SUPPLEMENTAL AGREEMENT

This SUPPLEMENTAL AGREEMENT is made and entered into on September 14th, 2000.

BETWEEN:

          ALCATEL NETWORKS  CORPORATION,  a corporation  incorporated  under the
          laws of Canada,  and having its main  offices at 600 March Road,  P.O.
          Box 13600, Kanata, Ontario, Canada K2K 2E6

          ("Alcatel")

AND:

          TELAXIS,  a corporation  incorporated under the laws of Massachusetts,
          having  its main offices at 20 Industrial Drive East, South Deerfield,
          Massachusetts, U.S.A. 01373

          ("Telaxis")

          Collectively known as the "Parties"

WHEREAS:

A.   Alcatel  (formerly known as "Newbridge  Networks  Corporation") and Telaxis
     (formerly  known  as  "Millitech  Corporation")  entered  into  a  Reseller
     Agreement  dated the 7th day of August,  1998 (the "Reseller  Agreement");
     and

B.   The  Parties  wish to  expand  and amend  their  existing  relationship  to
     encompass   Telaxis   participation   in  Alcatel's   Cross  Polarized  and
     Co-Polarized  product  lines,   including  product  development,   product
     improvements, and manufacturing.

NOW THEREFORE,  in  consideration of the mutual covenants  contained herein, and
for other good and valuable  consideration (the receipt and sufficiency of which
are hereby acknowledged) the parties hereto agree as follows:

1.   Cross Polarized Product Line Development and Deliveries
------------------------------------------------------------

1.1  Telaxis shall deliver,  at its  discretion,  approximately [****] units  of
     Vendor  Product from the remaining  backlog in Alcatel Fiscal Q3 and Fiscal
     Q4, 2000 Q3/Q4-2000. The Vendor Product mix is set out in Table A below.


                    [****] Confidential Treatment Requested

<PAGE>

Table A

<TABLE>
<CAPTION>
-------------------------------------------------------
Bandplan       OTRU            OTU             ORU
-------------------------------------------------------
<S>            <C>             <C>             <C>
[****]         [****]          [****]          [****]
-------------------------------------------------------
[****]         [****]          [****]          [****]
------------------------------------------------------
[****]         [****]          [****]          [****]
-------------------------------------------------------
[****]         [****]          [****]          [****]
-------------------------------------------------------
[****]         [****]          [****]          [****]
-------------------------------------------------------
[****]         [****]          [****]          [****]
-------------------------------------------------------
TOTAL          [****]          [****]          [****]
-------------------------------------------------------
</TABLE>

1.2  Delivery of the remaining  approximately [****] units of Vendor Product  in
     backlog  will be deferred to Alcatel  fiscal Q1 and fiscal Q2 - 2001,  with
     the  schedule of  deliveries  to be  dispersed  equally  over the period of
     January 1, 2001 through to June 30, 2001, unless otherwise agreed to by the
     Parties.

1.3  Additional  units of Vendor  Product  for  delivery in 2000 and 2001 may be
     added as mutually agreed to by the Parties.

1.4  Pricing of the  approximately [****] units of  product as noted above shall
     be as follows:

                        OTRU    US$[***]
                        OTU     US$[***]
                        ORU     US$[***]

1.5  Alcatel  shall pay to Telaxis  the sum of  US$[****]  (US$[***])  over and
     above the unit  pricing as noted in Section 1.4 above.  The  Parties  agree
     that the  additional  sum  reflects  the  increased  costs  of the  amended
     production volume.

1.6  Alcatel shall pay the sum of US$[***] as stated in Section 1.4 as follows:

     a)   The sum of $[***] shall be paid to Telaxis in Alcatel fiscal Q3 - 2000
          upon  shipment  of the last unit of Vendor  Product  from  Telaxis  to
          Alcatel in Alcatel fiscal Q3 2000;

     b)   The sum of $[***] shall be paid to Telaxis in Alcatel fiscal Q4 - 2000
          upon successful  completion by Telaxis of mutually  agreeable  Product
          Improvement Milestones as set out in Appendix A attached hereto:

     c)   The sum of $[***] shall be paid to  Telaxis in each of Alcatel  fiscal
          Q4 - 2000 and Alcatel fiscal Q1 - 2001 upon accomplishment of mutually
          agreeable Product Compatibility Milestones establishing  compatibility
          between the Telaxis  Cross  Polarized  ODUs and the Alcatel NIU and as
          more particularly described in Appendix B attached hereto; and


                    [****] Confidential Treatment Requested


<PAGE>

2.   Co-Polarized Product Line
------------------------------

2.1  Alcatel shall  purchase the following  minimum  quantities of  co-polarized
     products for delivery on or before December 31, 2000 as set out in Table B
     below.

Table B

<TABLE>
<CAPTION>
----------------------------------------------------------
  Sept       Oct        Nov        Dec        Total 2000
----------------------------------------------------------
<S>          <C>        <C>        <C>           <C>
[****]       [****]     [****]     [****]        [****]
----------------------------------------------------------
</TABLE>

2.2  In  addition  to the units set out in Table B,  Alcatel  shall  purchase  a
     minimum  of [****]  units of Vendor  Product to be  delivered  on or before
     December 31, 2001.  The [****] units of Vendor Product may be a combination
     of [****] and [****] products. Vendor Products delivered during the Alcatel
     fiscal year 2001 shall be at a nominal rate of [****] per month.

2.3  Purchases  made pursuant to Section 2.1 and 2.2 above shall be  conditional
     upon the Parties agreeing to mutually  acceptable terms including,  but not
     limited to, pricing, performance and quality.


3.   Product Improvement Concepts
---------------------------------

3.1  Telaxis agrees to arrange and conduct engineering  discussions with Alcatel
     of potential product  improvement and cost reduction  concepts at quarterly
     intervals.


4.   New Product Development
----------------------------

4.1  The sum of  $[****]  shall  be paid to  Telaxis  upon  accomplishment  of a
     successful  Preliminary  Design Review (PDR),  and a further sum of $[****]
     will be paid to Telaxis upon accomplishment of a successful Critical Design
     Review  (CDR) on a future BTS or CPE product to be  determined  by Alcatel.
     The PDR and CDR are more  particularly  described  in  Appendix  B attached
     hereto.

5.   Terms
----------

5.1  Section 6.3 of the Reseller  Agreement shall not apply to this Supplemental
     Agreement.  In all other respects the terms and conditions contained in the
     Reseller   Agreement  shall  be  deemed  to  be   incorporated   into  this
     Supplemental  Agreement.  In the event of conflict between the terms of the
     Reseller  Agreement and this  Agreement,  the terms of this Agreement shall
     prevail.

                    [****] Confidential Treatment Requested

<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

Alcatel Networks Corporation                 Telaxis

By:   /c/ Hubert de Pasquidoux           By:   /c/ Ransom Reynolds
      ------------------------                 ------------------------
Name: Hubert de Pasquidoux               Name: Ransom Reynolds

Title: Chief Executive Officer           Title: Sr. Vice President

<PAGE>

<TABLE>
<CAPTION>

-----------------------------------------------------------------------------------------------------------------------------
 Payment            OTU                                   [****]      [****]    [****]    [****]    [****]   [****]    [****]
-----------------------------------------------------------------------------------------------------------------------------
<S>          <C>                                           <C>        <C>       <C>       <C>       <C>      <C>       <C>
  [****]     Eng Analysis & Test                           3Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
   Upon      Develop [****] Tone Test Set
Completion   Develop [****] Tone Simulation Software
    of       ----------------------------------------------------------------------------------------------------------------
  [****]     Release specs                                 4Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
 Activity    [****] power [****] evaluation
             Linearizer test
             Test set manifold match improvement
             ----------------------------------------------------------------------------------------------------------------
             1st Board Spin into production [some risk to  4Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
             MS l level Gain Flatness - get as much as
             possible]
             DAC
             IF Amp
             Temp Sensor location
             Improved IF match to 2GHz
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
 Payment            ORU                                   [****]      [****]    [****]    [****]    [****]   [****]    [****]
-----------------------------------------------------------------------------------------------------------------------------
<S>          <C>                                           <C>        <C>       <C>       <C>       <C>      <C>       <C>
   [****]    Eng Analysis & Test                           3Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
    Upon
 Completion  LNA evaluation and others
     of      ----------------------------------------------------------------------------------------------------------------
   [****]    Release specs                                 4Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
  Activity   1st Board Spin into production
             Move gain stages
             New LNA [on [****] + existing bands that
             use new MMIC]
             IF output VSWR improvement
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
 Payment            OTRU                                  [****]      [****]    [****]    [****]    [****]   [****]    [****]
-----------------------------------------------------------------------------------------------------------------------------
<S>          <C>                                           <C>        <C>       <C>       <C>       <C>      <C>       <C>
   [****]    Xmtr [****] fix implemented for [****]        3Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
    Upon     Max IF input power [****]
 Completion  Inrush fix (all but [****])
     of      ----------------------------------------------------------------------------------------------------------------
   [****]    Release specs                                 4Q2000     1Q2001    2Q2001    2Q2001    3Q2001   3Q2001    3Q2001
  Activity   IF VSWR fix     (all below for [****])
             Rx RF image rejection - para 3.1.29([****]
             at greater than / equal to 200mhz - improved
             filter)
             Tx/Rx gain [****] fix (target [****])-
             validate approach
             Tx noise figure [****] improvement - confirm no
             issues with [****] degredation
             Rx noise figure [****] improvement
             Rx out of band [****] implementation
             ([****] first)
             Crossover fix (validate approach)
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>


                    [****] Confidential Treatment Requested


<PAGE>


                                   APPENDIX B

                        PRODUCT COMPATIBILITY MILESTONES


To Be agreed to


                           PRELIMIMARY DESIGN REVIEW

PDR (Preliminary  Design Review):  Held at the point in the development at which
the first theoretical concept design is available.  This review usually consists
of a "paper" design augmented with simulations and sometimes a limited amount of
measured results.


                             CRITICAL DESIGN REVIEW

CDR (Critical  Design  Review) Held at the point in development at which most if
not all of the  sub-components  have been  built and  tested  for  module  level
compliance  with the  specifications.  Measured  results are  available  on most
parameters.  Last  point in the  design  cycle  where the  design may be revised
before fully functional prototypes are fabricated.