be paid by Employee for such
coverage.

     (c) For purposes of applying Paragraph 6 hereof under the
circumstances described in (b) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change in
Control and all compensation, reimbursements and lump-sum payments due
Employee must be paid in full by Employer at or prior to such closing.

     (d) In the event that a successor in a pending Change in Control
gives notice pursuant to Paragraph 13(b) that it will assume Employer’s
obligations under this Agreement and at the time of or within twelve
(12) months following such Change in Control Employee either (i)
terminates this Agreement for good reason (as defined in Paragraph 6(c)
of this Agreement) or (ii) is terminated by Employer other than for good
cause (as defined in Paragraph 6(c) of this Agreement), then effective
as of the date of such termination, (A) the noncompetition provisions
of Paragraph 4 shall no longer apply; (B) Employee shall receive from
Employer, in a lump-sum payment due on the effective date of such
termination, an amount equal to three times the sum of (1) the
Employee’s annual Base Salary and (2) the higher of (x) the highest
annual bonus paid to Employee under the Company’s Annual Incentive Plan
in effect on the date hereof or a direct predecessor thereto or
replacement thereof, for the past three fiscal years and (y) the
Employee’s annual bonus paid or payable, including any bonus or portion
thereof which has been earned but deferred, under the Company’s Annual
Incentive Plan in effect on the date hereof or a direct predecessor
thereto or replacement thereof (and annualized for any fiscal year
during which the Employee was employed for less than 12 full months),
for the most recently completed or current fiscal year during the Term
and (C) until the third anniversary of the effective date of such
termination, Employee and, if applicable, Employee’s dependents shall be
eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and

-11-

 

programs provided by the Employer and its affiliated companies
(including, without limitation, medical, prescription, dental,
disability, employee life, group life, accidental death and travel
accident insurance plans and programs) (collectively, “Employer Welfare
Programs”) to the extent applicable generally to other peer executives
of Employer and its affiliated companies at the same after-tax cost to
Employee as if Employee was employed by Employer, but in no event shall
such Employer Welfare Programs provide Employee with benefits that are
less favorable, in the aggregate, than the most favorable of such
Employer Welfare Programs in effect for Employee at any time during the
120-day period immediately preceding the date of such termination;
provided, however, if Employer is unable to provide Employee and/or, if
applicable, any of Employee’s dependents, with any benefits to which
Employee or such dependent is entitled pursuant to the terms of this
Section 13(b)(iii) under any of the Employer Welfare Programs, Employer
shall at its cost provide such benefit at a level no less favorable to
Executive than would have been provided under the Employer Welfare
Programs under another plan or arrangement, including an individual
policy purchased by Employer for Employee or such dependent(s).
Employee agrees that if any benefit to be provided under the Employer
Welfare Programs is subject to the provisions of Part 6 of Subtitle B of
Title I of the Employee Retirement Income Security Act of 1974, as
amended (“COBRA”), Employee shall make a timely COBRA election to
continue such benefit under COBRA during the applicable COBRA
continuation period and Employer shall reimburse Employee for the amount
of the COBRA premiums, if any, required to be paid by Employee for such
coverage.

     (e) A “Change in Control” shall be deemed to have occurred
if:

     (i) any person or entity, other than Employer or an
employee benefit plan of Employer, acquires directly or
indirectly the Beneficial Ownership (as defined in
Section 13(d) of the Securities Exchange Act of 1934, as
amended) of any voting security of Employer and
immediately after such acquisition such person or entity
is, directly or indirectly, the Beneficial Owner of
voting securities representing fifty percent (50%) or
more of the total voting power of all of the
then-outstanding voting securities of Employer; or

     (ii) the following individuals no longer constitute
a majority of the members of the Board: (A) the
individuals who, as of the closing date of Employer’s
initial public offering, constitute the Board (the
“Original Directors”); (B) the individuals who thereafter
are elected to the Board and whose election, or
nomination for election, to the Board was

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approved by a vote of at least two-thirds (2/3) of the
Original Directors then still in office (such directors
becoming “Additional Original Directors” immediately
following their election); and (C) the individuals who
are elected to the Board and whose election, or
nomination for election, to the Board was approved by a
vote of at least two-thirds (2/3) of the Original
Directors and Additional Original Directors then still in
office (such directors also becoming “Additional Original
Directors” immediately following their election); or

     (iii) the stockholders of Employer shall approve a
merger, consolidation, recapitalization or reorganization
of Employer, a reverse stock split of outstanding voting
securities, or consummation of any such transaction if
stockholder approval is not obtained, other than any such
transaction that would result in at least seventy five
percent (75%) of the total voting power represented by
the voting securities of the surviving entity outstanding
immediately after such transaction being Beneficially
Owned by at least seventy five percent (75%) of the
holders of outstanding voting securities of Employer
immediately prior to the transaction, with the voting
power of each such continuing holder relative to other
such continuing holders not substantially altered in the
transaction; or

     (iv) the stockholders of Employer shall approve a
plan of complete liquidation of Employer or an agreement
for the sale or disposition by Employer of all or a
substantial portion of Employer’s assets (i.e., fifty
percent (50%) or more of the total assets of Employer).

     (f) “Lesser Position” shall mean a new position or a change in the
Employee’s Position, which, compared with Employee’s Position with
Employer immediately prior to the Change in Control, (i) offers a lower
level of compensation (including base salary, fringe benefits and target
bonuses under any corporate-performance based bonus or incentive
programs), or (ii) materially reduces Employee’s duties or level of
responsibility, or (iii) requires Employee to relocate his principal
residence.

     (g) Employee shall be reimbursed by Employer or its successor for
all excise taxes that Employee incurs under Section 4999 of the Internal
Revenue Code of 1986, as amended, as a result of any Change in Control.
In addition, Employee shall be reimbursed by Employer or its successor
for all federal, state and local income taxes and additional excise
taxes attributable to the payment pursuant to the preceding sentence and
the payment pursuant

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to this sentence. Such amount will be due and payable by Employer or its
successor within ten (10) days after Employee delivers a written request
for reimbursement accompanied by a copy of Employee’s tax return(s)
showing the excise tax actually incurred by Employee. Such amount shall
not be subject to offset or reduction for any amount owed or claimed to
be owed to Employer or its successor by Employee. If not paid within ten
(10) days from date of demand, the amount due under this subsection
shall bear interest at the maximum non-usurious rate allowed by law from
the date of demand to the date of payment.

     14. Complete Agreement. This Agreement supersedes any other agreements
or understandings, written or oral, between Employer and Employee, and Employee
has no oral representations, understandings or agreements with Employer or any
of its officers, directors or representatives covering the same subject matter
as this Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the agreement between Employer and Employee and of
all the terms of this Agreement, and it cannot be varied, contradicted or
supplemented by evidence of any prior or contemporaneous oral or written
agreements. This written Agreement may not be later modified except by a
written instrument signed by a duly authorized officer of Employer and
Employee, and no term of this Agreement may be waived except by a written
instrument signed by the party waiving the benefit of such term

     15. Notice. Whenever any notice is required hereunder, it shall be given
in writing addressed as follows:

	 	 	 
	To Employer:

	 	Quanta Services, Inc.

1360 Post Oak Boulevard, Suite 2100

Houston, Texas 77056

Attention: General Counsel
	 
	 	 
	To Employee:

	 	Kenneth W. Trawick

1850 Laster Road

Chipley, FL 32428

Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party
may change the address for notice by notifying the other party of such change
in accordance with this paragraph

     16. Severability, Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
paragraph headings herein are for reference purposes only and are not intended
in any way to describe, interpret, define or limit the extent or intent of
the Agreement or of any part hereof.

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     17. Arbitration. Except as provided in Paragraph 4(g) of this Agreement,
any unresolved dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration, conducted before a panel
of three (3) arbitrators in Houston, Texas, in accordance with the National
Rules of the American Arbitration Association for the Resolution of Employment
Disputes in effect on the date of the event giving rise to the claim or the
controversy. The arbitrators shall not have the authority to add to, detract
from or modify any provision hereof nor to award punitive damages to any
injured party. The arbitrators shall have the authority to order back-pay,
severance compensation, vesting of options or restricted stock (or cash
compensation in lieu of vesting of options or restricted stock), reimbursement
of costs, including those incurred to enforce this Agreement, and interest
thereon in the event the arbitrators determine that Employee was terminated
without disability or good cause, as defined in Paragraphs 6(b) and 6(c)
hereof, respectively, or that Employer has otherwise materially breached this
Agreement. A decision by a majority of the arbitration panel shall be final and
binding. Judgment may be entered on the arbitrators’ award in any court having
jurisdiction. The direct expense of any arbitration proceeding shall be borne
by Employer.

     18. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas.

     19. Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.

REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.

	 	 	 	 	 
	 	QUANTA SERVICES, INC.

 

 	 
	 	By:  	/s/ JOHN R. COLSON
 	 
	 	 	Name:  	John R. Colson 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 	EMPLOYEE

 	 
	 	/s/ KENNETH W. TRAWICK
 	 
	 	Kenneth W. Trawick 	 
	 	 	 	 

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