<PAGE>

                                                                   EXHIBIT 10.26


                    REGUS BUSINESS CENTRE SERVICE AGREEMENT

Agreement number: Opt-16                Agreement date: March 29, 2000

The address of the business centre
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Address:  2530 Meridian Parkway 2nd & 3rd Floors                City  Durham
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State:  NC                                                      Zip Code  27713
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Your details - Client
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Company Name  Optical Networks                     Contact Name/Title  Troy Ward
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Address  166 Baypointe Parkway                     City  San Jose
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State  CA                                            Zip Code  95134
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Telephone  408-965-2859                              Fax  408-965-2660
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The nature of your business for the purpose of this Agreement
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Software
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The number of workstations you are paying for and the room numbers allocated to
you
<TABLE>
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<C>                               <S>
Number of workstations  25        Room numbers initially allocated to you  3086, 3087, 3088, 3089, 3090, 3091, 3092, 3093
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</TABLE>

The standard fee per calendar month          The service retainer you have paid
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$11,150.00  plus local taxes of $ 107.10     $19,400
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The initial period for which the agreement lasts
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Start date:  04-01-00                   End date:  08-31-00
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COMMENTS
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 T1 Costs: First 10 users $75.00/user/month, 11th plus user $50.00/user/month.
 Regus agrees to a one and a half month's retainer of $19,400. Per accounting
 details, an adjustment of $750.00 has been taken off of the monthly investment
 of $11,900 (for the adjusted rate amounts for the offset charges of the
 handsets). Given a new total of $11,150 per month. The invoice will show a
 charge of $125/per handset/month. The charges have been offset in the monthly
 investment. All Parties Agree.
 Clients have access to the building and their officers 24/7. Heating and A/C is
 supplied throughout the building. After client fulfills agreement, they may
 extend the agreement on a month to month basis. Client may give sixty days
 notice to terminate their agreement. Client may enter into a 30-day link
 agreement after their agreement comes to an end. We will not need to allocate
 different rooms to Optical Networks during their stay. Client will not need to
 take occupancy or need to pay the monthly investment on office #3093 at this
 time. Rent will commence when occupancy does.
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We are REGUS BUSINESS CENTRE CORP. of 100 Manhattanville Road, Purchase, NY
10577. This Agreement incorporates our Terms of Business attached to this
Agreement USING REGUS BUSINESS CENTRES which you confirm you have read and
understood. We both agree to comply with those terms and our obligations as set
out in them. Note that the agreement does not come to an end automatically. See
"Brining your agreement to an end" in the Terms of Business.
<TABLE>
<S>                                                              <C>
Name                 Rusty Cumpston                 (printed)    Name    S. Noel Coak     (printed)
       --------------------------------------------                     -----------------
Title  Sr. Vice President Engineering & Operations  (printed)    Title   Sales Manager    (printed)
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Date                 March 29, 2000                 (printed)    Date   March 29, 2000    (printed)
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SIGNED on your behalf - Client                                   SIGNED on our behalf - Regus
                /s/ signature illegible                                 /s/ Noel Coak
       --------------------------------------------                     -----------------
</TABLE>
<PAGE>

                         USING REGUS BUSINESS CENTRES

We are Regus Business Centre Corp. These are our terms of business. They apply
to the service agreement which you the client have signed (which we refer to
simply as your agreement). If two or more of you have signed the agreement your
liabilities are joint and several. Your agreement supersedes any previous
agreement you may have had with us for the same services and contains all the
terms we have agreed.

                STANDARD SERVICES INCLUDED IN YOUR STANDARD FEE

Furnished office accommodation: We are to provide the number of serviced and
fully furnished office rooms for which you have agreed to pay in the business
centre stated in your agreement. Your agreement lists the rooms we have
initially allocated for your use. We may need to allocate different rooms from
time to time, but these will be of equivalent size and we will attempt to obtain
your approval with respect to such different rooms in advance.

Office services:  We are to provide the following office services during normal
opening hours Monday to Friday
 .  access to your accommodation
 .  personalized telephone answering by our operators
 .  reception of your visitors by our receptionist
 .  heating and (where available) air conditioning
 .  lighting and electrical power
 .  cleaning
 .  servicing, maintenance and repair of our equipment
 .  use of a kitchen, sanitary facilities and photocopying areas

We are happy to discuss special arrangements for use of these facilities outside
our normal opening hours.

Loyalty bonus:  During each calendar month while this agreement lasts you are
entitled (subject to availability) to 4 hours free use of a standard 1-4 person
meeting or board room in the business centre and 3 days' free use of a 1-2
person office at any other Regus business centre world wide.

                              ADDITIONAL SERVICES

The following services are available for an extra charge in accordance with our
published rates which are subject to change from time to time.
 .  Secretarial services              .  Photocopying
 .  Telephone sets, line and usage    .  Messaging
 .  Courier services                  .  Facsimile
 .  Travel arrangements               .  Office supplies
 .  Translations                      .  Meeting and conference rooms
 .  Food and beverage services        .  Mail handling
 .  Voicemail*                        .  Video conferencing*
 .  Car parking*                      .  High speed internet access*

*  not available at all centres

                            USING THE ACCOMMODATION

On moving in:  You will be asked to sign an inventory of all accommodation,
furniture and equipment you are permitted to use, together with a note of its
condition, and details of the days or entry cards issued to you.

The nature of your business:  You must only use the accommodation for office
purposes, and only for the business stated in your agreement or subsequently
agreed with us. Office use of a "retail" nature, involving frequent visits by
members of the public, is not permitted. You must not use the name Regus in any
way in connection with your business.

Your name and address:  You may only carry on that business in your name or some
other name that we previously agree. At your request and cost we will include
that name in the house directory at the business centre, where this is
available. You must not put up any signs on the doors to your accommodation or
anywhere else which is visible from outside the rooms you are using. You may use
the business centre address as your business address.

Taking care of our property:  You must take good care of all parts of the
business centre, its equipment, fittings and furnishings which you use. You must
not alter any part of it. You are liable for any damage caused by you or those
in the business centre with your permission or at your invitation.

Office furniture and equipment:  You must not install any furniture or office
equipment, cabling, IT or telecom connections without our consent, which we may
refuse at our absolute discretion.

Keys and security:  Any keys or entry cards which we let you use remain our
property at all times. You must not make any copies of them or allow anyone else
to use them without our consent. Any loss must be reported to us immediately and
you must pay the cost of replacement keys or cards and of changing locks, if
required. If you are permitted to use the business centre outside normal working
hours it is your responsibility to lock the doors to your accommodation and to
the business centre when you leave.

Comply with the law:  You must comply with all relevant laws and regulations in
the conduct of your business. You must do nothing illegal. You must not do
anything that may interfere with the use of the business centre by us or by
others, cause any nuisance or annoyance, increase the insurance premiums we have
to pay or cause loss or damage to us or to the owner of any interest in the
building which contains the business centre. You acknowledge that (a) the terms
of the foregoing sentence are a material inducement to us of the execution of
your agreement and (b) any violation by you of the foregoing sentenced shall
constitute a material default by you hereunder, entitling us to terminate your
agreement.

Comply with house rules:  You must comply with any house rules which we impose
generally on users of the business centre whether for reasons of health and
safety, fire precautions or otherwise. You must not bring animals into the
business centre. You must not play music or use amplification equipment in a way
that can be heard outside your rooms.

Insurance:  It is your responsibility to arrange insurance for your own property
which you bring into the business centre and for your own liability to your
employees and to third parties.

                            PROVIDING THE SERVICES

Access to your accommodation:  We can enter your accommodation at any time.
However, unless there is an emergency we will as a matter of courtesy try to
inform you in advance when we need access to carry out testing, repair or works
other than routine inspection, cleaning and maintenance. We will also respect
security procedures to protect the confidentiality of your business.

At the start of your agreement:  If for any reason we cannot provide the number
of rooms stated in your agreement by the date when your agreement is due to
start we have no liability to you for any loss or damages but you may cancel the
agreement without penalty. We will not charge you the standard fee for rooms you
cannot use until they become available.

Suspension of services:  We may by notice suspend the provision of services
(including access to the accommodation) for reasons of political unrest,
strikes, or other events beyond our reasonable control, in which even payment of
the standard fee will also be suspended for the same period.

Our liability:  We are not liable for any loss as a result of our failure to
provide a service as a result of mechanical breakdown, strike delay, failure of
staff, termination of our interest in the building containing the business
centre or otherwise unless we do so deliverability or are grossly negligent. We
are also not liable for any failure until you have told us about it and given us
a reasonable time to put it right.

                                       YOUR AGREEMENT

The nature of your agreement:  Your agreement is the commercial equivalent of an
agreement for accommodation in a hotel. The whole of the business centre remains
our property and in our possession and control. You acknowledge that your
agreement creates no tenancy interest, leasehold estate or other real property
interest in your favor with respect to the accommodation. We are giving you just
the right to share with us the use of the business centre so that we can provide
the services to you. The agreement is personal to you and cannot be transferred
to anyone else. We may transfer the benefit of your agreement and our
obligations under it at any time.

Duration:  Your agreement lasts for the period stated in it and will then
automatically be extended for successive periods equal to the initial period
hereof until brought to an end by you or by us. The standard fee during any
extension period shall be equal to the then current standard fee for your
accommodation but in no event lower than the fee paid by you during the then
current standard fee for your accommodation but in no event lower than the fee
paid by you during the then expiring period. Bringing your agreement to an end:
Either of us can terminate your agreement at the end date stated in it, or at
the end of any extension period, by giving at least three months' notice to the
other. However, if your agreement is for three months or less and one of us
wishes to terminate it, the notice period is two months or (if shorter) one week
less than the period stated in your agreement.

Ending your agreement immediately:  We may put an end to your agreement
immediately by giving you notice if:
 .  we have a reasonable basis to believe that you may not be able to pay fees on
   time
 .  you are in breach of one of your obligations which cannot be put right or
   which we have given you notice to put right and which you have failed to put
   right within fourteen days of that notice, or
 .  your conduct, or that of someone at the business centre with your permission
   or at your invitation, is incompatible with ordinary office use.

If we put an end to the agreement for any of these reasons it does not put an
end to any then outstanding obligations you may have and you must
 .  pay for additional services you have used
 .  pay the standard fee for the remainder of the period for which your agreement
   would have lasted had we not ended it or (if longer) for a further period of
   three months, and
 .  indemnify us against all costs and losses we incur as a result of the
   termination.

If the business centre is not available: In the unlikely event that we are no
longer able to provide the services and accommodation at the business centre
stated in your agreement then your agreement will end and you will only have to
pay standard fees up to the date it ends and for the additional services you
have used. We will try to find suitable alternate accommodation for you at
another Regus business centre.

When you agreement ends
 .  you are to vacate the accommodation immediately leaving it in the same
   condition as it was when you took it, save for fair wear and tear. If you
   leave any of your own property in the business centre we may dispose of it in
   any way to choose without owing you any responsibility for it or any proceeds
   of sale
 .  you must also enter into a Link agreement with us on our standard terms at
   the time for at least 3 months.

If you continue to use the accommodation when your agreement has ended
 .  you are responsible for any loss, claim or liability we incur as a result of
   your failure to vacate on time
 .  we may, at our discretion, permit you an extension subject to a surcharge on
   the standard fee.

Employees:  While your agreement is in force and for a period of six months
after it ends, you must not solicit or offer employment to any of our staff. If
you do, we estimate our loss at the equivalent of one year's salary for each of
the employees concerned and you must pay us damages equal to that amount.

Notices:  All formal notices must be in writing.

Confidentiality:  The terms of your agreement are confidential. Neither of us
must disclose them without the other's consent unless required to do so by law
or an official authority. This obligation continues after your agreement ends.

Indemnities:  You must indemnify us in respect of all liability, claims,
damages, loss and expenses which may arise (except to the extent caused by our
gross negligence or willful misconduct)
 .  if someone dies or is injured while in the accommodation you are using
 .  from a third party in respect of your use of the business centre and services
 .  from a third party in respect of our provision of services to you
 .  if you do not comply with the terms of your agreement

You must also pay any costs, including reasonable legal fees, which we incur in
enforcing your agreement.

Consequential loss:  If for any reason we cannot provide you with any service
our liability is limited to crediting or returning to you a fair proportion of
the relevant fee. To the extent permitted by law we have no liability whatever
for any consequential loss as a result of any thing we or our staff do or fail
to do.

Applicable law:  Your agreement is interpreted and enforced in accordance with
the laws of the state in which the business centre in question is located. We
both accept the non-exclusive jurisdiction of the courts of such jurisdiction.

                                     FEES

Standard services:  The standard fee is payable in advance in full by the 1st
day of each month in respect of standard services to be provided during such
calendar month. For a period of less than a month the fee will be apportioned on
a daily basis. You agree to pay promptly (i) all sales, use, excise and any
other taxes and license fees which you are required to pay to any governmental
authority (and, at our request, will provide to us evidence of such payment) and
(ii) any taxes paid by us to any governmental authority that are attributable to
the accommodation, including, without limitation, any gross receipts, rent and
occupancy taxes, or tangible personal property taxes.

Additional services:  Fees for additional services are invoiced in arrears and
payable on the 10th day of the month following the calendar month in which the
additional services were provided.

Payment terms:  All payments are to be made on or before the required date.
Preferred payment shall be by credit card or wire transfer. When you pay by
check, we reserve the right to deny you access to your accommodation and/or
refuse to provide additional services to you in the absence of cleared funds.

Service retainer:  The service retainer you paid on entering into your agreement
will be held by us as security for performance of all your obligations under
your agreement. The service retainer, or any balance after deducting outstanding
fees and other costs due to us, will be returned to you within 60 days after
your agreement ends. We may require you to pay an increased service retainer if
 .  outstanding fees exceed the service retainer held
 .  you frequently fail to pay fees when due.

Late payment:  If you do not pay fees when due, we may charge interest at the
rate of 2% per month on the amounts outstanding but in no event greater than the
rate permitted by law. If you dispute any part of an invoice you must pay the
amount not in dispute by the due date.

Withholding services:  We my withhold services (including for the avoidance of
doubt, denying you access to your accommodation) while there are any outstanding
fees and interest or you are in breach of your agreement.

Subordination:  Your agreement is subordinate to our lease with our landlord and
to any other agreement to which our lease with our landlord is subordinate.