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                                                                 EXHIBIT 10.21
                            ADSL LICENSE AGREEMENT


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                     INDIVIDUAL AGREEMENT ON THE LICENSING OF THE ADSL CHIPSET


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<CAPTION>
CONTENTS
<S>                                                                                            <C>
CONTENTS________________________________________________________________________________________2
ARTICLE 1 - DEFINITIONS_________________________________________________________________________5
ARTICLE 2 - LICENSE_____________________________________________________________________________9
   2.1 DESIGN- AND DEVELOPMENT RIGHTS___________________________________________________________9
   2.2 MANUFACTURING RIGHTS_____________________________________________________________________9
   2.3 HAVE-MADE RIGHTS________________________________________________________________________10
   2.4 DISTRIBUTION RIGHTS_____________________________________________________________________10
   2.5 RIGHT TO USE SOFTWARE___________________________________________________________________10
   2.6 GENERAL LICENSING PROVISIONS____________________________________________________________11
ARTICLE 3: MODALITIES OF RIGHTS GRANTED________________________________________________________12
   3.1 ADDITIONAL ALCATEL INFORMATION__________________________________________________________12
   3.2 RIGHT TO DESIGN, DEVELOP AND IMPLEMENT MODIFICATIONS____________________________________12
   3.3 GRANT BACK OF RIGHTS TO ALCATEL_________________________________________________________13
ARTICLE 4 - TECHNICAL DOCUMENTATION____________________________________________________________13
ARTICLE 5 - TECHNICAL ASSISTANCE_______________________________________________________________15
ARTICLE 6 - TRAINING___________________________________________________________________________16
ARTICLE 7 - SOFTWARE___________________________________________________________________________16
ARTICLE 8 - COPYRIGHT AND TRADEMARKS___________________________________________________________17
ARTICLE 9 - COMPENSATION_______________________________________________________________________18
   9.1 INITIAL PAYMENTS________________________________________________________________________18
   9.2 MINIMUM ROYALTIES_______________________________________________________________________18
   9.3 ROYALTIES ON SALES OF PRODUCTS__________________________________________________________19
   9.4 ROYALTIES ON SALES OF SAM_______________________________________________________________19
   9.5 ROYALTIES ON SALES OF DERIVATIVES_______________________________________________________19
   9.6 CALCULATION OF ROYALTIES USING THE FAIR MARKET VALUE____________________________________20
   9.7 SALES TO ALCATEL________________________________________________________________________20
   9.8 ROYALTY STATEMENTS______________________________________________________________________20
ARTICLE 10 - PAYMENT TERMS_____________________________________________________________________21
ARTICLE 11 - CONFIDENTIALITY___________________________________________________________________22
ARTICLE 12 - OTHER OBLIGATIONS_________________________________________________________________22
ARTICLE 13 - WARRANTY AND LIABILITIES__________________________________________________________24
ARTICLE 14 - TAXES AND DUTIES__________________________________________________________________25
ARTICLE 15 - TERM AND TERMINATION______________________________________________________________25
ARTICLE 16 - SOLICITING EMPLOYEES______________________________________________________________26

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ARTICLE 17 - FORCE MAJEURE_____________________________________________________________________27
ARTICLE 18 - MANUFACTURE DISCONTINUANCE________________________________________________________27
ARTICLE 19 - GOVERNING LAW AND SETTLEMENT OF DISPUTES__________________________________________28
ARTICLE 20 - MISCELLANEOUS PROVISIONS__________________________________________________________28
</TABLE>

<TABLE>
<CAPTION>
ANNEXES:
<S>               <C>
ANNEX 1:          SCOPE OF ADSLC, SACHEM AND SOFTWARE CORE TECHNOLOGY
ANNEX 2:          IMPLEMENTATION SCHEDULE
ANNEX 3:          TECHNICAL ASSISTANCE
ANNEX 4:          TRAINING PLAN
ANNEX 5:          MODEL END-USER LICENSE AGREEMENT
ANNEX 6:          NON DISCLOSURE AGREEMENT
</TABLE>

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<PAGE>


                             INDIVIDUAL AGREEMENT ON
                        THE LICENSING OF THE ADSL CHIPSET

This agreement (hereinafter referred to as "the AGREEMENT") is made and
effective as of this 20th of April 1998 by and between:

INTEGRATED TELECOM EXPRESS INC., a corporation organized and existing under
the laws of California, having its principal office at 2710 Walsh Avenue,
Santa Clara, California CA 95051, USA (hereinafter referred to as "ITEX")

and

ALCATEL BELL N.V., a company organized and existing under the laws of
Belgium, having its registered offices at 1, Francis Wellesplein, Antwerp,
Belgium, hereinafter referred to as "ALCATEL",

Where appropriate, ALCATEL and ITEX hereinafter collectively referred to as
"Parties" and individually referred to as "a Party"

WHEREAS, ALCATEL manufactures ADSL equipment which it sells world-wide and is
developing further generations of such ADSL equipment; and

WHEREAS, ALCATEL has designed CHIPSETS (as defined hereinafter) to implement
the ADSL transceiver function and requires such CHIPSETS to be manufactured
using advanced semiconductor manufacturing technologies, and to be sold on
the open market; and

WHEREAS, ITEX desires to receive a license to [*] the CHIPSET and related
software;

WHEREAS, ALCATEL is willing to grant to ITEX a license to [*] the CHIPSET and
related software;

WHEREAS, ITEX has developed a low-cost, DMT-based ADSL solution but requires
[*]and

WHEREAS ITEX wishes to ensure interoperability of its ADSL solution with
ALCATEL's Digital Subscriber Loop ATM Multiplexers ("DSLAM"); and

WHEREAS, ALCATEL and ITEX are both involved in standardization committees and
wish to co-operate in accelerating the completion of the ADSL standards based
on the Discrete MultiTone modulation technique;

AND WHEREAS, the Parties wish now to lay down the terms and conditions of
such licensing and co-operation by entering into this AGREEMENT.

NOW THEREFORE, in consideration of the premises and the undertakings of the
Parties contained therein, it is agreed as follows:

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                    4/30
<PAGE>


ARTICLE 1 - DEFINITIONS

1.1      In this AGREEMENT unless the context otherwise requires the
         following expressions shall have the following meanings:

         ADSLC: ADSL standard compliant semiconductor device, integrating A/D
         and D/A converters, AGC, and analogue filters, as resulting from the
         TECHNOLOGY and which may encompass such IMPROVEMENTS and/or
         MODIFICATIONS as may be achieved in accordance with this AGREEMENT.

         ADSL CHIPSET OR CHIPSET: the ADSLC and SACHEM combined, as resulting
         from the TECHNOLOGY and which may encompass such IMPROVEMENTS and/or
         MODIFICATIONS as may be achieved in accordance with this AGREEMENT,
         implementing, in combination with the SOFTWARE, the FUNCTIONALITY.

         ADSLC SOFTWARE: Any SOFTWARE which specifically relates to the ADSLC
         and/or the part of the FUNCTIONALITY which is proper to the ADSLC,
         and which is required by ITEX for the purpose of developing the SAM,
         in accordance with Section 2.3 herein.

         AFE: The ADSLC plus the discrete components which are part of
         ALCATEL's ADSL analogue front-end, and including the integration in
         the ADSLC of digital filtering functions, that are normally part of
         the SACHEM, as resulting from the TECHNOLOGY and described in the
         TECHNICAL DOCUMENTATION, and which may encompass such IMPROVEMENTS
         and/or MODIFICATIONS as may be achieved in accordance with this
         AGREEMENT.

         AFFILIATED COMPANIES: With respect to any party, a corporation or
         other entity which is directly or indirectly controlled by a Party,
         but only so long as such control subsists or which is directly or
         indirectly controlling or under the same control as a Party, but
         only so long as such control subsists. Control means the direct or
         indirect ownership of more than 50% of the shares entitled to vote
         upon election of directors or persons performing similar functions
         or having the right or the power to elect a majority of the members
         of the governing board.

         AGREEMENT YEAR: a twelve (12) month period which commences on
         January 1 of each calendar year and ends on December 31 of the same
         year during the TERM of this AGREEMENT. The first AGREEMENT YEAR
         shall commence on the EFFECTIVE DATE and shall end on December 31 of
         the same calendar year.

         AUTHORIZED DISTRIBUTORS: Any and all distributor, reseller, retailer
         or any other participant in ITEX's distribution channels, who may be
         involved in distributing PRODUCTS, SAM and/or DERIVATIVES.

                                    5/30
<PAGE>


         CONFIDENTIAL INFORMATION: Any and all documents, software (object
         code, source code and API) and other information conveyed by the
         disclosing party to the receiving party pursuant to this AGREEMENT
         in whatever media or method, which is marked or labeled as
         confidential. When disclosed orally, such information shall be
         identified as being confidential at the time of disclosure with
         subsequent confirmation in writing within thirty (30) days of the
         disclosure.

         CORE ELEMENTS: Elements in either the ADSLC, the SACHEM or the
         SOFTWARE which are identified in Annex 1.4 as a CORE ELEMENT.

         DERIVATIVES: a combination of either the ADSLC, the SACHEM or the
         ADSL CHIPSET with other technology such that the FUNCTIONALITY or
         the part thereof which is proper to either the ADSLC or the SACHEM,
         whichever applies, is preserved in the combination. If a DERIVATIVE
         results in a single chip, then the added technology may not relate
         to narrowband voice and data applications (such as those informally
         described as 'POTS') at the network side (such as informally
         described as "central office" or "remote access multiplexer"), other
         than those necessary to implement the FUNCTIONALITY.

         EFFECTIVE DATE: The date of execution of this AGREEMENT first set
         forth herein above.

         END USER: Person or corporate body having lawfully obtained directly
         or indirectly from ITEX a PRODUCT, SAM or DERIVATIVE, or any
         equipment containing the SACHEM or ADSLC for his personal or
         professional use, which is exclusive of any further act of
         manufacturing or distribution of such item.

         END USER LICENSE: License for the END USER to use the SOFTWARE or
         ADSLC SOFTWARE which is to be granted in accordance with the
         provisions hereof, and which shall contain at least the provisions
         of the model END USER LICENSE attached hereto as Annex 5.

         FAIR MARKET VALUE: The equivalent of NET SALES for the CHIPSET of
         substantially the same quantity and performance which would be
         charged by ITEX to non-affiliated customers in an arms-length
         transaction.

         FUNCTIONALITY: The full functionality as described in the ADSL
         System Reference Model comprised in Annex 1 between the V-C/U-C2
         interfaces of the ATU-C, and between the T- R/U-R2 interfaces of the
         ATU-R (editions 0 and 1 of the ALCATEL 1000 ADSL Interoperability
         Specification Document, chapter 4), thus ensuring full
         interoperability at the point of U-C/U-R with the ALCATEL 1000 ADSL
         product line at the central office side.

         IMPLEMENTATION SCHEDULE: The chronological schedule set forth in
         Annex 2 for the transfer of the TECHNOLOGY by ALCATEL to ITEX.

                                     6/30
<PAGE>

         IMPROVEMENTS: Changes which do not affect or modify the CORE ELEMENTS
         except for implementing alternative semiconductor/IC technology, nor
         the FUNCTIONALITY or that part of the FUNCTIONALITY which is proper to
         either the SACHEM or the ADSLC or the SOFTWARE, or CORE ELEMENTS, and
         which
         (i)      are introduced in the manufacture of the hardware of the
                  PRODUCT
                  or
         (ii)     which correct defects in, or improve the performance of the
                  SACHEM or ADSLC.
         For example, changes that, without affecting the FUNCTIONALITY or
         that portion of FUNCTIONALITY due to the SACHEM or ADSLC
         respectively, optimize the power consumption, the speed
         characteristics, the chip area dimensions, and the interfaces of the
         SACHEM and ADSLC would be considered as IMPROVEMENTS.

         INTELLECTUAL PROPERTY RIGHTS: Any and all patents, patent applications,
         copyrights, mask work rights, trade secrets know-how or other
         intellectual property rights of whatever nature other than trademarks
         and trade-names which have been, or will be applied for, acquired or
         secured before the effective date of or during the term of the
         AGREEMENT, throughout the world, by ALCATEL or any of its AFFILIATED
         COMPANIES, with regard to which ALCATEL has the right to enter into
         this AGREEMENT, and which are necessary to and/or essential to the
         reasonable practice or exercise of any rights granted under the
         AGREEMENT, exclusive however of any and all intellectual property
         rights of whatever nature which are related to foundry process
         technology and/or are developed by ALCATEL MICROELECTRONICS.

         MODIFICATIONS: Any change in relation to the design, development or
         production process of the CHIPSET, the SOFTWARE, the SACHEM or the
         ADSLC which:
         (i)      affects or modifies the FUNCTIONALITY of the PRODUCT;
         (ii)     requires ITEX to gain access to and/or to make changes which
                  affect or modify CORE ELEMENTS, whether or not such actions
                  affect or modify the FUNCTIONALITY.

         NET SALES: The amount represented by the sales (excluding freight, VAT
         or other invoiced sales taxes if separately stated in the invoice
         applicable) or other disposal including leases and sublicenses of the
         PRODUCT as invoiced by ITEX to its customer.

         PRODUCT: The SOFTWARE in combination with either the SACHEM, the ADSLC
         or the CHIPSET.

         REFERENCE MATERIALS: Any and all hardware, software and/or
         documentation which is not a part of the PRODUCT and which is supplied
         to ITEX as part of the TECHNICAL DOCUMENTATION for the sole purpose of
         illustration of technique, without ITEX having the right to use such
         software and/or documentation as part of its PRODUCTS, AFE'S or
         DERIVATIVES. REFERENCE MATERIALS shall be identified as such in
         Annex 1.


                                      7/30
<PAGE>



         SACHEM: ADSL digital semiconductor device integrating all fixed and
         adaptive digital functions needed to perform the Discrete MultiTone
         ("DMT") modulation technique including all fixed and adaptive Digital
         Signal Processing ("DSP") functions and error correction codes like
         Reed-Solomon & interleaving plus Trellis coding/Viterbi decoding, as
         resulting from the TECHNOLOGY and which may encompass such IMPROVEMENTS
         and/or MODIFICATIONS as may be achieved in accordance with this
         AGREEMENT.

         SAM: Any current or future ITEX scaleable ADSL Modem product combining
         the AFE, the ADSLC SOFTWARE, and a DMT signal processor, other than the
         SACHEM, for implementing a scaleable rate ADSL solution.

         SOFTWARE: Software in object code, documented source code and
         documented Application Programming Interface (API) form as further
         described in Annex 1, and excluding any REFERENCE MATERIALS, whether or
         not made available as software.

         TECHNICAL DOCUMENTATION: All of ALCATEL's manuals and documentation in
         which the PRODUCT is recorded and all other technical and
         organizational documentation associated with the PRODUCT and its
         manufacture including but not limited to designs, drawings, charts,
         manuals, material lists, blueprints, formulae, reproductions, written
         and printed instructions, descriptions, reports, material and equipment
         specifications, pictures and diagrams, computer print outs, magnetic
         tapes or disks or similar storage devices as implemented by ALCATEL.

         TECHNOLOGY: INTELLECTUAL PROPERTY RIGHTS, the SOFTWARE and all
         information with respect to the manufacture and sales of the PRODUCT
         which is embodied in the TECHNICAL DOCUMENTATION or given orally during
         the term of the AGREEMENT or any extension thereof under the form of
         technical assistance or training.

         TERM: The period starting on the EFFECTIVE DATE and having the duration
         specified in Article 15, or if this AGREEMENT shall be terminated prior
         to the expiration of such period, the period from the EFFECTIVE DATE to
         the date on which the AGREEMENT shall be terminated.

         T1.413: The T1.413 issue 2 standard as set out by the ANSI in its
         current form and any future evolutions of (including additions to) the
         same that are adopted during the term of this AGREEMENT, including but
         not limited to any standards adopted for G.Lite or splitterless ADSL
         implementations as may be emdodied, for example, in issues 3 or 4.

         UMC GROUP: United Microelectronics Corporation (UMC) and/or the
         following related semiconductor manufacturing entities:
         (i)      United Semiconductor Corporation (USC)
         (ii)     United Integrated Circuits Corporation (UICC)
         (iii)    United Silicon Inc. (USIC)
         all of which are Taiwanese joint venture foundries in which UMC has
         ownership superior to twenty five percent (25%), and have facilities in
         the Science Industrial Park, Hsinchu, Taiwan.


                                     8/30
<PAGE>

1.2      In this AGREEMENT unless the context otherwise requires, references:

1.2.1    to this AGREEMENT shall be construed as a reference to this AGREEMENT
         as amended, novated, supplemented or varied from time to time and shall
         include any document which is supplemental to, is expressed to be
         collateral with, or is entered into pursuant to, or in accordance with,
         the terms of this AGREEMENT;

1.2.2    to recitals, clauses and schedules are references to recitals to this
         AGREEMENT, clauses to this AGREEMENT, and schedules to this AGREEMENT;

1.2.3    to persons shall include individuals, bodies corporate (wherever
         incorporated), unincorporated associations and partnerships;

1.3      Words denoting the singular shall include the plural and vice versa.

1.4      The headings are inserted for convenience only and shall not affect the
         construction of this AGREEMENT.

1.5      The Annexes comprise Annexes to this AGREEMENT and form part of this
         AGREEMENT.

ARTICLE 2 - LICENSE

2.1      DESIGN- AND DEVELOPMENT RIGHTS

Within the framework of this AGREEMENT and for the TERM thereof, ALCATEL grants
to ITEX the [*] right, under the INTELLECTUAL PROPERTY:

2.1.1    subject to the provisions of Clause 3 hereof to [*], and,

2.1.2    subject to the provisions of Clause 3 hereof and solely to the extent
         permitted therein, to [*], and

2.1.3    subject to any such SAM being at all times fully interoperable with
         ALCATEL's current and/or future ADSL product line, to [*]

2.2      MANUFACTURING RIGHTS

Within the framework of this AGREEMENT and for the TERM thereof, ALCATEL grants
to ITEX the [*] right, under the INTELLECTUAL PROPERTY to [*]

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                      9/30
<PAGE>

2.3      HAVE-MADE RIGHTS

2.3.1    Within the framework of this AGREEMENT and for the TERM thereof, upon
         request of ITEX and subject to the prior written approval of ALCATEL,
         which will not be unreasonably withheld, ALCATEL grants to ITEX the
         [*] right, under the INTELLECTUAL PROPERTY to [*] provided however
         that the third party that will perform any such manufacturing shall
         have assumed in writing the obligations set forth in Section 7.2 and
         Article 11.

2.3.2    In the event that ITEX would elect to exercise its have made rights, as
         granted herein, other than through the UMC GROUP, ALCATEL
         MICROELECTRONICS shall be granted the right of first refusal under such
         terms and conditions (including pricing) as were offered to ITEX by the
         most eligible bidder for the award of such manufacturing by ITEX.

2.4      DISTRIBUTION RIGHTS

Within the framework of this AGREEMENT and for the TERM thereof, ALCATEL grants
to ITEX the [*] right, under the INTELLECTUAL PROPERTY to [*]

2.5      RIGHT TO USE SOFTWARE

2.5.1    Within the framework of this AGREEMENT and for the TERM thereof,
         ALCATEL grants to ITEX the [*] right, under the INTELLECTUAL PROPERTY:
         (i)   to [*] solely for the purposes set forth in Sections 2.1, 2.2 and
         2.3.
         (ii)  to [*], but exclusively for the purposes set forth in Section
         2.1.3 and solely to the extent thereof.

2.5.2    If ITEX elects to exercise its [*] rights as described in Section 2.3
         herein above, rights to [*] as set forth herein shall, solely to the
         extent required for the purpose thereof, extend to the third party that
         will perform such manufacturing as allowed under Section 2.3.

2.5.3    Within the framework of this AGREEMENT and for the TERM thereof,
         ALCATEL furthermore grants to ITEX the [*] right, under the
         INTELLECTUAL PROPERTY RIGHTS to [*], which shall not be less protective
         of ALCATEL's rights and interests in the SOFTWARE as the model END-USER
         LICENSE, attached hereto as Annex 5, copy of which shall be sent to
         ALCATEL.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                      10/30
<PAGE>

2.5.4    Within the framework of this AGREEMENT and for the TERM thereof,
         ALCATEL furthermore grants to ITEX the [*] right, under the
         INTELLECTUAL PROPERTY RIGHTS to [*] which shall not be less protective
         of ALCATEL's rights and interests in the SOFTWARE as the model END-USER
         LICENSE, attached hereto as Annex 5, copy of which shall be sent to
         ALCATEL.

2.5.5    In order to enable ITEX to achieve [*] as identified in Sections 2.5.3
         and 2.5.4, and within the framework of this AGREEMENT and for the TERM
         thereof, ALCATEL furthermore grants to ITEX the [*] to its AUTHORIZED
         DISTRIBUTORS such rights as identified in Sections 2.5.3 and 2.5.4,
         provided that such AUTHORIZED DISTRIBUTOR have assumed written
         obligations similar to those provided for in Section 7.2 and Article
         11, copy of which shall be sent to ALCATEL.

2.5.6    For the purposes set forth in the Sections 2.5.3, 2.5.4 and 2.5.5, ITEX
         shall be entitled to provide a copy of the SOFTWARE or the ADSLC
         SOFTWARE as applicable, to its AUTHORIZED DISTRIBUTORS, in object code
         only, and solely for the purpose of providing, under the conditions of
         the END-USER LICENSE, a copy of the SOFTWARE or the ADSLC SOFTWARE, in
         object code only, to the END-USER.

2.6      GENERAL LICENSING PROVISIONS

2.6.1    Upon request of ITEX, the Parties will discuss a possible extension of
         the license granted hereunder to components developed by ALCATEL or for
         which ALCATEL is able to grant a license and which are used by ALCATEL
         in its ADSL customer premises modem design.

2.6.2    Unless and to the extent as set forth herein, the rights granted herein
         shall not encompass the right to grant sublicenses.

2.6.3    The rights granted under this Article 2 are solely granted for the TERM
         of this AGREEMENT. Any extension beyond the TERM of the license and
         rights granted under this AGREEMENT and the terms and conditions
         thereof shall form the object of new negotiations between the Parties.

2.6.4    The rights granted hereunder are only granted to the extent
         (i) as the TECHNICAL DOCUMENTATION is specified in Annex 1 and
         (ii) ALCATEL owns the TECHNOLOGY and/or is entitled to grant licenses.

2.6.5    THIS ARTICLE 2 ENCOMPASSES THE FULL SCOPE OF RIGHTS GRANTED BY ALCATEL
         TO ITEX AND THIS AGREEMENT DOES IN NO EVENT CONFER OR IMPLY THE GRANT
         OR AGREEMENT TO GRANT ANY LICENSE OR OTHER RIGHTS WHATSOEVER, WHETHER
         EXPRESSLY OR IMPLIED, TO ITEX, EXCEPT AS SPECIFICALLY SET FORTH IN THIS
         ARTICLE 2.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                      11/30
<PAGE>

ARTICLE 3: MODALITIES OF RIGHTS GRANTED

3.1      ADDITIONAL ALCATEL INFORMATION

3.1.1    ALCATEL shall advise ITEX in writing of any MODIFICATIONS and
         IMPROVEMENTS which are devised by ALCATEL and relate to the PRODUCT.
         With respect to IMPROVEMENTS, ALCATEL shall provide ITEX with
         respective TECHNICAL DOCUMENTATION at no additional cost necessary for
         the manufacture of such IMPROVEMENTS. Any such IMPROVEMENTS shall be
         included in the rights granted under Article 2 herein. The transfer of
         MODIFICATIONS will be subject to a new technology transfer agreement
         with ALCATEL, after the Parties have reached an agreement on all terms
         and conditions, inclusive the price of such transfer.

3.1.2    Notwithstanding the above, any and all MODIFICATIONS ALCATEL may
         design, develop and implement, and which reflect the evolution of the
         T1.413 issue 2 standard and to the extent thereof, shall be included in
         the rights granted under Article 2 herein.
         ALCATEL shall provide ITEX with respective technical documentation at
         no additional cost necessary for the manufacture of such MODIFICATIONS,
         whereupon ITEX shall take such measures as appropriate to maintain or
         restore compliance of the FUNCTIONALITY with the T1.413 standard as it
         may have evolved.

3.1.3    Nothing in this AGREEMENT shall imply or be deemed to imply an
         obligation for ALCATEL to engage in any design and/or development
         activity relating to IMPROVEMENTS and/or MODIFICATIONS to the PRODUCT,
         nor shall this AGREEMENT imply or be deemed to imply an obligation to
         communicate, to grant rights to and/or to transfer to ITEX any
         information received from third Parties, whether related to the
         PRODUCT, the TECHNOLOGY or the T1.413 standard or not.

3.2      RIGHT TO DESIGN, DEVELOP AND IMPLEMENT MODIFICATIONS

3.2.1    The rights granted to ITEX under Clause 2 hereof encompass the right
         for ITEX to [*] exclusively and solely to the extent that:
         (i)      such MODIFICATION is [*] for the purpose of designing and
                  developing the AFE, in accordance with Section 2.1.3 herein
                  above,
                  or
         (ii)     the T1.413 standard evolves in a way which makes the
                  FUNCTIONALITY as laid down in the TECHNOLOGY to become
                  non-compliant with the T1.413 standard, and ALCATEL fails or
                  refuses to design, develop and implement such MODIFICATIONS as
                  identified under Section 3.1.2 herein above, within such
                  reasonable time frame as the Parties shall agree upon.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                      12/30

<PAGE>

3.2.2    In order to enable ITEX to [*] as set forth herein above, ALCATEL will
         disclose within a [*] time frame after such request of ITEX, the source
         code and a documented API of the SOFTWARE in accordance with Section
         7.1. It is understood by ITEX that ALCATEL will not give any technical
         support to ITEX for the purpose of [*] other than as provided for in
         Annex 3.

3.3      GRANT BACK OF RIGHTS TO ALCATEL

Any and all rights granted herein to ITEX to [*] shall be conditional upon:

3.3.1    ITEX promptly informing ALCATEL thereof and making available at
         ALCATEL's request and [*] of ALCATEL a modified test program or the
         relevant source code as the case may be, and any normally associated
         technical information necessary for manufacture.

3.3.2    The granting by ITEX to ALCATEL and its AFFILIATED COMPANIES of a [*]
         right, under any claims of any patents of any country obtained by ITEX
         and under any other intellectual property rights at any time during the
         term of the AGREEMENT to [*] IMPROVEMENTS or MODIFICATIONS. For the
         avoidance of doubt, such rights to be granted to ALCATEL shall not
         refer to any pre-AGREEMENT intellectual property rights owned by ITEX,
         save to the extent such rights are necessary for the purpose of
         exercising the rights granted to such IMPROVEMENTS or MODIFICATIONS.

3.3.3    In the event that ITEX does not intend to file in any country, or
         intends to file in certain countries only during the TERM of this
         AGREEMENT, application for patents for any of its inventions or those
         of its employees as defined in the paragraph above, ITEX undertakes to
         give ALCATEL timely advice of such intent and to assign or cause to be
         assigned to ALCATEL, if so requested, for itself, the entire right,
         title and interest in and to such inventions, for all countries in
         which ITEX does not intend to file. All expenses relating to the filing
         by ALCATEL will be borne by ALCATEL. In such case, ITEX will receive a
         license for exploitation as per the terms and conditions of this
         AGREEMENT, until expiry of the last to expire of any such patents filed
         by ALCATEL in accordance herewith.

ARTICLE 4 - TECHNICAL DOCUMENTATION

4.1      ALCATEL shall make available to ITEX a complete set of TECHNICAL
         DOCUMENTATION for the manufacture and sales of the PRODUCT as described
         in Annex 1 and relating to the ADSLC, allowing for the design and
         development of the AFE in accordance with Section 2.1.3 herein above,
         and as described in Annex 1.3 The scope of TECHNOLOGY to be covered by
         such TECHNICAL DOCUMENTATION is identified in Annex 1.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     13/30

<PAGE>

4.2      The TECHNICAL DOCUMENTATION as described under Section 4.1 above shall
         be made available in line with the IMPLEMENTATION SCHEDULE in Annex 2
         hereto, always provided that all payments due in accordance with
         Article 10 herein below have been duly effected.

4.3      No TECHNICAL DOCUMENTATION shall be supplied for those items of the
         PRODUCT which are commercially available on the open market or which
         are not made by ALCATEL. Likewise no TECHNICAL DOCUMENTATION shall be
         made available for such parts of equipment which are not specifically
         related to the PRODUCT, even though they are used in or in combination
         with the PRODUCT.

4.4      No TECHNICAL DOCUMENTATION shall be made available by ALCATEL which is
         specifically related to projects worked out by ALCATEL for other
         customers than ITEX, such as but not limited to software packages and
         test programs.

4.5      The TECHNICAL DOCUMENTATION specified in Annex 1 hereto shall consist
         of the latest documentation as available at ALCATEL at the [*] The
         TECHNICAL DOCUMENTATION shall be made available in [*] copies or any
         other appropriate means. With respect to MODIFICATIONS and
         IMPROVEMENTS, Article 7 shall apply.

4.6      The text appearing on the TECHNICAL DOCUMENTATION will be in the
         English language.

4.7      All TECHNICAL DOCUMENTATION shall be supplied by ALCATEL DDP Santa
         Clara according to INCOTERMS 1990 (ICC Publication No. 460). Each
         package of the TECHNICAL DOCUMENTATION referred to in Section 3.1 shall
         be accompanied by a list specifying those TECHNICAL DOCUMENTATION to be
         contained herein. ITEX shall check the completeness of the packages
         immediately after their receipt. If, through a fault of ALCATEL, any
         such TECHNICAL DOCUMENTATION should be missing, ALCATEL shall at the
         request of ITEX, deliver the missing TECHNICAL DOCUMENTATION without
         undue delay provided the request is made within [*] days from the
         receipt by ITEX of said TECHNICAL DOCUMENTATION.

4.8      All TECHNICAL DOCUMENTATION made available by ALCATEL to ITEX shall
         remain the property of ALCATEL. ITEX shall use them only for exercising
         its rights granted under this AGREEMENT. ITEX shall be entitled to
         duplicate, copy, translate, alter or redraw the TECHNICAL DOCUMENTATION
         only as far as necessary for the exercise of such rights. All
         duplications, copies, translations, alterations and re-drawings shall
         bear the same proprietary reference as the originals. In such
         duplications, copies, translations, alterations and re-drawings,
         ALCATEL shall have and reserves the same rights as those to the
         TECHNICAL DOCUMENTATION originally made available by ALCATEL to ITEX.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     14/30

<PAGE>

ARTICLE 5 - TECHNICAL ASSISTANCE

5.1      In order to assist ITEX in applying the TECHNOLOGY for the purposes set
         forth in Article 2, including ITEX's testing of its SAM device for
         interoperability with ALCATEL's current and future ADSL product line
         ALCATEL shall render to ITEX technical assistance as specified in Annex
         3 attached hereto at the times and for the periods outlined in Annex 3.
         ALCATEL warrants, that the engineers and technicians rendering the
         technical assistance have the skill and experience adequate to perform
         the functions mentioned in Annex 3.

5.2      The technical assistance shall be rendered in English.

5.3      ALCATEL agrees that its personnel working in ITEX's organization shall
         adhere to the working hours and working days in force in ITEX's
         facilities, and ITEX agrees that its personnel working in ALCATEL's
         organization shall adhere to the working hours and working days in
         force in ALCATEL's facilities.

5.4      ITEX agrees that ALCATEL's personnel working in ITEX's premises will
         remain employees of ALCATEL in every respect. ALCATEL's personnel shall
         comply with all reasonable rules which ITEX imposes on such visitors.
         ITEX shall use its best efforts to protect the safety and health of
         ALCATEL's personnel.
         ALCATEL agrees that ITEX's personnel working in ALCATEL's premises will
         remain employees of ITEX in every respect. ITEX's personnel shall
         comply with all reasonable rules which ALCATEL imposes on such
         visitors. ALCATEL shall use its best efforts to protect the safety and
         health of ITEX's personnel.

5.5      Either Party shall have the right, to request the other Party to
         replace any of the other Party's personnel rendering or receiving
         technical assistance in the first Party's premises whenever it is
         proven that such personnel does not meet the professional standards
         defined in Section 5.1 above or is essentially or continuously not
         conforming with the terms laid down in this Article 5 or to the
         reasonable rules and discipline in force at the first Party's
         facilities.

5.6      ALCATEL is entitled at its discretion to remove and replace any of its
         personnel rendering technical assistance in ITEX's premises. Any
         reasonable possible step will be taken to ensure that the continuity of
         technical assistance be not disturbed.

5.7      The Parties agree that the total scope of technical assistance to be
         rendered by ALCATEL to ITEX hereunder is as specified in Annex 3.
         Additional Technical Assistance or any expertise in other fields is
         subject to an agreement between the Parties on the applicable terms and
         conditions thereto, but at the corresponding rates as indicated in
         Annex 3.


                                     15/30

<PAGE>

ARTICLE 6 - TRAINING

6.1      ALCATEL shall train sufficiently qualified employees of ITEX, as
         specified in the Training Plan, included in Annex 4 in a facility of
         ALCATEL. Such training shall be in accordance with the program and
         conditions mentioned therein. The Parties agree that the total duration
         of the training hereunder should not exceed the scope of training given
         in Annex 4. Upon request of ITEX, ALCATEL and ITEX shall agree upon
         additional training at the rates set forth in Annex 4 hereof. The
         training shall be in English.

6.2      During their stay at ALCATEL, the trainees shall keep to the training
         schedule as will be communicated to them by ALCATEL. ALCATEL warrants
         that the courses will be given during working hours at ALCATEL.

6.3      ITEX agrees that during their stay at ALCATEL's premises, the trainees
         shall remain in every respect employees of ITEX though reporting to and
         being under the educational control of the training manager appointed
         by ALCATEL. The trainees shall comply with all reasonable rules which
         ALCATEL imposes on such visitors.
         ITEX shall bear [*] expenses for such trainees, [*]
         At the request of ALCATEL, ITEX shall, at [*] expense,
         replace trainees who are no longer fit for the training because of
         sickness or for any other reason. The trainee shall be given access to
         the facilities, tools, documentation etc. as required pursuant to
         Annex 4.

6.4      ITEX agrees, after completion of the training, to employ the trainees
         in the discipline and function in and for which they were trained, or
         provide correspondingly trained people prior to any departure of
         trainees from their function.

ARTICLE 7 - SOFTWARE

7.1      The SOFTWARE will be supplied by ALCATEL in object code and includes a
         documented API. The SOFTWARE CORE ELEMENTS and the ADSLC SOFTWARE shall
         also be supplied in source code form, and as soon as practical
         thereafter in documented form as well. The SOFTWARE shall be supplied
         subject to the following conditions:
         (i)      the source code shall only be used by a limited number of
                  employees of ITEX who will sign a specific confidentiality
                  undertaking acceptable to ALCATEL;
         (ii)     the source code may not be disclosed, transferred in whole or
                  in part to any non-authorized employee or to any entity other
                  than ITEX and may not be used in joint development or any kind
                  of co-operation other than with ALCATEL;
         (iii)    all other confidentiality obligations, user restrictions,
                  intellectual property and other relevant provisions contained
                  elsewhere in the AGREEMENT applicable to CONFIDENTIAL
                  INFORMATION shall also apply to the source code;
         (iv)     Other than as specified for the ADSLC SOFTWARE in Section
                  2.5.1 (ii) hereof, the source code of the SOFTWARE may not be
                  used to carry out MODIFICATIONS of the PRODUCT other than
                  those

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     16/30

<PAGE>

                  provided for in Section 3.2. In case the PRODUCT would be
                  modified otherwise than as permitted in accordance with
                  Article 2, any and all warranties and liabilities with respect
                  to the PRODUCT will lapse.
         (v)      no use of the source code of the SOFTWARE is allowed than such
                  use which is strictly necessary for the purposes of ITEX
                  exercising the rights granted in Clause 2 hereof.

7.2      The SOFTWARE, the object code as well as the source code and the API
         made available by ALCATEL to ITEX shall remain subject to the
         proprietary rights of ALCATEL and may not, otherwise than in accordance
         with Section 2.5.6, be communicated by ITEX to any third party. ITEX
         shall therefore use its [*] to prevent any unauthorized communication
         thereof, securing the SOFTWARE by measures which will at least be
         equal to the protection ITEX applies to its own proprietary
         information, but in no event less than reasonable protective measures
         as customary in the trade.
         ITEX shall use the SOFTWARE only for such activities for which it has
         been made available to ITEX hereunder. Subject only to Section 2.5.6,
         ITEX shall not be entitled to reproduce, modify or supplement the
         SOFTWARE or any part thereof and may only copy same for recording or
         operational purposes or for backup purposes expressly permitted by
         ALCATEL in writing.
         ITEX shall cause the SOFTWARE and said copies to be marked so as to
         indicate their confidential nature and to be used and stored in such a
         manner that only those persons in the employ of ITEX whose duties
         require the utilisation thereof will have access thereto. ITEX shall
         instruct and obligate all such persons in accordance with this Article.
         The provisions of this Section 7.2 will survive termination of the
         AGREEMENT.

ARTICLE 8 - COPYRIGHT AND TRADEMARKS

8.1      ALCATEL shall make available to ITEX any technical information
         published by ALCATEL for the PRODUCT. ITEX may use the contents thereof
         for preparation of ITEX's own data sheets and application notes. Any
         copying by ITEX of such documentation of ALCATEL shall include
         ALCATEL's copyright notice or make explicit reference to it and shall
         be submitted to ALCATEL's approval prior to publication.

8.2      Upon request of ALCATEL and subject to the entering by both Parties
         into a trade mark/trade name agreement, ITEX shall refer with
         reasonable prominence in all its quotation, invoices, catalogues and
         sales literature relevant to the PRODUCT, AFE and/or DERIVATIVE as
         being manufactured under license from ALCATEL, such references to be
         agreed in advance with ALCATEL.

8.3      No right under any trademark or logo of ALCATEL is granted hereby, and
         ITEX's products, data sheets and application notes shall not make any
         reference to ALCATEL (except for the copyright notice, if and as
         required by Section 8.1 above and except for the provisions in Section
         8.2 and Section 8.4 hereinafter).

8.4      The PRODUCT purchased by ALCATEL from ITEX shall include a marking of
         ALCATEL unless otherwise provided for herein. The marking
         specifications thereof will be delivered by ALCATEL.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     17/30

<PAGE>

         Furthermore, ALCATEL may request to include on the PRODUCT a marking of
         any third part of ALCATEL's choice. ITEX will grant such request. In
         order for ITEX to provide this marking, ALCATEL shall supply a marking
         specification not less than sixty (60) days prior to the first
         scheduled shipment date of such marked PRODUCT.

ARTICLE 9 - COMPENSATION

9.1      INITIAL PAYMENTS

         In consideration of the licenses granted under Clause 2, ITEX shall pay
         to ALCATEL an amount [*] according to following schedule:
         (i).     [*] upon signature of the AGREEMENT;
         (ii).    [*] upon delivery of the TECHNICAL DOCUMENTATION and
                  completion of the training to be given by ALCATEL at ALCATEL's
                  Antwerp premises, in accordance with terms and conditions of
                  the AGREEMENT;
         (iii).   [*] upon the successful verification of manufacturing the
                  CHIPSET or on [*] whichever is earlier.
         (iv).    [*] upon delivery by ALCATEL to ITEX of a certificate stating
                  the interoperablity of a SAM with ALCATEL's DSLAM equipment or
                  on [*] whichever is earlier;
         and together with the royalty payments in accordance with Sections
         9.8.2 and 10.3:
         (v).     [*]
         (vi).    [*]
         (vii).   [*]
         (viii).  [*]
         Each shall be due within [*] days after ITEX's receipt of a original of
         the signed invoice from ALCATEL, to be issued upon completion of each
         relevant milestone.

9.2      MINIMUM ROYALTIES

         Furthermore, ITEX undertakes to pay to ALCATEL, on a [*], by means of
         [*] instalments, [*] royalties as set forth in the following schedule:
         (i).     [*]
         (ii).    [*]
         (iii).   [*]
         Running royalty amounts [*], if any, as referred to in this Section

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     18/30

<PAGE>

9.3      ROYALTIES ON SALES OF PRODUCTS

         For all [*] or any [*] part thereof by ITEX, ITEX shall pay to
         ALCATEL, during the TERM of this AGREEMENT, royalties on [*] of the
         PRODUCT or any [*] part thereof or as the case may be, the [*] of
         the PRODUCT or any single part thereof otherwise disposed of by ITEX.
         The royalty rate shall amount to the percentages set forth in the
         following schedule:

<TABLE>
<CAPTION>

         [*] PRODUCTS or CHIPSETS                             Royalty rate
         sold by ITEX
      <S>                                                  <C>
         [*]                                                  [*]
         [*]                                                  [*]
         [*]                                                  [*]
         [*]                                                  [*]
</TABLE>
         For the purposes of this scheme, sales of either the SACHEM or the
         ADSLC separately, shall be counted as the sale of [*] PRODUCT.

9.4      ROYALTIES ON SALES OF SAM

         For all [*] by ITEX. ITEX shall pay to ALCATEL, during the TERM of this
         AGREEMENT, royalties on [*] of the SAM or as the case may be, the [*]
         of the SAM otherwise disposed of by ITEX. The royalty rate shall amount
         to the percentages set forth in the following schedule:

<TABLE>
<CAPTION>

         [*] SAM Sold by ITEX                                 Royalty
      <S>                                                  <C>
         [*]                                                    [*]
         [*]                                                    [*]
         [*]                                                    [*]
         [*]                                                    [*]
</TABLE>

9.5      ROYALTIES ON SALES OF DERIVATIVES

         For all [*] by ITEX to third parties other than ALCATEL or its
         AFFILIATED COMPANIES, the royalty rates stated in Section 9.3 shall
         apply. The royalty rate, however, shall be applied only to a portion of
         the [*] or [*] as applicable, [*] of the [*] that comprises
         (i)      the FUNCTIONALITY or
         (ii)     that portion of the FUNCTIONALITY attributable to the SACHEM
                  or ADSLC

         (for purposes of the remainder of this Article 9, the preceding clauses
         (i) and (ii) shall be collectively referred to as the "PRORATED
         FUNCTIONALITY"). For example, if the silicon area of the DERIVATIVE
         incorporating the [*] comprises [*] of the [*] surface area, the
         royalty due to ALCATEL would be [*]. In no event however, shall the
         royalty due per sale of a DERIVATIVE in accordance with this
         paragraph 9.5 be calculated on [*] of the [*]

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     19/30
<PAGE>

9.6      CALCULATION OF ROYALTIES USING THE [*]

         If a PRODUCT or any single part thereof or SAM is supplied by ITEX
         otherwise than by way of sale or is sold by ITEX to any person in any
         circumstances where for any reason the price is not fixed on the basis
         of a genuine commercial bargain at arm's length (e.g. on a sale to an
         AFFILIATED COMPANY) the royalty payable shall be based on the [*] If a
         PRODUCT or any [*] part thereof or SAM is either added to, or
         incorporated into another product by ITEX, not itself being a PRODUCT,
         a CHIPSET or a SAM, the [*] of such PRODUCT, or any [*] part thereof or
         SAM shall be deemed to be the price which would reasonably be
         obtainable by ITEX in an arm's length transaction if the PRODUCT, or
         any [*] part thereof or SAM were sold separately.

9.7      SALES TO ALCATEL

         In consideration of the licenses granted under Article 2, ITEX shall
         sell the PRODUCT or any part thereof to ALCATEL, including ALCATEL's
         AFFILIATED COMPANIES, for integration in ALCATEL's products, at a price
         [*] to the [*] selling price for said device granted by ITEX to any of
         its third party customers less [*] For the avoidance of doubt, no
         royalties shall be due on sales to ALCATEL and/or its AFFILIATED
         COMPANIES in accordance with this Section.

9.8      ROYALTY STATEMENTS

9.8.1    ITEX shall send to the address stated below royalty statements showing:
         (i)      the [*] of the PRODUCTS, SAM's and DERIVATIVES made by ITEX in
                  the accounting period;
         (ii)     the royalty bearing [*] according to Sections 9.3, 9.4 and 9.5
                  in the accounting period, including sales for which a [*]
                  is to be taken into account;
         (iii)    the exchange rates applied according to Section 9.8.3 herein
                  below;
         (iv)     the royalty payment due for the accounting period.

9.8.2    The royalty statements shall be made within [*] days after the end of
         each [*] accounting period ending on [*] and [*] of each AGREEMENT
         YEAR. A last royalty statement shall be due [*] days upon expiration of
         the TERM.

9.8.3    For the purposes of calculating the royalty payments, all [*] invoiced
         in currencies other than EURO shall be converted into EURO the average
         buy/sell closing exchange rate of the National Bank of Belgium on the
         last banking day of the respective accounting period.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     20/30
<PAGE>

ARTICLE 10 - PAYMENT TERMS

10.1     All payments to be made by ITEX to ALCATEL as set forth in Section 9.1
         shall be effected in US Dollar to the following Bank Account of ALCATEL
         BELL:
                  [*]
                  [*]
                  [*]

         All other payments to be made by ITEX shall be effected in EURO to the
         following bank account of ALCATEL BELL:
                  [*]
                  [*]
                  [*]

         or to such other bank account as may be communicated to ITEX on the
         relevant Invoice(s). Should, at any point in time where payments in
         EURO are due in accordance with this Section, EURO not hold legal
         tender in Belgium, the currency then holding legal tender in Belgium
         shall be used in lieu of the EURO. All banking charges incurred inside
         of the US and outside Belgium shall be [*] by ITEX and the banking
         charges incurred inside Belgium shall be [*] by ALCATEL.

10.2     Within [*] days upon lapse of the dates mentioned in Section 9.1,
         payment shall be made of the respective fees defined therein.

10.3     Royalty payments shall be made [*] days after the end of each
         accounting period referred to in Section 9.8.2 during the TERM. A last
         royalty payment shall be due [*] days upon expiration of the TERM.

10.4     ITEX shall keep for such period as may be required under the applicable
         law but not less than [*] years after the date of submission of each
         royalty statement referred to in Section 9.8 true and accurate records,
         files and books of account kept in USD containing all the data
         reasonably required for the full computation and verification of ITEX's
         [*] of the PRODUCT and respective royalties to be paid. ITEX shall
         permit an independent accounting firm or auditor nominated by ALCATEL
         on reasonable notice within the business hours during the TERM and at
         any time or times during the [*] years following the TERM to inspect
         and audit the said books and accounts and records to take copies
         thereof or make extracts therefrom for the sole purpose of verifying
         royalty payments and royalty statements due or made out within the
         framework hereof. If on any such inspection, a discrepancy is found
         between ITEX's [*] for the twelve month period preceding such
         inspection as reported to ALCATEL in the statements supplied by ITEX
         under Section 9.8 and the actual [*] and/or [*] of ITEX for the same
         period as determined in the course of any such inspection and audit
         and if such discrepancy is found to be superior to [*] of the actual
         [*] and/or [*] of, ITEX shall (without prejudice to any other rights
         which ALCATEL may have ) reimburse ALCATEL for [*] cost incurred in
         conducting such inspection and audit including [*] of the persons
         conducting such inspection and audit and the fees of any person
         engaged by ALCATEL to conduct such inspection and audit.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     21/30
<PAGE>

10.5     In case of late payment ALCATEL will be entitled to add pro rata
         temporis, as from the due date of payment till effective payment, a [*]
         interest equal to the BIBOR (Brussels Interbank Offered Rate) on [*]
         months increased with [*]

ARTICLE 11 - CONFIDENTIALITY

All CONFIDENTIAL INFORMATION exchanged between the Parties within the framework
of this AGREEMENT, shall be subject to such confidentiality undertakings as set
forth in the Non Disclosure Agreement executed between the Parties on the same
date as this AGREEMENT, attached hereto as Annex 6.

ARTICLE 12 - OTHER OBLIGATIONS

12.1     ITEX will develop and process prototypes in accordance with the
         milestones set out in the IMPLEMENTATION SCHEDULE attached hereto as
         Annex 2. ITEX will manufacture engineering samples of the PRODUCT. Upon
         request of ALCATEL, ITEX will enter into a supply agreement with
         ALCATEL further specifying the terms and conditions of supply by ITEX
         to ALCATEL of the PRODUCT, or part thereof manufactured by ITEX
         hereunder which are not yet specified herein.

12.2     The Parties will closely co-operate in the various standardization
         committees set up all over the world to promote and complete the ADSL
         standards.

12.3     ITEX will utilize its sales and marketing networks world-wide to
         promote the sales of the PRODUCT. In order to allow ITEX to familiarize
         its sales and marketing networks with the PRODUCT and to promote the
         PRODUCT before ITEX's own manufacturing thereof may be started, ALCATEL
         will supply the PRODUCT to ITEX under reasonable terms and conditions
         to be mutually agreed upon.

12.4     ITEX will use its [*] to produce the PRODUCT, and/or parts thereof in
         sufficient volume to meet its customers and ALCATEL's demand therefor.

12.5     ITEX further undertakes during the TERM:
         (i)      that it shall not use the TECHNOLOGY and ALCATEL's
                  IMPROVEMENTS and/or MODIFICATIONS for any purpose except as
                  expressly licensed in accordance with the terms of this
                  AGREEMENT in the plant of ITEX or the pertinent premises of a
                  customer;
         (ii)     that it shall not act as agent of ALCATEL nor make any
                  representation or give any warranty on behalf of ALCATEL;
         (iii)    that it shall not during the term of this AGREEMENT for any
                  reason, be directly or indirectly concerned in the
                  manufacture, distribution, sale or other supply of any
                  manufactured goods which by reason of their properties and
                  performance are commercially competitive with the PRODUCT. For
                  the avoidance of doubt, this section 12.5(iii) shall not
                  restrict ITEX in the exercise of the rights granted to ITEX in
                  Section 2.1.3 hereof in connection with the SAM.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     22/30
<PAGE>

12.6     ITEX shall indemnify ALCATEL, its directors and employees against all
         damages and costs in favour of a third party that ALCATEL, its
         directors and employees or any of them may incur in consequence of any
         claim (whether in tort or otherwise) in respect of the death or
         personal injury of or to any person and/or any loss or damage to any
         property and/or any other loss or damage wholly or partially caused
         (whether directly or indirectly) by reason of ITEX manufacturing,
         selling, supplying, offering for sale, offering to supply, agreeing to
         sell and/or agreeing to supply any PRODUCT, or any part thereof which:
         (i)      is not of merchantable quality; or
         (ii)     is defective in any respect; or
         (iii)    is or may be injurious to the health or safety of any person
                  using or handling the PRODUCT, or part thereof for any
                  reasonably foreseeable purpose; or
         (iv)     is or may be injurious to the property of any person referred
                  to in Section 12.6.

         ITEX represents that it shall at all times during the TERM of this
         AGREEMENT maintain in force such policies of insurance with a
         reputable insurance company as may be required to cover the risk of
         any one claim and for each and every claim against any damages,
         liabilities, claims and costs arising from any of the causes, events or
         circumstances referred to herein above. ITEX shall provide copy to
         ALCATEL of any and all relevant insurance policies, and will notify
         ALCATEL of any and all expiry, termination, renewal or change occurring
         in its relevant insurance portfolio.

12.7     A Steering Committee with [*] from each Party will be established and
         will meet as the Parties deem required, in order to review:
         (i)      the evolution of market requirements;
         (ii)     the possible corrective actions to be proposed by ITEX to
                  ALCATEL for the improvement of the PRODUCT in terms of
                  features, performances, manufacturability and costs;
         (iii)    all issues relating to new market penetration for the PRODUCT,
                  as well as other issues of common interest.

12.8     Although ITEX is under no obligation to register shares or engage in an
         IPO, and ITEX makes no promises that it will do so, in the event that
         ITEX successfully receives all requisite approval for a public offering
         of its shares, ITEX will exert [*] to convince its underwriters to
         offer ALCATEL the opportunity to purchase in the offering [*] of the
         outstanding shares of ITEX (calculated on a post offering basis).

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     23/30
<PAGE>

ARTICLE 13 - WARRANTY AND LIABILITIES

13.1     The TECHNICAL DOCUMENTATION related to the TECHNOLOGY shall correspond
         to the latest documentation used by ALCATEL for the respective purposes
         at the date of the actual transfer. Should any such TECHNICAL
         DOCUMENTATION supplied hereunder contain an error, ALCATEL, after being
         notified thereof, shall replace such erroneous TECHNICAL DOCUMENTATION
         by a correct one without undue delay. ITEX's claim to replacement of
         erroneous TECHNICAL DOCUMENTATION shall be limited to a period of three
         (3) months from the handing over or dispatch of the respective package.

13.2     The technical assistance and training pursuant to Articles 5 and 6
         shall be provided by qualified and experienced personnel with the same
         care as that normally employed at ALCATEL in its own affairs.

13.3     ITEX agrees that, in the event that any third party were to make a
         claim against ITEX of infringement of any of the ENUMERATED PATENTS, it
         shall be ITEX's sole responsibility to exercise reasonable commercial
         efforts to secure any licenses under such ENUMERATED PATENTS that ITEX
         may deem necessary. For purposes of this paragraph, the term
         "ENUMERATED PATENTS" shall mean: (i) any patents issued as of the
         EFFECTIVE DATE to Amati Communications Corporation; (ii) U.S. patent
         number 4,438,511, assigned to Telebit Corporation; (iii) U.S. patent
         number 4,946,800, assigned to Mr. Chou Li; and (iv) U.S. patent number
         4,713,817 WEI, US patent number 4,755,998 and US patent number
         4,597,090, all three assigned to Motorola, Inc.

13.4     ALCATEL REPRESENTS AND WARRANTS THAT IT HAS MADE DILIGENT INQUIRY AS TO
         WHETHER THE TECHNOLOGY INFRINGES THE INTELLECTUAL PROPERTY RIGHTS OF
         ANY PARTIES AND HAS DETERMINED THAT AS OF THIS DATE, TO THE BEST OF ITS
         KNOWLEDGE, IT IS NOT AWARE OF SUCH INFRINGEMENT. HOWEVER, ALCATEL
         CANNOT GUARANTEE THE ABSENCE OF INFRINGEMENT OF SUCH THIRD PARTY RIGHTS
         AND IN NO EVENT SHALL ALCATEL BE LIABLE TO ITEX FOR FAILURE TO DEFEND,
         PROTECT OR INDEMNIFY AGAINST INFRINGEMENT, CLAIMS OF INFRINGEMENT OR
         MISAPPROPRIATION OF ANY PATENT OR PROPRIETARY RIGHT OWNED AND/OR
         CLAIMED TO BE OWNED BY ANY THIRD PARTY. Diligent inquiry used herein
         means that ALCATEL has made searches in the USPTO Patent Databases (on
         Internet), in the IBM US Patent Database (on Internet) and in the
         Derwent Patent Data Base using the keywords "Asymmetric AND Digital",
         "multicarrier" and "discrete AND multitone.

13.4     ALCATEL BELL represents that it has the right to grant to ITEX such
         rights as set forth in Clause 2 herein above with regard to the
         INTELLECTUAL PROPERTY RIGHTS owned by the ALCATEL ALSTHOM group of
         companies.

                                     24/30

<PAGE>

13.5     This Article 13 sets forth ALCATEL's entire liability and ITEX's entire
         remedies with respect to infringement of intellectual property rights
         of any kind of a third party arising out of ITEX's actions under this
         AGREEMENT. The liability for any loss or damage, whether direct,
         indirect, consequential or incidental, arising out of or in connection
         with the manufacturing and sale of the LICENSED PRODUCTS by ITEX shall
         rest with ITEX.

13.6     ITEX represents that it is not presently controlled (as defined above
         in this AGREEMENT) by United Microelectronics Corporation or any other
         non-signatory entity. In the event ITEX desires to change control of
         the company, and wishes to maintain the current AGREEMENT in force, it
         must first obtain the consent of ALCATEL as set forth in Section 15.3
         hereof.

13.7     ITEX CANNOT GUARANTEE THE ABSENCE OF INFRINGEMENT OF THIRD PARTY RIGHTS
         AND IN NO EVENT SHALL ITEX BE LIABLE TO ALCATEL FOR FAILURE TO DEFEND,
         PROTECT OR INDEMNIFY AGAINST INFRINGEMENT, CLAIMS OF INFRINGEMENT OR
         MISAPPROPRIATION OF ANY PATENT OR PROPRIETARY RIGHT OWNED AND/OR
         CLAIMED TO BE OWNED BY ANY THIRD PARTY IN ANY TECHNOLOGY LICENSED BY
         ITEX TO ALCATEL.

ARTICLE 14 - TAXES AND DUTIES

All payments as set forth in this AGREEMENT shall be inclusive of [*]. Any and
all taxes, levies, fiscal or other withholdings due outside the [*] are hereby
explicitly excluded from the amounts set forth in this AGREEMENT, and ITEX shall
bear or reimburse to ALCATEL and all such taxes, levies, fiscal or other
withholdings falling due outside the [*].

ARTICLE 15 - TERM AND TERMINATION

15.1     This AGREEMENT shall become effective on its date of signature written
         above and shall remain in force for a period of ten (10) years from the
         EFFECTIVE DATE.

15.2     Notwithstanding the provisions of Section 15.1 and forthwith upon the
         occurrence of any of the following events, a Party may without
         prejudice to any other right or remedy by written notice to the other
         Party terminate this AGREEMENT with immediate effect:
         (i)      if the other Party fails to pay when due any sum payable under
                  this AGREEMENT;
         (ii)     if the other Party commits a material breach of any material
                  obligation under this AGREEMENT, including a breach of any
                  representation or warranty, and fails to remedy it within [*]
                  days of receipt of notice from the first Party of such breach;
                  a breach of any obligation contained in Section 7.2 or Clause
                  11 will be considered a material breach of a material
                  obligation; or
         (iii)    if the other Party enters into liquidation whether compulsory
                  or voluntary (other than for the purposes of amalgamation or
                  reconstruction approved in writing by the former Party) or has
                  a receiver or administrative receiver or administrator or
                  similar official appointed over all or any of its assets and
                  is not discharged within a period of [*] days; or

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     25/30
<PAGE>

         (iv)     if the other Party is declared insolvent or makes any general
                  composition with its creditors; or
         (v)      if the other Party ceases or threatens to cease to carry on
                  the whole or any material part of its business and any such
                  cessation, in the opinion of the former Party would be likely
                  to affect adversely the other party's ability to observe and
                  perform properly and punctually all or any of its obligations
                  under or pursuant to this AGREEMENT;

15.3     Notwithstanding the provisions of Section 15.1 and forthwith upon the
         occurrence of any of the following events, ALCATEL may without
         prejudice to any other right or remedy by written notice to ITEX
         terminate this AGREEMENT with immediate effect if:
         (i)      ITEX does not commence to make sales of the PRODUCT in
                  reasonably commercial quantities within [*] months following
                  the EFFECTIVE DATE; or
         (ii)     control (as defined in SUBSIDIARIES) or the power to take
                  control of ITEX is acquired by any person or group of
                  associates not having control of ITEX at the date of this
                  AGREEMENT unless such event occurs with the prior consent in
                  writing of ALCATEL.
         (iii)    ITEX challenges the validity or proprietorship of the
                  registered INTELLECTUAL PROPERTY RIGHTS or does any act or
                  thing which might impair the rights of ALCATEL in the
                  TECHNOLOGY or represents that it has any rights in the
                  TECHNOLOGY other than under and by virtue of this AGREEMENT.
                  This section does not cover any lawful applications (or
                  acquisitions) by ITEX of (or for) patent rights either prior
                  to and/or during the term of this AGREEMENT.

15.4     Termination of this AGREEMENT shall not release either of the Parties
         from any other liability which at the time of termination has already
         accrued to the other Party, nor affect in any way the survival of any
         other right, duty or obligation of the Parties which is expressly
         stated elsewhere in this AGREEMENT to survive such termination.

15.5     ITEX undertakes with ALCATEL that upon the expiration of the TERM or
         sooner determination of this AGREEMENT, ITEX shall at its own cost
         promptly return to ALCATEL or otherwise dispose of as ALCATEL may
         instruct all TECHNICAL DOCUMENTATION and all other documentation and
         papers supplied to ITEX by ALCATEL and all copies thereof and notes and
         extracts taken therefrom by ITEX and shall supply to ALCATEL within [*]
         days after the expiration of the TERM or sooner determination of this
         AGREEMENT a certificate signed by [*] directors of ITEX as to the
         destruction of all such materials.

ARTICLE 16 - SOLICITING EMPLOYEES

ITEX undertakes with ALCATEL that during the TERM it will not directly or
indirectly solicit or endeavor to entice away, offer employment to or employ, or
engage as an independent contractor (other than staff who have applied for
genuine vacancies advertised by the other) any person who is employed or engaged
by ALCATEL, who is employed or engaged or was employed by or engaged by ALCATEL
during the preceding [*] months.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     26/30
<PAGE>

ARTICLE 17 - FORCE MAJEURE

17.1     Force Majeure shall mean all events which are beyond the control of the
         Parties to this AGREEMENT, and which are unforeseen, unavoidable or
         insurmountable, and which arise after the EFFECTIVE DATE and which
         prevent total or partial performance by either Party. Such events shall
         include hostilities (whether war be declared or not), embargo or
         blockade, failure or delay in transportation, labor disputes involving
         complete or partial stoppages, riot, acts done in compliance with
         governmental request, earthquakes, explosion, typhoons, flood, fire,
         war or any other instances which cannot be foreseen, prevented or
         controlled, including instances which are accepted as force majeure in
         general international commercial practice.

17.2     If an event of Force Majeure occurs, a Party's contractual obligations
         affected by such an event under this AGREEMENT shall be suspended
         during the period of delay caused by the Force Majeure and shall be
         automatically extended, without penalty, for a period at least equal to
         such suspension.

17.3     The Party claiming Force Majeure shall promptly inform the other Party
         in writing and shall furnish within thirty (30) days thereafter
         sufficient proof of the occurrence and duration of such Force Majeure.
         The Party claiming Force Majeure shall also use all reasonable
         endeavors to terminate the Force Majeure.

17.4     In the event of Force Majeure, the Parties shall immediately consult
         with each other in order to find an equitable solution and shall use
         all reasonable endeavors to minimize the consequences of such Force
         Majeure.

17.5     This AGREEMENT may be terminated by the Party who is being prejudiced
         by the non-performance of the Party claiming the Force Majeure excuse,
         by giving written notice of termination to such non-performing Party,
         at any time after the Force Majeure event has continued to be in effect
         for more than six (6) months from the date on which the excused
         performance was originally due hereunder. The non-performing Party
         shall however be obligated to exercise its best reasonable efforts to
         overcome the effects of Force Majeure during the pendency thereof by
         means of substitute performance or any other method which will mitigate
         the loss or damage that could result to the other Party from such
         non-performance, provided such substitute performance does not result
         in financial hardship to the Party involved therein.

ARTICLE 18- MANUFACTURE DISCONTINUANCE

In the event of ITEX's decision to discontinue manufacture of the PRODUCT, ITEX
shall give ALCATEL [*] months prior notice and accept orders from ALCATEL
sufficient to cover its needs for a life time buy to be scheduled for delivery
up to [*] months after the above mentioned [*] months period. Should needs
specified by ALCATEL within the framework of this Article 18 be incompatible
with such reasonable availability of manufacturing capacity for the PRODUCT,
ITEX shall immediately give written notification thereof to ALCATEL, and upon
such notification, the PARTIES shall, at the initiative of either Party, meet in
order to agree in good faith on such arrangements as may be required by their
respective commercial interests.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.


                                    27/30
<PAGE>

ARTICLE 19 - GOVERNING LAW AND SETTLEMENT OF
DISPUTES

19.1     This Agreement shall be construed in accordance with and governed by
         the Law of Belgium (without regard to its conflicts of law rules),
         provided however, that if any provision of Belgian law purports to
         change any material term hereunder, to impose any material obligation,
         duty, warranty or burden on a party beyond, contrary to, and/or in
         addition to those expressly stated herein, then all aspects of this
         Agreement so affected shall not be subject to such law, and instead, to
         the extent necessary or appropriate to give effect to and/or to
         implement the express terms of this Agreement, this Agreement shall be
         governed solely and exclusively by the law of the State of California.

19.2     All disputes arising out of and/or in connection with this Agreement
         shall be finally settled by arbitration in accordance with the Rules of
         the London Court of International Arbitration. The arbitration will be
         held in London, England, and will be before a single arbitrator
         designated in conformity with the said Rules. The arbitrator (i) shall
         be neutral and without business affiliation with either party; (ii)
         shall not be a citizen or resident of the United States nor Belgium;
         (iii) shall have reasonable expertise in business and financial aspects
         of the computer and electronics industry; and (iv) shall make detailed
         and complete findings of fact and conclusions of law in writing. The
         arbitration proceedings shall be held entirely in the English language
         and shall be subject to such conditions and precautions as may be
         appropriate to protect the confidential information of each party in a
         manner consistent with and at least as secure as the provisions of this
         Agreement. In interpreting this Agreement, the arbitrator shall take
         into account usage's in the computer electronics and software trade,
         particularly with a view to interpreting the confidentiality and trade
         secret provisions of this contract in strict terms.

19.3     Judgment upon the arbitration award rendered may be entered in any
         Court having jurisdiction thereof, of having jurisdiction over either
         of the parties or their assets, or application may be made to such
         Court for a juridical acceptance of the award and an order of
         enforcement, as the case may be.

19.4     Nothing in this Agreement shall be deemed as preventing either party
         from seeking injunctive relief (or any other provisional remedy) from
         any court having jurisdiction over the parties and the subject matter
         of the dispute as necessary to protect either party's name, proprietary
         and/or intellectual property information, trade secrets, know-how or
         any other proprietary rights

ARTICLE 20 - MISCELLANEOUS PROVISIONS

20.1     If any Party fails to give notice or enforce any right under this
         AGREEMENT, such failure shall not constitute a waiver of the right,
         unless such waiver is contained in written notice signed by the duly
         authorized representatives of the waiving Party. If a Party waives its
         right in writing, such waiver shall not constitute a waiver of any
         other right or of a subsequent violation of the same right.

                                     28/30

<PAGE>

20.2     ITEX shall be entitled at any time to subcontract the performance of
         any of its obligations under this AGREEMENT to its SUBSIDIARIES,
         provided that such SUBSIDIARIES will comply with all applicable
         obligations undertaken by ITEX herein and that ITEX will remain liable
         for the performance of such subcontracted obligations towards ALCATEL.
         ITEX may not nor may purport to assign, transfer, charge or part with
         all or any of its rights and/or obligations under this AGREEMENT or
         sub-contract the performance of any of its obligations under this
         AGREEMENT without the prior written consent of ALCATEL. Such consent,
         however, shall not be necessary for activities and services normally
         sub-contracted by ITEX in connection with the design, manufacturing or
         testing of its products (or the processes for making the same),
         including but not limited to circuit design, simulation, verification,
         mask making, testing, and similarly related activities, to the extent
         that such activities do not require such subcontractor to be given
         access to the TECHNOLOGY or any part thereof.

20.3     This AGREEMENT is made for the benefit of ITEX and ALCATEL and their
         respective lawful successors and assignees and is legally binding on
         them. This AGREEMENT may not be changed orally, but only by a written
         instrument signed by ITEX and ALCATEL.

20.4     The invalidity of any provision of this AGREEMENT shall not affect the
         validity of any other provision of this AGREEMENT.

20.5     This AGREEMENT and the Annexes hereto attached to this AGREEMENT
         constitute the entire agreement between ITEX and ALCATEL with respect
         to the subject matter of this AGREEMENT and supersede all prior
         discussions, negotiations and agreements, either oral or written,
         between them. In the event of any conflict between the terms and
         provisions of this AGREEMENT and its Annexes, the terms and provisions
         of this AGREEMENT shall prevail.

20.6     ALCATEL's liability Under this AGREEMENT and its implementation are
         fully described in the present AGREEMENT and are limited to the extent
         as mentioned in this AGREEMENT.
         REGARDLESS WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS
         ESSENTIAL PURPOSE OR OTHERWISE, IN NO EVENT SHALL ALCATEL BE LIABLE
         FOR ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL OR SPECIAL DAMAGES OF
         ANY KIND, EVEN IF ADVISED IN ADVANCE OF THE POSSIBILITY OF SUCH
         DAMAGES. ALCATEL'S ENTIRE CUMULATIVE LIABILITY UNDER THIS
         AGREEMENT, FROM ALL CAUSES OF ACTION OF ANY TYPE, SHALL BE LIMITED
         TO THE AMOUNTS RECEIVED FROM ITEX HEREUNDER WITH A MAXIMUM OF [*]
         REGARDLESS WHETHER ANY REMEDY SET FORTH HEREIN FAILS OF ITS
         ESSENTIAL PURPOSE OR OTHERWISE, AND SUBJECT TO SUCH
         INDEMNIFICATIONS AS MAY BE DUE IN ACCORDANCE WITH SECTION 12.6
         HEREOF, WHICH IS SPECIFICALLY EXCLUDED FROM THE PRESENT LIMITATION,
         IN NO EVENT SHALL ITEX BE LIABLE RO ANY INDIRECT, INCIDENTAL,
         CONSEQUENTIAL OR SPECIAL DAMAGES OF ANY KIND, EVEN IF ADVISED IN
         ADVANCE OF THE POSSIBILITY OF SUCH DAMAGES.

* Certain Information in this exhibit has been omitted and filed separately
with the commission. Confidential treatment has been requested with respect
to the omitted portions under 17.C.F.R. section 200.80.80(b)(4), 200.83 and
230.406.

                                     29/30
<PAGE>

20.7     Any notice or written communication provided for in this AGREEMENT by
         either Party to the other, including but not limited to any and all
         offers, writings, or notices to be given hereunder, shall be made in
         English by facsimile, and confirmed by courier service delivered
         letter, promptly transmitted or addressed to the appropriate Party. The
         date of receipt of a notice or communication hereunder shall be deemed
         to be twelve (12) days after the letter is given to the courier service
         in the case of a courier service delivered letter and two (2) working
         days after dispatch in the case of a facsimile. All notices and
         communications shall be sent to the appropriate address set forth
         below, until the same is changed by notice given in writing to the
         other Party or the Parties:

         ITEX:
         2710 Walsh Avenue
         Santa Clara, California CA 95051, USA
         Facsimile No: 408-980-9214
         Attention: Daniel Chen, President

         ALCATEL:
         Francis Wellesplein 1
         B-2018 Antwerpen, BELGIUM
         Facsimile No: +32 (0)3 240 99 99
         Attention: Marc Hermans, Alliance Director
         copy to: Alcatel Bell Legal Dept.

20.8     The Annexes 1 through 6 hereto are made an integral part of this
         AGREEMENT and are equally binding with these Articles 1 to 20, unless
         stated otherwise in the Annexes. These Annexes may be modified by
         mutual written agreement of the Parties.

20.9     Neither this AGREEMENT or the Annexes hereto constitute either Party as
         the legal representative or agent of the other Party for any purpose
         whatsoever. Neither Party shall have the right or authority to assume,
         create or incur any liability or obligation of any kind, express or
         implied on behalf of the other Party.

IN WITNESS WHEREOF, each of the Parties hereto have caused this AGREEMENT to be
executed in Antwerp, Belgium by their duly authorized representatives on the
date first set forth above.

         FOR ALCATEL                                               FOR ITEX
      -----------------                                         ---------------

    /s/ Martin De Prycker                SIGNATURE              /s/ Daniel Chen
    ---------------------                                       ---------------
      MARTIN DE PRYCKER                    NAME                   DANIEL CHEN
     VICE PRESIDENT AND
       GENERAL MANAGER                     TITLE               PRESIDENT AND CEO
    INTERNET ACCESS AND
            ADSL


                                     30/30
<PAGE>

                  ANNEXES 1 THROUGH 4 IN THIS EXHIBIT HAVE BEEN OMITTED AND
FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

<PAGE>

                        ANNEX 5 TO THE LICENSE AGREEMENT:

                             MODEL END-USER LICENSE

--------------------------------------------------------------------------------

                                     ALCATEL

                           SOFTWARE LICENSE AGREEMENT

                 CAREFULLY READ ALL OF THE TERMS AND CONDITIONS
                       OF THIS SOFTWARE LICENSE AGREEMENT
           BEFORE YOU USE THE SOFTWARE [add name and release number].

THIS SOFTWARE LICENSE AGREEMENT (THIS "AGREEMENT") IS A LEGALLY BINDING
AGREEMENT BETWEEN THE PURCHASER OF THE SOFTWARE (THE "PURCHASER") AND ALCATEL
BELL N.V. ("ALCATEL"). BY USING, INSTALLING OR CLICKING THE ACCEPTANCE BUTTON OF
THE SOFTWARE (AS UPDATED BY ALCATEL FROM TIME TO TIME, THE "SOFTWARE") THE
PURCHASER IS ACCEPTING TO BE BOUND BY ALL OF THE TERMS AND CONDITIONS OF THIS
AGREEMENT.

1.  GRANT OF LICENSE.  The Software and all accompanying documentation (the
"Documentation) are licensed to the Purchaser under the terms and conditions set
forth in this Agreement. Subject to such terms and conditions, Alcatel hereby
grants to the Purchaser a non-exclusive, nontransferable right to use the
Software and the Documentation. The Purchaser may use the Software on a single
computer located in the country where the Purchaser purchased the Software or
any other country to which the Software is legally exported. The Software is in
use by a single computer when the Software is installed into the permanent or
temporary memory of that computer. The Software is in use by multiple computers
when (a) the Software is installed on a single computer and at least one copy of
the Software is installed on at least one other computer or (b) the Software is
installed on the storage device of a network server for the purpose of
distribution to at least two other computers. When the Software is in use by
multiple computers, the Purchaser must purchase a separate license for the
Software for each of those computers unless the Purchaser has purchased a
license allowing explicitly use for multiple computers in which case the
Purchaser may use the Software on the agreed upon number of computers.

2.  LIMITATIONS ON USE.  The Purchaser will not modify or translate the Software
or the Documentation without the prior written consent of Alcatel. The Purchaser
will not reverse engineer, decompile, disassemble or otherwise attempt to
recreate the source code of the Software. The Purchaser will not separate from
the Software any of the component parts of the Software.

3.  LIMITATIONS ON DUPLICATION.  The Purchaser will not make any copies of the
Software or the Documentation; provided, however, that the Purchaser may make
one complete copy of the Software or the Documentation solely for backup
purposes if such copy of the Software or Documentation contains the notation
"Copyright Alcatel". The Purchaser will not print any on-line or electronic
documentation other than solely for servicing, operating or training purposes.

<PAGE>

4.  LIMITATIONS ON TRANSFER.  The Purchaser will not sell, rent, lease or
otherwise transfer any or all of the Software, the Documentation or any copies
thereof, without the prior written consent of Alcatel. The Purchaser will not
sublicense, assign, delegate, rent, lease or otherwise transfer any or all of
its rights under this Agreement.

5.  OWNERSHIP AND COPYRIGHT.  The Purchaser has not acquired, by virtue of this
Agreement, any right of ownership in or to the Software, the Documentation or
any related patent, copyright, trademark or other intellectual property right.
By virtue of this Agreement, the Purchaser has acquired a right of ownership
solely in and to the physical media on which the Software and the Documentation
are recorded or fixed. Alcatel, its licensors and their respective licensors
retain all right, title and interest in and to the Software, the Documentation
and any and all copies thereof, except for the rights expressly granted to the
Purchaser pursuant to this Agreement and as may be granted by Alcatel from time
to time. Such right, title and interest of Alcatel is, and such right, title and
interest of Alcatel's licensors and their respective licensors may be, protected
by applicable copyright laws and international treaties.

6.  TERM AND TERMINATION.  The term of this Agreement commences upon the
first use by the Purchaser of the Software and expires upon the termination
of this Agreement. If the Purchaser fails to comply with any of the terms and
conditions set forth in this Agreement, then (a) this Agreement will
automatically terminate, (b) notwithstanding such termination, the Purchaser
will (i) destroy or permanently erase the Software and any and all copies
thereof and (ii) destroy the Documentation and any and all copies thereof,
and (c) Alcatel may exercise any or all remedies available to it under
applicable laws. In addition, the Purchaser may terminate this Agreement at
any time by (a) destroying or permanently erasing the Software and any and
all copies thereof and (b) destroying the Documentation and any and all
copies thereof.

7.  NO WARRANTIES.  THE SOFTWARE IS MADE AVAILABLE TO THE PURCHASER ON AN "AS
IS" BASIS WITHOUT ANY EXPRESS, IMPLIED OR STATUTORY WARRANTIES WHATSOEVER,
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.

Some jurisdictions may not permit the exclusion of implied warranties; so the
above exclusion may not apply to the Purchaser. The Purchaser may have other
rights that vary from jurisdiction to jurisdiction.

Alcatel may from time to time, in its sole discretion, make available to the
Purchaser, with or without charge, updates to the Software or the
Documentation. No such action will create any warranty obligation on the part of
Alcatel.

8.  LIMITATION OF REMEDIES.  IN NO EVENT WILL ALCATEL, ITS LICENSORS OR THEIR
RESPECTIVE LICENSORS BE LIABLE FOR ANY DAMAGES OR OTHER RELIEF WHATSOEVER
ARISING OUT OF PURCHASER'S USE OR INABILITY TO USE THE SOFTWARE OR THE
DOCUMENTATION, INCLUDING WITHOUT LIMITATION LOST PROFITS, LOST BUSINESS OR LOST
OPPORTUNITY OR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL OR EXEMPLARY DAMAGES OR
LEGAL FEES ARISING OUT OF SUCH USE OR INABILITY TO USE THE SOFTWARE, EVEN IF
ALCATEL, ITS LICENSORS OR THEIR RESPECTIVE LICENSORS HAVE BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGES.

<PAGE>

Some jurisdictions may not permit the exclusion or limitation of incidental
or consequential damages; so the above exclusion or limitation may not apply
to the Purchaser.

9.  GOVERNING LAW.  This Agreement will be governed by and construed in
accordance with the laws of Belgium, without giving effect to the conflicts
of laws principles thereof.

10.  OTHER TERMS.  Additional or different terms and conditions may be
applicable to the Purchaser if so agreed in writing by the vendor of the
Software, Alcatel, its licensors and/or their respective licensors.

<PAGE>

                        ANNEX 6 TO THE LICENSE AGREEMENT:

                            NON DISCLOSURE AGREEMENT

--------------------------------------------------------------------------------

This Agreement made of as of the 20th day of April, 1998,

BY and BETWEEN

ALCATEL BELL N.V., a company organized and existing under the laws of Belgium,
having its registered office at 1, Francis Wellesplein, 2018 Antwerp, Belgium,
acting on its own behalf and on behalf of all the companies belonging to the
ALCATEL group ("ALCATEL"),

AND

INTEGRATED TELECOM EXPRESS, INC., a corporation organised and existing under the
laws of California, having its principal office at 2710 Walsh Avenue, Santa
Clara, California CA 95051, (hereinafter referred to as "ITEX"),

WHEREAS, ALCATEL and ITEX (hereinafter referred to as the "Parties") have
executed between them, on the same date as the present Non-Disclosure Agreement,
an Individual Agreement on the Licensing of the ADSL Chipset (hereinafter the
"AGREEMENT");

AND WHEREAS, the carrying out of the AGREEMENT will involve the written or
verbal disclosure and communication to each other of CONFIDENTIAL INFORMATION,
as defined in Clause 1 of the AGREEMENT;

AND WHEREAS, the Parties hereto wish to define their rights with respect to the
CONFIDENTIAL INFORMATION, and to protect their respective rights to such
CONFIDENTIAL INFORMATION.

THIS AGREEMENT WITNESSES that in consideration of the above premises and the
mutual promises herein, the Parties agree as follows:

ARTICLE 1

1.1.     The Parties undertake at their discretion to provide the CONFIDENTIAL
         INFORMATION to the other Party for purposes of the Project, subject to
         the terms, conditions and understandings herein set forth. Nothing
         herein obligates the Parties to disclose any particular data or
         information whether or not it is part of the CONFIDENTIAL INFORMATION.

<PAGE>

1.2.     The CONFIDENTIAL INFORMATION, and all rights to the CONFIDENTIAL
         INFORMATION, which has been or will be disclosed to the receiving
         Party, shall remain the exclusive property of the disclosing Party and
         shall be held in trust by the receiving Party for the benefit of the
         disclosing Party. The receiving Party will not examine or use such
         CONFIDENTIAL INFORMATION for any purpose except as described in the
         AGREEMENT and will not disclose the CONFIDENTIAL INFORMATION or any
         part thereof to any third party, either directly or indirectly, in
         whatever form or by whatever means. The Receiving Party will only
         communicate the CONFIDENTIAL INFORMATION to those employees who have a
         need to know within the framework of the Project and shall ensure that
         a standard of strict confidentiality is applied by such employees and
         that the obligations of non-disclosure and non-use provided herein are
         respected by them.

1.3.     The CONFIDENTIAL INFORMATION shall not be mechanically copied or
         otherwise reproduced by the receiving Party other than as explicitly
         provided in the AGREEMENT without the express written permission of the
         disclosing Party, except for such copies as the receiving Party may
         require pursuant to this Non-Disclosure Agreement for internal
         evaluation purposes on a "need to know" basis. All copies shall, on
         reproduction by the receiving Party, contain the same proprietary and
         confidential notices and legends which appear on the original
         CONFIDENTIAL INFORMATION, unless expressly authorised otherwise by the
         disclosing Party.

1.4.     The receiving Party shall not be liable for disclosure of the
         CONFIDENTIAL INFORMATION upon the occurrence of one or more of the
         following events:

         (a)  The expiration of fifteen years from the date of this Non
              Disclosure Agreement first set out above;

         (b)  The receiving Party can establish that the CONFIDENTIAL
              INFORMATION is in the public domain other than through a breach of
              this Non Disclosure Agreement;

         (c)  The CONFIDENTIAL INFORMATION is subsequently lawfully obtained by
              the receiving Party from a third party or parties without breach
              of this Non Disclosure Agreement by the receiving Party as shown
              by documentation sufficient to establish the third party as a
              source of the CONFIDENTIAL INFORMATION;

         (d)  The CONFIDENTIAL INFORMATION was known to the receiving Party
              prior to such disclosure as shown by documentation sufficient to
              establish such knowledge; or

         (e)  The disclosing Party has provided its prior written approval for
              such disclosure by the receiving Party.

<PAGE>

ARTICLE 2

2.1.     No license under any patent and no copyright of the disclosing Party or
         any right respecting the CONFIDENTIAL INFORMATION other than expressly
         set out in the AGREEMENT, is granted to the receiving Party under this
         Non Disclosure Agreement by implication or otherwise. This Non
         Disclosure Agreement shall not constitute any representation, warranty
         or guarantee to the receiving Party by the disclosing Party with
         respect to the infringement of patents or other rights of third
         parties. The disclosing Party shall not be held liable for any errors
         or omissions in the CONFIDENTIAL INFORMATION and for the utilization
         and the results of utilization of the CONFIDENTIAL INFORMATION.

ARTICLE 3

3.1.     Should either Party decide to terminate the AGREEMENT in accordance
         with Clause 15 of the AGREEMENT, both Parties shall within 28 days of
         notice of such termination return all CONFIDENTIAL INFORMATION and
         copies thereof susceptible of being so returned to the disclosing Party
         or shall destroy such CONFIDENTIAL INFORMATION and copies as directed
         by the disclosing Party and furnish proof of their destruction provided
         that, in the event that the receiving Party has created documents which
         commingle the receiving Party's CONFIDENTIAL INFORMATION will that of
         the disclosing Party, such documents may be destroyed by the receiving
         Party rather than returned.

ARTICLE 4

4.1.     This Agreement shall be construed in accordance with and governed by
         the Law of Belgium (without regard to its conflicts of law rules),
         provided however, that if any provision of Belgian law purports to
         change any material term hereunder, to impose any material obligation,
         duty, warranty or burden on a party beyond, contrary to, and/or in
         addition to those expressly stated herein, then all aspects of this
         Agreement so affected shall not be subject to such law, and instead, to
         the extent necessary or appropriate to give effect to and/or to
         implement the express terms of this Agreement, this Agreement shall be
         governed solely and exclusively by the law of the State of California.

<PAGE>

4.2.     All disputes arising out of and/or in connection with this
         Non-Disclosure Agreement shall be finally settled by arbitration in
         accordance with the Rules of the London Court of International
         Arbitration. The arbitration will be held in London, England, and will
         be before a single arbitrator designated in conformity with the said
         Rules. The arbitrator (i) shall be neutral and without business
         affiliation with either party; (ii) shall not be a citizen or resident
         of the United States nor Belgium; (iii) shall have reasonable expertise
         in business and financial aspects of the computer and electronics
         industry; and (iv) shall make detailed and complete findings of fact
         and conclusions of law in writing. The arbitration proceedings shall be
         held entirely in the English language and shall be subject to such
         conditions and precautions as may be appropriate to protect the
         confidential information of each party in a manner consistent with and
         at least as secure as the provisions of this Non Disclosure Agreement.
         In interpreting this Agreement, the arbitrator shall take into account
         usages in the computer electronics and software trade, particularly
         with a view to interpreting the confidentiality and trade secret
         provisions of this Non Disclosure Agreement in strict terms.
         Arbitration will be final and binding upon the Parties.

4.3      Judgment upon the arbitration award rendered may be entered in any
         Court having jurisdiction thereof, of having jurisdiction over either
         of the parties or their assets, or application may be made to such
         Court for a juridical acceptance of the award and an order of
         enforcement, as the case may be.

4.4      Nothing in this Agreement shall be deemed as preventing either party
         from seeking injunctive relief (or any other provisional remedy) from
         any court having jurisdiction over the parties and the subject matter
         of the dispute as necessary to protect either party's name, proprietary
         and/or intellectual property information, trade secrets, know-how or
         any other proprietary rights.

ARTICLE 5

5.1.     No amendment to terms and conditions of this Agreement shall be valid
         and binding on the Parties hereto unless made in writing and signed by
         an authorised representative of each of the Parties.

5.2.     This Agreement shall be binding upon the Parties hereto and their
         respective successors and assigns.

     SIGNED FOR AND ON                                       SIGNED FOR AND ON
     BEHALF OF ALCATEL                                        BEHALF OF ITEX
   ---------------------                                      ----------------

   /s/ MARTIN DE PRYCKER                SIGNATURE             /s/ DANIEL CHEN
   ---------------------                                      ----------------

     MARTIN DE PRYCKER                    NAME                   DANIEL CHEN
    VICE PRESIDENT AND
      GENERAL MANAGER                     TITLE               PRESIDENT AND CEO
   INTERNET ACCESS AND
           ADSL