INTERCOMPANY SERVICES AGREEMENT


         INTERCOMPANY  SERVICES AGREEMENT  ("Agreement") dated as of October 27,
2000  by  and   between  BEI   TECHNOLOGIES,   INC.,   a  Delaware   corporation
("Technologies") and OPTICNET, INC., a Delaware corporation ("OpticNet").

                                 R E C I T A L S

         WHEREAS,  prior to the date hereof the parties hereto have entered into
that certain  Technology  Transfer and  Distribution  Agreement (the "Technology
Transfer and Distribution Agreement") for the contribution of certain technology
and related assets by  Technologies  to OpticNet and the issuance by OpticNet to
Technologies in exchange therefor of 3,616,000 shares of the Voting Common Stock
of OpticNet, par value $0.0001 per share;

         WHEREAS,  in connection with the Technology  Transfer and  Distribution
Agreement,  OpticNet  desires to obtain  certain  services,  personnel  support,
provision of facilities, use of equipment and a line of credit from Technologies
and  Technologies  desires to provide  same to  OpticNet  on the terms set forth
herein; and

         NOW,  THEREFORE,  in consideration  of the mutual  covenants  expressed
herein, the parties agree as follows:

         1. USE OF ADMINISTRATIVE FACILITIES.

                  The parties presently share certain administrative  facilities
located at One Post Street,  Suite 2500,  San Francisco,  California  94104 (the
"Shared Facilities"). The parties hereby agree that use of the Shared Facilities
by OpticNet is at the discretion of  Technologies,  and such use by OpticNet may
be terminated by Technologies pursuant to sixty (60) days advance written notice
by Technologies to OpticNet  stating the same. In  consideration  for the use of
the Shared Facilities,  OpticNet shall pay a fee to Technologies, as provided in
Section 5 hereof.

         2. USE OF EQUIPMENT.

                  a.   Technologies   will   assign   to   OpticNet   the  lease
obligation(s)  relating to the  equipment  set forth on Exhibit A hereto,  which
Exhibit A shall attach as Schedule  A-1 thereto such actual lease  obligation(s)
(the "Assigned  Equipment Leases") on the same terms and conditions set forth in
such  Assigned  Equipment  Leases.  The equipment  leased to OpticNet  under the
Assigned  Equipment  Leases  shall be used by  OpticNet  for  optical  component
product development and production.  The assignment to OpticNet of such Assigned
Equipment Leases shall expire by its terms on September 30, 2001,  provided that
such lease term  hereunder  may  otherwise be extended or earlier  terminated by
mutual  consent of the  parties  hereto.  Such  equipment  will be  provided  by
Technologies  for  OpticNet's  installation,   control  and  use  at  OpticNet's
facility.  From time to time the  parties  hereto  may  agree by mutual  written
consent to modify Exhibit A to allow for the direct lease or assignment,  as the
case may be, to OpticNet by Technologies  of additional  equipment or additional
lease obligations.  OpticNet shall make payments to Technologies on the first of
each month commencing in the month immediately  following the date hereof, which
payments shall be pursuant to the schedule incorporated into


                                       1.

<PAGE>

Exhibit  A.  OpticNet  will be  responsible  for all costs  associated  with the
equipment listed on Exhibit A, including all necessary or advisable  repairs and
maintenance.

                  b. To the extent that any of the equipment provided under such
Assigned Equipment Leases may have a residual purchase option, at such time that
such residual  purchase  option may first be  exercisable,  the purchase  option
shall be offered to OpticNet by  Technologies,  provided that (i) OpticNet shall
pay to Technologies a sum equal to all lease payments made by Technologies prior
to the date hereof in connection  with such Assigned  Equipment  Leases and (ii)
the exercise of such purchase option by OpticNet shall be permissible  under the
terms of the relevant Assigned Equipment Lease.

                  c. In  consideration of the agreement by Technologies to lease
to OpticNet the  equipment  set forth on Exhibit A,  OpticNet  hereby  agrees to
permit the use of such equipment by Technologies'  personnel or  representatives
of  Technologies'  SiTek,  Inc.  ("SiTek")  subsidiary,  as the case may be (the
"Shared  Equipment"),  following reasonable notice to OpticNet and provided that
such use shall not interfere with the operations of OpticNet.  OpticNet shall be
entitled to reduce the lease payments to Technologies  applicable to such Shared
Equipment on a pro-rata  basis,  based upon the actual usage time of such Shared
Equipment by personnel of Technologies or SiTek, as the case may be, compared to
the total available usage time of such Shared Equipment,  based on an eight-hour
business day.

                  d. In the  event  of a  Change  of  Control  of  Technologies,
OpticNet  shall  have the right to  purchase  from  Technologies  the  remaining
obligation  under such Assigned  Equipment  Leases,  or in the case of equipment
owned by  Technologies  and directly  leased to  OpticNet,  purchase the subject
equipment,  and  refuse  further  access to the  equipment  in its  facility  to
Technologies or SiTek personnel or their successors,  as the case may be. In the
event of a Change of Control of  OpticNet,  Technologies  will have the right to
terminate  its  agreement  to provide  the  equipment  set forth on Exhibit A to
OpticNet.  A "Change in Control"  shall be defined as the occurrence of: (i) any
consolidation or merger of Technologies or OpticNet, as the case may be, with or
into any other  corporation  or other entity or person,  or any other  corporate
reorganization,  in which the  stockholders of Technologies or OpticNet,  as the
case may be, immediately prior to such consolidation,  merger, reorganization or
recapitalization,  own less than 65% of the surviving entity's voting securities
immediately    after   such    consolidation,    merger,    reorganization    or
recapitalization, or any transaction or series of related transactions resulting
in the  transfer  of  control of in excess of 65% of the  voting  securities  of
Technologies  or OpticNet,  as the case may be; or (ii) the sale or an agreement
by  Technologies or OpticNet,  as the case may be, to sell all or  substantially
all of its assets;

         3. GENERAL & ADMINISTRATIVE.

                  Commencing as of the effective time for the distribution  (the
"Effective  Time"),  as set forth in the  Technology  Transfer and  Distribution
Agreement,   Technologies   hereby   agrees  to  perform   certain   specialized
administrative  services for OpticNet as more particularly  detailed below. Such
services  are  to be  performed  by  Technologies'  Human  Resources,  Corporate
Accounting and Administrative personnel and management for the transition period
set forth below.

                  a.  Human  Resources.  A  senior  manager  designated  by  the
corporate  secretary  of  Technologies  will  provide  management  consultation,
training and oversight of OpticNet's personnel regulatory affairs. The specified
affairs are those pertaining to: employment,  termination,  layoffs, discipline,
worker's  compensation,  and related areas. This assistance shall continue until
September 30, 2001, or such earlier or later date as may be mutually agreed upon
by the parties hereto.

                  b. Employee Benefits.  A member of Technologies' staff jointly
designated by Technologies and OpticNet will oversee, on behalf of OpticNet, the
administration of all employee fringe benefit programs, payroll systems, and IRS
qualified and non-qualified  retirement plans in which OpticNet  employees shall
participate,  whether  the same shall be  provided in the name of OpticNet or in
the name of Technologies to qualified  employees of OpticNet,  all in accordance
with the terms of the  Technology  Transfer and  Distribution  Agreement.  These
programs  include life,  medical,  dental and disability  income  benefits;  and
participation in Technologies' 401(k) retirement savings plan and other Employee
Welfare  Benefit  Plans  listed on  Schedule C to the  Technology  Transfer  and
Distribution  Agreement by OpticNet  eligible  employees.  These  services  will
continue,  as to participation in the Technologies 401(K) Plan, until the 401(k)
Participation  Termination  Date, and as to all other Employee  Welfare  Benefit
Plans, until the Benefits Participation Termination Date, each as defined in the
Technology Transfer and Distribution Agreement.

                  c. Insurance Coverage. A member of Technologies' staff jointly
designated by Technologies and OpticNet will oversee, on behalf of OpticNet, the
maintenance  of the  insurance  coverage for OpticNet set forth on Schedule B to
the Technology Transfer and Distribution  Agreement.  Maintenance of the interim
insurance  coverage will include risk  assessment,  assurance of policy coverage
and liaison with the insurance  broker(s) and  carrier(s) on behalf of OpticNet.
Premiums  due  from  OpticNet  shall be  invoiced  separately  by the  insurance
provider and shall be promptly  forwarded  by  Technologies  to  OpticNet.  This
service will continue until September 30, 2001, or such earlier or later date as
may be mutually agreed upon by the parties hereto.

                  d.  Audit  and  Tax   Preparation.   Technologies'   corporate
accounting  staff will supervise and coordinate  necessary  financial audits and
tax preparation activities for the accounts of OpticNet in conjunction with such
auditors as OpticNet may designate and the orderly  handoff of these  activities
to such audit and federal and state tax service provider(s) selected by OpticNet
when  supervision  and  coordination of these  activities by Technologies  staff
shall cease.  This liaison and oversight will continue through the completion of
the fiscal year end audits and tax returns  for the fiscal  year  following  the
year in  which  the  separation  occurs,  provided  that the  provision  of such
services  may be earlier  terminated  or extended  upon mutual  agreement of the
parties hereto.

                  e. SEC Compliance Reporting.  In the event that OpticNet shall
register  its shares of Common Stock under the  Securities  Exchange Act of 1934
during the term of this  Agreement,  and/or list its shares for  trading  with a
securities  exchange,  Technologies'  corporate staff responsible for 10-K, 10-Q
and preparation and filing of proxy statements will assist OpticNet by preparing
for filing by OpticNet such  applicable  SEC mandated  reports,  and any reports
required by any securities  exchange with which OpticNet may list its shares for
trading.


                                       3.

<PAGE>

This service will continue for no more than five fiscal  quarters  following the
date of separation,  as the case may be, unless  earlier  terminated or extended
upon mutual agreement of the parties hereto.

         4. LINE OF CREDIT.

                  a. Technologies shall make available advances to OpticNet from
time to time until  September 30, 2002,  not to exceed at any time the aggregate
principal amount of Two Million Dollars ($2,000,000) (the "Line of Credit"), the
proceeds of which shall be used to finance working capital requirements, capital
expenditures  and other general  corporate  purposes.  Provided,  however,  that
availability  of advances  under such Line of Credit shall be subject to subject
to (1)  Technologies'  own ability to borrow under the terms and  conditions  of
that  certain  Credit  Agreement   between  BEI   Technologies,   Inc.  and  its
wholly-owned  subsidiary,  BEI Sensors & Systems Company,  Inc., and Wells Fargo
Bank,  National  Association dated as of December 15, 1998, as amended from time
to time (the "Credit  Agreement"),  (2) no event of default  having  occurred as
defined within the Credit  Agreement and being continuing and (3) the advance of
sums  under  such Line of Credit  not  causing  an event of default to occur for
Technologies under that certain Credit Agreement. OpticNet's obligation to repay
advances  under the Line of  Credit  shall be  evidenced  by a  promissory  note
substantially  in the form attached as Exhibit B hereto (the  "Revolving Line of
Credit Note").

                  b.  OpticNet may from time to time during the term of the Line
of Credit borrow,  partially or wholly repay its outstanding  borrowings without
penalty, and reborrow,  provided that the total outstanding borrowings under the
Line of Credit shall not at any time exceed  $2,000,000.  OpticNet shall provide
five (5) business  days prior  written  notice to  Technologies  of any intended
borrowing under such Line of Credit,  including the amount of such borrowing and
the effective date thereof.

                  c. Interest shall accrue on the outstanding  principal balance
owing  under  the  Line of  Credit  at the  rate of prime  plus  1.5% per  annum
(computed on the basis of a 360-day year, actual days elapsed). Interest accrued
on borrowings shall be payable on the first day of each calendar quarter.

         5. FEES & PAYMENTS

                  a. OpticNet shall pay an aggregate fee to Technologies for the
shared facilities  described in Section 1 hereof and for the managerial services
described in Section 3 hereof. The amount to be paid shall be in accordance with
the rates attached on Exhibit C hereto.  In addition,  OpticNet shall  reimburse
Technologies  for any costs and expenses accrued prior to the date of separation
and  invoiced  following  the date  hereof as the same  relate  to  professional
services such as audit and tax  preparation  support,  employee  benefit  record
keeping and financial  advisory  services,  legal advice,  and insurance  policy
premiums for the benefit of OpticNet.

                  b. Fees for  Technologies'  services shall be payable monthly,
pro rated for fractional periods and invoiced in advance before the 10th of each
month.  OpticNet  agrees  to pay  Technologies'  invoices  net  within  30 days.
Additional  costs and  expenses  incurred  for  professional  services  shall be
invoiced  directly to  OpticNet.  Where  practical  considerations


                                       4.

<PAGE>

dictate that Technologies should pay for the professional  services directly, or
on behalf of OpticNet,  OpticNet  agrees to reimburse  Technologies  immediately
following receipt of Technologies' invoice which details the charges.

                  c. It is the intent of the parties  that the fees shall bear a
reasonable relationship to actual costs. The need for continued service (if any)
and the fees (if any)  therefore  shall be  reviewed  after  four  quarters  and
adjusted subject to arms length negotiation confirmed in writing.

         6. TERMINATION.

                  Either party may, in its discretion,  terminate this Agreement
in the event that the other party  breaches any material  obligation  hereunder,
which  breach  continues  for a period of sixty (60) days after  written  notice
thereof is delivered by the  non-breaching  party.  OpticNet may terminate  this
Agreement  at will,  thirty  (30) days after  written  notice of such  intent to
terminate has been given to Technologies.  In the event of termination, the fees
due Technologies shall accrue through the date of termination. Provided further,
that in the event of a Change in Control of OpticNet, as defined in Section 2.d.
hereof,  Technologies may terminate this agreement at will upon thirty (30) days
written notice to OpticNet of such intent to terminate.

         7. CONFIDENTIALITY AND DISPUTE RESOLUTION.

                  Each of the  confidentiality  provision and dispute resolution
provision  set  forth  in  Section  3.4  and  Article  4,  respectively,  of the
Technology  Transfer  and  Distribution  Agreement  shall apply and govern as to
performance of and disputes regarding this Agreement.

         8. FINAL AGREEMENT

                  This Agreement sets forth the complete and final understanding
of the parties hereto and supersedes  all prior  agreements and  understandings,
whether  written or oral,  between  the parties  hereto  relating to the subject
matter hereof.

         9. NOTICES.

                  All notices, requests and other communications to Technologies
or  OpticNet  hereunder  shall be in  writing  (including  telecopy  or  similar
electronic transmissions),  shall refer specifically to this Agreement and shall
be  personally  delivered  or sent by  telecopy  or other  electronic  facsimile
transmission or by registered mail or certified mail, return receipt  requested,
postage prepaid, in each case to the respective address specified below (or such
other address as may be specified in writing to the other party hereto):

                  BEI Technologies, Inc.
                  One Post Street, Suite 2500
                  San Francisco, CA 94104
                  Attn: Chief Financial Officer


                                       5.

<PAGE>

                  OpticNet, Inc.
                  One Post Street, Suite 2500
                  San Francisco, CA 94104
                  Attn: President

                  Any  notice or  communication  given in  conformity  with this
Section  shall be deemed to be  effective  when  received by the  addressee,  if
delivered by hand, and three days after mailing, if mailed.

         10. SUCCESSORS.

                  The terms and provisions of this Agreement  shall inure to the
benefit of, and be binding upon  Technologies,  OpticNet,  and their  respective
successors  and  assigns;  provided,  however,  that  neither  Technologies  nor
OpticNet may assign or otherwise  transfer any of its rights and interests,  nor
delegate  any of  its  respective  obligations,  hereunder,  including,  without
limitation,  pursuant to a merger or  consolidation,  without the prior  written
consent of the other party hereto.

         11. GOVERNING LAW.

                  This   Agreement   shall  be  governed  by  and  construed  in
accordance  with the laws of the State of  California,  as applied to  contracts
between  California   residents  entered  into  and  performed  entirely  within
California.

         12. SEVERABILITY.

                  In the event any one or more of the  provisions  contained  in
this Agreement should be held invalid,  illegal or unenforceable in any respect,
the validity,  legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.  The parties hereto
shall  endeavor in good-faith  negotiations  to replace the invalid,  illegal or
unenforceable  provisions  with valid  provisions,  the economic effect of which
comes as close as  possible  to that of the  invalid,  illegal or  unenforceable
provisions.


                                       6.

<PAGE>

         13. THIRD PARTY BENEFICIARIES.

                  This Agreement is solely for the benefit of the parties hereto
and their respective subsidiaries,  as the case may be, and should not be deemed
to confer upon third parties any remedy, claim, liability,  reimbursement, claim
of action or other right in excess of those existing  without  reference to this
Agreement.

         14. FORCE MAJEURE.

                  14.1 Acts Constituting  Force Majeure.  Neither party shall be
liable to the other for a delay in its  performance  of this  Agreement  arising
from causes beyond its reasonable  control.  Without  limiting the generality of
the foregoing,  such events include any act of God; accident;  explosion;  fire;
earthquake;  flood; strikes; labor disputes; riots; sabotage; embargo; equipment
failure; federal, state, or local legal restriction or limitation. Neither party
shall be  required  to  resolve  labor  disputes,  but  shall  use  commercially
reasonable efforts to seek alternative sources to the extent practicable.

                  14.2 Notice  Requirement.  When circumstances occur that delay
the  performance  of either  party  under  this  Agreement,  whether or not such
circumstances are excused pursuant to Section 14.1 above, such party shall, when
it first becomes aware of such  circumstances,  promptly notify the other party,
by facsimile or by telephone  confirmed in writing  within two (2) business days
in the case of oral  notice.  Within  ten (10)  business  days of the date  when
either party first becomes  aware of the event which it contends is  responsible
for the delay,  it shall supply to the other party in writing the  reason(s) for
and  anticipated  duration of such delay,  the measures taken and to be taken to
prevent or minimize the delay, and the timetable for the  implementation of such
measures.

         15. HEADINGS.

                  Headings used herein are for convenience only and shall not in
any  way  affect  the  construction  of,  or  be  taken  into  consideration  in
interpreting this Agreement.

16.      ENTIRE AGREEMENT; AMENDMENT.

                  This Agreement  constitutes the entire  agreement  between the
parties  hereto  regarding  the subject  matter hereof and may not be changed or
cancelled except in writing signed by all parties hereto.

17.      EXECUTION IN COUNTERPARTS.

                  This  Agreement  may be executed in two or more  counterparts,
each of which counterparts,  when so executed and delivered,  shall be deemed to
be an original and all of which counterparts,  taken together,  shall constitute
one and the same instrument.


                                       7.

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal and delivered as of the date first above written.  This
Agreement  may only be amended or  modified by a written  agreement  executed by
both parties.

                               BEI TECHNOLOGIES, INC.


                               By:
                                        ------------------------------------


                                        Title:  Vice President and Treasurer


                               OPTICNET, INC.


                               By:
                                        ------------------------------------


                                        Title: Vice President and Chief
                                        Financial Officer



                                       8.

<PAGE>



                 INTERCOMPANY SERVICES AGREEMENT AS OF 10/27/00

                                    EXHIBIT A

Facilities                                     Thin Film:
----------                                     ----------
         Clean Room                                    Oxidation furnace
         Safety Equipment                              Annealing furnace
         Furniture                                     Sputtering vacuum system
         Fab Network                                   Metal evaporator
                                                       CVD reactor


Photolithography:                              Plasma Etch:
-----------------                              ------------
         Spin coat rack                                Deep reactive ion etcher
         Developer                                     Reactive ion etcher
         Water scrubber
         Mask aligner
         Bake oven                             Back End Process:
         Descum / asher                        -----------------
         Manual spinner                        Wire bonder
         Mask cleaner                          Die attach system
                                               Dicing saw
                                               Probe station
Wet Processing:
---------------
         Bench 1 photolith
         Bench 2 oxide etch                    Device Package:
         Bench 3 general                       ---------------
         Bench 4 silicon etch                          Fiber aligner
         Bench 5 metal etch                            Auto fiber aligner
                                                       Lens array
                                                       Lens array
                                                       Dispenser, epoxy
Bonding Equipment:                                     Pack. assembly
-----------------                                      Inspection
         Controller                                    Test
         Bond aligner
         Bond preparation
         Polisher                              New Capabilities:
                                               -----------------
                                                       Deep reactive ion etching
Analytical:                                            Bonding aligner
-----------                                            CVD reactor
         Profilometer                                  CVD reactor
         Thickness gauge                               Dielectric
         Thin film gauge                               Nitride ref.
         Line width gauge                              Ion mill    z
         Scanning Electron Microscope
         IR microscope
         Optic microscope
         Wafer part
         Interferometer
         Optic thickness gauge


                                       1.

<PAGE>

                 INTERCOMPANY SERVICES AGREEMENT AS OF 10/27/00

                                    Exhibit B

                          REVOLVING LINE OF CREDIT NOTE


$2,000,000.00                                          San Francisco, California
                                                                October 30, 2000

         FOR  VALUE  RECEIVED,  the  undersigned  OPTICNET,   INC.  ("Borrower")
promises to pay to the order of BEI TECHNOLOGIES,  INC. ("Lender") at its office
at One Post Street,  Suite 2500,  San  Francisco,  California,  or at such other
place as the holder hereof may  designate,  in lawful money of the United States
of America and in immediately  available funds, the principal sum of Two Million
Dollars  ($2,000,000.00),  or  so  much  thereof  as  may  be  advanced  and  be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

                                  DEFINITIONS:

         As used herein,  the following  terms shall have the meanings set forth
below,  and any other term defined in this Note shall have the meaning set forth
at the place defined:

         "Business Day" means any day except a Saturday, Sunday or any other day
on which  commercial  banks in California  are  authorized or required by law to
close.

         18. INTEREST

                  a. Interest.  The outstanding  principal  balance of this Note
shall  bear  interest  (computed  on the basis of a 360-day  year,  actual  days
elapsed) at the rate of prime plus 1.5% per annum.

                  b. Payment of Interest. Interest accrued on this Note shall be
payable on the first day of each  quarter,  commencing  the first of the quarter
after any borrowing hereunder.

                  c. Late Charge.  From and after  September  30, 2002,  or such
earlier  date as all  principal  owing  hereunder  becomes  due and  payable  by
acceleration or otherwise,  the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year,  actual days  elapsed)  equal to two percent (2%) above
the rate of interest set forth above and otherwise applicable to this Note.

BORROWING AND REPAYMENT:

                  a.  Borrowing  and  Repayment.  Borrower may from time to time
during  the term of this  instrument  borrow,  partially  or  wholly  repay  its
outstanding borrowings, and reborrow,  subject to all of the limitations,  terms
and conditions of this Note and of any document  executed in connection  with or
governing this Note;  provided,  however,  that the total outstanding


                                       2.

<PAGE>

principal  amount of the borrowings under this Note shall not at any time exceed
$2,000,000. The unpaid principal balance of this obligation at any time shall be
the total  amounts  advanced  hereunder by the holder  hereof less the amount of
principal  payments  made hereon by or for the  Borrower,  which  balance may be
endorsed  hereon  from time to time by the  holder.  The  outstanding  principal
balance of this Note shall be due and payable in full on September 30, 2002.

                  b. Advances.  Advances  hereunder,  to the total amount of the
principal  sum stated  above,  may be made by the holder upon five (5)  Business
Days' prior written request by the Chief Financial Officer,  Corporate Secretary
or Treasurer of the Borrower,  any one acting alone who is authorized to request
advances and direct the  disposition of any advances until written notice of the
revocation of such authority is received by the holder at the office  designated
above.

                  c.  Application  of  Payments.  Each payment made on this Note
shall be credited first, to any accrued interest and second,  to the outstanding
principal balance hereof.

PREPAYMENT:

         Borrower may prepay  principal on any portion of this Note at any time,
in any amount and without penalty.

COMPLIANCE WITH OTHER AGREEMENTS:

         The obligation of the Lender to advance sums under this Note is subject
to (1) the Lender's own ability to borrow under the terms and conditions of that
certain Credit  Agreement  between BEI  Technologies,  Inc. and its wholly-owned
subsidiary,  BEI Sensors & Systems Company, Inc., and Wells Fargo Bank, National
Association  dated as of December  15,  1998,  as amended from time to time (the
"Credit  Agreement"),  (2) no event of default having occurred as defined within
the Credit  Agreement and being continuing and (3) the advance of sums hereunder
not  causing  an event of default  to occur for the  Lender  under that  certain
Credit  Agreement.  In the event that as of the date of any requested  borrowing
hereunder,  Lender  shall be unable to advance sums to the Borrower as set forth
above,   Lender  shall  (i)  immediately  provide  notice  to  Borrower  of  the
non-availability  of sums  hereunder  as of such date and (ii)  arrange  for the
advance to Borrower of such sums  requested  hereunder as soon as feasible after
such date.

MISCELLANEOUS:

                  d.  Remedies.  Upon the  occurrence of any Event of Default or
Change in Control  (each as  defined  below),  the  holder of this Note,  at the
holder's  option,  may declare all sums of principal  and  interest  outstanding
hereunder to be immediately due and payable without presentment,  demand, notice
of  nonperformance,  notice of protest,  protest or notice of  dishonor,  all of
which are  expressly  waived by  Borrower,  and the  obligation,  if any, of the
holder to extend  any  further  credit  hereunder  shall  immediately  cease and
terminate.  Borrower  shall pay to the holder  immediately  upon demand the full
amount  of all  payments,  advances,  charges,  costs  and  expenses,  including
attorneys'  fees (to include outside counsel fees and all allocated costs of the
holder's  in-house  counsel),  expended or incurred by the holder in  connection
with the


                                       3.

<PAGE>

enforcement of the holder's rights including, without limitation, the collection
of any amounts  which become due to the holder under this Note,  and the defense
of any  action in any way  related  to this,  whether  incurred  at the trial or
appellate  level,  in an  proceeding  or  otherwise,  and  including  any of the
expenses and costs  incurred by the holder of this Note, in connection  with any
adversary proceeding,  contested matter or motion brought by Lender or any other
person relating to the Borrower or any other person or entity.

         Each of the following events shall be an "Event of Default" hereunder:

         (i) Borrower fails to pay timely any of the principal  amount due under
this Note on the date the same  becomes due and payable or any accrued  interest
or other  amounts due under this Note within five  calendar  days after the date
the same becomes due and payable;

         (ii)  Borrower  files any  petition  or  action  for  relief  under any
bankruptcy,  reorganization,  insolvency or moratorium law, or any other law for
the relief of, or relating to, debtors, now or hereafter in effect, or makes any
assignment  for the  benefit  of  creditors,  or takes any  corporate  action in
furtherance of any of the foregoing; or

         (iii) An involuntary  petition is filed against  Borrower  (unless such
petition  is  dismissed  or  discharged  within  sixty  (60)  days),  under  any
bankruptcy  statute  now or  hereafter  in  effect,  or a  custodian,  receiver,
trustee,  assignee for the benefit of creditors (or other  similar  official) is
appointed to take possession, custody or control of any property of Borrower.

         A "Change in Control"  shall mean: (i) any  consolidation  or merger of
the Borrower with or into any other  corporation  or other entity or person,  or
any other corporate  reorganization,  in which the  stockholders of the Borrower
immediately   prior   to   such   consolidation,   merger,   reorganization   or
recapitalization,   own  less  than  [65]%  of  the  surviving  entity's  voting
securities  immediately  after such  consolidation,  merger,  reorganization  or
recapitalization,  (ii)  any  transaction  or  series  of  related  transactions
resulting  in the  transfer  of control of in excess of [65]% of the  Borrower's
voting securities, or (iii) the sale or an agreement by the Borrower to sell all
or substantially all of its assets.

          (b)  Governing  Law.  This Note shall be governed by and  construed in
accordance  with the laws of the State of California as such laws are applied to
agreements between California  residents entered into and to be performed within
the state of California.

         IN WITNESS  WHEREOF,  the  undersigned has executed this Note as of the
date first written above.

OPTICNET, INC.



By:
   --------------------------------------------------

Name:
     ------------------------------------------------

Title:
      -----------------------------------------------


                                       4.

<PAGE>

                 INTERCOMPANY SERVICES AGREEMENT AS OF 10/27/00



                                    EXHIBIT C







                  Rate Per Quarter:                  $25,000*









         *Amount includes fee for shared facilities and managerial services.


                                       5.