Document:

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                                                                   EXHIBIT 10.13

                                 ADDENDUM NO 2

                                     to the

Development Agreement of 23.12.1996 regarding the development of a Tunable Laser
              Source Module, amended by an Addendum of 30.10.1997

                                 by and between

                              AGILENT TECHNOLOGIES
                                DEUTSCHLAND GMBH

                              Herrenberger Str. 130

                                 71034 Boblingen

                                     Germany

                      hereinafter referred to as "AGILENT"

                                       and

                                 NEW FOCUS INC.

                                 2630 Walsh Ave.

                                 Santa Clara CA

                                     U.S.A.

                     hereinafter referred to as "New Focus"

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WHEREAS, New Focus developed a tunable laser module for AGILENT known as the
        "Happy module" under the Development Agreement of 23.12.1996, amended of
        30.10.1997 (hereinafter "the Development Agreement").

WHEREAS, the parties wish to develop a version of this module that provides more
        power, referred to hereinafter as the "TL1502 Module" as well as an
        L-band version, referred to hereinafter as the "TL1601 Module" (together
        hereinafter called "Monet Module").

        NOW THEREFORE, the parties agree as follows:

1. DEVELOPMENT AGREEMENT AND THIS ADDENDUM

        If not expressly stated to the contrary herein, all provisions set forth
        in the Development Agreement of 23.12.1996 and the Addendum of
        30.10.1997 shall fully apply to this Addendum No 2 and shall remain in
        full force and effect.

        With respect to the penalty clause set forth in section 5.2 of the
        Addendum 1 to the Development Agreement regarding the Happy Module,
        AGILENT agrees not to enforce such clause with respect to any delays
        having occurred before the date of this Addendum (altogether $[*];
        [*] Dollars).

2. AMENDMENTS REGARDING THE DEVELOPMENT AGREEMENT

2.1 PRICES AND RAMP-UP

        In amendment of Schedule 1 A.) 5. Of the Development Agreement of
        23.12.1996, the parties agree on an initial per unit price ("AGILENT
        Purchase Price") of $[*]-([*] U.S. Dollars) for the Happy Module. The
        parties agree that this price shall not be increased in case the initial
        AGILENT U.S. List Price increases or decreases.

        AGILENT agrees to purchase [*] "Modules" from New Focus prior to March
        2000. A "Module" is defined as a Happy Module or a Monet Module.

2.2 DELIVERY MILESTONES

2.2.i   New Focus shall deliver the Happy Module according to the following
        delivery milestones.

        [*]

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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        It is hereby agreed that the deliveries of the Happy Module as of the
        date of signing of this Addendum are in full compliance with the
        delivery milestones listed above.

        From December 1999 on, the parties take into account a rolling three
        months window (further delivery milestones after March 2000 will be
        agreed to in a separate purchase agreement). The numbers of units
        delivered by New Focus will be reviewed on a monthly basis. If the total
        number for one month is below the numbers agreed to this respective
        month, New Focus will have a two months period to bring the total number
        of units back to the number agreed to for the respective three months
        period.

2.2.ii  In the event that New Focus fails to deliver the number of units agreed
        to for a three months period, AGILENT may terminate this Agreement upon
        90 days notice.

        AGILENT may also terminate this Addendum without notice if New Focus
        fails to deliver the first PM beta unit by February 29, 2000 or fails to
        deliver the first PM production unit by March 31st, 2000.

AGILENT must inform New Focus that AGILENT wishes to terminate the agreement in
writing within 60 days of failure by New Focus to deliver. If AGILENT fails to
do so, then AGILENT's right to terminate will lapse until the next trigger event
occurs.

2.3 QUALITY TRIGGER (HAPPY MODULE)

        Regarding the Annualized Failure Rate (AFR) as defined in schedule 7,
        the parties will monitor a 6 months rolling average starting in June
        2000. The parties will notify each other in writing every month of the
        six month rolling average of the AFR.

        Regarding the rate of Defect on Arrival (DOA) as defined in schedule 7,
        the parties will measure a rolling three months average starting in
        December 1999. The parties will notify each other in writing every month
        of the three month rolling average of the DOA.

        In the event that the following trigger events apply, AGILENT may
        terminate this Addendum to the Development Agreement upon 90 days prior
        notice:

                - the six month rolling average of the AFR is above [*]%

                - the three month rolling average of the DOA exceeds [*]%

AGILENT must inform New Focus in writing within 60 days of the occurrence of the
above trigger events that AGILENT wishes to terminate the agreement. If AGILENT
fails to do so, then AGILENT's right to terminate will lapse until the next
trigger event occurs.

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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2.4 TRANSITION

        In the event that this Addendum will be terminated according to Article
        2.2, 2.3,5,6,7 or according to any provision regarding the Monet Module
        herein, New Focus agrees to provide the following documents and
        transition services to AGILENT:

        i.    [*]
        ii.   [*]
        iii.  [*]
        iv.   [*]
        v.    [*]
        vi.   [*]
        vii.  [*]
        viii. [*]
        ix.   [*]

3. DEVELOPMENT OF THE MONET MODULE

        New Focus agrees to develop a Tunable Laser Source Module (including
        hard- and software), hereinafter "Monet Module", which is described in
        greater detail in the specifications in Schedule 1 hereto, as well as to
        manufacture prototypes and produce units whilst adhering to the project
        schedule as set forth in Schedule 2 hereof.

4. BREAK-DOWN OF COSTS / REMUNERATION FOR THE MONET MODULE

4.1     In return for the services outlined in Article 3 above, AGILENT shall
        effect payment in installments as laid out in Section3. "Payment
        Criteria" of Schedule 1 according to the development phases for hardware
        and software described in 2 Sections 2. A-B of Schedule 1 hereto. The
        payments shall become due and payable in accordance with the terms and
        conditions outlined in Section3. "Payment Criteria" of Schedule 1.

4.2     A) AGILENT agrees to an initial payment to New Focus of [*] U.S. Dollars
        ($[*]) within 30 days of the execution of this Addendum in order to
        ensure timely manufacturing and delivery of the Monet Module by New
        Focus. This sum represents [*]% of the total developmental amount of [*]

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

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        U.S. dollars ($[*]) which Agilent is hereby obligated to pay according
        to the terms and of this Addendum and the schedules attached hereto for
        the development of the Monet Module. This sum is in addition to any
        contract amounts which Agilent has previously agreed to pay New Focus
        (See for Example: Section 4 of the Addendum No. 1 of 30.10.1997 to the
        Development Agreement.)

        B) The initial and subsequent payments for the Monet Module set forth
        above in Section 4.2A and which are detailed in the attached schedules
        1-2 shall be subject to New Focus providing AGILENT a performance
        guarantee of [*] U.S. Dollars ($[*]) from an internationally recognized
        Bank. This subsection shall, for the Monet Module, supercede and replace
        the guarantees set forth in Section 5 of Addendum No 1 of 30.10.1997 to
        the Development Agreement.

        C) The parties agree on an initial per unit price for the Monet Module
        (either for the TL1502 or the TL1601 single mode fiber version) of $[*]
        for the first [*] units and for any further unit $[*], as well as for
        the [*] of these Modules $[*]. The parties agree that this price shall
        not be increased within the [*] after delivery of the first production
        unit. The parties to this Addendum will renegotiate the per unit price
        one year after acceptance by AGILENT of the first units of Monet Modules
        produced under this Addendum. New Focus shall work continuously on
        reducing the cost of the products. Any share of cost advantages will be
        part of a future procurement agreement.

4.3     The production and delivery of the Monet Modules shall be subject to a
        separate Framework Purchase Agreement. The parties shall negotiate such
        terms and conditions and have an agreement in place 2 months before the
        first product shipment. This agreement shall contain the ramp up
        quantities for the first six months of production. The target capacity,
        without any commitment herein, is intended to be in total (for SMF/PC,
        SMF/APC, PMF/PC; PMF/APC) [*] units up to [*] per year.

5.      DEVELOPMENT

5.1     The prototypes as well as the software of the Monet Modules shall be
        manufactured and developed by New Focus in accordance with the project
        schedule (Schedule 2 to this Addendum No 2) and the development phases
        contained therein as well as in Schedule 1.

5.2     AGILENT may terminate this Addendum upon 90 days notice if New Focus
        fails to deliver the TL1502 prototype and production unit as well as the
        TL1601 prototype and production unit as defined in section 2 of schedule
        1 of this Addendum, until 3 months after the milestones as defined in
        Schedule 2 of this Addendum. Article 2.4 ("Transition") shall apply
        accordingly.

Agilent must inform New Focus in writing of Agilent's intention to terminate the
agreement within 60 days of the occurrence of the failure by New Focus to
deliver the TL1502 and TL1601 prototype and production units. If AGILENT fails
to do so, then AGILENT's right to terminate

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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will lapse until the next trigger event occurs.

6. QUALITY TRIGGER (MONET MODULE)

        Regarding the Annualized Failure Rate (AFR) as defined in schedule 7,
        the parties will monitor a 6 months rolling average starting 6 months
        after the first production unit is delivered. The parties will notify
        each other in writing every month of the six month rolling average of
        the AFR.

        Regarding the rate of Defect on Arrival (DOA) as defined in schedule 7
        the parties will measure a rolling three months average starting three
        months after the first production unit is delivered. The parties will
        notify each other in writing every month of the six month rolling
        average of the AFR.

        In the event that the following trigger events apply, AGILENT may
        terminate this Addendum upon 90 days notice:

                - the six month rolling average of the AFR is above [*]%

                - the three month rolling average of the DOA exceeds [*]%

                - the absolute number of DOA is higher than 3 during the first
                  three months after the delivery of the first production unit.

AGILENT must inform New Focus in writing within 60 days of the occurrence of a
trigger event that AGILENT wishes to terminate the agreement. If AGILENT fails
to do so, then AGILENT's right to terminate will lapse until the next trigger
event occurs.

7. RIGHTS OF USE

7.1     All rights of use set forth in Section 11 of the Development Agreement
        of 23.12.1996 granted to AGILENT regarding the Happy Modules under the
        Development Agreement shall remain in full force and effect and shall
        not be amended in any way by this Addendum. Only with respect to the
        Monet Modules being subject of this Addendum, section 11.1 shall be
        amended as follows.

7.2     AGILENT is hereby vested with an irrevocable, exclusive, transferable
        distribution right regarding the Monet Modules (including software, the
        respective prototypes, the production units and any and all parts
        including, but not limited to any building blocks) in their respective
        state of process, such right being unlimited with respect to time,
        contents and geographical scope.

7.3     It is the intent of the parties that the manufacturing and supply of the
        Monet Module be performed for AGILENT exclusively by New Focus provided
        that the quality, timeliness

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        of delivery of the Monet Modules as supplied by New Focus meet the
        commitments made herein. The parties will establish an escrow account to
        protect AGILENT in the event that New Focus is unable to meet its
        commitments under this Addendum, or in the event that the agreement is
        terminated under section 2, 5 or 6. The terms of the escrow account are
        set forth below in subsections 7.3 i to v.

                7.3.i   As soon as available, New Focus shall deposit any
                        prototypes and/or parts of them as well as any
                        documentation with the latest version of the source code
                        regarding the AGILENT-specific development result and
                        update such deposits in escrow with a mutually agreeable
                        escrow trustee. AGILENT shall bear the costs of the
                        escrow trust.

                The provisions applicable to the deposit of source code by New
                Focus shall be as follows:

                        In the event that one or more of the following trigger
                        events apply AGILENT is automatically vested with an
                        irrevocable, transferable, non-exclusive production
                        right regarding the Products under this Addendum.: New
                        Focus

                        a. is no longer able to meet its maintenance and support
                           contract obligations to AGILENT, provided that the
                           cessation of maintenance services is not solely
                           attributable to the failure of the licensee to make
                           timely payment of any charges under such maintenance
                           contract;

                        b. has ceased to do business;

                        c. has ceased to produce the Products specified in
                           Schedule 1 hereto;

                        d. has significantly changed its quality management in
                           such a way that it becomes unacceptable to AGILENT
                           (e.g. audit reasons, administrative or governmental
                           regulations) or if the Modules will not reach an
                           acceptable level and if after AGILENT informs New
                           Focus in writing New Focus fails to remedy such
                           quality deficiency within 90 days;

                        e. has increased prices of the Products specified in
                           Schedule 1 hereto by more than [*]%;

                        f. has become insolvent, suffers or permits the
                           appointment of a receiver for its business or assets
                           or becomes subject to, any bankruptcy proceedings or
                           any statute relating to insolvency or the protection
                           of rights of creditors.

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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                7.3.ii  The escrow trustee shall follow the procedures set forth
                        herein below:

                        - Escrow trustee shall promptly notify New Focus of the
                          occurrence of the Release Condition and shall provide
                          to New Focus a copy of AGILENT's notice to escrow
                          trustee. "Release Condition" for the purposes of this
                          Agreement shall mean all of the trigger events
                          described above.

                        - If the escrow trustee does not receive Contrary
                          Instructions, as defined below, from New Focus within
                          thirty (30) days following escrow trustee's delivery
                          of a copy of such notice to New Focus, Escrow trustee
                          shall deliver a copy of the source code to AGILENT.

                          "Contrary Instructions" for the purposes of this
                          subclause shall mean the filing of written notice with
                          escrow trustee by New Focus, with a copy to AGILENT
                          demanding delivery, stating that the Release Condition
                          has not occurred or has been cured.

                        - If Escrow trustee receives Contrary Instructions from
                          New Focus within thirty (30) days of the giving of
                          such notice to New Focus, Escrow trustee shall not
                          deliver a copy of the Source Material to AGILENT, but
                          shall continue to store the source code until:

                          a) otherwise directed by New Focus and AGILENT
                             jointly;

                          b) Escrow trustee has received a copy of an order of a
                             court of competent jurisdiction directing Escrow
                             trustee as to the disposition of the Source
                             Material; or

                          c) Escrow trustee has deposited the source code with a
                             court of competent jurisdiction or a Trustee or
                             receiver.

                7.3.iii Upon receipt of Contrary Instructions from New Focus,
                        escrow trustee shall have the absolute right, at escrow
                        trustee's election to file an action in interpleader
                        requiring the New Focus and AGILENT to answer and
                        litigate their several claims and rights amongst
                        themselves.

                7.3.iv  Upon execution of this Addendum, AGILENT shall be
                        granted, at no charge, a non-exclusive,
                        non-transferable, irrevocable and perpetual right of
                        utilization to the deposited source codes. AGILENT may
                        only exercise

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                        its rights under this license and use the source code in
                        the event that the requirements of subclause 7.3.ii are
                        met.

                7.3.v   Prior to depositing the source codes, AGILENT may
                        inspect the source material to assure itself of the
                        quality thereof and of the fact that they are complete.

7.4     New Focus grants to AGILENT a non-exclusive, worldwide, transferable and
        irrevocable license to all international property rights in the Monet
        Module which are owned by New Focus, copyrights included, Said grant
        will be provided royalty free for the Monet Modules sold to AGILENT by
        New Focus. Said grant will be provided under the royalty provisions set
        forth in subsection 7.7 hereof for Monet Modules not sold by New Focus
        to AGILENT..

7.5     AGILENT grants to New Focus a non-exclusive, transferable, irrevocable
        production and distribution right regarding the optoblock as defined in
        Schedule 3. New Focus will pay to AGILENT a royalty of $[*] for the
        first [*] and $[*] for any further sold optoblock. In the event of an
        acquisition of New Focus, New Focus will be allowed to produce the
        optoblock under the same agreement. AGILENT grants to New Focus a
        non-exclusive, non-transferable, irrevocable production and distribution
        right regarding the Digital/analog part as defined in Schedule 3. The
        rights granted shall be revocable if New Focus will be taken over by
        competitors as defined in Article 8.2 of this Addendum.

7.6     AGILENT grants to New Focus a non-exclusive, non-transferable,
        irrevocable production and distribution right regarding the
        Computing/interface part as defined in Schedule 3. New Focus will pay to
        AGILENT a royalty of $[*] for each sold Computing/interface part. The
        rights granted shall be revocable if New Focus will be taken over by
        competitors as defined in Article 8.2 of this Addendum.

7.7     In the event of termination of this Addendum by AGILENT, AGILENT will
        pay to New Focus a royalty for the Monet Module based on AGILENT's net
        revenues for Monet or other modules which are based on the optoblock as
        defined in schedule 3 of this Addendum or other modules which are based
        on the optoblock as defined in schedule 3 of this Addendum per calendar
        year as follows:

        - 2000: [*]%

        - 2001: [*]%

        - 2002: [*]%

        - 2003 and onward: [*]%

        The above royalty payments will not be due in case that one or more of
        the trigger events mentioned in Article 7.3i a-f apply.

        In case that this Addendum will be terminated by AGILENT because of
        Article 7.3.i.a-f, AGILENT agrees to pay a royalty of $[*] for each unit
        of the Monet Modules built after

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        termination.

        AGILENT agrees to keep records showing the sales or other disposition of
        Monet Modules or other modules based on the optoblock defined in
        schedule 3 of this Addendum in sufficient detail to enable the royalties
        payable hereunder by AGILENT to be determined, and further agrees to
        permit its books and records to be examined to the extent necessary to
        verify the Royalties payable. Such examination to be made at the expense
        of New Focus by an independent auditor acceptable to AGILENT. Costs
        shall be born by AGILENT if discrepancies occur.

8. MISCELLANEOUS

8.1     With respect to section 8.5 of the Development Agreement of 23.12.1996,
        the liability for New Focus under this section, regarding AGILENT's
        right to rectify the defect itself or have it rectified by a third party
        at New Focus's expense, shall be limited to [*] U.S. dollars ($[*].)

8.2     Article 15.1 second paragraph of the Development Agreement of 23.12.1996
        shall be modified as follows:

        Good cause shall be deemed to exist, in particular, if one of the
        parties hereto fails to perform its contractual obligations, despite a
        reminder to this effect. Good cause shall also be deemed to exist for
        AGILENT if bankruptcy proceedings are instigated or initiated against
        New Focus's assets or in the event of a lasting modification to the
        ownership rights within New Focus (for example, if New Focus will be
        taken over by competitors within the market of telecommunication, test
        and measurement).

8.3     Article 15.1 third paragraph of the Development Agreement of 23.12.1996
        shall not apply to this Addendum.

8.4     No ancillary verbal agreements have been made. Any alterations and
        amendments hereto must be made in writing in order to be valid and must
        expressly indicate that they constitute an alteration or amendment
        hereto. This shall similarly apply to any waiver of this written form
        requirement.

8.5     Should one or more of the provisions hereof be or become void or
        invalid, the parties hereto undertake to replace such a provision with a
        valid provision which approximates the economic purpose or intent of the
        void or invalid provision as closely as possible. The validity of the
        remaining provisions shall remain unaffected thereby.

8.6     In the case that AGILENT transfers all or part of its assets to a new
        legal entity and therefore has to assign and/or transfer the rights and
        obligations under the agreement and this Addendum No 2 to such new legal
        entity, New Focus declares its agreement to such assignment or transfer
        and AGILENT accepts such agreement.

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9.      SCHEDULES TO THIS ADDENDUM

        The Schedules listed in the following shall form an integral part of
        this Addendum:

        Schedule 1    Specifications, Development Phases, Payment

        Schedule 2    Project schedule

        Schedule 3    Definition of the "Tunable Laser Module" and Parts thereof

        Schedule 4    Contact persons

        Schedule 5    Bugfixing

        Schedule 6    Resources provided by AGILENT

        Schedule 7    Definition of Annualized Failure Rate (AFR) and Defect on
                      Arrval(DOA)

        For AGILENT:                                For New Focus:

Boeblingen, 12/16/1999                      Boeblingen, Dec 10, 1999

/s/ JORGE SCHULTZ                           /s/ PAUL SMITH
-----------------------------------         ------------------------------------
Name                                        Name

CONTROLLER, OCMD                            VP/GM Telecom Division
----------------------------                ---------------------------------
Area of activity/title                      Area of activity/title

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                           Final Version - 10.12.1999

SCHEDULE 1 SPECIFICATIONS, DEVELOPMENT PHASES, PAYMENT

        Complete specification should be according to specification control
        drawings!

        1. MODULE KEY FUNCTIONS AND FEATURES

        1.0 TUNABLE WAVELENGTH LASER SOURCE PARAMETERS

        From the customer point of view this source will have the following
        parameters. All these parameters must be accessible via the user
        interface.

<TABLE>
<CAPTION>
Parameter            Limits            Preset            Remarks
---------            ------            ------            -------
<S>                  <C>               <C>               <C>
[*]
</TABLE>

        1.1 TUNABLE WAVELENGTH LASER SOURCE FUNCTIONALITY

        [*]

        1.2 TUNABLE WAVELENGTH LASER SOURCE EXCEPTIONS / EVENTS

        [*]

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        [*]

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2. Development requirement:

        The Development will proceed in accordance with the development phases
        as described below.

        ("of each" herein means of [*] and of [*] modules)

        A: MODULE HARDWARE

        Start Contract

        [*]

        1. Design Review

        [*]

        2. Phase 1 Prototypes

        [*]

        3. Phase 2 Prototypes

        [*]

        4. Release to Production

        [*]

        5. Final Contact close

        [*]

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                           Final Version - 10.12.1999

        B: MODULE SOFTWARE

        1. Design Review

        [*]

        2. Phase 1 Prototypes (alpha units)

        [*]

        3. Phase 2 Prototypes (beta units)

        [*]

        4. Release to Production

        [*]

3. Payment criteria:

        [*]% ($[*]) will be due at contract start (payment criteria; contract
        signing by AGILENT and NFI).

        [*]% ($[*]) will be due after shipment of [*] with waiver spec and [*]
        (payment criteria is an [*] module successfully tested by AGILENT in
        Germany meeting specifications according to specification control
        drawing [*]). Estimated completion date [*].

        [*]% due [*] modules with coherence control and with the original
        environmental spec. (payment criteria both Alpha Modules pass
        environmental testing by AGILENT in Germany according to specification
        control drawing [*] and specification control drawing [*]. Estimated
        completion date [*].

        [*]% ($[*]) due after the first shipment of the [*] with coherence
        control (payment criteria: units meet the same specification control
        drawing limits as the [*] according to [*]). Estimated Completion date
        [*].

        [*]% ($[*]) due at final contract close (payment criteria: final
        contract close which shall occur after 30 production units of both the
        [*] modules have been accepted by AGILENT in Germany). Estimated
        completion date [*].

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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                           Final Version - 10.12.1999

SCHEDULE 2 - PROJECT SCHEDULE

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Agilent Technologies

        [*]

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.
<PAGE>   19

Agilent Technologies

        [*]

[*] Certain information on this page has been omitted and
    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.
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Agilent Technologies

        [*]

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.
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Agilent Technologies

        [*]

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.
<PAGE>   22

                           Final Version - 10.12.1999

SCHEDULE 3: DEFINITION OF THE "TUNABLE LASER MODULE" AND PARTS THEREOF

Digital/analog part

Comprising the [*] and the Analog board as well as the related Low Level
Software drivers.

Computing/interface part

Comprising the Computing Platform and the Bus interface as well as the
adaptation to the Wind River OS and the High Level Software Functions.

The optoblock

as the complete assembled opto-mechanical sub-assembly, including but not
limited to the diode laser, external cavity, cavity optics and drive train, in
the exact configuration, as subject of the Addendum to the Development
Agreement, last signed on Oct. 30, 1997.

[*]

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    filed separately with the Commission. Confidential treatment
    has been requested with respect to the omitted portions.

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                           Final Version - 10.12.1999

SCHEDULE 4 - CONTACT PERSONS

For a better fulfillment of this Agreement both parties name the following
contact persons

By AGILENT:                                    By New Focus

Name: Edgar Leckel                             Name: Bruce Pittman

Telephone-No.: (49) 7031-142691                Telephone-No.: (01) 408 919-2741

FAX: (49) 7031-143387

Name: Emmerich Muller                          Name: Dave Arnone

Telephone-No.: (49) 7031-144861                Telephone-No.: (01) 408-919-1528

FAX: (49) 7031-143387

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                           Final Version - 10.12.1999

SCHEDULE 5 - BUGFIXING

1.      Any bugs in the developed software shall be recorded and verified by
        AGILENT. Following verification, AGILENT shall forward the bug report to
        New Focus.

        Bugs shall be categorized as follows:

        A.      Serious bugs

                Bugs that result in system crashes (hangs or halts), loss of
                data, destruction of data, corruption of data or cases of
                unreasonable handling effort for which no "workaround" is
                available (i.e. there is no method accepted by AGILENT or by the
                customer for either avoiding the bug or using the developed
                software).

                Any medium bug as defined in B. of this schedule 4 which causes
                a serious bug as defined above within the final optical
                component platforms shall additionally be categorized as a
                serious bug.

        B.      Medium bugs

                Bugs as specified under A above, but for which a "workaround" is
                available for bug avoidance.

        C.      Minor bugs

                Any bugs not included in categories A and B above.

2.      Any serious bugs in the developed software shall be immediately fixed by
        New Focus. New Focus will begin to fix the bug 24 hours after the
        respective report by AGILENT the latest. New Focus shall fix the bug
        during 3 days or during a longer period agreed by AGILENT. If New Focus
        is unable to reproduce or to fix any bug immediately on its own computer
        system, it shall fix the bug - if decided by AGILENT - on-site in
        customer's place.

3.      Any medium bug in the developed software shall be fixed in a reasonable
        period of time. New Focus shall begin fixing the bug during 48 hours
        after the respective report by AGILENT. New Focus shall fix the bug
        during two weeks or during a longer period agreed by AGILENT.

4.      Any other bugs shall be fixed as soon as possible within the scope of
        the maintenance of the developed software.

5.      New Focus shall update the documentation in accordance with the bug fix.

                                                                               8
<PAGE>   25

                           Final Version - 10.12.1999

6.      New Focus shall ensure that any serious and medium bugs shall be fixed
        for both the current and the previous operating system release.

7.      New Focus will maintain a telephone number with a designated
        knowledgeable contact to AGILENT to call during normal business hours to
        report problems and receive assistance.

8.      The Bugfixing according to this schedule 5 shall be free of charge
        during the warranty period.

                                                                               9
<PAGE>   26

                           Final Version - 10.12.1999

SCHEDULE 6 - RESOURCES PROVIDED BY AGILENT

1. HARDWARE RELATED DOCUMENTS (see separate Documentation Package)

a) Drawings of all mechanical parts of the Module Chassis
   -  Module Bottom Cover
   -  Module Top Cover
   -  Module Sub Panel
   -  Plastic Front Panel
   -  Module Extractor
   -  Fiber Connector Bushing at Front Panel
   -  Module Fiber Interface

b) Description of Module Interface and digital Hardware
   - Printed Circuit Board Outline
   - Interface Connector to Module/Mainframe Positioning Dwg.

c) Schematics of digital parts including part list

d) Documentation and File of FPGA Communication Part

2. SOFTWARE RELATED DOCUMENTS (see separate Documentation Package)

a) Description of Communication between Mainframe and Module

b) AGILENT Coding Standards

c) Documentation and Source Code Template for Operating System, Start-up
   and Communication of Module

                                                                              10
<PAGE>   27

                           Final Version - 10.12.1999

SCHEDULE 7 - DEFINITION OF ANNUALIZED FAILURE RATE(AFR) AND DEFECT ON
ARRIVAL(DOA)

AFR(% YR), PER MONTH:

         =(SUM OF 'ONE YEAR' WARRANTY FAILS IN THIS MONTH)/(SUM OF UNITS IN
          WARRANTY THIS MONTH) *12 * 100

DOA = MODULE IS EITHER INCOMPLETE, DEFECT, OR DOES NOT MEET SPECIFICATIONS.

                                                                              11<PAGE>   1
                                                                   EXHIBIT 10.14

                                 [ALCATEL LOGO]

                             MEMORANDUM OF AGREEMENT

This Agreement is dated and effective as of January 7, 2000, by and between
Alcatel USA Sourcing, L.P. ("Buyer"), having a place of business at 1000 Coit
Road, Plano, Texas 75075 and New Focus, Inc. ("Seller"), having its principle
place of business at 2630 Walsh Avenue, Santa Clara, California 95051-0905.

Whereas, Seller commits to support and manufacture the optoelectronic component
("Product") as noted below for purchase by Customer.

Whereas, Buyer commits to purchase at least [*] of Buyer's total demand,
equating to approximately [*] units, based on acceptable levels of service and
quality from Seller, of the Product noted below from Seller for deliveries
during calendar year 2000 based on Buyer's current usage projections.

       Product and Commercial Issues
       -----------------------------

       - [*]

       - Establishment of safety stock for lead time reduction program as
         mutually agreed upon by both Buyer and Seller.

This Memorandum of Agreement supersedes all previous understandings or
representations made prior to or simultaneous with the execution of this
document, by any party, with respect to the subject matter contained herein.

It is understood that issuance of a purchase order(s) is subject to receipt of
final approval by internal management of Alcatel USA Sourcing, L.P. and mutually
agreed to terms and conditions. It is further understood that should
the-required management approval be withheld, Alcatel USA will not place a
purchase order(s) and will not be subject to penalties, costs or other liability
of any nature.

/s/ DAVE STARK                              /s/ BOB MACDONALD
-----------------------------------         ------------------------------------
Dave Stark                                  Bob MacDonald
Purchasing Team Leader                      Product Marketing Manager
Alcatel USA Sourcing, L.P.                  New Focus, Inc.

/s/ GREG BROCKMANN                          /s/ PAUL SMITH
-----------------------------------         ------------------------------------
Greg Brockmann                              Paul Smith
Manager - Advanced Purchasing               Vice President, GM of
Alcatel USA Sourcing, L.P.                     Telecommunications
                                            New Focus, Inc.

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

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00004-of-00352.parquet"}]]