EXHIBIT 10.3

                                     TEKELEC

                       NONSTATUTORY STOCK OPTION AGREEMENT

     Tekelec, a California corporation (the "Company"),  hereby enters into this
Nonstatutory Stock Option Agreement (this "Option  Agreement") with Frederick M.
Lax (the "Optionee") effective as of the 1st day of February,  2001, whereby the
Company  grants to the Optionee the right and option to purchase an aggregate of
350,000 shares of Common Stock (the "Shares") of the Company.

     1. Nature of the Option. This Option is intended to be a nonstatutory stock
option and is not intended to be an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), or to
otherwise qualify for any special tax benefits to the Optionee.

     2. Exercise Price.  The exercise price is $27.56 per Share,  which price is
not less than 100% of the fair market value thereof on the date of the grant.

     3. Method of  Payment.  The  consideration  to be paid for the Shares to be
issued  upon  exercise of this Option  shall  consist  entirely of cash or check
payable to the Company.

     4.  Exercise of Option.  This Option shall be  exercisable  during its term
only in accordance  with the terms and  provisions  of this Option  Agreement as
follows:

          (a) This Option shall vest and become  exercisable  cumulatively as to
87,500 Shares on February 1, 2002 and as to the remaining  262,500  Shares in 12
equal quarterly  installments of 21,875 shares each, with the first  installment
vesting on June 30, 2002 and one additional  installment vesting on the last day
of each calendar quarter thereafter,  as long as the Optionee continues to serve
as an employee of the Company. The Optionee may exercise the exercisable portion
of this Option in whole or in part at any time during his employment provided he
has been in  continuous  employment  with the  Company  since  the grant of this
Option.  However,  the Option may not be exercised for a fraction of a Share. In
the event of the  Optionee's  termination  of  employment  with the  Company  or
disability or death,  the  provisions of Sections 6 or 7 below,  as  applicable,
shall apply to the right of the Optionee to exercise this Option.

          (b) This Option  shall be  exercisable  by written  notice which shall
state the election to exercise  this Option,  the number of Shares in respect to
which  this  Option  is being  exercised  and  such  other  representations  and
agreements  as may be required by the  Company.  Such  written  notice  shall be
signed by the Optionee and shall be delivered in person or by certified  mail to
the  Secretary of the Company or such other person as may be  designated  by the
Company.  The written  notice  shall be  accompanied  by payment of the purchase
price and an executed  Notice of Exercise of Stock  Option in the form  attached
hereto.  As soon as  practicable  after any proper  exercise  of this  Option in
accordance with the provisions hereof, the Company shall deliver to the Optionee
at the principal executive office of the Company or such other place as shall be
mutually  agreed upon between the Company and the  Optionee,  a  certificate  or
certificates  representing  the
<PAGE>

                                                                    EXHIBIT 10.3

Shares  for which the Option  shall  have been  exercised.  The  certificate  or
certificates  for the  Shares  as to which  this  Option is  exercised  shall be
registered in the name of the Optionee.

          (c) No rights of a shareholder  shall exist with respect to the Shares
under this Option as a result of the mere grant of this  Option or the  exercise
of  this  Option.  Such  rights  shall  exist  only  after  issuance  of a stock
certificate in accordance with Section 4(b) hereof.

     5.  Restrictions  on  Exercise.  This  Option may not be  exercised  if the
issuance  of Shares  upon the  Optionee's  exercise  or the method of payment of
consideration  for such Shares would  constitute  a violation of any  applicable
Federal or state  securities law or other  applicable  law or  regulation.  As a
condition to the  exercise of this Option,  the Company may require the Optionee
to make any representation and warranty to the Company as may be required by any
applicable law or regulation.

     6.  Termination  of  Employment.  If the  Optionee  ceases  to  serve as an
employee of the Company for any reason other than death or  permanent  and total
disability  (within  the  meaning of Section  22(e)(3)  of the Code) and thereby
terminates  his  continuous  status as an employee of the Company,  the Optionee
shall have the right to exercise  this Option at any time  within  three  months
after the date of such  termination to the extent that the Optionee was entitled
to exercise this Option at the date of such termination.  To the extent that the
Optionee was not entitled to exercise this Option at the date of termination, or
to the extent this Option is not  exercised  within the time  specified  herein,
this Option shall terminate.  Notwithstanding  the foregoing,  this Option shall
not be  exercisable  after the  expiration  of the term set  forth in  Section 8
hereof.

     7. Death or Disability.  If the Optionee  ceases to serve as an employee of
the Company due to death or permanent and total  disability  (within the meaning
of Section  22(e)(3)  of the Code),  this  Option may be  exercised  at any time
within six months after the date of death or  termination  of employment  due to
disability,  in the case of death,  by the Optionee's  estate or by a person who
acquired the right to exercise this Option by bequest or inheritance, or, in the
case of  disability,  by the  Optionee,  but in any case only to the  extent the
Optionee was entitled to exercise  this Option at the date of such  termination.
To the extent that the Optionee was not entitled to exercise  this Option at the
date of  termination,  or to the extent this Option is not exercised  within the
time  specified  herein,  this  Option  shall  terminate.   Notwithstanding  the
foregoing, this Option shall not be exercisable after the expiration of the term
set forth in Section 8 hereof.

     8. Term of Option.  This  Option may not be  exercised  more than ten years
from the date of grant of this Option and may be exercised during such term only
in  accordance  with the terms of this  Option  Agreement.  Notwithstanding  any
provision  herein with respect to the  post-employment  exercise of this Option,
this Option may not be exercised after the expiration of its term.

     9. Reservation of Shares.  The Company covenants and agrees that all Shares
will, upon issuance and payment in accordance  herewith,  be fully paid, validly
issued and  nonassessable.  The Company further covenants and agrees that during
the term of this  Option,  the  Company  will at all times have  authorized  and
reserved for the purpose of issuance  upon  exercise of this Option at least the
maximum number of Shares as are issuable upon such exercise.
<PAGE>

                                                                    EXHIBIT 10.3

     10. Dissolution; Liquidation, Consolidation, Merger or Reclassification. In
the event that while the  Optionee is an employee  of the  Company,  the Company
proposes to dissolve or  liquidate  or to sell all or  substantially  all of its
assets  (other  than  in the  ordinary  course  of  business),  or to  merge  or
consolidate with or into another corporation as a result of which the Company is
not the surviving and controlling corporation,  the Board of Directors shall (i)
make provision for the assumption of this Option by the successor corporation or
(ii) declare that this Option shall terminate as of a date fixed by the Board of
Directors which is at least 30 days after the notice thereof to the Optionee and
shall give the Optionee the right to exercise  this Option as to all or any part
of the Shares,  including  Shares as to which this Option would not otherwise be
exercisable provided such exercise does not violate Section 8 hereof.

     11. Adjustment of Exercise Price and Number of Shares.

          (a) The  number  of  Shares  subject  to this  Option,  as well as the
exercise price per Share  hereunder  shall be  proportionately  adjusted for any
increase  or  decrease in the number of issued  shares of the  Company's  Common
Stock  resulting  from a stock  split or  combination  or the payment of a stock
dividend  (but only on the  Company's  Common  Stock) or any other  increase  or
decrease in the number of issued shares of the Company's  Common Stock  effected
without  receipt of  consideration  by the Company  (other than stock  awards to
employees  of the  Company);  provided,  however,  that  the  conversion  of any
convertible  securities of the Company shall not be deemed to have been effected
without the receipt of consideration. Such adjustment shall be automatic and the
form of this Agreement need not be changed because of any such adjustment in the
exercise  price or in the number of Shares  purchasable  upon exercise of all or
any portion of this Option. 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 subject to this Option.

          (b) No fractional  shares of Common Stock shall be issuable on account
of any  action  contemplated  by Section 10 or  Section  11(a)  hereof,  and the
aggregate  number of shares into which Shares then covered by this Option,  when
changed as the result of any such action, shall be reduced to the largest number
of whole  shares  resulting  from such  action,  unless the  Company's  Board of
Directors,  in its sole discretion,  shall determine to issue scrip certificates
in respect to any fractional shares, which scrip certificates shall be in a form
and have such terms and  conditions as the Board of Directors in its  discretion
shall prescribe.

     12.  Withholding upon Exercise of Option. The Company reserves the right to
withhold, in accordance with any applicable laws, from any consideration payable
to the Optionee any taxes required to be withheld by Federal, state or local law
as a  result  of the  grant  or  exercise  of this  Option  or the sale or other
disposition of the Shares issued upon exercise of this Option.  If the amount of
any  consideration  payable to the Optionee is insufficient to pay such taxes or
if no consideration is payable to the Optionee, upon the request of the Company,
the  Optionee  shall pay to the  Company  in cash an amount  sufficient  for the
Company to satisfy any Federal,  state or local tax withholding  requirements it
may  incur as a result of the grant or  exercise  of this  Option or the sale or
other disposition of the Shares issued upon the exercise of this Option.
<PAGE>

                                                                    EXHIBIT 10.3

     13.  Nontransferability  of Option.  This Option may not be sold,  pledged,
assigned, hypothecated,  gifted, transferred or disposed of in any manner either
voluntarily or  involuntarily  by operation of law, other than by will or by the
laws of descent or  distribution  or  transfer  between  spouses  incident  to a
divorce.  Subject to the  foregoing,  the terms of this Option  shall be binding
upon  the  executors,  administrators,  heirs,  successors  and  assigns  of the
Optionee.

     14. No Right of Employment.  This Option shall not confer upon the Optionee
any right to continue in the  employment  of the Company or limit in any respect
the right of the Company to discharge the Optionee at any time,  with or without
cause and with or without notice.

     15. Miscellaneous.

          (a) Successors and Assigns. This Option Agreement shall bind and inure
only to the benefit of the parties to this Option  Agreement (the "Parties") and
their respective successors and assigns.

          (b) No Third-Party Beneficiaries.  Nothing in this Option Agreement is
intended to confer any rights or remedies on any persons  other than the Parties
and their respective successors or assigns.  Nothing in this Option Agreement is
intended to relieve or discharge the obligation or liability of third persons to
any Party. No provision of this Option Agreement shall give any third person any
right of subrogation or action over or against any Party.

          (c) Amendments.

               (i) The  Company  reserves  the  right to  amend  the  terms  and
provisions  of this  Option  without the  Optionee's  consent to comply with any
Federal or state securities law.

               (ii) Except as  specifically  provided in  subsection  (i) above,
this Option  Agreement  shall not be changed or  modified,  in whole or in part,
except by supplemental  agreement signed by the Parties.  Either Party may waive
compliance  by the other Party with any of the  covenants or  conditions of this
Option  Agreement,  but no waiver shall be binding unless executed in writing by
the Party making the waiver. No waiver or any provision of this Option Agreement
shall be deemed, or shall constitute,  a waiver of any other provision,  whether
or not similar, nor shall any waiver constitute a continuing waiver. Any consent
under this Option  Agreement  shall be in writing and shall be effective only to
the extent  specifically  set forth in such writing.  For the  protection of the
Parties,  amendments,  waivers and consents that are not in writing and executed
by the Party to be bound may be enforced only if they are  detrimentally  relied
upon and  proved by clear  and  convincing  evidence.  Such  evidence  shall not
include any alleged reliance.

          (d)  Notice.  Any notice,  instruction  or  communication  required or
permitted  to be given under this Option  Agreement  to either Party shall be in
writing and shall be deemed given when  actually  received or, if earlier,  five
days after  deposit in the United  States  mail by  certified  or express  mail,
return  receipt  requested,  first  class  postage  prepaid,  addressed  to  the
principal  office  of such  Party or to such  other  address  as such  Party may
request by written notice.
<PAGE>

                                                                    EXHIBIT 10.3

          (e)  Governing  Law. To the extent that Federal laws do not  otherwise
control,  all  determinations  made or actions  taken  pursuant  hereto shall be
governed by the laws of the State of California,  without regard to the conflict
of laws rules thereof.

          (f) Entire  Agreement.  This Option  Agreement  constitutes the entire
agreement  between the Parties with regard to the subject  matter  hereof.  This
Option Agreement  supersedes all previous  agreements  between the Parties,  and
there are now no agreements, representations, or warranties between the Parties,
other than those set forth herein.

          (g)  Severability.  If any  provision of this Option  Agreement or the
application of such provision to any person or  circumstances is held invalid or
unenforceable,  the remainder of this Option  Agreement,  or the  application of
such  provision to persons or  circumstances  other than those as to which it is
held invalid or unenforceable, shall not be affected thereby.

     IN WITNESS WHEREOF,  this Option Agreement has been duly executed on behalf
of  the  Company  by an  authorized  representative  of the  Company  and by the
Optionee as of the date and year first written above.

DATE OF GRANT:  February 1, 2001     Tekelec

                                     By: /s/ Michael L. Margolis
                                        ----------------------------
                                         Michael L. Margolis
                                         President and Chief Executive Officer

                                         /s/ Frederick M. Lax
                                     -------------------------------
                                     Frederick M. Lax

     THIS OPTION AND THE  SECURITIES  WHICH MAY BE PURCHASED  UPON  EXECUTION OF
THIS  OPTION  HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES  ACT OF 1933,  AS
AMENDED,  OR QUALIFIED  UNDER THE  SECURITIES  LAWS OF ANY STATE,  AND HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE,
TRANSFER OR DISTRIBUTION  THEREOF. NO SUCH SALE, TRANSFER OR DISTRIBUTION MAY BE
EFFECTED  WITHOUT AN EFFECTIVE  REGISTRATION  STATEMENT  RELATING  THERETO OR AN
OPINION OF COUNSEL  SATISFACTORY  TO THE COMPANY THAT SUCH  REGISTRATION  IS NOT
REQUIRED.
<PAGE>

                                                                    EXHIBIT 10.3

                                     TEKELEC

                 NOTICE OF EXERCISE OF NONSTATUTORY STOCK OPTION

     I, Frederick M. Lax  ("Optionee"),  hereby agree,  represent and warrant to
Tekelec (the "Company") as follows:

     1.   I was granted a  Nonstatutory  Stock Option (the "Option") on February
          1, 2001.

     2.   Pursuant  to  the  Option,   I  was  granted  the  right  to  purchase
          ____________  shares of the  Company's  Common  Stock  (the  "Optioned
          Shares").

     3.   I am eligible to exercise the Option.

     4.   I hereby elect to exercise the Option to purchase  ___________ of such
          Optioned Shares (the "Shares") at  U.S.$___________  per share, for an
          aggregate purchase price of U.S.$___________.


     5.   Payment of Purchase Price (please check applicable box):

          |_|  This Notice of Exercise is  accompanied by payment in full of the
               purchase price for the shares in the form of cash or check.

               OR

          |_|  This  exercise  is a  "cashless  exercise"  effected  through  my
               broker.  Payment  in full for the  Shares  in the form of a check
               will be transmitted by my broker to the Company.

     6.   In connection  with my exercise of the Option,  I have received a copy
          of any  Prospectus  of the  Company's  relating  to the  shares of the
          Company's Common Stock issuable under the Option.

Dated: ________________, 200__          OPTIONEE


                                        Signature:
-----------------------                            ----------------------------
Social Security Number                                   Frederick M. Lax
                                        Address:
                                                -------------------------------
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Received on behalf of Tekelec on ____________________, 200__.
Signature:
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