Exhibit 10.7
2011 Executive Officer Bonus Plan
     The Tekelec 2011 Executive Officer Bonus Plan (the “Bonus Plan”) as
approved by the Board of Directors of Tekelec (the “Company”) on February 25,
2011, is described below:
     Under the terms of the Bonus Plan, each executive officer of the Company
named as an eligible officer in the table set forth below (or hereafter
designated by the Board as an eligible officer) is eligible to receive cash
bonuses for 2011 based upon a specified percentage of his or her annual base
salary. Specifically, each eligible officer is entitled to receive a bonus based
on the degree to which the Company achieves for the full year 2011 certain
pre-set financial targets consisting of: (i) a consolidated operating income
from continuing operations before bonus (as adjusted to exclude the effects of
equity incentive compensation expense, restructuring charges, impairment
charges, acquisition-related amortization and other mergers and
acquisitions-related charges or income, and similar charges or income) target
(the “Operating Income Target”) and (ii) an orders target (the “Orders Target”).
     All payouts under the Bonus Plan are contingent upon the Company performing
at or above the Operating Income Target and, independently, meeting or exceeding
100% of the Orders Target. Once the Company has met the Operating Income Target,
a bonus pool (the “Bonus Pool”) will be created for the Company’s executive
officers and employees based on the sum of the following (all operating income
amounts are adjusted as described above):

  •   100% of the first $5 million of operating income earned by the Company
above the Operating Income Target;     •   0% of the next $5 million of
operating income earned by the Company, such that a total of $5 million of the
first $10 million of operating income above the Operating Income Target has
funded the Bonus Pool; and     •   One sixth (1/6) of each incremental dollar of
operating income earned thereafter until such time as the Bonus Pool for all
eligible officers is funded at 100%. The Bonus Pool at 100% is calculated as the
sum of all eligible officers’ bonuses assuming payout at 100% of the target
bonus level for each eligible officer.

     Provided that the Orders Target is at least 100% achieved, the calculated
bonus will be based on a pro rata share of the Bonus Pool that is created as
described above. Each eligible officer will only achieve 100% of his or her
individual payout if the Bonus Pool is fully funded at 100% and the Company
achieves 100% of the Orders Target. The specific amounts of the bonuses will be
computed in accordance with the formulas described herein.
     Any bonuses earned under the Bonus Plan will be payable in one lump sum
within 30 days after the Company’s consolidated financial results for the year
ending December 31, 2011 have been filed with the Securities and Exchange
Commission (the “Commission”). An eligible officer is entitled to receive
bonuses under the Bonus Plan only if he or she is actively employed by Tekelec
or one of its subsidiaries as an eligible officer on the date on which the
bonuses are paid, unless the Board waives this requirement. If an executive
officer commences his or her employment as an eligible officer during the Bonus
Plan year, any bonus payable for achievement will be subject to a pro rata
adjustment. An Eligible Officer who is on an approved leave of absence from the
Company at any time during 2011 will, for purposes of determining eligibility
under the 2011 Bonus Plan, be treated as being employed by the Company during
such leave of absence provided, however, that an Eligible Officer who is on an
approved leave of absence from the Company on the date on which the 2011 Bonus
is 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 his/her Company
Bonus to which he/she is otherwise entitled 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 the 2011 Bonus
is 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 not be eligible to
receive a 2011 Bonus.
     The following table sets out the target full year bonus opportunities under
the Bonus Plan for Tekelec’s executive officers who are eligible to participate
in the Bonus Plan.

 

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                      2011 Bonus   2011 Target Name and Title of Named Executive
Officer   Opportunity   Bonus
Krish A Prabhu
    100 %   $ 310,000  
Interim President and Chief Executive Officer
               
 
               
Ronald J. de Lange
    60 %   $ 186,000  
Executive Vice President, Global Product Solutions
               
 
               
Stuart H. Kupinsky
    60 %   $ 186,000  
Senior Vice President, Corporate Affairs and General Counsel
               
 
               
Gregory S. Rush
    60 %   $ 174,000  
Senior Vice President and Chief Financial Officer
               
 
               
David K. Rice
    50 %   $ 135,000  
Senior Vice President, Operations
               
 
               
Yusun Kim Riley
    50 %   $ 125,000  
Chief Marketing Officer
               
 
               
Marykay Wells
    40 %   $ 94,800  
Vice President, Information Technology and Chief Information Officer
               

     The target annual bonuses payable under the Bonus Plan to the eligible
officers are equal to their 2011 bonus opportunities as set forth above
multiplied by their 2011 annual base salaries and are based on the Company’s
achievement of 100% funding of the Bonus Pool and provided that the Orders
Target is at least 100% achieved. The Company may also award discretionary
bonuses to eligible officers for 2011.
     The Board may amend, modify, or terminate the Bonus Plan, or any payment
owed under the Bonus Plan, at any time without prior notice to participants;
provided, however, that neither the Bonus Plan nor any payments owed under the
Bonus Plan may be amended, modified, or terminated after the Company files with
the Commission its financial statements covering the year ending December 31,
2011.
     If the Company is required to prepare an accounting restatement due to the
Company’s material noncompliance with any financial reporting requirement under
the securities laws, the Bonus Plan requires an officer to repay the excess
amount of any bonus that the officer received above what should have been paid.

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