<PAGE>
 
[LOGO OF BANK OF AMERICA]                               AMENDMENT TO DOCUMENTS
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                  AMENDMENT NO. 2 TO BUSINESS LOAN AGREEMENT


     This Amendment No. 2 (the "Amendment") dated as of September 9, 1997 is 
                                                        -----------
between BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (the "Bank") and
ORTEL CORPORATION (the "Borrower").


                                   RECITALS
                                   --------

     A.  The Bank and the Borrower entered into a certain Business Loan 
Agreement dated as of June 2, 1995, as previously amended (the "Agreement").

     B.  The Bank and the Borrower desire to further amend the Agreement.


                                   AGREEMENT
                                   ---------

     1.  DEFINITIONS.  Capitalized terms used but not defined in the Amendment 
         ----------- 
shall have the meaning given to them in the Agreement.

     2.  AMENDMENTS.  The Agreement is hereby amended as follows:
         ----------
         
         2.1  In Paragraph 1.2 of the Agreement, the date "SEPTEMBER 30, 1998"  
              is substituted for the date "JUNE 1, 1997."

         2.2  Paragraph 1.6 of the Agreement is deleted in its entirety.

         2.3  In Paragraph 1.7 of the Agreement, the "SHORT TERM BASE RATE PLUS
              ONE AND ONE HALF (1.50) PERCENTAGE POINTS" is substituted for the
              "SHORT TERM BASE RATE PLUS ONE AND THREE-QUARTERS (1.75)
              PERCENTAGE POINTS."

         2.4  Paragraph 1.8 of the Agreement is amended to read in its entirety 
              as follows:

              "1.8 LIBOR RATE. The Borrower may elect to have all or portions of
              the principal balance bear interest at the LIBOR Rate plus one and
              one half (1.50) percentage points.

              Designated of a LIBOR Rate portion is subject to the following  
              requirements:

              (a)  The interest period during which the LIBOR Rate will be in
                   effect will be one, two, or three weeks, or one, two, three,
                   four, five, six, seven, eight, nine, ten, eleven, or twelve
                   months. The first day of the interest period must be a day
                   other than a Saturday or a Sunday on which the Bank is open
                   for business in California, New York and London and dealing
                   in offshore dollars (a "LIBOR Banking Day"). The last day of
                   the interest period and the actual number of days during the
                   interest period will be determined by the Bank using the
                   practices of the London inter-bank market.

             (b)   Each LIBOR Rate portion will be for an amount not less than
                   Five Hundred Thousand Dollars ($500,000) for interest periods
                   of one month or longer. For shorter maturities, each LIBOR
                   Rate portion will be for an amount which, when multiplied by
                   the number of days in the applicable interest period, is not
                   less than fifteen million (15,000,000) dollar-days.


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     (c)  The "LIBOR Rate" means the interest rate determined by the following
          formula, rounded upward to the nearest 1/100 of one percent. (All
          amounts in the calculation will be determined by the Bank as of the
          first day of the interest period.)

                 LIBOR Rate = London Inter-Bank Offered Rate
                              ------------------------------
                                 (1.00-Reserve Percentage)  

             Where,

             (i) "London Inter-Bank Offered Rate" means the interest rate at
             which the Bank's London Branch, London, Great Britain, would offer
             U.S. dollar deposits for the applicable interest period to other
             major banks in the London inter-bank market at approximately 11:00
             a.m. London time two (2) London Banking Days before the
             commencement of the interest period. A "London Banking Day" is a
             day on which the Bank's London Branch is open for business and
             dealing in offshore dollars.

             (ii) "Reserve Percentage" means the total of the maximum reserve
             percentages for determining the reserves to be maintained by member
             banks of the Federal Reserve System for Eurocurrency Liabilities,
             as defined in Federal Reserve Board Regulation D, rounded upward
             to the nearest 1/100 of one percent. The percentage will be
             expressed as a decimal, and will include, but not be limited to,
             marginal, emergency, supplemental, special, and other reserve
             percentages.

     (d)  The Borrower shall irrevocably request a LIBOR Rate portion no later
          than 12:00 noon San Francisco time on the LIBOR Banking Day preceding
          the day on which the London Inter-Bank Offered Rate will be set, as
          specified above.

     (e)  The Borrower may not elect a LIBOR Rate with respect to any principal 
          amount which is scheduled to be repaid before the last day of the 
          applicable interest period.

     (f)  Any portion of the principal balance already bearing interest at the
          LIBOR Rate will not be converted to a different rate during its
          interest period.

     (g)  Each prepayment of a LIBOR Rate portion, whether voluntary, by reason
          of acceleration or otherwise, will be accompanied by the amount of
          accrued interest on the amount prepaid and a prepayment fee as
          described below. A "prepayment" is a payment of an amount on a date
          earlier than the scheduled payment date for such amount as required by
          this Agreement. The prepayment fee shall be equal to the amount (if
          any) by which:

          (i)   the additional interest which would have been payable during the
                interest period on the amount prepaid had it not been prepaid,
                exceeds

          (ii)  the interest which would have been recoverable by the Bank by
                placing the amount prepaid on deposit in the domestic
                certificate of deposit market, the eurodollar deposit market, or
                other appropriate money market selected by the Bank, for a
                period starting on the date on which it was prepaid and ending
                on the last day of the interest period for such portion (or the
                scheduled payment date for the amount prepaid, if earlier).

     (h)  The Bank will have no obligation to accept an election for a LIBOR
          Rate portion if any of the following described events has occurred and
          is continuing:

          (i)   Dollar deposits in the principal amount, and for periods equal
                to the interest period, of a LIBOR Rate portion are not
                available in the London inter-bank market; or

          (ii)  the LIBOR Rate does not accurately reflect the cost of a LIBOR 
                Rate portion."


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     2.5  Article 2 of the Agreement is deleted in its entirety. Any reference
          in the Agreement to the terms "Facility No. 1 Commitment" and
          "Facility No. 1 Expiration Date" shall mean the "Commitment" and the
          "Expiration Date."

     2.6  Paragraph 6.1 of the Agreement is amended to read in its entirety as
          follows:

          "6.1  USE OF PROCEEDS.  To use the proceeds only for operating capital
          and the issuance of letters of credit."    

     2.7  Subparagraph 6.2(c) of the Agreement is amended to read in its 
          entirety as follows:

              "6.2(c) Copies of the Borrower's Form 10-K Annual Report within
              120 days to include CPA audit opinion and Form 10-Q Quarterly
              Report within 45 days after the date of filing with the Securities
              and Exchange Commission."

     2.8  Article 7 of the Agreement is amended to read in its entirety as 
          follows:

          "7. HAZARDOUS WASTE INDEMNIFICATION. The Borrower will indemnify and
          hold harmless the Bank from any loss or liability directly or
          indirectly arising our of the use, generation, manufacture,
          production, storage, release, threatened release, discharge, disposal
          or presence of a hazardous substance. This indemnity will apply
          whether the hazardous substance is on, under or about the Borrower's
          property or operations or property leased to the Borrower. The
          indemnity includes but is not limited to attorneys' fees (including
          the reasonable estimate of the allocated cost of in-house counsel and
          staff). The indemnity extends to the Bank, its parent, subsidiaries
          and all of their directors, officers, employees, agents, successors,
          attorneys and assigns. "Hazardous substances" means any substance,
          material or waste that is or becomes designated or regulated as
          "toxic," "hazardous," "pollutant," or "contaminant" or a similar
          designation or regulation under any federal, state or local law
          (whether under common law, statute, regulation or otherwise) or
          judicial or administrative interpretation of such, including without
          limitation petroleum or natural gas. This indemnity will survive
          repayment of the Borrower's obligations to the Bank."

     2.9  Paragraph 9.6 of the Agreement is amended to read in its entirety as 
          follows:

          "9.6 ATTORNEYS' FEES. The Borrower shall reimburse the Bank for any
          reasonable costs and attorneys' fees incurred by the Bank in
          connection with the enforcement or preservation of any rights or
          remedies under this Agreement and any other documents executed in
          connection with this Agreement, and in connection with any amendment,
          waiver, "workout" or restructuring under this Agreement. In the event
          of a lawsuit or arbitration proceeding, the prevailing party is
          entitled to recover costs and reasonable attorneys' fees incurred in
          connection with the lawsuit or arbitration proceeding, as determined
          by the court or arbitrator. In the event that any case is commenced by
          or against the Borrower under the Bankruptcy Code (Title 11, United
          States Code) or any similar or successor statute, the Bank is entitled
          to recover costs and reasonable attorneys' fees incurred by the Bank
          related to the preservation, protection, or enforcement of any rights
          of the Bank in such a case. As used in this paragraph, "attorneys'
          fees" includes the allocated costs of the Bank's in-house counsel."

3.   CONDITIONS.  This Amendment will be effective when the Bank receives the 
     ----------
following items, in form and content acceptable to the Bank:

     3.1 Statement of Purpose for an Extension of Credit Secured by Margin
Stock, duly executed by the Borrower and the Bank.

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     4.  EFFECT OF AMENDMENT.  Except as provided in this Amendment, all of the
         -------------------- 
terms and conditions of the Agreement shall remain in full force and effect.

         This Amendment is executed as of the date stated at the beginning of 
this Amendment.




BANK OF AMERICA
National Trust and Savings Association           Ortel Corporation

   /s/ Stephen L. Nelson                            /s/ Wim Selders
X_____________________________________           X______________________________
By: Stephen L. Nelson, Vice President            By: Wim H.J. Selders, President
                                                     and Chief Executive Officer

                                                   
                                                   /s/ S.K. Workman
                                                 X______________________________
                                                 By: Stephen K. Workman, 
                                                     Vice-President-Finance and
                                                     Chief Financial Officer

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<PAGE>
 
                                                 FRU-1        
[LOGO OF BANK OF AMERICA]                        O.M.B. No. 7100-0115
                                                 Approval Expires July 31, 1998 

REPORTING BURDEN
Public reporting burden for this collection of information is estimated to
average 4.2 minutes (0.07 hours) per response, including the time for reviewing
instructions, searching existing data sources, gathering and maintaining the
data needed, and completing and reviewing the collection of information. Send
comments regarding this burden estimate, including suggestions for reducing this
burden, to Secretary, Board of Governors of the Federal Reserve System, 20th and
C Streets, N.W., Washington, D.C. 20551; and to the Office of Management and
Budget, Paperwork Reduction Project (7100-0115), Washington D.C. 20503.


               BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
    STATEMENT OF PURPOSE FOR AN EXTENSION OF CREDIT SECURED BY MARGIN STOCK
                          (FEDERAL RESERVE FORM U-1)
This form is required by law (15 U.S.C. (SS)78g and 78w; 12 CFR 221).


INSTRUCTIONS:

(1) This form must be completed when a bank extends credit in excess of $100,000
    secured directly or indirectly, in whole or in part, by any margin stock.
(2) The term "margin stock" is defined in Regulation U (12 CFR 221) and
    includes, principally: (1) stocks that are registered on a national
    securities exchange or that are on the Federal Reserve Board's List of
    Marginable OTC Stocks; (2) debt securities (bonds) that are convertible into
    margin stocks; and (3) any over-the-counter security designated as qualified
    for trading in the National Market System under a designation plan approved
    by the Securities and Exchange Commission (NMS security); and (4) shares of
    mutual funds, unless 95 per cent of the assets of the fund are continuously
    invested in U.S. government, agency, state, or municipal obligations.
(3) Please print or type (if space is inadequate, attach separate sheet).

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PART I   To be completed by borrower(s):

(1) What is the amount of the credit being extended?  $5,000,000

(2) Will any part of this credit be used to purchase or carry margin stock?
                                                                 [_] Yes  [X] No
    If the answer is "no," describe the specific purpose of the credit:

    TO PROVIDE FOR OPERATING CAPITAL AND THE ISSUANCE OF LETTERS OF CREDIT

I (we) have read this form and certify that to the best of my (our) knowledge 
and belief the information given is true, accurate, and complete, and that the 
margin stock and any other securities collateralizing this credit are authentic,
genuine, unaltered, and not stolen, forged or counterfeit.

Date:  9-9-97
     ------------

Ortel Corporation

x /s/ Wim H.J. Selders
 ------------------------------------------------------
By: Wim H.J. Selders, President/Chief Executive Officer


x /s/ Stephen K. Workman
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By: Stephen K. Workman, Vice President-Finance/Chief Financial Officer

                    THIS FORM SHOULD NOT BE SIGNED IF BLANK

     A BORROWER WHO FALSELY CERTIFIES THE PURPOSE OF A CREDIT ON THIS FORM
OR OTHERWISE WILLFULLY OR INTENTIONALLY EVADES THE PROVISIONS OF REGULATION U
                WILL ALSO VIOLATE FEDERAL RESERVE REGULATION X,
                       "BORROWERS OF SECURITIES CREDIT."

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PART II  To be completed by bank only if the purpose of the credit is to 
         purchase or carry margin stock 
         (Part 1(2) answered "yes")

(1)  List the margin stock securing this credit: do not include debt securities
     convertible into margin stock. The maximum loan value of margin stock is
     ____ per cent of its current market value under the current Supplement to
     Regulation U.
<TABLE> 
<CAPTION> 
                                                  DATE AND SOURCE                    
                                 MARKET PRICE       OF VALUATION       TOTAL MARKET  
     NO. OF SHARES      ISSUE      PER SHARE      (SEE NOTE BELOW)    VALUE PER ISSUE
     -------------      -----      ---------      ----------------    --------------- 
    <S>                <C>        <C>             <C>                 <C> 

</TABLE> 

(2)  List the debt securities convertible into margin stock securing this
     credit. The maximum loan value of such debt securities is ____ per cent of
     the current value under the current Supplement to Regulation U.
<TABLE> 
<CAPTION> 
                                                  DATE AND SOURCE                    
     PRINCIPAL                                      OF VALUATION       TOTAL MARKET  
     AMOUNT             ISSUE    MARKET PRICE     (SEE NOTE BELOW)    VALUE PER ISSUE
     ------             -----    ------------     ----------------    --------------- 
    <S>                <C>        <C>             <C>                 <C> 
</TABLE> 

(3)  List other collateral including non-margin stock securing this credit.
<TABLE> 
<CAPTION> 
                                                  DATE AND SOURCE                    
                                                    OF VALUATION       GOOD FAITH    
     DESCRIBE BRIEFLY            MARKET PRICE     (SEE NOTE BELOW)     LOAN VALUE    
     ----------------            ------------     ----------------     ----------
    <S>                           <C>             <C>                 <C> 
</TABLE> 

NOTE: Bank need not complete "Date and source of valuation" if the market value
      was obtained from regularly published information in a journal of general
      circulation.

PART III  To be signed by a bank officer in all instances

     I am a duly authorized officer of the bank and understand that this credit 
secured by margin stock may be subject to the credit restrictions of Regulation 
U. I have read this form and any attachments, and I have accepted the customer's
statement in Part I in good faith as required by Regulation U**, and I certify 
that to the best of my knowledge and belief, all the information given is 
true, accurate and complete.  I also certify that if any securities that 
directly secure the credit are not or will not be registered in the name of the 
borrower or its nominee, I have or will cause to have examined the written 
consent of the registered owner to pledge such securities. I further certify 
that any securities that have been or will be physically delivered to the bank 
in connection with this credit have been or will be examined, that all 
validation procedures required by bank policy and the Securities Exchange Act of
1934 (section 17(f), as amended) have been or will be performed, and that I am 
satisfied to the best of my knowledge and belief that such securities are 
genuine and not stolen or forged and their faces have not been altered.

                                        Signed:

Date:  9-9-97
     ----------
                                        x /s/ Stephen L. Nelson
                                          -------------------------------------
                                          for Stephen L. Nelson, Vice President

** To accept the customer's statement in good faith, the officer of the bank
must be alert to the circumstances surrounding the credit and, if in possession
of any information that would cause a prudent person not to accept the statement
without inquiry, must have investigated and be satisfied that the statement is
truthful. Among the facts which would require such investigation are receipt of
the statement through the mail or from a third party.

        THIS FORM MUST BE RETAINED BY THE BANK FOR AT LEAST THREE YEARS
                       AFTER THE CREDIT IS EXTINGUISHED

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