Document:

EXHIBIT 10.1

                                     TEKELEC
                        2002 Executive Officer Bonus Plan

Tekelec ("Tekelec" or the "Company") believes that a portion of each executive
officer's annual compensation should be directly related to the Company's
financial performance and such officer's achievement of certain objectives. The
2002 Executive Officer Bonus Plan ("2002 Bonus Plan") is designed to motivate
Tekelec's executive officers and to reward them if in 2002 the Company achieves
certain financial results and/or such officers achieve certain individual,
business or strategic objectives. The Company believes that the achievement of
these results and objectives is essential for the Company's success and for the
continued growth in shareholder value.

2002 Bonus Plan:

Each Eligible Officer (as defined below) will be eligible to receive:

(i)   a quarterly bonus ("Quarterly Bonus") based on the Company's financial
      performance as measured by the degree of the Company's attainment of a
      pre-set, Board of Directors' approved, operating income before bonus goal
      for each calendar quarter during 2002; and

(ii)  an annual bonus ("Annual Bonus") based on his/her achievement in 2002 of
      individual, business or strategic objectives that the Company's Chief
      Executive Officer (in the case of the Chief Executive Officer, the Board
      of Directors) approves during the first quarter of 2002.

The Quarterly Bonuses and Annual Bonus payable to an Eligible Officer under the
2002 Bonus Plan will be calculated as a percentage of such officer's actual
earnings paid during a calendar quarter or the calendar year, as the case may
be, excluding certain compensation and payments (e.g., reimbursement for moving
expenses, bonus payments received under the 2001 or 2002 Bonus Plan, stock
option compensation, disability benefits, sign-on bonuses, vacation cash-outs,
and similar payments).

Eligible Officers:

Unless additional officers are expressly designated as Eligible Officers under
the 2002 Bonus Plan pursuant to a subsequent, duly adopted Board of Directors'
resolution, only the following executive officers shall be eligible to
participate in the 2002 Bonus Plan (all titles are positions with Tekelec unless
otherwise specified):

                 Chief Executive Officer
                 Chief Operating Officer
                 Chief Financial Officer
                 Vice President and General Manager, Network Systems
                 Division
                 Vice President and General Manager, NDD
                 Vice President and General Counsel
                 Vice President, Global Sales and Marketing, Network Systems
                 Vice President and General Manager, IEX Contact Center Division
                 Vice President, Corporate Development
                 Vice President, Human Resources
                 Vice President, Operations and Quality

In order to be eligible to receive a Quarterly or an Annual Bonus, an Eligible
Officer must be employed by Tekelec or one of its subsidiaries as an Eligible
Officer on the date on which such bonuses are paid, unless such requirement is
waived in writing by the Company's Chief Executive Officer in the case of an
Eligible Officer other than the Chief Executive Officer, or by the Board of
Directors in the case of the Chief Executive Officer. An Eligible Officer who is
on an approved leave of absence from the Company during a calendar quarter will,
for purposes of determining eligibility under the 2002 Bonus Plan, be treated as
being employed by the Company during such leave of absence.

Quarterly Bonuses:

The Company's pro forma operating income before bonus (which excludes the
effects of acquisition-related amortization and other merger-related charges)
calculated on a consolidated basis ("Operating Income before Bonus") for each
calendar quarter will be the financial measure for the Quarterly Bonuses.

<PAGE>

                                                                    EXHIBIT 10.1

The amount of bonus payable as a Quarterly Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such Eligible Officer's actual
earnings paid in a calendar quarter and the Quarterly Bonus Percentage for such
calendar quarter listed opposite such officer's title in the Bonus Participation
Table below by (ii) the applicable Bonus Factor (as determined in accordance
with the matrix set forth in Schedule A attached hereto). Stated mathematically,
the amount of a Quarterly Bonus equals (AxB)xC, where A = an Eligible Officer's
actual earnings paid in a calendar quarter; B = the applicable Quarterly Bonus
Percentage; and C = the applicable Bonus Factor.

The amount of the Company's quarterly Operating Income before Bonus will
determine the applicable Bonus Factor. As indicated on Schedule A, minimum
quarterly Operating Income before Bonus will result in a Bonus Factor of 25%;
mid-point Operating Income before Bonus will result in a Bonus Factor of 50%;
and maximum quarterly Operating Income before Bonus will result in a maximum
Bonus Factor of 100%. There will be a linear increase in the percentage amount
of the Bonus Factor between (i) the minimum quarterly Operating Income before
Bonus and the mid-point Operating Income before Bonus; and (ii) the mid-point
Operating Income before Bonus and the maximum quarterly Operating Income before
Bonus.

Except as otherwise provided herein, the Quarterly Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 30 days after the Company's quarterly results are publicly
announced. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Quarterly Bonuses are paid by the Company and
thereafter returns to active status as an Eligible Officer upon the end of such
leave of absence, will be paid a Quarterly Bonus to which he/she is otherwise
entitled under this 2002 Bonus Plan within 30 days following his/her return to
active status as an Eligible Officer. An Eligible Officer who is on an approved
leave of absence from the Company on the date on which Quarterly Bonuses are
paid by the Company and thereafter fails to return to active status as an
Eligible Officer upon the end of such leave of absence, will forfeit his/her
right to any Quarterly Bonus to which he/she may otherwise be entitled for such
quarter.

Annual Bonuses:

The percentage degree (0% to 100%) to which an Eligible Officer achieves his/her
objectives for 2002 will be the measure for the Annual Bonus. The determination
of the percentage degree to which an Eligible Officer (other than the Chief
Executive Officer) achieves his/her objectives will be made by the Chief
Executive Officer by February 15, 2003. The determination of the percentage
degree to which the Chief Executive Officer achieves his objectives will be made
by the Board of Directors by February 15, 2003.

The amount of a bonus payable as an Annual Bonus to an Eligible Officer will be
calculated by multiplying (i) the product of such officer's actual earnings paid
in 2002 and the Annual Bonus Percentage listed opposite such officer's title in
the Bonus Participation Table below by (ii) the percentage degree to which the
Chief Executive Officer or the Board of Directors, as the case may be,
determines that such Eligible Officer has achieved his/her objectives for 2002.

Except as otherwise provided herein, the Annual Bonus will be payable in one
lump sum (subject to applicable withholding taxes and other applicable
deductions) within 30 days of the Chief Executive Officer's or Board of
Directors' determination, as the case may be, of the percentage degree to which
the Eligible Officer has achieved his/her objectives for 2002. An Eligible
Officer who is on an approved leave of absence from the Company on the date on
which Annual Bonuses are paid by the Company and thereafter returns to active
status as an Eligible Officer upon the end of such leave of absence, will be
paid an Annual Bonus to which he/she is otherwise entitled under this 2002 Bonus
Plan within 30 days following his/her return to active status as an Eligible
Officer. An Eligible Officer who is on an approved leave of absence from the
Company on the date on which Annual Bonuses are paid by the Company and
thereafter fails to return to active status as an Eligible Officer upon the end
of such leave of absence, will forfeit his/her right to any Annual Bonus to
which he/she may otherwise be entitled for 2002.

Bonus Participation Levels:

For purposes of determining an Eligible Officer's Quarterly or Annual Bonus
under the 2002 Bonus Plan, the Quarterly Bonus Percentages (by calendar quarter)
and the Annual Bonus Percentages for the Eligible Officers shall be as follows:

<PAGE>

                                                                    EXHIBIT 10.1

                            Bonus Participation Table

<TABLE>
<CAPTION>
                                                                                                            Annual
                                                                                                             Bonus
         Title                                                             Quarterly Bonus Percentage      Percentage
         -----                                                          -------------------------------    ----------
                                                                         Q1       Q2       Q3      Q4
                                                                        ----     ----     ----    ----
<S>                                                                     <C>      <C>     <C>      <C>          <C>
Chief Executive Officer                                                 40.0%    80.0%   120.0%   160.0%       25%
Chief Operating Officer                                                 32.0     64.0     96.0    128.0        20
Chief Financial Officer                                                 22.4     44.8     67.2     89.6        14
Vice President and General Manager, NSD                                 22.4     44.8     67.2     89.6        14
Vice President and General Manager, NDD                                 22.4     44.8     67.2     89.6        14
Vice President and General Counsel                                      22.4     44.8     67.2     89.6        14
Vice President, Global Sales and Marketing, Network Systems             22.4     44.8     67.2     89.6        14
Vice President and General Manager, IEX Contact Center Division         19.2     38.4     57.6     76.8        12
Vice President, Corporate Development                                   16.0     32.0     48.0     64.0        10
Vice President, Human Resources                                         16.0     32.0     48.0     64.0        10
Vice President, Operations and Quality                                  16.0     32.0     48.0     64.0        10
</TABLE>

----------
Discretionary Bonuses:

Discretionary bonuses may also be paid under the 2002 Bonus Plan but only upon
the express approval of the Board of Directors.

                                   * * * * *

<PAGE>

                                                                    EXHIBIT 10.1

                                   Schedule A

2002 First Quarter                                                  Bonus Factor

Minimum Operating Income before Bonus:     $ 3,250,000                  25%

Mid-Point Operating Income before Bonus:   $ 5,100,000                  50%

Maximum Operating Income before Bonus:     $ 6,700,000                 100%

2002 Second Quarter

Minimum Operating Income before Bonus:     $ 4,200,000                  25%

Mid-Point Operating Income before Bonus:   $ 7,900,000                  50%

Maximum Operating Income before Bonus:     $11,100,000                 100%

2002 Third Quarter

Minimum Operating Income before Bonus:     $ 7,650,000                  25%

Mid-Point Operating Income before Bonus:   $13,200,000                  50%

Maximum Operating Income before Bonus:     $18,000,000                 100%

2002 Fourth Quarter

Minimum Operating Income before Bonus:     $ 8,900,000                  25%

Mid-Point Operating Income before Bonus:   $16,300,000                  50%

Maximum Operating Income before Bonus:     $22,700,000                 100%EXHIBIT 10.2

                                     TEKELEC

                       NONSTATUTORY STOCK OPTION AGREEMENT

      Tekelec, a California corporation (the "Company"), hereby enters into this
Nonstatutory Stock Option Agreement (this "Option Agreement") with Lori A.
Craven (the "Optionee") effective as of the 18th day of January, 2002, whereby
the Company grants to the Optionee the right and option to purchase an aggregate
of 180,000 shares of Common Stock (the "Shares") of the Company.

      1. 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.

      2. Exercise Price. The exercise price is $19.21 per Share, which price is
not less than 100% of the fair market value thereof on the date of the grant.

      3. Method of Payment. The consideration to be paid for the Shares to be
issued upon exercise of this Option shall consist entirely of cash or check
payable to the Company.

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

            (a) This Option shall vest and become exercisable cumulatively as to
45,000 Shares on January 7, 2003 and as to the remaining 135,000 Shares in 12
equal quarterly installments of 11,250 shares each, with the first of such
installments vesting on June 30, 2003 and one additional installment vesting on
the last day of each calendar quarter thereafter, as long as the Optionee
continues to serve as an employee of the Company. The Optionee may exercise the
exercisable portion of this Option in whole or in part at any time during his
employment provided he has been in continuous employment with the Company since
the grant of this Option; provided, however, that the 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 disability or death, the provisions of
Sections 6 or 7 below, as applicable, shall apply to the right of the Optionee
to exercise this Option.

            (b) This Option shall be exercisable by written notice which shall
state the election to exercise this Option, the number of Shares in respect to
which this Option is being exercised and such other representations and
agreements as may be required by the Company. Such written notice shall be
signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company or such other person as may be designated by the
Company. The written notice shall be accompanied by payment of the purchase
price and an executed Notice of Exercise of Stock Option in the form attached
hereto. As soon as practicable after any proper exercise of this Option in
accordance with the provisions hereof, the Company shall deliver to the Optionee
at the principal executive office of the Company or such other place

<PAGE>

                                                                    EXHIBIT 10.2

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. The certificate or certificates for the Shares as to which
this Option is exercised shall be registered in the name of the Optionee.

            (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 4(b) hereof.

      5. Restrictions on Exercise. This Option may not be exercised if the
issuance of Shares upon the 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 of the Company 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 continuous status as an employee of the Company, the Optionee
shall have the right to exercise this Option at any time within three months
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 of
the Company 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 six months 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 years
from the date of grant of this Option and may be exercised during such term only
in accordance with the terms of this Option Agreement. Notwithstanding any
provision herein with respect to the post-employment exercise of this Option,
this Option may not be exercised after the expiration of its term.

<PAGE>

                                                                    EXHIBIT 10.2

      9. Reservation of Shares. The Company covenants and agrees that all Shares
will, upon issuance and payment in accordance herewith, be fully paid, validly
issued and nonassessable. The Company further covenants and agrees that during
the term of this Option, the Company will at all times have authorized and
reserved for the purpose of issuance upon exercise of this Option at least the
maximum number of Shares as are issuable upon such exercise.

      10. Dissolution; Liquidation, Consolidation, Merger or Reclassification.
In the event that while the Optionee is an employee of the Company, the Company
proposes to dissolve or liquidate or to sell all or substantially all of its
assets (other than in the ordinary course of business), or to merge or
consolidate with or into another corporation as a result of which the Company is
not the surviving and controlling corporation, the Board of Directors shall (i)
make provision for the assumption of this Option by the successor corporation or
(ii) declare that this Option shall terminate as of a date fixed by the Board of
Directors which is at least 30 days after the notice thereof to the Optionee and
shall give the Optionee the right to exercise this Option as to all or any part
of the Shares, including Shares as to which this Option would not otherwise be
exercisable provided such exercise does not violate Section 8 hereof.

      11. Adjustment of Exercise Price and Number of Shares.

            (a) The number of Shares subject to this Option, as well as the
exercise price per Share hereunder shall be proportionately adjusted for any
increase or decrease in the number of issued shares of the Company's Common
Stock resulting from a stock split or combination or the payment of a stock
dividend (but only on the Company's Common Stock) or any other increase or
decrease in the number of issued shares of the Company's Common Stock effected
without receipt of consideration by the Company (other than stock awards to
employees or directors of the Company); 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. Such adjustment shall be
automatic and the form of this Agreement need not be changed because of any such
adjustment in the exercise price or in the number of Shares purchasable upon
exercise of all or any portion of this Option. 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 this Option.

            (b) No fractional shares of Common Stock shall be issuable on
account of any action contemplated by Section 10 or Section 11(a) hereof, and
the aggregate number of shares into which Shares then covered by this Option,
when changed as the result of any such action, shall be reduced to the largest
number of whole shares resulting from such action, unless the Company's Board of
Directors, 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 of Directors in its discretion
shall prescribe.

      12. Withholding upon Exercise of Option. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to the

<PAGE>

                                                                    EXHIBIT 10.2

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.

      13. 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, the terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.

      14. No Right of Employment. This Option shall not 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.

      15. 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 Company 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

<PAGE>

                                                                    EXHIBIT 10.2

            such writing. For the protection of the Parties, amendments, waivers
            and consents that are not in writing and executed by the Party to be
            bound may be enforced only if they are detrimentally relied upon and
            proved by clear and convincing evidence. Such evidence shall not
            include any alleged reliance.

            (d) Notice. Any notice, instruction or communication required or
      permitted to be given under this Option Agreement to either Party shall be
      in writing and shall be deemed given when actually received or, if
      earlier, five days after deposit in the United States mail by certified or
      express mail, return receipt requested, first class postage prepaid,
      addressed to the principal office of such Party or to such other address
      as such Party may request by written notice.

            (e) Governing Law. To the extent that Federal laws do not otherwise
      control, 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.

            (f) Entire Agreement. This Option Agreement constitutes the entire
      agreement between the Parties with regard to the subject matter hereof.
      This Option Agreement supersedes all previous agreements between the
      Parties, and there are now no agreements, representations, or warranties
      between the Parties, other than those set forth herein.

            (g) 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.

      IN WITNESS WHEREOF, this Option Agreement has been duly executed on behalf
of the Company by an authorized representative of the Company and by the
Optionee as of the date and year first written above.

DATE OF GRANT: January 18, 2002        Tekelec

                                       By: /s/ Michael L. Margolis
                                           -------------------------------------
                                           Michael L. Margolis
                                           President and Chief Executive Officer

                                           /s/ Lori A. Craven
                                           -------------------------------------
                                           Lori A. Craven

<PAGE>

                                                                    EXHIBIT 10.2

      THIS OPTION AND THE SECURITIES WHICH MAY BE PURCHASED UPON EXECUTION OF
THIS OPTION HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE, AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE,
TRANSFER OR DISTRIBUTION THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATING THERETO OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED.

<PAGE>

                                                                    EXHIBIT 10.2

                                     TEKELEC

                 NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION

      I, Lori A. Craven ("Optionee"), hereby agree, represent and warrant to
Tekelec (the "Company") as follows:

      1.    I was granted a Nonstatutory Stock Option (the "Option") on January
            18, 2002.

      2.    Pursuant to the Option, I was granted the right to purchase 180,000
            shares of the Company's Common Stock (the "Optioned Shares").

      3.    I am eligible to exercise the Option.

      4.    I hereby elect to exercise the Option to purchase _________of such
            Optioned Shares (the "Shares") at U.S.$19.21 per share, for an
            aggregate purchase price of U.S.$__________.

      5.    Payment of Purchase Price (please check applicable box):

            |_|   This Notice of Exercise is accompanied by a check representing
                  payment in full of the purchase price for the Shares plus all
                  applicable withholding taxes.

                  OR

            |_|   This exercise is a "cashless exercise" effected through my
                  broker. Payment in full for the Shares (including all
                  applicable withholding taxes) in the form of a check will be
                  transmitted by my broker to the Company.

      6.    In connection with my exercise of the Option, I have received a copy
            of any Prospectus of the Company's relating to the shares of the
            Company's Common Stock issuable under the Option.

Dated: _______, 200__                           OPTIONEE

                                            Signature:
----------------------                                 -------------------------
Social Security Number                                  Lori A. Craven

                                            Address:
                                                     ---------------------------

                                            ------------------------------------

                                            ------------------------------------

================================================================================

Received on behalf of Tekelec on ____________________, 200__.

                                            Signature:
                                                      --------------------------

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