Document:

exv10w1

 

Exhibit 10.1

TEKELEC

2007 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 individual objectives. The 2007 Officer Bonus Plan (“2007 Bonus Plan” or
“this Plan”) is designed to motivate Tekelec’s officers and to reward them for their continuing
contributions to the Company’s business if, in 2007, the Company achieves certain financial results
and such officers achieve their individual business or strategic objectives. The Company believes
that the achievement of these results and objectives is essential for the Company’s success. The
effective date of the 2007 Bonus Plan is May 18, 2007 (the “Effective Date”).

2007 Bonus Plan

Each Eligible Officer (as defined below), by virtue of his or her continuing employment with
Tekelec, will be eligible to receive:

	(i)	 	2007 1H Bonus: a bonus based on the Company’s financial performance as measured by
the degree to which the Company achieves a pre-set, Board of Directors (“Board”)
approved,1 consolidated operating income before bonus goal for the first six months
of 2007;

	(ii)	 	2007 2H Bonus: a bonus based on the Company’s financial performance as measured by
the degree to which the Company achieves a pre-set, Board approved, consolidated operating
income before bonus goal for the second six months of 2007;

	(iii)	 	2007 1H MBO Bonus: a bonus based on his/her achievement in the first half of 2007
of individual, business or strategic objectives approved by the Board; and

	(iv)	 	2007 2H MBO Bonus: a bonus based on his/her achievement in the second half of 2007
of individual, business or strategic objectives approved by the Board.

The 2007 1H Bonus and the 2007 2H Bonus are sometimes referred to herein individually as a
‘Semi-Annual Bonus,” and collectively as “Semi-Annual Bonuses.” The 2007 1H MBO Bonus and the 2007
2H MBO Bonus are sometimes referred to herein individually as an “MBO Bonus,” and collectively as
“MBO Bonuses.” For purposes of this Plan, “semi-annual period” means the period from January 1,
2007 through June 30, 2007 (the “First Semi-Annual Period”) and the period from July 1, 2007
through December 31, 2007 (the “Second Semi-Annual Period”).

The Semi-Annual Bonuses and the MBO Bonuses payable to an Eligible Officer will be calculated as a
percentage of such Officer’s annual base salary of record in effect at the end of the semi-annual
period for which the bonuses are payable. An Eligible Officer’s annualized actual earnings for a
semi-annual period will be used to calculate his/her bonus if an Eligible Officer is on a leave of
absence in excess of 30 days during a semi-annual period. In determining an Eligible Officer’s
annual base salary of record or actual earnings, certain compensation and payments (e.g.,
reimbursement for moving expenses, bonus payments received under the 2006 Officer Bonus Plan or
this Plan, stock option or other equity incentive compensation, discretionary bonuses, disability
benefits, sign-on bonuses, vacation cash outs, on call pay, and similar payments) shall be
excluded.

If an executive officer commences his/her employment as an Eligible Officer in the first or third
calendar quarter of 2007, then for purposes of determining the amount payable as a Semi-Annual
Bonus or an MBO Bonus for the semi-annual period in which his/her employment commences, an
Officer’s annual base salary will be prorated based on the ratio of (i) the number of days that an
executive officer serves as an Eligible Officer during

 

			
	1	 	This and further references to Board action
or approval shall be interpreted as a duly adopted Board resolution following
consideration and a recommendation by the Compensation Committee of the Board,
if the Board accepts such recommendation, or alternatively by a duly adopted
resolution of the Board based on a vote by the independent members of the Board
as defined by NASDAQ rules.

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the semi-annual period to (ii) 180 (such ratio shall not be greater than one). An executive
officer who commences his/her employment during the second or fourth calendar quarter of 2007 will
not be eligible to receive either a Semi-Annual Bonus or an MBO Bonus for the semi-annual period in
which his/her employment commences.

Eligible Officers

The following executive officers have been designated by the Board as Eligible Officers for
purposes of the 2007 Bonus Plan and will be eligible to participate in the 2007 Bonus Plan (all
titles are positions with Tekelec unless otherwise specified):

Eligible Officers

Chief Executive Officer & President

Executive Vice President & Chief Financial Officer

Executive Vice President, Global Business Group Solutions

President & General Manager, NSG

President & General Manager, CSSG

Senior Vice President, Corporate Affairs & General Counsel

Chief Strategy & Corporate Development Officer

Senior Vice President, Operations

VP, Corporate Controller & Chief Accounting Officer

VP, Chief Information Officer

A person appointed as an Executive Officer of the Company after the Effective Date shall be
eligible to participate in the 2007 Bonus Plan if he/she is expressly designated by the Board as an
Eligible Officer under the 2007 Bonus Plan; provided, however, that notwithstanding anything to the
contrary in this Plan, an executive officer who commences his/her employment during the second or
fourth calendar quarter of 2007 will not be eligible to receive either a Semi-Annual Bonus or an
MBO Bonus for the semi-annual period in which his/her employment commences.

An Eligible Officer whose title changes after the Effective Date shall be entitled to participate
in the 2007 Bonus Plan on the same terms and conditions as applied immediately prior to such title
change unless either (i) the terms of such Eligible Officer’s participation in the 2007 Bonus Plan
are changed pursuant to a duly adopted resolution of the Board; (ii) the Board amends this Plan to
add the new title as an Eligible Officer in the Eligible Officer table above in which case such
Officer shall participate at the bonus participation level corresponding to such new title; or
(iii) as a result of the change in title, such individual is no longer an Eligible Officer.

In order to earn and be eligible to receive bonuses payable under the 2007 Bonus Plan, 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 by the Board. An Eligible
Officer who is on an approved leave of absence from the Company at any time during 2007 will, for
purposes of determining eligibility under the 2007 Bonus Plan, be treated as being employed by the
Company during such leave of absence.

Semi-Annual Bonuses

The Company’s consolidated operating income from continuing operations before any bonuses payable
under the 2007 Bonus Plan and the Company’s 2007 employee bonus plan (as adjusted to exclude the
effects of equity incentive compensation expense, restructuring charges, impairment charges,
acquisition-related amortization and other M&A-related charges or income, and similar non-GAAP
charges or income) (“Adjusted Operating Income before Bonus”) for the First Semi-Annual Period and
the Second Semi-Annual Period will be the financial measure for calculating the amount of
Semi-Annual Bonuses under the 2007 Bonus Plan. If any of the Company’s existing business units
becomes a discontinued operation prior to January 1, 2008, then the Adjusted Operating Income
before Bonus amounts may be amended by the Board in its sole discretion.

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The amount of an Eligible Officer’s Semi-Annual Bonus will be calculated by multiplying (i) the
product of such Eligible Officer’s annual base salary of record at the end of the semi-annual
period (or annualized actual earnings for such semi-annual period, if applicable) and the
applicable 2007 Bonus Percentage listed opposite such Eligible Officer’s title in the Bonus
Participation Table below by (ii) the applicable Bonus Factor. Stated mathematically, the amount
of a Semi-Annual Bonus payable to an Eligible Officer equals ((AxB)xC), where A = an Eligible
Officer’s annual base salary of record at the end of a semi-annual period (or 2007 annualized
actual earnings, if applicable); B = the applicable Bonus Percentage for such Eligible Officer; and
C = the applicable Bonus Factor.

The amount of the Company’s Adjusted Operating Income before Bonus for the First Semi-Annual Period
or Second Semi-Annual Period will determine the applicable Bonus Factor. The Board will separately
approve levels of Adjusted Operating Income before Bonus for purposes of determining such Bonus
Factor. As indicated on example Schedule A, minimum Adjusted Operating Income before Bonus
will result in a Bonus Factor of 50%, while greater amounts of Adjusted Operating Income before
Bonus will result in higher Bonus Factors, up to a maximum Bonus Factor of 100%. There will be a
linear increase in the percentage amount of the Bonus Factor if the amount of Adjusted Operating
Income before Bonus falls between any two amounts. An Eligible Officer will not be entitled to
receive a Semi-Annual Bonus if at least the minimum Adjusted Operating Income before Bonus for the
applicable semi-annual period is not achieved.

Except as otherwise provided herein, a Semi-Annual Bonus will be payable in one lump sum (subject
to applicable withholding taxes and other deductions) within 30 days after the Company’s
consolidated financial results for a semi-annual period are publicly announced. An Eligible
Officer who is on an approved leave of absence from the Company on the date on which Semi-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 his/her Semi-Annual 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 Semi-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 not be eligible to receive a
Semi-Annual Bonus.

MBO Bonuses

The percentage (0% to 100%) to which an Eligible Officer achieves his/her objectives for the first
half or the second half of 2007 will be one of the measures for his/her MBO Bonus for such
semi-annual period. The determination of the percentage to which an Eligible Officer achieves
his/her objectives will be made by the Board within 45 days following the end of the applicable
semi-annual period.

The amount of a bonus payable as an MBO Bonus to an Eligible Officer will be calculated by
multiplying (i) the product of such officer’s annual base salary of record at the end of the
semi-annual period (or annualized actual earnings for such semi-annual period, if applicable) and
the applicable 2007 MBO Bonus Percentage listed opposite such Officer’s title in the Bonus
Participation Table below by (ii) the product of the percentage degree to which it is determined
that such Eligible Officer has achieved his/her objectives for the semi-annual period and the
applicable Bonus Factor.

Except as otherwise provided herein, an MBO Bonus will be payable in one lump sum (subject to
applicable withholding taxes and other deductions) within 30 days of the determination of the
percentage degree to which the Eligible Officer has achieved his/her objectives. An Eligible
Officer who is on an approved leave of absence from the Company on the date on which MBO 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 his/her MBO Bonus to which he/she is otherwise entitled
under this 2007 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 MBO 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 MBO Bonus
to which he/she may otherwise be entitled for a semi-annual period.

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Bonus Participation Levels

For purposes of determining an Eligible Officer’s Semi-Annual Bonus or MBO Bonus under the 2007
Bonus Plan, the 2007 Bonus Opportunity, 2007 1H and 2H Bonus Percentages, and 2007 1H and 2H MBO
Bonus Percentages for each of the Eligible Officers identified below shall be as follows:

Bonus Participation Table

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	2007	 	 	 	 	 	2007
	 	 	 	 	 	 	2007	 	1H MBO	 	2007	 	2H MBO
	 	 	2007 Bonus	 	1H Bonus	 	Bonus	 	2H Bonus	 	Bonus
	Title	 	Opportunity	 	Percentage	 	Percentage	 	Percentage	 	Percentage
	Chief Executive Officer & President
	 	 	120	%	 	 	38.4	%	 	 	9.6	%	 	 	57.6	%	 	 	14.4	%
	Executive Vice President & Chief Financial Officer
	 	 	90	 	 	 	28.8	 	 	 	7.2	 	 	 	43.2	 	 	 	10.8	 
	Executive Vice President, Global Business Group Solutions
	 	 	80	 	 	 	25.6	 	 	 	6.4	 	 	 	38.4	 	 	 	9.6	 
	President & General Manager, NSG
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	President & General Manager, CSSG
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	Senior Vice President & General Counsel
	 	 	70	 	 	 	22.4	 	 	 	5.6	 	 	 	33.6	 	 	 	8.4	 
	Chief Strategy & Corporate Development Officer
	 	 	65	 	 	 	20.8	 	 	 	5.2	 	 	 	31.2	 	 	 	7.8	 
	Senior Vice President, Operations
	 	 	50	 	 	 	16.0	 	 	 	4.0	 	 	 	24.0	 	 	 	6.0	 
	VP, Corporate Controller & Chief Accounting Officer
	 	 	50	 	 	 	16.0	 	 	 	4.0	 	 	 	24.0	 	 	 	6.0	 
	VP, Chief Information Officer
	 	 	40	 	 	 	12.8	 	 	 	3.2	 	 	 	19.2	 	 	 	4.8	 

Discretionary Bonuses:

In addition to bonuses payable under the 2007 Bonus Plan, discretionary bonuses may also be paid by
the Company, but only upon the express approval of the Board in its sole discretion.

*      *      *       *

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Schedule A

SEMI-ANNUAL BONUSES/BONUS FACTOR MATRIX

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	First Semi-Annual Period	 	Second Semi-Annual Period	 	 
	 	 	Adjusted Operating Income	 	Adjusted Operating Income	 	 
	 	 	before Bonus	 	before Bonus	 	 
	 	 	(in thousands)	 	(in thousands)	 	Bonus Factor
	Maximum
	 	$	*	 	 	$	*	 	 	 	100	%
	 
	 	 	*	 	 	 	*	 	 	 	88	 
	 
	 	 	*	 	 	 	*	 	 	 	75	 
	 
	 	 	*	 	 	 	*	 	 	 	63	 
	Minimum
	 	 	*	 	 	 	*	 	 	 	50	 

 

			
	*	 	The Board will separately established levels of Adjusted Operating Income before Bonus for
purposes of this Schedule A.

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Exhibit 10.2

2007 OFFICER SEVERANCE PLAN

1. Purpose.

     The Tekelec 2007 Officer Severance Plan (this “Plan”) is intended to provide severance
benefits to salaried officers of Tekelec (“Tekelec” or the “Company”) who shall become eligible for
benefits under this Plan. The purpose of this Plan is to provide certain benefits to Eligible
Officers during the transition period following involuntary loss of employment under circumstances
outlined in this Plan. The provisions herein are being offered and provided at the sole discretion
of the Company. This Plan is effective May 21, 2007.

2. Definitions.

     As used herein, the terms identified below shall have the meanings indicated:

     (a) “Administrator” means the Compensation Committee of the Board of Directors of the
Company (or such other committee as may be appointed by the Board to administer this Plan); and, in
the absence of any such committee, shall mean the Board of Directors of the Company.

     (b) “Annual Compensation” means the Eligible Officer’s highest regular rate of annual
base salary paid by the Company during the calendar year in which the effective date of termination
occurs (or such other date specified herein), plus target bonus (computed as the product of the
Eligible Officer’s most recent preset annual bonus percentage of base salary and such base salary),
commissions and incentive compensation for such calendar year and excluding automobile allowances,
pension payments, 401(k) matching contributions, gains realized in connection with the exercise of
a stock option or participation in a stock option or purchase program, employer contributions for
benefits, relocation payments, expense reimbursements, noncash compensation and similar payments.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Cause” Termination by Tekelec of an Eligible Officer’s employment for “Cause”
means termination as a result of:

	 	(i)	 	willful refusal or failure to follow one or more important
Company policies;
	 
	 	(ii)	 	any conduct amounting to gross incompetence;
	 
	 	(iii)	 	any absence (excluding vacations, illnesses or leaves of
absence) from work for more than five consecutive work days or chronic absences
from work (also excluding vacations, illnesses or leaves of absence), all of
which are neither authorized, justified nor excused;
	 
	 	(iv)	 	refusal or failure, after written notice and reasonable time to
comply, to perform material, appropriate duties;

 

 

	 	(v)	 	refusal, after written notice and reasonable time to comply, to
obey any lawful resolution of the Board;
	 
	 	(vi)	 	embezzlement, misappropriation of any property or other asset
of the Company (other than de minimis properties or assets) or misappropriation
of a corporate opportunity of the Company;
	 
	 	(vii)	 	offer, payment, solicitation or acceptance in violation of
Company policy or law of any bribe, kickback or item of value with respect to
the Company’s business;
	 
	 	(viii)	 	conviction of the Eligible Officer for or the entering of a plea of nolo
contendere with respect to any felony whatsoever or for any misdemeanor
involving moral turpitude;
	 
	 	(ix)	 	any act or failure to act by the Eligible Officer that is
widely reported in the general or trade press or otherwise and which achieves a
general notoriety and which act or failure to act involves conduct that is
illegal or generally considered immoral or scandalous;
	 
	 	(x)	 	any willful material breach of the Eligible Officer’s
obligations to the Company under any nondisclosure or proprietary agreement
with or on behalf of the Company or any material unauthorized disclosure of any
important and confidential information of the Company;
	 
	 	(xi)	 	unlawful use (including being under the influence) or
possession of illegal drugs on Company premises; or
	 
	 	(xii)	 	death or long-term disability.

     (e) “Change in Control” A “Change in Control” of the Company shall be deemed to have
occurred at such time as (i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of
the Securities Exchange Act of 1934 (the “Exchange Act”)) becomes after the effective date of this
Plan the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more of the combined voting power of
the Company’s then outstanding securities; (ii) during any period of 12 consecutive months,
individuals who at the beginning of such period constitute the Board cease for any reason to
constitute at least a majority thereof unless the election, or the nomination for election by the
Company’s shareholders, of each new director was approved by a vote of at least a majority of the
directors then still in office who were directors at the beginning of the period; (iii) the closing
of a merger or consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after such merger or
consolidation; (iv) the shareholders of the Company approve a plan of liquidation of the Company;

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or (v) the closing of the sale or disposition (other than in the ordinary course of business)
by the Company of all or substantially all of the Company’s assets (or any transaction having
essentially the same effect).

     (f) “Change in Control Severance Allowance” means the aggregate gross amount of
severance payments determined in accordance with Section 6(c) of this Plan to be paid to an
Eligible Officer who is entitled to receive such severance benefits under this Plan.

     (g) “Change in Control Severance Period” means the period of time designated in
Section 6(f) herein.

     (h) “Code” means the Internal Revenue Code of 1986, as amended.

     (i) “Eligible Officers” mean only those duly elected or appointed officers of the
Company that (i) are expressly designated as ‘Eligible Officers’ by the Board for the purposes of
this Plan pursuant to resolutions duly adopted by the Board, (ii) receive written notice of their
status as designated Eligible Officers under the Plan, and (iii) provide service in their capacity
as officers of the Company on or following the effective date of the Plan.

     (j) “Employment Period” means the aggregate period of time during which an individual
has been employed as a duly elected or appointed officer (other than solely as Chairman of the
Board, Secretary and/or Assistant Secretary) by the Company prior to the Termination Date.

     (k) “General Severance Allowance” means the aggregate gross amount of severance
payments determined in accordance with Section 4(a) of this Plan to be paid to an Eligible Officer
who is entitled to receive such severance benefits under this Plan.

     (l) “General Severance Period” means the period of time designated in Section 4(b)
herein.

     (m) “Good Reason” means, without the express written consent of the Eligible Officer,
the occurrence after, or concurrently in connection with, a Change of Control of the Company of any
of the following conditions, provided the Eligible Officer provides notice to the Company of the
existence of the condition within 90 days of the initial existence of the condition and the Company
fails to remedy the condition within 30 days of receipt of such notice:

	 	(i)	 	a reduction by the Company (or the surviving and controlling
company if other than the Company (the “Acquiror”)) in the Eligible Officer’s
annual base salary as in effect on the date immediately prior to the Change in
Control of the Company;
	 
	 	(ii)	 	the Company or the Acquiror requiring the Eligible Officer to
be based for six months or more at a Company office more than 50 miles from the
Company’s offices at which such Eligible Officer was principally employed
immediately prior to the date of the Change in Control of the Company except
for required and appropriate travel on the Company’s or the

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	 	 	 	Acquiror’s business to an extent substantially consistent with the Eligible
Officer’s business travel obligations immediately prior to the Change in
Control of the Company;
	 
	 	(iii)	 	the assignment to the Eligible Officer of duties substantially
inconsistent with the position in the Company that such Eligible Officer held
immediately prior to the Change in Control of the Company, or a significantly
adverse change in the nature or status of the officer’s responsibilities or the
conditions of the Eligible Officer’s employment from those in effect
immediately prior to such Change in Control;
	 
	 	(iv)	 	the failure by the Company or the Acquiror to continue in
effect any compensation or benefit plan or perquisites in which the Eligible
Officer participates immediately prior to the Change in Control of the Company
which is material to the Eligible Officer’s total compensation, unless an at
least equally beneficial arrangement (embodied in an ongoing, substitute or
alternative plan) has been made with respect to such plan, or the failure by
the Company or the Acquiror to continue such Eligible Officer’s participation
therein (or in such ongoing, substitute or alternative plan) on a basis at
least as favorable, both in terms of the amount of benefits provided and the
level of the Eligible Officer’s participation relative to comparably situated
participants, as existed immediately prior to such Change in Control;
	 
	 	(v)	 	the failure by the Company or the Acquiror to continue to
provide the Eligible Officer with benefits substantially similar to those
enjoyed by such Eligible Officer under any of the Company’s life insurance,
medical, dental, accident, or disability plans in which the Eligible Officer
was participating immediately prior to such Change in Control of the Company or
the taking of any action by the Company or the Acquiror which would directly or
indirectly materially reduce any such benefits; or
	 
	 	(vi)	 	failure of the Acquiror to offer employment to the Eligible
Officer at least ten days prior to a Change in Control on terms and conditions
generally no less favorable than the terms and conditions of the Eligible
Officer’s employment in effect with the Company immediately prior to the Change
in Control.

     (n) “Specified Employee” means a key employee (as defined in Code Section 416(i)
without regard to Code Section 416(i)(5)) determined in accordance with the meaning of such term
under Code Section 409A and the regulations promulgated thereunder. The Company shall determine
whether an Eligible Officer is a Specified Employee by applying reasonable, objectively
determinable identification procedures set forth in a resolution of the Board issued before
December 31, 2007. In the event such procedures are not so established, the identification date
for purposes of determining the Company’s key employees shall be December 31.

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     (o) “Termination Date” means the date on which an Eligible Officer has a separation
from service with the Company.

3. Eligibility.

     (a) Eligible Officers. Only Eligible Officers shall be eligible to receive benefits
under this Plan.

     (b) Qualifying Terminations. Tekelec will pay severance benefits under Section 4 of
this Plan on account of the termination of an Eligible Officer’s employment with Tekelec only if
the conditions set forth in Section 5 are fulfilled, the termination is non-temporary and
attributable to one of the following conditions, and in the case of the conditions described in
Sections 3(b)(v) and (vi), below, the Eligible Officer provides notice to the Company of the
existence of the condition within 90 days of the initial existence of the condition and the Company
fails to remedy the condition within 30 days of receipt of such notice:

	 	(i)	 	the result of a reduction in force (an involuntary separation
without Cause and due to elimination of position or a layoff of personnel);
	 
	 	(ii)	 	the result of Tekelec’s belief that the Eligible Officer is
unable to fulfill or is not fulfilling the requirements of or should not hold
an officer position for a reason other than for Cause;
	 
	 	(iii)	 	the result of such Eligible Officer having submitted to the
Company his/her written resignation or offer of resignation (even if such
indicates that such resignation is “voluntary”) upon and in accordance with (A)
the request by the Board in writing or pursuant to a duly adopted resolution of
the Board or (B) with respect to all Eligible Officers other than the Chief
Executive Officer of the Company, the written request of the Chief Executive
Officer of the Company;
	 
	 	(iv)	 	the result of a divestment by Tekelec of the operating unit in
which such Eligible Officer works and which unit is sold, conveyed or
transferred to another corporation or entity (whether in connection with a sale
of assets, stock or other form of transaction) and the Eligible Officer is not
offered employment by the acquiring corporation or entity on substantially the
same or comparable terms and conditions as his/her employment with Tekelec;
	 
	 	(v)	 	the result of an otherwise voluntary separation following the
Company requiring the Eligible Officer to be based more than 50 miles from the
Company’s offices at which such Eligible Officer was principally employed and
such Eligible Officer declines to relocate except for required and appropriate
travel on the Company’s business consistent with the Eligible Officer’s prior
business travel obligations;

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	 	(vi)	 	the result of an otherwise voluntary separation within 30 days
following a greater than 10% reduction by the Company of the Eligible Officer’s
annual base salary as in effect from time to time; or
	 
	 	(vii)	 	for the convenience of Tekelec or otherwise for any reason
other than one or more of the reasons set forth in Section 3(c).

     (c) Nonqualifying Terminations. Notwithstanding Section 3(b), Tekelec will not be
obligated to pay severance benefits to an Eligible Officer if the termination is the result of:

	 	(i)	 	voluntary separation (a separation, including retirement,
initiated by the Eligible Officer), other than a voluntary separation pursuant
to Section 3(b)(iii), and (v)-(vi) hereof;
	 
	 	(ii)	 	voluntary retirement, whether early retirement, retirement at
normal retirement age or retirement following normal retirement age;
	 
	 	(iii)	 	the Company having terminated such Eligible Officer’s
employment for Cause; or
	 
	 	(iv)	 	the removal of an Eligible Officer from one or more officer
positions but such Eligible Officer is offered and accepts (and continuing to
work at the Company in such new officer position shall, among other methods, be
a method of acceptance) one or more other officer positions (other than merely
Secretary or Assistant Secretary) at the Company.

4. Amount and Payment of Benefits.

     (a) General Severance Compensation. Unless otherwise provided in Section 6 herein, an
Eligible Officer who is entitled to receive severance benefits under this Plan shall receive a
General Severance Allowance in an amount equal to the product of (i) such Eligible Officer’s
highest rate of Annual Compensation during the Employment Period and (ii) a percentage determined
in accordance with the following table:

	 	 	 
	Officer Position Held at Termination	 	General Percentage
	CEO
	 	200%
	President, CFO, COO, or EVP
	 	150%
	SVP, Chief Strategy and Business Development Officer, or 

President/GM of a Business Unit or Division
	 	130%
	VP, CAO, or CIO
	 	100%

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     (b) Method of Payment. Any General Severance Allowance will be paid in equal monthly
installments, less all applicable withholding taxes, over the Eligible Officer’s General Severance
Period as determined in accordance with the following table:

	 	 	 
	Officer Position Held at Termination	 	General Severance Period
	CEO
	 	24 months
	President, CFO, COO, EVP or SVP
	 	18 months
	Chief Strategy and Business Development Officer, 

President and GM of a Business Unit or Division, 

VP, CAO, or CIO
	 	12 months

          The installment payments will commence ten days after the effective date of the Agreement
required under Section 5 of this Plan; however, if the terminated Eligible Officer is a Specified
Employee, any payment which would otherwise occur within the first six months following the
Eligible Officer’s Termination Date shall be made in a lump sum, with interest accruing at a
reasonable rate from the Termination Date, on the first day of the seventh month immediately
following the Termination Date to the extent necessary for the Eligible Officer to avoid adverse
tax consequences under Code Section 409A. In the event the requirements of Section 5 of this Plan
are waived, the phrase “effective date of the Agreement” in this Section 4(b) shall be replaced
with “Termination Date”.

     (c) Health Care Coverage Continuation. Tekelec (at its expense) will continue, for
the duration of the Eligible Officer’s Severance Period, health care coverage for the terminated
Eligible Officer and his/her family members who are “qualified beneficiaries” (as such term is
defined in the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) under Tekelec’s
group health plan(s) generally available during such period to employees participating in such
plans(s) and at levels and contribution rates and with coverage no greater than those provided to
such terminated Eligible Officer as of the Termination Date. In the event the Eligible Officer and
his or her family members become eligible for group health care coverage elsewhere on terms
generally no less favorable to the Eligible Officer during the Severance Period, the Eligible
Officer shall provide notice to Tekelec, and Tekelec reserves the right to discontinue paying for
such coverage under Tekelec’s group health plans. Upon exhaustion of the later of the Eligible
Officer’s Severance Period or the COBRA continuation period, or after Tekelec ceases paying for
coverage (if applicable), such terminated Eligible Officer may elect coverage under a conversion
health plan available under Tekelec’s group health plan(s) from the Company’s health insurance
carrier if and to the extent he/she is entitled to do so as a matter of right under federal or
state law. Any expense associated with the continuation of any health care coverage beyond the
Eligible Officer’s Severance Period will be the sole responsibility of the terminated Eligible
Officer.

     (d) Other Benefit Plans. Except as otherwise expressly provided in this Section 4 or
as required by applicable law, a terminated Eligible Officer shall have no right to continue
his/her participation in any Tekelec benefit plan following such Eligible Officer’s termination.
Without

7

 

limiting the generality of the foregoing, a terminated Eligible Officer shall not be entitled
to participate in the Company’s 401(k) Plan or any similar plan following his/her Termination Date.

     (e) Vacation Pay. A terminated Eligible Officer will be promptly paid for accrued and
unused vacation entitlement on and through the Termination Date.

5. Condition Precedent to Severance Benefits.

     (a) Separation Agreement. Notwithstanding anything herein to the contrary and in
consideration for and as a condition precedent to the payment of severance or any other benefits
under this Plan, an Eligible Officer otherwise entitled to receive payments or benefits under this
Plan shall, following his/her Termination Date, execute and deliver to the Company a written
separation agreement (the “Agreement”), in substantially the form attached hereto as Attachment I.
Except as otherwise provided in the last sentence of Section 5(b), an Eligible Officer shall not
have any rights whatsoever to receive severance benefits under this Plan unless he or she timely
executes and delivers to the Company the Agreement. The obligations set forth in the Agreement
shall be in addition to any existing and continuing duties that such Eligible Officer may otherwise
have under law to the Company as a result of his/her former capacity as an officer, employee,
director, shareholder or otherwise.

     (b) Waiver. Not later than 20 days after an Eligible Officer’s Termination Date, the
Company shall provide such Eligible Officer with the Agreement for his/her execution. Unless such
Agreement is duly executed and returned by the Eligible Officer to the Company within 21 days after
he or she receives it or the Eligible Officer correctly disputes or otherwise correctly disagrees
with the Company’s determination of the severance payments payable under this Plan and has made a
timely claim in accordance with Section 8(a) hereof, such Eligible Officer shall be deemed to have
waived and forfeited his/her rights to severance payments and benefits under this Plan and the
Company shall have no further obligations whatsoever to such Eligible Officer under this Plan. If
the Company shall not provide the Agreement to the Eligible Officer within 20 days after such
Eligible Officer’s Termination Date, the Company shall be deemed to have waived the condition set
forth in this Section 5 and the Eligible Officer shall not be required to execute the Agreement as
a condition to receiving any severance payments or other benefits under this Plan.

6. Change in Control Provisions.

     (a) Eligibility. In the event of a Change in Control of the Company, this Section 6
will apply in lieu of all the provisions contained in Section 4 herein. However, in the event that
an Eligible Officer’s employment with the Company is terminated for any reason prior to the Change
in Control of the Company, and subsequently a Change in Control of the Company occurs, such
Eligible Officer shall not be entitled to any benefits under this Section 6 unless such termination
was in connection with or otherwise directly because of such anticipated Change in Control.

     (b) Qualifying Termination. In the event that a Change in Control of the Company
shall occur, Tekelec will pay the severance benefits provided in this Section 6 to an Eligible
Officer who (i) elects to terminate his/her employment within one year (eighteen months in the case
of an Eligible Officer who is a CEO, President, COO, CFO or EVP) of such Change in Control for

8

 

“Good Reason” or (ii) is terminated by the Company (or the Acquiror) without Cause within two
years following the Change of Control of the Company.

     (c)  Change in Control Severance Compensation. An Eligible Officer who is entitled to
receive severance benefits under Section 6(b) of this Plan shall receive, subject to Section 6(h),
a Change in Control Severance Allowance in an amount equal to the product of (i) such Eligible
Officer’s highest rate of Annual Compensation during the Employment Period and (ii) a percentage
determined in accordance with the following table:

	 	 	 
	Officer Position Held at Termination	 	Change in Control Percentage
	CEO
	 	250%
	President, CFO, COO or EVP
	 	200%
	SVP, Chief Strategy and Business Development 

Officer, or President/GM of a Business Unit 

or Division,

VP, CAO, or CIO
	 	150%

     (d) Method of Payment. Any Change in Control Severance Allowance will be paid in a
lump sum, less all applicable withholding taxes, ten days after the effective date of the Agreement
required under Section 5 of this Plan; however, if the terminated Eligible Officer is a Specified
Employee, payment shall be made in a lump sum, with interest accruing at a reasonable rate from the
Termination Date, on the first day of the seventh month immediately following the Termination Date
to the extent necessary for the Eligible Officer to avoid adverse tax consequences under Code
Section 409A. In the event the requirements of Section 5 of this Plan are waived, the phrase
“effective date of the Agreement” in this Section 6(d) shall be replaced with “Termination Date”.

     (e) Health Care Insurance Continuation. If the terminated Eligible Officer and
his/her family members elect to continue coverage under Tekelec’s group health plan(s) pursuant to
COBRA, Tekelec will pay the applicable premium to continue such coverage until the last day of (i)
the Eligible Officer’s Change in Control Severance Period or (ii) the COBRA coverage period,
whichever date occurs first. Any expense associated with the continuation of any health care
coverage beyond the Eligible Officer’s Change in Control Severance Period will be the sole
responsibility of the terminated Eligible Officer. A terminated Eligible Officer (at his/her
expense) may elect coverage under a conversion health plan available under Tekelec’s group health
plan(s) from the Company’s health insurance carrier if and to the extent he/she is entitled to do
so as a matter of right under federal or state law.

     (f) Change in Control Severance Period. Subject to any limitations set forth in
Section 6(e), a terminated Eligible Officer’s Change in Control Severance Period will be determined
in accordance with the following table:

9

 

	 	 	 
	Officer Position Held at Termination	 	CIC Severance Period
	CEO
	 	30 months
	President, CFO, COO, or EVP
	 	24 months
	SVP, Chief Strategy & BDO, Pres/GM – BU or Div., 

VP, CAO, or CIO
	 	18 months

     (g) Acceleration of Vesting. (i) If within two years following a Change in Control of
the Company, an Eligible Officer’s employment with the Company (or the Acquiror) is terminated by
the Company (or the Acquiror) without Cause, then all of such Eligible Officer’s then unvested
options stock appreciation rights (“SARs”), restricted stock units (“RSUs”) and other rights to
purchase or acquire securities or other property of the Company or the Acquiror (including but not
limited to any options or rights assumed by the Acquiror in connection with the Change in Control),
other than any such options or rights that were granted after the effective date of the Change in
Control, shall automatically vest and become immediately exercisable in full, and all of such
Eligible Officer’s options SARs, RSUs and rights to purchase securities or other property of the
Company and/or the Acquiror (other than any such options and rights that were granted after the
effective date of the Change in Control, which options and rights shall be governed by the terms
thereof) shall be exercisable for a period of one year following the effective date of such
Eligible Officer’s termination of employment with the Company or the Acquiror, as the case may be
(notwithstanding any terms or provisions to the contrary in any applicable stock option plan, stock
option agreement or other plan or agreement); provided, however, that any such option or other
right shall not be exercisable after the expiration of the term of such option or other right set
forth in the option agreement or other agreement evidencing such right.

          (ii) If within one year (eighteen months in the case of an Eligible Officer who is a CEO,
President, COO, CFO or EVP) following a Change in Control of the Company, an Eligible Officer
terminates his/her employment with the Company (or the Acquiror) for “Good Reason,” then all of
such Eligible Officer’s then unvested options SARs, RSUs and other rights to purchase or acquire
securities or other property of the Company or the Acquiror (including but not limited to any
options SARs, RSUs or rights assumed by the Acquiror in connection with the Change in Control),
other than any such options SARs, RSUs or rights that were granted after the effective date of the
Change in Control, shall automatically vest and become immediately exercisable in full, and all of
such Eligible Officer’s options SARs, RSUs and rights to purchase securities or other property of
the Company and/or the Acquiror (other than any such options and rights that were granted after the
effective date of the Change in Control, which options and rights shall be governed by the terms
thereof) shall be exercisable for a period of one year following the effective date of such
Eligible Officer’s termination of employment with the Company or the Acquiror, as the case may be
(notwithstanding any terms or provisions to the contrary in any applicable stock option plan, stock
option agreement or other plan or agreement); provided, however, that any such option SAR, RSU or
other right shall not be exercisable after the expiration of the term of such option SAR, RSU or
other right set forth in the option agreement or other agreement evidencing such right.

          (iii) If in connection with a Change in Control of the Company, an Eligible Officer is not
offered, prior to the effective date of such Change in Control, employment with the Acquiror after
the effective date of the Change in Control on terms and conditions generally no less favorable to
the Eligible Officer than the terms and conditions of his/her employment in effect with

10

 

the Company immediately prior to the effective date of the Change in Control, then all of such
Eligible Officer’s unvested options SARs, RSUs, and other rights to purchase or acquire the
Company’s securities that are outstanding immediately prior to the effective date of the Change in
Control shall automatically vest and become immediately exercisable in full, and all of such
Eligible Officer’s options SARs, RSUs, and rights to purchase or acquire the Company’s securities
that are outstanding immediately prior to the effective date of the Change in Control shall be
exercisable for a period of one year following the effective date of such Change in Control
(notwithstanding any terms or provisions to the contrary in any applicable stock option plan, stock
option agreement or other plan or agreement); provided, however, that any such option, SAR, RSU or
other right shall not be exercisable after the expiration of the term of such option SAR, RSU, or
other right set forth in the option agreement or other agreement evidencing such right.

     (h) 280G. The provisions of this Section 6(h) will automatically lapse on the
three-year anniversary of the Plan’s Effective Date unless otherwise renewed or extended by the
Board of Directors of the Company by written resolution.

          (i) Gross-Up Payment. In the event any payment or benefit of any type by Tekelec to
or for the benefit of an Eligible Officer who is a CEO, President, COO, CFO or EVP, whether paid or
payable or distributed or distributable pursuant to the terms of this Plan or otherwise, exceeds
the statutory limit under Code Section 280G by more than ten percent (10%) of such Eligible
Officer’s base salary (determined without regard to bonuses, commissions, incentive compensation
and similar non-base salary compensation) resulting in an excise tax imposed on the Eligible
Officer by Code Section 4999 (or any similar tax that may hereafter be imposed) or any interest or
penalties with respect to such excise tax (such excise tax, together with any such interest and
penalties, are collectively referred to as the “Excise Tax”), then such Eligible Officer shall be
entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the Eligible Officer of all taxes (including any interest or penalties imposed with
respect to such taxes), including any Excise Tax, imposed upon the Gross-Up Payment, the Eligible
Officer retains an amount of the Gross-Up Payment equal to the amount of the Excise Tax imposed.
Payment of the Gross-Up Payment shall be made by the end of the Eligible Officer’s taxable year
next following the taxable year in which the related taxes are remitted to the taxing authority.
However, if the terminated Eligible Officer is a Specified Employee, payment shall not occur
earlier than the first day of the seventh month immediately following his/her Termination Date to
the extent necessary for the Eligible Officer to avoid any adverse tax consequences under Code
Section 409A.

          (ii) Modified Cap. In the event that any payment or benefits of any type by Tekelec
to or for the benefit of an Eligible Officer who (1) is described in Section 6(h)(i) but is not
eligible for a gross-up payment thereunder or (2) is a SVP, VP, Controller or CAO, whether paid or
payable or distributed or distributable pursuant to the terms of this Plan or otherwise, would
exceed the statutory limit under Code Section 280G and result in an excise tax imposed on the
Eligible Officer by Code Section 4999 (or any similar tax that may hereafter be imposed), then such
Eligible Officer shall receive, subject to the conditions of this Plan and in full satisfaction of
his or her rights under this Plan, (A) such payment and benefits, or (B) an amount equal to the
product of 2.99 and the Eligible Officer’s “base amount” (as defined in Code Section 280G),
whichever yields the

11

 

highest after-tax benefit to the Eligible Officer . In the event the benefit described under
Section 6(h)(ii)(B) hereto yields the highest after-tax benefit, such amount shall be paid in a
lump sum, less all applicable withholding taxes, ten days after the effective date of the Agreement
required under Section 5 of this Plan; however, if the terminated Eligible Officer is a Specified
Employee, payment shall be made in a lump sum, with interest accruing at a reasonable rate of
interest from the Eligible Officer’s Termination Date, on the first day of the seventh month
immediately following the Termination Date to the extent necessary for the Eligible Officer to
avoid adverse tax consequences under Code Section 409A.. In the event the requirements of Section
5 of this Plan are waived, the phrase “effective date of the Agreement” in this Section 6(h)(ii)
shall be replaced with “Termination Date”.

          (iii) Underpayment. If the amount of the Eligible Officer’s anticipated Excise Tax
liability as determined at the time of his/her termination results in a Gross-Up Payment
insufficient to satisfy the Eligible Officer’s actual Excise Tax liability, payment of any
additional Gross-Up Payment to reconcile such deficiency will be made by the end of the Eligible
Officer’s taxable year next following the taxable year in which such taxes are remitted to the
taxing authority.

     (i) Overpayment. If, after the receipt by the Eligible Officer of an amount paid or
advanced by Tekelec pursuant to this Section 6(h), the Eligible Officer becomes entitled to receive
any refund with respect to such claim, the Eligible Officer shall promptly pay to Tekelec the
amount of such refund (together with any interest paid or credited thereon after taxes applicable
thereto).

     (j) Other Benefit Plans. Except as otherwise expressly provided in this Section 6 or
as required by applicable law, a terminated Eligible Officer shall have no right to continue
his/her participation in any Tekelec benefit plan following such officer’s termination. Without
limiting the generality of the foregoing, a terminated Eligible Officer shall not be entitled to
participate in the Company’s 401(k) Plan or any similar plan following his/her Termination Date.

     (k) Vacation Pay. A terminated Eligible Officer will be promptly paid for accrued and
unused vacation entitlement on and through the Termination Date.

7. Administration of this Plan.

     This Plan is a top-hat welfare plan under the Employee Retirement Income Security Act of 1974.
The Plan shall be interpreted and administered for the Company by the Administrator who shall also
be the named fiduciary of this Plan. The Administrator shall administer this Plan in accordance
with its terms and shall have all powers necessary to carry out this Plan’s provisions on behalf of
the Company. The Administrator shall have discretionary authority on behalf of the Company to
determine reasonably and in good faith all questions arising in the administration, interpretation
and application of this Plan and to construe the terms of this Plan, including any disputed or
doubtful terms or the eligibility of an Eligible Officer for any benefit hereunder. Except as
otherwise expressly provided in this Plan, the Administrator shall have no power or authority to
add to, subtract from or modify any of the terms of this Plan, or to change or modify any of the
benefits provided by this Plan, or to waive or fail to apply any requirements for eligibility for a
benefit under this Plan.

12

 

8. Claims for Benefits.

     (a) Initial Claim. In the event an Eligible Officer disputes or otherwise disagrees
with the Company’s determination of the severance benefits payable to him or her and desires to
make a claim (a “claimant”) with respect to any of the benefits provided hereunder, the claimant
shall so notify, in writing, the Administrator by actual receipt or registered mail (addressed to
the “Officer Severance Plan Administrator,” Tekelec, 5200 Paramount Parkway, Morrisville, North
Carolina 27560) and shall submit evidence of events constituting a termination of employment with
the Company. Any claim with respect to any of the benefits provided under this Plan shall be made
in writing within 90 days of the later of his/her becoming aware of the event which the claimant
asserts entitles him or her to severance benefits or the Company notifying him or her of its
determination of the severance benefits payable to him or her under this Plan as a result of the
occurrence of that event. Failure by the claimant to submit his/her claim within such 90-day
period shall bar the claimant from disputing the Company’s notification to him or her of its
determination of the severance benefits payable to him or her under this Plan as a result of the
occurrence of that event.

     (b) Appeal. In the event that a claim which is made by a claimant is wholly or
partially denied, the claimant will receive from the Administrator within 60 days of the claimant’s
above-referenced notice a written explanation of the reason for denial and the claimant or his/her
duly authorized representative may appeal the denial of the claim to the Administrator at any time
within 60 days after the receipt by the claimant of written notice from the Administrator of the
denial of the claim. In connection therewith, the claimant or his/her duly authorized
representative may request a review of the denied claim, may review pertinent documents, and may
submit issues and comments in writing. Upon receipt of a request for review of a denied claim, the
Administrator shall make a decision with respect thereto and, not later than 60 days after receipt
of a request for review, shall furnish the claimant with a decision on the review in writing,
including the specific reasons for the decision written in a manner reasonably calculated to be
understandable by the claimant or the claimant’s attorney or accountant, as well as specific
reference to the pertinent provisions of this Plan upon which the decision is based. In reaching
its decision, the Administrator shall have the discretionary authority in good faith to determine
on behalf of the Company all questions arising under this Plan.

9. Miscellaneous Provisions.

     (a) Offset. (i) If an Eligible Officer shall become entitled to receive benefits or
payments from the Company pursuant to the provisions of any statute, rule or regulation of the
United States or any state, territory, commonwealth or political subdivision thereof as the result
of a plant or facility shutdown or closing, or the change in the control or ownership of the
Company (other than unemployment benefits), the amount of severance benefits payable hereunder
shall be offset dollar for dollar and reduced by such benefits otherwise payable to the Eligible
Officer under such statute, rule or regulation. (ii) To the maximum extent permitted by law, the
amount of any severance benefit payable under this Plan may be offset by the Company against any
and all amounts due the Company by the terminated Eligible Officer.

13

 

     (b) Waiver. The failure of the Company to enforce at any time any of the provisions
of this Plan, or to require at any time performance of any of the provisions of this Plan, shall in
no way be construed to be a waiver of these provisions, nor in any way to affect the validity of
this Plan or any part thereof, or the right of the Company thereafter to enforce every provision.

     (c) Benefits Not Transferable. Except as may be required by law, no benefit which
shall be payable under this Plan to any Eligible Officer shall be subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any
attempt to alienate, sell, transfer, assign, pledge, encumber or charge all or any part of the
benefit shall be void; provided, however, in the event of the death of a terminated Eligible
Officer prior to the end of the period over which such Eligible Officer is entitled to receive
severance benefits under this Plan, the severance benefits payable hereunder shall be paid to the
estate of such Eligible Officer or to the person who acquired the rights to such benefits by
bequest or inheritance. Except as may be provided by law, no benefit shall in any manner be liable
for, or subject to, the debts, contracts, liabilities, engagements or torts of any Eligible
Officer, nor shall it be subject to attachment or legal process for, or against, the Eligible
Officer and the same shall not be recognized under this Plan.

     (d) Successors of the Company. The rights and obligations of the Company under the
Plan shall inure to the benefit of, and shall be binding upon, the successors and assigns of the
Company.

     (e) No Contract of Employment. The definitions and criteria set forth herein are
solely for the purpose of defining Plan eligibility. No legal rights to employment are created or
implied by this Plan, nor are any conditions or restrictions hereby placed on termination of
employment. Unless the employee has a written employment agreement binding on Tekelec which
provides otherwise, employment with Tekelec is employment-at-will. This means termination of
employment may be initiated by the Eligible Officer or by Tekelec at any time for any reason which
is not unlawful, with or without cause.

     (f) Governing Law. This Plan shall be construed, administered and governed under and
by the laws of the State of North Carolina and the laws of the United States to the extent they
preempt state law or are otherwise applicable to this Plan.

     (g) Controlling Plan. This Plan constitutes the Company’s entire Officer Severance
Plan for the Eligible Officer and supersedes all previous representations, understandings and plans
with respect to officer severance for the Eligible Officer, and any such representations,
understandings and plans with respect to officer severance are hereby canceled and terminated in
all respects.

     (h) Validity. In the event any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the validity of any other
provisions of the Plan.

     (i) Amendment and Termination. Subject to the limitations herein provided, this Plan
and each provision hereof may be amended, modified, supplemented, terminated or waived at any time
by the Board. Each such amendment, modification, supplement, termination or waiver shall be in
writing, shall be promptly sent in writing to each Eligible Officer and shall be effective on the
date

14

 

on or after such Board action as is specified by the Board; provided, however, that (i) no
such action shall have the effect of retroactively changing or depriving any terminated Eligible
Officers of their rights to benefits payable with respect to events occurring prior to the
effective date of such amendment, modification, supplement, termination or waiver unless the
explicit written consent or waiver of such Eligible Officer thereto is obtained; (ii) no such
action shall retroactively materially diminish the rights under this Plan of an officer who is an
Eligible Officer at the date on which such amendment, modification, supplement, termination or
waiver is approved by the Board unless (A) the explicit written consent thereto or waiver by such
Eligible Officer is obtained or (B) the Board specifies that such action shall not become effective
with respect to those officers who are Eligible Officers on the date such action is duly approved
by the Board until at least 12 months have elapsed after such Eligible Officers have been notified
in writing of the Board’s approval of such action; and (iii) no such action shall be taken within a
period of two years following a Change in Control. Except as expressly provided herein, no course
of dealing between the parties hereto and no delay in exercising any right, power or remedy
conferred hereby or now or hereafter existing at law, in equity, by statute or otherwise, shall
operate as a waiver of, or otherwise prejudice, any such right, power or remedy.

10. 409A Compliance.

     (a) Bifurcation of Severance. In the event payment of the General Severance Allowance
or the Change in Control Allowance is deferred with respect to an Eligible Officer on account of
such Eligible Officer being a Specified Employee, then to the extent it will not cause adverse tax
consequences under Code Section 409A, the amount of the General Severance Allowance or Change in
Control Severance Allowance up to two times the lesser of (i) the sum of the Eligible Officer’s
annualized compensation based upon his or her annual rate of pay for services provided to the
Company for the prior taxable year; or (ii) the maximum amount that may be taken into account under
a qualified plan pursuant to Code Section 401(a)(17) for the year in which the Eligible Officer’s
termination of employment occurs, may be paid without regard to the six month delay.

     (b) Savings Clause. This Plan is intended to comply with the provisions of Code
Section 409A. If any compensation or benefits provided by this Plan may result in adverse
consequences under Code Section 409A, the Company shall, in consultation with the Executive, modify
the Agreement in the least restrictive manner necessary in order to exclude such compensation from
the definition of “deferred compensation” within the meaning of Code Section 409A or in order to
comply with the provision of Section 409A, other applicable provision(s) of the Code and/or any
rules, regulations or other regulatory guidance issued under such statutory provisions and without
any diminution in the value of the payments to the Eligible Officer.

	 	 	 	 	 
	 	Tekelec

 	 
	 	By:  	 	 
	 	 	Franco Plastina 	 
	 	 	Chief Executive Officer 	 
	 

Date: May 21, 2007

15

 

ATTACHMENT I

EMPLOYMENT SEPARATION AGREEMENT

     THIS EMPLOYMENT SEPARATION AGREEMENT (the “Agreement”), which includes Exhibits A, B and C
hereto which are incorporated herein by this reference, is entered into by and between TEKELEC, a
California corporation (“Tekelec”), and ___ (“Former Employee”), and shall become
effective when executed by both parties hereto (the “Effective Date”).

RECITALS

     A. Former Employee ceased to be an employee and officer of Tekelec on ___, 200___
(the “Termination Date”).

     B. Former Employee desires to receive severance benefits under Tekelec’s Officer Severance
Plan dated ___ (the “Severance Plan”), which benefits are stated in the Severance Plan to be
contingent upon, among other things, Former Employee’s entering into this Agreement and undertaking
the obligations set forth herein.

     C. Tekelec and Former Employee desire to set forth their respective rights and obligations
with respect to Former Employee’s separation from Tekelec and to finally and forever settle and
resolve all matters concerning Former Employee’s past services to Tekelec.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants and
conditions set forth herein, the receipt and sufficiency of which are hereby acknowledged, Tekelec
and Former Employee hereby agree as follows:

1. DEFINITIONS

     As used herein, the following terms shall have the meanings set forth below:

     1.1. “Includes;” “Including.” Except where followed directly by the word “only,” the
terms “includes” or “including” shall mean “includes, but is not limited to,” and “including, but
not limited to,” respectively.

     1.2. “Severance Covered Period.” The term “Severance Covered Period” shall mean a
period of time commencing upon the effective date of this Agreement and ending on the last day of
the Change in Control Severance Period or General Severance Period, as applicable.

     1.3. Other Capitalized Terms. Capitalized terms (other than those specifically
defined herein) shall have the same meanings ascribed to them in the Severance Plan.

 

 

2. MUTUAL REPRESENTATIONS, WARRANTIES AND COVENANTS

     Each party hereto represents, warrants and covenants (with respect to itself/himself only) to
the other party hereto that, to its/his respective best knowledge and belief as of the date of each
party’s respective signature below:

     2.1. Full Power and Authority. It/he has full power and authority to execute, enter
into and perform its/his obligations under this Agreement; this Agreement, after execution by both
parties hereto, will be a legal, valid and binding obligation of such party enforceable against
it/him in accordance with its terms; it/he will not act or omit to act in any way which would
materially interfere with or prohibit the performance of any of its/his obligations hereunder, and
no approval or consent other than as has been obtained of any other party is necessary in
connection with the execution and performance of this Agreement.

     2.2. Effect of Agreement. The execution, delivery and performance of this Agreement
and the consummation of the transactions hereby contemplated:

          (a) will not interfere or conflict with, result in a breach of, constitute a default under or
violation of any of the terms, provisions, covenants or conditions of any contract, agreement or
understanding, whether written or oral, to which it/he is a party (including, in the case of
Tekelec, its bylaws and articles of incorporation each as amended to date) or to which it/he is
bound;

          (b) will not conflict with or violate any applicable law, rule, regulation, judgment, order or
decree of any government, governmental agency or court having jurisdiction over such party; and

          (c) has not heretofore been assigned, transferred or granted to another party, or purported to
assign, transfer or grant to another party, any rights, obligations, claims, entitlements, matters,
demands or causes of actions relating to the matters covered herein.

3. CONFIDENTIALITY OBLIGATIONS DO NOT TERMINATE

     Former Employee acknowledges that any confidentiality, proprietary rights or nondisclosure
agreement(s) in favor of Tekelec which he may have entered into in connection with his employment
(collectively, the “Nondisclosure Agreement”) with Tekelec is understood to be intended to survive,
and does survive, any termination of such employment, and accordingly nothing in this Agreement
shall be construed as terminating, limiting or otherwise affecting any such Nondisclosure Agreement
or Former Employee’s obligations thereunder. Without limiting the generality of the foregoing, no
time period set forth in this Agreement shall be construed as shortening or limiting the term of
any such Nondisclosure Agreement, which term shall continue as set forth therein.

 

 

4. BENEFITS

     4.1. Health Care Coverage Continuation.

     4.2. Tekelec (at its expense) will continue, for the duration of the Former Employee’s
Severance Period, health care coverage for the Former Employee and his/her family members who are
“qualified beneficiaries” (as such term is defined in the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”) under Tekelec’s group health plan(s) generally available
during such period to employees participating in such plans(s) and at levels and contribution rates
and with coverage no greater than those provided to such Former Employee as of the Termination
Date. In the event the Former Employee and his or her family members become eligible for group
health care coverage elsewhere on terms generally no less favorable to the Former Employee during
the Severance Period, the Former Employee shall provide notice to Tekelec, and Tekelec reserves the
right to discontinue paying for such coverage under Tekelec’s group health plans. Upon exhaustion
of the later of the Former Employee’s Severance Period or the COBRA continuation period, or after
Tekelec ceases paying for coverage (if applicable), such Former Employee may elect coverage under a
conversion health plan available under Tekelec’s group health plan(s) from the Company’s health
insurance carrier if and to the extent he/she is entitled to do so as a matter of right under
federal or state law. Any expense associated with the continuation of any health care coverage
beyond the Former Employee’s Severance Period will be the sole responsibility of the Former
Employee.

     4.3. Other Benefit Plans. Except as otherwise expressly provided in this Section 4 or
as required by applicable law, Former Employee shall have no right to continue his participation in
any Tekelec benefit plan following such employee’s termination.

5. STOCK OPTIONS

     Exhibit A hereto sets forth any and all outstanding stock options, warrants and equity
incentives and other rights to purchase capital stock or other securities of Tekelec which have
been previously issued to Former Employee and which are outstanding as of the date hereof. Nothing
in this Agreement shall alter or affect any of such outstanding stock options, warrants, equity
incentives or rights or Former Employee’s rights or responsibilities with respect thereto,
including but not limited to Former Employee’s rights to exercise any of his options, warrants,
equity incentives or rights following the Termination Date.

6. PAYMENTS TO FORMER EMPLOYEE

     6.1. Employee Compensation. Tekelec has paid, and Former Employee acknowledges and
agrees that Tekelec has paid, to him any and all salary and accrued but unpaid vacation and sick
pay owed by Tekelec to Former Employee up to and including the Termination Date other than any
compensation owed to him under the Severance Plan.

     6.2. General / Change in Control Severance Allowance. In consideration for the
release by Former Employee set forth herein (including the release of any and all claims Former
Employee has or may have under the Age Discrimination in Employment Act (“ADEA”) and Older Workers

 

 

Benefit Protection Act (“OWBPA”)) and Former Employee’s performance of his obligations under
this Agreement (including but not limited to Former Employee’s obligations under Section 7 hereof),
Former Employee is entitled to receive, and Tekelec shall pay to Former Employee, a General
Severance Allowance, or if applicable, a Change in Control Severance Allowance, in the aggregate
gross amount of $___ payable in [___ equal monthly installments of $___ each] [a
lump sum], less all applicable withholding taxes, on the date that is ten days after the Effective
Date, in accordance with the terms and conditions of the Severance Plan; however, if Former
Employee is a Specified Employee, any payment which would otherwise occur within the first six
months following the Former Employee’s termination of employment shall be paid in a lump
sum, with interest accruing at a reasonable rate of interest from the date of the Former Employee’s
termination of employment, on the first day of the seventh month immediately following the
termination of employment to the extent necessary for the Former Employee to avoid any adverse tax
consequences under Code Section 409A.

7. NON-COMPETITION AND NON-SOLICITATION

     7.1. Subject and in addition to Former Employee’s existing fiduciary duties as a former
officer and employee of Tekelec to the extent such continues under applicable law after Former
Employee’s Termination Date, provided that Tekelec has not breached any of the terms of this
Agreement or any other currently existing written agreements between Tekelec and Former Employee,
Former Employee agrees until the earlier of (i) the completion of the Severance Covered Period or
(ii) such date as Tekelec may terminate this Agreement for default hereunder:

          (a) Not to engage, either directly or indirectly, in any Competing Business Activity (as
defined below) or be associated with a Competing Business Entity (as defined below) as an officer,
director, employee, principal, consultant, lender, creditor, investor, agent or otherwise for any
corporation, partnership, company, agency, person, association or any other entity; provided,
however, that nothing contained herein shall prevent Former Employee from owning not more than 5%
of the common equity and not more than 5% of the voting power of, or lending not more than $25,000
to, any Competing Business Entity or any business engaged in a Competing Business Activity;
provided, further, that for purposes of this agreement, any equity ownership, voting control or
lending activity of Former Employee shall be deemed to include that of (i) any family member or
(ii) person or entity controlled by Former Employee;

          (b) Not to call upon or cause to be called upon, or solicit or assist in the solicitation of,
in connection with any Competing Business Entity or Competing Business Activity, any entity,
agency, person, firm, association, partnership or corporation that is a customer or account of
Tekelec, currently and/or during the Severance Covered Period, for the purpose of selling, renting,
leasing, licensing or supplying any product or service that is the same as, similar to or
competitive with the products or services then being sold or developed by Tekelec;

          (c) Not to enter into an employment or agency relationship with a Competing Business Entity or
involving a Competing Business Activity with any person who, at the time of such entry, is an
officer, director, employee, principal or agent of or with respect to Tekelec; and

 

 

          (d) Not to induce or attempt to induce any person described in Section 7.1(c) to leave his
employment, agency, directorship or office with Tekelec.

     7.2. For purposes of this Section 7, a “Competing Business Activity” shall mean any business
activity of a person or entity (other than Tekelec) involving the development, design, manufacture,
distribution, marketing, licensing, renting, leasing or selling within the Territory (as defined
below) of products and services which are the same as, similar to or competitive with products or
services of Tekelec then in existence or under development. For purposes hereof, the Territory
shall include the United States of America, Canada, Central America, South America, Europe, Japan,
Australia, Singapore and such other countries in which Tekelec then distributes, markets, licenses,
rents, leases or sells its products or services. An entity as a whole shall be deemed to be a
Competing Business Entity if it has one or more business activities involving the development,
design, manufacture, distribution, marketing, licensing, renting, leasing or selling directly or
indirectly within the Territory of products or services which are the same as, similar to or
competitive with products or services of Tekelec then being sold or under development and if and
only if the revenues derived directly or indirectly from engaging in such business activities by
such entity represent either more than 3% of the entity’s revenues or at least $5 million in
aggregate sales, or both, for the then-preceding 12-month period.

     7.3. The parties acknowledge that the provisions and obligations set forth in this Section 7
are an integral part of this Agreement and that in the event Former Employee breaches any of the
provisions or obligations of this Section 7 or any other term, provision or obligation of this
Agreement, then Tekelec, in addition to any other rights or remedy it may have at law, in equity,
by statute or otherwise, shall be excused from its payment obligations to Former Employee under the
Severance Plan and this Agreement.

8. CONFIDENTIAL INFORMATION AND TRADE SECRETS

     8.1. Former Employee hereby recognizes, acknowledges and agrees that Tekelec is the owner of
proprietary rights in certain confidential sales and marketing information, programs, tactics,
systems, methods, processes, compilations of technical and non-technical information, records and
other business, financial, sales, marketing and other information and things of value. To the
extent that any or all of the foregoing constitute valuable trade secrets and/or confidential
and/or privileged information of Tekelec, Former Employee hereby further agrees as follows:

          (a) That, except with prior written authorization from Tekelec’s CEO, for purposes related to
Tekelec’s best interests, he will not directly or indirectly duplicate, remove, transfer, disclose
or utilize, nor knowingly allow any other person to duplicate, remove, transfer, disclose or
utilize, any property, assets, trade secrets or other things of value, including, but not limited
to, records, techniques, procedures, systems, methods, market research, new product plans and
ideas, distribution arrangements, advertising and promotional materials, forms, patterns, lists of
past, present or prospective customers, and data prepared for, stored in, processed by or obtained
from, an automated information system belonging to or in the possession of Tekelec which are not
intended for and have not been the subject of public disclosure. Former Employee agrees to
safeguard all Tekelec trade secrets in his possession or known to him at all times so that they are
not

 

 

exposed to, or taken by, unauthorized persons and to exercise his reasonable efforts to assure
their safekeeping. This subsection shall not apply to information that as of the date hereof is,
or as of the date of such duplication, removal, transfer, disclosure or utilization (or the knowing
allowing thereof) by Former Employee has (i) become generally known to the public or competitors of
Tekelec (other than as a result of a breach of this Agreement); (ii) been lawfully obtained by
Former Employee from any third party who has lawfully obtained such information without breaching
any obligation of confidentiality; or (iii) been published or generally disclosed to the public by
Tekelec. Former Employee shall bear the burden of showing that any of the foregoing exclusions
applies to any information or materials.

          (b) That all improvements, discoveries, systems, techniques, ideas, processes, programs and
other things of value made or conceived in whole or in part by Former Employee with respect to any
aspects of Tekelec’s current or anticipated business while an employee of Tekelec are and remain
the sole and exclusive property of Tekelec, and Former Employee has disclosed all such things of
value to Tekelec and will cooperate with Tekelec to insure that the ownership by Tekelec of such
property is protected. All of such property of Tekelec in Former Employee’s possession or control,
including, but not limited to, all personal notes, documents and reproductions thereof, relating to
the business and the trade secrets or confidential or privileged information of Tekelec has already
been, or shall be immediately, delivered to Tekelec.

     8.2. Former Employee further acknowledges that as the result of his prior service as an
officer and employee of Tekelec, he has had access to, and is in possession of, information and
documents protected by the attorney-client privilege and by the attorney work product doctrine.
Former Employee understands that the privilege to hold such information and documents confidential
is Tekelec’s, not his personally, and that he will not disclose the information or documents to any
person or entity without the express prior written consent of the CEO or Board of Tekelec unless he
is required to do so by law.

     8.3. Former Employee’s obligations set forth in this Section 8 shall be in addition to, and
not instead of, Former Employee’s obligations under any written Nondisclosure Agreement.

9. ENFORCEMENT OF SECTIONS 7 AND 8

     Former Employee hereby acknowledges and agrees that the services rendered by him to Tekelec in
the course of his prior employment were of a special and unique character, and that breach by him
of any provision of the covenants set forth in Sections 7 and 8 of this Agreement will cause
Tekelec irreparable injury and damages. Former Employee expressly agrees that Tekelec shall be
entitled, in addition to all other remedies available to it whether at law or in equity, to
injunctive or other equitable relief to secure their enforcement.

     The parties hereto expressly agree that the covenants contained in Sections 7 and 8 hereof are
reasonable in scope, duration and otherwise; however, if any of the restraints provided in said
covenants are adjudicated to be excessively broad as to geographic area or time or otherwise, said
restraint shall be reduced to whatever extent is reasonable and the restraint shall be fully
enforced in such modified form. Any provisions of said covenants not so reduced shall remain in
full force and effect.

 

 

10. PROHIBITION AGAINST DISPARAGEMENT

     10.1. Former Employee agrees that for a period of two years following the Effective Date any
communication, whether oral or written, occurring on or off the premises of Tekelec, made by him or
on his behalf to any person or entity (including, without limitation, any Tekelec employee,
customer, vendor, supplier, any competitor, any media entity and any person associated with any
media) which in any way relates to Tekelec (or any of its subsidiaries) or to Tekelec’s or any of
its subsidiaries’ directors, officers, management or employees: (a) will be truthful; and (b) will
not, directly or indirectly, criticize, disparage, or in any manner undermine the reputation or
business practices of Tekelec or its directors, officers, management or employees.

     10.2. The only exceptions to Section 10.1 shall be: (a) truthful statements privately made to
(i) the CEO of Tekelec, (ii) any member of Tekelec’s Board, (iii) Tekelec’s auditors, (iv) inside
or outside counsel of Tekelec, (v) Former Employee’s counsel or (vi) Former Employee’s spouse; (b)
truthful statements lawfully compelled and made under oath in connection with a court or government
administrative proceeding; and (c) truthful statements made to specified persons upon and in
compliance with prior written authorization from Tekelec’s CEO or Board to Former Employee
directing him to respond to inquiries from such specified persons.

11. COOPERATION

     Former Employee agrees that for a period of five years commencing with the Effective Date he
will cooperate fully and reasonably with Tekelec in connection with any future or currently pending
matter, proceeding, litigation or threatened litigation: (1) directly or indirectly involving
Tekelec (which, for purposes of this section, shall include Tekelec and each of its current and
future subsidiaries, successors or permitted assigns); or (2) directly or indirectly involving any
director, officer or employee of Tekelec (with regard to matters relating to such person(s) acting
in such capacities with regard to Tekelec business). Such cooperation shall include making himself
available upon reasonable notice at reasonable times and places for consultation and to testify
truthfully (at Tekelec’s expense for reasonable, pre-approved out-of-pocket travel costs plus a
daily fee equal to one-twentieth of his monthly severance compensation under Section 6.2 hereof for
each full or partial day during which Former Employee makes himself so available) in any action as
reasonably requested by the CEO or the Board of Directors. Former Employee further agrees to
immediately notify Tekelec’s CEO in writing in the event that he receives any legal process or
other communication purporting to require or request him to produce testimony, documents,
information or things in any manner related to Tekelec, its directors, officers or employees, and
that he will not produce testimony, documents, information or other things with regard to any
pending or threatened lawsuit or proceeding regarding Tekelec without giving Tekelec prior written
notice of the same and reasonable time to protect its interests with respect thereto. Former
Employee further promises that when so directed by the CEO or the Board of Directors, he will make
himself available to attend any such legal proceeding and will truthfully respond to any questions
in any manner concerning or relating to Tekelec and will produce all documents and things in his
possession or under his control which in any manner concern or relate to Tekelec. Former Employee
covenants and agrees that he will immediately notify Tekelec’s CEO in writing in the event that he
breaches any of the provisions of Sections 7, 8, 10 or 11 hereof.

 

 

12. SOLE ENTITLEMENT

     Former Employee acknowledges and agrees that his sole entitlement to compensation, payments of
any kind, monetary and nonmonetary benefits and perquisites with respect to his prior Tekelec
relationship (as an officer and employee) is as set forth in the Severance Plan, this Agreement,
the Company’s bonus plan for officers as in effect from time to time, stock option and warrant
agreements, COBRA, and such other written agreements and securities between Tekelec and Former
Employee as may exist or as may be set forth on Exhibit B hereto.

13. RELEASE OF CLAIMS

     13.1. General. Former Employee does hereby and forever release and discharge Tekelec
and the predecessor corporation of Tekelec as well as the successors, current, prior or future
shareholders of record, officers, directors, heirs, predecessors, assigns, agents, employees,
attorneys, insurers and representatives of each of them, past, present or future, from any and all
cause or causes of action, actions, judgments, liens, indebtedness, damages, losses, claims,
liabilities and demands of any kind or character whatsoever, whether known or unknown, suspected to
exist or not suspected to exist, anticipated or not anticipated, whether or not heretofore brought
before any state or federal agency, court or other governmental entity which are existing on or
arising prior to the date of this Agreement and which, directly or indirectly, in whole or in part,
relate or are attributable to, connected with, or incidental to the previous employment of Former
Employee by Tekelec, the separation of that employment, and any dealings between the parties
concerning Former Employee’s employment existing prior to the date of execution of this Agreement,
excepting only those obligations expressly recited herein or to be performed hereunder. Nothing
contained in this Section 12 shall affect any rights, claims or causes of action which Former
Employee may have (1) with respect to his outstanding stock options, warrants or other stock
subscription rights to purchase Tekelec Common Stock or other securities under the terms and
conditions thereof; (2) as a shareholder of Tekelec; (3) to indemnification by Tekelec, to the
extent required under the provisions of Tekelec’s Articles of Incorporation, Tekelec’s Bylaws, the
California General Corporation Law, insurance or contracts, with respect to matters relating to
Former Employee’s prior service as a director, an officer, employee and agent of Tekelec; (4) with
respect to his eligibility for severance payments under the Severance Plan or any other written
agreement listed on Exhibit B hereto; and (5) to make claims against or seek indemnification or
contribution from anyone not released by the first sentence of this Section 12 with respect to any
matter or anyone released by the first sentence of this Section 12 with respect to any matter not
released thereby; or (6) with respect to Tekelec’s performance of this Agreement. Further, Former
Employee waives specifically any and all rights or claims Former Employee has or may have under the
ADEA and/or the OWBPA, and acknowledges that such waiver is given voluntarily in exchange for
certain consideration included in the severance benefits being paid pursuant to this Agreement.

     13.2. Waiver of Unknown Claims. Former Employee acknowledges that he is aware that he
may hereafter discover claims or facts different from or in addition to those he now knows or
believes to be true with respect to the matters herein released, and he agrees that this release
shall be and remain in effect in all respects a complete general release as to the matters released
and all claims relative thereto which may exist or may heretofore have existed, notwithstanding any
such different

 

 

or additional facts. Former Employee acknowledges that he has been informed of Section 1542
of the Civil Code of the State of California, and does hereby expressly waive and relinquish all
rights and benefits which he has or may have under said Section (or any similar state statute),
which reads as follows:

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing
the release, which if known by him must have materially affected his
settlement with the debtor.”

     13.3. Covenant Not to Sue on Matters Released. Former Employee covenants that he will
not make, assert or maintain against any person or entity that Former Employee has released in this
Agreement, any claim, demand, action, cause of action, suit or proceeding arising out of or in
connection with the matters herein released, including but not limited to any claim or right under
the ADEA, the OWBPA, or any other federal or state statute or regulation. Former Employee
represents and warrants that he has not assigned or transferred, purported to assign or transfer,
and will not assign or transfer, any matter or claim herein released. Former Employee represents
and warrants that he knows of no other person or entity which claims an interest in the matters or
claims herein released. Former Employee agrees to, and shall at all times, indemnify and hold
harmless each person and entity that Former Employee has released in this Agreement against any
claim, demand, damage, debt, liability, account, action or cause of action, or cost or expense,
including attorneys’ fees, resulting or arising from any breach of the representations, warranties
and covenants made herein.

14. ASSIGNMENT

     Former Employee represents and warrants that he has not heretofore assigned, transferred or
granted or purported to assign, transfer or grant any claims, entitlement, matters, demands or
causes of action herein released, disclaimed, discharged or terminated, and agrees to indemnify and
hold harmless Tekelec from and against any and all costs, expense, loss or liability incurred by
Tekelec as a consequence of any such assignment, transfer or grant.

15. FORMER EMPLOYEE REPRESENTATIONS

     Notwithstanding that this Agreement is being entered into subsequent to the Termination Date,
except as listed by Former Employee on Exhibit C, from the period beginning on the Termination Date
to the Effective Date, Former Employee represents and warrants that he has not acted or omitted to
act in any respect which directly or indirectly would have constituted a violation of Sections 7,
8, 10 or 11 herein had this Agreement then been in effect.

16. MISCELLANEOUS

     16.1. Notices. All notices and demands referred to or required herein or pursuant
hereto shall be in writing, shall specifically reference this Agreement and shall be deemed to be
duly sent and given upon actual delivery to and receipt by the relevant party (which notice, in the
case of Tekelec, must be from an officer of Tekelec) or five days after deposit in the U.S. mail by
certified

 

 

or registered mail, return receipt requested, with postage prepaid, addressed as follows (if,
however, a party has given the other party due notice of another address for the sending of
notices, then future notices shall be sent to such new address):

	 	 	 	 	 	 	 	 	 
	 

	 	(a)
	 	If to Tekelec:
	 	Tekelec	 	 
	 

	 	 	 	 	 	5200 Paramount Parkway	 	 
	 

	 	 	 	 	 	Morrisville, North Carolina 27560	 	 
	 

	 	 	 	 	 	Attn: Chief Executive Officer	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	With a copy to:
	 	General Counsel Tekelec	 	 
	 

	 	 	 	 	 	5200 Paramount Parkway	 	 
	 

	 	 	 	 	 	Morrisville, North Carolina 27560	 	 
	 

	 	 	 	 	 	            -and-	 	 
	 

	 	 	 	 	 	Katherine Ashton	 	 
	 

	 	 	 	 	 	Bryan Cave LLP	 	 
	 

	 	 	 	 	 	120 Broadway, Suite 300	 	 
	 

	 	 	 	 	 	Santa Monica, California 90401-2386	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	(b)
	 	If to Former Employee:
	 	 
 

 
 

 
 

	 	   

     16.2. Legal Advice and Construction of Agreement. Both Tekelec and Former Employee
have received (or have voluntarily and knowingly elected not to receive) independent legal advice
with respect to the advisability of entering into this Agreement and with respect to all matters
covered by this Agreement and neither has been entitled to rely upon or has in fact relied upon the
legal or other advice of the other party or such other party’s counsel (or employees) in entering
into this Agreement.

     16.3. Parties’ Understanding. Tekelec and Former Employee state that each has
carefully read this Agreement, that it has been fully explained to it/him by its/his attorney (or
that it/he has voluntarily and knowingly elected not to receive such explanation), that it/he fully
understands its final and binding effect, that the only promises made to it/him to sign the
Agreement are those stated herein, and that it/he is signing this Agreement voluntarily.

     16.4. Recitals and Section Headings. Each term of this Agreement is contractual and
not merely a recital. All recitals are incorporated by reference into this Agreement. Captions
and section headings are used herein for convenience only, are not part of this Agreement and shall
not be used in interpreting or construing it.

     16.5. Entire Agreement. This Agreement constitutes a single integrated contract
expressing the entire agreement of the parties with respect to the subject matter hereof and
supersedes all prior and contemporaneous oral and written agreements and discussions with respect
to the subject matter hereof. Notwithstanding the foregoing, the parties understand and agree that
any Nondisclosure Agreement and all other written agreements between Former Employee and

 

 

Tekelec are separate from this Agreement and, subject to the terms and conditions of each such
agreement, shall survive the execution of this Agreement, and nothing contained in this Agreement
shall be construed as affecting the rights or obligations of either party set forth in such
agreements.

     16.6. Severability. In the event any provision of this Agreement or the application
thereof to any circumstance shall be determined by arbitration pursuant to Section 16.10 of this
Agreement or held by a court of competent jurisdiction to be invalid, illegal or unenforceable, or
to be excessively broad as to time, duration, geographical scope, activity, subject or otherwise,
it shall be construed to be limited or reduced so as to be enforceable to the maximum extent
allowed by applicable law as it shall then be in force, and if such construction shall not be
feasible, then such provision shall be deemed to be deleted herefrom in any action before that
court, and all other provisions of this Agreement shall remain in full force and effect.

     16.7. Amendment and Waiver. This Agreement and each provision hereof may be amended,
modified, supplemented or waived only by a written document specifically identifying this Agreement
and signed by each party hereto. Except as expressly provided in this Agreement, no course of
dealing between the parties hereto and no delay in exercising any right, power or remedy conferred
hereby or now or hereafter existing at law, in equity, by statute or otherwise, shall operate as a
waiver of, or otherwise prejudice, any such rights, power or remedy.

     16.8. Cumulative Remedies. None of the rights, powers or remedies conferred herein
shall be mutually exclusive, and each such right, power or remedy shall be cumulative and in
addition to every other right, power or remedy, whether conferred herein or now or hereafter
available at law, in equity, by statute or otherwise.

     16.9. Specific Performance. Each party hereto may obtain specific performance to
enforce its/his rights hereunder and each party acknowledges that failure to fulfill its/his
obligations to the other party hereto would result in irreparable harm.

     16.10. Arbitration. Except for the right of either party to apply to a court of
competent jurisdiction for a Temporary Restraining Order to preserve the status quo or prevent
irreparable harm, any dispute or controversy between Tekelec and Former Employee under this
Agreement involving its interpretation or the obligations of a party hereto shall be determined by
binding arbitration in accordance with the commercial arbitration rules of the American Arbitration
Association, in the County of Wake, State of North Carolina.

     Arbitration may be conducted by one impartial arbitrator by mutual agreement. In the event
that the parties are unable to agree on a single arbitrator within 30 days of first demand for
arbitration, the arbitration shall proceed before a panel of three arbitrators, one of whom shall
be selected by Tekelec and one of whom shall be selected by Former Employee, and the third of whom
shall be selected by the two arbitrators selected. All arbitrators are to be selected from a panel
provided by the American Arbitration Association. The arbitrators shall have the authority to
permit discovery, to the extent deemed appropriate by the arbitrators, upon request of a party.
The arbitrators shall have no power or authority to add to or, except as otherwise provided by
Section 16.6 hereof, to detract from the agreements of the parties, and the prevailing party shall
recover costs and attorneys’ fees incurred in arbitration. The arbitrators shall have the
authority to grant

 

 

injunctive relief in a form substantially similar to that which would otherwise be granted by
a court of law. The arbitrators shall have no authority to award punitive or consequential
damages. The resulting arbitration award may be enforced, or injunctive relief may be sought, in
any court of competent jurisdiction. Any action arising out of or relating to this Agreement may
be filed only in the Superior Court of the County of Wake, North Carolina or the United States
District Court for the Eastern District of North Carolina.

     16.11. North Carolina Law and Location. This Agreement was negotiated, executed and
delivered within the State of North Carolina, and the rights and obligations of the parties hereto
shall be construed and enforced in accordance with and governed by the internal (and not the
conflict of laws) laws of the State of North Carolina applicable to the construction and
enforcement of contracts between parties resident in North Carolina which are entered into and
fully performed in North Carolina. Any action or proceeding arising out of, relating to or
concerning this Agreement that is not subject to the arbitration provisions set forth in Section
16.10 above shall be filed in the state courts of the County of Wake, State of North Carolina or in
a United States District Court for the Eastern District of North Carolina and in no other location.
The parties hereby waive the right to object to such location on the basis of venue.

     16.12. Attorneys’ Fees. In the event a lawsuit is instituted by either party
concerning a dispute under this Agreement, the prevailing party in such lawsuit shall be entitled
to recover from the losing party all reasonable attorneys’ fees, costs of suit and expenses
(including the reasonable fees, costs and expenses of appeals), in addition to whatever damages or
other relief the injured party is otherwise entitled to under law or equity in connection with such
dispute.

     16.13. Force Majeure. Neither Tekelec nor Former Employee shall be deemed in default
if its/his performance of obligations hereunder is delayed or become impossible or impracticable by
reason of any act of God, war, fire, earthquake, strike, civil commotion, epidemic, or any other
cause beyond such party’s reasonable control.

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

     16.15. Successors and Assigns. Neither party may assign this Agreement or any of its
rights or obligations hereunder (including, without limitation, rights and duties of performance)
to any third party or entity, and this Agreement may not be involuntarily assigned or assigned by
operation of law, without the prior written consent of the non-assigning party, which consent may
be given or withheld by such non-assigning party in the sole exercise of its discretion, except
that Tekelec may assign this Agreement to a corporation acquiring: (1) 50% or more of Tekelec’s
capital stock in a merger or acquisition; or (2) all or substantially all of the assets of Tekelec
in a single transaction; and except that Former Employee may transfer or assign his rights under
this Agreement voluntarily, involuntarily or by operation of law upon or as a result of his death
to his heirs, estate and/or personal representative(s). Any prohibited assignment shall be null
and void, and any attempted assignment of this Agreement in violation of this section shall
constitute a material breach of this Agreement and cause for its termination by and at the election
of the other party hereto by notice.

 

 

This Agreement shall be binding upon and inure to the benefit of each of the parties hereto
and each person or entity released pursuant to Section 12 hereof and, except as otherwise provided
herein, their respective legal successors and permitted assigns.

     16.16. Payment Procedure. Except as otherwise explicitly provided herein or in the
Severance Plan, all payments by Tekelec to Former Employee or by Former Employee to Tekelec due
hereunder may be by, at the paying party’s election, cash, wire transfer or check. Except as
explicitly provided herein or in the Severance Plan, neither party may reduce any payment or
obligation due hereunder by any amount owed or believed owed to the other party under any other
agreement, whether oral or written, now in effect or hereafter entered into.

     16.17. Survival. The definitions, representations and warranties herein as well as
obligations set forth in Sections 7, 8 and 10-16 shall survive any termination of this Agreement
for any reason whatsoever.

     16.18. No Admission. Neither the entry into this Agreement nor the giving of
consideration hereunder shall constitute an admission of any wrongdoing by Tekelec or Former
Employee.

     16.19. Limitation of Damages. Except as expressly set forth herein, in any action or
proceeding arising out of, relating to or concerning this Agreement, including any claim of breach
of contract, liability shall be limited to compensatory damages proximately caused by the breach
and neither party shall, under any circumstances, be liable to the other party for consequential,
incidental, indirect or special damages, including but not limited to lost profits or income, even
if such party has been apprised of the likelihood of such damages occurring.

     16.20. Pronouns. As used herein, the words “he”, “him”, “his” and “himself” shall be
deemed to refer to the feminine as the identity of the person referred to and the context may
require.

     16.21. Effectiveness. This Agreement shall become effective upon execution by the
later of the parties hereto to execute this Agreement.

17. 21 DAY REVIEW PERIOD; RIGHT TO REVOKE

     Former Employee acknowledges that he was advised in writing to consult with an attorney prior
to executing this Agreement and represents and warrants to Tekelec that he has done so, and further
acknowledges that he has been given a period of 21 days within which to consider the terms and
provisions of this Agreement with his attorney. If Former Employee has executed and delivered to
Tekelec this Agreement prior to the expiration of such 21-day period, then in doing so, Former
Employee acknowledges that he has unconditionally and irrevocably waived his right to that
unexpired portion of such 21-day period. In addition, Former Employee shall have the right to
revoke this Agreement for a period of seven days following the date on which this Agreement is
signed by sending written notification of such revocation directly to each of Tekelec, General
Counsel of Tekelec and Katherine Ashton at the addresses specified in Section 16.1, supra, via hand
delivery.

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	TEKELEC	 	 	 	 	 	[Insert Former Employee’s Name]	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 
	 	 	 	 	 	 	 	Signature:
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	Print Name:	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Print Title:	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Date:	 	 	, 20___	 	 	 	Date:	 	 	, 20____	 	 
	 

	 	 	 	 

	 	 	 	 	 	 	 	 

	 	 	 	 

 

 

EXHIBIT A

OUTSTANDING STOCK PURCHASE RIGHTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Maximum	 	 	 	 
	 	 	 	 	Number of	 	 	 	 
	 	 	 	 	Shares	 	 	 	 
	Type of Security	 	 	 	Currently	 	 	 	 
	[e.g., stock option, SAR, RSU	 	 	 	Purchasable or	 	Purchase Price	 	Termination
	warrant, etc.]	 	Date Issued	 	Issuable	 	Per Share	 	Date
	 
	 	 	 	 	 	 	 	 

 

 

EXHIBIT B

LIST OF OTHER AGREEMENTS (Pursuant to §§12 and 13)

 

 

EXHIBIT C

EXCEPTIONS (Pursuant to §15)

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