8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 21, 2006

TEKELEC

(Exact name of registrant as specified in its charter)

California	0-15135	95-2746131
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5200 Paramount Parkway, Morrisville, North Carolina	27560
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (919) 460-5500

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

o Written Communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

Item 1.01 Entry into a Material Definitive Agreement	1
Item 2.05 Costs Associated with Exit or Disposal Activities	2
Item 8.01 Other Events	3
Item 9.01 Financial Statements and Exhibits	4
Exhibit 10.1
Exhibit 10.2

(i)

Item 1.01 Entry into a Material Definitive Agreement

     Employment Separation Agreement with Lori Craven

          On June 22, 2006, Tekelec (the “Company”) and Lori Craven, Executive Vice President, Global Sales and Marketing of the Company, entered into an Employment Separation Agreement (the “Agreement”) under the Company’s Officer Severance Plan, as amended (the “Severance Plan”), in connection with Ms. Craven’s resignation as an executive officer and employee of the Company, effective June 30, 2006 (the “Termination Date”).

          Pursuant to the Agreement, the Company has agreed to pay to Ms. Craven a severance allowance equal to $648,000 plus the aggregate amount of any bonus payments for services rendered during the first six months of 2006, the amount of which is not yet determinable. Under the terms of the Agreement, 50% of the severance allowance will be paid in January 2007, and the remaining 50% will be paid in six equal monthly installments commencing in February 2007. The Company will also continue, at its expense and for a period of 18 months after the Termination Date, health benefits coverage for Ms. Craven and her family members.

          In exchange for the benefits under the Agreement, Ms. Craven has agreed to certain covenants prohibiting (i) competition and solicitation of customers and employees during the period from the Termination Date until July 3, 2007 and (ii) non-disparagement during the two-year period following the Termination Date. Ms. Craven has also agreed to provide the Company with customary releases and acknowledgements.

          By law, Ms. Craven has the right to revoke the Agreement within seven days after signing the Agreement, and the Agreement does not become binding until that time has elapsed.

          The Severance Plan under which Ms. Craven’s severance benefits are paid is described under the heading “Employment Agreements and Termination of Employment and Change-in-Control Arrangements” in Item 11 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2005 (the “2005 Form 10-K”), as filed with the Securities and Exchange Commission (the “Commission”). The Severance Plan is filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31, 1987, and amendments to the Severance Plan are filed as exhibits to the Company’s Annual Reports on Form 10-K for the years ended December 31, 1998 and December 31, 1999.

          The foregoing description of the Agreement is qualified in its entirety by reference to the Employment Separation Agreement which is filed as Exhibit 10.1 to this Current Report on Form 8-K.

     Amended and Restated Tekelec 2005 Employee Stock Purchase Plan

          The Tekelec 2005 Employee Stock Purchase Plan (the “Original Plan”) was adopted and approved by the Board of Directors of the Company in April 2005 and by the Company’s shareholders in May 2005. On June 26, 2006, the Company’s Board of Directors amended and restated the Tekelec 2005 Employee Stock Purchase Plan (as so amended and restated, the

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“Amended and Restated Plan”). The Amended and Restated Plan, like the Original Plan, is designed to provide the Company’s employees with an opportunity to purchase, on a periodic basis and at a discount, shares of the Company’s Common Stock through payroll deductions.

          The Original Plan was implemented in a series of consecutive, overlapping 24-month offering periods, with each offering period consisting of four six-month purchase periods. The Original Plan provided for the 24-month offering periods to begin on the first trading day on or after August 1 and February 1 of each year. The Amended and Restated Plan eliminates the 24-month offering periods and instead provides for consecutive six-month offering periods commencing on the first trading day on or after August 1 and February 1 of each year, with the first such period commencing on August 1, 2006. The Amended and Restated Plan also provides for the offering period that commenced on February 1, 2006 to terminate on July 31, 2006.

          During each six-month offering period under the Amended and Restated Plan, participants accumulate payroll deductions which on the last trading day of the offering period are applied toward the purchase of shares of the Company’s Common Stock at a purchase price equal to 85% of the lower of (i) the fair market value of a share of the Company’s Common Stock as of the first trading day of the six-month offering period and (ii) the fair market value of a share of Common Stock on the last trading day of the six-month purchase period.

          The Original Plan provided that participants could not sell or otherwise dispose of the shares of the Company’s Common Stock purchased thereunder for a period of 90 days following the purchase date. The Amended and Restated Plan reduces the 90-day holding period to 30 days.

          The Original Plan provided that if the fair market value of the Company’s Common Stock on the last trading day of a six-month purchase period within a 24-month offering period was lower than the fair market value of the Company’s Common Stock on the first trading day of the 24-month offering period, then all participants in the 24-month offering period would automatically be withdrawn from the offering period and re-enrolled in the immediately following 24-month offering period. Because the Amended and Restated Plan reduces offering periods from 24 to six months, the automatic re-enrollment feature has been eliminated.

          The foregoing description of the Amended and Restated Plan is qualified in its entirety by reference to the Amended and Restated Plan which is filed as Exhibit 10.2 to this Current Report on Form 8-K.

Item 2.05 Costs Associated with Exit or Disposal Activities

          On June 21, 2006, Tekelec committed to a restructuring plan as part of its ongoing efforts to align its cost structure with its business opportunities in certain business units and operating groups. The restructuring plan involves the termination prior to July 1, 2006 of approximately 60 employees across the Company’s business units, customer service organization and operations group. The majority of the terminated employees worked directly for or in support of the Company’s Switching Solutions Group in Plano, Texas.

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          The Company estimates that it will record pre-tax restructuring changes in the quarter ending June 30, 2006 of approximately $3.4 million related to employee severance arrangements entered into in connection with the restructuring plan. All of such severance payments are expected to be paid within a one-year period commencing in the third quarter of 2006. As a result of the restructuring plan, the Company currently estimates that it will reduce ongoing operating costs annually by approximately $8.0 million to $8.5 million.

Item 8.01 Other Events

     Filing of Amendments on Form 10-Q/A to 2005 Quarterly Reports on Form 10-Q

          The Company filed with the Commission on June 26, 2006 an Amendment No. 1 on Form 10-Q/A to each of the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2005, June 30, 2005 and September 30, 2005 (collectively, the “Forms 10-Q/A”). The Forms 10-Q/A were filed as part of and to complete the restatement of the Company’s previously issued financial statements for (i) the year ended December 31, 2003, (ii) the year ended December 31, 2004 and each of the quarters and year-to-date periods therein, and (iii) the nine months ended September 30, 2005 and each of the quarters and year-to-date periods therein. The Company previously filed with the Commission on May 30, 2006 its 2005 Form 10-K, which included restated consolidated financial statements for the years ended December 31, 2004 and 2003 and restated unaudited quarterly financial information for each of the quarters in the nine months ended September 30, 2005 and in the year ended December 31, 2004.

     Quarterly Report on Form 10-Q for Quarter Ended March 31, 2006

          The Company is continuing to work expeditiously to file with the Commission its Quarterly Report on Form 10-Q for the quarter ended March 31, 2006 (the “First Quarter 2006 Form 10-K”) and currently anticipates making the filing with the Commission on July 12, 2006. The anticipated filing date constitutes the Company’s best estimate as of the date of this filing as to when it will be able to file the First Quarter 2006 Form 10-Q with the Commission.

FORWARD-LOOKING STATEMENTS

          Certain statements made in this Current Report on Form 8-K are forward looking, reflect the Company’s current intent, belief or expectations and involve certain risks and uncertainties. The Company’s actual future performance may not meet the Company’s expectations. As discussed in the Company’s 2005 Form 10-K and other filings with the Commission, the Company’s future operating results are difficult to predict and subject to significant fluctuations. Factors that may cause future results to differ materially from the Company’s current expectations, in addition to those identified in its 2005 Form 10-K and other Commission filings, include, among others, the impact on future operating results of changes in revenue recognition described in the 2005 Form 10-K and in prior reports filed with the Commission; the Company’s failure to achieve the anticipated operating cost savings from the June 2006 restructuring plan; uncertainties as to the effects of the restructuring plan; the need for additional restructuring activities; the Company’s failure to timely file with the Commission its First Quarter 2006 Form 10-Q and the resulting default by the Company with respect to its outstanding 2.25% Senior Subordinated Convertible Notes due 2008; and the Company’s failure to comply with the Nasdaq’s listing requirements as a result of the Company’s failure to timely file with the Commission its First Quarter 2006 Form 10-Q. The Company undertakes no obligation to publicly

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update any forward-looking statements whether as a result of new information, future events or otherwise.

Item 9.01 Financial Statements and Exhibits

     (d) Exhibits

          The following exhibits are filed as a part of this Current Report on Form 8-K:

Exhibit No.	Description
10.1	Employment Separation Agreement dated as of June 22, 2006 between the Registrant and Lori Craven
10.2	Amended and Restated Tekelec 2005 Employee Stock Purchase Plan

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Tekelec
Dated: June 26, 2006	By:	/s/ Franco Plastina
		Franco Plastina
		President and Chief Executive Officer

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Employment Separation Agreement dated as of June 22, 2006 between the Registrant and Lori Craven
10.2	Amended and Restated Tekelec 2005 Employee Stock Purchase Plan

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EX-10.1

EXHIBIT 10.1

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 LORI CRAVEN (“Former Employee”), and shall become effective on the Termination Date defined in Recital paragraph A below. (the “Effective Date”).

RECITALS

     A. Former Employee ceased or will cease to be an employee and officer of Tekelec as of the close of business on June 30, 2006 (the “Termination Date”). Former Employee will utilize her accrued paid time off commencing June 1, 2006 through the Termination Date. Except as provided in Section 11 of this Agreement, after June 30, 2006, Former Employee will not be required to provide any services as an employee, independent contractor or other service provider for Tekelec or any related person or entity that along with Tekelec would be considered a single employer under Section 414(b) or (c) of the Internal Revenue Code of 1986, as amended.

     B. Former Employee desires to receive severance benefits under Tekelec’s Officer Severance Plan dated May 14, 1993 (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 date on which the last installment of the Severance Allowance is due and payable pursuant to Section 6.2 of this Agreement.

     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/herself only) to the other party hereto that, to its/her respective best knowledge and belief as of the date of each party’s respective signature below:

     2.1 Full Power and Authority. It/she has full power and authority to execute, enter into and perform its/her 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/her in accordance with its terms; it/she will not act or omit to act in any way which would materially interfere with or prohibit the performance of any of its/her 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/she is a party (including, in the case of Tekelec, its bylaws and articles of incorporation each as amended to date) or to which it/she 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.

     2.3 Representations and Warranties of Tekelec Only. Tekelec represents and warrants that Former Employee is a “specified employee” within the meaning of Code Section 409A(a)(2)(B)(i)

3. CONFIDENTIALITY OBLIGATIONS DO NOT TERMINATE

     Former Employee acknowledges that any confidentiality, proprietary rights or nondisclosure agreement(s) in favor of Tekelec which she may have entered into in connection with her 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

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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 Life Insurance Continuation. In lieu of Tekelec’s continuation of Former Employee’s life insurance benefits after the Termination Date, the Severance Allowance described in Section 6.2 below has been increased by the amount of $1800.00. Any conversion or continuation of life insurance after the Termination Date shall be at Former Employee’s sole expense in accordance with the terms of applicable life insurance policy.

     4.2 Health Care Insurance Continuation. Tekelec (at its expense) will continue, for a period of 18 months following the Termination Date, health care coverage including medical, dental and vision coverage for Former Employee and her family members so long as they are “qualified beneficiaries” (as such term is defined in the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”)) entitled to COBRA continuation coverage, such coverage to be provided under Tekelec’s group health plan(s) generally available during such period to employees participating in such plan(s) and at levels and with coverage no greater than those provided to such Former Employee as of the Termination Date. Thereafter, Former Employee (at her expense) may elect coverage under a conversion health plan available under Tekelec’s group health plan(s) from Tekelec’s health insurance carrier if and to the extent she is entitled to do so as a matter of right under federal or state law.

     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 her participation in any Tekelec benefit plan following such employee’s termination.

5. STOCK OPTIONS

     5.1 Outstanding Stock Options. Exhibit A hereto sets forth any and all outstanding stock options, warrants and other rights to purchase capital stock or other securities of Tekelec which have been previously issued to Former Employee and which are outstanding and vested as of the date hereof. Except as specifically set forth in Section 5.2 below, nothing in this Agreement shall alter or affect any of such outstanding stock options, warrants 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 her options, warrants or rights following the Termination Date.

     5.2 Extension of Exercise Period. The parties acknowledge that in connection with the filing of Tekelec’s Current Report on Form 8-K in February 2006, wherein Tekelec announced that it would restate previously issued financial statements, Tekelec is prohibited by applicable securities laws from issuing any shares of its common stock (hereinafter referred to as the “restriction”) and accordingly, Former Employee is unable to exercise any of her stock options until Tekelec becomes current in its financial reporting and the restriction lapses. In consideration for Former Employee’s release of claims set forth herein, and her continuing performance of her obligations under the Employment Separation Agreement (including but not

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limited to Former Employee’s obligations under Sections 7 , 8, 10 and 11 thereof), Tekelec agrees to extend the exercise period with respect to Former Employee’s nonstatutory stock options (“NSOs”) totaling 323,752 shares as set forth on Exhibit A, for a limited period following the lapse of the restriction to the extent indicated in footnotes 2 through 5 therein. Upon the termination dates as specified therein, said options to the extent not exercised shall terminate and expire for all purposes.

     5.3 No Guarantees of Exercisability or Value; No Other Changes. Tekelec has not extended the term of the Incentive Stock Option granted to Former Employee on January 18, 2002 for 20,000 shares (the “ISO”), has not promised Former Employee that the restriction will lapse prior to the termination of the ISO, and Former Employee understands that there can be no assurance that Former Employee will have the opportunity to exercise the ISO. Former Employee further acknowledges that Tekelec has not guaranteed the value of any of Former Employee’s nonstatutory stock options. Except as specifically set forth in Section 5.2 above and Exhibit A, the time period through which Former Employee may exercise her vested stock options shall expire in accordance with the terms of the stock option plans under which Former Employee’s options were granted.

6. PAYMENTS TO FORMER EMPLOYEE

     6.1 Employee Compensation. Tekelec has paid or shall pay in 2006 within the time period required by law, 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 severance payments owed to her under the terms of this Agreement and certain bonuses as described in this Section 6.1(b)

          (a) Former Employee’s quarterly bonus due for the fourth quarter of 2005 (Q405) in the amount of $12,852.00, and her MBO 2005 bonus due in the amount of $58,527.00 shall be paid at the same time as such bonuses are paid to other similarly situated executive officers of Tekelec but in no event later than the Termination Date.

          (b) The parties acknowledge that any bonuses due to Former Employee for the first quarter of 2006 (“Q106”) and the second quarter of 2006 (“Q206”) may not have been calculated and/or paid as of the Termination Date. Tekelec agrees to pay Former Employee any bonus due for Q106 and Q206 under the 2006 Executive Officer Bonus Plan when such bonuses are calculated and paid to similarly situated executive officers of Tekelec, but in any case on or before December 31, 2006, and further agrees to waive the requirement that Former Employee must be in active status on the bonus payment date(s) to receive her bonuses for Q106 and Q206 Former Employee understands that Tekelec has not promised that any bonus will be payable under the terms of the Executive Officer Bonus Plan for such periods.

     6.2 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 her obligations under this Agreement

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     (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 Severance Allowance in the aggregate gross amount of $648,033.00 (the “Severance Allowance”), less all applicable withholding taxes. Such Severance Allowance shall be paid by direct deposit into Former Employee’s bank account on file with Tekelec according to the following schedule: Fifty percent (50%) of the Severance Allowance ($324, 016.50, less all applicable withholdings and deductions) shall be due and payable on January 3, 2007, and the remainder of the Severance Allowance shall be due and payable in six (6) equal monthly installments of $54,002.75 (less all applicable withholdings and deductions), on February 2, 2007, March 2, 2007, April 3, 2007, May 2, 2007, June 4, 2007, and a final payment on July 3, 2007. The parties specifically acknowledge and agree that Former Employee has requested and Tekelec has agreed to accumulate and defer all installment payments of the Severance Allowance that would otherwise be due during the first six (6) months following the Termination Date in order to comply with Section 409A of the Internal Revenue Code

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 her 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, China, India, the Russian Federation 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, she 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 her possession or known to her at all times so that they are not exposed to, or taken by, unauthorized persons and to exercise her 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 her prior service as an officer and employee of Tekelec, she 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 hers personally, and that she 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 she 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 her to Tekelec in the course of her prior employment were of a special and unique character, and that breach by her 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 her or on her 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. In response to any inquiries from prospective employers of Former Employee, Tekelec will confirm dates of employment, positions held, and that Former Employee resigned together with a statement that Tekelec’s policies prevent Tekelec from providing additional information and that no negative inferences should be drawn from Tekelec’s failure to do so.

     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 her 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 she 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 herself 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 her monthly severance compensation under Section 6.2 hereof for each full or partial day during which Former Employee makes herself so available which shall be paid with reasonable promptness following Tekelec’s receipt of an invoice from Former Employee) in any action as reasonably requested by

8

the CEO or the Board of Directors. Former Employee further agrees to immediately notify Tekelec’s CEO in writing in the event that she receives any legal process or other communication purporting to require or request her to produce testimony, documents, information or things in any manner related to Tekelec, its directors, officers or employees, and that she 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, she will make herself 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 her possession or under her control which in any manner concern or relate to Tekelec. Former Employee covenants and agrees that she will immediately notify Tekelec’s CEO in writing in the event that she breaches any of the provisions of Sections 7, 8, 10 or 11 hereof.

12. SOLE ENTITLEMENT

     Former Employee acknowledges and agrees that her sole entitlement to compensation, payments of any kind, monetary and nonmonetary benefits and perquisites with respect to her prior Tekelec relationship (as an officer and employee) is as set forth in this Agreement, Tekelec’s bonus plan for officers as in effect from time to time, stock option and warrant agreements, COBRA, Tekelec Indemnification Agreement dated April 8, 2005 by and between Tekelec and Former Employee, 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 her 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,

9

employee and agent of Tekelec; (4) with respect to 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 she is aware that she may hereafter discover claims or facts different from or in addition to those she now knows or believes to be true with respect to the matters herein released, and she 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 she 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 she has or may have under said Section or any other comparable section under the laws of North Carolina or other state as applicable. Section 1542 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 her must have materially affected his settlement with the debtor.”

     13.3 Covenant Not to Sue on Matters Released. Former Employee covenants that she 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 she 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 she 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 she 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.

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15. FORMER EMPLOYEE REPRESENTATIONS

     Except as indicated on Exhibit C, from the period beginning on May 10, 2006 through the Effective Date , Former Employee represents and warrants that she 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:	Lynn K. Thompson, Esq.
		Bryan Cave LLP
		120 Broadway, Suite 300
		Santa Monica, CA 91204
(b)	If to Former Employee:	Lori A. Craven
		1244 Bayleaf Ch. Road
		Raleigh, NC 27614-9167
	With a copy to:	Hugh W. Davis II
		Poyner & Spruill LLP
		P.O. Box 10096
		Raleigh, NC 27605-0096

     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. Without limiting the generality of the foregoing, Former Employee acknowledges that she has been encouraged to obtain independent advice concerning the tax consequences of the severance benefits payable under this Agreement including Section 409A of the Internal Revenue Code, and that while both parties have cooperated in an effort to minimize any adverse tax consequences, Tekelec has not made any

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representations (other than as set forth in Section 2.3 above) regarding, nor indemnified Former Employee with respect to any tax liabilities that may be imposed on her.

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

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     16.9 Specific Performance. Each party hereto may obtain specific performance to enforce its/her rights hereunder and each party acknowledges that failure to fulfill its/her 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 National Rules for the Arbitration of Employment Disputes of the American Arbitration Association, in Wake County , State of North Carolina. Tekelec shall be responsible for paying the filing fee and tribunal costs associated with arbitration. The arbitrators shall have the authority to permit discovery, to the extent deemed appropriate by the arbitrator, upon request of a party. The arbitrator 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. Employee shall not be entitled to receive any reimbursement of costs and attorneys’ fees pursuant to this section if the parties agree that the reimbursement would be included in the Former Employee’s income pursuant to Section 409A(a)(1)(A) of the Code, or would result in the imposition of any additional tax or interest charge pursuant to Section 409A(a)(1)(B) of the Code).The arbitrator 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 arbitrator 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 Choice of Law and Venue. 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; provided, however, that Former Employee shall not be entitled to receive any reimbursement of costs, expenses and attorneys’ fees pursuant to this section if the parties agree that the

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reimbursement would be included in the Former Employee’s income pursuant to Section 409A(a)(1)(A) of the Code, or would result in the imposition of any additional tax or interest charge pursuant to Section 409A(a)(1)(B) of the Code.

     16.13 Force Majeure. Neither Tekelec nor Former Employee shall be deemed in default if its/her 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 her rights under this Agreement voluntarily, involuntarily or by operation of law upon or as a result of her death to her 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 through 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

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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 “she”, “her” and “herself” 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 she was advised in writing to consult with an attorney prior to executing this Agreement and represents and warrants to Tekelec that she has done so, and further acknowledges that she has been given a period of 21 days within which to consider the terms and provisions of this Agreement with her 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 she has unconditionally and irrevocably waived her 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 and Ronald W. Buckly at the addresses specified in Section 16.1, supra, via hand delivery.

18. 409A COMPLIANCE

     18.1 Severance Plan Superseded. The parties intend that this Agreement shall constitute an amendment and restatement of the Severance Plan’s provisions as they apply to Former Employee for the purpose of bringing the Severance Plan documentation into compliance with Code Section 409A, effective retroactively to January 1, 2005.

     18.2 Construction in Accordance with Code Section 409A. The parties agree that, pending the effective date of final regulations, this Agreement shall be administered in good faith in compliance with Section 409A of the Code, and applicable guidance thereunder, with respect to any amounts treated as compensation deferred after December 31, 2004. The parties intend that the terms of this Agreement be construed in a manner consistent with Code Section 409A and in a manner that will not result in amounts being included in the Former Employee’s income pursuant to Section 409A(a)(1)(A) of the Code, or that would result in the imposition of any additional tax or interest charge pursuant to Section 409A(a)(1)(B) of the Code.

     18.3 Tekelec and Former Employee agree to cooperate to the extent reasonably necessary (without unreasonable cost or burden to Tekelec) to prevent amounts payable hereunder from being included in Former Employee’s income pursuant to Section 409A(1)(A) of the Code or being subject to any additional tax or interest charge pursuant to Section 409A(a)(1)(B) of the Code, provided that there shall be no change in the value of Former

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Employee’s compensation or benefits or in Tekelec’s costs or administrative burdens in fulfilling its obligations under the applicable plan, agreement or arrangement.

TEKELEC		LORI CRAVEN
By:	/s/ Ronald W. Buckly	Signature:	/s/ Lori Craven
Name:	Ronald W. Buckly	Date Signed June  22, 2006
	Senior Vice President, Corporate
Title:	Affairs and General Counsel
Date Signed June  22, 2006

L. Craven

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EXHIBIT A

OUTSTANDING STOCK PURCHASE RIGHTS

		Maximum
		Number of
		Shares		Purchase
		Purchasable		Price		Termination
Plan/Type of Security	Date Issued	As of 7/01/061		Per Share		Date
1994/ISO	01/18/2002		20,000	$	19.2100	September 30, 2006
Ofcr/NSO	01/18/2002		180,000	$	19.210	Footnote2
1994/NSO	01/31/2003		37,500	$	8.540	Footnote3
1994/NSO	01/31/2003		23,439	$	8.540	Footnote 4
2003/NSO	03/05/2004		37,500	$	18.800	Footnote5
2003/NSO	03/05/2004		4,688	$	18.800	Footnote6
2003/NSO	04/02/2004		50,000	$	17.330	Footnote7
2003/NSO	04/02/2004		6,250	$	17.330	Footnote8

1	In connection with the filing of Tekelec’s Current Report on Form 8-K in February 2006 wherein Tekelec announced that it would restate previously issued financial statements, Former Employee is not able to exercise stock options under Tekelec’s stock option plans until such time as Tekelec becomes current in its SEC reporting and the restriction on the issuance of shares of Tekelec’s common stock lapses.
2	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses or September 30, 2006.
3	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses or September 30, 2006.
4	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses ends or September 30, 2006.
5	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses or September 28, 2006.
6	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses or September 28, 2006.
7	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses ends or September 28, 2006.
8	The termination date shall be the later of the date that is thirty (30) calendar days after the restriction lapses ends or September 28, 2006.

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EXHIBIT B

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

- None -

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EXHIBIT C

EXCEPTIONS (Pursuant to §15)

- None -

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EX-10.2

EXHIBIT 10.2

AMENDED AND RESTATED

TEKELEC 2005 EMPLOYEE STOCK PURCHASE PLAN

     The following constitutes the provisions of the Amended and Restated Tekelec 2005 Employee Stock Purchase Plan (the “Plan”).

     1. Purpose. The purpose of the Plan is to provide employees of Tekelec (the “Company”) and its subsidiaries with an opportunity to purchase Common Stock of the Company through payroll deductions. It is the intention of the Company that the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan shall, accordingly, be construed so as to extend and limit participation in a manner consistent with the requirements of that section of the Code, as amended from time to time. The Plan modifies, supplements and supersedes the terms of the Original Plan (as defined herein), as modified, supplemented and superseded by the Supplemental Provisions approved by the Compensation Committee of the Company’s Board of Directors on June 10, 2005.

     2. Certain Definitions.

          (a) “Amendment Effective Date” shall mean June 26, 2006.

          (b) “Board” shall mean the Board of Directors of the Company or any committee thereof designated by the Board of Directors of the Company in accordance with Section 13 of the Plan.

          (c) “Code” shall mean the Internal Revenue Code of 1986, as amended, and any applicable regulations promulgated thereunder.

          (d) “Common Stock” shall mean the common stock of the Company.

          (e) “Compensation,” unless otherwise determined by the Board of Directors of the Company, means total cash compensation from employment reportable on Form W-2 including, without limitation, regular straight-time gross earnings, overtime pay, shift premium, incentive compensation, bonuses, commissions, but expressly excluding expense reimbursements, automobile allowances, relocation benefits, equity-based compensation, gains realized in connection with the exercise of stock options or participation in a stock option or purchase programs and contributions by the Company to qualified deferred compensation plans.

          (f) “Eligible Subsidiary” means any subsidiary that from time to time is expressly designated by the Board as being an “Eligible Subsidiary” for purposes of the Plan. As of the Amendment Effective Date, each of Santera Systems Inc., VocalData, Inc. and Taqua, Inc. has been designated as an “Eligible Subsidiary” for purposes of participation in the Plan. As of such date, employees of any other Subsidiary are not eligible to participate in the Plan.

          (g) “Employee” means any person, including an officer, who is customarily employed for more than 20 hours per week by the Company or its Eligible Subsidiary and more

than five months in any calendar year. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company. Where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship shall be deemed to have terminated on the 91st day of such leave.

          (h) “Enrollment Date” means the first Trading Day of each Offering Period.

          (i) “Exercise Date” means the last Trading Day of each Purchase Period.

          (j) “Fair Market Value” means, as of any date, the fair market value of one share of Common Stock, determined as follows:

               (i) If the Common Stock is listed on a national or regional securities exchange or market system, including without limitation the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its fair market value shall be the closing sales price for such stock (or the mean of the closing bid and asked prices, if no sales were reported) as reported on such date (or, if such day is not a Trading Day, on the most recent Trading Day prior to such date) in The Wall Street Journal or such other source as the Board deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized securities dealer but sales prices are not reported, its fair market value shall be the mean of the closing bid and asked prices for the Common Stock on such date (or, if such day is not a Trading Day, on the most recent Trading Day prior to such date), as reported in The Wall Street Journal or such other source as the Board deems reliable; or

               (iii) In the absence of an established market for the Common Stock, the fair market value thereof shall be determined in good faith by the Board.

          (k) “Offering Periods” shall (i) prior to the Amendment Effective Date, mean the periods of approximately 24 months during which an option granted pursuant to the Plan may be exercised, commencing on the first Trading Day on or after August 1 and February 1 of each year and terminating on the last Trading Day in the period prior to the 24-month anniversary of such date and (ii) subsequent to the Amendment Effective Date, shall have the same meaning as “Purchase Period” under the Plan. The duration and timing of Offering Periods may be changed pursuant to Section 4 of this Plan.

          (l) “Original Plan” means the Tekelec 2005 Employee Stock Purchase Plan as approved by the Board on April 7, 2005 and by the shareholders of the Company on May 13, 2005.

          (m) “Purchase Period” shall mean the approximately six-month periods commencing on the first Trading Day on or after August 1 and February 1 of each year during the term of this Plan and ending with the last Trading Day prior to the commencement of the next Purchase Period. The first Purchase Period under the Plan shall commence on August 1, 2005 and end on January 31, 2006.

2

          (n) “Purchase Price” shall mean 85% of the Fair Market Value of a share of Common Stock on the Enrollment Date or on the Exercise Date, whichever is lower; provided, however, that the Purchase Price may be adjusted by the Board pursuant to Section 19.

          (o) “Subsidiary” means any corporation described in Section 424 of the Code in which the Company owns, directly or indirectly, 50% or more of the voting shares.

          (p) “Trading Day” shall mean a day on which national stock exchanges and The Nasdaq Stock Market are open for trading.

     3. Eligibility.

          (a) General Rule. Any Employee, as defined in Section 2, who shall have completed at least 30 days of continuous employment by the Company or its Eligible Subsidiaries on the date his or her participation in the Plan is effective shall be eligible to participate in the Plan, subject to the limitations imposed by Section 423(b) of the Code.

          (b) Exceptions. Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan if:

               (i) immediately after the grant, such Employee (or any other person whose stock ownership would be attributed to such Employee pursuant to Section 424(d) of the Code) would own shares and/or hold outstanding options to purchase shares possessing five percent or more of the total combined voting power or value of all classes of shares of the Company or of any Subsidiary; or

                (ii) such option would permit the Employee’s rights to purchase shares under all employee stock purchase plans of the Company and its Subsidiaries to accrue (i.e., become exercisable) at a rate which exceeds $25,000 of fair market value of such shares (determined at the time such option is granted) for any calendar year in which such option is outstanding at any time.

     4. Offering Periods.

          (a) Prior to the Amendment Effective Date. Prior to the Amendment Effective Date and subject to Section 4(c) below, the Plan shall be implemented by consecutive, overlapping 24-month Offering Periods with a new 24-month Offering Period commencing on the first Trading Day on or after August 1 and February 1 of each year, or on such other date as the Board shall determine, and continuing thereafter until terminated in accordance with Section 20 hereof. The first such 24-month Offering Period under the Plan shall commence on August 1, 2005.

          (b) Subsequent to the Amendment Effective Date. Subsequent to the Amendment Effective Date, the Plan shall be implemented by consecutive six-month Offering Periods. The first such six-month Offering Period shall commence on August 1, 2006.

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          (c) Offering Period Commencing on February 1, 2006. Notwithstanding the terms of the Original Plan and Section 4(a) above, the Offering Period that commenced on February 1, 2006 shall terminate on July 31, 2006.

          (d) Change of Duration of Offering Periods. The Board shall have the power to change the duration of Offering Periods (including the commencement dates thereof) with respect to future offerings without shareholder approval if any such change is announced at least five days prior to the scheduled beginning of the first Offering Period to be affected thereafter.

          (e) Effect of Participation in an Offering Period. Participation in one offering under the Plan shall neither limit nor require participation in any other offering.

     5. Participation.

          (a) Enrollment. An eligible Employee may become a participant in the Plan by completing and signing a subscription agreement authorizing payroll deductions in the form of the Subscription Agreement attached to this Plan as Attachment A (the “Subscription Agreement”) and by filing it with the Company’s payroll office on or before the 25th day of the calendar month prior to the start of the applicable Offering Period with respect to which it is to be effective (unless a different time for filing the Subscription Agreement has been set by the Company with respect to a given offering). The Company will provide employees with advance notice of all such enrollment periods. Enrollment periods will typically commence on or about the first day of the calendar month immediately prior to the commencement of an Offering Period and will end on such 25th day of such calendar month. An Employee’s authorization and participation in the Plan shall become effective on the first Enrollment Date following the timely filing of his or her Subscription Agreement and shall remain effective until revoked by the participant by the filing of a Payroll Deduction Authorization Change or Withdrawal form as described in Section 10(a) hereof or until changed by the filing of a Payroll Deduction Authorization Change or Withdrawal form providing for a change in the participant’s payroll deduction rate. An Employee who becomes eligible to participate in the Plan after the commencement of an Offering Period or who is eligible but declines to participate prior to the commencement of such Offering Period may not become a participant in the Plan until the commencement of the next Offering Period.

     6. Payroll Deductions.

          (a) Commencement of Deductions. Payroll deductions for a participant shall commence on the first payroll following the Enrollment Date and shall end on the last payroll in the Offering Period as to which such authorization is applicable, unless sooner terminated by the participant as provided in Section 10 hereof.

          (b) Rate of Deductions. At the time a participant files his or her Subscription Agreement with the Company, he or she shall elect to have payroll deductions made on each payday during the next Offering Period at a percentage rate equal to a positive whole number not exceeding 15%, or such other maximum rate as may be determined from time to time by the Board subject to the provisions of Section 19 hereof, of the Compensation which would otherwise be payable to such participant on each such payday.

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          (c) Automatic Continuation of Deductions. Payroll deductions for a participant shall automatically continue from Offering Period to Offering Period until changed or terminated by the participant in accordance with the terms hereof.

          (d) Credit to Plan Accounts. All payroll deductions authorized by a participant shall be credited to the participant’s individual account under the Plan. A participant may not make any additional payments into such account.

          (e) Termination of Deductions and Changes in Rate of Payroll Deductions. A participant may terminate his or her participation in the Plan prior to the termination of any Purchase Period as provided in Section 10 hereof, or may increase or decrease the rate of his or her payroll deductions for a future Purchase Period by completing and filing with the Company, on or before the 25th day of the calendar month prior to the start of the next Purchase Period, a Payroll Deduction Authorization Change or Withdrawal form in the form attached hereto as Attachment B (“Payroll Deduction Authorization Change or Withdrawal Form”) authorizing a change in payroll deduction rate or a withdrawal, as applicable; provided, however, that prior to the Amendment Effective Date, any such increase in the rate of payroll deductions with respect to a future six-month Purchase Period (as opposed to a future 24-month Offering Period) was limited to a maximum increase of 5%. The Board may, in its discretion, limit the number of participation rate changes during any Offering Period. The change in rate shall be effective as of the first full payday of the next Purchase Period. A participant’s Subscription Agreement shall remain in effect for successive Offering Periods (and, prior to the Amendment Effective Date, for successive Purchase Periods within a 24-Month Offering Period) unless terminated as provided in Section 10 hereof.

     7. Grant of Option. On the Enrollment Date of each Offering Period, each participant in such Offering Period shall automatically be granted an option to purchase on the Exercise Date during such Offering Period (or, prior to the Amendment Effective Date, on each Exercise Date during such Offering Period), at the applicable Purchase Price, up to a number of shares of the Company’s Common Stock determined by dividing such Employee’s payroll deductions accumulated prior to such Exercise Date and retained in the participant’s account as of the Exercise Date by the applicable Purchase Price; provided, however, that in no event shall an Employee be permitted to purchase during each Purchase Period more than a number of shares equal to the lesser of (1) the number of Shares determined by dividing $12,500 by the Fair Market Value of a share of the Company’s Common Stock (subject to any adjustment pursuant to Section 19) on the Enrollment Date or (2) 1,500 shares, and provided further that such grant of options and purchase shall in all cases be subject to the limitations set forth in Sections 3(b) and 12 hereof. The Board may, for future Offering Periods, increase or decrease, in its absolute discretion, the maximum number of shares of the Company’s Common Stock an Employee may purchase during each Purchase Period. Exercise of the option shall occur as provided in Section 8 hereof, unless the participant has withdrawn pursuant to Section 10 hereof. The option shall expire on the last day of the Offering Period.

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     8. Exercise of Option.

          (a) Automatic Exercise on Exercise Dates. Unless a participant withdraws from the Plan as provided in Section 10, his or her option for the purchase of shares shall be exercised automatically on each Exercise Date and the accumulated payroll deductions credited to a participant’s account on the Exercise Date will be applied to purchase whole shares of the Company’s Common Stock (up to the maximum number subject to option as determined in Section 7 hereof) at the Purchase Price. Any amount credited to a participant’s account and not applied to the purchase of Common Stock by reason of the limitation on the number of shares subject to option (including amounts representing a fractional share) shall be refunded promptly to such participant after the Exercise Date. A participant’s option to purchase shares hereunder shall be nontransferable other than by will or the laws of descent and distribution and shall be exercisable during the participant’s lifetime only by the participant.

          (b) Allocation of Shares if Insufficient Shares are Available on Enrollment or Exercise Date. If the Board determines that, on a given Enrollment Date or Exercise Date, the number of shares with respect to which options are to be granted or exercised, as applicable, may exceed (i) the number of shares of Common Stock that were available for sale under the Plan on the Enrollment Date of the applicable Offering Period, or (ii) the number of shares available for sale under the Plan on such Exercise Date, the Board may in its sole discretion (x) provide that the Company shall make a pro rata allocation of the shares of Common Stock available for grant or purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants granted options to purchase Common Stock on such Enrollment Date or exercising options to purchase Common Stock on such Exercise Date, as applicable, and continue the Offering Period(s) then in effect, or (y) provide that the Company shall make a pro rata allocation of the shares available for grant or purchase on such Enrollment Date or Exercise Date, as applicable, in as uniform a manner as shall be practicable and as it shall determine in its sole discretion to be equitable among all participants granted options to purchase Common Stock on such Enrollment Date or exercising options to purchase Common Stock on such Exercise Date, and terminate any Offering Period(s) then in effect pursuant to Section 19 hereof. The Company may make a pro rata allocation of the shares available on the Enrollment Date of any applicable Offering Period pursuant to the preceding sentence, notwithstanding any authorization of additional shares for issuance under the Plan by the Company’s shareholders subsequent to such Enrollment Date. In the event of any pro rata allocation of shares, the Company shall give written notice of such allocation to each participant affected thereby and shall reduce the rate of payroll deductions, if necessary.

     9. Delivery; Holding Period. As promptly as practicable after each Exercise Date on which a purchase of shares occurs, the Company shall arrange for the issuance and delivery to, or credit to the account of, each participant, as appropriate, of the shares purchased upon exercise of his or her option. At the election of the Company, the issuance and delivery of the shares purchased upon exercise of a participant’s option may be effected by transfer (electronic or otherwise in the discretion of the Company) of such shares to a securities account maintained in the participant’s name. The shares purchased upon exercise of any option granted to a participant may not be assigned, transferred, pledged or otherwise disposed of in any way (other than by will or by the laws

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of descent and distribution) for a period of (i) 90 days following the exercise of any option on or prior to the Amendment Effective Date or (ii) 30 days following the exercise of any option subsequent to the Amendment Effective Date; provided, however, that the Board of Directors may, in its sole discretion, permit an assignment, transfer, pledge or other disposition of such shares at such other time as the Company’s Board of Directors may determine in the event that the participant has suffered a hardship, as determined by the Company’s Board of Directors in its sole discretion. Shares purchased upon exercise of any option granted to a participant and subject to the above restrictions may include a legend indicating that such shares may not be transferred, pledged or otherwise disposed of for 90 days or 30 days, as applicable, from the date of issue.

     10. Withdrawal; Termination of Employment.

          (a) Withdrawal from Plan and Immediate Cancellation of Option. A participant may terminate his or her participation in an offering under the Plan and withdraw all, but not less than all, of the payroll deductions credited to his or her account under the Plan at any time prior to an Exercise Date by giving written notice of withdrawal to the Company on a Payroll Deduction Authorization Change or Withdrawal Form. In such case, all of the participant’s payroll deductions credited to his or her account shall be paid to him or her promptly after receipt of his or her notice of withdrawal, his or her option for the Offering Period shall be automatically canceled, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. If a participant withdraws from an Offering Period, payroll deductions shall not resume at the beginning of the succeeding Offering Period unless the participant delivers to the Company a new Subscription Agreement in accordance with Section 5 hereof.

          (b) Withdrawal from Plan without Cancellation of Option in Current Purchase Period. A participant may terminate his or her participation in the Plan effective as of the first day of the next Purchase Period by giving written notice of withdrawal to the Company on a Payroll Deduction Authorization Change or Withdrawal Form. In such case, the participant’s payroll deductions will continue through the end of the Purchase Period in which the notice of withdrawal is given, all amounts deducted from the participant’s Compensation during such Purchase Period will be applied to the purchase of Common Stock pursuant to the Plan, and following such termination of participation no further payroll deductions for the purchase of shares shall be made except pursuant to a new Subscription Agreement delivered in accordance with Section 5 hereof.

          (c) Termination of Employment. Upon termination of a participant’s employment for any reason, including retirement or death, as soon as practicable after such termination, the payroll deductions credited to his or her account shall be returned to him or her or, in the case of his or her death, to the person or persons entitled thereto under Section 14, and his or her option shall be automatically canceled.

          (d) Employment for Less than 20 Hours Per Week. In the event an Employee fails to remain in the continuous employ of the Company or its Eligible Subsidiaries for more than 20 hours per week during the Offering Period in which the Employee is a participant, he or she will be deemed to have elected to withdraw from the Plan and the payroll deductions credited to his or her account will be returned to him or her and his or her option will be canceled.

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          (e) Effect of Withdrawal on Future Eligibility. A participant’s withdrawal from an offering shall not have any effect upon his or her eligibility to participate in a subsequent offering or in any similar plan which may hereafter be adopted by the Company.

     11. Interest. No interest shall accrue on the payroll deductions of a participant in the Plan.

     12. Stock.

          (a) Authorized Shares. The maximum number of shares of the Company’s Common Stock which shall be made available for sale under the Plan shall be 1,000,000 shares, subject to adjustment upon changes in capitalization of the Company as provided in Section 18(a) hereof, together with a cumulative annual increase to the number of shares reserved for issuance thereunder on August 1, 2006 and on each August 1 thereafter equal to the lesser of (i) 500,000 shares, (ii) 1% of the number of outstanding shares of Common Stock of the Company on the date of such increase or (iii) such amount as may be determined by the Board. The shares to be sold to participants in the Plan will be authorized but unissued shares. Upon the cancellation of any option granted under the Plan, the shares subject thereto shall return to the Plan and become available for options thereafter granted under the Plan.

          (b) No Interest or Voting Rights in Shares. A participant will have no interest or voting right in shares covered by his or her option until such option has been exercised.

          (c) Registration of Shares. Shares to be issued to a participant under the Plan shall, as specified in the participant’s Subscription Agreement, be registered in the name of the participant or in the name of the participant and his or her spouse.

     13. Administration. The Plan shall be administered by the Board or a committee of members of the Board appointed by the Board. The Board or its committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision and determination made by the Board or its committee shall, to the fullest extent permitted by law, be final and binding upon all parties.

     14. Designation of Beneficiary.

          (a) Designation. A participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the participant’s account under the Plan in the event of such participant’s death subsequent to the Exercise Date on which an option is exercised but prior to delivery to him or her of such shares and cash. In addition, a participant may file a written designation of a beneficiary who is to receive any cash from the participant’s account under the Plan in the event of such participant’s death prior to exercise of the option. If a participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

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          (b) Change in Beneficiary. Such designation of beneficiary may be changed by the participant at any time by written notice. In the event of the death of a participant and in the absence of a valid designation of a beneficiary who is living at the time of such participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the participant; or if no such executor or administrator has been appointed (to the knowledge of the Company), the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the participant; or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

     15. Transferability. Neither payroll deductions credited to a participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution, pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act, or the rules thereunder, or as provided in Section 14 hereof) by the participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw funds from an Offering Period in accordance with Section 10 hereof.

     16. Use of Funds. All payroll deductions received or held by the Company on behalf of a participant under the Plan may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions.

     17. Reports. Individual accounts will be maintained for each participant in the Plan. Individual statements of account will be given to participating Employees at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased and the remaining cash balance, if any, in a participant’s account.

     18. Adjustments upon Changes in Capitalization or Control.

          (a) Changes in Capitalization. Subject to any required action by the shareholders of the Company, the number of shares of Common Stock covered by each option under the Plan which has not yet been exercised and the number of shares of Common Stock which has been authorized for issuance under the Plan but has not yet been placed under option or which has been returned to the Plan upon the cancellation of an option, as well as the option price per share of Common Stock covered by each option under the Plan which has not yet been exercised, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to option.

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          (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Exercise Date (the “New Exercise Date”), and shall terminate immediately prior to the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Board. The New Exercise Date shall be before the date of the Company’s proposed dissolution or liquidation. The Board shall notify each participant in writing, at least ten business days prior to the New Exercise Date, that the Exercise Date for the participant’s option has been changed to the New Exercise Date and that the participant’s option shall be exercised automatically on the New Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof.

          (c) Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding option shall be assumed or an equivalent option substituted by the successor corporation or a parent or subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the option, any Purchase Periods then in progress shall be shortened by setting a new Exercise Date (the “Modified Exercise Date”) and any Offering Periods then in progress shall end on the Modified Exercise Date. The Modified Exercise Date shall be before the date of the Company’s proposed sale or merger. The Board shall notify each participant in writing, at least ten business days prior to the Modified Exercise Date, that the Exercise Date for the participant’s option has been changed to the Modified Exercise Date and that the participant’s option shall be exercised automatically on the Modified Exercise Date, unless prior to such date the participant has withdrawn from the Offering Period as provided in Section 10 hereof.

          (d) No Fractional Shares. No fractional shares of Common Stock shall be issuable on account of any adjustment described herein, and the aggregate number of shares into which shares then covered by an option, when changed as the result of such adjustment, shall be reduced to the largest number of whole shares resulting from such adjustment, unless the Board, in its sole discretion, shall determine to issue scrip certificates in respect to any fractional shares, which scrip certificates, in such event, shall be in a form and have such terms and conditions as the Board in its discretion shall prescribe.

     19. Amendment or Termination.

          (a) Amendment and Termination in General. The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 18 hereof, no such amendment or termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Exercise Date if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its shareholders. Except as provided in Section 18 and this Section 19, no amendment may make any change in any option theretofore granted which adversely affects the rights of any participant without the prior written consent of such participant.

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          (b) Modifications Relating to Section 423 of the Code. To the extent necessary to comply with Section 423 of the Code (or any successor rule or provision or any other applicable law, regulation or stock exchange rule), the Company shall obtain shareholder approval of any amendment to the Plan in such a manner and to such a degree as is required.

          (c) Limitations and Procedures with respect to Offering Periods. Without shareholder approval and without regard to whether any participant rights may be considered to have been “adversely affected,” the Board (or its committee) shall be entitled to change the Offering Periods, limit the frequency and/or number of changes in the amount withheld during an Offering Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in excess of the amount designated by a participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each participant properly correspond with amounts withheld from the participant’s Compensation, and establish such other limitations or procedures as the Board (or its committee) determines in its sole discretion advisable which are consistent with the Plan.

          (d) Modifications Relating to Unfavorable Accounting Consequences. In the event the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequence including, but not limited to:

                (i) altering the Purchase Price for any Offering Period including an Offering Period underway at the time of the change in Purchase Price;

               (ii) shortening any Offering Period so that Offering Period ends on a new Exercise Date, including an Offering Period underway at the time of the Board action; and

               (iii) allocating shares.

          Such modifications or amendments shall not require shareholder approval or the consent of any Plan participants.

     20. Term of Plan. The Original Plan became effective upon its approval by vote of the outstanding shares of the Company as provided in Section 22. The Plan shall continue in effect for a term of ten years following the date of approval of the Original Plan by the Board (i.e., until May 13, 2015) unless sooner terminated under Sections 19 or 22 hereof.

     21. Notices. All notices or other communications (i) by a participant to the Company in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof and (ii) by the Company to a participant in connection with the Plan shall be deemed to have been duly given when received by the participant or, if earlier, five days after deposit in the

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United States mail by certified or registered mail, return receipt requested, first class postage prepaid, addressed to the participant at his or her address as shown on the records of the Company or as such participant may request by written notice to the Company hereunder.

     22. Shareholder Approval. The effectiveness of the Original Plan was expressly subject to approval by the Company’s shareholders prior to August 31, 2005 by the affirmative vote of the holders of a majority of the outstanding shares of stock of the Company present or represented and entitled to vote thereon at a shareholder meeting duly held or by written consent in accordance with applicable law. Such approval was given at a regular meeting of the Company’s shareholders held on May 13, 2005. The amendment and restatement of the Original Plan as of the Amendment Effective Date is not subject to the approval of the Company’s shareholders.

     23. Automatic Transfer to Low Price Offering Period. Prior to the Amendment Effective Date and to the extent permitted by any applicable laws, regulations or stock exchange or market system rules, if the Fair Market Value of the Common Stock on any Exercise Date in an Offering Period is lower than the Fair Market Value of the Common Stock on the Enrollment Date of such Offering Period, then all participants in the Offering Period shall be automatically withdrawn from such Offering Period immediately after the exercise of their option on such Exercise Date and automatically re-enrolled in the immediately following Offering Period as of the first day thereof in accordance with the terms and conditions of their Subscription Agreement then in effect. Effective as of the Amendment Effective Date, this Section 23 shall not apply to any Offering Periods then in effect or commencing thereafter.

     24. No Enlargement of Employee Rights. The Plan is purely voluntary on the part of the Company, and the continuance of the Plan shall not be deemed to constitute a contract between the Company and any Employee, or to be consideration for or a condition of the employment of any Employee. Nothing contained in this Plan shall be deemed to give any Employee the right to be retained in the employ of the Company, its parent, any Subsidiary or a successor corporation, or to interfere with the right of the Company or any such corporations to discharge or retire any Employee thereof at any time. No Employee shall have any right to or interest in options authorized hereunder prior to the grant of an option to such Employee, and upon such grant he or she shall have only such rights and interests as are expressly provided herein, subject, however, to all applicable provisions of the Company’s Articles of Incorporation, as the same may be amended from time to time.

     25. Information to Participants. The Company shall provide without charge to each participant in the Plan copies of such annual and periodic reports as are provided by the Company to its shareholders generally.

     26. Governing Law. To the extent that federal laws do not otherwise control, the Plan and all determinations made or actions taken pursuant hereto shall be governed by the laws of the State of California, without regard to the conflicts of laws rules thereof.

     27. Tax Withholding. If at any time the Company or any Eligible Subsidiary is required, under applicable laws and regulations, to withhold, or to make any deduction of, any taxes or take any other action in connection with any exercise of an option granted hereunder or any disposition

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of shares of Common Stock issued hereunder, the participant must make adequate provision for the Company’s federal, state or other tax withholding obligations which arise from such exercise or disposition. The Company or such Eligible Subsidiary shall have the right to deduct or withhold from the participant’s compensation the amount necessary for the Company or such Eligible Subsidiary to meet applicable withholding obligations.

     28. Securities Law Compliance. No shares of Common Stock may be issued upon the exercise of any option under the Plan until all requirements of applicable federal, state, foreign or other securities laws with respect to the purchase, sale and issuance of shares of Common Stock shall have been satisfied. If any action must be taken because of such requirements, then the purchase, sale and issuance of shares shall be postponed until such action can reasonably be taken. Upon request by the Company, an Employee shall deliver to the Company such information, representations or undertakings as the Company may reasonably request in order to comply with any registration requirements or exemptions therefrom of applicable securities laws. The Company may require any securities so issued to bear a legend, may give its transfer agent instructions, and may take such other steps as in its judgment are reasonably required to prevent any violation of applicable securities laws.

* * *

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ATTACHMENT A

AMENDED AND RESTATED
TEKELEC 2005 EMPLOYEE STOCK PURCHASE PLAN

FORM OF
SUBSCRIPTION AGREEMENT

Instructions: Please print or type all information except your signature.

Name:

First                                            Middle                               Last

Address:

Social Security No.: ____ ____ ____ - ____ ____ - ____ ____ ____ ____

Employee No.:                                                                                                                            Employment Start Date:

ORIGINAL APPLICATION

1. I hereby elect to participate in the Offering Period specified below under the Amended and Restated Tekelec 2005 Employee Stock Purchase Plan (the “Plan”) in accordance with this Subscription Agreement and subject to the terms and conditions of the Plan.

Offering Period commencing (check one): o August 1, 200___   o February 1, 200___

2. I hereby authorize Tekelec to make regular payroll deductions, at the rate indicated below and in accordance with the terms of the Plan, from the total Compensation (as defined in the Plan) including overtime, bonuses, commissions and other earnings, if any, paid to me during each Offering Period during which I remain a participant in the Plan:

(circle one)	1%    2%   3%   4%   5%   6%   7%   8%   9%
	10%   11%   12%   13%   14%   15%   of compensation

3. I understand that payroll deductions at the indicated rate will continue from Offering Period to Offering Period unless I become ineligible to participate in the Plan or I file a “Payroll Deduction Authorization Change or Withdrawal” form provided by the Company.

4. I understand that the deducted amounts will be applied automatically to the purchase of shares of Tekelec Common Stock at the end of each six-month Offering Period unless I elect to cancel my option and withdraw from the Plan by filing a “Payroll Deduction Authorization Change or Withdrawal” form no later than on the 25th day of the last calendar month during the Offering Period with respect to which it is to be effective.

5. I hereby acknowledge that I have received and read a copy of Tekelec’s most recent Prospectus describing the terms and provisions of the Plan and understand the information therein and the risks of participating in the Plan.

6.	Shares purchased for me under the Plan should be issued in the name(s) of:
7.	I hereby agree to be bound by the terms of the Plan. The effectiveness of this Subscription Agreement is dependent upon my eligibility to participate in the Plan.
8.	I will promptly (a) notify Tekelec if I have sold, transferred, gifted or otherwise disposed of any shares purchased for me under the Plan at any time within two years after the beginning of the six-month Offering Period during which such shares were purchased or within one year after the end of the six-month Offering Period in which such shares were purchased and (b) provide Tekelec with all requested information regarding such transaction.
9.	In the event of my death before the end of an Offering Period, I hereby designate as my beneficiary(ies) to receive all payments and shares due me under the Plan:

Name: (Please print)
	First	Middle	Last
Relationship	Address
	City	State	Zip Code
Name: (Please print)
	First	Middle	Last
Relationship	Address
	City	State	Zip Code

Date:
	Signature of Employee

ELECTION NOT TO PARTICIPATE

     I hereby acknowledge receipt of a copy of Tekelec’s most recent Prospectus which describes the Amended and Restated Tekelec 2005 Employee Stock Purchase Plan and elect not to participate in the Plan. I understand that my decision not to participate in the next offering under the Plan will not affect my eligibility to participate in subsequent offerings under the Plan.

Date:
	Signature of Employee

(To be completed by Tekelec)

Date Received:                                          Approved by:                                         

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ATTACHMENT B

AMENDED AND RESTATED
TEKELEC 2005 EMPLOYEE STOCK PURCHASE PLAN

FORM OF
PAYROLL DEDUCTION AUTHORIZATION CHANGE OR WITHDRAWAL

       I am now a participant in the Amended and Restated Tekelec 2005 Employee Stock Purchase Plan (the “Plan”) and I wish to make the change indicated below (check one):

o A. Change in Payroll Deduction Rate: I hereby authorize the following new rate of payroll deduction set forth below, effective as of the first payday of the next Offering Period (such change must be filed with the Company no later than on the 25th day of the calendar month immediately prior to the start of the Offering Period with respect to which it is to be effective).

(circle one)	1%   2%   3%   4%   5%   6%   7%   8%   9%
	10%   11%   12%   13%   14%   15%   of compensation

o B. Withdrawal from Plan and Immediate Cancellation of Option: I hereby elect to cancel my participation in the Plan effective immediately and to cancel my option to purchase Tekelec Common Stock under the Plan and request that all amounts withheld from me through payroll deductions relating to the canceled option be refunded to me. I understand that cancellation of my option for the current Offering Period will be effective only if this form is filed with the Company on or before the 25th day of the last calendar month during the Offering Period with respect to which it is to be effective. I understand that if I wish to participate in the Plan following my cancellation and withdrawal from the Plan, I must re-enroll by filing a new Subscription Agreement with the Company on or before the 25th day of the calendar month immediately prior to the start of the Offering Period with respect to which it is to be effective.

o C. Withdrawal from Plan without Cancellation of Option in Current Offering Period. I hereby elect to cancel my participation in the Plan effective as of the first day of the next Offering Period. However, I request that my previously authorized payroll deductions continue through the end of the current Offering Period and that all amounts deducted from my Compensation during the current Offering Period be applied to the purchase of Tekelec Common Stock pursuant to the Plan. I understand that if I wish to participate in the Plan following my cancellation and withdrawal from the Plan, I must re-enroll by filing a new Subscription Agreement with the Company on or before the 25th day of the calendar month immediately prior to the start of the Offering Period with respect to which it is to be effective.

Date:
	Signature of Employee

                                                                                                          Print Name:

(To be completed by Tekelec)

     Date Received:                                          Approved by: