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EXHIBIT 10.19
November 22, 1995
Mr. Allan Toomer
Senior Vice President & General Manager
Tekelec
Network Switching Division
3000 Aerial Parkway
Suite #120
Morrisville, NC 27560
Dear Allan,
I am very pleased to offer the following compensation program
to you as Senior Vice President and General Manager of Tekelec's Network
Switching Division ("NSD"). This package, once accepted by you, will supersede
and replace any executory portions of that agreed to in my letter to you dated
September 5, 1994 (see attached). I am proposing a longer term commitment
through 1997 from both you and Tekelec to supersede the previous arrangement. I
believe this is beneficial to both of us because of the potential the EAGLE
business offers and the contribution you can continue to make to its success.
1. Your base salary will be $203,000 per annum payable
$7,807.69 bi-weekly effective October 1, 1995. It
will be reevaluated annually each year thereafter
based on my recommendations to the Compensation
Committee of the Board and subject to final Board
approval.
2. The terms of your bonus plan for 1995 will be as
follows:
(a) Up to * of your annual salary based on
achievement of 105% of NSD's business plan revenues
for 1995 (see attached) and operating income of * or
(b) Up to * of your annual salary based on
achievement of 110% of NSD's business plan revenues
for 1995 and operating income of *.
Under these criteria, the aggregate amount of your bonus for
1995 will be determined as follows:
o one third of the bonus will be based on
achievement of the revenue objective
o one third of the bonus will be based on
achievement of both the revenue and operating
income objectives
________________
* Confidential material has been omitted pursuant to Rule 24b-2 and
filed separately with the Securities and Exchange Commission.
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Mr. Allan Toomer
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o one third of the bonus will be based on
achievement of both the revenue objectives
and management objectives set forth in your
1994 review and based on my recommendation to
the Board.
The bonus plan for each year thereafter will be based on the
Tekelec Corporate Executive bonus program recommended annually by me and
approved by the Board of Directors.
3. The terms of the Early Retirement Bonus Plan outlined
in the letter of September 5, 1994, will be amended
as follows and will be in lieu of the benefits you
are eligible to receive under the Officer Severance
Plan. If you elect on or after 1/1/97 and prior to
4/1/97 to retire, or if your employment with Tekelec
terminates prior to 4/1/97 as a result of your death
or long-term disability, then you receive the
following:
A bonus payment equal to 130% of the sum of
your then current salary plus the highest
annual bonus paid to you by Tekelec in the
three calendar years prior to your retirement
date. At a minimum this will amount to
$300,000.
In addition, if your employment with Tekelec
terminates prior to 4/1/97 as a result of your death
or long-term disability, then all stock options
granted to you prior to 9/30/95 under Tekelec's 1984
and 1994 Stock Option Plan which remain unvested at
the date of such termination would immediately vest.
4. The vesting of the unvested portion of all stock
options granted to you prior to September 30, 1995
under Tekelec's 1984 and 1994 Stock Option Plan will
accelerate on a "first-in-first-out basis" and become
exercisable as follows:
December 31, 1995 26,000
March 31, 1996 23,000
June 30, 1996 20,000
September 30, 1996 17,000
December 31, 1996 10,000
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96,000
5. Provided a successor as General Manager of NSD has
been identified and approved by the Board of
Directors and upon the effective date of your
full-time retirement, then Tekelec will enter into a
consulting agreement with you for 6 months for up to
20 hours per week at a rate of $2,500 per week. You
will still be eligible for all other Tekelec benefits
for which you qualify during this period. This
consulting agreement may be extended by mutual
agreement.
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Mr. Allan Toomer
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6. I will recommend that the Compensation Committee of
the Board of Directors grant to you additional Stock
Options with an aggregate exercise cost of $300,000,
based on 100% of the closing price at November 22,
1995 of Tekelec Common Stock with vesting in 7
quarterly installments to commence 12/31/95 and
ending 6/30/97.
You will also be eligible for further grants of Stock Options
based on my recommendation and subject to the discretion of the Compensation
Committee of the Board. There can be no assurance, however, that such
recommendations will be made or approved for you.
7. In the event of termination of your employment prior
to January 1, 1997, you would still be eligible to
receive your severance benefits in accordance with
the terms of the Officer Severance Plan. In addition,
if you are entitled to receive severance benefits
under the Officers Severance Plan, all options
granted to you prior to September 30, 1995 which
remain unvested at the date of termination would
immediately vest.
Over the next two years there are some significant and
exciting goals outlined below that I believe we have agreed you would like to
achieve for Tekelec with NSD and Eagle. Obviously, in a rapidly changing
environment new business opportunities will evolve that could change these
goals and we will keep this under review. *
o Continue to develop the NSD management team encompassing all
major functions of sales, engineering, marketing and customer
service. *
o Continue to develop the EAGLE product line and business to at
least $* in revenues and operating income of at least *% in
1997.
*
Although this agreement is subject to Board approval, I do not
envision that it will not be approved.
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* Confidential material has been omitted pursuant to Rule 24b-2 and
filed separately with the Securities and Exchange Commission.
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Mr. Allan Toomer
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Allan, I believe that this compensation program meets both our
objectives. I am looking forward to continuing the working relationship we have
developed and to the opportunity to build on the success you have achieved for
EAGLE and Tekelec. * I look forward to receiving your agreement to the
foregoing.
Sincerely,
/s/ Philip J. Alford
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Philip J. Alford
President & CEO
Agreed and accepted:
Agreed and accepted effective
/s/ Allan Toomer as of November 22, 1995
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Allan Toomer
cc: Compensation Committee
Ronald W. Buckly, Coudert Brothers
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* Confidential material has been omitted pursuant to Rule 24b-2 and
filed separately with the Securities and Exchange Commission.