EXHIBIT 10.2

January 18, 2001

PERSONAL AND CONFIDENTIAL                                    Via Federal Express

Frederick M. Lax
2902 Glenbriar Drive
St. Charles, IL  60174

Dear Fred:

     On behalf of Tekelec,  I am pleased to offer you  employment  as  Executive
Vice  President and Chief  Operating  Officer,  on the terms and  conditions set
forth in this letter.  As Executive Vice President and Chief Operating  Officer,
you  will  report  directly  to  Tekelec's  Chief  Executive  Officer,  will  be
principally  responsible for Tekelec's  worldwide  operations and will have such
other duties and  responsibilities  as may be delegated to you from time to time
by the Chief  Executive  Officer  and/or the Board of Directors.  Your principal
office   will  be  located  in  our   Calabasas,   California   facility.   Your
responsibilities  will from time-to-time require frequent travel. You may choose
your employment start date so long as it is on or before February 19, 2001.

Your compensation and benefits will be as follows:

1.   Your  starting  annual  base salary  will be  $325,000  (i.e.,  $12,500 per
     bi-weekly period).

2.   You will be eligible to  participate  in Tekelec's 2001 Officer Bonus Plan,
     under which you will be eligible to receive,  in accordance  with the terms
     of such  Plan as  approved  by the  Company's  Board  of  Directors  (which
     approval is expected no later than in February 2001), (A) quarterly bonuses
     in 2001 equal to 160% of your quarterly  earnings for a calendar quarter if
     the Company  achieves  certain  quarterly  financial  milestones and (B) an
     annual  bonus  equal to 40% of your 2001  annual  earnings  if you  achieve
     certain  objectives  during 2001.  For  purposes of the 2001 Officer  Bonus
     Plan, your quarterly earnings and your annual earnings will be deemed equal
     to $81,250 and $325,000,  respectively.  The terms of your participation in
     any officer  bonus plans for post - 2001  periods will be subject to change
     and the approval of the Board of Directors of Tekelec.

3.   You will be entitled to take four weeks personal time annually.

4.   You will receive applicable  benefits,  including health,  dental,  vision,
     long-term  disability  and life  insurance,  as are  generally  provided to
     Tekelec's executive officers.
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                                                                    EXHIBIT 10.2

5.   You will be offered the  opportunity to  participate in Tekelec's  Employee
     Stock  Purchase  Plan  and  401(k)  Plan  upon  your  satisfaction  of  the
     eligibility requirements for such plans.

6.   You will be covered by Tekelec's  Officer  Severance  Plan (a copy of which
     has been previously provided to you).

7.   The Board of  Directors  of Tekelec  will grant to you  nonstatutory  stock
     options to purchase  350,000  shares of Tekelec  Common Stock  ("Options"),
     effective  as of the later of your  start  date or the date of the  Board's
     action  granting  such options (the "grant  date").  Alternatively,  at the
     Board's  election prior to the grant date, the Options may be granted under
     Tekelec's  1994 Stock Option Plan.  The exercise price of your Options will
     be equal to the closing  price of Tekelec's  Common Stock on the grant date
     (as reported in The Wall Street Journal on the first business day following
     the grant date).  Your Options will vest to the extent of 87,500  shares on
     the one-year  anniversary of your start date. The remaining  262,500 shares
     will  vest  and  become  exercisable  cumulatively  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 you remain an  employee  of
     Tekelec.  The  issuance of the shares upon  exercise of the Options will be
     registered  under the Securities Act of 1933. Your Options will expire,  to
     the extent previously  unexercised,  upon the earlier of ten years from the
     date of grant or a date not less than three  months after you cease to be a
     Tekelec employee.  The Options will in all respects be subject to the terms
     and  provisions of the stock option  agreement  evidencing the grant of the
     Options.  In addition to the foregoing  grant,  it is anticipated  that the
     Compensation  Committee  of  the  Board  of  Directors  will  periodically,
     typically  annually,  consider whether additional options should be granted
     to you while you remain an officer of the Company.

8.   The Board of Directors  will grant you a  restricted  stock award of 30,000
     shares ("Restricted Shares"). The Restricted Shares will vest in four equal
     annual  installments  of 7,500  shares  each,  with the  first  installment
     vesting on the one-year  anniversary  of your start date and one additional
     installment vesting on each anniversary thereafter provided that you remain
     an employee of Tekelec.

9.   Tekelec will pay you up to a maximum of $250,000 to reimburse  you for your
     accountable  costs  incurred in  relocating  to  California,  including the
     anticipated  commissions and fees for the sale of your current home, losses
     incurred on the sale of your current  home,  the closing costs you incur in
     connection  with your  purchase  of a new home in  California,  your actual
     out-of-pocket  travel,  moving,  rental and other expenses relating to your
     relocation and the  associated  income taxes payable by you with respect to
     your receipt of such reimbursement. In addition, the Company will reimburse
     you  for  the  costs  of  temporary  housing  in  California  pending  your
     relocation   (up  to  a  maximum  of  six   months)   and  the   reasonable
     transportation expense you incur traveling to such location.

     You have  advised us that you propose to resign as Vice  President,  Global
Customer Technical Support, of, and from all other positions that you hold with,
Lucent  Technologies no later than the date of your acceptance of this offer. We
understand  that you  believe  that you can become and serve as  Executive  Vice
President  and  Chief   Operating   Officer  of  Tekelec  under  the
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                                                                    EXHIBIT 10.2

conditions  anticipated in this letter  agreement  without  violating any of the
provisions  of your  current  employment  and  related  agreements  with  Lucent
(collectively,  the "Lucent Agreement"). In any event, we expect you to strictly
observe,  and to comply fully with, all the  provisions of the Lucent  Agreement
during its term  (including any provisions  that survive the termination of that
Agreement),  and to refrain from taking any action,  or causing any action to be
taken,  that would  directly or  indirectly  violate any provision  thereof.  By
signing the enclosed copy of this letter, you unconditionally  agree to strictly
observe  and to comply  fully  with all the terms and  provisions  of the Lucent
Agreement and  represent  and warrant that you are not currently  subject to any
express or implied  contractual  obligations to any former or current  employers
under  any  proprietary  rights,   confidentiality,   non-competition  or  other
agreements or understandings  except for the Lucent Agreement.  If you ever have
any concerns that the duties or responsibilities  assigned to you may violate or
have violated the Lucent Agreement,  you agree to promptly notify in writing our
General Counsel, Ronald W. Buckly.

     You are aware  that  Tekelec  prohibits  employees  from  unlawfully  using
confidential or proprietary information belonging to any other person or entity.
By signing the enclosed copy of this letter, you agree not to disclose or use or
induce Tekelec or any of its employees to use any trade secrets or  confidential
or proprietary information belonging to any of your former employers.

     As a condition of commencing  your  employment  with  Tekelec,  you will be
required  to  sign  Tekelec's  standard   "Confidentiality   and  Non-Disclosure
Agreement  and  Assignment  of  Rights"  (a copy of which  has  been  previously
provided  to you).  As with every  Tekelec  employee,  you  reserve the right to
terminate your employment at any time for any reason,  and we similarly  reserve
the right to terminate your  employment at any time,  with or without cause.  We
hope and  expect,  however,  that  this will be a long and  mutually  beneficial
relationship.

     This letter agreement contains our entire  understanding and agreement with
respect to your  employment with Tekelec and supercedes and replaces any and all
prior or contemporaneous  oral or written  communications  with respect thereto,
including  that letter  addressed to you from Tekelec,  dated December 22, 2000.
There are no promises or  understandings,  express or implied,  concerning  your
proposed  employment with Tekelec except as set forth herein.  The provisions of
this letter may be amended only by a writing  signed by you and by myself or the
Chairman of the Board of Directors of Tekelec on behalf of Tekelec.  If you have
any  questions  about the  meaning  of any of the terms or  provisions  included
herein, please let me know at your earliest  convenience.  This letter agreement
shall be construed under the laws of California.

     Fred,  we believe  that  Tekelec  can provide  you with  opportunities  for
professional  growth and financial  return.  We look forward to working with you
and to a mutually fulfilling and rewarding relationship.

     If this letter agreement is acceptable to you, then please acknowledge your
acceptance  by signing and dating the  enclosed  copy of this  letter  agreement
where indicated below and then faxing (fax number:  818.880.0176)  and returning
such signed copy to me for receipt no later than January 31, 2001.
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                                                                    EXHIBIT 10.2

                                   Sincerely,

                                   Michael L. Margolis
                                   Chief Executive Officer and President

Acknowledged and Accepted:

                                   Date:  January __, 2001
-------------------------------
Frederick M. Lax