<PAGE>


                                                                    Exhibit 10.5


                                   SENIOR NOTE

$46,250,000.00                New York, New York                August 14, 2001


         FOR VALUE RECEIVED, the undersigne d, NEON OPTICA, INC., a Delaware
corporation ("MAKER"), promises to pay to the order of NORTEL NETWORKS INC., a
Delaware corporation ("PAYEE"), the principal sum of FORTY-SIX MILLION TWO
HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($46,250,000.00), together with
interest as provided below. All payments on this Senior Note (the "NOTE") shall
be due and payable in lawful money of the United States of America, without
offset, counterclaim or deduction, at the office of Payee at 2221 Lakeside
Boulevard, Richardson, Texas 75082-4399, or such other place as Payee shall
request.

         1. INDEBTEDNESS. The indebtedness evidenced by this Note represents
amounts to be paid by Maker to Payee for goods and services provided by Payee to
Maker.

         2. SECURITY. The indebtedness evidenced by this Note is secured by the
security interests granted under that certain Network Products Purchase
Agreement dated effective as of March 23, 1998, by and between Maker and Payee,
as amended by that certain Amendment No. 1 dated effective as January 4, 1999,
by and between Maker and Payee (as amended, the "NPPA").

         3. INTEREST. The unpaid principal balance from day to day outstanding
hereunder shall bear interest at a rate per annum which shall from day to day be
equal to the lesser of (a) fifteen percent (15%), based upon a 365 or 366-day
year (as applicable) and the actual number of days elapsed, or (b) the Maximum
Lawful Rate (as hereinafter defined). All past due principal of and, to the
extent permitted by law, accrued interest on this Note shall bear interest from
maturity (whether by acceleration or otherwise) until paid at an annual rate
equal to the lesser of (i) eighteen percent (18%), based upon a 365 or 366-day
year (as applicable) and the actual number of days elapsed, or (ii) the Maximum
Lawful Rate.

         4. PAYMENTS, MATURITY. Accrued but unpaid interest on this Note shall
be due and payable quarterly in arrears on the last day of each calendar quarter
beginning on September 30, 2001 and continuing on the last day of each calendar
quarter thereafter through and including June 30, 2003 (the "MATURITY DATE").
Default interest shall be due on demand. The unpaid principal balance of this
Note shall be due and payable in eight equal quarterly installments of
$5,781,250, on the last day of each calendar quarter beginning on September 30,
2001, and continuing on the last day of each calendar quarter thereafter through
and including the Maturity Date. The unpaid principal balance of this Note and
all accrued but unpaid interest thereon shall be due and payable in full on the
Maturity Date.

<PAGE>

         5. VOLUNTARY PREPAYMENTS. The unpaid principal balance of this Note may
be prepaid in increments of at least $1,000,000 beginning one year after the
date hereof. No amounts prepaid may be re-borrowed.

         6. MANDATORY PREPAYMENTS. Maker shall make a mandatory prepayment on
this Note with one hundred percent of the proceeds of any sale, transfer or
other disposition of any of the "Products" as such term is defined in the NPPA
(hereinafter referred to as the "COLLATERAL"), including the amount of any
insurance recovery or condemnation payment with respect to any of the
Collateral. Any such payment will be due concurrently with the receipt of such
funds by the Maker. This requirement does not authorize the disposition of any
Collateral. Maker shall make a mandatory prepayment on this Note in the amount
of fifty percent of the net proceeds (gross proceeds less reasonable and
customary expenses of issuance paid to third parties) of any offerings of debt
or equity securities by Maker or NEON Communications, Inc. ("HOLDINGS");
provided, however, that no such payment shall be required from the proceeds of
debt or equity offerings until the gross proceeds of all such offerings after
the date hereof exceed $50,000,000.

         7. FINANCIAL REPORTING. So long as any amounts remain outstanding
hereunder, Maker agrees to provide to Payee quarterly, no more than 45 days
after the end of each calendar quarter beginning with the calendar quarter
ending June 30, 2001, a copy of (i) an unaudited financial report of Holdings
and its consolidated subsidiaries as of the end of such quarter and for the
portion of the fiscal year then ended containing, on a consolidated and
consolidating basis, balance sheets and statements of income, retained earnings
and cash flow, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in reasonable detail
certified by the chief financial officer of Holdings to have been prepared in
accordance with generally accepted accounting principles consistently applied
("GAAP") and to fairly and accurately present (subject to year-end audit
adjustments) the financial condition and results of operations of Holdings and
its consolidated subsidiaries, on a consolidated and consolidating basis, at the
date and for the periods indicated therein and (ii) management's financial
reports comparing actual financial results for the period to the current budget
for the period. Payee acknowledges and agrees that Maker may provide Payee a
copy of the form 10-Q (including all financial statements contained therein) or
form 10-K (including all financial statements contained therein) or any
successor form, as applicable, filed with the Securities and Exchange Commission
by Holdings for the applicable reporting period in satisfaction of Maker's
reporting obligations under this PARAGRAPH 7 and that certification by the chief
financial officer shall not be required, provided that such reports include the
information required by this PARAGRAPH 7.

         8. MAINTENANCE OF INSURANCE. Maker will keep insured by financially
sound and reputable insurers all property and other assets of a character
usually insured by responsible corporations engaged in the same or a similar
business similarly situated against loss or damage of the kinds and in the
amounts customarily insured against by


                                       2
<PAGE>

such corporations or entities and carry such other insurance as is usually
carried by such corporations or entities, PROVIDED that in any event Maker will
maintain (a) general liability insurance with coverage of at least $1,000,000
and (b) worker's compensation insurance (including employers' liability
insurance) to the extent required by applicable law, which may be self-insurance
to the extent permitted by applicable law. Such insurance shall be written by
financially responsible companies selected by Maker and having an A.M. Best
Rating of "A-" or better and being in a financial size category of "VI" or
larger, or by other companies reasonably acceptable to Payee. Each policy
referred to in this PARAGRAPH 7 shall provide that it will not be canceled,
amended or reduced except after not less than 30 days' prior written notice to
Payee, shall name Payee as additional insured and as loss payee as its interest
may appear, and shall also provide that the interests of Payee shall not be
invalidated by any act or negligence of Maker. Maker will advise Payee promptly
of any policy cancellation, reduction or amendment. Maker shall provide to Payee
original certificates evidencing all such policies of insurance and, at the
request of Payee, copies of such policies.

         9. DEBT. Maker will not, nor will it permit any of its subsidiaries to,
incur, create, assume or permit to exist any Debt, except:

         (a) Debt evidenced by this Note; and

         (b) existing Debt in the principal amounts and as otherwise described
on SCHEDULE 9 hereto.

As used herein, "DEBT" means as to any natural person, corporation, partnership,
trust, limited liability company, or other organization or entity (any of the
foregoing being referred to hereinafter as a "PERSON") at any time (without
duplication): (a) all indebtedness, liabilities and obligations of such Person
for borrowed money; (b) all indebtedness, liabilities and obligations of such
Person evidenced by bonds, notes, debentures or other similar instruments; (c)
all indebtedness, liabilities and obligations of such Person to pay the deferred
purchase price of property or services, except trade accounts payable of such
Person arising in the ordinary course of business that are not past due by more
than 90 days; (d) all capital lease obligations of such Person, except capital
lease obligations of such Person arising in the ordinary course of business that
are related to the maintenance or improvement of such Person's
telecommunications network and that do not exceed $7,500,000 in the aggregate at
any time; (e) all Debt of others guaranteed by such Person; (f) all
indebtedness, liabilities and obligations secured by a Lien existing on property
owned by such Person, whether or not the indebtedness, liabilities or
obligations secured thereby have been assumed by such Person or are non-recourse
to such Person; (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers' acceptances,
surety or other bonds and similar instruments, except obligations of such Person
arising in the ordinary course of business that are related to such Person's
telecommunications network and that do not exceed $5,000,000 in the aggregate at
any time; (h) all indebtedness,


                                       3
<PAGE>

liabilities and obligations of such Person to redeem or retire shares of capital
stock of such Person; (i) all indebtedness, liabilities and obligations of such
Person under interest rate protection agreements; and (j) all indebtedness,
liabilities and obligations of such Person in respect of unfunded vested
benefits under any pension plans.

         10. CONTRIBUTIONS TO THE EQUITY CAPITAL OF MAKER. Maker represents and
warrants to Payee that the net proceeds of the convertible debt issued by
Holdings to Mode 1 Communications, Inc. and Exelon Enterprises Management Inc.
have been contributed as equity to the capital of Maker.

         11. ABSENCE OF LIENS. Maker will not permit or suffer to exist, and
will not permit Holdings to create or suffer to exist, any Lien on or with
respect to any of its respective assets or properties other than Permitted
Liens. As used in this Note, "LIEN" shall mean any lien, mortgage, security
interest, tax lien, financing statement, pledge, charge, hypothecation or other
encumbrance of any kind or nature whatsoever (including, without limitation, any
conditional sale or title retention agreement), whether arising by contract,
operation of law or otherwise. As used in this Note, "PERMITTED LIENS" shall
have the meaning assigned to that term in the Indenture dated as of August 5,
1998 between NorthEast Optic Network, Inc. and U.S. Bank Trust National
Association, as Trustee, for 12-3/4% Senior Notes Due 2008.

         12. RESTRICTED PAYMENTS. Maker will not, and will not permit Holdings
to, make any Restricted Payments. As used in this Note, a "RESTRICTED PAYMENT"
means (a) any dividend or other distribution (whether in cash, property or
obligations), direct or indirect, on account of (or the setting apart of money
for a sinking or other analogous fund for) any shares, interests, rights to
purchase, warrants, options, participation or other equivalents of or interests
in (however designated) equity of such Person, including any preferred stock,
but excluding any debt securities convertible into such equity ("CAPITAL STOCK")
of Maker or Holdings now or hereafter outstanding, except a dividend payable
solely in Capital Stock of Maker or Holdings, respectively; and (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Capital
Stock of Maker or Holdings now or hereafter outstanding. This PARAGRAPH 12 shall
not prohibit the repurchase or other acquisition of shares of, or options to
purchase shares of, common stock of Holdings or Maker from employees, former
employees, directors or former directors of Holdings or Maker (or permitted
transferees of such employees, former employees, directors or former directors),
pursuant to the terms of the agreements (including employment agreements) or
plans (or amendments thereto) approved by the Board of Directors of Holdings
under which such individuals purchase or sell, or are granted the option to
purchase or sell, shares of such common stock; provided, however, that the
aggregate amount of such repurchases and other acquisitions shall not exceed
$500,000 in any calendar year.


                                       4
<PAGE>

         13. AFFILIATE TRANSACTIONS. Maker will not, and will not permit
Holdings to, enter into or permit to exist any transaction (including the
purchase, sale, lease or exchange of any property, employee compensation
arrangements or the rendering of any service) with any Affiliate of Maker or
Holdings (an "AFFILIATE TRANSACTION") unless the terms thereof (i) are no less
favorable to Maker or Holdings than those that could be obtained at the time of
such transaction in arm's-length dealings with a Person who is not such an
Affiliate, (ii) if such Affiliate Transaction involves an amount in excess of
$1,000,000, (1) are set forth in writing and (2) have been approved by a
majority of the members of the Board of Directors of Holdings having no personal
stake in such Affiliate Transaction and (iii) if such Affiliate Transaction
involves an amount in excess of $5,000,000, have been determined by a nationally
recognized investment banking firm to be fair, from a financial standpoint, to
Maker and Holdings. The provisions of this PARAGRAPH 13 shall not prohibit (i)
any Restricted Payment permitted to be paid pursuant to PARAGRAPH 12 of this
Note, (ii) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors of Holdings, (iii) the grant of stock options or similar rights to
employees and directors of Maker or Holdings pursuant to plans approved by the
Board of Directors of Holdings, (iv) loans or advances to employees in the
ordinary course of business in accordance with the past practices of Maker or
Holdings, but in any event not to exceed $1,000,000 in the aggregate outstanding
at any one time, (v) the payment of reasonable fees to directors of Maker or
Holdings who are not employees of Maker or Holdings, (vi) any Affiliate
Transaction between Maker and Holdings or between subsidiaries of Holdings not
designated as unrestricted subsidiaries by the Board of Directors of Holdings
and (vii) the issuance or sale of Capital Stock of Holdings. As used in this
Note, an "AFFILIATE" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling " and "controlled" have meanings correlative to the foregoing. For
purposes of this PARAGRAPH 13 only, "Affiliate" shall also mean any beneficial
owner of Capital Stock representing 5% or more of the total voting power of the
voting stock (on a fully diluted basis) of Holdings or of rights or warrants to
purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.

         14. ASSET DISPOSITIONS. Maker will not, and will not permit Holdings
to, sell, lease, assign, transfer or otherwise dispose of any of its property,
except (a) dispositions of inventory in the ordinary course of business, (b)
dispositions of property no longer used or useful in the ordinary course of
business, (c) transfers of fiber capacity in exchange for indefeasible rights of
use, and (d) long-term leases of fiber capacity; provided, however, that Maker
or Holdings may sell, lease, assign, transfer or otherwise dispose of up to an
aggregate of $5,000,000 of property (not including dispositions of


                                       5
<PAGE>

property permitted by clauses (a) through (d) of this PARAGRAPH 14) as long as
(i) no Event of Default has occurred and is continuing and (ii) Maker or
Holdings receives consideration for the disposition of the property at least
equal to the fair market value of the property as determined in good faith by
the board of directors of Maker or Holdings, as the case may be.

         15. PREPAYMENT OF OTHER DEBT. Maker will not, and will not permit
Holdings to, directly or indirectly make any payment or distribution on account
of, or voluntarily purchase, acquire, redeem or retire, any indebtedness of any
type or nature, including any contingent obligations, prior to 30 days before
its stated maturity (in effect on the date hereof, for indebtedness outstanding
on the date hereof), or in the case of interest, its stated due date, or
directly or indirectly become obligated to do any of the foregoing by amending
the terms thereof or otherwise without Payee's prior written consent, except for
(a) prepayments of the indebtedness evidenced by this Note, and (b) payments of
accounts payable in the ordinary course of business.

         16. EVENTS OF DEFAULT AND REMEDIES. Without notice or demand (which are
hereby waived), the entire unpaid principal balance of, and all accrued but
unpaid interest on, this Note shall immediately become due and payable at the
option of the holder hereof upon the occurrence and during the continuance of
any Event of Default. The occurrence of any one or more of the following shall
constitute an Event of Default hereunder (each an "EVENT OF DEFAULT"): (a) a
failure by Maker to make any payment of principal or interest on this Note or
any other payment required of Maker hereunder when due; (b) Maker shall fail to
observe or perform any obligation, requirement, covenant or restriction to be
observed or performed by it under this Note (other than a payment described in
SUBPARAGRAPH (A) above) and such failure continues for a period of thirty (30)
days; (c) the representation and warranty made by Maker to Payee in PARAGRAPH 10
hereof or any representation or warranty made by Maker to Payee in the officer's
certificate furnished to Payee in connection herewith shall be false,
misleading, incorrect or incomplete in any material respect; (d) the appointment
of a receiver, trustee, conservator, or liquidator of Maker or Holdings or any
property of Maker or Holdings which is not dismissed within sixty (60) days
after its filing; (e) a filing by Maker or Holdings of a voluntary petition
seeking an entry of an order for relief as a debtor in a proceeding under the
United States Bankruptcy Code or seeking reorganization or rearrangement or
taking advantage of any bankruptcy, insolvency, liquidation, conservatorship,
receivership, moratorium, rearrangement, reorganization or other similar law for
the relief of debtors, or an answer by Maker or Holdings admitting the material
allegations of a petition filed against Maker or Holdings in any bankruptcy,
reorganization, insolvency, conservatorship, or similar proceeding, or an
admission by Maker or Holdings in writing of an inability to generally pay its
debts as they become due; (f) the making by Maker or Holdings of a general
assignment for the benefit of creditors; (g) the filing of a petition or entry
of an order for relief by or against Maker or Holdings as debtor in a proceeding
under the United States Bankruptcy Code by any court of competent jurisdiction,
or approving a petition seeking reorganization of Maker


                                       6
<PAGE>

or Holdings or an arrangement of their respective debts, or appointing a
receiver, trustee, conservator, or liquidator of Maker or Holdings or any
property of Maker or Holdings not dismissed within thirty (30) days after
filing; (h) the liquidation, termination, or dissolution of Maker or Holdings;
(i) if the validity or enforceability of this Note shall be contested by Maker
or Holdings, or if Maker shall deny that it has any further liability or
obligation hereunder; (j) Maker or Holdings shall fail to pay any indebtedness
greater than $5,000,000 due any third person and such failure continues beyond
any applicable grace period; (k) Maker or Holdings shall suffer a final judgment
or judgments not covered by insurance for payment of money aggregating in excess
of $5,000,000 and shall not discharge such judgment(s) within sixty (60) days;
(l) any default or event of default occurs with respect to any indebtedness for
borrowed money or any lease agreement for which Maker or Holdings has liability
in excess of $5,000,000 and is not cured within any applicable grace period; (m)
Maker shall be in material breach of any material provision of the NPPA or any
default or event of default shall exist under the NPPA, which is not cured
within any applicable grace period; or (n) the occurrence of a Change in
Control. As used in this Note, a "CHANGE IN CONTROL" means the existence or
occurrence of any of the following: (i) any Person other than Holdings owns any
of the capital stock of Maker; (ii) any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "EXCHANGE
ACT")), other than one or more of Central Maine Power Company, a Maine
corporation, and its Affiliates, and Northeast Utilities, a Massachusetts
business trust, and its Affiliates (together, the "PERMITTED HOLDERS"), is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), except that for purposes of this clause (ii) such person shall be
deemed to have "beneficial ownership" of all shares that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 35% of the total
voting power of the voting stock of Holdings; provided, however, that the
Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the voting stock of Holdings than such other person
and do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of Holdings
(for the purposes of this clause (ii), such other person shall be deemed to
beneficially own any voting stock of a specified corporation held by another
Person (a "PARENT CORPORATION"), if such other person is the beneficial owner
(as described in this clause (ii)), directly or indirectly, of more than 35% of
the voting power of the voting stock of such Parent Corporation and the
Permitted Holders beneficially own (as described in this clause (ii)), directly
or indirectly, in the aggregate a lesser percentage of the voting power of the
voting stock of such Parent Corporation and do not have the right or ability by
voting power, contract or otherwise to elect or designate for election a
majority of the board of directors of such Parent Corporation); (iii)
individuals who, on the date this Note is executed (the "EXECUTION DATE"),
constituted the Board of Directors of Holdings (together with any new directors
whose election by such Board of Directors of Holdings or whose nomination for
election by the shareholders of Holdings was approved by a vote of 66-2/3% of
the directors of Holdings then still in office who were either directors on the

                                       7
<PAGE>

Execution Date or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of Holdings then in office; (iv) the adoption of a plan relating to
the liquidation or dissolution of Holdings; or (v) the merger or consolidation
of Holdings with or into another Person or the merger of another Person with or
into Holdings, or the sale of all or substantially all the assets of Holdings to
another Person (other than a Person that is controlled by the Permitted
Holders), and, in the case of any such merger or consolidation, the securities
of Holdings that are outstanding immediately prior to such transaction and which
represent 100% of the aggregate voting power of the voting stock of Holdings are
changed into or exchanged for cash, securities or property, unless pursuant to
such transaction such securities are changed into or exchanged for, in addition
to any other consideration, securities of the surviving Person or transferee
that represent immediately after such transaction, at least a majority of the
aggregate voting power of the voting stock of the surviving Person or
transferee. Upon the occurrence of an Event of Default, the holder of this Note
may (i) offset against this Note any sum or sums owed by the holder hereof to
Maker, (ii) proceed to protect and enforce its rights either by suit in equity
and/or by action at law, or by other appropriate proceedings, whether for the
specific performance of any covenant or agreement contained in this Note, or in
aid of the exercise of any power or right granted by this Note, or to enforce
any other legal or equitable right of the holder of this Note, and/or (iii)
pursue the remedies available to Payee hereunder, at law and otherwise.

         17. ATTORNEY'S FEES AND COSTS. In the event this Note is placed in the
hands of an attorney for collection, or in the event this Note is collected in
whole or in part through legal proceedings of any nature, Maker promises to pay
all costs of collection, including, but not limited to, attorneys' fees incurred
by the holder hereof on account of such collection, whether or not suit is
filed.

         18. CUMULATIVE RIGHTS. No delay on the part of the holder of this Note
in the exercise of any power or right under this Note, or under any other
instrument executed pursuant hereto, shall operate as a waiver thereof, nor
shall a single or partial exercise of any such power or right. Enforcement by
the holder of this Note of any security for the payment hereof shall not
constitute any election by it of remedies so as to preclude the exercise of any
other remedy available to it.

         19. MAXIMUM INTEREST RATE. Regardless of any provision contained
herein, or in any other document executed in connection herewith, Payee shall
never be entitled to contract for, charge, receive, take, collect, reserve or
apply, as interest on this Note, any amount in excess of the maximum rate of
interest from time to time permitted under state or federal law applicable to
the indebtedness evidenced hereby, after taking into account any amount, fee or
charge which is characterized as interest under applicable law (the "MAXIMUM
LAWFUL RATE"), and in the event Payee ever contracts for, charges, receives,
takes, collects, reserves or applies, as interest, any such excess, such amount
which would be deemed excessive interest shall be deemed a partial prepayment of

                                       8
<PAGE>

principal on this Note and treated hereunder as such; and, if this Note is paid
in full, any remaining excess shall promptly be paid to Maker. In determining
whether the interest paid or payable, under any specific contingency, exceeds
the Maximum Lawful Rate, Maker and Payee shall, to the maximum extent permitted
under applicable law, (a) characterize any nonprincipal payment as an expense,
fee or premium rather than as interest, (b) exclude voluntary prepayments and
the effects thereof, and (c) amortize, prorate, allocate and spread, as
appropriate to reflect variations in the Maximum Lawful Rate, the total amount
of interest throughout the entire contemplated term of this Note, so that the
interest rate does not exceed the Maximum Lawful Rate throughout the entire term
of this Note; PROVIDED THAT, if the unpaid principal balance hereof is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received for the actual period of existence thereof exceeds the
Maximum Lawful Rate, Payee shall refund to Maker the amount of such excess and,
in such event, Payee shall not be subject to any penalties provided by any laws
for contracting for, charging, receiving, taking, collecting, reserving or
applying interest in excess of the Maximum Lawful Rate. Upon the tender by Payee
or any holder of this Note to Maker of any excess amount, Maker will be deemed
to have accepted such excess in full satisfaction of any claim (including,
without limitation, a claim of usury) arising out of such excess being
contracted for, charged, received, taken, collected, reserved or applied.

         20. WAIVER. Maker, and each surety, endorser, guarantor, and other
party ever liable for the payment of any sum of money payable on this Note,
jointly and severally waive notice, demand, presentment, protest, notice of
protest, notice of nonpayment, notice of dishonor, notice of intention to
accelerate, notice of acceleration, and any and all lack of diligence or delay
in collection or the filing of suit hereon which may occur, and agree that their
liability on this Note shall not be affected by any renewal or extension in the
time of payment hereof, by any indulgences, or by any release, impairment or
change in any security for the payment of this Note, and hereby consent to any
and all renewals, extensions, indulgences, releases, or changes (including
partial payments), regardless of the number of such renewals, extensions,
indulgences, releases or changes, without notice and for any period or periods
of time, before or after maturity, all without prejudice to the holder. The
holder shall similarly have the right to deal in any way, at any time, with one
or more of the foregoing parties without notice to any other party, and to grant
any such party any extensions of time for payment of any of said indebtedness,
or to release or substitute part or all of the collateral (if any) securing this
Note, or to grant any other indulgences or forbearances whatsoever, without
notice to any other party and without in any way affecting the personal
liability of any party hereunder.

         21. SUCCESSORS AND ASSIGNS. All of the covenants, stipulations,
promises and agreements in this Note by or on behalf of Maker shall bind Maker's
respective successors and assigns, whether so expressed or not; PROVIDED,
HOWEVER, that Maker may not, without the prior consent of Payee, assign any
rights, powers, duties, or obligations under this Note. Any holder of this Note
shall succeed to the rights of Payee hereunder. Payee may sell, transfer or
assign its rights hereunder and to the Collateral in whole or in


                                       9
<PAGE>

part at any time and from time to time without the consent of Maker, PROVIDED,
HOWEVER, that unless an Event of Default has occurred and is continuing, Payee
may not, without the prior written consent of Maker, sell, transfer or assign
its rights hereunder and to the Collateral in whole or in part to any individual
or entity that is engaged in a business competitive with that of Maker.

         22. INVALID PROVISIONS. Any provision in this Note prohibited by law
shall be ineffective only to the extent of such prohibition and shall not
invalidate the remainder of this Note.

         23. GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PROVISIONS THEREOF, AND APPLICABLE FEDERAL LAW.

         24. NOTICES. All notices and other communications provided for in this
Note shall be given or made by telecopy or in writing and telecopied, mailed by
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below Maker's name on the signature pages
hereof or if to Payee at GMS 991-15-A40, 2221 Lakeside Boulevard, Richardson,
Texas 75082-4399, Attention: Vice President Customer Finance Americas, telephone
no.: 972-684-2271, fax no.: 972-684-3679; or, as to any party at such other
address as shall be designated by such party in a notice to the other party
given in accordance with this PARAGRAPH 24. All such communications shall be
deemed to have been duly given when transmitted by telecopy or when personally
delivered or, in the case of a mailed notice, three Business Days after deposit
in the mails, in each case given or addressed as aforesaid; PROVIDED, HOWEVER,
that notices to the Payee shall be deemed given when received by the Payee. As
used herein, "BUSINESS DAY" means any day on which Payee is open for its general
business at its offices in the United States.

         25. HEADINGS. The headings of the sections of this Note are inserted
for convenience only and shall not be deemed to constitute a part hereof.

         26. PAYMENTS; BUSINESS DAY. Each payment or prepayment hereon must be
paid at the office of Payee specified above in lawful money as therein specified
and in funds which are or will be available for immediate use by Payee at such
office on or before 3:00 p.m., Eastern time on the day such payment or
prepayment is due. If a payment of principal or interest hereon is due on a day
which is not a Business Day, Maker shall make such payment on the next preceding
Business Day.

         27. STATUTE OF FRAUDS NOTICE. THIS NOTE REPRESENTS THE FINAL AGREEMENT
OF MAKER AND PAYEE AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF MAKERS AND PAYEE. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN MAKER AND PAYEE.


                                       10
<PAGE>

         28. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, MAKER AND EACH SURETY, ENDORSER, GUARANTOR, AND OTHER PARTY EVER LIABLE FOR
THE PAYMENT OF ANY SUM OF MONEY PAYABLE ON THIS NOTE, HEREBY IRREVOCABLY AND
EXPRESSLY AND JOINTLY AND SEVERALLY WAIVE ALL RIGHT TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THE ACTIONS OF PAYEE IN THE NEGOTIATION, ADMINISTRATION
OR ENFORCEMENT HEREOF.

         EXECUTED at New York, New York, as of August 14 , 2001.

                                             NEON OPTICA, INC.

                                             By:    /s/ WILLIAM F. FENNELL
                                                    ---------------------------
                                             Name:  WILLIAM F. FENNELL
                                             Title: CHIEF FINANCIAL OFFICER AND
                                                    TREASURER

                                             ADDRESS FOR NOTICES:
                                             -------------------
                                             2200 West Park Drive, Suite 200
                                             Westborough, Massachusetts 01581
                                             Fax No.: (508) 616-7895
                                             Telephone No.: (508) 616-7820
                                             Attention: Chief Financial Officer


                                       11
<PAGE>


                                   SCHEDULE 9

                                  Existing Debt

                                  See Attached.



                                       12