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                          CONSULTING SERVICES AGREEMENT

THIS AGREEMENT entered into as of the 8th day of October, 1998, by and between
AM Communications, Inc., a Delaware corporation, having its principal address at
100 Commerce Boulevard, Quakertown, PA 18951-2237 ("AM" or "Company") and
Network Systems and Technologies (P) Ltd. ("NeST"), having its principal address
in Trivandrum, India.

WHEREAS, NeST desires to provide and AM desires to obtain from time to time
certain technical services; and

WHEREAS, the parties intend that this Agreement shall constitute a basic
agreement the terms and conditions of which shall apply to each Task Order
issued by Company and accepted by NeST.

NOW THEREFORE, in consideration of the mutual covenants and premises contained
herein and the compensation to be paid by AM to NeST hereunder, the parties
hereto convenant and agree as follows:

 1.       DEFINITIONS

          As used in this Agreement and all Task Orders, the terms set forth in
          this Section 1 shall have those meanings indicated below or in the
          referenced Section.

          Consultant--An individual employee (or independent contractor) of NeST
          who performs services for Company pursuant to this Agreement and any
          related Task Order.

          Disclosed Information - Section 5.1

          Discloser - Section 5.1

          Key Consultant - Section 2.4

          NeST Materials - Section 5.2

          Task Order - Section 2.2

          Work Product - Section 5.2


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2.        SERVICES

2.1       Services Provided. NeST agrees to provide to AM under the terms and
          conditions of this Agreement technical engineering services including
          hardware and software design. Said services shall be provided in
          accordance with Task Orders which reference this Agreement, are issued
          from time to time by Company to NeST, and are accepted by NeST. The
          parties anticipate that certain Task Orders will be issued as set out
          in Schedule A. NeST agrees to have sufficient resources available to
          perform the anticipated Task Orders set out in Schedule A.

2.2       Task Orders.

(a)       Each Task Order shall be governed by the terms and conditions of this
          Agreement and the terms and conditions of the Task Order. In the event
          of a conflict between the terms and conditions of this Agreement and
          the terms and conditions of any Task Order, the terms and conditions
          of the Task Order shall govern and Supersede those of this Agreement
          with respect to that Task order only.

(b)       NeST acknowledges AM's right to make Task Orders subject to (i) NeST's
          right to refuse to accept (in writing within five (5) business days
          following its receipt of Company's proposed changes) material changes,
          and (ii) the parties agreeing on appropriate increases or decreases to
          the charges under the applicable Task Order for material changes.

(c)       Company may terminate any Task Order for convenience at any time by
          giving NeST prior written notice. Upon its receipt of such notice of
          termination, NeST will immediately discontinue all further services on
          behalf of Company under the applicable Task Order and will use
          reasonable efforts to mitigate all costs to Company from that date
          forward. In no event shall Company be required to pay for any
          consulting fees incurred beyond a date which is (5) business days
          following NeST's receipt of such notice.

2.3       Time and Place. The parties hereto will perform their respective
          obligations hereunder in accordance with the time schedule set out in
          each Task Order. TIME IS OF THE ESSENCE. Notwithstanding the foregoing
          two sentences, neither party shall be deemed to have breached the
          provisions of this Section 2.3 for any reasonable delay due to the
          prolonged incapacitation of a Key Consultant or delays which are
          caused solely by Company.


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2.4       Key Consultants. The Key Consultants of NeST who will provide
          programme management services will be designated as "Key Consultants"
          in each Task Order. Unless they cease to be directly or indirectly
          employed or retained by NeST, these Key Consultants shall not be
          replaced by NeST for services designated under the applicable Task
          Order without Company's prior approval, not to be unreasonably
          withheld. In the event of prolonged illness, resignation, discharge
          for cause or other causes beyond NeST's control, a Key Consultant may
          be replaced by another person of equal expertise, competence and
          level, and said replacement by NeST shall be made within a reasonably
          feasible time following reasonable knowledge by NeST of the necessity
          for such replacement.

2.5       Termination of Consultants by Company NeST shall immediately reassign
          any Consultant with whom Company, in its sole opinion, is dissatisfied
          for any reason.

2.6       Tools NeST shall provide at its expense all working space, tools and
          other items as it considers appropriate for the services to be
          performed at its location in India. AM will provide the same for any
          work done at its facility in Quakertown.

2.7       Relationship Manager. Each party shall assign one individual as
          relationship manager who shall be the primary liaison between the
          parties during the terms of this Agreement. The NeST relationship
          manager shall be located at the AM facility.

2.8       Progress Reports. NeST shall prepare reports on the first and
          fifteenth day of each calendar month (or such times as may be mutually
          agreed upon by the parties) during the Term of any Task Order. The
          progress reports shall address the following primary areas: (i) work
          accomplished during the period covered by the report, (ii) new
          problems encountered during the period covered by the report and
          solutions effected or recommended, (iii) work schedule for the period
          to be covered by the next report, (iv) old problems that have been
          resolved and old problems that have not been resolved and the
          anticipated date of resolution, (v) status of the project relative to
          the Time Schedule, and (vi) the amount of permissible expenses for
          reimbursement for the preceding period and the aggregate total of the
          reimbursable expenses to the date of the report.


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2.9       Consultant Standards.

(a)       NeST represents and warrants that its consultants will be of a high
          caliber and will meet the highest professional standards for the type
          of work assigned to such Consultant hereunder. NeST further
          represents, warrants and covenants that the services performed by each
          Consultant will be reasonably acceptable to Company.

(b)       Any services performed by Consultants under proper technical direction
          by NeST which are determined by Company to be of a caliber below that
          warranted by NeST pursuant to Section 2.9 (a) above, shall be
          corrected by NeST without charge to Company provided that Company
          informs NeST thereof within three (3) months of the time it knew of
          such below warranted caliber services.

3.        COMPENSATION

3.1       Payments by AM for the NeST engineering services shall be based on the
          rate of $20.00 per hour based on the number of hours incurred on each
          specific Task Order. NeST shall be responsible for paying all expenses
          related to consultants. NeST shall invoice AM monthly for services
          performed. NeST is responsible for any and all taxes applicable to
          this Agreement or which are measured by payments made under it.

3.2       AM shall pay invoices within thirty (30) days of receipt. Upon
          termination of this Agreement for any reason, any compensation accrued
          but unpaid at the time of termination shall be paid in accordance with
          this Section.

3.3       In lieu of making cash payments on invoices, AM shall have the right
          to make payment against invoices by issuing warrants to purchase AM
          common stock under the following terms:

(a)       The purchase price of warrants to be issued shall be $.01 per share.

(b)       The number of the shares of AM Common Stock which warrants shall be
          entitled to purchase shall be based on the invoice value of the
          services performed divided by AM per share price based on the 30 days
          average (based on average of bid and ask price) of the AM stock during
          the respective month in which the services were performed.


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(c)       Warrants shall be exercisable for a period of five (5) years after
          issuance.

(d)       The maximum number of shares represented by warrants shall not exceed
          10 million shares.

3.4       The terms of the warrants shall be outlined in a separate warrant
          agreement to be negotiated between the parties.

4.        TERM

4.1       Term of Agreement. The term of this Agreement shall commence on the
          date of execution of this Agreement and shall continue until all Task
          Orders issued by Company prior to termination as provided in the
          immediately following sentence have expired by their terms. This
          Agreement may be terminated by either party upon ninety (90) days
          prior written notice to the other.

4.2       Termination for Default. Company shall have the right to immediately
          terminate this Agreement and / or any Task Order in the event the
          occurrence of any one of the following is not remedied within thirty
          (30) days of receipt of written notice; (I) NeST neglects or fails to
          perform or observe any of its obligations hereunder or pursuant to
          any other Agreement with Company, or (ii) if any assignment is made of
          NeST's business for the benefit of creditors, or if a petition in
          bankruptcy is filed by or against NeST, or if a receiver, trustee in
          bankruptcy or similar officer is appointed to take charge of all part
          of its property or if NeST is adjudicated as bankrupt.

5.        CONFIDENTIALITY AND PROPRIETARY RIGHTS

5.1       The parties agree to abide by the Mutual Confidentiality Agreement
          attached as Schedule C.

5.2       Assignment of Work Product.

(a)       NeST agrees that all inventions, improvement, discoveries, or
          developments including, but not limited to, computer software authored
          by NeST ("Work Product") which NeST may make or conceive during the
          term hereof and for one (1) year thereafter, either solely or jointly
          with others, whether arising from NeST's own efforts or suggestions
          received from any other source, which arise out of the services
          provided pursuant to this Agreement or


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          exposure to Disclosed Information, are a work make for hire and are
          the exclusive property of Company free from any claim or retention of
          rights thereto on the part of NeST (including for the purposes of
          copyright). In addition to the immediately preceding sentence and
          other than where the Work Product is considered a work made for hire.
          NeST further agrees to (and, as appropriate, will in the future), and
          here does, grant, convey and assign to Company absolutely and
          exclusively all such Work Product and all intellectual property rights
          therein.

(b)       NeST agrees to fully disclose all Work Product to Company.

(c)       NeST agrees that at the request and expense of Company and without
          charge or compensation beyond the charges provided pursuant to this
          Agreement, to execute all instruments and documents and to do all
          things which may be reasonably necessary to protect the rights of
          Company and vest in it and its assigns all such Work Product and all
          intellectual property rights therein.

(d)       NeST may identify portions of the Work Product as proprietary to NeST
          at the time of delivery of the Work Product to Company, if those
          portions pre-existed this agreement ("NeST Materials"). The parties
          agree that the NeST Materials will remain the property of NeST, but
          Company is hereby granted a permanent, non-revocable, non-exclusive,
          royalty free license with the right to sublicense to make, have made,
          use, sell, reproduce, distribute, perform, display and prepare
          derivative works of NeST Materials.

5.3       Consultant Confidentiality Agreements. NeST represents and warrants
          that NeST has appropriate agreements with its employees and / or any
          Consultant to whom Disclosed Information may be disclosed, or others
          whose services it may require, sufficient to enable it to comply with
          all of the terms of this Agreement.

5.4       Standard of Care. In connection with NeST's obligations hereunder,
          NeST agrees to use the standard of care, which is consistent with the
          highest industry standards in continuously controlling the use and
          disclosure of Disclosed Information in a manner that fully protects
          Company's rights therein.


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5.5 Representations, Warranties, Covenants and Indemnities.

(a)       NeST represents, warrants and covenants that all Work Product is
          original to NeST, that NeST is the sole creator of the Work Products,
          that no Work Product has been published; that NeST has not made any
          commitment for the use or publication of the Work Product; and that no
          such Work Product nor the use thereof does or will violate or infringe
          upon any patent, copyright, trademark, trade secret or other property
          right of any other person, whether or not similar to any of the
          foregoing, nor entitle any third party to make a claim against Company
          for the unlawful use of confidential information or trade secrets.
          NeST further represents and warrants that the Work Product contains no
          matter which is libelous or otherwise contrary to law. NeST agrees
          that NeST will indemnify and hold Company harmless from any and all
          losses, costs, claims, demands, expenses (including attorney's fees),
          and liabilities whatsoever arising from its breach of any warranty or
          any misrepresentation with respect to the provisions of this Section
          5.5, and at NeST's own expense will defend with legal counsel
          acceptable to Company, or, Company, at its option, may defend with its
          legal counsel at its cost and NeST will assist in such defense,
          providing, however, that NeST has received reasonably prompt notice of
          any matter of which Company has knowledge which gives rise to a right
          of indemnity hereunder. During the pendency of any claim against NeST
          with respect to infringement, Company may withhold payment of any sums
          otherwise required to be paid hereunder.

(b)       If, in any suit such work or any portion thereof is held to constitute
          any infringement and its use enjoined, NeST will, at its sole cost,
          undertake one of the following courses of action; (i) procure the
          right to continue to use such work or such infringing portion, (ii)
          upon the consent of Company, modify such work or such infringing
          portion to render it non-infringing, or (iii) upon the consent of
          Company replace such work or such infringing portion with a
          non-infringing replacement.

5.6       Survival. The provisions of this Section 5 and all subsections
          thereunder shall survive the completion and any termination or
          expiration of any Task Order or this Agreement.


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6.        EMPLOYEES

6.1       Non-Solicitation of Employees. NeST agrees that without the prior
          written content of Company, it will not hire or cause to be hired or
          induce any of Company's employees who are assigned full or part time
          to any endeavor related to a Task Order to leave his / her employment
          from the expiration of said Task Order through a date two (2) years
          thereafter.

7.        INSURANCE AND INDEMNITIES

7.1       Insurance for NeST and Consultants. NeST represents, warrants and
          covenants that during the term of this Agreement, NeST will maintain
          at NeST's expense all the necessary insurance for NeST and
          Consultants, including but not limited to workmen's compensation,
          disability, and unemployment insurance, and to provide Company with
          certification thereof upon request. NeST agrees to indemnify and hold
          harmless Company and its employees from any and all loss, costs,
          damages, expenses and liabilities (including attorney's fees), arising
          as a result of the breach by NeST of the provisions of this Section
          7.1

7.2       Injury or Damages to Persons or Property NeST agrees to indemnify and
          hold harmless Company and its employees from any and all loss, costs,
          damages, expenses and liabilities (including attorney's fees) by
          reason of personal injury or property damage of whatsoever nature or
          kind arising, in whole or in part, out of, as a result of, or in
          connection with the acts or omissions of NeST or Consultants.
          Furthermore, NeST agrees to maintain public liability insurance
          covering NeST's obligations contained herein.

7.3       Company Regulations.

(a)       NeST agrees that it and its employees will at all times comply with
          all reasonable regulations regarding security, usage of Company
          equipment, facilities and personnel and safety generally applicable to
          Company's employees and invitees, in effect from time to time at
          company's premises, and externally for material belonging to Company.
          Further NeST agrees that it and its employees will be subject to
          reasonable restrictions imposed by Company in connection with areas of
          their premises at which Consultants may be present during the course
          of the performance of this Agreement.


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(b)       NeST will indemnify and hold harmless Company and its employees, from
          any and all loss, costs, damages, expenses and liabilities (including
          attorney's fees) with respect to: (i) any injury to, or death of any
          employee of NeST while such person is present on the premises of
          Company, and (ii) any damage to NeST property or that of any of its
          employees which may occur while at the premises of Company, unless and
          except to the extent that such injury, death, loss, or damage is
          caused by the gross negligence or willful misconduct of Company, its
          employees or agents.

8.        GENERAL

8.1       Compliance with Laws. Each party agrees to perform its obligations
          hereunder in accordance with all-applicable laws, rules, and
          regulations now or hereafter in effect.

8.2       Modification. This Agreement can only be modified by a written
          agreement duly signed by the persons authorize to sign agreements on
          behalf of Company and NeST, and variance from the terms or conditions
          of this Agreement or any order or other written notification from the
          Company will be of no effect.

8.3       Severability of Provisions. If any provision or provisions of this
          Agreement shall be held to be invalid, illegal or unenforceable, the
          validity, legality and enforceability of the remaining provisions
          shall not in any way be affected or be impaired thereby.

8.4       Choice of Law: Choice of Forum. This Agreement shall be construed
          according to the laws (other than the laws on conflicts of laws) of
          the Commonwealth of Pennsylvania. The parties hereto agree to accept
          the exclusive jurisdiction of the courts of the Commonwealth of
          Pennsylvania, and those of the United States of America situated in
          Pennsylvania, for the adjudication of any dispute arising here from.
          The parties hereby waive their right, if any, to have any dispute
          arising under this Agreement determined by a jury proceeding.

8.5       Entire Agreement. This Agreement is the complete and exclusive
          statement of the agreement between the parties as to the subject
          matter hereof which supersedes all proposals or agreements, oral or
          written, and all other communications between the parties related to
          the subject matter of this Agreement.


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8.6       Waivers. A waiver of a breach or default under this Agreement shall
          not be a waiver of any other or subsequent breach or default. The
          failure or delay by either party in enforcing compliance with any term
          or condition of this Agreement shall not constitute a waiver of such
          term or condition unless such term or condition is expressly waived in
          writing.

8.7       Captions. Captions contained in this Agreement are for reference
          purposes only and do not constitute part of this Agreement.

8.8       Equity. In the event of a breach or threatened breach by NeST or any
          Consultant of any of the provisions of this Agreement, Company, in
          addition to any other remedies available to it under law, shall be
          entitled to an injunction restraining NeST from the performance of
          acts which constitute a breach of this Agreement, and NeST agrees not
          to raise adequacy of legal remedies as a defense thereof

8.9       Assignments. This Agreement and NeST's rights, duties, and obligations
          under this Agreement are not transferable, delegable, or assignable by
          NeST without the prior written consent of Company. Any attempt by NeST
          to transfer, delegate or assign this Agreement or any of its rights,
          duties, or obligations under this Agreement with such prior consent is
          void. Company may assign this Agreement or any of its rights or
          responsibilities hereunder.

8.10      Notices. All notices which are required to be given or submitted
          pursuant to this Agreement shall be in writing and shall be hand
          delivered or sent by certified mail or reputable overnight carrier
          (e.g. - Federal Express) return receipt requested, to the address set
          forth herein or to such other address as Company or NeST may from time
          to time designate and shall be deemed given upon receipt.

8.11      Compliance With Other Agreements. NeST represents and warrants to
          Company that in entering into this Agreement and carrying out its
          provisions, neither NeST nor any Consultant will be violating any
          Agreement or obligation it may have with any other party.

8.12      Non-use of Names and Marks. NeST agrees that it will not directly or
          indirectly, without the prior written consent of Company, use for the
          purposes of advertising, promotion, or publicity, or otherwise, the
          name of Company or any of its divisions, subsidiaries, affiliates,
          vendors or customers, or any


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          trademarks of Company or of any of its divisions, subsidiaries,
          affiliates, vendors or customers.

 8.13     Independent Contractors. NeST agrees that NeST and its consultant
          employees shall be considered an independent contractor and that
          neither NeST nor the consultants shall be deemed to be employees of
          Company. Consultants shall not be entitled to any employee benefits of
          Company. NeST will be solely responsible for the payment of all
          compensation owed to Consultants including payment, if any, of
          employment related taxes, all benefits and workmen's compensation
          insurance. NeST warrants and represents that it has complied, is in
          compliance with, and covenants that during the term of this Agreement
          or any Task Order hereunder, NeST will comply with all laws, rules,
          and regulations required by appropriate government authorities of
          independent contractors, including the appropriate withholding,
          reporting and payment of all required taxes. NeST agrees to indemnify
          and hold harmless Company and its employees from any and all loss,
          costs, damages, expenses or liabilities (including attorney's fees)
          arising as a result of the breach by NeST of the provisions of this
          Section 8.13.

8.14      Schedules  All Schedules to this Agreement referred to herein are
          incorporated herein by reference.

8.15      Authority  Each party represents that it has full power and authority
          to enter into and perform this Agreement, and the person signing this
          Agreement on behalf of it has been properly authorized and empowered
          to enter into this Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective
the day and year first above written,

AM COMMUNICATIONS, INC,                           NETWORK SYSTEMS &
                                                  TECHNOLOGIES (P) LTD.

Name /s/ Keith Schneck                            Name /s/ xxxxxxxxx
----------------------                            ---------------------
Title  President                                  Title