Exhibit 10.16**FIRST AMENDMENT TO CREDIT AGREEMENT**     THIS AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is entered into as of December 15, 2005by and between TEKELEC, a California corporation (“Borrower”) and WELLS FARGO BANK, NATIONALASSOCIATION (“Bank”).**RECITALS**     WHEREAS, Borrower is currently indebted to Bank pursuant to the terms and conditions of thatcertain Credit Agreement between Borrower and Bank dated as of December 15, 2004, as amended fromtime to time (“Credit Agreement”).     WHEREAS, Bank and Borrower have agreed to certain changes in the terms and conditions setforth in the Credit Agreement and have agreed to amend the Credit Agreement to reflect saidchanges.     NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree that the Credit Agreement shall be amended as follows:     1. The term “Tangible Net Worth” is hereby redefined as follows:     ‘“Tangible Net Worth’ means the aggregate of total stockholders’ equity plussubordinated debt less any intangible assets and goodwill.”     2. Section 1.1(a) is hereby amended by deleting “December 15, 2005” as the last day on whichBank will make advances under the Line of Credit, and by substituting for said date “December 15,2006,” with such change to be effective upon the execution and delivery to Bank of a promissorynote dated as of December 15, 2005 (which promissory note shall replace and be deemed the Line ofCredit Note defined in and made pursuant to the Credit Agreement) and all other contracts,instruments and documents required by Bank to evidence such change.     3. Borrower may from time to time request in writing a reduction in the maximum principalamount available under the Line of Credit. Each such reduction shall be in the minimum amount of$1,000,000.00 and in increments of $1,000,000.00. Each such reduction shall take effect 5 calendardays after Bank receives the written request therefor, provided that within such 5 day period (a)Borrower executes and delivers to Bank a new Line of Credit Note reflecting the applicableprincipal amount available thereunder, and (b) Borrower repays principal and/or causes the returnand cancellation of outstanding Letters of Credit such that the amount, if any, by which the thenoutstanding principal balance of the Line of Credit (inclusive of the amount available to be drawnunder outstanding Letters of Credit plus amounts drawn and not yet reimbursed thereunder) exceedsthe new principal amount available thereunder.     4. Section 1.2(c) is hereby amended to read as follows:     “(c) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to oneeighth of one percent (0.125%) per annum (computed on the basis of a 360-day year, actualdays elapsed) on the average daily unused amount of the Line of Credit, which fee shall becalculated on a quarterly basis by Bank and shall be due and payable by Borrower in arrearswithin 10 days after the last day of each calendar quarter.
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     5. Clause (i) of Section 1.2(d) is hereby amended to read as follows:       “(i) fees upon the issuance of each Letter of Credit equal to three-tenthspercent (0.30%) per annum (computed on the basis of a 360-day year, actual dayselapsed) of the face amount thereof, and.”     6. The reference in Section 2.5 to “June 30, 2004” as the date of Borrower’s financialstatement is hereby amended to read “June 30, 2005.”     7. The reference in Section 3.1(c) to “December 31, 2003” is hereby amended to read “December31, 2004.”     8. Section 3.2(b) is hereby amended to read as follows:       “(b) Notice of Borrowing. Bank shall have received a Notice ofBorrowing, in the form of Exhibit B hereto, with respect to each advance or anApplication for Letter of Credit, in the form of Exhibit C hereto, with respect toeach Letter of Credit not later than three (3) Business Days prior to the date of arequested advance or Letter of Credit.”     9. Section 3.2(c) is hereby amended to read as follows:       “(c) Collateral. Borrower shall have deposited Sufficient Assets intothe Pledged Account not later than three (3) Business Days prior to the date of arequested advance or Letter of Credit.”     10. Section 4.3(c) is hereby deleted, provided, however, that Borrower’s authorization setforth in the parenthetical phrase therein shall remain in full force and effect.     11. Sections 4.3(a) and (b) are each hereby deemed amended by requiring that, in addition tothe financial statements (and other items) that are required to be delivered thereunder, Borrowerdeliver to Bank, together with such financial statements, a compliance certificate executed byBorrower’s Chief Financial Officer or Chief Executive Officer certifying Borrower’s compliance withall affirmative and negative covenants set forth in the Credit Agreement.     12. Section 4.9(a) is hereby amended to read as follows:       “(a) Tangible Net Worth, determined as of the end of each fiscal quarter, notless than an amount equal to 80% of Borrower’s Tangible Net Worth as of September30, 2005.”     13. Except as specifically provided herein, all terms and conditions of the Credit Agreementremain in full force and effect, without waiver or modification. All terms defined in the CreditAgreement shall have the same meaning when used in this Amendment. This Amendment and the CreditAgreement shall be read together, as one document.     14. Borrower hereby remakes all representations and warranties contained in the CreditAgreement and reaffirms all covenants set forth therein. Borrower further certifies that as of thedate of this Amendment there exists no Event of Default as defined in the Credit
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Agreement, nor any condition, act or event which with the giving of notice or the passage oftime or both would constitute any such Event of Default.     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the dayand year first written above.           WELLS FARGO BANK,TEKELEC      NATIONAL ASSOCIATION       By:      /s/ William H. Everett By:      /s/ Paul K. Stimpfl       Title: Title:   Senior Vice President       
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     WELLS **Paul Stimpfl, CFA** **U.S. Corporate Banking**FARGO Senior Vice President MAC E2064-12B    333 S. Grand Ave.    12th Floor    Los Angeles, CA 90071    213 253-7305     Tekelec March 15, 20065200 Paramount Parkway  Morrisville, NC 27560  Attention: William Everett    Chief Financial Officer  Ladies and Gentlemen,     Tekelec has advised Wells Fargo Bank, National Association (“Bank”) that Tekelec hasdiscovered certain accounting errors (the “Accounting lssues”), and that accordingly Tekelec mayhave breached (a) the representation set forth in the first sentence of Section 2.5 (the“Applicable Representation”), and (b) the covenant set forth in the first clause of Section 4.2(the “Applicable Covenant”), and that such Accounting lssues may have resulted in the occurrence ofthe Events of Default described in the next paragraph. Tekelec has requested that Bank waive suchbreaches and Events of Default and amend certain provisions of the Credit Agreement. All Sectionnumbers cited in this letter refer to Sections of the Credit Agreement dated as of December 15,2004 by and between Tekelec and Bank, as amended from time to time (the “Credit Agreement”).     Bank hereby waives any breach(es) by Tekelec as a result of the Accounting lssues of theApplicable Representation made by Tekelec to Bank from time to time prior to the date hereof andthrough June 30, 2006, as well as the Event(s) of Default which may have occurred or may occur(through June 30, 2006) under Section 6.1(b) as a result thereof. Bank also hereby waives anybreach by Tekelec as a result of the Accounting lssues of the Applicable Covenant with respect toTekelec’s books and records pertaining to any and all periods to and including, but not beyond, thedate hereof, as well as the Event(s) of Default which may have occurred under Section 6.1 (c) as aresult thereof. Bank also hereby waives any Event(s) of Default which may have occurred underSection 6.1 (b) as a result of any Accounting lssues in the financial statements delivered byTekelec to Bank prior to the date hereof under Sections 4.3(a) and 4.3(b).     Except as specifically set forth in the preceding paragraph, Bank is not waiving, and reservesall of its rights and remedies, with respect to any other breaches of the Credit Agreement orEvents of Default which may now exist or may hereafter occur, including, without limitation, of theApplicable Representation and Applicable Covenant.     Tekelec hereby agrees that it shall deliver to Bank on or before June 30, 2006, a revisedfinancial statement of Borrower dated June 30, 2004 (the “Revised 6/30/04 Financial Statement”).Bank and Tekelec hereby agree that from and after the date of such delivery, the Revised 6/30/04Financial Statement (and not the financial statement delivered by Tekelec to Bank prior to the dateof execution of the Credit Agreement) shall be deemed to be the subject of the ApplicableRepresentation.     Bank further hereby agrees (and Tekelec, by signing below, agrees) that Section 4.3(a) (butonly with respect to FYE2005), and Section 4.3(b) (but only with respect to fiscal quarter end3/31/06), are hereby deemed amended by requiring that all items described therein be delivered toBank no later than June 30, 2006. Accordingly, determination by Bank of Tekelec’s continuingcompliance with Section 4.9(a) (Tangible Net Worth) shall be based on (i)
 

 
the items so delivered nolater than June 30, 2006 and (ii) Borrower’s Tangible Net Worth as reflected in the 9/30/05financial statements as revised to correct the Accounting Issues.     Except as so in full amended, and subject to the terms and conditions of this letter, theCredit Agreement remains force and effect according to its terms.       Sincerely,       Wells Fargo Bank, National Association       By:      /s/ Paul K. Stimpfl       Title:      Senior Vice President     Tekelec       By:      /s/ William H. Everett       Title:      CFO  
 

 
     Tekelec May 25, 20065200 Paramount Parkway  Morrisville, NC 27560  Attention: William Everett    Chief Financial Officer       Capitalized terms used in this letter shall herein have the meanings given to them in theletter dated March 15, 2006 executed by Paul Stimpfl, Senior Vice President, on behalf of WellsFargo Bank, National Association and countersigned by William Everett, Chief Financial Officer, onbehalf of Tekelec (the “Prior Letter”) or, as applicable, in the Credit Agreement (as defined inthe Prior Letter).     Tekelec has advised Bank that due to the time required to correct the Accounting Issues, an“Event of Default” may occur under the Indenture dated as of June 17, 2003 executed by Tekelec toDeutsche Bank Trust Company Americas, as Trustee (the “Indenture”) in that Tekelec may not deliverto the Trustee the 2005 Form 10-K required under Section 7.04 within the sixty-day cure periodcontemplated in Section 8.01(e) of the Indenture (the “Indenture Reporting Default”). Theoccurrence of the Indenture Reporting Default would constitute an Event of Default under Section6.1(d) of the Credit Agreement (the “Specified Cross-Default”).     Tekelec hereby requests that Bank prospectively waive and Bank hereby prospectively waives theSpecified Cross-Default should the same occur.     In consideration of such waiver, Tekelec hereby agrees that in the event that the IndentureReporting Default occurs and Tekelec requests an advance(s) under the Line of Credit, saidrequest(s) shall be accompanied by a written certification by Tekelec’s Chief Financial Officerthat, as of the date of such request, the aggregate amount of Tekelec’s cash and marketablesecurities is no less than $200,000,000.00 less the aggregate amount, if any, of repayments ofprincipal that have already been made by Tekelec under the Notes (as defined in said Indenture),other than repayments made directly or indirectly with proceeds of the Line of Credit. Tekelecunderstands, however, that advances under the Line of Credit shall continue to be available subjectto its compliance and in accordance with all terms and conditions of the Credit Agreement and otherLoan Documents, as supplemented by the terms of this paragraph and the Prior Letter.     In the event that Borrower files its 2005 Form10-K with the SEC by June 30, 2006, Bank agreesthat the time by which Borrower is required to deliver its Form 10-Q report for FQE3/31/06 to theBank shall be extended until July 17, 2006. The Prior Letter is hereby deemed amended in accordancewith this paragraph. Until such time as Borrower has filed its 2005 Form 10-K as required in thisparagraph:
 

 
(a) the definition of Sufficient Assets in the Credit Agreement shall be amended to read asfollows:     “Sufficient Assets” means cash, cash equivalents and/or Acceptable Securities inan aggregate face amount equal to 120% of the amount of a requested advance orUSD-denominated Letter of Credit or 120% of the USD Equivalent Amount of a OAC-denominatedLetter of Credit,” and(b) the Addendum to Security Agreement: Pledged Account dated as of November ___, 2004 executed byBorrower shall be amended by replacing the sentence that reads as follows:     “The Collateral Value of the Pledged Account shall at all times be equal to or greaterthan the sum of one hundred percent (100%) of the outstanding amount of Indebtedness securedhereby (other than Indebtedness owing under or in connection with OAC-denominated Letters ofCredit) and 120% of the USD Equivalent Amount of Indebtedness owing under or in connectionwith OAC-denominated Letters of Credit.”with the following:     “The Collateral Value of the Pledged Account shall at all times be equal to or greaterthan the sum of 120% of the outstanding amount of Indebtedness secured hereby (other thanIndebtedness owing under or in connection with OAC-denominated Letters of Credit) and 120%of the USD Equivalent Amount of Indebtedness owing under or in connection withOAC-denominated Letters of Credit.”Following such filing of the 2005 Form 10-K, the terms of the Credit Agreement and the Addendumshall apply without regard to the foregoing amendments.     Except as specifically set forth herein, Bank is not waiving, and reserves all of its rightsand remedies, with respect to any other breaches of the Credit Agreement or Events of Default whichmay now exist or may hereafter occur, including, without limitation, any Event of Default underSection 6.1(d) of the Credit Agreement not consisting of the Indenture Reporting Default.     Except as so amended, and subject to the terms and conditions of this letter, the CreditAgreement remains in full force and effect according to its terms. The Prior Letter (as amendedabove) also remains in full force and effect.       Sincerely,       Wells Fargo Bank, National Association       By:       /s/ Catherine Wallace       Title:       SVP**Tekelec’s execution block is on the next page**
 

 
Agreed: Tekelec     By:      /s/ William H. Everett       Title:      Sr. VP CFO  Date:      5/25/06