exv10w1



 






EXHIBIT 10.1




January 13, 2006




 




PERSONAL AND CONFIDENTIAL




Mr. Frank Plastina




Dear Frank:



On behalf of Tekelec, I am pleased to offer you employment as Chief Executive Officer and President
of Tekelec on the terms and conditions set forth in this letter. As Tekelec’s Chief Executive
Officer and President, you will report directly to the Board of Directors and will have such duties
and responsibilities as set forth in Tekelec’s Bylaws and as may be delegated to you from time to
time by the Board. As the Chief Executive Officer and President, you will be principally
responsible for developing and implementing the strategic and tactical goals for Tekelec, in
addition to managing the day-to-day operations of Tekelec. You may select your start date so long
as it is on or before February 14, 2006. Effective upon the commencement of your employment with
Tekelec, you will be elected to the Board of Directors.





	1.	 	Your starting annual base salary will be $550,000.00 (i.e., $21,153.84 per bi-weekly period).
	 
	2.	 	You will be eligible to participate in Tekelec’s 2006 Officer Bonus Plan, under which you
will be eligible to receive, in accordance with the terms of such Plan as approved by the
Company’s Board of Directors, up to 120% of your annual base salary (pro rated in accordance
with the terms of the Plan to reflect the fact that you will be employed for only a portion of
2006) as a cash bonus based on the extent to which the Company achieves certain financial
milestones in 2006. The terms of your participation in any officer bonus plans after 2006 will
be subject to change and the approval of the Board of Directors of Tekelec.
	 
	 	 	Your participation in the 2006 Officer Bonus Plan will commence with the start of the second
quarter of 2006.
	 
	3.	 	You will be eligible to participate in Tekelec’s Vacation/Personal Time Off policy, which
allows you maximum flexibility and discretion in using company paid personal time. You start
accruing at twenty (20) days per year during your first year of employment. Tekelec also
provides eleven (11) paid holidays per calendar year.




 









 






Frank Plastina

January 13, 2006

Page 2





	4.	 	You will receive applicable benefits, including health, dental, vision, short-term and
long-term disability and life insurance, as are generally provided to Tekelec’s executive
officers.
	 
	5.	 	You will be offered the opportunity to participate in Tekelec’s Employee Stock Purchase Plan
and 401(k) Plan upon your satisfaction of the eligibility requirements for such plans.
	 
	6.	 	You will be designated as an “Eligible Officer” under Tekelec’s Officer Severance Plan, as
amended.
	 
	7.	 	The Board of Tekelec will grant to you, at its sole election, either nonstatutory stock
options or stock-settled stock appreciation rights1 (collectively “Options”) under
Tekelec’s Equity Incentive Plan for New Employees (the “Plan”) to purchase 1,000,000 shares of
Tekelec Common Stock effective as of the later of your start date or the date of the
Compensation Committee’s action granting such options (the “Grant Date”). The exercise price
of your Options will be equal to the closing price of Tekelec’s Common Stock on the Grant Date
(as reported in The Wall Street Journal on the first business day following the Grant Date).
Your Options will vest to the extent of 250,000 shares on the one-year anniversary of your
start date. The remaining 750,000 shares will vest and become exercisable cumulatively in 12
equal quarterly installments of 62,500 shares each, with the first of such installments
vesting on the last day of the first full calendar quarter following the one-year anniversary
of your start date and one additional installment vesting on the last day of each calendar
quarter thereafter as long as you remain an employee of Tekelec. Your Options will expire, to
the extent previously unexercised, upon the earlier of the four-year anniversary of the
vesting date or a date not less than three months after you cease to be a Tekelec employee as
determined in accordance with the terms of the Plan. Your Options will in all respects be
subject to the terms and provisions of the Plan and the agreement evidencing the grant of the
Options.
	 
	 	 	Also you will be granted 250,000 restricted stock units (RSUs) under Tekelec’s 2004 Equity
Incentive Plan for New Employees (the “2004 Plan”), effective as of the date of the
Compensation Committee’s action granting such RSUs (the “grant date”). Thirty-three percent
(33%) of your RSUs will vest and the 83,334 shares represented thereby will be issued
automatically on the second-year anniversary of your grant date (the “Initial Vesting Date”).
Your remaining RSUs will vest and the shares represented thereby will







 




			
	1	 	Tekelec is currently transitioning from stock
options to stock-settled stock appreciation rights for its Equity Incentive
Plan for New Employees due to the favorable SFAS 123R accounting treatment for
this equity instrument.




 









 










Frank Plastina

January 13, 2006

Page 3





	 	 	be issued automatically in 2 equal annual installments of 83,333 shares each, with the first of such installments vesting on
the third anniversary of the Initial Vesting Date and the second installment of
83,333 shares vesting on the fourth anniversary following the Initial Vesting Date as
long as you remain an employee of Tekelec. The RSUs will in all respects be subject to the
terms and provisions of the 2004 Plan and the agreement evidencing the grant of RSUs.




You are aware that Tekelec strictly prohibits employees from unlawfully using confidential or
proprietary information belonging to any other person or entity (including all former employers).
By signing the enclosed copy of this letter, you agree not to disclose or use, or induce Tekelec or
any of its employees to use, any trade secrets or confidential or proprietary information belonging
to any of your former employers or other parties, and further agree that you are not subject to any
express or implied contractual obligations, including but not limited to noncompetition agreements
to any of your former employers under any agreements or understandings whether oral or written.



As a condition of commencing your employment with Tekelec, you will be required to sign Tekelec’s
standard “Confidentiality and Non-Disclosure Agreement and Assignment of Rights” (a copy of which
is enclosed). As with every Tekelec employee, you reserve the right to terminate your employment
at any time for any reason, and we similarly reserve the right to terminate your employment at any
time, with or without cause. We hope and expect, however, that this will be a long and mutually
beneficial relationship.



In accordance with Tekelec policy, this offer is conditioned upon your successful completion of a
drug screen which will be conducted within 24 hours after you accept this offer. To arrange for
your test, please contact Al Ragland at 919-380-6120.



This letter agreement contains our entire understanding with respect to your employment with
Tekelec. The provisions of this letter may be amended only by a writing signed by you and Tekelec.
If you have any questions about the meaning of any of the terms or provisions included herein,
please let me know at your earliest convenience. This letter agreement shall be construed under
the laws of California.



Frank, we believe that Tekelec can provide you with opportunities for professional growth and
financial return. We look forward to working with you and to a mutually fulfilling and rewarding
relationship.



If this letter agreement is acceptable to you, then please acknowledge your acceptance by signing
and dating the enclosed copy of this letter agreement where indicated below




 









 








Frank Plastina

January 13, 2006

Page 4



and returning such signed copy to Al Ragland, SVP, Human Resources, at Tekelec, 5200 Paramount
Parkway, Morrisville, NC 27560.




	 	 	 	 	 
	Sincerely,

 	 	 
	/s/ Alvin G. Ragland
 	 	 
	Alvin G. Ragland 	 	 
	Senior Vice President, Human Resources 	 	 



C: Mark Floyd



 




	 	 	 	 	 	 	 
	Acknowledged and Accepted:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	/s/ Frank Plastina

	 	Date:
	 	January 18, 2006	 	 
	 

	 	 	 	 	 	 
	Frank Plastina