Document:

exv10w3

Exhibit 10.3

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 Frank Plastina (“Former Employee”), and shall become
effective on the date on which it is executed by both parties hereto and after expiration of the
revocation period in Section 18 (the “Effective Date”).

RECITALS

     A. Former Employee ceased to be an employee and officer of Tekelec on January 4, 2011 (the
“Termination Date”).

     B. Former Employee desires to receive severance benefits under the Tekelec 2007 Officer
Severance Plan (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 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.

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4. BENEFITS

     4.1. Health Care Coverage Continuation. Tekelec (at its expense) will continue, for
the duration of the Former Employee’s General 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 family members become
eligible for group health care coverage elsewhere on terms generally no less favorable to the
Former Employee during the General 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 General 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 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 General Severance Period will be the sole
responsibility of the Former Employee. In the event of Former Employee’s death during the General
Severance Period, the above-referenced continuation of health care coverage will continue for
Former Employee’s qualified beneficiaries in accordance with the terms of the applicable plans for
the duration of the General Severance Period.

     4.2. 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 appreciation rights, restricted
stock unit grants, 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 appreciation rights, restricted stock unit grants, 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.

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     6.2. General 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, in the
aggregate gross amount of $2,508,000 payable in 24 equal monthly installments of $104,500 each,
less all applicable withholding taxes, with such installments to commence on the first regular
payroll date after the Effective Date; provided, however, that in all cases, such monthly payments
shall commence within sixty (60) days following Former Employee’s separation from service with
Tekelec, and further provided that if the sixty (60) day period begins in one taxable year for the
Former Employee and ends in the subsequent taxable year for the Former Employee, then the monthly
payments shall not commence until the subsequent taxable year pursuant to the guidance provided in
IRS Notice 2010-80. For purposes of Code Section 409A, as applicable, each installment payment
shall be considered a separate payment.

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;

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     (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 or Board, 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,

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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.

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     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,

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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 13 shall affect any rights, claims or causes of action which Former
Employee may have (1) with respect to his outstanding stock appreciation rights, restricted stock
unit grants, 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; (5) to make claims
against or seek indemnification or contribution from anyone not released by the first sentence of
this Section 13 with respect to any matter or anyone released by the first sentence of this Section
13 with respect to any matter not released thereby;

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(6) with respect to Tekelec’s performance of this Agreement; or (7) with respect to claims for
(a) workers’ compensation benefits or unemployment benefits filed with the applicable state
agencies, (b) vested retirement benefits or (c) claims described in Sections 13.3 and 13.4 below.
Further, Former Employee waives specifically any and all rights or claims Former Employee has or
may have under the ADEA, 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; provided, however, this Section 13.3 shall not bar a challenge under the OWBPA to the
enforceability of the waiver and release of ADEA claims set forth in this Agreement or claims for
workers’ compensation, unemployment benefits or vested retirement benefits referenced above.
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.

     13.4 Agency Changes/Investigations. Nothing in this Agreement shall prohibit Former
Employee from filing a charge or participating in an investigation or proceeding conducted by the
U.S. Equal Employment Opportunity Commission or other governmental agency with jurisdiction
concerning the terms, conditions and privileges of his employment; provided, however, that by
signing this Agreement, Former Employee waives his right to, and shall not seek or accept, any
monetary or other relief of any nature whatsoever in connection with any such changes,
investigations or proceedings.

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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. PROPERTY

Tekelec agrees that Former Employee may keep his Tekelec-issued iPad, BlackBerry, and Nokia mobile
phone, after securing and removal of Company information by the IT department.

17. MISCELLANEOUS

     17.1. 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: General Counsel
	 
	 	 	 	 
	(b)
	 	If to Former Employee:	 	Frank Plastina
	 
	 	 	 	306 Pond Bluff Way
	 
	 	 	 	Cary, NC  27513

     17.2. 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

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relied upon the legal or other advice of the other party or such other party’s counsel (or
employees) in entering into this Agreement.

     17.3. 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.

     17.4. 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.

     17.5. 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.

     17.6. 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.

     17.7. 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.

     17.8. 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.

11

 

     17.9. 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.

     17.10. 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
17.6 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.

     17.11. 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.

     17.12. 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.

12

 

     17.13. 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.

     17.14. 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.

     17.15. 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, provided that, in either case, the acquiring corporation must be
reasonably capable of fulfilling the remaining Tekelec obligations hereunder; 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.

     17.16. 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.

     17.17. Survival. The definitions, representations and warranties herein as well as
obligations set forth in Sections 7, 8 and 10-17 shall survive any termination of this Agreement
for any reason whatsoever.

     17.18. 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.

     17.19. 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

13

 

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.

     17.20. 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.

     17.21. Effectiveness. This Agreement shall become effective upon execution by both
parties hereto and after expiration of the revocation period in Section 18.

18. 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 the General Counsel of
Tekelec at the addresses specified in Section 17.1, supra, via hand delivery. This Agreement shall
not become effective or enforceable until the revocation period has expired.

19. CODE SECTION 409A COMPLIANCE

     If the Company determines, in accordance with Code Sections 409A and 416(i) and the
regulations promulgated thereunder, in the Company’s sole discretion, that Employee is a Specified
Employee on the Termination Date and that a delay in severance pay and benefits provided under this
Agreement is necessary for compliance with Code Section 409A(a)(2)(B)(i), then:

     (a) The General Severance Allowance and any continuation of benefits or reimbursement of
benefit costs provided under this Agreement and not otherwise exempt from Code Section 409A shall
be delayed for a period of six (6) months (the “409A Delay Period”). In such event, the General
Severance Allowance and the cost of any such continuation of benefits provided under this Agreement
that would otherwise be due and payable to Employee during the 409A Delay Period shall be paid to
Employee in a lump sum cash amount, with interest accruing at a reasonable rate from the
Termination Date, on the first day of the seventh month immediately following the Termination Date.

     (b) To the extent that it will not cause adverse tax consequences under Code Section 409A, the
amount of the General Severance Allowance up to two times the lesser of (i) the sum of Employee’s
annualized compensation based upon his annual rate of pay for services provided

14

 

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 Employee’s
termination of employment occurs, may be paid without regard to the six-month delay.

15

 

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	TEKELEC	 	 	Frank Plastina	 
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Stuart Kupinsky
	 	 	Signature:
	 	/s/ Frank Plastina	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Print Name: Stuart Kupinsky	 	 	 	 	 	 
	 

	 	Print Title: General Counsel	 	 	 	 	 	 
	 	 	Date: January 25, 2011	 	 	Date: January 25, 2011	 

 

 

EXHIBIT A

OUTSTANDING STOCK PURCHASE RIGHTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Type of Security	 	 	 	 	 	Maximum Number of	 	 	 	 	 	 	 
	[e.g., stock	 	 	 	 	 	Shares Currently	 	 	 	 	 	 	 
	option, SAR, RSU	 	 	 	 	 	Purchasable or	 	 	Purchase Price Per	 	 	 	 
	warrant, etc.]	 	Date Issued	 	 	Issuable	 	 	Share	 	 	Termination Date	 
	Grant A010122 - 2003/SARs
	 	 	5/16/08	 	 	 	85,000	 	 	$	16.42	 	 	 	5/28/11	 
	Grant A010267 — 2003/SARs
	 	 	2/27/09	 	 	 	14,250	 	 	$	12.26	 	 	 	5/28/11	 
	Grant U013988 — 2004/SARs
	 	 	8/9/06	 	 	 	437,500	 	 	$	11.96	 	 	 	5/28/11	 

Future shares vesting in the month of February, 2011

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Type of Security	 	 	 	 	 	Maximum Number of	 	 	 	 	 	 	 
	[e.g., stock	 	 	 	 	 	Shares Currently	 	 	 	 	 	 	 
	option, SAR, RSU	 	 	 	 	 	Purchasable or	 	 	Purchase Price Per	 	 	Vest Date &	 
	warrant, etc.]	 	Date Issued	 	 	Issuable	 	 	Share	 	 	Termination Date	 
	Grant A010220 — 2003/RSUs
	 	 	2/27/09	 	 	 	7,500	 	 	 	—	 	 	 	2/27/11	 
	Grant A010289 — 2003/PSUs
	 	 	5/16/08	 	 	 	16,299	 	 	 	—	 	 	 	2/25/11	 
	Grant A010663 — 2003/RSU
	 	 	2/26/10	 	 	 	6,500	 	 	 	—	 	 	 	2/26/11	 
	Grant A010267 — 2003/SARs
Term date 5/2811
	 	 	2/27/09	 	 	 	14,250	 	 	$	12.26	 	 	 	2/27/11 &	 
	Grant A010360 — 2003/SARs
Term date 5/28/11
	 	 	2/26/10	 	 	 	19,250	 	 	$	16.52	 	 	 	2/26/11 &	 

 

 

EXHIBIT B

LIST OF OTHER AGREEMENTS (Pursuant to §12)

 

 

EXHIBIT C

EXCEPTIONS (Pursuant to §15)

Noneexv10w7

Exhibit 10.7

2011 Executive Officer Bonus Plan

     The Tekelec 2011 Executive Officer Bonus Plan (the “Bonus Plan”) as approved by the Board of
Directors of Tekelec (the “Company”) on February 25, 2011, is described below:

     Under the terms of the Bonus Plan, each executive officer of the Company named as an eligible
officer in the table set forth below (or hereafter designated by the Board as an eligible officer)
is eligible to receive cash bonuses for 2011 based upon a specified percentage of his or her annual
base salary. Specifically, each eligible officer is entitled to receive a bonus based on the degree
to which the Company achieves for the full year 2011 certain pre-set financial targets consisting
of: (i) a consolidated operating income from continuing operations before bonus (as adjusted to
exclude the effects of equity incentive compensation expense, restructuring charges, impairment
charges, acquisition-related amortization and other mergers and acquisitions-related charges or
income, and similar charges or income) target (the “Operating Income Target”) and (ii) an orders
target (the “Orders Target”).

     All payouts under the Bonus Plan are contingent upon the Company performing at or above the
Operating Income Target and, independently, meeting or exceeding 100% of the Orders Target. Once
the Company has met the Operating Income Target, a bonus pool (the “Bonus Pool”) will be created
for the Company’s executive officers and employees based on the sum of the following (all operating
income amounts are adjusted as described above):

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

     Provided that the Orders Target is at least 100% achieved, the calculated bonus will be based
on a pro rata share of the Bonus Pool that is created as described above. Each eligible officer
will only achieve 100% of his or her individual payout if the Bonus Pool is fully funded at 100%
and the Company achieves 100% of the Orders Target. The specific amounts of the bonuses will be
computed in accordance with the formulas described herein.

     Any bonuses earned under the Bonus Plan will be payable in one lump sum within 30 days after
the Company’s consolidated financial results for the year ending December 31, 2011 have been filed
with the Securities and Exchange Commission (the “Commission”). An eligible officer is entitled to
receive bonuses under the Bonus Plan only if he or she is actively employed by Tekelec or one of
its subsidiaries as an eligible officer on the date on which the bonuses are paid, unless the Board
waives this requirement. If an executive officer commences his or her employment as an eligible
officer during the Bonus Plan year, any bonus payable for achievement will be subject to a pro rata
adjustment. An Eligible Officer who is on an approved leave of absence from the Company at any
time during 2011 will, for purposes of determining eligibility under the 2011 Bonus Plan, be
treated as being employed by the Company during such leave of absence provided, however, that an
Eligible Officer who is on an approved leave of absence from the Company on the date on which the
2011 Bonus is paid by the Company and thereafter returns to active status as an Eligible Officer
upon the end of such leave of absence, will be paid his/her Company Bonus to which he/she is
otherwise entitled within 30 days following his/her return to active status as an Eligible Officer.
An Eligible Officer who is on an approved leave of absence from the Company on the date on which
the 2011 Bonus is paid by the Company and thereafter fails to return to active status as an
Eligible Officer upon the end of such leave of absence, will not be eligible to receive a 2011
Bonus.

     The following table sets out the target full year bonus opportunities under the Bonus Plan for
Tekelec’s executive officers who are eligible to participate in the Bonus Plan.

 

 

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

     The target annual bonuses payable under the Bonus Plan to the eligible officers are equal to
their 2011 bonus opportunities as set forth above multiplied by their 2011 annual base salaries and
are based on the Company’s achievement of 100% funding of the Bonus Pool and provided that the
Orders Target is at least 100% achieved. The Company may also award discretionary bonuses to
eligible officers for 2011.

     The Board may amend, modify, or terminate the Bonus Plan, or any payment owed under the Bonus
Plan, at any time without prior notice to participants; provided, however, that neither the Bonus
Plan nor any payments owed under the Bonus Plan may be amended, modified, or terminated after the
Company files with the Commission its financial statements covering the year ending December 31,
2011.

     If the Company is required to prepare an accounting restatement due to the Company’s material
noncompliance with any financial reporting requirement under the securities laws, the Bonus Plan
requires an officer to repay the excess amount of any bonus that the officer received above what
should have been paid.

2

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