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                                                                    Exhibit 10.3

                             RESTRUCTURING AGREEMENT

         THIS RESTRUCTURING AGREEMENT, dated as of May 13, 2002 (this
"Agreement"), is entered into in respect of that certain Note and Warrant
Purchase Agreement dated as of September 7, 2001 (the "Note Agreement") between
Oasys Telecom, Inc., a California corporation (the "Company"), and Larscom
Incorporated, a Delaware corporation (the "Lender") and those Convertible
Promissory Notes dated as of September 7, 2001, September 25, 2001, October 26,
2001, December 17, 2001, and December 27, 2001, respectively, issued to Lender
pursuant thereto (each a "Note").

                                    ARTICLE I
                       Defaults and Restructuring of notes

         1.1 The Company acknowledges and agrees that, as of the close of
business on May 13, 2002, Lender has extended credit to the Company for the
purposes permitted in the Note Agreement and evidenced by the Notes in an
aggregate principal amount equal to $****** together with accrued and unpaid
interest of $***** (the "Outstanding Obligations").

         1.2 The Company acknowledges and agrees that the Outstanding
Obligations and the terms of the Note Agreement and Notes are the valid and
binding obligations of the Company enforceable in accordance with their terms,
except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general application relating to the rights of
creditors generally or the effect of equitable principles which limit the
availability of equitable remedies.

         1.3 The Lender has expressed to Company its concerns regarding the
continued performance by Company of the Outstanding Obligations, the Note
Agreement and Notes, and requested Company to provide assurances as to Company's
continued performance, including under Section 3(b) of the Notes. Among other
reasons and to address these concerns, the Company has requested that the Lender
enter into this Agreement and amend and restate the Notes as two promissory
notes upon the terms set forth in Exhibit A (the Notes as so amended and
restated, the "Amended Notes").

         1.4 The Outstanding Obligations shall be continuing obligations of the
Company pursuant to the Amended Notes. The issuance of the Amended Notes is not
an accord and satisfaction, a novation or an extinguishment of the Outstanding
Obligations.

                                   ARTICLE II
                               Waiver and Release

         2.1 The Company hereby acknowledges and agrees that: (a) it has no
claim, right or cause of action of any kind against the Lender or any parent,
subsidiary or affiliate of the Lender or any of the Lender's officers,
directors, employees, attorneys or other representatives or agents (all of which
parties other than the Lender being, collectively, the "Lender Agents") in
connection with the Outstanding Obligations, the Note Agreement, Notes, Amended
Notes or the transactions contemplated thereby; (b) it has no offset or defense
of any kind against any of the Outstanding Obligations or the Amended Notes; (c)
it recognizes that the Lender has heretofore properly performed and satisfied in
a timely manner all of its obligations to and contracts with the Company; and
(d) without limitation to any of the foregoing, it releases the Lender and any
Lender Agent from any and all such claims, rights, causes of action, defenses,
counterclaims and offsets. The Company hereby irrevocably waives the benefits of


Confidential treatment has been requested for portions of this exhibit. The copy
herewith omits the information subject to the confidentially request. Omissions
are designated as *****. A complete version of this exhibit has been filed
separately with the Securities and Exchange Commission.

<PAGE>

California Civil Code Section 1542 which provides: "A general release does not
extend to claims which the creditor does not know or suspect to exist in his
favor at the time of executing the release, which known by him must have
materially affected his settlement with the debtor." This release is fully
effective on the date hereof.

                                   ARTICLE III

                                   Forbearance

         3.1 As a further accommodation to Company and to further assist the
Company in restructuring its business operations, and subject to the terms and
conditions hereof, the Lender agrees to forbear from exercising its remedies
under the Amended Notes with respect to the occurrence of any Event of Default
(as defined in the Amended Notes) until the earlier of: (a) January 13, 2004; or
(b) the date upon which any of the Forbearance Termination Events occurs (the
earlier date occurring under clause (a) or (b), above, being referred to as the
"Forbearance Termination Date"). In agreeing to forbear from any such remedies
the Lender is not agreeing to waive any such rights or remedies (all of which
are expressly reserved).

         3.2 For the purposes hereof:

                  (a) "Adverse Person" shall mean: any of the persons listed in
         Schedule 1 hereto, or any of their affiliates, and their respective
         ----------
         successors and assigns;

                  (b) "affiliate" with respect to any person, shall mean: any
         person that directly or indirectly controls, is controlled by, or is
         under common control with such person; and "control of" "controlled by"
         and "under common control with" any person (and similar phrases) shall
         mean the direct or indirect possession of the power to direct, or cause
         the direction of, the management or policies (whether through ownership
         of voting securities, by contract or otherwise) of such person;

                  ( c) "Bankruptcy Event" shall mean the filing of a petition by
         or against the Company under any provision of the Bankruptcy Reform
         Act, Title 11 of the United States Code, as amended or recodified from
         time to time (the "Bankruptcy Code"), or under any similar law relating
         to bankruptcy, insolvency or other relief for debtors; or appointment
         of a receiver, trustee, custodian or liquidator of or for any
         substantial part of the assets of Company; or the Company shall
         liquidate, wind up or dissolve (or suffer any liquidation, winding up
         or dissolution) or suspend its operations; and

                  (d) "Forbearance Termination Events" shall mean any of the
         following events, to the extent occurring prior to the first
         anniversary hereof: (i) the Company (or any person controlling the
         Company) shall be acquired, directly or indirectly, and whether
         through, merger, consolidation, combination, reorganization, stock
         purchase or otherwise by any one or more of the Adverse Persons; or
         (ii) one or more Adverse Persons (whether or not acting in concert)
         shall, directly or indirectly, in one or more transactions, acquire
         control of the Company, or any other person controlling the Company, or
         acquire all or substantially all of the assets of the Company; or (iii)
         an Event of Default pursuant to Section (8)(b) or (8)(d) of the Amended
         Notes shall occur; or (iv) a Bankruptcy Event shall occur.

         3.3 The Lender reserves all rights and remedies available to it under
the Amended Notes (and any other outstanding agreement with the Company) and
applicable law in respect of the failure of the Company to comply with the
provisions of this Agreement. All such rights and remedies of the Company are
cumulative and without prejudice to any other rights or remedies.

                                   ARTICLE IV
                             Undertaking Of Company

         So long as any of the Amended Notes are outstanding, the Company shall
promptly notify the Lender of the occurrence of any Event of Default (as defined
in the Amended Notes) or any Forbearance Termination Event.

<PAGE>

                                    ARTICLE V
                      Other Matters; Entirety Of Agreement

         5.1 Without limitation to any other rights or remedies of the Lender,
at any time on or after the Forbearance Termination Date, the Lender shall be
entitled to exercise all rights and remedies available to it, whether under the
Amended Notes or otherwise, without further notice or demand.

         5.2 This Agreement (including all Exhibits and Schedules hereto)
constitutes the entire agreement of the Company and Lender concerning the
subject matter hereof, and all prior or contemporaneous understandings, oral
representations or agreements had among the parties with respect to the subject
matter hereof are merged in, and are contained in, this Agreement.

         5.3 This Agreement is binding upon and shall inure to the benefit of
each party and their respective successors and assigns. This Agreement is
entered into for the sole protection and benefit of the parties hereto and their
respective successors and assigns, and no other person shall be a direct or
indirect beneficiary of, or shall have any direct or indirect cause of action or
claim in connection with this Agreement.

         5.4 No amendment or waiver of any provision of this Agreement nor
consent to any departure therefrom by Lender shall in any event be effective
unless the same shall be in writing and signed by the Lender, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

         5.5 No failure on the part of the Lender to exercise, and no delay in
exercising, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
remedy, power or privilege preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights and remedies
under this Agreement and the Amended Notes or otherwise are cumulative and not
exclusive of any rights, remedies, powers and privileges that may otherwise be
available to the Lender.

         5.6 All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing and shall be delivered and deemed
effective in the manner set forth in the Amended Notes.

         5.7 Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under all applicable
laws and regulations. If, however, any provision of this Agreement shall be
prohibited by or invalid under any such law or regulation in any jurisdiction,
it shall, as to such jurisdiction, be deemed modified to conform to the minimum
requirements of such law or regulation, or, if for any reason it is not deemed
so modified, it shall be ineffective and invalid only to the extent of such
prohibition or invalidity without affecting the remaining provisions of this
Agreement, or the validity or effectiveness of such provision in any other
jurisdiction.

         5.8 This Agreement is the result of negotiations among and has been
reviewed by counsel to the parties, and is the product of all parties hereto.
Accordingly, this Agreement shall not be construed against any party merely
because of such party's involvement in the drafting preparation hereof.

         5.9 THIS AGREEMENT SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE
WITH, CALIFORNIA LAW WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW.

         5.10 Each party hereby consents to the institution and resolution of
any action or proceeding of any kind or nature with respect to or arising out of
this Agreement and the Amended Notes in the state and federal courts located
within Santa Clara county or the Northern District respectively of the State of
California.

         5.11 EACH PARTY HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT AND THE AMENDED NOTES OR THE TRANSACTIONS

<PAGE>

CONTEMPLATED THEREBY IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE
BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY. THE PARTIES HEREBY AGREE
THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT IN ANY WAY LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT
THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION
AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING THAT SEEKS, IN WHOLE OR IN
PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT, THE AMENDED
NOTES, OR ANY PROVISION HEREOF OR THEREOF.

         5.12 Article and section headings used in this Agreement are for
convenience only and shall not be used to interpret, limit or amplify any term
of this Agreement.

         5.13 This Agreement may be executed in one or more counterparts, each
of which shall constitute an original and all of which taken together shall
constitute one agreement.

         5.14 Each party executing this Agreement represents that such party has
the full authority and legal power to do so.

                            [signature page follows]

<PAGE>

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered as of the date first written above.

COMPANY:                            OASYS TELECOM, INC.
                                    a California corporation

                                    By: /s/ Gerard Miille
                                        -----------------
                                    Title: President and Chief Executive Officer
                                           -------------------------------------


LENDER:                             LARSCOM INCORPORATED

                                    By: Daniel L. Scharre
                                        -----------------
                                    Title: President and Chief Executive Officer
                                           -------------------------------------

                   [Signature page to Restructuring Agreement]

<PAGE>

                                    EXHIBIT A
                                  AMENDED NOTES

         AMENDED AND RESTATED PROMISSORY NOTE (NO. 1) Dated May 13, 2002

         AMENDED AND RESTATED PROMISSORY NOTE (NO. 2) Dated May 13, 2002

                            [Please see the attached]
                    (Please see 10-Q Exhibits 10.1 and 10.2)

<PAGE>

                                   SCHEDULE 1

                                 ADVERSE PERSONS

1.   *****

2.   *****

3.   *****

4.   *****

5.   *****

6.   *****

***** Confidential treatment has been requested for the redacted portions. The
confidential redacted portions have been filed separately with the Securities
and Exchange Commission.