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EXHIBIT 10.5
TEKELEC
STOCK AWARD AGREEMENT
THIS STOCK AWARD AGREEMENT (this "Agreement") is made as of February 17,
1998 (the "Effective Date") by and between Tekelec, a California corporation
(the "Company"), and Xxxxxxx X. Xxxxxxxx ("Xxxxxxx").
WHEREAS, in consideration of Michael's acceptance of employment as the
Chief Executive Officer and President of the Company and his future service as
an employee of the Company, and as an incentive to motivate and retain Xxxxxxx
as an employee of the Company, the Company's Board of Directors has awarded to
Xxxxxxx as of the Effective Date 15,000 shares (the "Shares") of the Company's
Common Stock, subject to the terms and conditions set forth herein and on the
condition that Xxxxxxx enter into this Agreement with the Company;
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. ACCEPTANCE AND VALUE OF SHARES. Xxxxxxx hereby accepts the Shares
effective as of the Effective Date as additional consideration for his
acceptance of employment as the Chief Executive Officer and President of the
Company and his future service to the Company and as an incentive to motivate
and retain him as an employee of the Company. The value of the Shares on the
Effective Date for tax, accounting and all other purposes shall be $40.4375 per
Share (i.e., the closing price of the Company's Common Stock on The Nasdaq Stock
Market on February 17, 1998).
2. VESTING OF SHARES. Subject to Sections 3 and 4 hereof, the Shares
shall vest cumulatively as to 3,000 Shares on each of the vesting dates
specified below so long as Xxxxxxx continues to serve as an employee of the
Company:
Number of
Vesting Date Shares Vesting
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02/17/99 3,000
02/17/00 3,000
02/17/01 3,000
02/17/02 3,000
02/17/03 3,000
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15,000
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3. ACCELERATED VESTING OF SHARES. In the event that prior to
February 17, 2003, Michael's employment with the Company is terminated by either
Xxxxxxx or the Company under circumstances entitling Xxxxxxx to severance
benefits under the Tekelec Officer Severance Plan and Xxxxxxx executes and
delivers to the Company an Employment Separation Agreement (in the form attached
to such Officer Severance Plan), then the Shares will fully vest as of the
effective date of such termination of Michael's employment to the extent the
Shares are then unvested.
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4. FORFEITURE OF SHARES. If at any time prior to February 17, 2003,
Xxxxxxx ceases to serve as an employee of the Company under circumstances not
entitling Xxxxxxx to severance benefits under the Tekelec Officer Severance
Plan, Xxxxxxx shall forfeit any Shares which are not then vested, which
forfeiture shall be effective on the date on which Xxxxxxx ceases to be an
employee of the Company. Upon any forfeiture of any of the Shares in accordance
with this Section 4, Xxxxxxx shall assign and transfer such forfeited Shares to
the Company or its assignee.
5. ISSUANCE AND ESCROW OF SHARES. The Shares shall be evidenced by
five stock certificates (the "Stock Certificates"), each of which shall
represent 3,000 Shares. The Stock Certificates shall be issued in the name of
Xxxxxxx as soon as administratively practicable following the Effective Date and
shall be delivered by the Company's transfer agent directly to the Secretary of
the Company (the "Secretary"). As security for Michael's faithful performance of
the terms of this Agreement and to ensure the availability for delivery of the
Shares upon any forfeiture of any of the Shares pursuant to Section 4 hereof,
Xxxxxxx also agrees upon execution of this Agreement to deliver to and deposit
with the Secretary five Assignments Separate from Certificate (the
"Assignments") duly endorsed (with date left blank) in the form attached hereto
as Attachment A. The Secretary shall hold the Shares and the Assignments in an
escrow and, within seven days after the date on which any of the Shares vest
hereunder, the Secretary shall release from escrow and deliver to Xxxxxxx the
Stock Certificate(s) evidencing such Shares. The escrow shall terminate upon the
first to occur of (i) Michael's forfeiture of any Shares not then vested
pursuant to Section 4 hereof or (ii) the date on which all of the Shares are
vested (i.e., February 17, 2003 or such earlier date on which all remaining
unvested Shares vest in accordance with Section 3 hereof). If the escrow
terminates upon any forfeiture of Shares pursuant to Section 4 hereof, the
Secretary shall within seven days thereafter release from escrow and deliver to
the Company all Stock Certificates representing the forfeited Shares and all
Assignments then held in escrow.
6. RIGHTS AS SHAREHOLDER. Subject to the provisions of this
Agreement, Xxxxxxx shall be entitled to exercise all rights and privileges of a
shareholder of the Company (including voting rights) with respect to the Shares.
7. CONTINUATION AS AN EMPLOYEE, OFFICER OR DIRECTOR. Neither the
award of the Shares to Xxxxxxx nor this Agreement shall confer upon Xxxxxxx any
right to continue as an employee, officer or director of the Company or any of
its subsidiaries or limit in any respect the right of the Company to terminate
Michael's employment with the Company at any time for any reason.
8. WITHHOLDING. The Company reserves the right to withhold, in
accordance with any applicable laws, from any consideration payable to Xxxxxxx
any taxes required to be withheld by federal, state or local law as a result of
the issuance of the Shares to Xxxxxxx.
9. NONTRANSFERABILITY PRIOR TO VESTING. Xxxxxxx xxx not at any time
transfer any Shares which are not then vested or any interest therein by sale,
assignment, hypothecation, pledge, donation, operation of law or otherwise,
including without limitation pursuant to the laws of descent and distribution.
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10. MISCELLANEOUS.
(a) This Agreement shall inure to the benefit of the
successors and assigns of the Company.
(b) This Agreement shall be governed by and construed under
the laws of the State of California and constitutes the entire agreement of the
parties with respect to the subject matter hereof. This Agreement may only be
amended by a writing signed by the parties hereto.
(c) If any provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions shall nevertheless continue in full force and effect without being
impaired or invalidated in any way.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Effective Date.
COMPANY: TEKELEC, a California corporation
By: Xxxxxx X. Xxxxx
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Print Name: Xxxxxx X. Xxxxx
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Title: V. P. Finance & CFO
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XXXXXXX: Xxxxxxx X. Xxxxxxxx
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Xxxxxxx X. Xxxxxxxx
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ATTACHMENT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto __________________________________ __________________________ (______)
shares of the Common Stock of Tekelec, a California corporation (the "Company"),
standing in the name of the undersigned on the books of the Company represented
by Certificate No. ______ herewith and does hereby irrevocably constitute and
appoint ________________________________________________ attorney to transfer
said stock on the books of the Company with full power of substitution in the
premises.
Signature:
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Printed Name: Xxxxxxx X. Xxxxxxxx
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Dated:
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