Tekelec in Calabasas agreed to buy most of the assets of Protocol Technologies, based in Raleigh, N.C., for $3.5 million in cash. Both companies make equipment for testing telecommunications systems.
The agreement also calls for Tekelec to pay up to $3 million to Protocol over the next three years based on sales of products that use Protocol's technology.
In addition, Rex R. Hester and Fred E. Tinch, founders and principal owners of privately held Protocol, agreed to become vice presidents of Tekelec and not to compete against Tekelec for five years. In exchange, they will be paid up to a combined $2 million over that period.
Tekelec earned $749,000 on revenue of $17 million last year. Protocol reported pre-tax income of about $1.5 million on sales of $2.75 million.