2.2.0.25falsefalse0218 - Disclosure - Subsequent Eventstruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) / shares USD ($) $Jan-01-2010_Dec-31-2010http://www.sec.gov/CIK0000790705duration2010-01-01T00:00:002010-12-31T00:00:00USDEPSDividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0USDStandardhttp://www.xbrl.org/2003/iso4217USDiso42170SharesStandardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0tklc_SubsequentEventsAbstracttklcfalsenadurationSubsequent events.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringSubsequent events.falsefalseSubsequent Events [Abstract]3false0us-gaap_ScheduleOfSubsequentEventsTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseverboselabel1falsefalsefalse00  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b>Note 18 — Subsequent Events</b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt"><b><i>Executive Officer Resignation and Severance Agreement</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 4, 2011, Frank Plastina resigned as President and Chief Executive Officer and as a member of our Board of Directors (the “Board”). He also resigned as an employee and from any and all other positions he held with us and our subsidiaries. Mr. Plastina entered into an Employment Separation Agreement dated as of January 25, 2011 in accordance with the terms of our 2007 Officer Severance Plan, as amended (the “Severance Plan”), under which he will receive cash severance compensation in the total amount of $2,508,000. We will also provide continuing health care coverage to Mr. Plastina and his beneficiaries for a period of 24 months following the termination of his employment. </div>   </div>  <div style="font-family: 'Times New Roman',Times,serif"> <div align="left" style="font-size: 10pt; margin-top: 6pt">Tekelec and Mr. Plastina also entered into a consulting agreement pursuant to which, through February 28, 2011, Mr. Plastina will perform services to facilitate the transition to our Interim President and Chief Executive Officer. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Appointment of Interim President and Chief Executive Officer and Departure of and Appointment of Certain Directors</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 4, 2011 the Board appointed Krish A. Prabhu, who has been one of our directors since May 2008, as our Interim President and Chief Executive Officer to serve in that position until Mr. Plastina’s successor is identified and appointed. We established an annual base salary for Mr. Prabhu of $570,000 and fixed Mr. Prabhu’s target annual bonus opportunity at 100% of annual base salary. Mr. Prabhu will not be eligible to receive benefits under the Severance Plan. We also granted to Mr. Prabhu restricted stock units (“RSUs”) covering up to 120,000 shares of our common stock. He received an initial award of 10,000 RSUs and will receive subsequent awards of 10,000 RSUs on each of the 11 monthly anniversaries thereafter on which he is still serving as our Interim President and Chief Executive Officer, subject to proration for any partial month. All of the RSUs will vest upon termination of Mr. Prabhu’s service as Interim President and Chief Executive Officer. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On February 16, 2011, Mark A. Floyd, our Chairman of the Board, notified us that he will not be standing for re-election to the Board at our upcoming 2011 Annual Meeting of Shareholders (the “2011 Annual Meeting”). On February 16, 2011, the Board appointed Thomas J. Coleman and Anthony Colaluca, Jr. as additional members of the Board and agreed to include them among management’s nominees for election at the 2011 Annual Meeting. The Board also appointed Mr. Coleman to serve as a member of the Compensation and Nominating and Corporate Governance Committees of the Board and as a member of the Board’s ad hoc search committee for a new Chief Executive Officer of the Company. In connection with the appointment of Messrs. Coleman and Colaluca, the Board approved an amendment to the Company’s Amended and Restated Bylaws, as amended (the “Bylaws”), to increase the size of the Board from seven to nine directors. On February 16, 2011, the Board also agreed to include Jean-Yves Courtois among management’s nominees for election to the Board at the 2011 Annual Meeting. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Updated Credit Agreement with Wells Fargo Bank</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 13, 2011, we entered into an Amended and Restated Credit Agreement (the “Amended and Restated Credit Agreement”) by and among the Company, the Company’s Belgian subsidiary, Tekelec International, SPRL (each, a “Borrower,” and together, the “Borrowers”), the lenders who are or may become a party thereto and Wells Fargo Bank, N.A. (the “Bank”), as administrative agent, swing line lender and issuing lender. The Amended and Restated Credit Agreement amends and restates in its entirety the Credit Agreement dated as of October 2, 2008, including all subsequent amendments (as amended, the “Original Credit Agreement”). </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     The Amended and Restated Credit Agreement amended the Original Credit Agreement to, among other changes, increase the aggregate amount of the revolving credit facility from $50.0 million to $75.0 million and extend the maturity date of the revolving credit facility and the related swing line sub facility from October 2, 2012 to January 12, 2016 (the “Maturity Date”). Pursuant to the Amended and Restated Credit Agreement, (i) the Borrowers may borrow up to an aggregate principal amount of $75.0 million for general corporate purposes, (ii) the Company may borrow up to $10.0 million of such amount under a swing line sub facility and (iii) the Bank agrees to issue commercial letters of credit and standby letters of credit prior to the Maturity Date, provided that each letter of credit shall expire no later than the one-year anniversary of the Maturity Date, and provided further that the Bank shall have no obligation to issue any letter of credit if after giving effect to such letter of credit the dollar amount of all outstanding letters of credit would exceed $20.0 million or the aggregate amount of borrowings under the Amended and Restated Credit Agreement would exceed $75.0 million. At the time of entering into the Amended and Restated Credit Agreement, the Company had approximately $2.7 million of borrowings outstanding under the letter of credit facility under the Original Credit Agreement that became obligations under the Amended and Restated Credit Agreement. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Borrowings under the Amended and Restated Credit Agreement (i) by the Company for revolving loans in U.S. Dollars, bear interest, at the Company’s election, at the base rate, calculated at the higher of the prime rate and the federal funds rate plus one half of 1%, or at the Bank’s LIBOR rate plus the applicable margin for the one, two or three month interest period selected by the Company, (ii) by Tekelec International, SPRL for revolving loans in Euros, bear interest at the Bank’s LIBOR rate plus the applicable margin for the one, two or three month interest period selected by Tekelec International, SPRL, and (iii) by the Company for swing line loans in U.S. Dollars, bear interest at the base rate, calculated at the higher of the prime rate and the federal funds rate plus one half of 1%, plus the applicable margin. The foregoing rates are the current rates and are subject to adjustment over time based on financial ratios. If the Borrowers default under the Amended and Restated Credit Agreement, the Bank may at its option increase the interest rate on all outstanding principal balances to 2.0% more than the rate otherwise applicable. The Company is required to pay to the Bank certain fees, including a one-time commitment fee of $90,000 and an undrawn fee at a rate per annum equal to the applicable margin (0.2%, 0.25% or 0.3% based on the level of Consolidated Total Leverage Ratio) on the average daily unused portion of the revolving credit commitment, payable quarterly in arrears. In addition, the applicable Borrower is required to pay fees in connection with each letter of credit, including a commission at a rate per annum equal to the applicable margin (1.5%, 2.0% or 2.5% based on the level of Consolidated Total Leverage Ratio), payable quarterly in arrears, and an advance issuance or extension fee, as applicable, equal to the greater of $300 and 0.15% per annum on the face amount thereof pro-rated from the date of issuance or extension, as applicable, to the expiration date thereof. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     There are several changes to the covenants in this Amended and Restated Credit Agreement compared to the Original Credit Agreement. Some of these changes include: an increase in the Maximum Total Leverage Ratio from 2.5:1.0 to 3.0:1.0, an increase in the Maximum Senior Leverage from 1.5:1.0 to 2.0:1.0, a reduction in the threshold for Tangible Net Worth and removal of the rolling four quarter test related to Permitted Acquisitions, a reduction in the threshold for Tangible Net Worth related to Permitted Dividends or Share Repurchases and the removal of the Profitability test. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Securities Class Action and Shareholder Derivative Complaints</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On January 6, 2011, a purported class action complaint was filed against us and certain of our current and former officers in the U.S. District Court for the Eastern District of North Carolina alleging claims under Section 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated there under. The case purports to be brought on behalf of a class of purchasers of our stock during the period February 11, 2010 to August 5, 2010. The complaint generally alleges violations of federal securities laws based on, among other things, claimed misstatements or omissions regarding our business and prospects in emerging markets. The complaint seeks unspecified damages, interest, attorneys’ fees, costs, and expenses. As we are in the very early stages of this potential litigation, we are unable to predict the outcome of this case or estimate a range of potential loss related to this matter. Although the Company denies the allegations in the complaint and intends to vigorously pursue its defense, we are unable to predict the outcome of this case. An adverse court determination in the purported class action lawsuit against us could result in significant liability and could have a material adverse effect on our business, results of operations and financial condition. </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     On February 7, 2011, a shareholder derivative complaint was filed in the California Superior Court of Santa Clara County against certain current and former officers and directors. The suit alleges that named parties breached their fiduciary duties to the Company by, among other things, making statements between February, 2010 and August, 2010 which plaintiffs claim were false and misleading and by allegedly failing to implement adequate internal controls and means of supervision at the Company. The suit seeks an unspecified amount of damages from the named parties and modifications to the Company’s corporate governance policies. The allegations in the complaint are similar to the purported class action complaint discussed above. The individual defendants intend to vigorously defend the suit and the Company, on whose behalf these claims purport to be brought, intends to move to dismiss the shareholder derivative complaint on the grounds that the derivative plaintiff did not file the claims in accordance with applicable laws governing the filing of derivative suits. As we are in the very early stages of this potential litigation, we are unable to predict the outcome of this case or estimate a range of potential costs related to this matter. </div> <div align="left" style="font-size: 10pt; margin-top: 12pt"><b><i>Decline in Market Capitalization</i></b> </div> <div align="left" style="font-size: 10pt; margin-top: 6pt">     Beginning in the middle of February, 2011, our book value exceeded our market capitalization, which is calculated by multiplying our stock price as reported on the NASDAQ stock market by the number of outstanding shares. We will evaluate the events and circumstances related to this decline in market capitalization in the first quarter of 2011 to determine whether a triggering event to perform an interim goodwill impairment test has occurred. If we conclude that a triggering event has occurred, we will perform an interim goodwill impairment analysis to assess if the goodwill has been impaired. An interim impairment analysis may result in our recording a write-down of goodwill to its estimated implied fair value and recognizing a corresponding goodwill impairment loss, which may be material to our financial position and results of operations. </div> </div>  <!-- Begin Block Tagged NotefalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescribes disclosed significant events or transactions that occurred after the balance sheet date, but before the issuance of the financial statements. 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