Document:

<PAGE>

                      FIRST AMENDMENT TO CREDIT AGREEMENT
                      -----------------------------------

     THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "First Amendment") is
                                                     ---------------
entered into by and between PEET'S OPERATING COMPANY, INC. (formerly known as
Peet's Coffee and Tea, Inc.) ("Borrower"), PEET'S TRADEMARK COMPANY ("Trademark
                               --------                               ---------
Co."), and PEET'S COFFEE & TEA, INC. (formerly known as Peet's Companies, Inc.)
---
("Holdings"), each a Washington corporation (each a "Credit Party" and
  --------                                           ------------
collectively, the "Credit Parties"), and GENERAL ELECTRIC CAPITAL CORPORATION, a
                   --------------
New York corporation ("Lender"), as of January 19, 2001, with reference to the
                       ------
following facts:

                                   RECITALS
                                   --------

     A.  Pursuant to that certain Credit Agreement dated as of September 1,
2000, by and among Credit Parties and Lender (as the same may have been amended,
supplemented, or otherwise modified from time to time prior to the date of this
First Amendment, the "Credit Agreement"), Lender agreed to provide certain
                      ----------------
financial accommodations to or for the benefit of Borrower and the other Credit
Parties upon the terms and conditions contained therein.  Unless otherwise
defined in this First Amendment, (i) capitalized terms or matters of
construction defined or established in Annex A to the Credit Agreement shall be
                                       -------
applied as defined or established therein, and (ii) references to Sections,
Schedules, and Annexes shall refer, respectively, to Sections, Schedules, and
Annexes of the Credit Agreement.

     B.  Credit Parties have advised Lender that they propose to enter into
certain transactions described in a registration statement on Form S-1 (File No.
333-47976), filed with the Securities and Exchange Commission ("SEC") on or
                                                                ---
about October 13, 2000, and amended as of December 1, 2000, and further amended
as of December 22, 2000, and as of January 17, 2001 (collectively, the
"Registration Statement"), relating to the offer of Holdings to sell up to
 ----------------------
3,300,000 shares of its common Stock through a Public Offering described in the
Registration Statement (the "Offering").  Credit Parties have further advised
                             --------
Lender that the effective date of the Offering is anticipated to occur on or
about January 22, 2001.

     C.  Pursuant to the Credit Agreement, Credit Parties have agreed that they
shall not take certain actions described in the Registration Statement, and
certain related actions in connection with the Offering, without the prior
written consent of Lender.  Credit Parties have requested the consent of  Lender
to such actions, and Lender has agreed to such request on the terms and
conditions set forth in this First Amendment.

         NOW, THEREFORE, in consideration of Credit Parties' performance of
their promises and obligations hereunder, the continued performance by Credit
Parties of their promises and obligations under the Credit Agreement and the
other Loan Documents, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Credit Parties and Lender
hereby agree as follows:

                                       1
<PAGE>

                                   AGREEMENT
                                   ---------

     1.   Amendments Effective As of the Date Hereof. Effective as of the date
          ------------------------------------------
hereof, the Credit Agreement is hereby amended as follows:

          1.1  Clause (d) of Section 6.2 is hereby amended by deleting the
phrase "so long as no Default or Event of Default shall have occurred and be
continuing and there is no Revolving Loan balance, Borrower may make investments
up to $1,000,000 in the aggregate" and substituting the phrase "so long as no
Default or Event of Default shall have occurred and be continuing and so long as
proceeds of Revolving Loans are not applied, directly or indirectly, to the
purchase of such investments, Borrower may make investments up to $35,000,000 in
the aggregate" therefor.

          1.2  Section 6.2 is hereby further amended by deleting the word "and"
immediately prior to clause (d) thereof, substituting a semicolon for the period
at the conclusion of clause (d) thereof, and adding the following new text after
clause (d), as so amended:

     "and (e) except as otherwise provided in Section 1.3(b)(iii), capital
                                              -------------------
     contributions by Holdings to Borrower funded by proceeds of any Public
     Offering or Private Placement of Stock of Holdings."

          1.3  Section 6.20 is hereby amended by deleting the word "None" at the
commencement of such section and adding the following in place thereof:

          "Except as otherwise expressly permitted under Section 6.2, none"
                                                         ------------

     2.   Amendments Effective as of the Closing Date.  Effective as of the
          -------------------------------------------
Closing Date, the Credit Agreement is hereby further amended as follows:

          2.1  Section 1.3(b)(iv) is hereby amended by deleting in its entirety
the final sentence thereof, and substituting the following therefor:

     "Any prepayments required by Section 1.3(b)(ii) or 1.3(b)(iii)(B) shall be
                                  ------------------    --------------
     applied in accordance with Section 1.3(c)."
                                --------------

          2.2  Section 5.10 is hereby amended by deleting the phrase "90 days"
in the second sentence thereof and substituting the phrase "180 days" therefor.

          2.3  Clause (b) of Section 6.5 is hereby amended by deleting the
phrase "other than the issuance of Stock of Borrower" and substituting the
phrase "other than the issuance of Stock of Holdings" therefor.

                                       2
<PAGE>

     3.   Lender's Receipt of Certain Documents. In connection with this First
          -------------------------------------
Amendment, Lender hereby acknowledges receipt of the following:

          3.1  The documents described on Schedule A to this First Amendment
(the "Offering Related Documents"), which Holdings and Borrower represent and
      --------------------------
warrant to be true and correct copies of the documents (a) filed with the SEC as
exhibits to the Registration Statement and (b) approved by the boards of
directors or holders of Stock of Holdings or Borrower, as applicable, with the
intent of adopting or otherwise giving effect to such documents on or about the
effective date of the Offering; provided, that to the extent that Lender has not
                                --------
received, on or before the date of this First Amendment, true and correct copies
of the final and fully executed Registration Statement, the Offering Related
Documents, or any further amendments to the Registration Statement, Credit
Parties shall promptly deliver the same to Lender;

          3.2  UCC financing statements or amendments in form and substance
satisfactory to Lender, duly executed on behalf of Borrower and Holdings,
bearing information regarding the name changes of Borrower and Holdings
sufficient to ensure that no financing or continuation statement filed under the
Code in connection with the Loan Documents is seriously misleading within the
meaning of Section 9402(7) of the Code; and

          3.3  A Control Letter in favor of Lender or other documents
establishing a perfected security interest in favor of Lender, in form and
substance satisfactory to Lender, duly executed on behalf of Borrower, with
respect to the investments contemplated by Section 6.2(d), as such section is to
be amended by this First Amendment

     4.   Lender's Consent to Certain Transactions. Subject to the terms and
          ----------------------------------------
conditions of this First Amendment, and notwithstanding any other provision of
the Loan Documents to the contrary, Lender hereby consents to (a) the issuance
and transfers of Stock of Holdings, and the payment of related underwriting and
marketing fees and expenses, to be effected pursuant to the terms of the
Offering (the "Offering Stock Transfers"), and (b) Credit Parties' filing,
               ------------------------
execution, and delivery, as the case may be, of the Registration Statement and
each of the Offering Related Documents. Lender and Credit Parties acknowledge
that the Offering constitutes a Public Offering for all purposes under the
Credit Agreement.

     5.   Credit Parties' Receipt of Proceeds.  Immediately upon any Credit
          -----------------------------------
Party's receipt of any initial proceeds of the Offering, and on any Business Day
thereafter on which any Credit Party has received further proceeds of the
Offering, Credit Parties shall report to Lender in writing as to the receipt and
proposed disposition of such proceeds.

     6.   Application of Certain Proceeds.  Credit Parties and Lender shall
          -------------------------------
apply all proceeds of the Offering, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in connection
therewith, as set forth in the Credit Agreement, including, without limitation,
Sections 1.3(b)(iii)(A) and 1.3(b)(iv) thereof.  To the extent

                                       3
<PAGE>

proceeds of the Offering are not applied to the Loans, Borrower may expend such
proceeds pursuant to and subject to the limitations set forth in the Credit
Agreement. Credit Parties and Lender hereby confirm that in connection with
Borrower's prepayment of Term Loan B and the Revolving Loan from proceeds of the
Offering, LIBOR breakage costs and related charges will be assessed against the
Loan Account pursuant to the Credit Agreement in an aggregate amount not to
exceed $1,500.

     7.   Term Loan B Note. Within five Business Days of the date on which the
          ----------------
outstanding principal amount of Term Loan B and all accrued and unpaid interest
thereunder shall have been paid in full, Lender shall deliver to Borrower the
original executed Term Loan B Note, stamped "Cancelled."

     8.   Ownership of Stock of Holdings.  Within thirty days of the date on
          ------------------------------
which any Credit Party receives any initial proceeds of the Offering, and on the
first Business Day of each Fiscal Quarter thereafter, Credit Parties shall
deliver to Lender an addendum to Disclosure Schedule (3.8) setting forth updated
                                 -------------------------
information concerning the Stock of Holdings held at such time by the Persons
constituting, as of the date of the Offering Stock Transfers or such later date
as is reflected in such addendum, each of the directors, executive officers and
5% shareholders of Holdings, as each such term is used in the description of
"Principal and Selling Shareholders" set forth in the Registration Statement.

     9.   Effectiveness. This First Amendment shall become effective upon
          -------------
receipt by Lender of an original of this First Amendment that bears the
signatures of Credit Parties and Lender.

     10.  Representations and Warranties. Borrower hereby represents and
          ------------------------------
warrants that the representations and warranties contained in the Credit
Agreement were true and correct in all material respects when made and, after
giving effect to this First Amendment, the Registration Statement, the Offering
Stock Transfers, the Offering Related Documents, and the other matters
contemplated under this First Amendment, shall remain true and correct in all
material respects as of the date hereof, except to the extent that a particular
representation or warranty by its terms expressly applies only to an earlier
date. The Credit Agreement, as modified and amended by this First Amendment, and
the other Loan Documents constitute legal, valid and binding obligations of
Borrower, enforceable against Borrower in accordance with their respective
terms.

     11.  Ratification. Except as specifically modified by this First Amendment,
          ------------
the parties acknowledge that the Credit Agreement shall remain binding upon
Credit Parties and Lender and all provisions of the Credit Agreement shall
remain in full force and effect. Credit Parties expressly ratify and affirm
their respective obligations to Lender under the Credit Agreement and the other
Loan Documents.

                                       4
<PAGE>

     12.  Miscellaneous.
          -------------

          12.1  Entire Agreement; Amendment.  This First Amendment, together
                ---------------------------
with the Credit Agreement and the other Loan Documents, is the entire agreement
between the parties hereto with respect to the subject matter hereof.  This
First Amendment supersedes all prior and contemporaneous oral and written
agreements and discussions with respect to the subject matter hereof or thereof.
No amendment, modification, or waiver of any of the provisions of this First
Amendment shall be valid or enforceable unless set forth in a writing signed by
Credit Parties and Lender.

          12.2  Recitals.  The recitals set forth at the beginning of this First
                --------
Amendment are true and correct, and such recitals are incorporated into and are
a part of this First Amendment.

          12.3  Headings.  Section headings used herein are for convenience of
                --------
reference only, are not part of this First Amendment, and are not to be taken
into consideration in interpreting this First Amendment.

          12.4  Counterparts.  This First Amendment may be executed in identical
                ------------
counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this First Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this First
Amendment.  Any party delivering this First Amendment by facsimile shall send
the original manually executed counterpart of this First Amendment to the other
party promptly after such facsimile transmission.

          12.5  GOVERNING LAW.  THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
                -------------
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.

          12.6  No Waiver.  Except as specifically set forth in this First
                ---------
Amendment, the execution, delivery and effectiveness of this First Amendment
shall not (a) limit, impair, constitute a waiver of or otherwise affect any
right, power or remedy by Lender under the Credit Agreement or any other Loan
Document, (b) constitute a waiver of any provision in the Credit Agreement or
any other Loan Document, or (c) alter, modify, amend or in any way affect any of
the terms, conditions, obligations, covenants or agreements contained in the
Credit Agreement or any other Loan Document, all of which are ratified and
affirmed in all respects and shall continue in full force and effect.

          12.7  Conflict of Terms.  In the event of any inconsistency between
                -----------------
the provisions of this First Amendment and any provision of the Credit
Agreement, the terms and provisions of this First Amendment shall govern and
control.

                                       5
<PAGE>

          IN WITNESS WHEREOF, this First Amendment has been duly executed as of
the date first written above.

                                             "Credit Parties"

                                        PEET'S COFFEE & TEA, INC.

                                        By:  /s/ Mark N. Rudolph
                                             -------------------------
                                             Mr. Mark N. Rudolph
                                             Chief Financial Officer

                                        PEET'S OPERATING COMPANY, INC.

                                        By:  /s/ Mark N. Rudolph
                                             -------------------------
                                             Mr. Mark N. Rudolph
                                             Chief Financial Officer

                                        PEET'S TRADEMARK COMPANY

                                        By:  /s/ Mark N. Rudolph
                                             -------------------------
                                             Mr. Mark N. Rudolph
                                             Chief Financial Officer

                                             "Lender"

                                        GENERAL ELECTRIC CAPITAL
                                        CORPORATION

                                        By:  /s/ Todd A. Gronsky
                                           ---------------------------
                                        Name     Todd A. Gronsky
                                             -------------------------
                                             Duly Authorized Signatory

                                       6
<PAGE>

                         Schedule A to First Amendment

                          Offering Related Documents

Form of Amended and Restated Articles of Incorporation of Holdings
Form of Articles of Amendment of Holdings (effecting a two-for-one stock split)
Form of Amended and Restated Bylaws of Holdings
Form of Underwriting Agreement among Holdings, WR Hambrecht+Co, and Pacific
Growth Equities, Inc.
2000 Equity Incentive Plan and form of Stock Option Agreement
2000 Non-Employee Director Plan and form of Stock Option Agreement
2000 Employee Stock Purchase Plan and form of Offering
Articles of Amendment of Holdings dated October 31, 2000<PAGE>
                                                                   EXHIBIT 10.11

                                 CONFIDENTIAL

                                      OEM
                               PURCHASE AND SALE
                                   AGREEMENT

                                By and Between

                            NORTEL NETWORKS LIMITED

                                       &
                       CHORUM TECHNOLOGIES INCORPORATED

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

<PAGE>

                          TABLE OF CONTENTS
                          -----------------

                                                              Page
                                                              ----

 1.  DEFINITIONS............................................     1
 2.  SCOPE..................................................     2
 3.  EXHIBITS...............................................     3
 4.  NORTEL'S PRODUCT QUALIFICATION AND ACCEPTANCE PROGRAM..     3
 5.  PRODUCT AND PROCESS CHANGES............................     4
 6.  QUALITY CONTROL AND RELIABILITY REQUIREMENTS,
     SUPPLY MANAGEMENT AND NORTEL'S AUDITING RIGHTS.........     6
 7.  ORDERING...............................................     7
 8.  DELIVERY...............................................     8
 9.  PRICES AND PAYMENTS....................................     9
10.  TITLE AND RISK OF LOSS.................................    10
11.  ACCEPTANCE OR REJECTION................................    10
12.  WARRANTY...............................................    10
13.  REPAIR PROCEDURES......................................    12
14.  REPAIR SERVICES........................................    13
15.  CONTINUING AVAILABILITY OF TECHNICAL ASSISTANCE,
     REPAIR SERVICES, MAINTENANCE, REPLACEMENT
     AND REPAIR PARTS.......................................    15
16.  TECHNICAL ASSISTANCE AND MARKETING SUPPORT.............    15
17.  DOCUMENTATION..........................................    16
18.  CONFIDENTIAL INFORMATION...............................    16
19.  INTELLECTUAL PROPERTY RIGHT INFRINGEMENT...............    17
20.  HAZARDOUS MATERIALS....................................    18
21.  INDEMNITY..............................................    18
22.  COMPLIANCE WITH LAWS...................................    19
23.  CONSEQUENTIAL DAMAGES..................................    19
24.  INSURANCE..............................................    19
25.  FORCE MAJEURE..........................................    19
26.  TERM...................................................    20
27.  TERMINATION AND CONTINUING RIGHTS......................    20
28.  NOTICES................................................    21
29.  CONTINGENT LICENSE.....................................    21
30.  GOVERNING LAW..........................................    21
31.  GENERAL................................................    21

<PAGE>

                                    EXHIBITS
                                    --------

Exhibit A -   Product Lists, Part I and Part II, Prices, Discounts, Availability
              Dates and FCA Delivery Locations

Exhibit B -   Specifications and Acceptance Program

Exhibit C -   Demand-Pull Program

Exhibit D -   Repair Services Rates, FCA Repair Locations and Technical
              Assistance Rates

Exhibit E -   Procedures for Orders utilizing EDI and TDI

Exhibit F -   Monthly Reports

Exhibit G -   Change Notification

Exhibit H -   Interim Dates

Exhibit I -   RUS Debarment Certificate

Exhibit J -   North American Free Trade Agreement - Procedures

Exhibit K -   Notices
<PAGE>

                        OEM PURCHASE AND SALE AGREEMENT

This OEM Purchase and Sale Agreement ("Agreement") entered into by and between
Nortel Networks Limited, a Canada corporation with offices located at 2800 Dixie
Road, Brampton, Ontario ("Nortel") and Chorum Technologies Incorporated, a
Delaware corporation with offices located at 1303 E. Arapaho Road, Richardson,
TX, 75081 (hereinafter referred to as  "Seller").

WITNESSETH that the Parties hereto hereby agree as follows:

1.   DEFINITIONS
     -----------

1.1  As used herein:

a)  "ARO" means after Seller's receipt of a Purchase Order or Release.

b)  "Blanket Purchase Order" means a Purchase Order which does not set forth a
    Delivery Date.

c)  "Business Day" means any day other than a Saturday, Sunday, a non-working
    day or statutory holiday observed in the jurisdiction where a right is to
    be exercised or an obligation to be executed hereunder.

d)  "Delivery Date" means the date specified in a Purchase Order or a Release
    when the Products are to be delivered to the FCA Delivery Location except
    in the event Nortel elects to take delivery of such Products at Seller's
    loading dock, in which case the Delivery Date shall be the date Nortel
    takes delivery of such Products at Seller's loading dock.

e)  "Demand-Pull Program" means Nortel's ordering process which may be
    established by mutual agreement of the Parties pursuant to Section 7
    (Ordering) and Exhibit C.

f)  "Documentation" means the documentation as described in Section 17.

g)  "EDI" means the electronic data interchange procedures established in
    Exhibit E.

h)  "Effective Date" means January 1, 2000.

i)  "Exhibit" means any Exhibit listed in Section 3 hereof.

j)  "FCA Delivery Locations" means FCA delivery  at Seller's facility,
    Richardson, Texas.

k)  "FCA Repair Locations" means Seller's FCA repair location at Seller's
    facility, Richardson, Texas.

<PAGE>

l)  "Free Carrier" and "FCA" have the meaning set forth in the International
    Chamber of Commerce document, "INCOTERMS 1990".

m)  "Hardware" means the hardware components of the Products and any set of
    programs in machine-executable code whether residing in fixed coded
    instructions resident in read-only memory or equivalent devices forming
    part of hardware and sometimes known as firmware or whether residing in any
    other form of memory device such as `flash memory'. "product"
    (uncapitalized "p") is not included within this definition of "Hardware."

n)  "Party" means Nortel or Seller and "Parties" means Nortel and Seller.

o)  "Prices" means the prices applicable to the Products and Repair Services
    determined in accordance with Section 9 (Prices and Payments) hereof,
    Exhibit A, Part I and Part II and Exhibit D.

p)  "Process" means a set of inter-related resources and activities which
    transform inputs into outputs; resources may include personnel, finance,
    facilities, equipment, techniques and methods.

q)  "Product" means any one of the fiber optic component products comprising
    Hardware components, as modified by Seller for Nortel and listed in the
    Product List attached hereto as Exhibit A, Part I, as such Exhibit A, Part
    I may be modified, from time to time, in accordance herewith or by
    agreement of the Parties and "Products" means some or all Products.

    Whenever the term "product" is used in this Agreement with respect to any
    Seller product, such term designates any such product listed in Exhibit A,
    Part II which has not yet been accepted by Nortel in accordance with
    Section 4 (Nortel's Product Qualification and Acceptance Process) and
    "products" means some or all products.  "Product" is not included within
    this definition of "product."

r)  "Purchase Order" means any purchase order issued (by any means of
    transmission) or output of an electronic "paperless" process, initiated by
    Nortel, in respect of the Products and accepted by Seller pursuant to
    Section 7 (Ordering).

s)  "Release" means a verbal release confirmed in writing within two (2)
    Business Days, the document issued (by any means of transmission) or output
    of an electronic "paperless" process, initiated by Nortel, pursuant to a
    Blanket Purchase Order by which the Delivery Date for such Blanket Purchase
    Order or portion(s) thereof is requested.

t)  "Repair Date" means the date on which the repair of a Product is completed
    as stamped on the Products in accordance with Section 13.4.

u)  "Repair Services" means in the case of Hardware, the upgrade, the repair or
    replacement of defective Hardware as set forth in Section 14 (Repair
    Services) to be performed during and after the applicable Product Warranty
    Period.

<PAGE>

v)  "Specifications" means the technical specifications and the other
    requirements listed, described or referred to in Exhibit B, Part I,
    including acceptance test specifications, which are required to be met by
    the Products and the Documentation.

w)  "Subsidiary" means a corporation in which Nortel Networks Corporation, the
    parent company of Nortel, effectively owns or controls, and continues to
    own or control, directly or indirectly, more than fifty percent (50%) of
    the voting stock or shares.

x)  "Term" has the meaning ascribed to such term in Section 26 (Term) of this
    Agreement.

y)  "$" or "Dollars" means lawful money of the United States of America except
    as otherwise expressly set forth herein.

1.2 Any reference in this Agreement to another agreement shall mean such other
    agreement as executed by the Parties thereto and all amendments thereto,
    unless otherwise explicitly stated.

2.  SCOPE
    -----

2.1 From time to time Nortel may request Seller to sell the Products to Nortel
    and Seller agrees to sell such Products to Nortel.  The sale of Products by
    Seller and the purchase of Products by Nortel shall be in accordance with
    the terms of this Agreement and Exhibits thereto.

2.2 Nortel shall have the right to request Seller to customize any Product or
    product. Upon Nortel's written request, Seller will evaluate the request
    and provide to Nortel a proposal regarding the customization of any such
    Product or product.  The proposal will include, but not be limited to, the
    revised specification for the customized Product or product, the estimated
    cost of such customization, the price for the customized Product or
    product; and, an estimated completion date of Seller's efforts.  If Nortel
    agrees to such proposal, Seller will so customize any such Product or
    product.  Customization requirements, if any, shall be incorporated in the
    Specifications and the sale and purchase of any customized Product or
    product shall be in accordance with the terms and conditions of this
    Agreement and Exhibits thereto. At the time any customized Product or
    product is incorporated in this Agreement, Exhibit A, Part II and Exhibit B
    shall be amended to add thereto the prices and the availability date and
    the acceptance program applicable to such customized Product or product.
    In the event that the Parties are unable to agree on the customization of a
    Product or product, subject to the other provisions of this Agreement,
    Seller will continue to provide the Product or product without the
    requested customization.

    At an agreed upon charge, if requested by Nortel and agreed upon by Seller,
    the Products will incorporate Nortel's branding requirements, as provided
    by Nortel and in accordance with the Specifications to include, as mutually
    agreed on a case by case basis and without limitation, Nortel's name,
    trademark and logotype, Nortel's color, Nortel's part number as per
    Specifications, Nortel's bar-codes and/or CLEI codes, Nortel's technical
    handbook (standard gray color binder) with each Product, packing material
    with Nortel's logotype and Nortel's box bar coding, applicable to each
    shipment.  In no event, however, shall Nortel remove any of Seller's
    markings, notices or
<PAGE>

     legends contained on or in the Product, product or Documentation and in all
     events Nortel shall reproduce and include any Seller markings, notices or
     legends contained on or in the Product, product or Documentation.

2.3  For those Products expressly stated in Exhibit A, Part I, as being subject
     to this Section 2.3, Seller hereby grants to Nortel the exclusive worldwide
     right to distribute and sell Products, directly or indirectly for the Term
     of the Agreement.

2.4  Nortel and Seller may from time to time, by mutual agreement, modify the
     Product Lists contained in Exhibit A, to add thereto other products offered
     for sale by Seller, and/or to incorporate therein enhancements or new
     features introduced in Products by Seller. Seller shall advise Nortel
     during scheduled Product marketing reviews and offer and make available to
     Nortel for incorporation in this Agreement, any new product or Product
     enhancement or new feature that Seller makes generally available.  Such
     notification shall be made by Seller to Nortel within fifteen (15) Business
     Days of the Seller's internal design authorization allowing any such new
     product, enhancement or feature.  Unless otherwise expressly stated in
     Exhibit A, Part I, any such new product or any Product enhancement or new
     feature will not be subject to the exclusivity granted to Nortel in Section
     2.3 above.  At the time any new product or Product enhancement or new
     feature is incorporated in this Agreement, Exhibit A, Part II and Exhibit B
     shall be amended to add thereto the prices and the availability date and
     the acceptance program applicable to such new product or Product
     enhancement or new feature.

2.5  Reserved.

2.6  Seller accepts and acknowledges that Nortel may request it to sell Products
     to Nortel Companies.  Upon the agreement of Seller and the agreement of the
     Nortel Company to the obligations and duties imposed by this Agreement,
     Seller will grant the Nortel Company the right to place Purchase Orders
     together with the obligations and rights which accrue in respect of the
     Products or in respect of the ordering or delivery of such Products in
     accordance with this Agreement.  For the purposes of giving effect to the
     above, where a Nortel Company purchases Products pursuant to this
     Agreement, where the context so admits, references to Nortel shall be
     deemed to be to the relevant Nortel Company which is ordering and/or
     purchasing Products in accordance with the terms of this Agreement.
     Notwithstanding the foregoing, in no event shall Seller be required to
     accept any Purchase Order issued by Nortel Companies in excess of factory
     capacity or the Forecast provided by Nortel; neither shall Seller be liable
     to Nortel for the failure to (a) accept any Purchase Order placed by Nortel
     Companies; or, (b) agree to extend this Agreement to any Nortel Companies.
     In no event shall Seller be required to deal with any Nortel Companies.
     For the purpose of this Agreement, "Nortel Company" shall mean individually
     or collectively: (i) a Manufacturing Licensee (i.e. a third party which
     enters into an agreement with a Nortel Company to (1) manufacture in
     modified or unmodified form, a Nortel product incorporating the Product,
     and (2) lease, sell, sublicense or otherwise distribute (directly or
     indirectly) through distributors such Nortel product under Nortel's or the
     Manufacturing Licensee's own brand name) and agreed upon by Seller (such
     agreement not to be unreasonably withheld); and/or (ii) any other legal
     entity (including, but not limited to a joint venture, which is a
     cooperative enterprise formed between a
<PAGE>

     Nortel Company and one or more other autonomous entities to address more
     effectively certain mutual business interests and opportunities) which
     qualifies as a Subsidiary.

3.   EXHIBITS
     --------

3.1  The following Exhibits, attached hereto, are an integral part of this
     Agreement and are incorporated herein by reference:

     Exhibit A -  Product Lists, Part I and Part II, Prices, Discounts,
                  Availability Dates and FCA Delivery Locations
     Exhibit B -  Specifications and Acceptance Program
     Exhibit C -  Demand-Pull Program
     Exhibit D -  Repair Services Rates, FCA Repair Locations and Technical
                  Assistance Rates
     Exhibit E -  Procedures for Orders utilizing EDI and TDI
     Exhibit F -  Monthly Reports
     Exhibit G -  Change Notification
     Exhibit H -  Interim Dates
     Exhibit I -  RUS Debarment Certificate
     Exhibit J -  North America Free Trade Agreements - Procedures
     Exhibit K -  Notices

3.2  Any amendment to any Exhibit shall be in the form of a revised Exhibit duly
     dated and signed by authorized representatives of the Parties.

4.   NORTEL'S PRODUCT QUALIFICATION AND ACCEPTANCE PROGRAM
     -----------------------------------------------------

4.1  Seller undertakes to supply Products which comply with the Specifications.
     Except as otherwise set forth herein, prior to being purchased by Nortel,
     the products listed in Exhibit A, Part II will undergo a program of
     evaluation, qualification and acceptance by Nortel ("Acceptance Program")
     to verify their compliance with the Specifications. Products listed in
     Exhibit A, Part I have been accepted by Nortel in accordance with this
     Section 4. The Acceptance Program will be conducted in accordance with
     Exhibit B, Part II.

4.2  It is acknowledged by Seller that circumstances may arise where Nortel will
     desire to purchase one or more products as are listed in Exhibit A, Part
     II, prior to acceptance thereof in accordance with this Section 4. Such
     circumstances will be examined in good faith by the Parties on a case-by-
     case basis. In the event Seller accepts to sell any one of the products,
     Nortel will issue Purchase Order(s) covering same.

4.3  Acceptance by Nortel of the products will take place upon successful
     completion of Nortel's Acceptance Program.  Nortel will notify Seller in
     writing of its acceptance of the products within three (3) Business Days
     from successful completion of its Acceptance Program.

4.4  In the event that in the course of the carrying out of the Acceptance
     Program, Nortel determines that the products fail to comply with the
     Specifications, Nortel will promptly notify Seller in
<PAGE>

     writing of such failure, with reasonable detail, and upon receipt of such
     notice, Seller will, at its expense, take prompt and effective action to
     correct the notified deficiencies by the applicable Acceptance Date, as
     such term is hereafter defined.  Product acceptance dates shall be agreed
     upon by the Parties on a case-by-case basis, any such date to be, in any
     event, no later than eight (8) weeks after the date specified in Exhibit A,
     Part II for each product (herein referred to as "Acceptance Date"), or
     extensions thereof, if any, granted in writing by Nortel.  In such case,
     acceptance of the products will take place upon verification by Nortel
     that the notified deficiencies have been corrected, and accepted products
     shall become Products hereunder and be deemed to be included in Exhibit A,
     Part I.

4.5  In the event that acceptance of the products does not take place on or
     before the Acceptance Date or extensions thereof, if any, granted in
     writing by Nortel, or in the event Nortel, acting reasonably, does not
     expect that acceptance will take place on the Acceptance Date or extensions
     thereof, if any, granted in writing by Nortel, Nortel may, in addition to
     any other remedies hereunder, at law or in equity, recover all costs and
     charges it has incurred as a result of the products not being accepted by
     the Acceptance Date, including, without limitation as to the nature of such
     costs and expenses, laboratory testing cancellation charges. In addition
     Nortel may, upon notice to Seller to that effect, request that a design
     review be held between Seller's and Nortel's engineers in order to
     determine how far away the products actually are from acceptance.

4.6  In the event Seller has accepted Nortel's Purchase Order(s) for products
     pursuant to Section 4.2 hereof, Nortel may, in addition to its rights under
     Section 4.5 hereof, request that Seller provide, and in such event, Seller
     will provide as a temporary solution, functionally equivalent equipment
     acceptable to Nortel's customer(s). Once the products have passed
     acceptance, Seller shall, at its own cost, replace the functionally
     equivalent equipment with the Products, and shall invoice Nortel for the
     price of Products only, once the Products have been delivered to Nortel's
     customer(s). Nortel shall not be responsible for the cost of the equipment
     sent as an alternate and temporary solution.

4.7  Seller has identified and will continue to identify to Nortel any sole
     source/critical components incorporated into the Products. For purposes of
     this Agreement, "critical components" means those parts of the Products for
     which there is no other readily identifiable source.

4.8  Acceptance of the Products by Nortel under this Section 4 shall not relieve
     Seller from its obligations to manufacture, deliver, repair and support the
     Products in accordance with this Agreement.

5.   PRODUCT AND PROCESS CHANGES
     ---------------------------

5.1  Seller shall notify Nortel in writing of all proposed modifications and
     changes that affect form, fit, function, performance or Price (herein
     "Change(s)") to the Products and/or Processes. Such notification shall be
     made by Seller to Nortel within seven (7) calendar days* of Seller's
     internal design authorization allowing any such Change except in the cases
     contemplated in Section 5.6, in which case Seller shall promptly so notify
     Nortel and initiate immediate action to correct the situation. The Changes
     which require that a notice be forwarded to Nortel shall be any proposed
<PAGE>

     Change to the Products in accordance with the classifications described in
     GR-209-CORE incorporated by reference  ( "GR-209") unless otherwise
     expressly set forth in this Section 5.  All Changes proposed outside the
     spectrum of GR-209 shall be classified as "O".   The interpretation of
     GR-209 shall be decided on a per product basis in agreement between Seller
     and Nortel prior to acceptance of a given PO or addition of a product to
     Product List in Exhibit A. Seller's Change notifications (herein "Change
     Notifications") shall be in the form and content of Exhibit G.

*  See Exhibit H

5.2  Seller's written Change Notifications shall be numbered in a single
     sequential numbering scheme and shall include the information specified in
     GR-209.   In addition, a detailed description of the Change, the
     consequences if the Change is not implemented and the planned
     implementation date of the Change shall be included in the Change
     Notification.

5.3  Nortel reserves the right to request reasonable test data associated with
     any Product Changes.  Furthermore, in the event Nortel determines it is
     necessary to verify the Change prior to acceptance, Seller shall supply, on
     loan and without charge, a mutually agreed upon quantity of Products for
     such verification, or offer some other alternative arrangement,
     satisfactory to Nortel, for such verification.

5.4  If Nortel disagrees with any classification issued by Seller, Seller shall
     present evidence in writing, within a period of five (5) calendar days*
     from Nortel's request therefore, that such a classification is justified.
     If Nortel still disagrees with the justification, within thirty (30)
     calendar days* from its receipt of Seller's written justification of the
     classification, Nortel shall present evidence in writing that Nortel's
     disagreement is justified and made in good faith and based on Nortel's
     product implementation requirements.  Thereafter, the Parties shall
     negotiate in good faith until a final resolution is mutually agreed upon by
     the Parties within thirty (30) calendar days* from the date of Seller's
     Change Notification. In the event that thirty (30) calendar days* after the
     date of Seller's Change Notification, the Parties still disagree on the
     Change classification, Nortel's reasonable and substantiated determination
     shall prevail and be final.

5.5  Seller shall not implement a Change such as those contemplated above
     without the prior written consent of Nortel, provided such consent is not
     unreasonably withheld.  Should Nortel fail to respond within a period of
     forty (40) calendar days* from the date it has received a notice forwarded
     by Seller under this Section 5, then Seller shall have the right to
     implement such Change and Nortel forfeits all rights to object to such
     Change.

5.6  In addition to Seller's warranty obligations contained in Section 12
     (Warranty) and without diminishing Seller's obligations under this Section
     5 and Sections 6 (Quality Control and Reliability Requirements, Supply
     Management and Nortel's Auditing Rights) and 14 (Repair Services) but only
     on a customer by customer basis and only for as long as Nortel is similarly
     obligated to such customer with regard to Class A or AC Changes, in the
     event that an intrinsic design or manufacturing defect of the Product(s),
     causes an inoperative, hazardous or unsatisfactory condition of a nature as
     to require the introduction in the Product(s) of a Class A or AC Change, as
     described in GR-209, Seller shall, as expeditiously as possible, at its
     expense, generate a Class A or AC Change, as applicable, to eliminate the
     defect, and supply such Change,
<PAGE>

     at no charge, for installation by Nortel at reasonable costs, at Seller's
     expense, in all defective units of the Product(s), both installed and
     stocked, in accordance with a retrofit program negotiated by Nortel with
     its customers. A retrofit program is a program that allows Nortel to
     install the Change in all of Nortel's stockrooms and customer locations
     within a period not to exceed one hundred and eighty (180) calendar days
     from the date such inoperative, hazardous or unsatisfactory condition first
     occurs. In the course of negotiations of the retrofit program with its
     customers, Nortel shall consult closely with Seller with a view to endeavor
     to achieve the twofold objective of customers' satisfaction and
     minimization of retrofit costs to Seller.

     Seller shall provide, at its expense, seed stock units to support a
     retrofit project completion within said one hundred and eighty (180)
     calendar days in quantities determined in accordance with the following
     formulae: The one hundred and eighty (180) calendar days period begins when
     all the details of the retrofit program are determined by Nortel.

     Seed Stock Units = Material Cycle Time (Weeks) x Repair and Return Rate

     Repair and Return Rate =         Number of units to be retrofitted
                               -------------------------------------------
                              Change Completion Date - Implementation Date

5.7  Nortel shall provide to Seller Nortel's Product Engineering Code, the
     release number of the Product and the CLEI code of the Product, if
     required, for each Product Change under this Section 5.  At Nortel's
     request, this information shall be placed on the Products by Seller in
     accordance with the Specifications.

5.8  From acceptance of the Products by Nortel in accordance with Section 4
     (Nortel's Product Qualification and Acceptance Process), Seller shall
     provide Nortel with a field baseline report which will include: part
     number, Current Revision Level, New Revision Level, Reason for Change,
     Parts affected by Change, Old and New Revision of PCB, if applicable.  This
     report will be updated whenever a Change is generated by Seller which
     affects form, fit, function, performance or Price of the Products.  Seller
     will use its best efforts to produce these updates within seven (7)
     Business Days* of each Change date.

5.9  Throughout the Term, Seller shall requalify the Products once every twelve
     (12) month period in accordance with Bellcore Standard TR-NWT-000418,
     Issue 2 (Draft 3) September 1992.

5.10 Change notices relating to Product Changes should be sent to Nortel's
     System Engineering department and Change notices relating to Process
     Changes should be sent to Nortel's Quality Department.  Seller's Quality
     Department shall be responsible for the obligations described in this
     Section 5.
<PAGE>

6.    QUALITY CONTROL AND RELIABILITY REQUIREMENTS, SUPPLY MANAGEMENT AND
      -------------------------------------------------------------------
      NORTEL'S AUDITING RIGHTS
      ------------------------

6.1   ISO 9001 and 9002 Certification
      -------------------------------

6.1.1 Seller will use commercially reasonable efforts to obtain ISO 9002
      certification by [*]. After such certification is received, Seller
      undertakes to maintain ISO 9002 certification in effect throughout the
      Term including in respect of Seller's quality control systems and Seller's
      failure to maintain ISO 9002 certification shall constitute a material
      breach by Seller of its obligations hereunder. Seller expects to obtain
      ISO 9001 certification by [*]. After ISO 9001 certification is received,
      Seller agrees to maintain such certification in the same manner as set
      forth above for ISO 9002 certification.

6.1.2 In the event Seller receives any notice of non-conformance to ISO from
      the ISO registrars, Seller shall immediately advise Nortel and forthwith
      provide Nortel with (i) the list and details of the non-conformance and
      (ii) the detailed plan submitted to the ISO registrars including timelines
      and goals to achieve compliance with the applicable ISO certification.

6.2   Quality Control and Reliability Requirements
      --------------------------------------------

6.2.1 The Nortel quality and reliability target metrics shall be set out in the
      Specifications, such metrics to include, without limitation, Mean Time
      Between Failure ("MTBF"), Return Rate ("RR") and Seller Product Quality
      Level ("SPQL").  In the event Nortel proposes any changes or additions to
      such quality and reliability target metrics, Seller shall not unreasonably
      refuse to agree or delay compliance with such changes.

6.2.2 Products furnished hereunder by Seller shall be tested and inspected by
      Seller prior to shipment in accordance with testing and inspection
      procedures contained in the Specifications.  Seller agrees to perform the
      quality control functions set forth in the Specifications.    Detailed
      inspection records are to be maintained by Seller and made available to
      Nortel upon request.

6.2.3 Seller shall provide Nortel with a monthly report covering the items
      shown in Exhibit F and any other items reasonably required by Nortel in a
      format acceptable to Nortel.

6.2.4 Seller shall within seven (7) calendar days* of becoming aware of such
      event, report to Nortel by Technical Bulletin any potential, suspected or
      actual (i) defect in design and/or manufacturing of the Products, (ii)
      malfunction of the Products or of products similar to the Products, (iii)
      failure of the Products to conform to the Specifications or (iv) uses of
      the Products in combination with other product(s) or services which cause
      or have the potential of causing disruption in the services provided by
      end-users using the Products.

  *   Certain information on this page has been omitted and filed separately
      with the Securities and Exchange Commission. Confidential treatment has
      been requested with respect to the omitted portions.

<PAGE>

6.3   Supply Management
      -----------------

6.3.1 Seller's procurement Process must cover all reasonable activities related
      to the purchase of components and materials used in the finished Product
      including the selection of Seller approved suppliers and the acceptance by
      Seller of the material. Seller shall ensure through its procurement
      Process that only Seller qualified components and materials from Seller
      approved suppliers are used in the manufacture of Product at Seller's
      manufacturing facilities.

6.3.2 Seller's supply management Processes, excluding any specific supplier
      information, are subject to reasonable inspection by Nortel to assess
      their effectiveness and ensure corrective and preventive actions are taken
      internally by Seller. Nortel's inspection of the Processes may be held,
      upon reasonable prior notice, within thirty (30) calendar days of evidence
      of receiving Products from Seller that do not comply with the particular
      Specification.

6.3.3 Where Nortel reasonably determines that certain components used in
      Products contain potential problem areas, it shall notify Seller in
      writing, and the Parties shall discuss the matter with a view to
      confirming a problem area exists, and then mutually agreeing to ways to
      resolve such problem areas.

6.4   Nortel's Inspection Rights
      --------------------------

6.4.1 Upon advance notice to Seller and only without unduly interfering with
      Seller's normal day-to-day operations, Nortel may inspect or test, at all
      reasonable times and at Seller's locations, any Products covered by this
      Agreement. Seller shall provide such reasonable assistance as is
      reasonably required to allow Nortel to perform a full range of quality
      assurance functions without unduly interfering with Seller's normal
      day-to-day operations. Seller shall provide such reasonable assistance at
      no additional charge; provided, however, that in the event Seller is
      required to purchase any goods or services to accommodate Nortel's
      request, Nortel shall reimburse Seller for the expenses incurred by
      Seller. Inspection of Products may be performed in whole or in part prior
      to final assembly and/or completion of manufacturing or repair Processes.

6.4.2 In addition to, and without restricting, Nortel's auditing and inspection
      rights described in this Section 6, Nortel shall have the right to visit
      Seller's manufacturing location(s) for the purpose of inspecting any of
      the Processes, upon fifteen (15) Business Days* written notice and only
      without unduly interfering with Seller's normal day to day operations.
      Nortel shall request inspection no more frequently than required by good
      commercial practices.

6.4.3 Nortel shall keep Seller informed as to any problems encountered with the
      Products and Processes and to communicate promptly to Seller any and all
      modifications or improvements to the Products and Processes suggested by
      any customer, employee or agent, as Nortel considers appropriate.

6.4.4 Any exercise of Nortel's right to inspect Products, Processes and Seller's
      manufacturing locations as set forth in this Section 6 and Section 11
      (Acceptance or Rejection) shall not constitute, or be construed as
      acceptance of the Products and Processes by Nortel or relieving Seller
      from its
<PAGE>

     obligations to furnish all Products in strict compliance with this
     Agreement, including the Specifications, and the applicable Blanket
     Purchase Order, Release or Purchase Order.

7.   ORDERING
     --------

7.1  Products will be purchased, upon mutual agreement of the Parties,
     through Blanket Purchase Orders and Releases under the Demand-Pull Program,
     in accordance with Exhibit C, or, absent such Demand-Pull Program, through
     Purchase Orders with a schedule of delivery, which may be issued by Nortel,
     from time to time, in accordance with this Agreement. Seller agrees to be
     compliant with the Demand-Pull Program no later than [*].

7.2  Notwithstanding that a Blanket Purchase Order, a Release or a Purchase
     Order issued in respect of Products does not refer to this Agreement, any
     such Blanket Purchase Order, Release or Purchase Order issued by Nortel
     during the Term shall be deemed to have been issued pursuant to this
     Agreement and shall be deemed to incorporate and be governed solely by the
     terms and conditions set forth in this Agreement unless the Parties
     expressly agree in writing to the contrary. Any printed terms and
     conditions contained in any Blanket Purchase Order, Release or Purchase
     Order or in any Seller's acknowledgment, invoice or other documentation
     shall be deemed deleted and of no force or effect. Any additional typed
     and/or written terms and conditions contained in any Purchase Order or
     Release and any Seller's acknowledgment, invoice or other documentation
     shall be for administrative purposes only, i.e. to identify the types and
     quantities of Products to be supplied, line item Prices and total Price,
     delivery schedule, and other similar ordering data, all in accordance with
     the provisions of this Agreement.

7.3  Nortel shall not be obligated to purchase any quantities of Products
     hereunder, except and only to the extent required in order to satisfy its
     obligations to purchase Products pursuant to (a) the Demand-Pull Program,
     if any, as expressly set forth in Exhibit C; or (b) Section 8.5 below.

7.4  Seller undertakes to accept any Blanket Purchase Orders and Releases or
     Purchase Orders issued hereunder by Nortel and Nortel Companies, provided
     that such Blanket Purchase Orders and Releases or Purchase Orders are
     consistent with this Agreement.  Seller shall acknowledge receipt of each
     Blanket Purchase Order, Release or Purchase Order within two (2) Business
     Days ARO.  For the avoidance of doubt, Seller may reject any Blanket
     Purchase Order, Releases or Purchase Orders which (i) is not consistent
     with the terms of this Agreement; (ii) is issued under the Demand-Pull
     Program and exceeds the quantity contained in the Forecast provided to
     Seller; or (iii) is not issued under the Demand-Pull Program and Seller, in
     its sole judgment, does not believe it can provide the quantity requested
     by the requested delivery date.

7.5  Any change to the original Purchase Order or Release initiated by Nortel
     after Seller's acknowledgment and any resulting adjustments to Prices,
     schedule and/or other requirements of the Purchase Order or Release shall
     be negotiated and mutually agreed upon and subsequently detailed in a
     written change to the Purchase Order or Release ("Change Order"),
     referencing the original Purchase Order or Release and executed by
     authorized representatives of Nortel and Seller.  In the event that the
     Charge Order affects work already performed, the adjustment of the Purchase
     Order or Release price shall include reasonable charges incurred by Seller
     related to such

 *   Certain information on this page has been omitted and filed separately
     with the Securities and Exchange Commission. Confidential treatment has
     been requested with respect to the omitted portions.

<PAGE>

     work. No such charges shall be performed until a Change Order has been
     executed by Seller and Nortel as described above.

7.6  The Blanket Purchase Orders, Releases, or Purchase Orders shall:

     a)  reference the number of Nortel's Blanket Purchase Order, Release or
         Purchase Order issued for the Products;
     b)  include a signature of an authorized employee of Nortel (to be provided
         by Nortel);
     c)  have the correct Product and options description (including item
         numbers and part numbers if shown for that item in the Product list);
     d)  have the correct Price in accordance with Exhibit A of this Agreement
         or any amendments hereto;
     e)  specify the exact quantity of Products to be delivered;
     f)  provide tax status for each FCA Delivery Location including the
         exemption certificate number if tax exempt;
     g)  have firm delivery schedules and a firm Delivery Date (where
         applicable) for each shipment;
     h)  specify the FCA Delivery Location and the Nortel location where the
         invoice shall be rendered for payment;
     i)  specify the method of shipment including the names of carrier and
         broker, if applicable; and
     j)  specify special shipping and transportation instructions, if any.

8.   DELIVERY
     --------

8.1  Products shall be delivered as follows:

     a)  Products ordered pursuant to the Demand-Pull Program shall be
         delivered by Seller FCA Delivery Location set forth in the Release
         within a delivery lead time not to exceed one (1) Business Day* from
         Nortel's Release(s).

     b)  Products not ordered pursuant to the Demand-Pull Program shall be
         delivered by Seller FCA Delivery Location set forth in the Purchase
         Order, within a delivery lead time as mutually agreed by the Parties,
         but not to exceed; (i) five (5) Business Days, if forecasted in the
         manner mutually agreed upon by the Parties, or (ii) four (4) weeks ARO,
         if not forecasted.

     No partial shipment shall be made without prior written approval from
     Nortel.

8.2  Seller shall package the Products in accordance with the packing and
     external marking practices listed in Schedule B, Part III and the
     Specifications.

8.3  Seller shall mark each Product listed in Exhibit A in accordance
     with the Specifications and as set forth in Exhibit B, Part III.
<PAGE>

8.4   In the event that Seller fails to deliver Products by the Delivery Date or
      extension thereof granted by Nortel, if any, and provided that such
      failure is not due to a Force Majeure event (Section 25 below), Nortel
      may, as its sole and exclusive remedy, cancel, without charge or
      liability, the affected Purchase Order and/or Release or applicable
      portion thereof. Seller shall promptly advise Nortel of any anticipated
      delay in meeting the Delivery Date specified in any Purchase Order or
      Release and shall cooperate with Nortel in the implementation by Seller of
      any appropriate action or workaround plans. Without limiting the
      generality of the foregoing or otherwise affecting Nortel's rights, in the
      event a Nortel customer cancels one or more orders for Products as a
      result of Seller's delay in the delivery of Products of more than five (5)
      calendar days and provided that such delay is not due to a Force Majeure
      event (Section 25 below), Nortel shall have the right to cancel, without
      charge or liability, the Purchase Order and/or Release issued to Seller in
      respect of Nortel's customer cancelled order(s).

8.5   Prior to December 31, 2000 Nortel agrees to purchase at least [*]
      units of Products from Seller as set forth in Appendix A ("2000
      Commitment").

      In addition, in the event that Seller's Product delivery, pricing and
      ability to ramp-up to Nortel's demand meet or exceed Nortel's
      expectations, then Nortel may purchase an additional mutually agreeable
      quantity of Products from Seller during the first [*] months of the
      Agreement.

8.5.1 Beginning on January 1, 2001, for each calendar year of the Term, Nortel
      agrees to issue Purchase Orders to Seller as set forth in Appendix A
      ("Annual Commitment") on the following basis:

      a)  where Seller has complied with the performance requirements set out in
          Section 8.5 to the reasonable satisfaction of Nortel during the
          preceding twelve (12) month period, a Nortel Annual Commitment shall
          remain overall at the said same level;

      b)  where Seller has reasonably exceeded the performance requirements set
          out in Section 8.5, to the reasonable satisfaction of Nortel during
          the preceding twelve (12) month period, and subject to Nortel's other
          legal obligations and commitments, Nortel shall in good faith use
          reasonable commercial efforts to increase the percentage of business
          in a Nortel Annual Commitment to match the level of the exceeded
          performance by Seller, provided that Nortel makes no firm commitment
          to effect such increase;

      c)  where Seller has failed to meet the performance requirements set out
          in Section 8.5, to the reasonable satisfaction of Nortel, during the
          preceding twelve (12) month period, then the percentage of business in
          a Nortel Annual Commitment may be decreased by an amount equal to [*]
          percent ([*]%) per calendar quarter for each Product type that had two
          (2) or more Delivery Defaults in such quarter. Subject to Section 9.4
          and 9.5, Nortel acknowledges and understands that the Prices charged
          by Seller may increase.

      In the event that Seller is unable to deliver sufficient quantities of
      Products in order to satisfy a Nortel Commitment as set forth above due to
      no fault of Nortel, the Parties agree that Nortel shall be relieved of any
      obligation to fulfil the remainder of the applicable Commitment.

  *   Certain information on this page has been omitted and filed separately
      with the Securities and Exchange Commission. Confidential treatment has
      been requested with respect to the omitted portions.

<PAGE>

8.5.2 [*].

8.5.3 Annual Commitments may decrease (and any such decrease may subsequently be
      reversed as provided for herein) in accordance with the following:

      "Delayed Delivery" shall be any instance where Seller fails to make a
      shipment that a) is in compliance with the quantity of Products in a
      Release and the delivery date of such Products in accordance with Section
      3.4 of Exhibit C, for Products supplied pursuant to the Demand-Pull
      Program, or b) as per the mutually agreed upon delivery date with respect
      to Products ordered under a Purchase Order.

      "Default Period" shall be any calendar week where Seller has made a
      Delayed Delivery.

      "Delivery Default" will be deemed to occur if there are three
      consecutive Default Periods, or five Default Periods, for the same
      particular Product within any calendar quarter.

      Upon the occurrence of a Delivery Default, Nortel may, upon written
      notice to Seller, reduce by up to [*] percent Nortel's Annual Commitment
      for the particular Product for that calendar quarter.

      Upon the occurrence of a second Delivery Default for the same particular
      Product within the same calendar quarter, Nortel may, upon written
      notice to Seller, reduce by up to an additional [*] percent Nortel's
      Annual Commitment for the particular Product for that calendar quarter.

      Upon the occurrence of a third Delivery Default for the same particular
      Product within the same calendar quarter, Nortel may, upon written
      notice to Seller, reduce by up to an additional [*] percent Nortel's
      Annual Commitment for the particular Product for that calendar quarter.

      In addition, and notwithstanding the terms of this Section 8.5, Seller
      herein recognizes Nortel's need to respond to increases in demand for
      the Products, and to the extent that Seller cannot meet such increases
      in demand, it is understood that Nortel may seek, at its sole discretion
      to have such increased demand fulfilled by another supplier.

  *   Certain information on this page has been omitted and filed separately
      with the Securities and Exchange Commission. Confidential treatment has
      been requested with respect to the omitted portions.

<PAGE>

      If, at anytime within ninety (90) days from the date of written notice to
      Seller reducing a Nortel Annual Commitment pursuant to the foregoing
      provisions, there are no Default Periods for three consecutive weeks for
      the particular Product, then such reduction to Nortel's Annual Commitment
      for that particular Product will be reversed and returned to the original
      level of Nortel's Purchase Commitment for that particular Product prior to
      such reduction; provided, however, that if Nortel actually purchases and
      receives delivery of the total quantity by which Seller is in default
      under the Delivery Default of that particular Product from an alternative
      vendor for that particular Product covered by that Delivery Default, and
      if such alternative vendor makes a permanent investment in capital
      equipment, personnel and supply chain commitments in order to supply such
      Products, then Nortel will have no obligation to make up the value of the
      business Seller has lost due to such Delivery Default.

8.5.4 The Parties agree that Seller is currently operating at maximum
      capacity.  No additional capacity can be provided by Seller until [*], at
      time Seller agrees to provide the following flex ramp-up.

      In the event Nortel provides at least ninety (90) days written notice to
      Seller, Seller shall use commercially reasonable efforts to deliver up to
      an additional [*] percent ([*]%) of the quantity Forecasted after such
      ninety (90) day period.  Additionally, in the event Nortel provides at
      least one hundred eighty (180) days written notice to Seller, Seller will
      use commercially reasonable efforts to deliver up to an additional [*]
      percent ([*]%) of the quantity Forecasted after such 180 day period.
      Notwithstanding anything to the contrary set forth in this paragraph
      above, Seller agrees to use commercially reasonable efforts, but shall
      have no obligation to increase capacity by more than [*] percent ([*]%) of
      the Forecasted quantity during any twelve (12) month period.

8.5.5 The Parties may mutually agree to hold operational reviews at mutually
      agreed upon times and places during the Term of the Agreement.

8.6   Nortel may at any time, for its convenience and without cause, reschedule
      the Delivery Date of ordered Products, provided such rescheduled Delivery
      Date shall not exceed [*] Business Days from the date the Products were
      originally scheduled to be delivered.

8.7   Nortel may at any time for its convenience and without cause, cancel, in
      whole or in part, any Purchase Order placed hereunder for Products subject
      to the payment of a cancellation fee based on the total Price of the
      cancelled Products in accordance with the following:

      (a)  finished Products = 100%
      (b)  Products in progress:
              Cancellation less than [*] weeks but at least [*] weeks before the
              Delivery Date = [*]%
              Cancellation less than [*] weeks but at least [*] weeks before the
              Delivery Date = [*]%
              Cancellation less than [*] weeks before the Delivery Date = [*]%

  *   Certain information on this page has been omitted and filed separately
      with the Securities and Exchange Commission. Confidential treatment has
      been requested with respect to the omitted portions.

<PAGE>

9.   PRICES AND PAYMENTS
     -------------------

9.1  Except as specifically provided herein, all charges incurred by Seller in
     performing its obligations hereunder shall be paid by Seller and shall not
     be subject to reimbursement by Nortel.

9.2  Prices shall be firm throughout the Term except for Price decreases due to
     Seller's cost reductions or an increased Nortel volume discount; unless
     changes to form, fit or function are implemented in any product at the
     request of Nortel.  If said changes are requested by Nortel, Seller has to
     right to renegotiate price of affected product.  Seller agrees to use
     commercially reasonable efforts to review prices each [*] and, in its sole
     discretion, to offer price reductions to Nortel as may be permitted due to
     savings which Seller has realized in the manufacturing of Product.

9.3  Prices are: (a) FCA Seller's Richardson, TX plant; (b) stated and payable
     in US currency; (c) include packing; and (d) exclude all applicable
     federal, state and local taxes and import duties or custom charges.

9.4  Seller agrees that the Prices charged to Nortel for Products and Repair
     Services supplied hereunder are and will continue to be [*] percent ([*]%)
     lower than the prices that Seller charges directly to its end-user
     customers, at a particular time, for the same Products purchased in similar
     quantities and under terms and conditions substantially similar to those
     contained in this Agreement, including, without limitation, any purchase
     commitments. For comparison purposes, Seller shall aggregate purchases of
     Products by all Nortel Companies.

9.5  Seller further agrees that the Prices charged to Nortel for Products and
     Repair Services supplied hereunder are and will continue to be [*] charged
     by Seller, at a particular time, [*] has entered into an OEM agreement (or
     similar contractual arrangement), for [*] Products purchased [*] to those
     contained in this Agreement, including without limitation, any purchase
     commitments. For comparison purposes, Seller shall aggregate purchases of
     Products by all Nortel Companies

9.6  Seller shall promptly notify and extend to Nortel any reductions made by
     Seller in its published list prices and any increases in discounts for
     Products.  Such price reductions and increased discounts shall apply to
     Blanket Purchase Orders, Releases and Purchase Orders received by Seller on
     or after the effective date of the price reduction.  Any price decreases
     will be immediately applied to any Blanket Purchase Orders, Releases or
     Purchase Orders received and acknowledged but not delivered by Seller.

9.7  In an effort to provide Nortel the opportunity to competitively and
     profitably offer Products in high volume applications, Seller may offer to
     Nortel, additional discounts upon mutually agreeable terms on Products for
     Nortel's use in high volume, competitive price proposals.

9.8  Payment shall be due to Seller from Nortel [*] calendar days following the
     receipt by Nortel of an invoice for the Products, which invoice shall be
     delivered to Nortel no earlier than the Delivery Date of the Products.

 *   Certain information on this page has been omitted and filed separately
     with the Securities and Exchange Commission. Confidential treatment has
     been requested with respect to the omitted portions.

<PAGE>

9.9  Invoices for Products delivered hereunder and for any other amounts, which
     may be payable hereunder, shall be forwarded directly to the following
     address (unless Nortel designates, in writing, another address):

     NORTEL NETWORKS INC.

     P.O. Box 90510
     Nashville, TN 37208-0510
     U.S.A.

     Attention:  Accounts Payable Dept.

10.  TITLE AND RISK OF LOSS
     ----------------------

10.1 Title to the Products (excluding Software) and risk of loss of and damage
     to the Products will pass to Nortel upon delivery to the FCA Delivery
     Location provided that under Section 12.1.1 (Warranty), 13.2 and 13.7
     (Repair Procedures), risk of loss of or damage to the replacement Products
     will pass to Nortel upon the delivery thereof at a Nortel designated
     destination.

11.  ACCEPTANCE OR REJECTION
     -----------------------

11.1 Nortel reserves the right to accept or reject, in accordance with Section
     11.2 below, Products ordered hereunder after the delivery of such Products
     to Nortel's facility or, as the case may be, to a Nortel Customer's site.
     Products shall be deemed accepted by Nortel unless Nortel notifies Seller,
     in writing, that such Products are rejected and provides the reasons for
     such rejection within thirty (30) Business Days* after Nortel's receipt
     thereof at its facilities or, when the Products are received at a Nortel
     customer's site, as the case may be, upon completion of installation and
     testing of the Products or thirty (30) Business Days* after such receipt of
     the Products at such customer site, whichever event occurs first.

11.2 If any Products are found not to be in substantial conformance with the
     Specifications, and/or fail to meet any of the acceptance criteria
     specified in the applicable Specifications, and/or in the event an
     excessive failure rate (as defined in the Specifications) is observed by
     Nortel with respect to Products contained in a lot/shipment, Nortel shall
     have the right, notwithstanding the warranty provisions contained in this
     Agreement, to reject the same.  Nortel shall promptly return to Seller the
     rejected Products and Seller will repair or replace the rejected Products
     within [*] Business Days of receipt of the rejected Products.  Return
     shipment of the rejected Products will be at Seller's risk and expense
     (including shipping charges).  Any notice of rejection issued by Nortel
     under this Section 11.2 will include a reasonable description of the
     deficiencies.

11.3 Payment or acceptance by Nortel shall not be deemed to constitute a waiver
     of the rights which Nortel may have resulting from Seller's delivery of
     faulty or defective Products.

 *   Certain information on this page has been omitted and filed separately
     with the Securities and Exchange Commission. Confidential treatment has
     been requested with respect to the omitted portions.

<PAGE>

12.    WARRANTY
       --------

12.1   Seller warrants that:

       a) Product shall, at the Delivery Date, be new and free and clear of all
          security interest or other lien and other encumbrance;

       b) for a period of [*] from the Delivery Date or, [*] from the
          manufacturing date stamped on the Products, whichever period expires
          last (such period being hereinafter referred to as the "Product
          Warranty Period"), the Products shall be free from defects in
          materials and workmanship and shall conform to and operate in
          accordance with the Specifications;

       c) with the exception of any notice which may be provided by Seller
          pursuant to Section 20 (Hazardous Materials), the Products furnished
          by Seller, and the components thereof, are not considered, under the
          laws of the U.S. or Canada, toxic or hazardous to persons or the
          environment;

       d) no license or other agreement is or will be violated by the terms and
          conditions of this Agreement;

       e) without limiting the generality of the foregoing provisions, that it
          has the authority to enter into this Agreement and has obtained all
          rights and waivers necessary to sell Products to Nortel and to grant
          the rights granted hereunder.

       f) that the Products and the exercise of the rights granted in this
          Agreement do not infringe any third-party patent, copyright,
          trademark, trade secret or other intellectual property right.

12.1.1 The warranty provisions contained in Sections 12.1(c), (d), (e) and (f)
       shall apply during and after the Product Warranty Period and shall
       survive inspection, acceptance and payment

12.2   The warranty in Section 12.1(b) above does not apply to items normally
       consumed in operation, such as lamps and fuses and to any defect which
       has been caused by Nortel or arises from mishandling, misuse, neglect or
       improper testing or repair or modification or repair by any party other
       than Seller. Any failure of the Hardware determined by Seller to not have
       resulted from a defect covered by the warranty in Section 12.1(b) above,
       will, at Nortel's option and expense, be returned to Nortel, without the
       performance of Repair Services or repaired, in accordance with Section 14
       (Repair Services) and returned to Nortel.

       Subject to the paragraph above, as Nortel's sole and exclusive remedy and
       Seller's sole and exclusive liability for breach of the warranty in
       Section 12.1(b) above, Seller shall, at its expense, during the Product
       Warranty Period, provide Repair Services in accordance with Section 14
       (Repair Services) in respect of Hardware which have failed to conform to
       the warranty listed in Sections 12.1(b) above as confirmed by Seller's
       testing and inspection of the Hardware after return of the Hardware by
       Nortel. Hardware repairs or replacements effected during the Product
       Warranty Period shall be warranted, as above provided, for the remainder
       of the Product

   *   Certain information on this page has been omitted and filed separately
       with the Securities and Exchange Commission. Confidential treatment has
       been requested with respect to the omitted portions.

<PAGE>

     Warranty Period or for [*] from the Repair Date, whichever is longer.
     Hardware repairs or replacements effected after expiry of the Product
     Warranty Period shall be warranted, as above provided, for a period of [*]
     from the Repair Date stenciled or otherwise identified in accordance with
     Section 13.4 (Repair Procedures). All transportation and other expenses
     arising from shipping the non-conforming Products to Seller shall be paid
     by Nortel, and the repaired or replacement Products from Seller to Nortel
     shall be paid by Seller.

12.3 NORTEL'S SOLE AND EXCLUSIVE REMEDY AND SELLER'S SOLE AND EXCLUSIVE
     LIABILITY FOR ANY BREACH OF THE WARRANTIES SET FORTH IN SECTIONS 12.1(B),
     (D), (E) OR (F) ABOVE OR FOR PRODUCT DEFECTS SHALL BE ITS RIGHTS AS SET
     FORTH IN THIS SECTION 12.

12.4 NORTEL'S SOLE AND EXCLUSIVE REMEDIES, AND SELLER'S SOLE AND EXCLUSIVE
     LIABILITY, FOR ANY BREACH OF THE WARRANTIES CONTAINED IN SECTIONS 12.1(D)
     OR 12.1(E) OR 12.1(F) ABOVE SHALL BE (A) TERMINATION OF THIS AGREEMENT;
     AND/OR (B) THE INFRINGEMENT INDEMNITY PROVIDED IN SECTION 19 BELOW.

     EXCEPT FOR THE EXPRESS WARRANTIES STATED IN THIS SECTION 12, SELLER DOES
     NOT WARRANT THE MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE
     PRODUCTS OR THE PERFORMANCE OR NONINFRINGEMENT THEREOF, DOES NOT MAKE ANY
     WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO PRODUCTS, SPECIFICATIONS,
     SUPPORT, SERVICE OR ANYTHING ELSE AND DOES NOT MAKE ANY WARRANTY TO
     NORTEL'S CUSTOMERS OR AGENTS. SELLER HAS NOT AUTHORIZED ANYONE TO MAKE ANY
     REPRESENTATION OR WARRANTY OTHER THAN AS PROVIDED ABOVE.

     EXCEPT IN RELATION TO DAMAGES, LIABILITIES, COSTS AND EXPENSES INCLUDED IN
     A JUDGMENT OR CLAIM COVERED BY THE INDEMNITY IN SECTION 19, UNDER NO
     CIRCUMSTANCES SHALL SELLER BE LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL,
     CONSEQUENTIAL, EXEMPLARY, PUNITIVE OR OTHER DAMAGES WHATSOEVER (INCLUDING
     DAMAGES FOR LOSS OF PROFITS, GOOD WILL, USE, DATA, OR OTHER INTANGIBLES)
     ARISING OUT OF OR RELATING TO ANY BREACH OF THE FOREGOING WARRANTIES EVEN
     IF SELLER HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

     THE FOREGOING LIMITATIONS SHALL BE APPLICABLE EVEN IF SUCH LIMITATIONS FAIL
     OF THEIR ESSENTIAL PURPOSE.

12.5 Any failure by Seller to execute its warranty obligations as contained in
     this Section 12 and Section 14 (Repair Services) shall constitute a
     material breach of Seller's obligations hereunder.

13.  REPAIR PROCEDURES
     -----------------

  *  Certain information on this page has been omitted and filed separately
     with the Securities and Exchange Commission. Confidential treatment has
     been requested with respect to the omitted portions.

<PAGE>

13.1  This Section 13 shall be applicable to the providing of Repair Services
      described in Section 14 by Seller during and after the Product Warranty
      Period.

13.2  a)  Prior to returning any defective Products to the FCA Repair Location,
          Nortel will notify Seller orally of the defect, if known at that time,
          and will request authorization from Seller for the return of such
          Products.  Upon such request, Seller shall provide Nortel with a
          Return Material Authorization ("RMA") number to be prominently
          displayed on the shipping container for the defective Products and
          advise Nortel of the FCA Repair Location to which the Products should
          be returned.

      b)  In all cases covered in Section 14 (Repair Services), Nortel shall
          then ship such Products to Seller, freight prepaid and properly
          insured. Nortel shall prepare proper export documentation evidencing
          Nortel's ownership of the Products and shall comply with the
          requirements set forth in Exhibit J (NAFTA).

13.3  Nortel shall furnish the following information with Products returned to
      for Repair Services:

      i)   Nortel's or the Nortel Company's name and complete address;
      ii)  quantities and model and serial numbers of Products being delivered
           for repair;
      iii) the nature of the defect or failure, if known;
      iv)  Purchase Order number under which repairs are to be made, if Product
           is no longer under warranty;
      v)   name(s) and telephone number(s) of Nortel's employee(s) or other
           designated persons to contact in case of questions about the
           Products;
      vi)  ship-to address or Nortel's location to which repaired or replacement
           Products should be returned;
      vii) whether or not returned Products are under warranty.

13.4  Seller shall date stamp each repaired and returned Product with the Repair
      Date and type of repair "pre fix" as per Bellcore GR-209 specifications
      incorporated herein by reference and Specifications described in Exhibit
      B. Hardware repaired by Seller shall be stamped in accordance with
      requirements outlined in Bellcore TR-NWT-000078 incorporated herein by
      reference.. Without limiting the foregoing, the stamping shall include the
      Repair Date stenciled or otherwise identified in a permanent manner at a
      readily visible location on the Hardware, unless otherwise directed by
      Nortel.

13.5  Seller shall promptly provide a written notice to Nortel with the name(s)
      and telephone number(s) of the individual(s) to be contacted by designated
      Nortel personnel concerning any questions that may arise with respect to
      the Repair Services, and if required, specify any special packing of
      Products which might be necessary to provide adequate in-transit
      protection from transportation damage.

13.6  Once Products have been repaired or replaced by Seller, Seller shall
      reissue to Nortel an invoice for such repaired or replacement Products and
      the charges applicable to the providing of Repair Services, if any, as set
      forth in Exhibit D. Seller's invoice shall contain the following:

<PAGE>

     i)    Nortel's Purchase Order number for these Repair Services;
     ii)   a detailed description of the Repair Services provided by Seller and
           the need therefore;
     iii)  quantities and model numbers of Products repaired and associated
           repair charges;
     iv)   applicable sales or excise taxes;
     v)    total amount payable;
     vi)   address to which payment should be made.

13.7 The repaired or replacement Products shall be delivered by Seller to the
     destination specified by Nortel, freight prepaid and properly insured.
     Seller shall prepare proper export documentation as per Nortel's
     instructions, evidencing Nortel's ownership of the Products and shall
     comply with the requirements set forth in Exhibit J (NAFTA).

13.8 Seller shall promptly notify Nortel of returned Products which are found by
     Seller to be beyond repair. Products shall only be considered beyond repair
     after agreement of the Parties to that effect. All Products which are found
     to be beyond repair and not replaced shall be returned to Nortel at
     Nortel's discretion.

13.9 Nothing in this Agreement shall be construed as giving Seller an exclusive
     privilege to repair any Products covered under this Agreement; provided,
     however, that any repairs or modifications to the Hardware, or any attempt
     to do either by any third party not authorized by Seller, shall invalidate
     the warranties granted by Seller in Section 12 (Warranty) above.

14.  REPAIR SERVICES
     ---------------

14.1 Repair Services shall be available to Nortel in accordance with the
     provisions contained in this Section 14 and in Section 13 (Repair
     Procedures).

14.2 This Section 14 shall be applicable to the providing of Repair Services by
     Seller during and after the Product Warranty Period.

14.3 To order Repair Services after expiry of the applicable Product Warranty
     Period, Nortel shall issue a Purchase Order and such Purchase Order shall
     contain the description of the requested Repair Services.

14.4 Repair Services for defects resulting from the breach of the warranty
     contained in Section 12 (Warranty) above shall be provided by Seller at no
     charge to Nortel during the Product Warranty Period.  After expiry of the
     Product Warranty Period, Repair Services shall be at prices set forth in
     Exhibit D (Repair Services and Technical Assistance Rates) unless otherwise
     set forth in this Section 14 or unless covered by Section 5 (Product and
     Process Changes).

14.5 Same-for-Same Repair Services
     -----------------------------

     The following procedures will apply:
<PAGE>

        a)  Products returned to Seller for Repair Services shall be shipped by
            Nortel freight and insurance prepaid.

        b)  Seller shall track any defective Product by its unique serial number
            throughout the repair process.

        c)  Seller shall return, after having repaired and updated the Products
            to the minimum field baseline, the exact same Products having the
            same serial number. If the serial number has to change for any
            reason, Seller shall, on the `repair tag' originally provided by
            Nortel, document the following information: old serial number, new
            serial number and reason(s) for change.

        d)  Seller shall return any repaired Products with the `repair tag' or
            other mutually agreed to repair tag that was originally provided by
            Nortel with the defective Products. Seller shall provide all post-
            repair information as required on the 'repair tag'.

        e)  Seller shall complete the Same-for-Same process within [*] calendar
            days* of having received the defective Product.

14.6    Fast Cycle Failure Analysis
        ---------------------------

14.6.1  Seller shall perform a Fast Cycle Failure Analysis ("FCFA") at no cost
        to Nortel on Products which have caused any service interruption in the
        field or as may otherwise be reasonably requested by Nortel. Nortel will
        request a separate RMA number for each Product returned for an FCFA. An
        FCFA shall be performed by Seller in accordance with the following
        additional requirements:

        a)  FCFA shall include a detailed root cause analysis, using engineering
            tools such as Environment Stress Screening ("ESS") and any other
            tools which may be required to determine the cause of the failure.

        b)  Seller shall track any defective Product by its unique serial number
            throughout the repair process.

        c)  Seller shall return, after having repaired and updated the Products
            to the minimum field baseline, the exact same Products having the
            same serial number. If the serial number has to change for any
            reason, Seller shall, on the `repair tag' originally provided by
            Nortel, document the following information: old serial number, new
            serial number and reason(s) for change. This information will also
            be documented in the FCFA report. The Products shall not be
            "upgraded" to other than the actual unit release vintage until root
            cause analysis is completed and the Products successfully pass the
            complete test cycle. The Products shall not be repaired without
            completion of the FCFA activity.

        d)  Seller shall return the repaired Products with a written report
            documenting all findings as a result of the FCFA.

        e)  Seller shall complete the FCFA process within [*] calendar days* of
            having received the defective Products at its Richardson, Texas
            plant. Nortel shall provide all available technical information to
            allow Seller to understand the circumstances and environmental
            conditions that led to the failure of the Products.

        f)  Seller shall inform Nortel of the return Product shipping
            information as soon as it is available. The shipping information
            will include, date shipped, carrier, waybill number and any other
            information that will help Nortel expedite the return of the
            Products.

        *   Certain information on this page has been omitted and filed
            separately with the Securities and Exchange Commission. Confidential
            treatment has been requested with respect to the omitted portions.

<PAGE>

        g)  In the event that the results of the FCFA indicate deficiencies with
            the Product Hardware or Software, then Seller will modify the
            Products to eliminate such deficiencies. Such modifications will be
            implemented in accordance with Section 5 (Product and Process
            Changes).

14.7    Products found defective within the first ninety (90) calendar days from
        their initial utilization at customer site, (referred to as `Dead On
        Arrival' ("DOA") or Early Life Failure ("ELF") shall be returned to
        Seller along with the RMA documentation. Returned DOA/ELF Products shall
        be tested through full functional tests and ESS in order to provide a
        root cause analysis, then repaired, re-furbished, upgraded to the latest
        version or release, stamped with the Repair Date and returned to Nortel
        as new Products. Such testing and repairs will be done at no charge for
        those returned DOA/ELF Products which are within the Product Warranty
        Period; for those returned DOA/ELF Products which are not within the
        Product Warranty Period, Nortel shall pay the fee set forth in Exhibit
        D. Should the DOA/ELF occurrence represent more than [*] percent ([*]%)
        of the Products RR as defined in the Specifications, then Seller shall,
        in addition to performing root cause analysis, implement a corrective
        plan of action within thirty (30) Business Days of this occurrence being
        reported. Seller will update Nortel in writing with the findings of the
        root cause analysis as well as with the corrective plan of action.

14.8    In case of a No Fault Found ("NFF") in respect of Products returned or
        if Nortel requests re-testing of Products reasonably known to Nortel as
        being in good condition, Seller shall invoice Nortel at the Prices
        specified in Exhibit D for their full functional tests and ESS and such
        Products shall be returned to Nortel after the tests are completed,
        freight collect using Nortel's designated carrier. Test turnaround time
        shall not exceed [*] Business Days* from the date the Product is
        received at Seller facilities and a Purchase Order number has been
        received from Nortel.

14.9    Should the Product failures classified by Seller as NFF represent more
        than [*] percent ([*]%) of the Products RR as defined in the
        Specifications, then Seller shall, in addition to performing a root
        cause analysis, implement a corrective plan of action within thirty (30)
        calendar days* of this occurrence being reported. Seller will update
        Nortel in writing with the findings of the root cause analysis as well
        as with the corrective plan of action.

14.10   Emergency Replacement Products
        ------------------------------

        In emergency situations threatening continuity of service or Nortel
        end-user's in-service date, Seller shall in good faith, at Nortel's
        option, utilize reasonable commercial efforts to deliver to Nortel or
        its end-users, upon mutually agreeable terms, emergency replacement
        Products within [*] of Nortel's request, which may be conveyed to Seller
        by telephone or facsimile. All Products supplied under this Section
        shall be functionally equal or better than the vintage of the replaced
        units and must be backward compatible and meet the minimum field
        baseline. Emergency replacement Products shall be delivered via next day
        service and, for Products not within the Product Warranty Period,
        invoiced at rates then current for Products. Nortel agrees to pay such
        invoices within [*] calendar days. In addition to above [*] emergency
        replacement service, Seller shall make available to Nortel at a price
        premium specified in Exhibit D, a eight (8) hours per day,

    *   Certain information on this page has been omitted and filed separately
        with the Securities and Exchange Commission. Confidential treatment has
        been requested with respect to the omitted portions.

<PAGE>
     five (5) days per week, standard business days not including holidays, 8 am
     to 5 pm CST emergency replacement service for cases where Nortel cannot
     deliver from its emergency stock. Under this service, Seller will ship new
     units to the destination designated by Nortel, freight collect using
     Nortel's designated carrier within three (3) hours of Nortel's verbal
     request, such verbal request to be confirmed by Nortel in writing and
     transmitted by facsimile or other means of communications, prior to
     shipment of the units by Seller. In the case of shipment outside of the
     United States, Seller shall prepare proper export documentation as per
     Nortel's instructions, evidencing Nortel's ownership of the Product;
     customs clearance and duty fees (as applicable) shall be the responsibility
     of Nortel. This emergency service shall be available to Nortel through the
     following Seller's emergency telephone number 214-570-3600.

15.  CONTINUING AVAILABILITY OF TECHNICAL ASSISTANCE, REPAIR SERVICES,
     -----------------------------------------------------------------
     MAINTENANCE, REPLACEMENT AND REPAIR PARTS
     -----------------------------------------

15.1 In no event shall the Products be discontinued until after the expiry of a
     period of twelve (12) months, or such other period as may be agreed upon by
     the Parties, from Seller's written discontinuance notice to Nortel.
     Seller shall accept Releases and Purchase Orders submitted by Nortel within
     such period for any such affected Products.

15.2 Provided that this Agreement is not terminated due to the default or
     breach of Nortel, for a period of five (5) years after the discontinuance
     of a Product, Seller agrees to provide Repair Services on all Products
     ordered hereunder and to offer for sale to Nortel, functionally equivalent
     maintenance, replacement and repair parts as may be necessary for the
     continued maintenance of the Products, including discontinued Products.

15.3 Seller, upon supply discontinuance notices from its suppliers, of any sole
     source/critical components incorporated into the Products, shall notify
     Nortel immediately upon receipt of such notice.  Seller shall endeavor to
     have its suppliers provide notices one (1) year in advance of
     discontinuance.  Seller and Nortel shall determine the quantity of such
     components to be ordered as last time buy to cover for Nortel's spare parts
     requirements.  Seller and Nortel will determine the quantity of such
     components to be ordered as last time buy to cover for spare maintenance,
     replacement and repair parts requirements as described in Section 14
     (Repair Services).  Furthermore, should the unavailability of a component
     require Seller to develop a replacement product, Seller will jointly decide
     with Nortel on last time buys for such component to ensure continuity of
     supply until the replacement product is approved by Nortel and ready to be
     manufactured.  The provisions contained in this Section 15.3 shall be
     applicable for a period five (5) years after the expiry or termination of
     this Agreement.

15.4 Provided that this Agreement is not terminated due to the default or
     breach of Nortel, and provided that Nortel has paid all applicable fees,
     for a period of five (5) years after the discontinuance of a Product,
     Seller agrees to provide technical assistance in accordance with Section 16
     (Technical Assistance and Marketing Support).

16.  TECHNICAL ASSISTANCE AND MARKETING SUPPORT
     ------------------------------------------
<PAGE>

16.1 Technical assistance consists of those services described in this Section.

16.2 Product training shall be provided by Seller to Nortel as mutually agreed
     upon by the Parties.

16.3 In addition, Seller shall provide Nortel with Product training
     documentation and related information material as mutually agreed upon by
     the Parties.

16.4 All technical assistance rendered during the Product Warranty Period shall
     be provided to Nortel at no charge.  In all other cases, Seller's current
     rates applicable to technical assistance are those set forth in Exhibit D.
     Any technical assistance which Seller shall provide to Nortel or its
     customers shall be pursuant to a written request from Nortel's designated
     personnel, or such other individual that Nortel may from time to time
     designate. The availability or performance of technical assistance under
     this Section 16, shall not be construed as altering or affecting Seller's
     other obligations under this Agreement, including under Sections 6 (Quality
     Control and Reliability Requirements, Supply Management and Nortel's Audit
     Rights), 12 (Warranty) and 5 (Product and Process Changes).

16.5 Seller shall provide technical assistance as set forth in this Section 16
     in order to facilitate the providing by Nortel of technical assistance to
     its customers. In order to facilitate Nortel's support of its customers,
     Seller shall provide to designated Nortel personnel only, without charge
     for a period of five (5) years following the expiration of this Agreement,
     telephone access to qualified Seller's technical personnel eight (8) hours
     per day, five (5) days per week, standard business days not including
     holidays, 8 am to 5 pm CST.

16.6 It shall be Nortel's responsibility to provide `first line' technical
     assistance to its customers.

16.7 Seller's failure to provide technical assistance as required under this
     Section 16 shall constitute a material breach of Seller's obligations
     hereunder.

16.8 Subject to the provisions set forth in Section 17, in order to assist
     Nortel in its Product related marketing activities, Seller shall provide
     Nortel with reasonable and mutually agreed upon marketing support.

16.9 Subject to the provisions set forth in Section 17, in order to assist
     Seller in its Product related marketing activities, Nortel shall provide
     Seller with reasonable and mutually agreed upon marketing support.

17.  DOCUMENTATION
     -------------

17.1 The Product Documentation shall be developed by Seller in accordance
     with the Specifications.

17.2 Seller shall provide, at no charge to Nortel, for each Product delivered
     one (1) set of the following Product Documentation in accordance with the
     Specifications: all Product descriptions, planning
<PAGE>

     guides, operations manuals, installation manuals, and maintenance manuals
     normally provided by Seller to customers to facilitate their installation,
     use, and maintenance of the Products.

17.3 Seller shall supply to Nortel, at no additional charge, hard and electronic
     copies of Seller's Product Documentation (i.e., manuals, application notes
     and sales collateral) and any technical assistance reasonably required by
     Nortel and mutually agreed upon. Seller shall also continue to provide to
     Nortel, at no additional charge, during the Term of this Agreement any
     updates to Seller's Product Documentation, as soon as they are available.

17.4 Seller hereby grants to Nortel, at no cost, the limited and revocable
     right to use, copy, modify and translate the Product Documentation
     furnished hereunder solely for the purpose of providing such Product
     Documentation to Nortel's customers as a part and parcel of Nortel's sale
     of the Product to such customer; provided, however, that Nortel shall
     reproduce and include the copyright notice and any other notices or legends
     that appear in the Documentation in any copies or derivatives thereof.

17.5 Seller shall notify Nortel of any modifications to the Product
     Documentation in accordance with Section 5 (Product and Process Changes).

18.  CONFIDENTIAL INFORMATION
     ------------------------

18.1 It is expected that the Parties will disclose to each other certain
     business, marketing, technical, scientific or other information of any
     Party, including, without limitation, Specifications and Software which, at
     the time of disclosure, is designated as confidential (or like
     designation), is disclosed in circumstances of confidence, or would be
     understood by the Parties, exercising reasonable business judgment, to be
     confidential information ("Confidential Information") and each Party
     recognizes the value and importance of the protection of the other's
     Confidential Information.  All Confidential Information owned or controlled
     by one Party and disclosed to the other Party shall remain solely the
     property of the disclosing Party, and its confidentiality shall be
     maintained and protected by the other Party with the same degree of care
     used to protect its own proprietary and confidential information of a
     similar nature, but no less than reasonable care, to prevent the
     unauthorized use, dissemination or publication of the Confidential
     Information. Except to the extent required or expressly permitted by this
     Agreement, both Parties agree not to duplicate or use in any manner the
     other's Confidential Information or to disclose it to any of their
     employees not having a need to know for the purposes of this Agreement or
     to any third party.  The receiving Party's employees having a need to know
     the Confidential Information for the purpose of this Agreement may receive
     disclosure of the Confidential Information provided such employees are
     bound by confidentiality obligations no less stringent than those set forth
     in this Section 18.  The confidentiality provisions contained herein shall
     survive the expiration or termination of this Agreement for a period of ten
     (10) years.

18.2 Confidential Information shall not include information which:

     a)  now is, or hereafter becomes, available to the public through no act or
         omission of the receiving Party; or
<PAGE>

     b)  is documented as being known by the receiving Party prior to its
         disclosure by the other Party; or

     c)  is independently developed by the receiving Party by persons who have
         not made reference to the Confidential Information and without
         recourse to any Confidential Information received under this Agreement
         and is so documented; or

     d)  is lawfully obtained by the receiving Party from a third party or
         parties without breach of confidentiality obligations or is disclosed
         hereafter to the receiving Party by a third party who did not acquire
         the information directly or indirectly from the disclosing Party; or

     e)  is disclosed in response to a valid order of a court or other
         governmental body or any political subdivision thereof, but only to
         the extent and for the purpose of such order and only if the receiving
         Party, to the extent possible, first notifies the disclosing Party, of
         such order and permits and reasonably assists it in seeking an
         appropriate protective order.

18.3 Subject to the restrictions and obligations of this Section 18,
     Confidential Information, nothing in this Agreement shall be interpreted or
     construed to limit either Party's right to perform or to continue to
     perform its own independent research, development, manufacturing or
     marketing of any type of Products or systems even if such research,
     development, manufacturing or marketing pertains to technology or products
     similar to the Products.

18.4 Subject to the exceptions set forth in this Section 18.4 (a) - (d) below,
     prior to the publication or use by a Party hereto of any advertising, sales
     promotions, press releases or other publicity matters relating to the
     Products or this Agreement in which the name or logo of the other Party is
     mentioned or language from which the connection of said name can be
     reasonably inferred or implied, each Party shall obtain the prior written
     consent of the other Party.  Terms, conditions and general information of
     this Agreement shall be held in confidence by both Parties and only
     disclosed (a) as may be agreed to by both Parties, (b) as authorized in
     this Agreement, (c) to the receiving Party's insurers or financial or legal
     advisers under the terms of a confidentiality agreement with provisions
     substantially similar to those contained herein, or (d) as may be required
     to meet securities disclosure or export permit requirements provided,
     however, that the receiving Party shall attempt to preclude disclosure of
     the Confidential Information by means of an application for confidential
     treatment.

18.5 The Parties acknowledge and agree that a breach of this Section 18,
     Confidential Information, may result in irreparable and continuing harm to
     the disclosing Party for which there may be no adequate remedy at law.  In
     the event of a breach or a threatened or intended breach of this Section 18
     by the receiving Party, the receiving Party hereby consents to the granting
     of, and the disclosing Party shall be entitled to seek, preliminary
     injunctions unilaterally without notice, and final injunctions with notice,
     enjoining and restraining such breach, or threatened or intended breach,
     and to such other rights and remedies as are available at law or in equity
     to the disclosing Party except as expressly set forth herein.

18.6 Return Of Confidential Information: Upon request from the disclosing
     Party, the receiving Party shall (i) immediately return all Confidential
     Information and copies thereof; or (ii) immediately destroy such
     Confidential Information and all copies thereof, and certify their
     destruction to the
<PAGE>

     disclosing Party. The receiving Party's legal counsel may retain a single
     copy of Confidential Information for archival purposes only to provide a
     record of disclosure.

18.7 Proprietary Rights: The disclosing Party and its suppliers (as applicable)
     shall retain all right, title and interest in and to its Confidential
     Information. No license of any patent or copyright is granted to the
     receiving Party under this Agreement, except for the express rights granted
     in sections 19.5 and 29.

18.8 Liabilities: EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, THE DISCLOSING
     PARTY HEREBY EXCLUDES ALL REPRESENTATIONS, WARRANTIES AND CONDITIONS,
     EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATIONS, WARRANTIES OR CONDITIONS
     OF ACCURACY, SUFFICIENCY, SUITABILITY OR NON-INFRINGEMENT. EXCEPT AS
     OTHERWISE PROVIDED IN THIS AGREEMENT, THE DISCLOSING PARTY SHALL HAVE NO
     LIABILITY WHATSOEVER FOR ANY DAMAGES, LOSSES OR EXPENSES INCURRED BY THE
     RECEIVING PARTY AS A RESULT OF ITS RECEIPT OF INFORMATION PURSUANT TO THIS
     AGREEMENT, WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE. THE PARTIES
     ACKNOWLEDGE THAT THE LIMITATIONS DESCRIBED IN THIS SECTION AND THE
     ALLOCATION OF RISKS AND BENEFITS UNDER THIS AGREEMENT ARE A FUNDAMENTAL
     PART OF THIS AGREEMENT.

19.  INTELLECTUAL PROPERTY RIGHT INFRINGEMENT
     ----------------------------------------

19.1 Seller shall defend Nortel (including their directors, officers, employees
     and agents) against any and all proved and unproved claims brought by
     unrelated third parties against Nortel and shall hold Nortel and
     Subsidiaries harmless from and pay any corresponding damages, liabilities,
     costs and expenses (including reasonable attorney's fees) arising out of
     any proved or unproved claim that the use, sale and/or distribution of a
     Product delivered hereunder infringes any third-party patent, copyright,
     trademark, trade secret or other intellectual property right ("herein
     "Infringement Claim") provided that Nortel gives Seller prompt notice of,
     and authority to defend or settle, any such Infringement Claim and gives,
     at Seller's expense, reasonable information and assistance. Seller will
     notify Nortel if Seller is subject to any enquiry, allegation, claim or
     lawsuit in respect of patent, copyright, trade secret or other intellectual
     property right infringement regarding any Product delivered hereunder or
     any part thereof.

19.2 When notified of an action or motion that seeks to restrict the use, sale
     and/or distribution of any Product delivered hereunder, Seller may, (and in
     the case of a judgment, order or injunction that restricts the use, sale
     and/or distribution of any Product delivered hereunder shall), at its
     option and expense, (a) obtain the right for Nortel, Nortel Companies,
     distributors, end users and contractors, as applicable, to use, sell and/or
     distribute such Product delivered hereunder, (b) substitute other
     functionally equivalent product that does not infringe, or (c) modify such
     Product so that it no longer infringes.
<PAGE>

19.3 In the event that Seller cannot perform under Section 19.2 (a) - (c) within
     sixty (60) days after the commencement of a judgment, order or injunction
     that restricts the use, sale and /or distribution of any Product purchased
     hereunder, this Agreement shall terminate in relation to the infringing
     Product and Nortel shall have the right to return such Products or portion
     thereof to Seller upon written notice to Seller, and, in the event of
     return, neither party shall have any further liabilities or obligations
     under this Agreement, except that Seller shall refund to Nortel the full
     Price paid for such returned Products within thirty (30) business days
     following their return. Seller's indemnification obligations under this
     Section 19 shall survive with respect to those Products or portions thereof
     that have been previously distributed or sold by Nortel or Nortel Companies
     before commencement of the judgment, order or injunction.

19.4 The indemnity obligations under the foregoing provisions shall survive the
     termination or expiration of this Agreement.

19.5 The foregoing indemnification obligations shall not be applicable to the
     extent the Infringement Claim arises from:

     (a)  compliance of the Product with Nortel's designs; or
     (b)  modification by Nortel, Nortel Companies or their respective customers
          of the Product; or
     (c)  use of the Product by Nortel, Nortel Companies or their respective
          customers in combination with other products not provided by Seller
          provided the infringement arises from such combination and such
          combination was not contemplated by the Specifications or
          Documentation.  If Seller becomes aware of any infringement or
          potential infringement which results from a combination identified in
          the Specifications, Documentation, or otherwise identified to Seller
          by a third party claiming an infringement or potential infringement,
          Seller will promptly notify Nortel of such infringement or potential
          infringement. If Seller fails to promptly notify Nortel of such
          infringement or potential infringement, Seller shall be liable to
          indemnify Nortel as set forth in this Section 19 of the Agreement.

     Nothing contained in this Agreement shall be deemed to grant, either
     directly or indirectly or by implication, any license under any patents or
     patent applications of Seller, except that Nortel shall have the normal
     non-exclusive, royalty-free license to use the Products as is implied, or
     otherwise arises by operation of law, due to Nortel's purchase of the
     Products and relates to the use, sale and/or distribution of the Products.

19.6 The foregoing is Nortel's sole and exclusive remedy and Seller's sole and
     exclusive liability relating to any Infringement Claim or any other claim
     of infringement of any intellectual or other proprietary or property right.

20.  HAZARDOUS MATERIALS
     -------------------

20.1 Seller shall identify and list in a notice forwarded to Nortel all of the
     hazardous or toxic materials which may be contained in the Products prior
     to shipping the Products.  For the purposes of this Section 20.1, the
     hazardous and/or toxic materials shall be those identified or described by
     characteristics in the regulations promulgated under the applicable laws,
     rules and regulations of the United States, including, without limitation,
     the following: the Toxic Substances Control Act, Resource Conservation and
     Recovery Act of 1976, Hazardous Materials Transportation Act, Occupational
     Safety and Health Act of 1970, Comprehensive Environmental Response,

<PAGE>

       Compensation and Liability Act of 1980, Consumer Product Safety Act,
       Radiation Control for Health and Safety Act of 1968, Clean Air Act, and
       Clean Water Act.

20.2   Seller shall periodically, but no less than annually, review the
       pertinent regulations and the materials contained in the Products and
       update the lists of hazardous and/or toxic materials accordingly. Upon
       request by Nortel, Seller shall also identify such other hazardous and/or
       toxic substances as Nortel may specify.

21.    INDEMNITY
       ---------

21.1   General
       -------

21.1.1 Each Party shall indemnify and save harmless as "Indemnitees" the other
       and its employees, officers and directors from and against any and all
       fines, penalties, losses, costs, damages, injuries, claims, expenses or
       liabilities as a result of injury to, or death of, any person, or damage
       to, or loss or destruction of, any property, arising out of, or resulting
       from, or in connection with, this Agreement or the performance of this
       Agreement and caused by the negligence or willful misconduct of the
       indemnifying Party or a contractor or an agent of the indemnifying Party
       or an employee of any one of them (hereinafter individually and
       collectively "Liabilities").

21.1.2 Upon request of an Indemnitee, the other Party shall, at no cost or
       expense to such Indemnitee, defend or settle any suit or other legal
       proceeding asserting a claim for Liabilities, and the other Party shall
       pay any reasonable costs and attorneys' fees that may be incurred by such
       Indemnitee in connection with any such claim, proceeding or suit.

21.1.3 The Indemnitee shall as soon as practicable notify the other Party of the
       assertion of any such claim of which the Indemnitee is aware and the
       other Party shall (a) keep the Indemnitee subject to any such claim fully
       informed as to the progress of such defense, and (b) afford such
       Indemnitee, each at its own expense, an opportunity to participate fully
       with the other Party in the defense or settlement of any such claim, but
       the other Party shall have sole control of any such settlement or
       defense.

22.    COMPLIANCE WITH LAWS
       --------------------

22.1   Seller represents and warrants that, to the best of its knowledge, it
       complies with and shall continue to comply with and has obtained and will
       continue to maintain in effect all licenses and permits required by, and
       Products shall be in conformance with, all applicable laws and
       governmental orders and regulations in effect in the United States and
       Canada at the time of the Delivery Date applicable thereto.

23.   CONSEQUENTIAL DAMAGES
      ---------------------

23.1  Except in relation to damages, liabilities, costs and expenses included in
      a judgment or claim covered by the indemnity in section 19, neither Party
      shall be liable pursuant to this Agreement for any incidental,
      consequential, special, exemplary, punitive or any other indirect damages
      or for

<PAGE>

     any damages for loss of profits or revenues even if the party has been
     advised of the possibility of such damages.

23.2 Except for a Party's indemnity obligations under Sections 19 or 21,
     Seller's breach of warranty under Section 13.1(c), or either Party's breach
     of Section 18, Confidential Information, in no event shall either party be
     liable for any damages in excess of the amounts paid by Nortel to Seller
     under this Agreement for Products and products in the twelve (12) months
     immediately preceding the institution of proceedings.

23.3 The limitations of this Section shall apply even in the event of the
     failure of their essential purpose.

24.  INSURANCE
     ---------

24.1 Seller shall procure and maintain in full force and effect during the
     period that this Agreement is in effect and for a period of five (5) years
     thereafter, with an insurance company a Comprehensive General Liability
     insurance policy with third party liability coverage protecting Nortel and
     Nortel Companies against any loss, liability or expense due to bodily
     injury, death or property damage arising out of this Agreement or Products
     delivered hereunder, to the extent such loss, liability or expense is not
     due to the negligence of Nortel and any Nortel Company.  Such policy shall
     have a combined single limit of a minimum of [*] Dollars ($[*]), shall
     provide coverage worldwide and shall not be restricted to occurrences in
     the country of insurer of Seller.  Nortel and Nortel Companies shall be
     additional insureds under such insurance policy.

24.2 Nortel may upon sixty (60) calendar days written notice request that Seller
     increase the foregoing minimum amount in order to comply with Nortel's
     obligations to any customer of any Products provided any such increase
     shall not exceed an amount equal to one hundred percent (100%) of the
     applicable minimum amounts and shall be subject to the availability of such
     insurance. Following such request by Nortel, the Parties shall mutually
     agree on any increase and the amount of such increase and the allocation of
     payment obligations for any increased premium Seller incurs in obtaining
     such insurance.

24.3 Such policy shall be endorsed to be primary insurance and shall provide
     that it will not be cancelled or altered without at least thirty (30)
     Business Days prior written notice to Nortel.  Not later than twenty (20)
     Business Days following the execution of this Agreement, Seller shall
     furnish Nortel with a certificate of such insurance and evidence that the
     premiums therefore have been paid.  Maintenance of such insurance and the
     performance by Seller of its obligations under this Section 24 shall not
     relieve Seller of liability under the indemnity provisions set forth in
     this Agreement.

25.  FORCE MAJEURE
     -------------

25.1 Except for a Party's payment obligations under this Agreement, if the
     performance of any obligation under this Agreement or a Release or Purchase
     Order is interfered with by reason of any circumstances beyond the
     reasonable control of the Party affected, including, without limitation,

 *   Certain information on this page has been omitted and filed separately with
     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

<PAGE>

     fire, explosion, power failure, acts of God, war, revolution, civil
     commotion, delays of the other Party in the performance of any of its
     obligations hereunder, acts of the public enemy, or any law, order,
     regulation, ordinance or requirement of any government or legal body, and
     labor difficulties, including without limitation, strikes, slowdowns,
     picketing or boycotts; then the Party affected shall be excused from such
     performance for a period equal to the delay resulting from any such causes
     and such additional period as may be reasonably necessary to allow the
     Party to resume its obligations, (and the other Party shall likewise be
     excused from performance of its obligations to the extent such Party's
     obligations relate to the performance which was interfered with). The Party
     so affected shall make reasonable efforts to remove such causes of
     nonperformance; provided, however, in the event any such cause of
     nonperformance extends for more than forty-five (45) calendar days, Nortel
     shall have the right, without obligation or liability, to cancel any
     Release or Purchase Order affected by such cause.

25.2 Either Party shall notify the other Party in writing within ten (10)
     Business Days after becoming aware of the occurrence of any force majeure
     event which may cause any delay or failure on the part of such Party to
     perform its obligations hereunder.

26.  TERM
     ----

26.1 This Agreement shall become effective on the Effective Date and shall
     remain in effect for a period of [*] months ("Initial Term") and will be
     automatically renewed for successive [*] month period(s) ("Subsequent
     Term") unless one Party gives to the other Party a notice to the effect
     that this Agreement will not be renewed, individually and collectively such
     period(s) being referred to herein as "Term", unless and until terminated
     in accordance with this Agreement.

27.  TERMINATION AND CONTINUING RIGHTS
     ---------------------------------

27.1 The Agreement may be terminated upon notice by one Party, at its sole
     discretion, in the event the other Party is affected by any one of the
     following events:

     a)  the institution by one Party of insolvency, receivership or bankruptcy
         proceedings or any other material proceedings for the settlement of its
         debts, including, without limitation, a reorganization, a compromise,
         an arrangement or assignment for the benefit of its creditors; the
         institution of such proceedings against a Party which such Party has
         failed to resolve in its favor within one hundred and twenty (120)
         calendar days in the case of involuntary proceedings or twenty (20)
         calendar days in the case of voluntary proceedings, after appropriate
         services of process; a Party making a general assignment for the
         benefit of creditors; or a Party's dissolution or ceasing to do
         business in the normal course; or

     b)  has a substantial part of its assets seized; or

     c)  assigns the Agreement or any part thereof in violation of Section 31.4
         (Assignment);

     the affected Party is obliged to immediately give notice to the other of
     the occurrence of any such event.

 *   Certain information on this page has been omitted and filed separately with
     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

<PAGE>

27.2 The Agreement and/or any Purchase Order or Release may be terminated, in
     whole or in part, by Nortel, upon written notice to Seller, in the event
     another party acquires a controlling interest in Seller (controlling
     requiring greater than 50% of voting stock) or a majority equity
     participation in Seller, without a written guarantee from such party to
     Nortel that such party will continue to abide by the terms of this
     Agreement within thirty(30) Business Days of such party assuming control or
     a majority equity interest.

27.3 The Agreement and/or any Purchase Order or Release may be terminated, in
     whole or in part by either Party, upon a forty-five (45) Business Day
     written notice, in the event the other Party fails to execute any one of
     its material obligations hereunder and fails to remedy the default within
     said period of thirty (30) Business Days.

27.4 Above termination rights shall be in addition to other termination rights
     contained herein, including under Sections 8 (Delivery) and 9 (Prices and
     Payment), and shall be without prejudice to the rights or claims one Party
     may have against the other with respect to the performance, nonperformance,
     or breach of such Party's obligations hereunder, and shall not operate so
     as to extinguish any rights or obligations which arose prior to the date of
     termination, and each Party shall have the right to pursue each and every
     available remedy at law and in equity, including, without limitation,
     withholding payments of any undisputed amount owed by Nortel to Seller
     pending resolution of any claims made by Nortel in good faith against
     Seller.

27.5 In the event this Agreement is terminated by Seller for default by Nortel
     or for any other reason hereunder, Nortel and its customers shall
     thereafter retain the right to purchase Repair Services and Product support
     and maintenance under terms and conditions mutually agreed upon by the
     Parties.

27.6 This Agreement may be terminated upon agreement of the Parties to that
     effect.

27.7 Notwithstanding any termination or expiry of this Agreement, the provisions
     of Sections 1 (Definitions), 5 (Product and Process Changes), 9 (Prices and
     Payments), 12 (Warranty), 15 (Continuing Availability of Technical
     Assistance, Repair Services, Maintenance, Replacement and Repair Parts), 18
     (Confidential Information), 19 (Intellectual Property Right Infringement),
     21 (Indemnity), 23 (Consequential Damages), 27 (Termination and Continuing
     Rights), 28 (Notices), 30 (Governing Law), and 31 (General) shall survive
     the termination or expiry of this Agreement.

28.  NOTICES
     -------

28.1 Any and all notices or other information to be given by one of the Parties
     to the other hereunder shall be sent by registered or certified mail,
     postage prepaid, return receipt requested or by overnight delivery service
     which provides written receipt of delivery, or by confirmed fax or hand
     delivery to the other Party at the addresses set forth in Exhibit K.

28.2 Notices given pursuant to Section 28.1 shall be deemed to have been
     received five (5) Business Days after mailing if given by mail, and one
     business day after sending if given by telecopy or overnight delivery
     service and upon delivery if given by hand.
<PAGE>

28.3 Either Party may change its address at any time by giving fifteen (15)
     Business Days prior written notice to the other Party as provided above.

29.  CONTINGENT LICENSE
     ------------------

29.1 To ensure uninterrupted availability of the Products and ongoing
     maintenance and support for such Products, including Repair Services, in
     the event of (i) Seller's insolvency, receivership or bankruptcy
     proceedings or any other material proceedings for the settlement of its
     debts, including, without limitation, a reorganization, a compromise, an
     arrangement or assignment for the benefit of its creditors; the institution
     of such proceedings against Seller which Seller has failed to resolve in
     its favor within sixty (60) calendar days after appropriate services of
     process; (ii) Seller making a general assignment for the benefit of
     creditors; or (iii) Seller's dissolution or ceasing to do business in the
     normal course; then Seller shall, at no additional charge, furnish to
     Nortel a license to use and have manufactured the Products for the duration
     of the Term.  Should such use or manufacture of the Products, due to the
     occurrence of either (i), (ii) or (iii) above, involve the practice of any
     invention covered by a patent, Seller shall not assert such patent against
     Nortel.

30.  GOVERNING LAW
     -------------

30.1 The validity, construction, interpretation and performance of this
     Agreement and the rights and obligations of the Parties and any purchase
     made hereunder shall be governed by the courts and laws of the State of
     Texas, United States of America, except for its rules with respect to the
     conflict of laws.  The application of the U.N. Convention on Contracts for
     the International Sale of Goods is specifically excluded from this
     Agreement.

31.  GENERAL
     -------

31.1 Severability
     ------------

     If any of the provisions of this Agreement shall be adjudged invalid or
     unenforceable, such invalidity or unenforceability shall not invalidate or
     render this Agreement unenforceable, but rather this Agreement shall be
     construed as if not containing the particular invalid or unenforceable
     provision or provisions, and the rights and obligations of the Parties
     shall be construed and enforced accordingly, provided that, in the event
     either Nortel or Seller would not have entered into this Agreement without
     such provision, that Party shall have the right to terminate this Agreement
     upon written notice to the other Party.

31.2 North America Free Trade Agreement - Procedures
     -----------------------------------------------

     Seller shall assist Nortel in performing all administrative actions
     required to qualify Products for preferential treatment under the rules of
     any applicable trade pursuant to the procedures set out in Exhibit J.
<PAGE>

31.3 Debarment Certificate
     ---------------------

     Seller shall promptly, upon written request of Nortel, provide a properly
     executed certificate in the form attached as Exhibit I (as such form may be
     modified from time to time by the United States Rural Utilities Service)
     and in accordance with the requirements specified therein with respect to
     any Products furnished by Seller and which Nortel provides to a customer
     which requires Nortel to provide a similar certificate. Seller will comply
     with clause 52.244-6 of the Federal Acquisition Regulations ("FAR"),
     including all FAR provisions referenced therein, in effect as of the
     Effective Date of this Agreement.  Seller disclaims, and disclaims
     compliance with, any other FARs, including but not limited to those
     concerning cost and pricing data and/or cost accounting standards.

31.4 Assignment
     ----------

     Neither Party shall assign or otherwise transfer all or any part of this
     Agreement or any rights or payments to be made hereunder (by way of a
     written assignment and/or change of control), or any interest herein,
     without the prior written consent of the other Party, except that Nortel
     may assign or subcontract any of its rights or obligations hereunder to any
     Nortel Subsidiary and Seller may assign to a successor in interest which
     acquires all or substantially all of the assets or control of Seller
     provided that such successor [*], controlled by or under common control
     with [*].  For purposes of this provision, "control" of an entity means the
     power to direct or cause the direction of the management and policies of
     such entity through the ownership of more than fifty percent (50%) of the
     voting securities of such entity.

31.5 Waiver
     ------

     Except as specifically provided for in a waiver signed by duly authorized
     representatives of Nortel and Seller, failure by either Party at any time
     to require performance by the other Party or to claim a breach of or to
     enforce any provision of this Agreement shall not be construed as affecting
     any subsequent breach or the right to require performance with respect
     thereto or to claim a breach with respect thereto and shall not constitute
     a waiver of such provisions or the right of such Party to enforce each and
     every provision.

31.6 Independent Contractors
     -----------------------

     Nortel and Seller are independent contractors in all relationships and
     actions under and contemplated by this Agreement. This Agreement shall not
     be construed to create or to authorize the creation of any employment,
     partnership or agency relation, or to authorize Nortel or Seller to enter
     into or make any commitment, agreement, representation or warranty binding
     on the other, or to allow one Party to accept service of any legal process
     addressed to, or intended for, the other Party. Nothing contained in this
     Agreement shall limit, in any manner, either Party's right to enter into
     other agreements with other parties.

 *   Certain information on this page has been omitted and filed separately with
     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

<PAGE>

31.7 Section Headings
     ----------------

     Section headings are inserted herein for convenience only and shall not
     affect the meaning or interpretation of this Agreement or any provision
     hereof.

31.8 Entire Agreement
     ----------------

     This Agreement, including Exhibits A through K attached hereto, comprises
     all the terms, conditions and agreements of the Parties hereto with respect
     to the subject matter herein, and save as expressly provided herein, may
     not be altered or amended except in writing signed by authorized
     representatives of each Party hereto. This Agreement may not be varied
     except through a document agreed to and signed by both Parties.

31.9 Each party agrees that, during the term of this Agreement, a party will
     not solicit the employees of the other party. This nonsolicitation
     restriction does not prohibit either party from using general recruiting
     strategies that are not directed specifically towards the other party's
     employees, including, but not limited to, the placement of advertisements
     or web-site postings regarding employment opportunities or from hiring any
     such employee if such employee seeks employment in response to such general
     solicitation and without individual, personal solicitation by the hiring
     party as the first contact with such employee.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the day
and year last written below.

CHORUM TECHNOLOGIES             NORTEL NETWORKS LIMITED
INCORPORATED

By:                                By:
   -----------------------            -------------------------
        (Signature)                           (Signature)
Name:                              Name:
     ---------------------              -----------------------
        (Print)                               (Print)
Title:                             Title:
      --------------------               ----------------------
Date:                              Date:
     ---------------------              -----------------------
<PAGE>

                                   EXHIBIT A
                                   ---------

             PRODUCT LISTS, PART I AND PART II, PRICES, DISCOUNTS,
             -----------------------------------------------------
                 AVAILABILITY DATES AND FCA DELIVERY LOCATIONS
                 ---------------------------------------------
Part I:       Product List:    Accepted Products, Prices and Discounts
                               ---------------------------------------

CPC Code      Description      [*]      [*]     [*]     [*]
------------  ---------------  ---      ---     ---     ---

A0805895      ILF Demux Grid1  [*]      [*]     [*]     [*]
A0805907      ILF Mux Grid1    [*]      [*]     [*]     [*]
A0805908      ILF Demux Grid2  [*]      [*]     [*]     [*]
A0805909      ILF Mux Grid2    [*]      [*]     [*]     [*]
A0805911      ILF Demux Grid3  [*]      [*]     [*]     [*]
A0805912      ILF Mux Grid3    [*]      [*]     [*]     [*]
A0805914      ILF Demux Grid4  [*]      [*]     [*]     [*]
A0805915      ILF Mux Grid4    [*]      [*]     [*]     [*]
00032-0001    Interleaver[*] [*]    [*]     [*] [*]
00033-0001    Interleaver[*]   [*]      [*]     [*]     [*]

* volumes represent [*] of Nortel capacity plan from which Seller is entitled to
the allocated portion as set forth herein.

** represents the percentage of Nortel's capacity plan of interleavers
(represented by *) that Nortel will allocate to Seller.

For avoidance of doubt, in the event that CPC Codes change, such successor
products will be subject to this guaranteed allocation.

Part II:  Product List:  Non-accepted products, Prices, Discounts and
                         --------------------------------------------
Availability Dates
------------------

To be determined

Part III:  FCA Delivery Locations

Chorum Technologies
1303 E. Arapaho Road
Richardson, TX 75081

*   Certain information on this page has been omitted and filed separately with
    the Securities and Exchange Commission. Confidential treatment has been
    requested with respect to the omitted portions.

<PAGE>

                                   EXHIBIT B
                                   ---------

                     SPECIFICATIONS AND ACCEPTANCE PROGRAM
                     -------------------------------------

Part I:    Specifications

1.  Document Identification:
<TABLE>
<CAPTION>
 Nortel Specification    Nortel Specification Doc   Nortel Specification Doc     Nortel Specification     Nortel Specification
 Doc #:  GSCA15MA              #:  GSCA15MA               #:  GSCA15MA             Doc #:  GSCA15MA         Doc #:  GSCA15MA

Nortel CPC #  A0805907    Nortel  CPC #  A0805909    Nortel CPC #  A0805908    Nortel  CPC #  A0805912   Nortel CPC #  A0805911

SUPPLIER Product         SUPPLIER Product           SUPPLIER Product           SUPPLIER Product          SUPPLIER Product
Model #:                 Model #:                   Model #:                   Model #:                  Model #:
--------------------------------------------------------------------------------------------------------------------------------
<S>                      <C>                        <C>                        <C>                       <C>
[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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[*]                      [*]                        [*]                        [*]                       [*]
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</TABLE>

 *   Certain information on this page has been omitted and filed separately with
     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

<PAGE>

<TABLE>
<CAPTION>
Nortel Specification     Nortel Specification Doc   Nortel Specification Doc   Nortel Specification      Nortel Specification
 Doc #:  GSCA15MA        #:  GSCA15MA               #:  GSCA15MA               Doc#:                     Doc#:
                                                                               Q-CS-00032-0001           Q-CS-00033-0001
Nortel CPC #  A0805915   Nortel CPC #  A0805914     Nortel CPC #  A0805895     Nortel CPC #  00032-0001  Nortel CPC # 00033-0001

SUPPLIER Product        SUPPLIER Product            SUPPLIER Product
Model #:                Model #:                    Model #                    SUPPLIER Product          SUPPLIER Product
                                                                               Model #: 100210-0001      Model#: 100211-0001
--------------------------------------------------------------------------------------------------------------------------------
<S>                     <C>                         <C>                        <C>                       <C>
[*]                      [*]                        [*]                        [*]                       [*]
--------------------------------------------------------------------------------------------------------------------------------
[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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[*]                      [*]                        [*]
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</TABLE>

2.  Certification

    Seller shall use reasonable due diligence to pursue the certifications
    listed below (as applicable) as soon as new or modified designs have passed
    Seller's production release milestone without prejudice to Nortel's
    Acceptance Program outlined in Exhibit B, Part II. Seller and Nortel shall
    arrange for joint submission to the regulatory bodies and Nortel shall repay
    Seller the additional costs incurred through the joint submissions. All
    Changes to existing designs that could invalidate any one of the
    certifications shall be discussed between Seller and Nortel as part of the
    Change Notification procedure even if they do not require a production
    release.

*   Certain information on this page has been omitted and filed separately with
    the Securities and Exchange Commission. Confidential treatment has been
    requested with respect to the omitted portions.

<PAGE>

    The list of required certifications will be mutually agreed to in good faith
    and may include those below:

    CEMark
    UK Type Approval
    UL / CSA / EN safety
    FCC parts 15 and 101

    Should other certifications be required, they shall be discussed between
    Seller and Nortel. Seller shall use its reasonable commercial efforts to
    support Nortel's regulatory activities.

    Support groups:     Seller's Support Engineering group
    --------------
                        Nortel's Design Engineering group.

Part II:  Product Acceptance Program

1.  In order to verify that the products or modified Products meet the
    applicable Specifications, Nortel will undertake an Acceptance Program
    covering verification and product integrity testing.

2.  Seller, upon mutually agreeable terms, shall provide the products necessary
    to perform the Acceptance Program to Nortel and shall provide support to the
    applicable Nortel group during the testing.  Such support includes diligence
    in replacing failed products, availability of technically knowledgeable
    individuals to discuss testing results and teaming of at least one
    individual from Seller with the Nortel testing group for all tests to occur
    on Seller's premises.

3.  At a minimum, each new design shall be tested by Nortel's Design Engineering
    team.

4.  Primeships:

    Nortel Networks Design Engineering group is prime for the verification
    testing; Seller's Support Engineering group is prime for supporting Nortel's
    Acceptance Program.

PART III:  Product Marking

    In absence of a Product Specification that defines Product Marking, the
following shall apply:

1. Serial number:  bar-coded serial number, as per relevant Specifications

2. Manufacturing date stamp: Seller stamps date as agreed upon by the Parties.

3. Seller's model number as agreed upon by the Parties.

4. Nortel's CPC will be placed on the module.
<PAGE>

5. Repair Date Stamp:  Bellcore TR-NWT-000078 (issue 3, December 1991), section
   12.2.  The location code for Seller ("LL") and how Seller rubber stamps shall
   be mutually agreed upon by the Parties.

6. Product marking and packaging requirements pursuant to this Agreement:

   a) Nortel's Corporate Standard CS152.50 on product integrity;
   b) Bellcore GR-CORE-1421 and TR-NWT-000063;
   c) Nortel's Corporate Standard 157.0 and Bellcore TR-NWT-870 on ESD
      protection;
   d) Nortel's Quality System Procedure EXCESDO1.STL.

   Seller shall package the Products for shipment in accordance with
   Bellcore's GR-CORE-1421, TR-NWT-000063 and TR-NWT-870 standard packing
   practices.  Any modifications specified by Nortel which are related to the
   size and external markings (including branding) of the boxes shall be agreed
   upon by Seller.  Seller shall be responsible for any damage to Products
   including damage caused by packing noncompliant with Bellcore requirements.

7.  Cables:   As per relevant Specifications.
<PAGE>

                                   EXHIBIT C
                                   ---------

                              DEMAND-PULL PROGRAM
                              -------------------

1.  SCOPE

1.1 This Exhibit C sets forth the terms and conditions applicable to the
    ordering of Products pursuant to the Demand-Pull Program.

2.  NORTEL'S RESPONSIBILITIES

2.1 For Products that are ordered under the Demand-Pull Program Nortel shall,
    on the first business day of each week during the Term, provide Seller with
    a twelve (12) month rolling forecast ("Forecast") of its Product
    requirements, if any. Concurrently with its presentation of the first
    Forecast to Seller, Nortel shall issue an annual firm Blanket Purchase Order
    for the quantity of Products shown on such Forecast. Releases for Products
    covered by a Blanket Purchase Order issued under this Section will be issued
    in accordance with Nortel's designated purchasing department
    representative's weekly demands. If a required Forecast update is not timely
    submitted for a Product, the immediately preceding week Forecast shall
    become the new Forecast and/or Release; if there is no Forecast from the
    immediately preceding week, the Forecast for the most recent preceding week
    shall become the Forecast and/or Release. Nortel's Forecasts and Blanket
    Purchase Orders shall reflect its good-faith expectations of customer demand
    and Nortel shall act in a commercially reasonable manner to schedule orders
    to avoid creating production capacity problems for Seller.

2.2 Attachment A sets forth the applicable Product stocking requirements stated
    on a Target Finished Goods ("Target FG") and Target Work-In Process
    (modules, dies components and parts) ("Target WIP") basis, (collectively
    referred to as "Target Products Total Stock"). The Target Products Total
    Stock will be jointly established by the Parties in writing based on the run
    rate and agreed upon number of weeks, as referred to in Section 3.2 hereof,
    taking into consideration the Seller's Products manufacturing lead time as
    well as the unique component purchasing lead time, all as stated in
    Attachments A and B hereof. The Target Products Total Stock shall be jointly
    monitored and may be revised by agreement of the Parties in writing as
    fluctuations in the run rate so require and Attachment A updated
    accordingly.

2.3 If the Target Finished Goods is inactive for more than [*] days, Nortel
    shall purchase Target Products Total Stock from Seller. Nortel shall
    reimburse Seller promptly upon request for all reasonable out of pocket
    costs and expenses, including the cost of carrying increased inventory, to
    the extent caused by such inactivity and Seller will act reasonably to
    mitigate any such costs and expenses. Upon the expiration of the Blanket
    Purchase Order, Seller will deliver any Product ordered but not delivered
    pursuant to a release.

2.4 It is acknowledged by the Parties that although Products have been included
    in Attachment A, any such Products may, from time to time at Nortel's
    option, be purchased by Nortel otherwise than pursuant to the Demand-Pull
    Program and in such event, Nortel will issue Purchase Orders for its
    requirements for such Products.

*   Certain information on this page has been omitted and filed separately with
    the Securities and Exchange Commission. Confidential treatment has been
    requested with respect to the omitted portions.

<PAGE>

3.  THE SELLER'S RESPONSIBILITIES

3.1 Seller shall manufacture the Target Products Total Stock in accordance with
    the run rate as set forth in Attachment A which may be revised as provided
    hereunder but shall only deliver Products per latest written instruction
    from Nortel.

3.2 Seller shall maintain Target FG and Target WIP quantities representing a
    maximum of [*], respectively, of the run rate set forth in Attachment A
    which may be revised as provided hereunder.

3.3 Seller's manufacturing operations and processes shall be established and
    maintained throughout the Term so that Seller is able to comply with Section
    8.5.4 of the Agreement.

3.4 Products ordered pursuant to the Demand-Pull Program shall be delivered FCA
    Seller's Richardson, TX plant, within one (1) Business Day from Nortel's
    Release(s) communicated to Seller via facsimile.

3.5 Seller shall provide to Nortel's designated Purchasing Department
    representative a weekly report of Seller's Actual Products Total Stock
    status.

4.  CANCELLATION OF THE DEMAND-PULL PROGRAM

4.1 Nortel may terminate the Demand-Pull Program in whole or in part by means of
    a written notice to that effect, forwarded to Seller at least [*] Business
    Days in advance. Should the Demand-Pull Program be terminated, and if Nortel
    cancels a Blanket Purchase Order, Nortel may issue other Purchase Orders for
    Products that were contained in the cancelled Blanket Purchase Order
    ("Substitute PO"). In the event Nortel does not issue a Substitute PO(s),
    the cancellation charges set forth in Section 8.7 shall be applicable to
    such cancelled Blanket Purchase Order.

4.2 Nortel's obligation to purchase under this Agreement is set forth in Section
    8.

4.3 Nortel's obligation to purchase under this Agreement shall be reduced by the
    amount of Products that can be purchased by Purchase Orders or that may be
    purchased by other customers of Seller. In addition, Seller shall use all
    reasonable endeavors to minimize any such costs by, inter alia, returning
    components to suppliers or reducing cancellation costs to suppliers, and
    such savings will be passed on to Nortel.

*   Certain information on this page has been omitted and filed separately with
    the Securities and Exchange Commission. Confidential treatment has been
    requested with respect to the omitted portions.

<PAGE>

                                 ATTACHMENT A
                                                                   WEEK:________
<TABLE>
<CAPTION>
                                          RUN           TARGET          TARGET        ACTUAL        ACTUAL         LEAD
CPC NO.             DESCRIPTION          RATE           FG STK           WIP          FG STK         WIP           TIME
---------------------------------------------------------------------------------------------------------------------------
<S>              <C>                 <C>            <C>             <C>             <C>          <C>           <C>
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
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---------------------------------------------------------------------------------------------------------------------------
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</TABLE>
     NORTEL APPROVAL:                     ______________________________
     DATE:_____________
     SELLER APPROVAL:                     ______________________________
     DATE:___________________

<PAGE>

                                  ATTACHMENT B
STRATEGIC SUPPLIER MANAGEMENT

DEMAND-PULL PROGRAM - Unique Components

SUPPLIER:
         ---------------------------------------------------------
CONTACT:
        ----------------------------------------------------------
TEL. NO.
        ----------------------------------------------------------

<TABLE>
<CAPTION>
 Supplier        Description         Supplier       WIP @ supplier
 Product                           Safety Stock         (weeks)
                                      (weeks)
---------------------------------------------------------------------
<S>         <C>                    <C>            <C>
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
---------------------------------------------------------------------
</TABLE>
<PAGE>

                                   EXHIBIT D
                                   ---------

   REPAIR SERVICES RATES, FCA REPAIR LOCATIONS AND TECHNICAL ASSISTANCE RATES
   --------------------------------------------------------------------------

I.   TECHNICAL ASSISTANCE RATES
     --------------------------

        All technical assistance rates shall be [*].

II.  FCA REPAIR LOCATIONS
     --------------------

        Chorum Technologies
        1303 E. Arapaho  Road
        Richardson, Texas 75081

III. REPAIR SERVICES RATES
     ---------------------

        Repair Services Prices shall be [*].

 *   Certain information on this page has been omitted and filed separately with
     the Securities and Exchange Commission. Confidential treatment has been
     requested with respect to the omitted portions.

<PAGE>

                                   EXHIBIT E
                                   ---------

The method of transmission of information, Purchase Orders, Blanket Purchase
----------------------------------------------------------------------------
Orders, Releases, acknowledgments and invoices will be mutually agreed upon by
------------------------------------------------------------------------------
the Parties.  The provisions set forth below in Part I and II are for example
-----------------------------------------------------------------------------
purposes only and will not apply unless mutually agreed upon by the Parties.
-----------------------------------------------------------------------------

                  PROCEDURES FOR ORDERS UTILIZING EDI AND TDI
                  -------------------------------------------
                              (rev NAESGA_970321)

                                     PART I
                Electronic Data Interchange ("EDI") Transmission

This Part I of Exhibit E contemplates EDI transmissions of information and
Purchase Orders, Blanket Purchase Orders, Transaction Set 850 Releases or
EDIFACT 2.0 P.O. Releases (collectively, in this Exhibit E, "Orders"),
acknowledgments and invoices.  The EDI transactions shall be governed by the
Agreement, as modified by this Part I of Exhibit E.  This Part I of Exhibit E
shall not apply to Orders delivered solely in hard copy document form.

EDI transactions shall be made through a third-party computer network with which
the Nortel Companies and Seller have a services agreement ("Network").  EDI
transactions shall be made in accordance with the version of either 1) the
American National Standards Institute ("ANSI") Business Data Interchange
Standards ANSI X12, or 2) Electronic Data Interchange for Administration,
Commerce and Transportation Issue No. 2.0 ("EDIFACT"), which each Nortel Company
then utilizes, inclusive of transaction sets or comparable EDIFACT electronic
messages, data dictionary, data elements and transmission control.  Each party
shall be responsible for its respective costs incurred in sending and receiving
EDI transmissions.

Seller shall access at least once on each business day the Network to determine
whether it has received any Orders (ANSI X12, Transaction Set 850 or EDIFACT 2.0
ORDERS).  A functional Acknowledgment of Receipt of Transmission (ANSI X12,
Transaction Set 997) or an EDIFACT functional Acknowledgment Receipt of P.O.
Message shall be transmitted immediately upon receipt of an EDI Order.  A full
Transaction Acknowledgment (ANSI X12, Transaction Set 855 or EDIFACT 2.0 ORDSP)
shall be transmitted by Seller within two (2) Business Days after transmittal of
the functional Acknowledgment of Receipt of Transmission.  Each Order shall
contain and each full Transaction Acknowledgment shall confirm the price,
quantity, Product description by part number, FCA Delivery Location, location to
which the invoice shall be rendered for payment, method of shipment, Delivery
Date.

To reschedule, cancel or otherwise change an Order, a Nortel Company shall
transmit a Purchase Order Change (ANSI X12, Transaction Set 860 or EDIFACT 2.0
ORDCHG) and Seller shall transmit a Purchase Order Change Acknowledgment (ANSI
X12, Transaction Set 865 or EDIFACT 2.0 ORDSP) to the appropriate Nortel Company
within two (2) Business Days after receipt by Seller of the Purchase Order
Change.
<PAGE>

Any forecast information shall be sent using ANSI X12, Transaction Set 830 with
a quantity status code of "D" shown in the applicable time period field or
EDIFACT 2.0 DELFOR with a delivery plan status indicator of 4.  A Transaction
Set 830 Release (ANSI X12, Transaction Set 830 with a quantity status code of
"C" shown in the applicable time period field on such Transaction Set) or
EDIFACT 2.0 DELFOR with a delivery plan status indicator of 1 shall be
transmitted by a Nortel Company to confirm a Delivery Date for specific
quantities of Products covered by a Blanket Purchase Order, where that Nortel
Company requires Seller to send an Advanced Shipment Notice (ANSI X12,
Transaction Set 856 or EDIFACT 2.0 DESADV) prior to shipment.  Upon receipt of
such Transaction Set 830 Release or EDIFACT 2.0 DELFOR, Seller shall transmit to
the Nortel Company such Advanced Shipment Notice not less than the number of
days agreed upon between the FCA Delivery Location and Seller prior to shipment
of the quantity of Products covered by such Transaction Set 830 Release or
EDIFACT 2.0 DELFOR.

Each Nortel Company ordering under this Agreement shall access the Network at
least once on each Business Day to determine whether it has received any
"Invoices" (ANSI X12, Transaction Set 810 or EDIFACT 2.0 INVOIC).  A functional
Acknowledgment of Receipt of Transmission (ANSI X12, Transaction Set 997 or
comparable EDIFACT 2.0 electronic message) shall be transmitted immediately upon
receipt of an Invoice.

A Nortel Company shall not have any liability to Seller for Orders or Invoices
erroneously transmitted to or received by Seller due to the malfunction of or a
defect in the Network or other causes beyond a Nortel Company's reasonable
control.  If Seller receives a distorted EDI transmission, Seller shall
immediately contact the Network to reject the distorted transmission and request
that such transmission be resent.  If Seller receives an Order by EDI
transmission stating a quantity and/or price significantly higher or lower than
the typical quantity and/or Price shown on Orders issued by that Nortel Company
ordering location, Seller shall immediately contact such ordering location to
confirm the accuracy of the electronically transmitted Order.

Each Party shall adopt as its signature an electronic identification consisting
of symbol(s) or code(s) which shall be affixed to or contained in each document
transmitted by such Party ("Signatures").  Each Party agrees that its Signature
shall be sufficient to verify that such Party originated and authorized such
document.  Each Party shall use reasonable efforts to not disclose the Signature
of the other Party to any unauthorized third party.

Any document properly transmitted pursuant to this Part I of Exhibit E shall be
deemed to be a "writing" or "in writing", and any such document when containing,
or to which there is affixed, a Signature ("Signed Documents") shall be deemed
for all purposes (a) to have been duly authorized and executed and (b) to
constitute an "original" when printed from electronic files or records
established and maintained in the normal course of business.  The Parties agree
not to contest the validity or enforceability of Signed Documents under the
provisions of any applicable law relating to whether certain agreements are to
be in writing or signed by the Party to be bound thereby.  Signed Documents, if
introduced as evidence on paper in any judicial, arbitration, mediation or
administrative proceedings, shall be admissible as between the Parties to the
same extent and under the same conditions as other business records originated
and maintained in documentary form.
<PAGE>

                                    Part II
                TECHNICAL Data Interchange ("TDI") Transmission

This Part II of Exhibit E contemplates the electronic transmission of various
types of data files, including but not limited to engineering and material
specifications, drawings, computer-aided designs ("CADs"), models, plot and flat
files ("Technical Data Interchange" or "TDI").  The TDI transmissions between
each Nortel Company and Seller shall be governed by the Agreement and this Part
II of Exhibit E.

TDI transmissions shall be made through a third-party computer network with
which each of the Nortel Companies and Seller have a services agreement
("Network").  Each Party shall be responsible for its respective costs incurred
in sending and receiving TDI transmissions.

Seller shall access the Network at least once on each Business Day to determine
whether it has received any TDI transmissions.

Seller acknowledges and agrees that a Nortel Company shall not have any
liability for TDI transmissions erroneously transmitted to or received by Seller
due to a malfunction of or a defect in the Network or other causes beyond a
Nortel Company's reasonable control.  If Seller receives a distorted TDI
transmission, Seller shall immediately contact the Network to reject the
distorted transmission and request that such transmission be resent.

Seller shall comply with such security precautions and rules as may be initiated
by the Network to protect TDI transmissions from unauthorized access.  Seller
shall treat each TDI transmission as confidential information under the
applicable provisions of the Agreement.

Each Party shall adopt as its signature an electronic identification consisting
of symbol(s) or code(s) which shall be affixed to or contained in each document
transmitted by such Party ("Signature").  Each Party agrees that its Signature
shall be sufficient to verify that such Party originated such document.  Each
Party shall use reasonable efforts to not disclose the Signature of the other
Party to any unauthorized third party.
<PAGE>

                                   EXHIBIT F
                                   ---------

                                MONTHLY REPORTS
                                ---------------

Seller agrees to use reasonable commercial efforts to provide the reports set
-----------------------------------------------------------------------------
forth in this Exhibit as requested in writing by Nortel.
--------------------------------------------------------

1.  Seller will provide monthly reports in the following areas:

    a)  Repair and Return;
    b)  Baseline Report;
    c)  General Business.

2.  Seller shall provide a Unit Failure Analysis report on all field returned
    Products and a Component Failure Analysis report on a monthly basis to
    Nortel's Repair Manager, to Nortel's Quality Manager and to Nortel's Product
    Brand Manager.  This report which will be issued no later than three (3)
    Business Days after the start of every month shall contain the following
    information:

    a)  The number of Products delivered to Nortel (on a per PEC level)
        in previous month.
    b)  The number of Products returned to Seller (on a per PEC level) in
        previous month.
    c)  The number of Products delivered to Nortel (on a per PEC level)
        year to date.
    d)  The number of Products returned to Seller (on a per PEC level)
        year to date.
    e)  The number of Products delivered to Nortel (on a per PEC level)
        to date.
    f)  The number of Products returned to Seller (on a per PEC level) to
        date.
    g)  Pareto of replacement devices of current month per PEC code.
    h)  Pareto of replacement devices cumulative per PEC code.
    i)  Post Repair Information on a per unit basis returned to Seller
        for repair under the "like-for-like" program for the previous month to
        include the following information:
        - Symptoms of replacement devices per unit;
        - Cumulative In-service time (in months) per PEC code;
        - Annualized replacement rate per PEC code.
    j)  Trend chart in time of replacement rate value (RpR)
    k)  Actual MTBF measurement. Actual annualized MTBF will be
        calculated from the cumulative replacement rate recorded monthly.  Based
        on results, additional requirements can be determined upon agreement of
        both Parties.
    l)  On Time service level for 1) Repair and Return 2) Retrofit 3)
        FCFA 4) RMA.

    For all occurrences of Product failure in the field, analysis
    results, corrective actions and implementation plan have to be included in
    the monthly report.

3.  From the date the Products will have successfully passed the Acceptance
    Program in accordance with Section 4 of the Agreement, Seller shall provide
    to Nortel's Repair Manager, to Nortel's Quality Manager and to Nortel's
    Product Brand Manager a monthly "Minimum Field Baseline" report indicating
    the minimum applicable release level (number) for the in-service operation
    of the Products and a "New Product Shipped Baseline".  The reports shall
    provide the details of specific Product releases for each applicable
    Software load.  The reports shall contain aforementioned
<PAGE>

    information for all current and previous releases of the Products, and
    clearly indicate for both Hardware and Software:

    a)  backward and forward compatibility;
    b)  upgradability from any release to any other release;
    c)  the current Product releases.

4.  From the date the Products will have successfully passed the Acceptance
    Program in accordance with Section 4 of the Agreement, Seller shall provide
    to Nortel's Product Brand Manager a monthly "General Business" report which
    includes the following information:

    a)  Number of Products (on a per PEC level) delivered to Nortel in the
        previous month.
    b)  Total business in dollars on a per PEC level delivered to Nortel in the
        previous month.
    c)  Number of Products (on a per PEC level) delivered year to date to
        Nortel.
    d)  Total business in dollars on a per PEC level delivered year to date to
        Nortel.
    e)  Number of Products (on a per PEC level) delivered to date to Nortel.
    f)  Total business in dollars on a per PEC level delivered to date to
        Nortel.
    g)  Total number of shipments that were missed or delivered short by Seller
        in the previous month.
    h)  Price in effect on a per PEC level in the previous and current months.
    i)  Prices paid for Nortel proprietary components in the last month.
    j)  Total number of PRS and CSR raised in the previous month against the
        Products and a summary of each problem.
    k)  Total number of calls received from the Nortel Customer Service center
        in the previous month.

5.  In addition to the above, Nortel may, from time to time, request that Seller
    provides detailed Unit Failure Analysis and Component Failure Analysis
    reports.
<PAGE>

                                   EXHIBIT G
                                   ---------
                              Change Notification
                              -------------------
                                   (Example)

--------------------------------------------------------------------------------
1.  SELLER INFORMATION:                |2. PRODUCT CHANGE NOTICE:
                        |          1997xxxx
                                           | ISSUE:  01
                                                   |
--------------------------------------------------------------------------------
3.  ISSUE DATE:   |4. PRODUCT IDENTIFICATION:
           |  MAJOR SYSTEM:
           |  SUB SYSTEM  :
           |  HWARE: ?   FWARE: ?   SWARE: ?   PLUGIN: ?
                     |
--------------------------------------------------------------------------------
5.  NEW PROD  RLSE |7. NEW CLEI CODE |6. OLD PROD  RLSE |8. OLD CLEI CODE
   NTxxxxxx  tbd  | tbd      |  NTxxxxxx     xx  | xxxxxxxxx
                       |                  |                    |
--------------------------------------------------------------------------------
9. ASSOCIATED PRODUCTS OR CHANGES AFFECTED:

--------------------------------------------------------------------------------
10. DRAWING NUMBER:          |11. CHANGE CLASSIFICATION:
   ADxxxxxx           |  A/AC/B.....
                                         |
--------------------------------------------------------------------------------
12. CLASSIFICATION SUBSTANTIATION:

--------------------------------------------------------------------------------
13. REASON FOR CHANGE:

--------------------------------------------------------------------------------
14. DESCRIPTION OF CHANGE:

  VERIFICATION PROCEDURES:

  BACKOUT PROCEDURES:

--------------------------------------------------------------------------------
<PAGE>

--------------------------------------------------------------------------------
15. EFFECT OF CHANGE:
    Enhanced features and easier install ability.
    SAFETY HAZARD: ? FIRE HAZARD: ? SRVC AFFCTG: ?  TRANS AFFCTG: ?
    MNTNCE AFFCTG: ? RELIA AFFCTG: ?  POWR AFFCTG: ?  TRAF  AFFCTG: ?
--------------------------------------------------------------------------------
16. MATERIAL AFFECTED:

--------------------------------------------------------------------------------
17. DOCUMENTATION AFFECTED:
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
18. IMPLEMENTATION DATE:              |19. CHANGE COMPLETION DATE:
    MM/DD/YY        |  N/A

--------------------------------------------------------------------------------

20. MODIFICATION LOCATION:
  N/A
  TRIALED: N (Field Lab Na)
--------------------------------------------------------------------------------
21. INSTALLATION HOURS AND MATERIAL COST:
  HOURS: N/A
  COST : N/A
--------------------------------------------------------------------------------
22. LOCATION AND QUANTITY OF EQUIPMENT:
  N/A
--------------------------------------------------------------------------------
23. ATTACHMENTS:
  None
--------------------------------------------------------------------------------
24. COMMENTS:
<PAGE>

                                   EXHIBIT H
                                   ---------

The dates set forth below take precedence over any conflicting dates set forth
in the Agreement and shall apply until January 1, 2001, at which time the dates
in the Agreement shall be applicable.

    Section 5.1    15 Business Days
    Section 5.4    15 Business Days
                   45 calendar days
                   45 calendar days
                   45 calendar days
   Section 5.5     15 Business Days
   Section 5.8     15 Business Days
   Section 6.2.4   10 Business Days
   Section 8.1(a)  10 Business Days
   Section 11.1    15 calendar days
                   15 calendar days
   Section 11.2    [*] calendar days
   Section 14.5(e) [*] calendar days
   Section 14.6(e) [*] calendar days
   Section 14.8    [*] Business Days
   Section 14.9    30 Business Days

*  Certain information on this page has been omitted and filed separately with
   the Securities and Exchange Commission. Confidential treatment has been
   requested with respect to the omitted portions.

<PAGE>

                                   EXHIBIT I

                                      RUS

                             DEBARMENT CERTIFICATE

                                  S A M P L E

   CERTIFICATION REGARDING DEBARMENT, SUSPENSION, INELIGIBILITY AND VOLUNTARY
                  EXCLUSION - LOWER TIER COVERED TRANSACTIONS

This certification is required by the regulations implementing Executive Order
12549, Debarment and Suspension, 7 CFR Part 3017, Section 3017.510,
Participants' responsibilities.  The regulations were published as Part IV of
the January 30, 1989, Federal Register (pages 4722-4733).

(BEFORE COMPLETING CERTIFICATION, READ INSTRUCTIONS ON REVERSE)

(1)  The prospective lower tier participant certifies, by submission of this
proposal, that neither it nor its principals is presently debarred, suspended,
proposed for debarment, declared ineligible, or voluntarily excluded from
participation in this transaction by any Federal department or agency.

(2)  Where the prospective lower tier participant is unable to certify to any of
the statements in this certification, such prospective participant shall attach
an explanation to this proposal.

Organization Name                          PR/Award Number or Project Name

Name and Title of Authorized Representative

Signature                                      Date
<PAGE>

Instructions For Certification

1.    By signing and submitting this form, the prospective lower tier
participant is providing the certification set out on the reverse side in
accordance with these instructions.

2.    The certification in this clause is a material representation of fact upon
which reliance was placed when this transaction was entered into.  If it is
later determined that the prospective lower tier participant knowingly rendered
an erroneous certification, in addition to other remedies available to the
Federal Government, the department or agency with which this transaction
originated may pursue available remedies, including suspension and/or debarment.

3.    The prospective lower tier participant shall provide immediate written
notice to the person to whom this proposal is submitted if at any time the
prospective lower tier participant learns that its certification was erroneous
when submitted or has become erroneous by reason of changed circumstances.

4.    The terms "covered transaction", "debarred", "suspended", "ineligible",
"lower tier covered transaction", "participant", "person", "primary covered
transaction", "principal", "proposal", and "voluntarily excluded", as used in
this clause, have the meanings set out in the Definitions and Coverage sections
of rules implementing Executive Order 12549.  You may contact the person to
which this proposal is submitted for assistance in obtaining a copy of those
regulations.

5.    The prospective lower tier participant agrees by submitting this form
that, should the proposed covered transaction be entered into, it shall not
knowingly enter into any lower tier covered transaction with a person who is
debarred, suspended, declared ineligible, or voluntarily excluded from
participation in this covered transaction, unless authorized by the department
or agency with which this transaction originated.

6.    The prospective lower tier participant further agrees by submitting this
form that it will include this clause titled "Certification Regarding Debarment,
Suspension, Ineligibility and Voluntary Exclusion - Lower Tier Covered
Transactions", without modification, in all lower tier covered transactions and
in all solicitations for lower tier covered transactions.

7.    A participant in a covered transaction may rely upon a certification of a
prospective participant in a lower tier covered transaction that it is not
debarred, suspended, ineligible, or voluntarily excluded from the covered
transaction, unless it knows that the certification is erroneous.  A participant
may decide the method and frequency by which it determines the eligibility of
its principals.  Each participant may, but is not required to, check the Non-
procurement List.

8.    Nothing contained in the foregoing shall be construed to require
establishment of a system of records in order to render in good faith the
certification required by this clause.  The knowledge and information of a
participant is not required to exceed that which is normally possessed by a
prudent person in the ordinary course of business dealings.

9.    Except for transactions authorized under paragraph 5 of these
instructions, if a participant in a covered transaction knowingly enters into a
lower tier covered transaction with a person who is suspended, debarred,
ineligible, or voluntarily excluded from participation in this transaction, in
addition
<PAGE>

to other remedies available to the Federal Government, the department
or agency with which this transaction originated may pursue available remedies,
including suspension and/or debarment.
<PAGE>

                                   EXHIBIT J

                NORTH AMERICAN FREE TRADE AGREEMENT - PROCEDURES

1.1   Seller shall perform all administrative actions required to qualify
Products and maintain qualification for preferential treatment under the rules
of any applicable trade treaty between Canada, USA and Mexico including, without
limitation, the North American Free Trade Agreement ("NAFTA").  If a Product
qualifies under NAFTA, Seller shall prepare and distribute a NAFTA Exporter's
Certificate of Origin according to Sections 1.2 and 1.3 below, whichever
applies, and any other documents required. Seller shall respond to NAFTA
Exporter's Certificate of Origin questionnaires and assist each Nortel Company
in resolving any Product eligibility issues.  Seller alone shall bear
responsibility for all penalties and costs resulting from a NAFTA Exporter's
Certificate of Origin subsequently being determined to be invalid.

1.2   If a NAFTA Exporter's Certificate of Origin is prepared for each shipment,
Seller shall (a) retain the original NAFTA Exporter's Certificate of Origin in
Seller's files with appropriate backup documentation, (b) attach a copy of the
Exporter's Certificate of Origin to the customs/shipping documents for the
qualifying Product, and (c) mark these customs/shipping documents with the
legend: "Copy of the NAFTA Exporter's Certificate of Origin attached."

1.3   If a blanket NAFTA Exporter's Certificate of Origin is prepared, Seller
shall: (a) retain the original NAFTA Exporter's Certificate of Origin in
Seller's files with appropriate backup documentation, (b) mark the
customs/shipping documents for the qualifying Product with the legend: "Copy of
blanket NAFTA Exporter's Certificate of Origin on file at Nortel customs offices
in Milton, Ontario (Canada) and in Tonawanda, NY (USA)," and (c) mail copies of
the blanket NAFTA Exporter's Certificate of Origin to the following offices:

      Canada:                                   USA:
      Nortel Networks Corp.                     Nortel Networks Inc.
      Dept. 1560                                77 Oriskany Drive
      901 Steeles Avenue                        Tonawanda, NY, 14150
      Milton, Ontario, Canada  L9T 4B6          USA
<PAGE>

                                   EXHIBIT K

                                    NOTICES

           Chorum Technologies
           1303 E. Arapaho Road,
           Richardson, TX, 75081
           Attention: Vice President of Sales
           Facsimile No:______________________________

And

           Gunderson Dettmer, LLP
           2700 Via Fortnua, Suite 300
           Austin, Texas 78746
           Attn:  Kirk Lundburg

           Facsimile No:  512/732-0081

NORTEL:    Nortel Networks Limited
           8200 Dixie Road, Suite 100
           Brampton, Ontario
           Canada L6T 5P6

           Attention: Vice-President and Deputy General Counsel
           Facsimile No: (905) 863-8425

      and: Nortel Networks Limited
           9300 Trans Canada Highway
           St. Laurent, QC
           Canada  H4S 1K5

           Attention: Director, Purchasing and Component Engineering
           Facsimile No: (514) 818-3222

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