<PAGE>

EXHIBIT 10.2 NON-EXCLUSIVE OEM AGREEMENT

                            CONFIDENTIAL TREATMENT

                          NON-EXCLUSIVE OEM AGREEMENT

THIS NON-EXCLUSIVE OEM AGREEMENT is entered into on May 1, 2001 (the "Effective
Date") between Oasys Telecom, Inc., a California corporation with offices at
7060 Koll Center Parkway, Pleasanton, CA 94566 ("Oasys"), and Larscom
Incorporated, a Delaware corporation with offices at 1845 McCandless Drive,
Milpitas, CA 95035 ("Larscom").

                                 R E C I T A L S
                                 - - - - - - - -

A. Oasys has developed and manufactures telecommunications equipment, including
products known as EXchange Mux(R) and EXchange Mux(R) II, as more particularly
described on Exhibit A to this Agreement.
             ---------

B. Larscom desires to market and distribute the Oasys Product, either separately
or as bundled with its own telecommunications equipment (collectively, the
"Larscom Equipment"), on a private label basis.

                                A G R E E M E N T
                                - - - - - - - - -

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

1.       DEFINITIONS
         The following capitalized terms shall have these meanings throughout
         this Agreement.
         1.1   "Customer Documentation" shall mean the user and technical
               manuals and other documentation that Oasys will make available
               with the Oasys Product and all updates thereof.

         1.2   "Intellectual Property Rights" shall mean all patents, trade
               names, trade secrets, trademarks, service marks, copyrights, mask
               work rights, trade dress rights and other similar proprietary
               rights.

         1.3   "Order" shall mean a written or electronic purchase order placed
               by Larscom to Oasys for purchase of the Oasys Product.

         1.4   "Software" shall mean the software and firmware developed or
               licensed by Oasys and included in the Oasys Product as listed in
               Exhibit A.
               ---------

         1.5   "Specifications" shall mean the operating requirements and
               functionality of the Oasys Product as attached hereto as Exhibit
                                                                        -------
               B attached hereto and incorporated herein by this reference.
               -

         1.6   "Oasys Product" shall mean the private label version of each
               product developed by Oasys listed on Exhibit A and all related
                                                    ---------
               Customer Documentation.

         1.7   "Technical Information" shall mean manufacturing drawings,
               specifications, schematics or other drawings pertinent to the
               most current revision level of manufacturing of the Oasys
               Product; copies of all inspection, manufacturing, test and
               quality control procedures and any other work processes; tooling
               and tooling designs; Oasys history files; and all other
               information and/or technology deemed necessary by Oasys to allow
               Larscom to exercise any manufacturing rights provided under this
               Agreement.

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                            CONFIDENTIAL TREATMENT

         1.8      "Larscom Equipment" shall mean the telecommunications
                  equipment manufactured, marketed and/or distributed by Larscom
                  at any time during the Term (as defined below).

         1.9      "Term" shall mean the time period commencing upon the
                  Effective Date and, unless earlier terminated hereunder,
                  continuing for a ***** period thereafter.

         1.10     "Territory" shall mean the *****.

2.       SCOPE OF AGREEMENT
         2.1      General. This Agreement sets forth the terms and conditions
                  -------
                  under which Oasys shall sell, license and support the Oasys
                  Product. The Oasys Product shall be regarded as "Original
                  Equipment Manufacturer" products that shall either be sold
                  separately or bundled with Larscom Equipment for resale solely
                  by or on behalf of Larscom, whether directly or through its
                  distributors, resellers or independent sales representatives.
                  Larscom may not distribute, resell or sublicense the Oasys
                  Product or any portion thereof for distribution by or through
                  any other OEM manufacturer. The Oasys Product shall be
                  marketed, serviced and supported by Larscom's field
                  organization or Larscom's affiliates or agents, subject to the
                  marketing, service and support obligations of Oasys hereunder.

                  2.1.1    Restrictions. Larscom may not modify the Oasys
                           ------------
                           Product in any way or add any functionality's
                           thereto.

                  2.1.2    Ownership. Except for the limited rights expressly
                           ---------
                           granted herein, as between the parties, Oasys retains
                           all right, title and interest in and to the
                           technology and all related Intellectual Property
                           Rights and proprietary information incorporated into
                           the Oasys Product or any other hardware or software
                           product otherwise distributed or licensed to Larscom
                           hereunder.

         2.2      Appointment. Oasys hereby appoints Larscom to act as a
                  -----------
                  non-exclusive distributor of the Oasys Product within the
                  Territory (including distribution through Larscom's
                  distributors, resellers or independent sales representatives);
                  provided that (i) Oasys may continue to market, sell and
                  distribute the Oasys Product in the Territory on its own
                  behalf, either directly through its own sales force or
                  indirectly through independent sales representatives, and (ii)
                  Oasys may, at its option, distribute the Oasys Product on a
                  private label basis through other companies.

         2.3      Channel Conflict Management. If either party becomes aware of
                  ---------------------------
                  any channel conflict hereunder, that party shall promptly
                  notify the other party and both parties shall work
                  cooperatively to offer the best solution for that customer.
                  During the Term, the parties shall work together proactively
                  to minimize the risk of channel conflict.

         2.4      Other Products. Other products may be added to this Agreement
                  --------------
                  from time to time on the mutual agreement of the parties.

         2.5      Enhancement Requests. Larscom may from time to time request an
                  --------------------
                  enhancement to the Oasys Product. Oasys shall consider each
                  such enhancement request and respond to Larscom within 30 days
                  of the possibility of developing such enhancement. If Oasys,
                  in its sole and absolute discretion, determines to incorporate
                  such enhancement into the Oasys Product, the parties shall
                  negotiate in good faith the terms of the proposed enhancement
                  within 30 days after Oasys' acceptance of Larscom's proposal.

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

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                            CONFIDENTIAL TREATMENT

         2.6      Condition of Products. All Oasys Products shall be new except
                  ---------------------
                  as otherwise provided by the parties.

3.       SHIPMENT AND DELIVERY OF OASYS PRODUCTS
         3.1      Orders. Each delivery of Oasys Products shall be initiated by
                  ------
                  an Order which must be accepted by Oasys to be effective;
                  provided that, if Oasys fails to respond to an Order within 10
                  business days, such order shall be deemed accepted.

         3.2      Delivery Dates. Each Order shall specify the date on which the
                  --------------
                  Oasys Products or Parts must be received by Larscom (the
                  "Delivery Date"). Larscom may schedule regular intervals for
                  deliveries by an appropriate Order setting forth the
                  intervals. At Larscom's sole expense, Larscom may utilize drop
                  shipment options to any designation specified by Larscom and
                  agreed upon by Oasys.

         3.3      Shipment Requirements and Risk of Loss. All shipments of Oasys
                  --------------------------------------
                  Products hereunder shall be F.O.B. Oasys' place of shipment.
                  Title to Oasys Products ordered hereunder shall pass from
                  Oasys to Larscom upon Oasys' delivery to Larscom's designated
                  delivery location. Oasys shall immediately advise Larscom of
                  any prospective failure to timely ship the specified quantity
                  of Oasys Products.

                  Each delivery of Oasys Products to Larscom shall include a
                  packing list which contains at least: (a) the Order number and
                  applicable Larscom part numbers; (b) the quantity of Oasys
                  Products shipped; and (c) the date of shipment.

         3.4      Lead Time. The maximum lead time for the Delivery Date of any
                  ---------
                  Oasys Products ordered by Larscom is 30 business days. Oasys
                  shall, for any proposed variance of the lead time, give
                  Larscom no less than 20 days' advance notice.

         3.5      Packaging. Oasys shall preserve, package, handle and pack all
                  ---------
                  Oasys Products so as to protect the Oasys Products from loss
                  or damage, in conformance with good commercial practice,
                  government regulations and other applicable standards. Static
                  protection shall be provided for Oasys Products requiring such
                  packaging. Normal Oasys Products will be packaged in
                  appropriate containers labeled with the Larscom mark pursuant
                  to Section 11.3 below.

                  Each package label shall include the following data: (i)
                  quantity; (ii) assembly number; (iii) serial number; and (iv)
                  revision of products in package.

4.       PRICES, PAYMENTS, AND FORECASTS
         4.1      Initial Fee. Larscom will pay a ***** fee of ***** to Oasys
                  -----------
                  upon the execution of this agreement. However, if Oasys
                  Telecom terminates this agreement during the first ***** of
                  the initial term, except for breach, according to Section
                  13.2, Oasys will reimburse to Larscom a prorated amount of
                  this initial fee based on the number of months the Agreement
                  was effective.

         4.2      *****. Upon execution of this Agreement, Larscom will place an
                  -----
                  initial order to Oasys consisting of ***** (or any
                  configurations of equivalent value) of Oasys Equipment (any
                  mix of Oasys Equipment indicated in Exhibit A). At this time
                  Oasys will invoice Larscom and Larscom will ***** Oasys for
                  this initial equipment. Delivery to Larscom of Oasys Equipment
                  specified in this initial order will be evenly spread over a
                  *****

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

                                      45
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                            CONFIDENTIAL TREATMENT

                  period beginning immediately for ***** equipment as indicated
                  in Exhibit A or over a ***** period beginning from the date of
                  availability for ***** unless mutually agreed to otherwise by
                  the parties.

         4.3      List Prices. The list price for the Oasys Product is set forth
                  -----------
                  in Exhibit A attached hereto and incorporated herein by this
                     ---------
                  reference and shall remain in effect during the Term. All
                  costs of transportation and handling, including freight and
                  insurance, and all taxes, duties and other governmental
                  charges applicable to Larscom's purchase of Oasys Products
                  hereunder shall be billed to and paid by Larscom or Larscom
                  shall provide Oasys or the appropriate taxing authority with
                  an exemption certificate therefor.

                  4.3.1    Discounts. Oasys shall extend discount pricing to
                           ---------
                           Larscom as set forth in Exhibit C, which discounts
                                                   ---------
                           shall remain in effect during the ***** and any *****
                           (as defined below) and Larscom's sales volume for
                           purposes of calculating the applicable discount shall
                           be ***** over the ***** and any *****.

                  4.3.2    Changed Prices. If, during the Term or any Renewal
                            -------------
                           Term, changed prices are put in effect by Oasys, such
                           prices shall apply to all Orders issued by Larscom
                           after the effective date of such price change.

         4.4      Payment Procedure. Payment for Oasys Products shall be net 30
                  -----------------
                  days of shipment. Invoices outstanding 45 days after shipment
                  shall be subject to a late charge equal to the lesser of 1.5%
                  per month or the maximum amount permitted by law.

         4.5      Rolling Forecast. Larscom shall furnish Oasys with a rolling
                  ----------------
                  six-month forecast on the first day of each calendar month
                  during the Term.

5.       RETURN OF PRODUCTS
         5.1      Return Materials Authorization. If any Oasys Product is
                  ------------------------------
                  defective or otherwise not in conformity with the requirements
                  of this Agreement (a "Noncomplying Oasys Products"), in
                  addition to its other rights and remedies hereunder, Larscom
                  may return the Noncomplying Oasys Products for replacement or
                  repair at Oasys's expense.

                  All Oasys Products returned by Larscom to Oasys, including
                  Noncomplying Oasys Products, shall be accompanied by a Return
                  Materials Authorization ("RMA"). Unless further verification
                  is reasonably required by Oasys, Oasys shall supply an RMA
                  within three business days of Larscom's request. If Oasys
                  fails to timely provide the RMA, Larscom may return the Oasys
                  Products without an RMA.

         5.2      Return Charges. All Noncomplying Oasys Products returned by
                  --------------
                  Larscom to Oasys, and all replacement or repaired Oasys
                  Products shipped by Oasys to Larscom to replace Noncomplying
                  Oasys Products, shall be shipped each way at Oasys' expense,
                  including transportation charges (round trip charges for
                  replacement or reworked Oasys Products). Notwithstanding the
                  foregoing, if Oasys determines that Oasys Products returned
                  hereunder do not constitute "Noncomplying Oasys Products,"
                  Larscom shall reimburse Oasys for any and all its shipping and
                  handling costs hereunder.

         5.3      Repair Period. Oasys shall return the replacement or reworked
                  -------------
                  Oasys Products as soon as possible but in no event later than
                  15 business days after receipt of the Noncomplying Oasys
                  Products from Larscom. If Oasys fails to return the
                  replacement or repaired Oasys

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

                                      46
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                            CONFIDENTIAL TREATMENT

                  Products to Larscom in a timely manner, Larscom may reject the
                  Noncomplying Oasys Products and obtain a full refund of all
                  costs paid by Larscom for the Oasys Products, without any
                  deductions.

         5.4      Duty To Remove Marks. Oasys shall remove from all Oasys
                  --------------------
                  Products rejected, returned or not purchased by Larscom,
                  Larscom's name or any of Larscom's trademarks, tradenames,
                  insignia, part numbers, symbols or decorative designs prior to
                  any other sale, use, or disposition of such Oasys Products by
                  Oasys.

6        PROCESS OR DESIGN CHANGES
         6.1      Notice Of Change. Oasys shall give Larscom at least 60 days'
                  ----------------
                  prior written notice of any change to the Oasys Product or its
                  Specifications affecting the form, fit and function of the
                  Oasys Product. On Larscom's reasonable request, Oasys shall
                  provide evaluation samples and other appropriate information
                  to Larscom.

         6.2      Safety Standard Changes. Oasys shall immediately give notice
                  -----------------------
                  to Larscom if any change, upgrade, or substitution is required
                  to make the Oasys Products meet applicable safety standards or
                  specifications, excluding any changes which do not affect the
                  Oasys Product's form, fit or function.

7.       QUALITY AND WARRANTY
         7.1      Quality Program. Oasys shall maintain an objective quality
                  ---------------
                  program for all Oasys Products supplied pursuant to this
                  Agreement. Oasys shall, upon Larscom's request, provide to
                  Larscom copies of Oasys' program and supporting factory test
                  documentation.

         7.2      Larscom's Right To Inspect. Larscom shall have the right to
                  --------------------------
                  inspect, at Oasys' plant, the Oasys Products and associated
                  nonproprietary manufacturing processes. Any inspection of
                  Oasys Products shall be prior to shipment. Manufacturing
                  processes may be inspected at any time during the Term.

         7.3      Product Warranty. Oasys warrants for a period of ***** after
                  ----------------
                  shipment thereof that each Oasys Product, including the
                  associated embedded software, shall:
                  (a)      Be manufactured, processed and assembled by Oasys or
                           by companies under Oasys' direction;
                  (b)      Conform materially to its Specifications;
                  (c)      Comply with governmental and industry certification
                           requirements, including UL, NEBS, FCC, CSA, and CE
                           Mark (where applicable) certifications, and all other
                           applicable federal, state and local laws and
                           regulations;
                  (d)      Be free from material defects in material and
                           workmanship; and
                  (e)      Be free and clear of all liens, encumbrances,
                           restrictions and other claims against title or
                           ownership.
                  (f)      Be Year 2000 compliant.

         7.4      Exceptions to Warranty Coverage. This warranty is contingent
                  -------------------------------
                  upon proper use of the Oasys Products in the application for
                  which they were intended as indicated in the Documentation,
                  and Oasys makes no warranty (express, implied or statutory)
                  for Oasys Products that are modified or subjected to accident,
                  misuse, neglect, unauthorized repair or improper testing or
                  storage.

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

                                      47
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                            CONFIDENTIAL TREATMENT

         7.5      Software Warranty. Oasys warrants that it owns or has the
                  -----------------
                  necessary licenses to use the Software incorporated in the
                  Oasys Products, free of any and all restrictions, settlements,
                  judgments or adverse claims. Oasys warrants it has full power
                  and authority to grant Larscom the rights granted herein on a
                  worldwide basis.

         7.6      EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, OASYS MAKES NO
                  OTHER WARRANTIES, EITHER EXPRESS OR IMPLIED, REGARDING ANY
                  OASYS PRODUCT, INCLUDING AS TO ITS MERCHANTABILITY OR FITNESS
                  FOR ANY PARTICULAR PURPOSE.

8.       SERVICE AND SUPPORT
         8.1      Customer Support. Larscom shall provide all direct first-tier
                  ----------------
                  and second-tier support to its customers. Oasys shall support
                  Larscom by telephone from 8:00 a.m. through 5:00 p.m., p.t.,
                  including direct dial into the equipment of any Larscom
                  customer at any location. On Larscom's reasonable request,
                  Oasys shall travel with Larscom to a Larscom customer site
                  and, if there proves to be a defect in the Oasys Product, each
                  of Oasys and Larscom shall bear their own travel and service
                  costs for such on-site call. If the Oasys Product is shown not
                  to be defective in any way, Larscom shall pay Oasys at Oasys'
                  then-current consulting rate for all time spent by Oasys
                  personnel and shall reimburse Oasys for its personnel's
                  reasonable travel and living expenses during that on-site
                  visit. The current consulting rate as of the effective date of
                  this Agreement is ***** + expenses (M-F, 8:00 am to 5:00 pm)
                  and ***** + expenses (Nights and weekends).

         8.2      Defect Reports. Oasys shall notify Larscom of the resolution
                  --------------
                  of any defects discovered in the Oasys Product and shall
                  provide Larscom with the necessary data, equipment and/or
                  software to allow Larscom to distribute the solution to its
                  customers. Larscom shall periodically supply Oasys with
                  available repair data or defect reports, including field
                  failure rate data, inspection tests and strife tests. On
                  Larscom's request, Oasys shall supply to Larscom available
                  repair data from Oasys' service facilities.

         8.3      Continued Supply. Subject to Section 8.4 below, Oasys shall
                  ----------------
                  provide Larscom with a continuous supply of Oasys Products for
                  the Term and any Renewal Term, as well as
                  functionally-equivalent spares, for no less than five years
                  after any termination of this Agreement.

         8.4      Lifetime Buy Rights. If Oasys determines to discontinue any
                  -------------------
                  Oasys Product, Oasys shall give notice to Larscom no less than
                  90 days written advance notice of the last Order date thereof.
                  After receipt of notice of discontinuance, Larscom may
                  purchase from Oasys such quantity of the discontinued Oasys
                  Product as Larscom deems necessary for its future
                  requirements. Alternatively, on Larscom's request, Oasys shall
                  grant Larscom a license to manufacture only that discontinued
                  product pursuant to Section 11.5 below.

9.       COUNTRY OF MANUFACTURE
         9.1      Country Of Origin Certification. Upon Larscom's request, Oasys
                  -------------------------------
                  shall provide Larscom with an appropriate certification
                  stating the country of origin for Oasys Products, sufficient
                  to satisfy the requirements of (a) the customs authorities of
                  the country of receipt and (b) any applicable export licensing
                  regulations, including those of the United States.


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

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         9.2      Country Of Origin Marking. If and as required, Oasys shall
                  -------------------------
                  mark each Oasys Product, or the container if there is no room
                  thereon, with the country of origin. Oasys shall, in marking
                  Oasys Products, comply with the requirements of the customs
                  authorities of the country of receipt.

10.      TRAINING
         10.1     Technical Training. Oasys shall provide ***** training classes
                  ------------------
                  during the ***** of the Agreement, with no more than ***** per
                  quarter, on the Oasys Products at Oasys' Pleasanton facility
                  for up to ***** people each at ***** to Larscom, excluding
                  Larscom's responsibility for the compensation, travel and
                  living expenses for any Larscom personnel. Training of any
                  additional people or training outside Oasys' Pleasanton
                  facility shall be at Larscom's expense. At a
                  mutually-agreeable time, location and cost, Oasys shall
                  provide additional training to inform Larscom personnel of
                  upgraded, enhanced or new versions of the Oasys Products.
                  Larscom may duplicate and use, either internally or for
                  Larscom's customers, all training classes, methods and
                  materials supplied or developed by Oasys pursuant to this
                  Agreement at no additional charge.

11.      MARKETING AND LICENSING
         11.1     Marketing and Sales Authority. Subject to Section 2 above,
                  -----------------------------
                  Larscom shall market, sell and distribute the Oasys Products
                  and the Larscom Equipment as it deems appropriate in its sole
                  discretion and on its own business terms.

         11.2     Retention of Copyright Notices. Larscom shall retain all
                  ------------------------------
                  copyright notices on the Oasys Products, including in the
                  Software, and in the Customer Documentation therefor. Larscom
                  shall do nothing to infringe any rights of Oasys in its
                  trademarks, copyrights or trade names.

         11.3     Private Labeling. At Oasys' sole cost and expense, Oasys shall
                  ----------------
                  design and manufacture the Oasys Products, including the
                  Customer Documentation, ordered by Larscom hereunder as
                  Larscom private label versions, bearing the trademarks, trade
                  names and logos (the "Larscom Marks") and labeling and
                  packaging specified by Larscom and conforming to Larscom
                  specifications for external appearance (which shall not
                  require any material change in form or dimensions of the
                  Products or require commercially unreasonable actions).
                  Neither party is granted any right or interest to the
                  trademarks, marks or trade names of the other party. However,
                  Oasys may use and reproduce Larscom's Marks, as provided by
                  Larscom, as necessary to fulfill its obligations hereunder.
                  Within 15 days after the Effective Date, Larscom shall deliver
                  to Oasys the Larscom Marks, in camera-ready format, and all
                  other requisite labeling and packaging specifications.

         11.4     Software and Customer Documentation License. Oasys hereby
                  -------------------------------------------
                  grants to Larscom ***** license to use, reproduce, sell and
                  distribute the Software and Customer Documentation
                  incorporated into or accompanying the Oasys Products, whether
                  directly or through its third party channels of distribution,
                  provided that "sell" means (in any tense or form) the license
                  or sub-license of the software in accordance with the terms
                  hereof.


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

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11.5              Manufacturing License. Subject to the terms of this Section
                  ---------------------
                  11.5, Oasys hereby grants to Larscom a ***** license to
                  manufacture, have manufactured and sell and sublicense the
                  Oasys Products, such license to be effective only on the
                  happening of the following events; (i) Oasys liquidates its
                  business, dissolves, ceases business operations or becomes the
                  subject of any voluntary or involuntary Chapter 7 bankruptcy
                  proceeding; or (ii) one or more of the specific Oasys Products
                  as listed in Exhibit A is discontinued (in which case the
                  manufacturing license is granted only for the discontinued
                  items).

                  Within sixty (60 days of the Effective Date, at Larscom's
                  request, Oasys shall establish an escrow account with a
                  mutually satisfactory agent and deposit the Technical
                  Information in that account. Oasys will update the Technical
                  Information in the escrow account upon the release of any
                  major design changes to the Oasys Product and at least every 6
                  months. The expense for such escrow account will be shared
                  equally by Oasys and Larscom. The Technical Information will
                  be released to Larscom from the escrow account in accordance
                  with this Section 11.5. The Technical Information is deemed
                  Confidential Information as governed by Section 14.8 and will
                  only be used for the purpose of manufacturing the Oasys
                  Product. Larscom shall not communicate to third parties any
                  Technical Information released from the escrow account except
                  to Larscom's subcontractors, if applicable, without Oasys'
                  prior written consent.

12.      INTELLECTUAL PROPERTY RIGHTS
         12.1     Infringement Indemnity. Oasys shall defend, indemnify and hold
                  ----------------------
                  Larscom and its affiliates and customers harmless from all
                  claims, actions, damages or other liabilities, including
                  reasonable attorney's fees (collectively, "Damages") arising
                  from any claim that any Oasys Product, any portion thereof or
                  any related Intellectual Property Rights therein constitutes
                  an infringement or unauthorized use of any third party's
                  intellectual property rights (each, an "Infringement Action").
                  Notwithstanding the foregoing, Oasys shall have no obligation
                  to indemnify Larscom against any Infringement Action arising
                  out of (i) the Larscom Equipment, (ii) the combination of the
                  Larscom Equipment and any Oasys Product or (iii) any
                  modification of the Oasys Products by Larscom, its affiliates
                  or its customers.

         12.2     Duty To Notify. Larscom shall give Oasys prompt notice of any
                  --------------
                  Infringement Action and shall give Oasys sole authority,
                  information and assistance (at Oasys' expense) to defend
                  against the Infringement Action


13.      TERM AND TERMINATION
         13.1     Term. Following the Term, this Agreement may be extended upon
                  ----
                  mutual agreement of the parties for successive ***** periods
                  (each, a "Renewal Term"). The use of "Term" in the Agreement,
                  unless expressly indicated otherwise, shall refer to both the
                  Term and any Renewal Term collectively.

         13.2     Termination for Convenience. Either party may terminate this
                  ---------------------------
                  Agreement at any time for any reason on 90 days' prior written
                  notice to the other party; provided that, if Larscom
                  terminates this agreement, Larscom shall purchase Oasys'
                  inventory on hand, specific to Larscom. Larscom will only be
                  responsible for inventory and work in process material for
                  which Oasys has received hard copy purchase orders from
                  Larscom through the date of termination with payment therefor
                  due net 15 days after termination. Larscom may at its option,
                  require Oasys to provide products as per orders placed prior
                  to termination.

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

                                      50
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                            CONFIDENTIAL TREATMENT

     13.3    Termination for Breach. If either party materially breaches this
             ----------------------
             Agreement, the other party may terminate this Agreement on 30 days'
             prior written notice to the other party unless such breach is cured
             within such 30-day notice period or, if such breach cannot be cured
             in 30 days, the breaching party has commenced good faith efforts to
             cure such breach.

     13.4    Rights Upon Breach. If Larscom terminates this Agreement on Oasys'
             ------------------
             breach, Larscom will not be required to purchase Oasys' inventory
             of Oasys Products or work in progress and Larscom may exercise it
             rights under Section 11.5. If Oasys terminates this Agreement on
             Larscom's breach, Larscom shall purchase Oasys' inventory on hand,
             specific to Larscom. Larscom will only be responsible for inventory
             and work in process material for which Oasys has received hard copy
             purchase orders from Larscom through the date of termination with
             payment therefor due net 15 days after termination.

     13.5    Survival. The following Sections of this Agreement shall survive
             --------
             any termination hereof: 2.1.2, 7.3 through 7.6, 8.1, 12, 13.4 and
             14. In addition, this Agreement shall govern all Orders transmitted
             to Oasys prior to termination and to all Oasys Products shipped to
             Larscom thereunder.

14.  MISCELLANEOUS
     14.1    Entire Agreement. This Agreement, including its Exhibits,
             ----------------
             constitutes the entire agreement between the parties, supersedes
             all prior communications, representations, negotiations and
             agreements, whether oral or written and may only be modified in a
             writing signed by an authorized representative of each party. If
             any provision of this Agreement is held to be invalid or
             unenforceable for any reason, the remaining provisions will
             continue in full force without being impaired or invalidated in any
             way. Larscom and Oasys agree to replace any invalid provision with
             a valid provision which most closely approximates the intent and
             economic effect of the invalid provision. The waiver by either
             party of a breach of any provision of this Agreement by the other
             party will not operate or be interpreted as a waiver of any other
             or subsequent breach by such other party.

     14.2    Independent Contractors. The parties are entering into this
             -----------------------
             Agreement as independent contractors and nothing herein shall be
             construed to establish a partnership, joint venture, agency or
             other similar relationship between the parties.

     14.3    No Assignment. No party hereto shall assign this Agreement without
             -------------
             the other party's prior written consent except in conjunction with
             a merger or sale of substantially all its assets; provided that the
             assigning party shall give the other party written notice of such
             merger or sale.

     14.4    Publicity. No press releases shall be made by one party hereto
             ---------
             without the prior written consent of the other party.

     14.5    Governing Law. This Agreement shall be governed by and construed in
             -------------
             accordance with California law as applied to transactions taking
             place in California between California residents. All disputes
             between the parties arising out of or relating to this Agreement
             (other than actions seeking only equitable remedies) shall be
             settled by binding arbitration pursuant to the Commercial
             Arbitration Rules of the American Arbitration Association by an
             arbitrator who is knowledgeable about telecommunications equipment.
             The arbitrator may award any legal or equitable remedy and may, in
             his discretion, require one party to pay the costs of the
             arbitration as well as the fees and expenses, including reasonable
             attorneys' fees, of the other party. In the absence of any such

                                      51
<PAGE>

                            CONFIDENTIAL TREATMENT

             ruling, each party shall bear its own costs in connection with an
             arbitration proceeding hereunder and the parties shall share the
             costs of the arbitration equally.

     14.6    Notices. Notices given hereunder shall be effective on receipt and
             -------
             shall be sufficient if given in writing, hand-delivered, sent by
             telefax with confirmation of receipt, sent by First Class Mail,
             return receipt requested (for all types of correspondence), postage
             prepaid, or sent by overnight courier service and addressed as
             follows:

             Oasys Telecom, Inc.                          Larscom Incorporated
             7060 Koll Center Parkway                     1845 McCandless Drive
             Pleasanton, CA 94566                         Milpitas, CA 95035
             Attn: Mr. Gerard Miille, President           Attn: Shan Varaitch

     14.7    Insurance. Prior to the delivery of the Oasys Product, Oasys shall
             ---------
             procure and thereafter maintain, with insurers acceptable to
             Larscom, the following minimum insurance protecting Oasys and
             Larscom against liability from damages because of injuries,
             including death, suffered by persons including employees of
             Larscom, and liability from damages to property arising from or
             growing out of Oasys' operations in connection with the performance
             of this Agreement:

<TABLE>
<CAPTION>
              -------------------------------------------------------------------------------------
                                 COVERAGE                              LIMITS
              -------------------------------------------------------------------------------------
              <S>                                 <C>
              Commercial General Liability        ***** General/Aggregate

                                                  ***** Products/Completed Operations Aggregate

                                                  ***** Combined Limit/Each Occurrence

              -------------------------------------------------------------------------------------
              Product Liability                   ***** General Aggregate

              -------------------------------------------------------------------------------------
</TABLE>

             Oasys shall provide certificates evidencing such insurance prior to
             beginning delivery of Oasys Product on a form reasonably required
             by Larscom. Larscom shall be listed as an additional insured under
             the foregoing Commercial General Liability insurance policies, and
             Oasys shall cause its insurance carrier to waive all rights of
             subrogation against Larscom on the policies listed above.

     14.7    Force Majeure. Neither party shall be liable to the other for its
             -------------
             failure to perform any obligations under this Agreement during any
             period in which such performance is rendered impracticable or
             impossible due to circumstances beyond its reasonable control,
             including acts of God, floods, earthquakes, riots or other
             hostilities, strikes or government actions, provided that the party
             experiencing the delay promptly notifies the other of the delay.

     14.8    Confidential Information. Each party acknowledges that all
             ------------------------
             information relating to the business, products and operations of
             the other party which it learns or has learned during or prior to
             the Term is the valuable, confidential and proprietary information
             of the disclosing party. The receiving party shall maintain all
             confidential information disclosed hereunder by the disclosing
             party in confidence and shall not disclose such information to any
             third party other than those of its employees or contractors with a

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

                                      52
<PAGE>

                            CONFIDENTIAL TREATMENT

             need to know such information; provided that each such employee or
             contractor must have executed a confidentiality agreement or be
             otherwise bound by the obligations of the receiving party
             hereunder. The receiving party shall safeguard the confidential
             information with the same degree of care which it uses to protect
             its own confidential information.

             This Section shall not apply to any information which (i) is
             already lawfully in the receiving party's possession (unless
             received pursuant to a nondisclosure agreement); (ii) is or becomes
             generally available to the public through no fault of the receiving
             party; (iii) is disclosed to the receiving party by a third party
             who may transfer or disclose such information without restriction;
             (iv) is required to be disclosed by the receiving party as a matter
             of law, governmental order or judicial mandate; provided that the
             receiving party will use all reasonable efforts to provide the
             disclosing party with prior notice of such disclosure; (v) is
             disclosed by the receiving party with the disclosing party's
             approval; and (vi) is independently developed by the receiving
             party without any use of confidential information. In all cases,
             the receiving party will use all reasonable efforts to give the
             disclosing party ten days' prior written notice of any disclosure
             of information hereunder.

             Each party acknowledges that any breach of this Section by a
             receiving party will irreparably harm the disclosing party.
             Accordingly, on any such breach, the disclosing party shall be
             entitled to promptly seek injunctive relief in addition to any
             other remedies which it may have at law or in equity. The parties
             will maintain the confidentiality of all confidential and
             proprietary information learned hereunder for a period of five
             years from the date of termination of this Agreement.


     14.9    Limitation of Liability. EXCEPT ON ONE PARTY'S MISAPPROPRIATION OF
             -----------------------
             THE OTHER PARTY'S CONFIDENTIAL INFORMATION OR INTELLECTUAL PROPERTY
             OR ON LARSCOM'S BREACH OF SECTIONS 2.1.1 OR 2.1.2, NEITHER PARTY
             SHALL BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL OR
             CONSEQUENTIAL DAMAGES (INCLUDING BUT NOT LIMITED TO LOSS OF PROFITS
             OR COST OF PROCUREMENT OF SUBSTITUTE GOODS) ARISING OUT OF THIS
             AGREEMENT, REGARDLESS OF WHETHER SUCH DAMAGES ARE BASED ON TORT,
             WARRANTY, CONTRACT OR ANY OTHER LEGAL THEORY EVEN IF THE DEFAULTING
             PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

     14.10   Product Liability Indemnification. Subject to Section 14.9 above,
             ---------------------------------
             Oasys shall defend, indemnify and hold Larscom harmless against any
             Damages (as defined in Section 12.1 above) specifically resulting
             from the injury to or death of any person or damage to, or loss or
             destruction of, any real property or tangible personal property and
             arising out of any claim that any Oasys Product hereunder is
             defective in design or manufacture.

             Larscom shall give Oasys prompt notice of any action hereunder and
             shall give Oasys sole authority, information and assistance (at
             Oasys' expense) to defend against or settle such action in Oasys'
             sole discretion.

             However, Oasys shall have no indemnification obligation or
             liability under this Section 14.10 for damages based on (a) any
             party's use of an Oasys Product in a manner other than for which it
             was intended, (b) any party's modification of an Oasys Product, (c)
             the misuse, neglect, damage, unauthorized repair or improper
             testing or storage of any Oasys Product, (d) any party's use of the
             Larscom Equipment, or (e) Oasys' adherence to

                                      53
<PAGE>

                            CONFIDENTIAL TREATMENT

             Larscom's designs, instructions or directions, in which case
             Larscom shall indemnify, defend and hold Oasys harmless from any
             Damages on the basis set forth above.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first set forth above.

OASYS TELECOM, INC.                      ARSCOM INCORPORATED


By: /s/ Gerard Miille                    By: /s/ Bob Coackley
    -----------------                        ----------------
        Gerard Miille, President and CEO         Bob Coackley, President and CEO

                                      54
<PAGE>

                            CONFIDENTIAL TREATMENT

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


                                   EXHIBIT A
                                 OASYS PRODUCT

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
      Part Number                                           Item                                          List Price
----------------------------------------------------------------------------------------------------------------------
<S>                     <C>                                                                        <C>
                          General & International M13 Items (PM13E, E1-to-T3)
----------------------------------------------------------------------------------------------------------------------
815-00063-001             EXchange Mux(R) II Rack Mount Assembly, 23" (Shelf & backplane)                       *****
----------------------------------------------------------------------------------------------------------------------
815-00073-001             EXchange Mux(R) II Rack Mount Assembly, 19" (Shelf & backplane)                       *****
----------------------------------------------------------------------------------------------------------------------
700-00052-003             EXchange Mux(R) II 23" Starter Kit (Shelf, Bkplane, 2 MPUs)                           *****
----------------------------------------------------------------------------------------------------------------------
700-00053-001             EXchange Mux(R) II 19" Starter Kit (Shelf, Bkplane, 2 MPUs)                           *****
----------------------------------------------------------------------------------------------------------------------
890-00009-001             EXchange Mux(R) II Basic Software                                                     *****
----------------------------------------------------------------------------------------------------------------------
810-00062-003             Module, MPU, (Exchange Mux(R) II Use Only), -48V                                      *****
----------------------------------------------------------------------------------------------------------------------
810-00070-001             Module, Field Programmable M13 Multiplexer, Int'l (PM13E), -48V                       *****
----------------------------------------------------------------------------------------------------------------------
810-00065-002             Output Redundancy Interface Module (RIM), Exchange Mux(R) II PM13E                    *****
----------------------------------------------------------------------------------------------------------------------
810-00066-002             Input Redundancy Interface Module (RIM), Exchange Mux(R) II PM13E                     *****
----------------------------------------------------------------------------------------------------------------------
815-00050-003             Module, Blank, 1-Slot Wide                                                            *****
----------------------------------------------------------------------------------------------------------------------
815-00071-001             RIM, Blank, EXM II (Covers 1 set of Input and Output RIM slots)                       *****
----------------------------------------------------------------------------------------------------------------------
815-00064-002             Cable, 28 DS1/E1, RIM-to-Champ Plug, 10'                                              *****
----------------------------------------------------------------------------------------------------------------------
815-00011-001             Cable, Craft, Modular-to-DB9, 6'                                                      *****
----------------------------------------------------------------------------------------------------------------------
815-00011-002             Cable, Craft, Modular-to-DB9, 15'                                                     *****
----------------------------------------------------------------------------------------------------------------------
815-00011-003             Cable, Craft, Modular-to-DB9, 30'                                                     *****
----------------------------------------------------------------------------------------------------------------------
815-00011-004             Cable, Craft, Modular-to-DB9, 50'                                                     *****
----------------------------------------------------------------------------------------------------------------------
815-00055-001             Cable, Null Modem, 6'                                                                 *****
----------------------------------------------------------------------------------------------------------------------
815-00055-002             Cable, Null Modem, 15'                                                                *****
----------------------------------------------------------------------------------------------------------------------
815-00055-003             Cable, Null Modem, 30'                                                                *****
----------------------------------------------------------------------------------------------------------------------
815-00055-004             Cable, Null Modem, 50'                                                                *****
----------------------------------------------------------------------------------------------------------------------
835-00075-001             Air Baffle, 1 Mounting Space                                                          *****
----------------------------------------------------------------------------------------------------------------------
815-00056-001             DS3/STS-1 Connector Panel                                                             *****
----------------------------------------------------------------------------------------------------------------------
890-00007-001             Manual, Operations, Exchange Mux(R) II                                                *****
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
                          Domestic M13 Items (PM13, T1-to-T3)
----------------------------------------------------------------------------------------------------------------------
810-00068-001             Module, Field Programmable M13 Multiplexer (PM13), -48V                               *****
----------------------------------------------------------------------------------------------------------------------
810-00065-001             Output Redundancy Interface Module (RIM), Exchange Mux(R) II PM13                     *****
----------------------------------------------------------------------------------------------------------------------
810-00066-001             Input Redundancy Interface Module (RIM), Exchange Mux(R) II PM13                      *****
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

                          OC-3/STM-1 Items
----------------------------------------------------------------------------------------------------------------------
810-00067-001             OC-3/STM-1 OMux Module, -48V                                                          *****
----------------------------------------------------------------------------------------------------------------------
810-00069-001             Output Redundancy Interface Module, EXchange Mux(R) II OC-3/STM-1                     *****
----------------------------------------------------------------------------------------------------------------------
810-00069-002             Input Redundancy Interface Module, EXchange Mux(R) II OC-3/STM-1                      *****
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

                          Misc Items
----------------------------------------------------------------------------------------------------------------------
820-00072-001             Ethernet Daughter Board for EXM Transmux or EXMII MPU                                 *****
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------

                          EXchange Mux Transmux Items
----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                      55
<PAGE>

<TABLE>
<S>                      <C>                                                                         <C>
----------------------------------------------------------------------------------------------------------------------
815-00034-001             EXchange Mux(R) Transmux Basic Rack Mount Assy, 23" (Shelf & Bkplane)                *****
----------------------------------------------------------------------------------------------------------------------
890-00002-001             EXchange Mux(R) Transmux Basic Software                                              *****
----------------------------------------------------------------------------------------------------------------------
890-00002-003             EXchange Mux(R) Transmux Extended Feature Group #1 Upgrade (Test)                    *****
----------------------------------------------------------------------------------------------------------------------
890-00002-004             EXchange Mux(R) Transmux SNMP Upgrade (requires MPU Daughter Bd.)                    *****
----------------------------------------------------------------------------------------------------------------------
810-00063-001             EXchange Mux(R) Transmux 1X6 Redundancy Interface Module (RIM)                       *****
----------------------------------------------------------------------------------------------------------------------
810-00062-001             Module, MPU (EXchange Mux(R) Transmux use only), -48V                                *****
----------------------------------------------------------------------------------------------------------------------
810-00061-001             T3-to-STS-1 Transmux Module (ST3), -48V                                              *****
----------------------------------------------------------------------------------------------------------------------
815-00050-003             EXchange Mux(R) Module Blank, 1 slot wide                                            *****
----------------------------------------------------------------------------------------------------------------------
835-00075-001             Air Baffle, 1 Mounting Space                                                         *****
----------------------------------------------------------------------------------------------------------------------
815-00056-001             DS3/STS-1 Connector Panel                                                            *****
----------------------------------------------------------------------------------------------------------------------
815-00026-002             Cable, DS3/STS-1, Rt. Angle SMB-to-Male BNC, 3.5'                                    *****
----------------------------------------------------------------------------------------------------------------------
815-00052-001             Cable, DS3/STS-1, Rt. Angle SMB-to-Female BNC, 3'                                    *****
----------------------------------------------------------------------------------------------------------------------
128-00010-001             Connector, BNC, 75-ohm, Hand Crimp                                                   *****
----------------------------------------------------------------------------------------------------------------------
815-00060-001             Cable, DS3/STS-1, 12 Conductor, 50'                                                  *****
----------------------------------------------------------------------------------------------------------------------
815-00011-001             Cable, Craft, EXchange Mux(R) User Interface, 6'                                     *****
----------------------------------------------------------------------------------------------------------------------
815-00011-002             Cable, Craft, EXchange Mux(R) User Interface, 15'                                    *****
----------------------------------------------------------------------------------------------------------------------
815-00011-003             Cable, Craft, EXchange Mux(R) User Interface, 30'                                    *****
----------------------------------------------------------------------------------------------------------------------
815-00011-004             Cable, Craft, EXchange Mux(R) User Interface, 50'                                    *****
----------------------------------------------------------------------------------------------------------------------
815-00055-001             Cable, Null Modem, 6'                                                                *****
----------------------------------------------------------------------------------------------------------------------
815-00055-002             Cable, Null Modem, 15'                                                               *****
----------------------------------------------------------------------------------------------------------------------
815-00055-003             Cable, Null Modem, 30'                                                               *****
----------------------------------------------------------------------------------------------------------------------
815-00055-004             Cable, Null Modem, 50'                                                               *****
----------------------------------------------------------------------------------------------------------------------
940-00007-001             Manual, Operations, Exchange Mux(R) Transmux                                         *****
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                      56
<PAGE>

                            CONFIDENTIAL TREATMENT



                                   EXHIBIT B

                      [SEE ATTACHED PRODUCT DATA SHEETS]

                                      57
<PAGE>

                            CONFIDENTIAL TREATMENT



                                   EXHIBIT C
                              DISCOUNT STRUCTURE

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
                       Item                                                         Discount from List
----------------------------------------------------------------------------------------------------------------------
<S>                                                                  <C>
All Items in Exhibit A except cables                                 *****, increasing to *****after reaching a
                                                                     ***** of ***** or immediately if an *****
                                                                     spanning ***** is made.
----------------------------------------------------------------------------------------------------------------------
Cables                                                               *****
----------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                      58