Document:

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                                                                   Exhibit 10.54

                       WARRANT AND STOCKHOLDER'S AGREEMENT

         THIS WARRANT AND STOCKHOLDER'S AGREEMENT (the "Agreement"), dated this
13th day of October, 2000, is made and entered into by and between Verilink
Corporation, a Delaware corporation ("Verilink") and Beacon Telco, L.P., a
Delaware limited partnership ("Beacon").

         WHEREAS, Verilink and Beacon have entered into a Cooperative Research
Agreement dated the date hereof (the "Research Agreement") for the
implementation of a research and development project for optical networking
products for the telecommunications access market; and

         WHEREAS, Verilink and the Trustees of Boston University, a
Massachusetts non-profit corporation (the "University"), have entered into a
Premises License and Services Agreement dated the date hereof (the "Premises
Agreement"), providing for Verilink to participate in the Photonics Center
Incubator and Accelerator Program of the University and, as a part thereof, to
obtain a license from the University to use certain University premises and to
obtain certain engineering support services of the University's Photonics Center
in furtherance of such project; and

         WHEREAS, in consideration of the execution and delivery of the Research
Agreement and the Premises Agreement, Verilink has proposed to grant Beacon a
warrant to purchase up to Two Million Two Hundred Forty-Nine Thousand Nine
Hundred (2,249,900) shares (subject to adjustment, as provided herein) of common
stock of Verilink on the terms and conditions set forth herein; and

         WHEREAS, the parties desire to provide for the terms of such warrant
and certain other rights and obligations related to the warrant and the common
stock issuable upon the exercise thereof;

         NOW, THEREFORE, in consideration thereof and for other good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties hereto, subject to the terms and conditions set forth
below, hereby agree as follows:

                             ARTICLE I - DEFINITIONS

1.1 Definitions. Capitalized terms used herein and not defined herein will have
the meaning set forth in the Research Agreement. In addition to the terms
defined elsewhere herein, the following terms have the following meanings when
used herein with initial capital letters:

    (a)      "Affiliate" of any Person means any other Person, that, directly or
             indirectly through one or more intermediaries, controls or is
             controlled by, or is under common control with, such Person; and,
             for the purposes of this definition only, "control" (including the
             terms "controlling", "controlled by" and "under common control
             with") means the possession, direct or

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             cause the direction of the management, policies or activities of a
             Person whether through the ownership of securities, by contract or
             agency or otherwise.

    (b)      "Assumption Agreement" means an agreement in writing in
             substantially the form of Exhibit B hereto pursuant to which the
             party thereto agrees to be bound by the terms and provisions of
             this Agreement.

    (c)      "Average Trading Price" at any date means the average of the Market
             Prices for the Common Stock for the five (5) consecutive trading
             days immediately prior to such date.

    (d)      "Beacon" means and includes Beacon as well as any Permitted
             Transferees, as applicable.

    (e)      A Person will be deemed the "Beneficial owner" of, and will be
             deemed to "Beneficially own", and will be deemed to have
             "Beneficial ownership" of:

             (i)      any securities that such Person or any of such Person's
                      Affiliates is deemed to "beneficially own" within the
                      meaning of Rule 13d-3 under the Exchange Act, as in effect
                      on the date of this Agreement; and

             (ii)     any securities (the "underlying securities") that such
                      Person or any of such Person's Affiliates has the right to
                      acquire (whether such right is exercisable immediately or
                      only after the passage of time) pursuant to any agreement,
                      arrangement or understanding (written or oral), or upon
                      the exercise of conversion rights, exchange rights,
                      rights, warrants or options, or otherwise (it being
                      understood that such Person will also be deemed to be the
                      Beneficial owner of the securities convertible into or
                      exchangeable for the underlying securities).

    (f)      "Board" means the Board of Directors of Verilink.

    (g)      "Board Approval" means the approval of a majority of the members of
             the Board who neither (i) are a Beacon Designee nor (ii) are an
             Affiliate of Beacon.

    (h)      "Change in Control" means the occurrence of any of the following
             events: (i) the merger or consolidation of Verilink with or into
             another entity, unless the holders of Verilink's Voting Securities
             immediately prior to such transaction continue to hold at least a
             majority of outstanding voting power of the surviving entity
             following such transaction, (ii) any Person or Group (other than
             Beacon, its Permitted Transferees, their Affiliates, or any
             Subsidiary of Verilink or any employee benefit plan sponsored by
             Verilink) becomes the Beneficial Owner of 50% or more of the
             outstanding Voting Securities, or (iii) the sale of all or
             substantially all of the assets of Verilink.

    (i)      "Common Stock" means the common stock, $.01 par value per share, of
             Verilink as constituted on the date hereof, together with any other
             equity securities that may be issued by Verilink in substitution
             therefor.

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    (j)      "Exchange Act" means the Securities Exchange Act of 1934, as
             amended, and the rules and regulations promulgated thereunder.

    (k)      "Exercise Price" means $4.75 per share.

    (l)      "Expiration Date" means the third (3rd) anniversary of the date
             hereof.

    (m)      "Group" shall have the meaning as set forth in Rule 13d-5 under the
             Exchange Act.

    (n)      "Market Price" at any date means the closing price of the Common
             Stock on the Nasdaq Stock Market or the principal national
             securities exchange on which the Common Stock is admitted to
             trading or listed, or if not then listed on a national securities
             exchange or the Nasdaq Stock Market, the closing sale price as
             reported on the Over the Counter Bulletin Board or Electronic "Pink
             Sheets", as applicable, or if the closing sale price is not then
             reported, the average of the closing bid and ask prices so
             reported, or if not then publicly traded or quoted, the fair market
             price of the Common Stock as determined by the Board.

    (o)      "Permitted Acquisition" means (i) any acquisition by Beacon of
             Warrant Stock pursuant to or contemplated by this Agreement, (ii)
             any other acquisition of Voting Securities after Beacon has
             received prior Board Approval of such acquisition, and (iii) any
             Common Stock received by Beacon upon payment of a Bonus Amount or
             Bonus Note (as such terms are used in the Research Agreement).

    (p)      "Permitted Transferees" means any Person to whom the Warrant or
             Common Stock is Transferred in a Transfer in accordance with
             Section 2.1 or Section 3.2(a)(i) of this Agreement or a Transfer
             otherwise not in violation of this Agreement, which includes any
             Person to whom a Permitted Transferee of Beacon (or a Permitted
             Transferee of a Permitted Transferee) so further Transfers Common
             Stock, and who is required to, and does, become bound by the terms
             of this Agreement.

    (q)      "Person" means an individual, a corporation, a partnership, a
             limited partnership, a limited liability company, an association, a
             trust or other entity or organization, including without limitation
             a government or political subdivision or an agency or
             instrumentality thereof.

    (r)      "Public Offering" means the sale of shares of any class of Voting
             Securities to the public pursuant to an effective registration
             statement (other than a registration statement on Form S-4 or S-8
             or any similar or successor form) filed under the Securities Act.

    (s)      "Registrable Stock" shall mean those shares of Common Stock issued
             to Beacon either upon exercise of the Warrant (including shares
             issuable as a result of the adjustments provided for herein) or in
             payment of a Bonus Amount or a Bonus Note under Article IV of the
             Research Agreement.

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    (t)      "SEC" means the Securities and Exchange Commission.

    (u)      "Securities Act" means the Securities Act of 1933, as amended, and
             the rules and regulations promulgated thereunder.

    (v)      "Standstill Period" means the period commencing on the date of this
             Agreement and ending on the tenth (10th) anniversary thereof.

    (w)      "Transfer" means a transfer, sale, assignment, pledge,
             hypothecation or disposition.

    (x)      "Warrant Stock" means up to Two Million Two Hundred Forty-Nine
             Thousand Nine Hundred (2,249,900) shares of Common Stock
             deliverable upon such exercise of the Warrant granted pursuant to
             Article II hereof and as adjusted from time to time.

    (y)      "Verilink" means and includes Verilink as well as (i) any successor
             corporation resulting from the merger or consolidation of such
             corporation with another corporation, or (ii) any corporation to
             which such corporation has transferred its property or assets as an
             entirety or substantially as an entirety.

    (z)      "Voting Securities" means the Common Stock and any other securities
             of Verilink entitled to vote generally in the election of directors
             of Verilink, and all other securities convertible into,
             exchangeable for or exercisable for any such securities (whether
             immediately or otherwise).

                          ARTICLE II - GRANT OF WARRANT

2.1 Grant of Warrant. Verilink hereby agrees that Beacon is entitled, subject to
the provisions of this Agreement, to purchase from Verilink, commencing on the
dates as set forth in Article II herein and expiring at 5:00 P.M. New York City
time on the Expiration Date, the Warrant Stock at a price equal to the Exercise
Price (the "Warrant"). The number of shares of Warrant Stock to be received upon
the exercise of this Warrant may be adjusted from time to time as hereinafter
set forth. This Warrant is non-transferable and non-assignable, except that this
Warrant may be assigned or transferred (a) to any Affiliates of Beacon, or (b)
pursuant to a merger or sale of all or substantially all the assets or stock of
Beacon; provided that in either such event, the Transferee executes an
Assumption Agreement.

2.2 Exercise Events. Subject to the provisions set forth in this Agreement, this
Warrant may be exercised to purchase the number of shares of Warrant Stock upon
the occurrence of such events (each, an "Exercise Event" and collectively, the
"Exercise Events") set forth in subsections (a) through (e) below:

    (a)      MILESTONE 1 -- SIGNING. Seven Hundred Forty-Nine Thousand Nine
             Hundred (749,900) shares of Warrant Stock at any time following the
             execution of this Agreement;

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    (b)      MILESTONE 2 -- PHASE O. An additional Two Hundred Fifty Thousand
             (250,000) shares of Warrant Stock following the earliest of: (i)
             twelve (12) months after the completion of Milestone 2 -- Phase 0
             as set forth in the PACE(TM) Phase Description and Deliverable
             Milestone Document relating to developing the specifications of the
             Developed Product(s) and the milestones for the work attached as
             Appendix A-1 to Research Agreement, as such may be supplemented or
             amended from time to time by mutual agreement of the parties (the
             "PACE Document"); (ii) a change in control of Verilink, or (iii)
             sixty (60) months after the date hereof;

    (c)      MILESTONE 3 -- PHASE 1. An additional Five Hundred Thousand
             (500,000) shares of Warrant Stock upon the earliest of (i) twelve
             (12) months after the completion of Milestone 3 - Phase 1 as set
             forth in the PACE Document; (ii) a Change in Control of Verilink,
             or (iii) sixty (60) months after the date hereof;

    (d)      MILESTONE 4 -- PHASE 2 ALPHA. An additional Two Hundred Fifty
             Thousand (250,000) shares of Warrant Stock, upon the earlier of (i)
             twelve (12) months after the completion of Milestone 4 - Phase 2
             Alpha as set forth in the PACE Document, with such twelve (12)
             month period reduced by two (2) weeks for each full week that such
             phase is duly completed prior to the date such phase is scheduled
             to be completed as mutually determined by the parties as
             contemplated by the PACE Document, (ii) a Change in Control
             occurring after the completion of Phase 2 Alpha as set forth in the
             PACE Document or (iii) sixty (60) months after the date hereof;

    (e)      MILESTONE 5 -- PHASE 2 BETA. An additional Five Hundred Thousand
             (500,000) shares of Warrant Stock upon the earlier of (i) twelve
             (12) months after the completion of Milestone 4 - Phase 2 Beta as
             set forth in the PACE Document, with such twelve (12) month period
             reduced by (x) two (2) weeks for each full week that the Milestone
             4 is duly completed prior to the date such phase is scheduled to be
             completed as mutually determined by the parties as contemplated by
             the PACE Document and (y) by one week for each full week that
             Milestone 5 is duly completed prior to the date such phase is
             scheduled to be completed as set as mutually determined by the
             parties as contemplated by the PACE Document, (iii) a Change in
             Control occurring after the completion of Phase 2 Beta as set forth
             in the PACE Document or (iii) sixty (60) months after the date
             hereof; and

    (f)      ACCELERATION. Notwithstanding sub-sections (a) through (e) above,
             the Warrant will become exercisable for one-half the number of
             shares of Warrant Stock for which the Warrant would not yet then be
             exercisable but for this sub-section whenever (i) twelve months
             (12) after the date hereof, if the Average Trading Price for the
             Common Stock as of such date is greater than $11.88; or (ii) upon
             the completion of an underwritten Public Offering of capital stock
             either (x) providing gross proceeds to Verilink of $20 million or
             more or (y) at a price per share to the public of at least two
             hundred percent (200%) of the Exercise Price.

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2.3 Exercise of Warrant.

    (a)      Beacon may exercise this Warrant by presentation and surrender of
             the Warrant Exercise Form, in the form attached hereto as Exhibit A
             (the "Warrant Exercise Form"), to Verilink at its principal office,
             or to its stock transfer agent, if any, duly executed and
             accompanied by payment of the Exercise Price for the number of
             shares of Warrant Stock specified in such form. The Exercise Price
             may be paid either, at Beacon's option, (i) in cash or by certified
             or official bank check, payable to the order of Verilink, or by
             wire transfer of immediately available funds to an account
             designated by Verilink, or (ii) if a Bonus Amount (as defined in
             the Research Agreement) has been paid by the issuance of a Note
             pursuant to Article IV of the Research Agreement (the "Bonus
             Note"), by the delivery and cancellation of the Bonus Note, with
             the aggregate principal amount of the Bonus Note credited against
             the exercise price for the number of shares specified in such form.

    (b)      In connection with any requested exercise of this Warrant, and in
             lieu of the payment of the Exercise Price as described in paragraph
             (a) of this Section 2.3, at the request of Beacon, Verilink shall
             convert this Warrant, in whole or in part and at any time or times,
             into Warrant Stock (the "Conversion Right"), as follows: Upon
             exercise of the Conversion Right, Verilink shall deliver to Beacon
             (without payment by Beacon of any Exercise Price) that number of
             shares of Warrant Stock equal to the quotient obtained by dividing
             (i) the difference of (A) the aggregate Market Price for all
             Warrant Stock issuable upon exercise of the Warrants being
             converted, less (B) the aggregate Exercise Price for all such
             Warrant Stock, by (ii) the Market Price of one share of Warrant
             Stock.

    (c)      Upon receipt by Verilink of the Warrant Exercise Form and the
             Exercise Price (the "Exercise Time"), at its office, or by the
             stock transfer agent of Verilink at its office, Beacon shall be
             deemed to be the holder of record of the shares of Warrant Stock
             issuable upon such exercise, notwithstanding that the stock
             transfer books of Verilink shall then be closed or that
             certificates representing such shares of Warrant Stock shall not
             then be actually delivered to Beacon.

    (d)      Verilink will deliver to Beacon certificates for Warrant Stock
             purchased upon exercise of this Warrant within ten (10) business
             days after the Exercise Time.

    (e)      The issuance of certificates for Warrant Stock upon exercise of
             this Warrant will be made without charge to Beacon for any issuance
             tax in respect thereof or other cost incurred by Verilink in
             connection with such exercise and the related issuance of Warrant
             Stock. Beacon or its transferee shall pay any transfer tax payable
             in respect of a transfer of the Warrant Stock to a third party.

2.4 Reservation of Shares. Verilink shall at all times authorize and reserve for
issuance and delivery all shares of Warrant Stock issuable upon exercise of this
Warrant. All such shares shall be duly authorized and, when issued upon exercise
in compliance with the terms of this Agreement, shall be validly issued, fully
paid and non-assessable. No fractional shares or scrip

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representing fractional shares shall be issued upon the exercise of this
Warrant, but Verilink shall pay Beacon an amount equal to the applicable
Exercise Price multiplied by such fraction in lieu of each fraction of a share
otherwise called for upon any exercise of this Warrant. If at any time the
number of authorized but unissued shares of Common Stock shall not be sufficient
to effect the conversion of this Warrant, Verilink will use its best efforts to
take such corporate action as may, be reasonably necessary to increase its
authorized but unissued shares of Common Stock to such number of shares as shall
be sufficient for such purpose. Verilink shall use its best efforts to take all
such actions as may be reasonably necessary to assure that all such shares of
Common Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any securities exchange or
inter-dealer quotation system upon which shares of Common Stock may be listed or
traded (except for official notice of issuance which shall be immediately
transmitted by Verilink upon issuance).

2.5 Adjustments.

    (a)      Capital Adjustments. If Verilink at any time or from time to time
             after the date hereof effects a subdivision of the outstanding
             Common Stock (by stock split, stock dividend, recapitalization or
             otherwise) or a combination the outstanding shares of Common Stock
             into a smaller number of shares (by reverse stock split,
             recapitalization or otherwise), (i) the Exercise Price in effect
             immediately before the subdivision or combination shall be
             automatically adjusted by multiplying the Exercise Price by a
             fraction (the "Capital Adjustment Factor"), (A) the numerator of
             which is the total number of shares of Common Stock issued and
             outstanding immediately prior to the time of such subdivision or
             combination, and (B) the denominator of which is the total number
             of shares of Common Stock issued and outstanding immediately after
             such subdivision or combination, and (ii) the number of shares of
             Warrant Stock issuable upon exercise of this Warrant shall be
             automatically adjusted by dividing such number of shares by the
             Capital Adjustment Factor.

    (b)      Reorganizations, Mergers, Consolidations or Sales of Assets. If at
             any time or from time to time after the date hereof, there is a
             capital reorganization of the Common Stock (other than a
             recapitalization, subdivision, combination, reclassification,
             exchange or substitution of shares provided for elsewhere in
             Article II), as a part of such capital reorganization, provision
             shall be made so that Beacon shall thereafter be entitled to
             receive upon exercise of this Warrant the number of shares of stock
             or other securities or property of Verilink to which a holder of
             the number of shares of Warrant Stock deliverable upon exercise of
             this Warrant would have been entitled in connection with such
             capital reorganization, subject to adjustment in respect of such
             stock or securities by the terms thereof. In any such case,
             appropriate adjustment shall be made in the application of the
             provisions of this Article II with respect to the rights of Beacon
             after the capital reorganization to the end that the provisions of
             this Article II (including adjustment of the Exercise Price and the
             number of shares of Warrant Stock issuable upon exercise of this
             Warrant then in effect) shall be applicable after that event and be
             as nearly equivalent as practicable.

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    (c)      Notice to Beacon of Adjustment. Whenever the number of shares of
             Warrant Stock issuable upon exercise of this Warrant is adjusted as
             herein provided, Verilink shall cause to be mailed to Beacon in
             accordance with the provisions of this Section 2.5(c), a notice (i)
             stating that an event giving rise to an adjustment hereunder has
             occurred, (ii) setting forth the adjusted number of shares of
             Warrant Stock and (iii) showing in reasonable detail the
             computations and the facts upon which such adjustments are based.

2.6 Beacon Representations and Warranties. Beacon hereby represents and warrants
to, and agrees with, Verilink, as of the date of this Agreement and each date
that the warrant is exercised, as follows:

    (a)      Beacon is a limited partnership duly organized, validly existing
             and in good standing under the laws of the State of Delaware.
             Beacon has all necessary power and authority under all applicable
             provisions of law to execute and deliver this Agreement and to
             carry out its provisions. All partnership action on the part of
             Beacon necessary for the authorization, execution and delivery of
             this Agreement, the performance of the obligations of Beacon under
             this Agreement has been taken. This Agreement has been duly
             executed and delivered by Beacon and constitutes legal, valid and
             binding obligations of Beacon enforceable in accordance with its
             terms.

    (b)      The execution, delivery and performance of this Agreement and the
             performance by Beacon of its obligations hereunder do not and will
             not conflict with or violate any provision of the certificate of
             limited partnership, limited partnership agreement or bylaws of
             Beacon or any law, statute, rule or regulation or any agreement,
             contract or instrument or any order, judgment or decree to which
             Beacon is subject or by which any of its assets are bound.

    (c)      Beacon understands that neither the Warrant nor the Warrant Stock
             has been registered under any state securities act or the
             Securities Act. Beacon also understands that the Warrant and the
             Warrant Stock are being offered and sold pursuant to an exemption
             from registration contained in applicable state securities acts and
             the Securities Act based in part upon Beacon's representations
             contained in this Warrant.

    (d)      Beacon has substantial experience in evaluating and investing in
             private placement transactions of securities in companies similar
             to Verilink so that Beacon is capable of evaluating the merits and
             risks of its investment in Verilink and has the capacity to protect
             its own interests. Beacon must bear the economic risk of this
             investment indefinitely unless the Warrant or the Warrant Stock is
             registered pursuant to the Securities Act, or an exemption from
             registration is available. Beacon also understands that there is no
             assurance that any exemption from registration under the Securities
             Act will be available and that, even if available, such exemption
             may not allow Beacon to transfer all or any portion of the Warrant
             or the Warrant Stock under the circumstances, in the amounts or at

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             the times Beacon might propose. Beacon can bear the economic risk
             of losing its entire investment in Verilink.

    (e)      Beacon is acquiring the Warrant and the Warrant Stock for its own
             account for investment only, and not with a view towards their
             resale or distribution in violation of applicable securities laws.

    (f)      Beacon represents that, by reason of its management's business or
             financial experience, Beacon has the capacity to protect its own
             interests in connection with the transactions contemplated in this
             Agreement. Further, Beacon is aware of no publication of any
             advertisement in connection with the transactions contemplated by
             this Agreement.

    (g)      Beacon represents that it is an accredited investor within the
             meaning of Regulation D under the Securities Act.

    (h)      Beacon has had an opportunity to discuss Verilink's business,
             management and financial affairs with directors, officers and
             management of Verilink. Beacon has also had the opportunity to ask
             questions of, and receive answers from, Verilink and its management
             regarding the terms and conditions of this investment. Beacon has
             had an adequate opportunity to inspect and copy all material
             documents relating to Verilink which it has requested.

2.7 Verilink Representations and Warranties. Verilink hereby represents and
warrants to, and agrees with, Beacon as follows:

    (a)      Organization. Verilink is a corporation duly organized, validly
             existing and in good standing under the laws of the State of
             Delaware. Verilink has all requisite corporate power and authority
             to execute and deliver this Agreement, and to issue the shares of
             Warrant Stock upon exercise of the Warrant.

    (b)      Capitalization. The authorized capital stock of Verilink as of
             October 2, 2000, consists of (i) 40,000,000 shares of Common Stock,
             14,717,791 shares of which are issued and outstanding and 3,662,523
             shares held in treasury and (ii) 1,000,000 shares of preferred
             stock, par value $.01 per share, none of which are outstanding.
             Other than 2,192,343 options available for grant and outstanding
             options to purchase 4,002,406 shares of Common Stock under
             Verilink's option plans, 806,116 of which were vested as of
             September 30, 2000 and 180,995 shares of Common Stock reserved for
             issuance under Verilink's Employee Stock Purchase Plan, there are
             no outstanding options, warrants or other securities convertible
             into or exercisable for common stock, other than the Warrant
             granted hereby.

    (c)      Authorization; Binding Obligations. All corporate action on the
             part of Verilink necessary for the authorization, execution and
             delivery of this Agreement, the performance of the obligations of
             Verilink under this Agreement and for the authorization, sale,
             issuance and delivery of the Warrant Stock issuable upon exercise
             of the Warrant has been taken. When issued in compliance with the

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             provisions of this Agreement, the Warrant Stock will be duly
             authorized, validly issued, fully paid and nonassessable. This
             Agreement has been duly executed and delivered by Verilink and
             constitutes legal, valid and binding obligations of Verilink
             enforceable in accordance with its terms.

    (d)      No Violations. The execution, delivery and performance of this
             Agreement and the performance by Verilink of its obligations
             hereunder do not and will not conflict with or violate any
             provision of the certificate of incorporation or bylaws of Verilink
             or any law, statute, rule or regulation or any agreement, contract
             or instrument or any order, judgment or decree to which Verilink is
             subject or by which any of its assets are bound.

    (e)      No Other Representations or Warranties. The representations and
             warranties made by Verilink in this Agreement supersede any prior
             statements, representations and warranties of any person with
             respect to Verilink or the transactions contemplated hereby. The
             representations and warranties of Verilink in this Agreement are
             the only representations and warranties by Verilink upon which
             Beacon may rely in connection with transactions contemplated by
             this Agreement.

2.8 Notices of Record Date, Etc. In case:

    (a)      Verilink shall establish a record date for the holders of its
             Common Stock for the purpose of entitling them to receive any
             dividend or other distribution, or any right to subscribe for,
             purchase or otherwise acquire any shares of stock of any class or
             any other securities or to receive any other right; of any capital
             reorganization of Verilink, any reclassification of the capital
             stock of Verilink, any consolidation or merger of Verilink with or
             into another corporation, any share exchange for shares of capital
             stock of another corporation or any conveyance of all or
             substantially all of the assets of Verilink to another corporation;

    (b)      of any voluntary or involuntary dissolution, liquidation or winding
             up of Verilink; or

    (c)      Verilink shall enter into a letter of intent or agreement with
             respect to a transaction by which all of the outstanding shares of
             Common Stock of Verilink are to be acquired by a third party;

then Verilink shall mail or cause to be mailed to each holder of the Warrant at
the time outstanding a notice specifying, as the case may be, (i) the date on
which a record is to be taken for the purpose of such dividend, distribution or
rights, and stating the amount and character of such dividend, distribution or
rights, (ii) the date on which such reorganization, reclassification,
consolidation, merger, conveyance, dissolution, liquidation or winding up is to
take place, and the time, if any is to be fixed, as to which the holders of
record of Common Stock shall be entitled to exchange their shares for securities
or other property deliverable upon the completion of such transaction, or (iii)
the closing of the acquisition by a third party of all of the outstanding

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shares of Common Stock. Such notice shall be mailed as soon as practicable after
the occurrence or likelihood of such event is publicly disclosed.

2.9 Automatic Exercise. Notwithstanding any provision of this Agreement to the
contrary, immediately prior to the termination of this Warrant, it shall be
automatically exercised as follows. If a Bonus Note is outstanding immediately
prior to the termination of the Warrant, the outstanding Bonus Note shall be
automatically cancelled (whether or not physically delivered) and the aggregate
principal amount hereof, together with accrued interest thereon, shall be
applied against the remaining aggregate exercise price for the remaining Warrant
Stock. To the extent the Warrant is not fully exercised after applying the
principal amount hereof, together with accrued interest thereon, of any
outstanding Bonus Note to purchase Warrant Stock, the Warrant shall be
automatically exercised to purchase the balance of the Warrant Stock pursuant to
the provisions of Section 2.3(b) of this Agreement, unless the holder gives five
(5) business days' notice to Verilink that this Warrant shall not be exercised
pursuant to the provisions of this Section 2.9.

2.10 Registered Owner. Except as otherwise expressly provided herein, Verilink
may deem and treat the registered owner of the Warrant and the Warrant Stock as
the absolute owner hereof (notwithstanding any notation of ownership or other
writing thereon made by anyone) for all purposes and shall not be affected by
any notice (other than a duly executed Assumption Agreement) to the contrary.

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<PAGE>   12

                      ARTICLE III - STOCKHOLDER'S AGREEMENT

3.1 Standstill.

    (a)      Additional Ownership. Except in connection with a Permitted
             Acquisition, during the Standstill Period, Beacon will not purchase
             or otherwise acquire Beneficial ownership of any Voting Security.

    (b)      Other Restrictions. Without prior Board Approval, except as
             otherwise permitted hereunder, during the Standstill Period, Beacon
             will not, nor will it encourage any other person to do, any of the
             following:

             (i)      solicit proxies from other stockholders of Verilink in
                      opposition to, or prior to the issuance of, a
                      recommendation of the Board for any matter to be
                      considered at any meeting of holders of securities of
                      Verilink;

             (ii)     form, join or participate in or encourage the formation of
                      a Group with respect to any securities of Verilink other
                      than a group consisting solely of Affiliates of Beacon;

             (iii)    deposit any securities of Verilink into a voting trust or
                      subject any such securities to any arrangement or
                      agreement with respect to the voting thereof, other than
                      any such trust, arrangement or agreement (A) the only
                      parties to, or beneficiaries of, which are Affiliates of
                      Beacon; and (B) the terms of which do not require or
                      expressly permit any party thereto to act in a manner
                      inconsistent with this Agreement; or

             (iv)     tender any securities in any tender offer involving
                      Verilink unless such tender offer has received Board
                      Approval.

3.2 Transfer of Common Stock.

    (a)      Transferability. Beacon agrees that it will not Transfer any Common
             Stock Beneficially owned by it, except in strict compliance with
             the terms of this Section 3.2.

             (i)      Affiliates. Notwithstanding any other provision of this
                      Agreement other than Section 3.3 relating to securities
                      law compliance, Beacon may Transfer all or any part of the
                      Common Stock owned by it at any time, without compliance
                      with Section 3.2(b), to any Affiliate of Beacon; provided
                      that, prior to such Transfer, (A) notice of such Transfer
                      is given to Verilink and (B) the Affiliate to whom such
                      Common Stock is to be Transferred enters into an
                      Assumption Agreement.

             (ii)     Transfer After First Anniversary. From and after the first
                      (1st) anniversary of the date of this Agreement, Beacon
                      may Transfer all or any part of the

                                       12
<PAGE>   13

                      Warrant Stock Beneficially owned by it, without compliance
                      with Section 3.2(b), provided that such transaction (A) is
                      pursuant to an available exemption from the registration
                      requirements under applicable securities laws and (B) does
                      not involve the Transfer of Common Stock representing five
                      percent (5%) or more of the outstanding Voting Securities
                      to any one Person or Group.

             (iii)    5% Transfer After First Anniversary. Subject to compliance
                      with the requirements of Section 3.2(b) hereof, from and
                      after the first (1st) anniversary of the date of this
                      Agreement, Beacon may Transfer Common Stock representing
                      five percent (5%) or more of the outstanding Common Stock
                      to any one Person or Group, following compliance with
                      Section 3.2(b); provided, that with respect to any such
                      Transfer, such Transfer shall -------- ---- be conditioned
                      on the Permitted Transferee agreeing (A) to be bound by
                      the provisions of this Agreement and (B) not to acquire
                      more than two percent (2%) of the outstanding Voting
                      Securities during any twelve (12) month period except in
                      compliance with this Agreement. Notwithstanding any other
                      provision of this Agreement to the contrary, open market
                      sales of Common Stock shall not be deemed for any purpose
                      a Transfer to one Person or Group unless transferor has
                      actual knowledge that such Transfer would result in a
                      Person or Group becoming the Beneficial owner or five
                      percent (5%) or more of the outstanding Common Stock.

             (iv)     Void Transfer. In the event of any purported Transfer by
                      Beacon of Common Stock not made in compliance with this
                      Section 3.2, such purported Transfer will be void and of
                      no effect and Verilink will not give effect to such
                      Transfer. Verilink shall be entitled to treat the prior
                      owner as the holder of any such securities not Transferred
                      in accordance with this Agreement.

             (v)      Legend. Each certificate representing Common Stock issued
                      to Beacon will bear a legend on the face thereof
                      substantially to the following effect (with such additions
                      thereto or changes therein as Verilink may be advised by
                      counsel are required by law (the "Legend")):

                      "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
                      SUBJECT TO A STOCKHOLDERS AGREEMENT BETWEEN VERILINK
                      CORPORATION AND BEACON TELCO, L.P. A COPY OF WHICH IS ON
                      FILE WITH THE SECRETARY OF VERILINK CORPORATION. NO
                      TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
                      DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
                      CERTIFICATE MAY BE MADE EXCEPT IN ACCORDANCE WITH THE
                      PROVISIONS OF SUCH STOCKHOLDERS AGREEMENT."

                      "THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE HAVE
                      NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF

                                       13
<PAGE>   14

                      1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
                      UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR ANY
                      OTHER APPLICABLE LAW OR AN EXEMPTION FROM REGISTRATION IS
                      AVAILABLE."

                      The Legend will be removed by Verilink by the delivery of
                      substitute certificates without such Legend in the event
                      of (A) a Transfer permitted by Section 3.2(a) to any
                      Person who is not required to enter into an Assumption
                      Agreement as a condition to such Transfer or (B) the
                      termination of this Article III pursuant to the terms of
                      this Agreement, provided, however, that the second
                      paragraph of such Legend will only be removed if at such
                      time a legal opinion from counsel to the Transferee shall
                      have been obtained to the effect that such Legend is no
                      longer required for purposes of applicable securities
                      laws. In connection with the foregoing, Verilink agrees
                      that, if Verilink is required to file reports under the
                      Exchange Act, for so long as and to the extent necessary
                      to permit Beacon to sell any Common Stock pursuant to Rule
                      144, Verilink will use its best efforts to file, on a
                      timely basis, all reports required to be filed with the
                      SEC by it pursuant to Section 13 of the Exchange Act,
                      furnish to Beacon upon request a written statement as to
                      whether Verilink has complied with such reporting
                      requirements during the twelve (12) months preceding any
                      proposed sale under Rule 144 and otherwise use its best
                      efforts to permit such sales pursuant to Rule 144.

    (b)      Right of First Offer for Five Percent (5%) Sales.

             (i)      Prior to Beacon effecting a Transfer described in Section
                      3.2(a)(iii) (a "Third-Party Sale"), Beacon will deliver to
                      Verilink a written Notice (an "Offer Notice") specifying
                      the amount of consideration (the "Offer Price") and the
                      other material terms pertaining to such Third Party Sale
                      for which Beacon proposes to sell the Common Stock to be
                      offered in such Third-Party Sale (the "Offered Stock")
                      and, to the extent known or contemplated, the proposed
                      purchaser of the Offered Stock.

             (ii)     If Verilink delivers to Beacon a written notice (an
                      "Acceptance Notice") within five (5) calendar days of
                      receipt of the Offer Notice (such five (5) calendar day
                      period being referred to herein as the "ROFO Acceptance
                      Period") stating that Verilink or its designee (the "ROFO
                      Purchaser") is willing to purchase all of the Offered
                      Stock for the Offer Price and on the other terms set forth
                      in the Offer Notice, Beacon will sell all of the Offered
                      Stock to the ROFO Purchaser, and Verilink will purchase
                      such Offered Stock from Beacon, on the proposed terms and
                      subject to the conditions set forth below.

             (iii)    The consummation of any purchase of the Offered Stock by
                      the ROFO Purchaser pursuant to this Section 3.2(b) (the
                      "ROFO Closing") will occur no more than fifteen (15)
                      calendar days following the delivery of the

                                       14
<PAGE>   15

                      Acceptance Notice (such fifteen (15) calendar day period
                      being referred to herein as the "ROFO Closing Period") at
                      10:00 a.m. (Eastern Time) at Verilink's offices or at such
                      other time of day and place as may be mutually agreed upon
                      by Beacon and the ROFO Purchaser. At the ROFO Closing, (x)
                      the ROFO Purchaser will deliver to Beacon by wire transfer
                      to an account designated by Beacon an amount in
                      immediately available funds equal to the Offer Price, (y)
                      Beacon will deliver one or more certificates evidencing
                      the Offered Stock, together with such other duly executed
                      instruments or documents (executed by Beacon) as may be
                      reasonably requested by the ROFO Purchaser to acquire the
                      Offered Stock free and clear of any and all claims, liens,
                      pledges, charges, encumbrances, security interests,
                      options, trusts, commitments and other restrictions of any
                      kind whatsoever (collectively, "Encumbrances"), except for
                      Encumbrances created by this Agreement, or federal or
                      state securities laws ("Permitted Encumbrances"), and (z)
                      in connection with the foregoing, Beacon will represent
                      and warrant to Verilink that, upon the ROFO Closing,
                      Beacon will convey and Verilink will acquire the entire
                      record and Beneficial ownership of, and good and valid
                      title to, the Offered Stock, free and clear of any and all
                      Encumbrances, except for Permitted Encumbrances.

             (iv)     If no Acceptance Notice relating to the proposed
                      Third-Party Sale is delivered to Beacon prior to the
                      expiration of the ROFO Acceptance Period, or an Acceptance
                      Notice is so delivered to Beacon but the ROFO Closing
                      fails to occur prior to the expiration of the ROFO Closing
                      Period (unless the ROFO Purchaser was ready, willing and
                      able prior to the expiration of the ROFO Closing Period to
                      consummate the transactions to be consummated by the ROFO
                      Purchaser at the ROFO Closing), Beacon may, during the
                      three hundred sixty (360) calendar day period immediately
                      following the expiration of the ROFO Acceptance Period (in
                      the event that no Acceptance Notice was timely delivered
                      to Beacon) or the three hundred sixty (360) calendar day
                      period immediately following the expiration of the ROFO
                      Closing Period (in the event that an Acceptance Notice was
                      timely delivered to Beacon but the ROFO Closing failed
                      timely to occur other than as a result of a failure by
                      Beacon to perform its obligations under Section
                      3.2(b)(iii) hereof) at a gross price at least equal to the
                      Offer Price and on such other terms no more favorable to
                      the Transferee than those set forth in the Offer Notice,
                      consummate the Third-Party Sale in accordance with Section
                      3.2(a)(iii). After the applicable three hundred sixty
                      (360) day period, any Transfer pursuant to Section
                      3.2(a)(iii) shall not be made unless Beacon again complies
                      with the provisions of this Section 3.2(b).

             (v)      For purposes of this Section 3.2(b), the value of any
                      consideration other than cash that is payable or
                      receivable in the Third Party Sale will be as determined
                      by the Board in good faith or, if Beacon gives Verilink
                      written

                                       15
<PAGE>   16

                      notice of its disagreement with such valuation within ten
                      (10) business days after receipt of written notice of such
                      value, such value will be determined in accordance with
                      the appraisal procedures set forth on Exhibit C. The
                      various time periods described above relating to any
                      actions regarding the exercise of a right of first offer
                      will be extended for the duration of any period in which
                      the value of any non-cash consideration is subject to
                      dispute pursuant to Section 3.2(b).

    (c)      Transfer Prohibited prior to First Anniversary. Beacon shall not
             effect any Transfer (other than to an Affiliate pursuant to Section
             3.2(a)(i) above or Section 5.4 below, or as contemplated by a
             Piggyback Registration, under Section 4.1) of any amount of Warrant
             Stock prior to the first (1st) anniversary of the date of this
             Agreement, and any such purported Transfer shall be void as
             provided in Section 3.2(a)(iv) above.

3.3 Securities Law Restrictions. In order to comply with applicable securities
laws, Beacon further agrees not to make any transfer of all or any portion of
the Common Stock unless and until:

    (a)      there is then in effect a registration statement under the
             Securities Act covering such proposed Transfer and such Transfer is
             made in accordance with such registration statement; or

    (b)      Beacon shall have furnished Verilink, at the expense of Beacon or
             its transferee, with an opinion of counsel, reasonably satisfactory
             to Verilink (it being agreed that an opinion of Bingham Dana LLP
             shall be reasonably satisfactory), that such disposition shall not
             require registration of such securities under the Securities Act.

    (c)      Notwithstanding the provisions of paragraphs (1) and (2) above, no
             such registration statement or opinion of counsel shall be
             required: (i) for any transfer of any of the Common Stock in
             compliance with Rule 144 or Rule 144A promulgated under the
             Securities Act, or (ii) for any transfer of the Common Stock by
             Beacon or a Permitted Transferee, if such holder is a partnership
             or a corporation to (A) a partner of such partnership, shareholder
             of such corporation or controlled subsidiary of such partnership or
             corporation, (B) a retired partner of such partnership who retires
             after the date hereof, (C) the estate of any such partner or
             shareholder, or (iii) for the transfer by gift, will or intestate
             succession by the holder to his or her spouse or lineal descendants
             or ancestors or any trust for any of the foregoing, provided that
             in each of the foregoing cases the subsequent Permitted Transferee
             agrees in writing to be subject to the terms of this Section 3.3.

3.4 Board Representative.

    (a)      Promptly after the date hereof, Verilink shall take all necessary
             action to appoint or elect to the Board one person designated by
             Beacon and reasonably acceptable to Verilink (the "Beacon
             Designee"). For so long as Beacon Beneficially owns at

                                       16
<PAGE>   17

             least ten percent (10%) of the outstanding Voting Securities,
             Verilink, at each meeting of stockholders of Verilink at which
             directors are elected or pursuant to which such action is to be
             taken by written consent, will nominate such Beacon Designee for
             election as a director of Verilink. Ninety (90) calendar days prior
             to any such meeting or action by written consent, Beacon will
             provide Verilink with the information required pursuant to
             Regulation 14A under the Exchange Act with respect to such Beacon
             Designee. Verilink will solicit proxies from its stockholders for
             such nominees, vote all proxies in favor of such nominees, except
             for such proxies that specifically indicate to the contrary, and
             otherwise use its best efforts to cause such nominees to be elected
             to the Board as herein contemplated.

    (b)      The Beacon Designee will serve until his or her successor is
             elected and qualified or until his or her earlier resignation,
             retirement, disqualification, removal from office, or death.

    (c)      If the Beacon Designee ceases to be a director of Verilink for any
             reason, Verilink will promptly upon the request of Beacon cause a
             person designated by Beacon to replace such director if Beacon is
             then so entitled.

    (d)      Beacon agrees to cause the Beacon Designee to promptly resign in
             the event Beacon's Beneficial ownership of the outstanding Voting
             Securities falls below ten percent (10%).

    (e)      Verilink shall reimburse reasonable expenses of the Beacon Designee
             incurred in connection with the performance of his or her duties as
             a director of Verilink in accordance with Verilink's policies
             regarding director reimbursement and on the same basis as all other
             non-employee directors of Verilink.

    (f)      Beacon and its Permitted Transferees shall vote all Common Stock
             owned by any of them for the election of directors nominated by the
             Nominating Committee of the Board and in accordance with the
             recommendations of the Board on all other matters at each
             stockholder meeting, or shall execute written consents for such
             purpose at the request of Verilink.

                        ARTICLE IV - REGISTRATION RIGHTS

4.1 Incidental Registration. If Verilink proposes to register any Common Stock
under the Securities Act for sale by Verilink in an underwritten Public
Offering, it will each such time give written notice to Beacon of its intention
so to do. Upon the written request of Beacon given within ten (10) days after
receipt of any such notice (stating the number of shares of Registrable Stock to
be disposed of by Beacon) and notwithstanding Section 3.2, Verilink will use its
best efforts to cause all such shares of Registrable Stock intended to be
disposed of to be registered under the Securities Act so as to permit the
disposition by Beacon in the proposed underwritten Public Offering (a "Piggyback
Registration"), subject, however, to the limitations set forth in Section 4.2.

                                       17
<PAGE>   18

4.2 Limitations on Incidental Registration. Beacon may not participate in any
underwritten registration hereunder unless Beacon (i) agrees to sell its
Registrable Stock on the basis provided in any underwriting arrangements
approved by Verilink, (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and (iii) agrees to
pay its pro rata portion of all underwriting discounts and commissions and any
fees and expenses of its counsel. Notwithstanding any provision of Section 4.1,
if the managing underwriter determines that marketing or other factors require a
limitation of the number of shares of Registrable Stock to be included in the
underwritten offering, the managing underwriter may exclude or otherwise limit
the number of shares of Registrable Stock to be included in the registration and
underwriting to the extent that it also excludes from registration of shares to
be offered by officers and directors of Verilink as well on a pro rata basis
based on the number of shares requested to be included in such registration.
Shares to be offered by Verilink shall have priority in registration. Verilink
shall so advise Beacon, and no Registrable Stock excluded from the underwriting
by reason of the managing underwriter's determination shall be included in such
registration.

4.3 S-3 Registration.

    (a)      Verilink agrees to use its best efforts, upon written request of
             Beacon at any time after the first anniversary of the date hereof,
             to file and cause to be declared effective a valid "shelf"
             registration on Form S-3 (a "Demand Registration") providing for
             the registration and sale on a continuous or delayed basis all of
             the Registrable Stock, pursuant to Rule 415 under the Securities
             Act and/or any similar rule that may be adopted by the Commission.
             Verilink will use its best efforts to keep the Demand Registration
             current and effective until the earliest to occur of (i) the
             seventh anniversary of the date hereof, (ii) the date all of the
             Registrable Stock then held by Beacon and its Permitted Transferees
             is eligible for sale under Rule 144 within a single three-month
             period, and the date on which all the Registrable Stock registered
             thereunder has been sold.

    (b)      In connection with any underwritten Public Offering pursuant to a
             Demand Registration, the managing underwriter shall be an
             investment banking firm reasonably acceptable to Verilink.

    (c)      Notwithstanding the foregoing, Verilink may delay filing a
             registration statement relating to a Demand Registration and may
             withhold its efforts to cause such registration statement to become
             effective for not more than sixty (60) days and for not more than
             ninety (90) days in the aggregate during any twelve (12) month
             period, if Verilink determines in good faith that such registration
             might (i) interfere with or affect the negotiation or completion of
             any transaction that is being contemplated by Verilink (whether or
             not a final decision has been made to undertake such transaction)
             at the time the right to delay is exercised, or (ii) involve
             initial or continuing disclosure obligations that might not be in
             the best interests of Verilink's stockholders.

                                       18
<PAGE>   19

4.4 Cooperation by Beacon. Beacon will furnish to Verilink such information as
Verilink may reasonably require from Beacon in connection with the registration
statement (and the prospectus included therein) and shall not effect sales of
the shares included in the registration after receipt of telegraphic or written
notice from Verilink to suspend sales to permit Verilink to correct or update a
registration statement or prospectus.

4.5 Expenses of Registration. All expenses incurred in effecting any
registration pursuant to this Agreement, including, without limitation, all
registration and filing fees, printing expenses, expenses of compliance with
blue sky laws, fees and disbursements of counsel for Verilink and expenses of
any audits incidental to or required by any such registration shall be borne by
Verilink, except that all additional expenses, fees and disbursements of any
counsel retained by Beacon, and all underwriting discounts, fees and commissions
shall be borne by Beacon, according to the quantity of its Registrable Stock so
registered.

4.6 Indemnification.

    (a)      To the extent permitted by law, Verilink will indemnify Beacon,
             each agent, officer and director of Beacon, each person, if any,
             who controls Beacon within the meaning of Section 15 of the
             Securities Act, each underwriter and selling broker of the
             securities so registered (collectively, "Indemnitees") against all
             claims, losses, damages and liabilities (or actions in respect
             thereof) arising out of or based on any untrue statement (or
             alleged untrue statement) of a material fact contained in any
             prospectus, offering circular or other document incident to any
             registration, qualification or compliance (or in any related
             registration statement, notification or the like) or any omission
             (or alleged omission) to state therein a material fact required to
             be stated therein or necessary to make the statements therein not
             misleading in the light of the circumstances in which they were
             made, or any violation by Verilink of any rule or regulation
             promulgated under the Securities Act applicable to Verilink and
             relating to an action or inaction required of Verilink in
             connection with any such registration, qualification or compliance,
             and will reimburse each such Indemnitee for any legal and any other
             expenses reasonably incurred in connection with investigating or
             defending any such claim, loss, damage, liability or action;
             provided, however, that Verilink will not be liable in any such
             case to the extent that any such claim, loss, damage, liability or
             action is caused by any untrue statement or omission so made in
             conformity with written information furnished to Verilink by such
             Indemnitees and except that the foregoing indemnity agreement is
             subject to the condition that, insofar as it relates to any such
             untrue statement (or alleged untrue statement) or omission (or
             alleged omission) made in the preliminary prospectus but eliminated
             or remedied in the amended prospectus on file with the SEC at the
             time the registration statement becomes effective or in the amended
             prospectus filed with the SEC pursuant to Rule 424(b) (the "Final
             Prospectus"), such indemnity agreement shall not inure to the
             benefit of any underwriter, or any Indemnitee if there is no
             underwriter, if a copy of the Final Prospectus was not furnished to
             the person or entity asserting the loss, liability, claim or damage
             at or prior to the time such furnishing is required by the
             Securities Act; provided, further, that this indemnity shall not be
             deemed to relieve any underwriter of any of its due diligence
             obligations;

                                       19
<PAGE>   20

             provided, further, that the indemnity agreement contained in this
             Section 4.6(a) shall not apply to amounts paid in settlement of any
             such claim, loss, damage, liability or action if such settlement is
             effected without the consent of Verilink, which consent shall not
             be unreasonably withheld.

    (b)      To the extent permitted by law, Beacon and each underwriter of the
             securities so registered will indemnify Verilink and its officers
             and directors and each person, if any, who controls Verilink within
             the meaning of Section 15 of the Securities Act and their
             respective successors against all claims, losses, damages and
             liabilities (or actions in respect thereof) arising out of or based
             on any untrue statement (or alleged untrue statement) of a material
             fact contained in any prospectus, offering circular or other
             document incident to any registration, qualification or compliance
             (or in any related registration statement, notification or the
             like) or any omission (or alleged omission) to state therein a
             material fact required to be stated therein or necessary to make
             the statements therein not misleading in the light of the
             circumstances in which they were made and will reimburse Verilink
             and each other person indemnified pursuant to this subsection (b)
             for any legal and any other expenses reasonably incurred in
             connection with investigating or defending any such claim, loss,
             damage, liability or action, provided, however, that this
             subsection (b) shall apply only if (and only to the extent that)
             such statement or omission was made in reliance upon and in
             conformity with written information furnished to Verilink by Beacon
             or underwriter and except that the foregoing indemnity agreement is
             subject to the condition that, insofar as it relates to any such
             untrue statement (or alleged untrue statement) or omission (or
             alleged omission) made in the preliminary prospectus but eliminated
             or remedied in the amended prospectus on file with the SEC at the
             time the registration statement becomes effective or in the Final
             Prospectus, such indemnity agreement shall not inure to the benefit
             of (i) Verilink and (ii) any underwriter if a copy of the Final
             Prospectus was not furnished to the person or entity asserting the
             loss, liability, claim or damage at or prior to the time such
             furnishing is required by the Securities Act; provided, further,
             that the indemnity agreement contained in this Section 4.6(b) shall
             not apply to amounts paid in settlement of any such claim, loss,
             damage, liability or action if such settlement is effected without
             the consent of Beacon or underwriter, as the case may be, which
             consent shall not be unreasonably withheld; and provided, further,
             that the obligations of Beacon shall be limited to an amount equal
             to the proceeds to Beacon of Registrable Stock sold as contemplated
             herein, unless such claim, loss, damage, liability or action
             resulted from Beacon's fraudulent misconduct.

    (c)      Each party entitled to indemnification hereunder (the "Indemnified
             Party") shall give notice to the party required to provide
             indemnification (the "Indemnifying Party") promptly after such
             Indemnified Party has actual knowledge of any claim as to which
             indemnification may be sought, and shall permit the Indemnifying
             Party (at its expense) to assume the defense of any claim or any
             litigation resulting therefrom, provided that counsel for the
             Indemnifying Party, who shall conduct the defense of such claim or
             litigation, shall be satisfactory to the

                                       20
<PAGE>   21

             Indemnified Party, and the Indemnified Party may participate in
             such defense at such party's expense, and provided, further, that
             the omission by any Indemnified Party to give notice as provided
             herein shall not relieve the Indemnifying Party of its obligations
             under this Section 4.6 except to the extent that the omission
             results in a failure of actual notice to the Indemnifying Party and
             such Indemnifying Party is damaged solely as a result of the
             failure to give notice. No Indemnifying Party, in the defense of
             any such claim or litigation, shall, except with the consent of
             each Indemnified Party, consent to entry of any judgment or enter
             into any settlement that either (i) does not include as an
             unconditional term thereof the giving by the claimant or plaintiff
             to such Indemnified Party of a release from all liability in
             respect to such claim or litigation or (ii) contains any finding of
             a violation of law by an Indemnified Party.

    (d)      The reimbursement required by this Section 4.6 shall be made by
             periodic payments during the course of the investigation or
             defense, as and when bills are received or expenses are incurred.

    (e)      If the indemnification provided for in this Section 4.6 is
             unavailable to an Indemnified Party in respect of any losses,
             claims, damages or liabilities referred to therein, then each
             Indemnifying Party, in lieu of indemnifying such Indemnified Party,
             shall contribute to the amount paid or payable by such Indemnified
             Party as a result of such losses, claims, damages or liabilities in
             such proportion as is appropriate to reflect the relative fault of
             Verilink on the one hand, and of Beacon and any other sellers
             participating in the registration statement on the other hand, in
             connection with the statements or omissions that resulted in such
             losses, claims, damages or liabilities, as well as any other
             relevant equitable considerations. The relative benefits received
             by Verilink on the one hand, and Beacon and any other sellers
             participating in the registration statement on the other hand,
             shall be deemed to be in the same proportion as the total net
             proceeds from the offering (before deducting expenses) to Verilink
             bear to the total net proceeds from the offering (before deducting
             expenses) to Beacon and any other sellers participating in the
             registration statement. The relative fault of Verilink on the one
             hand, and of Beacon and any other sellers participating in the
             registration statement on the other hand, shall be determined by
             reference to, among other things, whether the untrue or alleged
             untrue statement of a material fact or the omission or alleged
             omission to state a material fact relates to information supplied
             by Verilink or by Beacon or other sellers participating in the
             registration statement and the parties' relative intent, knowledge,
             access to information and opportunity to correct or prevent such
             statement or omission.

    (f)      Verilink and Beacon agree that it would not be just and equitable
             if contribution pursuant to this Section 4.6 were determined by pro
             rata allocation or by any other method of allocation that does not
             take account of the equitable considerations referred to in the
             immediately preceding paragraph. The amount paid or payable by an
             Indemnified Party as a result of the losses, claims, damages and
             liabilities referred to in the immediately preceding paragraph
             shall be deemed to include,

                                       21
<PAGE>   22

             subject to the limitations set forth above, any legal or other
             expenses reasonably incurred by such Indemnified Party in
             connection with investigating or defending any such action or
             claim. No person guilty of fraudulent misrepresentation (within the
             meaning of Section 11(f) of the Securities Act) shall be entitled
             to contribution from any person who was not guilty of such
             fraudulent misrepresentation.

    (g)      The obligations under this Section 4.6 shall survive the completion
             of any offering of Registrable Stock in a registration statement
             under this Agreement or otherwise.

4.7 "Stand-Off" Agreement. In consideration for Verilink performing its
obligations under this Agreement, Beacon agrees for a period of time (not to
exceed one hundred eighty (180) days) from the effective date of any
registration of securities of Verilink (upon request of Verilink or of the
underwriters managing any underwritten offering of Verilink's securities) not to
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Warrants or Registrable Stock or other securities
exercisable or exchangeable for, or convertible into, Common Stock, other than
shares of Registrable Stock included in the registration, without the prior
written consent of Verilink and such underwriters, provided that all executive
officers and directors of Verilink shall enter into similar agreements.

                      ARTICLE V - MISCELLANEOUS PROVISIONS

5.1 Applicable Law. The Agreement shall for all purposes be governed by and
construed in accordance with the internal laws of the State of Delaware, without
regard to conflicts of laws principles.

5.2 Entire Agreement. This Agreement, the Research Agreement, the Premises
Agreement and the existing Confidentiality Agreement and the other agreements,
certificates and documents delivered in connection with this Agreement contain
the entire agreement between Verilink and Beacon with respect to the
transactions described herein, and supersede all prior agreements or statements,
written or oral, with respect thereto.

5.3 Termination. The provisions of this Agreement specified below will
terminate, and be of no further force or effect (other than with respect to
prior breaches), as follows:

    (a)      Article II will terminate upon the earlier of (A) the exercise in
             full of the Warrant; or (B) seven (7) years from the date hereof;

    (b)      Section 3.1 will terminate upon the expiration of the Standstill
             Period;

    (c)      Section 3.2 will terminate upon the earlier of (A) Beacon ceasing
             to be the Beneficial owner of five percent (5%) or more of the
             outstanding voting securities or (B) five (5) years from the date
             hereof;

                                       22
<PAGE>   23

    (d)      Section 3.4 will terminate upon the earlier of (A) Beacon ceasing
             to be the Beneficial owner of ten percent (10%) or more of the
             outstanding Voting Securities; or (B) five (5) years from the date
             hereof;

    (e)      Article IV will terminate on the earlier of (A) the tenth (10th)
             anniversary of the date of this Agreement or (B) at such time when
             Beacon would be permitted to sell all of the Warrant Stock held by
             Beacon within a single three (3) month period pursuant to Rule
             144(k); and

    (f)      Any portion or all of this Agreement will terminate and be of no
             further force and effect upon a written agreement of the parties to
             that effect.

5.4 Transfer and Assignment.

         The provisions of this Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
provided, however, that neither of the parties may assign, delegate or otherwise
transfer any of their rights or obligations under this Agreement except as
follows:

    (a)      with the written consent of the other party hereto,

    (b)      to any Affiliate of Beacon or pursuant to a merger or sale of
             substantially all the assets or stock of Beacon, provided that the
             Permitted Transferee executes an Assumption Agreement.

    (c)      Beacon's rights under Section 3.4 and Article IV of this Agreement
             may only be assigned, transferred, pledged or hypothecated in any
             way (whether by operation of law or otherwise) to an Affiliate in
             connection with a Transfer of the Warrant or the Warrant Stock in
             accordance with Section 2.1 or Section 3.2(a)(i).

    (d)      Except as otherwise expressly set forth in this Agreement,
             including without limitation Section 3.2(a) and Section 5.4, this
             Agreement, the Warrant, the Warrant Stock or any rights hereunder
             may not be assigned, transferred, pledged or hypothecated in any
             way (whether by operation of law or otherwise). The Warrant and the
             Warrant Stock shall not be subject to execution, attachment or
             similar process. Any attempted assignment, transfer, pledge,
             hypothecation or other disposition of the Warrant and/or the
             Warrant Stock contrary to the provisions of this Agreement shall be
             null and void and without legal effect.

Except upon assignment or transfer expressly permitted by any this Agreement,
this Agreement nor any provision hereof is intended to confer upon any Person
other than the parties hereto any rights or remedies hereunder.

5.5 Notices. All notices required hereunder must be in writing and shall be
deemed given when telefaxed, delivered personally or by overnight delivery
service or within three days after mailing when mailed by certified or
registered mail, return receipt requested, if to Verilink, at:

                                       23
<PAGE>   24

                  Verilink Corporation
                  950 Explorer Blvd.
                  Huntsville, AL 35806,
                  Attention: Ronald G. Sibold, Vice President and Chief
                    Financial Officer
                  Fax: (256) 774-2425

with a courtesy copy to:

                  Powell, Goldstein, Frazer & Murphy LLP
                  191 Peachtree Street, N.E, 16th Floor,
                  Atlanta, Georgia 30303
                  Attention: Eliot Robinson
                  Fax: 404-572-6999

 and if to Beacon, at:

                  Beacon Telco, L.P.
                  8 St. Mary Street, Suite 910
                  Boston, MA 02115
                  Attention: Alok Prasad, President
                  Fax: (617) 351-1636

with a courtesy copy to:

                  Bingham Dana LLP
                  150 Federal Street
                  Boston, MA 02110,
                  Attention: Jack Concannon
                  Fax: 617-951-8736

or at such other address of which Verilink or Beacon has been advised by notice
hereunder.

5.6 Rights as a Stockholder. Unless otherwise expressly provided herein, Beacon
shall have no rights as a stockholder with respect to any Warrant Stock until
the date of issuance of such shares. No provision hereof, in the absence of
affirmative action by Beacon to purchase Warrant Stock, and no enumeration
herein of the rights or privileges of Beacon shall give rise to any liability of
such holder for the Exercise Price of Warrant Stock acquirable by exercise
hereof or as a stockholder of Verilink.

5.7 Specific Performance. The parties agree that any breach by any of them of
any provision of this Agreement would irreparably injure Verilink or Beacon, as
the case may be, and that money damages would be an inadequate remedy therefor.
Accordingly, the parties agree that the other party will be entitled to one or
more injunctions enjoining any such breach and requiring specific performance of
this Agreement and consent to the entry thereof, in addition to any other remedy
to which such other party are entitled at law or in equity.

                                       24
<PAGE>   25

5.8 Amendment; Waivers.

    (a)      Any provision of this Agreement may be amended or waived if, and
             only if, such amendment or waiver is in writing and signed, in the
             case of an amendment, by Verilink and Beacon (who shall have the
             authority to bind all Permitted Transferees), or in the case of a
             waiver, by the party against whom the waiver is to be effective.

    (b)      No failure or delay by any party in exercising any right, power or
             privilege hereunder will operate as a waiver thereof nor shall any
             single or partial exercise thereof preclude any other or further
             exercise thereof or the exercise of any other right, power or
             privilege. The rights and remedies herein provided will be
             cumulative and not exclusive of any rights or remedies provided by
             law.

5.9 Counterparts; Effectiveness. This Agreement may be signed in any number of
counterparts, each of which will be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement will
become effective when each party hereto shall have received a counterpart hereof
signed by the other party hereto.

5.10 Calculation of Beneficial Ownership. Any provision in this Agreement that
refers to a percentage of Voting Securities shall be calculated based on the
aggregate number of issued and outstanding shares of Common Stock at the time of
such calculation (including any shares of Common Stock that would then be
issuable upon the exercise of the Warrant and the conversion of any outstanding
convertible security), but shall not include any shares of Common Stock issuable
upon any other options, warrants or other securities that are exercisable for
Common Stock.

5.11 Severability. In the event that any one or more of the provisions contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be in any way impaired thereby,
it being intended that all of the rights and privileges of the parties hereto
shall be enforceable to the fullest extent permitted by law.

5.13 No Strict Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto, and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of the authorship
of any of the provisions of this Agreement.

                            [Signature page follows]

                                       25
<PAGE>   26

         IN WITNESS WHEREOF, Verilink and Beacon have caused this Agreement to
be signed as of the day and year first above written.

                                    VERILINK CORPORATION

                                    By: /s/ Graham G. Pattison
                                        ----------------------------------------
                                    Name:  Graham G. Pattison
                                           -------------------------------------
                                    Title: President and Chief Executive Officer
                                           -------------------------------------

                                    BEACON TELCO, L.P.

                                    By: /s/ Alok Prasad
                                        ----------------------------------------
                                    Name:  Alok Prasad
                                           -------------------------------------
                                    Title: President
                                           -------------------------------------

                                       26
<PAGE>   27

                                    EXHIBIT A

                              WARRANT EXERCISE FORM

         To: VERILINK CORPORATION

         1. The undersigned hereby irrevocably elects to purchase
__________________ shares of Common Stock ("Stock") of VERILINK CORPORATION (the
"Company") pursuant to the terms of the Warrant and Stockholder's Agreement
dated as of ________ __, 2000 by and between the Company and Beacon Telco, L.P.,
(the "Agreement"), and tenders herewith payment of the purchase price for the
Stock.

         2. The undersigned understands that the issuance of the Stock to the
undersigned has not been registered under the Securities Act of 1933, as amended
(the "Act") or any state securities laws and can only be resold or transferred
pursuant to an effective registration statement under the Act or an applicable
exemption from such registration, and in accordance with the restrictions on
transfer set forth in the Agreement.

         3. The undersigned is an "accredited investor" as defined in Rule 502
of Regulation D under the Act and confirms that each of its representations and
warranties set forth in Section 2.6 of the Agreement are true and correct as of
the date hereof.

         4. The undersigned understands the instruments evidencing the Stock may
bear a restrictive legend as set forth in the Agreement.

Date:                               [BEACON TELCO, L.P.]
      ------------------------

                                    By:
                                        ----------------------------------------
                                    Name:
                                    Title:

--------------------------------------------------------------------------------
                           CASHLESS EXERCISE PROVISION

         (To be executed upon exercise of Warrant pursuant to Section 2.3(b) of
the Agreement)

         The undersigned hereby irrevocably elects to surrender
____________________ shares purchasable under the attached Warrant for such
shares of Common Stock issuable in exchange therefor pursuant to the Conversion
Right provision of Section 2.3(b) of the Agreement.

Date:                               [BEACON TELCO, L.P.]
      ------------------------

                                    By:
                                        ----------------------------------------
                                    Name:
                                    Title:

<PAGE>   28
                                    EXHIBIT B

                              ASSUMPTION AGREEMENT

                  The undersigned hereby agrees, effective as of the date
hereof, to become a party to, and be bound by the provisions of, that certain
Warrant and Stockholder's Agreement (the "Agreement") dated as of ________ ___,
2000 by and between Verilink Corporation and Beacon Telco, L.P. and for all
purposes of the Agreement, the undersigned shall be included within the term
"Permitted Transferee" (as defined in the Agreement). The address and facsimile
number to which notices may be sent to the undersigned is as follows:

         ----------------------------
         ----------------------------
         ----------------------------
         Facsimile No.
                       --------------

                                   [Name]

                                    By:
                                        ----------------------------------------
                                    Name:
                                    Title:

<PAGE>   29
                                    EXHIBIT C

                              APPRAISAL PROCEDURES

         If the ROFO Purchaser gives the Offering Stockholder written notice of
its disagreement as to the valuation of any non-cash consideration payable or
receivable in a Third Party Sale in accordance with Section 3.2(b) (the
"Agreement Deadline"), then appraisals hereunder shall be undertaken by two (2)
Appraisers (as defined below), one selected by the ROFO Purchaser and one
selected by the Offering Stockholder, which appointment shall be made within
fifteen (15) calendar days after the Agreement Deadline. Such Appraisers shall
have thirty (30) calendar days following the appointment of the last Appraiser
to be appointed to agree upon the value of the consideration other than cash
proposed to be received in the Third Party Sale pursuant to Section 3.2(b) of
this Agreement (the "Consideration Value"). In the event that such Appraisers
cannot so agree within such period of time, (x) if such Appraisers' valuations
do not vary by more than twenty (20%) percent, then the Consideration Value
shall be the average of the two valuations and (y) if such Appraisers'
valuations differ by more than twenty (20%) percent, such Appraisers shall
mutually agree on a third Appraiser who shall calculate the Consideration Value
independently. In the event that the two original Appraisers cannot agree upon a
third Appraiser within thirty (30) calendar days following the end of the thirty
(30) day period referred to above, then the third Appraiser shall be determined
by lottery from a group of two (2) Appraisers, one of whom will be designated by
the ROFO Purchaser and one of whom will be designated by the Offering
Stockholder. The third Appraiser shall make its determination as to
Consideration Value within thirty (30) calendar days of its appointment. The
third Appraiser's valuation will be the Consideration Value for all purposes
hereof and will not be subject to appeal or challenge by either the ROFO
Purchaser or the Offering Stockholder.

         For purposes of this Exhibit C, "Appraiser" means a nationally
recognized investment banking firm that (a) does not have a direct or indirect
material financial interest in the ROFO Purchaser or the Offering Stockholder,
(b) has not received in excess of $50,000 in fees or other compensation from the
ROFO Purchaser, the Offering Stockholder or any of their respective subsidiaries
or affiliates in the preceding three hundred sixty (360) days, and (c) is
otherwise qualified to render an appraisal of the Consideration Value.<PAGE>   1
                                                                   Exhibit 10.55

                     PREMISES LICENSE AND SERVICES AGREEMENT

This Premises License and Services Agreement ("Agreement") dated as of the 16th
day of October, 2000 is by and among TRUSTEES OF BOSTON UNIVERSITY, a
Massachusetts non-profit corporation with an address at 147 Bay State Road,
Boston, Massachusetts 02215 (the "University"), Beacon Telco, L.P., a Delaware
Limited Partnership with an address at 8 St. Mary's Street, Boston, MA 02215
("Telco") and VERILINK CORPORATION, a Delaware corporation with an address at
950 Explorer Blvd., Huntsville, AL 35806 (the "Company").

         WHEREAS, Company entered into a Cooperative Research Agreement on
October 13, 2000 with Telco with respect to the development of an optical
networking product prototype for the telecommunications access market (the
"Developed Prototype Product") (the "Cooperative Research Agreement");

         WHEREAS, Company desires to participate in the Photonics Center
Incubator and Accelerator Program and, as a part thereof, to obtain a license
from Trustees of Boston University to use certain University premises and to
obtain certain engineering support services of the University's Photonics Center
in furtherance of the objective which is a research and development project
subject to the Cooperative Research Agreement (the "Project") and intended to
create prototype products based on an optical networking product for the
telecommunications access market with modular, extendable architectures, with
software to be developed thereunder (the "Project");

         WHEREAS, the University is willing to license the use of certain
University premises to Company, and to permit Company to access certain
engineering support services, all in furtherance of the Project; and

         WHEREAS, the parties intend that in consideration for Company being
 provided with access to certain University premises and services granted by the
 University to Company under this Agreement, Company shall issue and deliver
 Warrants and Bonus Payments to Telco, pursuant to the terms and conditions of
 the Cooperative Research Agreement (for purposes of the first Bonus Payment)
 and a separate Warrant and Stockholders Agreement between Company and Telco.

NOW THEREFORE, in consideration of the mutual promises and agreements set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the University, Telco and Company
hereby agree as follows:

                                    ARTICLE I
                               CERTAIN DEFINITIONS

SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms
shall have the meaning accorded to them below:

         "BACKGROUND INTELLECTUAL PROPERTY" means Intellectual Property owned by
University which was in existence prior to this Agreement and which would be of
use to Company in conducting its work under this Agreement. Licensing of
Background Intellectual Property, if agreed to by the Parties, shall be the
subject of separate licensing agreements between the University and Company,
provided however, that any Background Intellectual Property of the University
which is necessary for Company to use in performing the research and development
activities referenced in this Agreement shall be deemed to have been licensed to
Company on a

                                       1
<PAGE>   2

royalty-free basis, but solely for performing such research and development
during the Term of and pursuant to the Cooperative Research Agreement.. To the
extent that a license(s) to Boston University Intellectual Property would be
necessary at law with respect to the use, sale, manufacturing or
commercialization of the Developed Prototype Product by Company after conclusion
of the Cooperative Research Agreement, such license(s) shall be subject to the
mutual agreement of Company and the University. Background Intellectual
Properties and Boston University Intellectual Property are not Subject
Inventions for ownership and rights of use purposes.

         "BOSTON UNIVERSITY INTELLECTUAL PROPERTY" shall be deemed to mean any
Intellectual Property in existence as of the Effective Date of this Agreement
which is owned exclusively by the University, and which the University has the
right to license for the purpose specified in the separate license agreement
referenced above.

         "BUILDING" means the building located at 8 St. Mary's Street, Boston,
MA 02215

         "DEVELOPED PROTOTYPE PRODUCT" means the prototype to be developed
pursuant to the Cooperative Research Agreement, and which expressly excludes any
Generated Information, Subject Inventions, Mask Works, Intellectual Property,
and Background Intellectual Property content to the extent owned by Telco,
Beacon Photonics, Inc., Beacon Photonics, L.P., or the University, including but
not limited to, Boston University Intellectual Property.

         "GENERATED INFORMATION" means all information, however characterized,
originally developed or created by each Party's personnel in connection with the
Cooperative Research Agreement, including but not limited to, the source and
object code of any software developed hereunder but, excluding any Confidential
Information, Background Intellectual Property, Boston University Intellectual
Property or content of the Party who did not generate it.

         "INTELLECTUAL PROPERTY" means patents, pending patent applications,
Trademarks, copyrights, Mask Works, Confidential Information and other forms of
comparable property rights protected by Federal Law, state law, and foreign
counterparts.

         "LICENSED PREMISES" means as applied to Company (a) approximately 2500
square feet of office space on the sixth (6th) Floor of the Building as more
particularly described on the floor plan attached as Exhibit A hereto, and (b)
shared access to, on a basis reasonably equivalent to other users thereof as
determined solely by the University in its good faith discretion, (i) the Optics
Laboratory 615 on the sixth (6th) Floor of the Building; and (ii) other
laboratories in the Building, and the equipment therein. Access to these other
laboratories will be coordinated through the University in its sole good faith
discretion.

         "MASK WORK" means a series of related images, however fixed or encoded,
having or representing the predetermined, three-dimensional pattern of metallic,
insulating or semiconductor material present or removed from the layers of a
semiconductor chip product; and in which series the relation of the images to
one another is that each image has the pattern of the surface of one form of the
semiconductor chip product.

         "PERMITTED USES" means for purposes of the Company, research and
development for purposes limited to the Project, but excluding any manufacturing
or commercialization purposes.

         "SUBJECT INVENTION" means any invention(s) of the University, Telco or
Company, both first conceived and actually reduced to practice (as defined under
the United States patent laws), in the performance of work under this Agreement,
but excluding any Intellectual Property of any Party(s) not the inventor.

                                       2
<PAGE>   3

         "TRADEMARK" means a distinctive mark, symbol or emblem used in commerce
by a producer or manufacturer to identify and distinguish its goods or services
from those of others.

                                   ARTICLE II
                              TERM AND TERMINATION

         SECTION 2.01. TERM OF AGREEMENT. This Agreement shall co-exist with the
term of the Cooperative Research Agreement and shall commence on the date that
the Cooperative Research Agreement, Warranty and Stockholder's Agreement, and
this Agreement have been fully executed (the "Term Commencement Date"). This
Agreement shall terminate on the expiration or termination of the Cooperative
Research Agreement or in eighteen (18) months from the Term Commencement Date,
whichever first occurs (which date for the termination of the term hereof shall
hereafter be called the "Termination Date").

         SECTION 2.02. TERMINATION. In the event that Company shall neglect or
fail to perform or observe any of Company's covenants and agreements herein, and
such nonperformance continues for thirty (30) business days after receipt of
written notice thereof to Company, as the case may be, the University may
terminate this Agreement with respect to the Party in breach without prejudice
to any other right or remedy of the University or of Telco with respect to the
Warranty Agreement and with respect to Telco's right to receive the first Bonus
Payment pursuant to Article IV of the Cooperative Research Agreement and Company
shall forthwith upon request by the University, vacate and yield up the Licensed
Premises; provided, however, that if Company again neglects or fails to perform
or observe its covenants and agreements of the same nature herein after having
cured such covenants and agreements in the past, the University may terminate
this Agreement as to that Party at any time without further notice.

                                   ARTICLE III
                      CONSIDERATION FOR LICENSED PREMISES,
                PHOTONICS CENTER SERVICES AND ENGINEERING SUPPORT

         SECTION 3.01. ISSUANCE OF WARRANTS AND BONUS PAYMENTS. Company
acknowledges and agrees that in partial consideration for the University
granting Company a premises license pursuant to Article V and the services to be
provided pursuant to Article IV, Company has agreed to issue and deliver
Warrants and Bonus Payments as defined in, and pursuant to, the terms and
conditions of the Warrant and Stockholders Agreement and the Cooperative
Research Agreement executed between Company and Telco, bearing the same
Effective Date as this Premises License and Services Agreement.

                                   ARTICLE IV
                       SERVICES PROVIDED BY THE UNIVERSITY

         SECTION 4.01. GENERAL SERVICES OF LICENSED PREMISES. The University
agrees to provide to the Licensed Premises, at no additional cost to Company,
janitorial services, waste disposal services of the Office of Environmental
Health Services pursuant to Section 5.15., electricity, heat, air conditioning,
and domestic water in the same manner and amounts as such services and utilities
are provided to other occupants of the Building. The University reserves the
right to interrupt, curtail, stop or suspend the furnishing of services provided
for in this Section 4.01 and the operation of Building systems, when necessary
by reason of accident or emergency, or of repairs, alterations, replacements or
improvements in the reasonable judgment of the University desirable or necessary
to be made, or of difficulty or inability in securing supplies or labor, or of
strikes, or of any other cause beyond the reasonable control of the University,
until

                                       3
<PAGE>   4

said cause has been removed. The University shall have no responsibility or
liability for any such interruption, curtailment, stoppage, or suspension of
services or systems.

         SECTION 4.02. OFFICE SUPPLIES AND EQUIPMENT. During the Term, the
University shall provide Company with (i) use of office furniture currently
located in the office space portion of the Licensed Premises, (ii) use of a
telephone (not including the fees for the use thereof), (iii) shared use of and
access to a copy machine, and (iv) access to the University network consistent
with the University's computer use policies and under the direction of the
University's Office of Information.

         SECTION 4.03. LABORATORY SUPPLIES. Company shall be solely responsible
for providing all of the laboratory supplies and consumables that it requires
for use in the Licensed Premises related to the development of the Project, as
well as the maintenance, loss of, or damage to any of these laboratory supplies
and consumables. In the event that the University provides any such laboratory
supplies and consumables to Company, Company shall pay the University for all
such laboratory supplies and consumables it uses, at rates customarily imposed,
as well as be responsible for the maintenance, loss of, or damage to any such
miscellaneous laboratory supplies and consumables. The University shall invoice
Company for such laboratory supplies and consumables to be paid by Company
within thirty (30) days of receipt of an invoice.

         SECTION 4.04. TECHNICAL AND ENGINEERING DEVELOPMENT SUPPORT. In
addition to the services to be provided pursuant this Article IV, Company shall
be entitled to have access to technical and engineering personnel of the
University through its Photonics Center, as determined solely by the University
in its good faith discretion, to provide assistance only and solely with respect
to the Project (the "Engineering Services").

         SECTION 4.05. UNIVERSITY PERSONNEL AGREEMENTS AND POLICIES. Company and
Telco each acknowledges and agrees that as a condition of employment by the
University, the technical, engineering and academic personnel of the University
are required to execute agreements with the University which, by their terms,
will result in all Intellectual Property Rights, Generated Information and
Subject Inventions conceived and/or developed by such personnel while employed
by the University, belonging solely and exclusively to the University.
Accordingly, and notwithstanding any separate confidentiality agreements that
Company may enter into with any University personnel pursuant to Article 6.01.a.
of this Agreement, all such Intellectual Property Rights, Generated Information
and Subject Inventions shall be owned exclusively by the University and
accordingly, no disclosure of the same to the University by such University
personnel shall be deemed to be a disclosure of Company Confidential Information
in violation of any obligations which any such personnel may have undertaken
with Company. Company and Telco each acknowledges and agrees that no provision
of this Agreement or of the Cooperative Research Agreement is intended to or
shall otherwise operate in any way to modify or waive the requirements contained
in such agreements. With respect to Company Confidential Information, Company
acknowledges and agrees that any disclosures of such Confidential Information by
Company must only be pursuant to confidentiality agreements between Company and
University personnel as individuals. The terms and conditions of such
confidentiality agreements are for Company alone to dictate, and the University
shall not be responsible or liable to Company or to any third party for any
breach of those agreements by such personnel and any damages which the Company
or any such third party might incur as a result.

                                    ARTICLE V
                        LICENSE OF THE LICENSED PREMISES

         SECTION 5.01. LICENSED PREMISES. The University hereby grants to
Company, and Company hereby accepts from the University, the non-exclusive right
to use the Licensed

                                       4
<PAGE>   5

Premises as the same may from time to time be constituted after changes therein,
additions thereto and eliminations therefrom pursuant to the terms and
conditions of this Agreement and subject to the rights of the University
hereinafter reserved. Company hereby acknowledges and agrees that the Licensed
Premises, including but not limited to all manner of resources to which Company
will have access in connection therewith, are being provided by the University
and are hereby accepted by Company on an "AS IS" and "AS SHOWN" basis with no
warranties or representations of any kind having been made by the University or
to be implied.

         SECTION 5.02. APPURTENANT RIGHTS. Company shall have, as determined
solely by the University, as appurtenant to the Licensed Premises, rights to use
as well as the right to permit others to use in common, subject to any
University safety policies and procedures in effect during the Term and
generally applicable to other users of the Building, those common roadways,
walkways, elevators, lobbies, hallways and stairways necessary and appropriate,
for access to that portion of the Building occupied by the Licensed Premises.
Company shall also have access, in common with other occupants of the Building,
to conference rooms on an "as-available" basis.

         SECTION 5.03. EXCLUSIONS AND RESERVATIONS. All the perimeter walls of
the Licensed Premises except the inner surfaces thereof, any balconies, terraces
or roofs adjacent to the Licensed Premises, and any space in or adjacent to the
Licensed Premises used for shafts, stacks, pipes, conduits, wires and
appurtenant fixtures, ducts, electric or other utilities, or other Building
facilities, and the use thereof, as well as the right of access through the
Licensed Premises for the purpose of operation, maintenance, decoration and
repair, are expressly reserved to the University.

         SECTION 5.04. LICENSE AGREEMENT. THE PARTIES ACKNOWLEDGE AND AGREE THAT
THE RIGHT TO ACCESS AND USE THE LICENSED PREMISES UNDER THIS AGREEMENT SHALL BE
DEEMED TO BE A LICENSE ONLY AND SHALL NOT BE CONSTRUED TO BE A LEASE, JOINT
VENTURE, OR PARTNERSHIP, OR AS EVIDENCING ANY RELATIONSHIP BETWEEN THE
UNIVERSITY AND COMPANY OTHER THAN AS LICENSOR AND LICENSEES RESPECTIVELY. NO
INTEREST IN THE REAL ESTATE INCLUDING BUT NOT LIMITED TO ANY AND ALL ASSOCIATED
FIXTURES IS CONVEYED BY THE UNIVERSITY TO COMPANY.

         SECTION 5.05. PERMITTED USES. Company shall be entitled to occupy and
use the Licensed Premises solely for the Permitted Use and for no other purpose.
Service and utility areas (whether or not a part of the Licensed Premises) shall
be used only for the particular purpose for which they were designated.

         SECTION 5.06. PROHIBITED USES. Notwithstanding any provision of this
Agreement which may indicate or suggest the contrary, including but not limited
to Section 5.05 above, Company agrees not to use, or suffer or permit the use
of, or suffer or permit anything to be done in or around any part thereof (i)
which would violate any of the covenants, agreements, terms, provisions and
conditions of this Agreement, (ii) for any unlawful purposes or in any unlawful
manner, or (iii) which, in the reasonable judgment of the University, shall in
any way (a) impair or tend to impair the appearance or reputation of the
Building, (b) impair or interfere with or tend to impair or interfere with any
of the Building services or the proper and economic heating, cleaning, air
conditioning or other servicing of the Building, or (c) occasion discomfort,
inconvenience or annoyance to any of the other tenants or occupants of the
Building, whether through the transmission of noise or odors or otherwise.

         SECTION 5.07. LICENSES AND PERMITS. To the extent allowed by any
applicable laws and regulations, Company may conduct research and development in
pursuit of the Project and

                                       5
<PAGE>   6

consistent with the terms of the Cooperative Research Agreement, and dispose of
waste materials, under University's existing licenses and permits but such
licenses and permits shall not be deemed to in any way expand upon the singular
purpose for which the University has agreed to permit Company to access and use
the Licensed Premises which is solely for the Permitted Use. Company shall have
no right to use University licenses and permits outside of the Licensed Premises
and any other University owned property without the written permission of the
University. In addition, Company shall coordinate any handling or disposal of
any hazardous material with the University pursuant to Section 5.15. If any
governmental license or permit other than existing University licenses and
permits shall be required for the proper and lawful conduct of the Permitted Use
by Company, or if such existing licenses and permits are otherwise insufficient
for the Permitted Use, Company, at no cost or expense to the University or any
third party, shall duly procure and thereafter maintain for the duration of this
Agreement whatever licenses and/or permits are required, such additional license
or permit and submit the same to inspection by the University. Company, at
Company's expense, shall at all times comply with the terms and conditions of
each such license or permit in this Section 5.07.

         SECTION 5.08. CHANGES OR ALTERATIONS BY THE UNIVERSITY. The University
reserves the right, exercisable by itself or its nominee, at any time and from
time to time without the same constituting an actual or constructive eviction
and without incurring any liability to Company therefor or otherwise affecting
Company's obligations under this Agreement, to make such changes, alterations,
additions, improvements, repairs or replacements in or to the Building
(including the Licensed Premises) and the fixtures and equipment thereof, as
well as in or to the street entrances, halls, passages, elevators, escalators,
and stairways thereof, as it may deem necessary or desirable, and to change the
arrangement and/or location of entrances or passageways, doors and doorways, and
corridors, elevators, stairs, toilets, or other public parts of the Building.
Nothing contained in this Section 5.08 shall be deemed to relieve Company of any
duty, obligation or liability of Company with respect to making or causing to be
made any repair, replacement or improvement or complying with any law, order or
requirement of any governmental or other authority. To the extent that Company
purchases any equipment or property pursuant to the Cooperative Research
Agreement in connection with the Project such equipment or property may not
become a fixture of the Building without the University's express prior written
consent in each instance. In the event any equipment and/or property does become
a fixture of the Building, the University shall be entitled to purchase, and
Company agrees to sell to the University, Company's ownership interest in any
and all such equipment and property on a depreciated cost basis consistent with
industry practice.

         SECTION 5.09. ALTERATIONS AND IMPROVEMENTS BY COMPANY. Company agrees
not to make any alterations, installations, removals, additions or improvements
in or to the Licensed Premises without the University's prior written consent,
which consent shall be in the University's sole and unfettered discretion.

         SECTION 5.10. REPAIRS BY COMPANY. Company agrees to keep or cause to be
kept the Licensed Premises neat and clean and in such repair, order and
condition as the same are in on the Term Commencement Date or may be put in
during the Term, reasonable use and wear thereof and damage by fire or
unavoidable casualty excepted. Without limiting the generality of the foregoing,
Company agrees to replace all windows with glass of the same quality whenever
broken as a result of negligence or misconduct attributable to Company. Company
agrees that any and all repairs hereunder shall be made by or at the direction
of the University's Office of the Physical Plant and, unless otherwise agreed,
at Company's sole and respective cost and expense.

         SECTION 5.11. RULES AND REGULATIONS. Company and an their respective
servants, employees, agents, visitors and licensees will faithfully observe such
rules and regulations as the University hereafter at any time or from time to
time may make and may communicate in writing to Company, and which in the
reasonable judgment of the University shall be necessary for the

                                       6
<PAGE>   7

reputation, safety, care or appearance of the Building and the land on which it
is situated (together, the "Property"), or the preservation of good order
therein, or the operation or maintenance of the Property, or the equipment
thereof, or the comfort of tenants or others in the Building, provided, however,
that in the case of any conflict between the provisions of this Agreement and
any such rules and regulations, the provisions of this Agreement shall control,
and provided further that nothing contained in this Agreement shall be construed
to impose upon the University any duty or obligation to enforce such rules and
regulations or the terms, covenants or conditions in any other lease, license or
occupancy agreement as against any other tenant or occupant and the University
shall not be liable to Company for violation of the same by any other tenant or
occupant, its servants, employees, agents, visitors, invitees or licensees.
Consistent with this provision, University shall be entitled to require that
Company promptly remove any of its employees and/or agents from the BU Photonics
Center who University reasonably believes are in violation of any rules,
regulations or policies of the University in general or of the BU Photonics
Center in particular. University rules, regulations and policies to which
Company and its personnel are required to comply may be viewed on the University
Website www.bu.edu but are not all-inclusive and may change, from time to time.
Accordingly, it shall be Company's responsibility to ensure that it remains
current and complies with the University's then-current published rules,
regulations and policies, as well as with whatever other rules, regulations or
policies are otherwise required and imposed by the University with the
appropriate informative notice.

         SECTION 5.12. ACCIDENTS TO SANITARY AND OTHER SYSTEMS. Company agrees
to give to the University prompt notice of any fire or accident in the Licensed
Premises or in the Building and of any damage to, or defective condition in, any
part or appurtenance of the Building's sanitary, electrical, heating and air
conditioning or other systems located in, or passing through, the Licensed
Premises. Company agrees not to suffer or permit the Licensed Premises or any
fixtures, equipment or utilities therein or serving the same, to be overloaded,
damaged or defaced. Company agrees not to permit any hole to be drilled or made
in any structural part of the Licensed Premises of the Building, without the
prior written consent of the University, which consent shall be at the
University's sole and unfettered discretion.

         SECTION 5.13. SIGNS, BLINDS AND DRAPES. Company agrees not to place any
signs on the exterior of the Building or on or in any window, public corridor or
door visible from the exterior of the Licensed Premises without the prior
written approval of the University. Company shall be responsible for obtaining
any required sign permits for signs it erects. No blinds may be put on or in any
window nor may any Building drapes or blinds be removed by Company.

         SECTION 5.14. ESTOPPEL CERTIFICATE. In connection with any proposed
sale or financing of all or part of the Building, Company shall upon not less
than ten (10) days' prior notice by the University to Company execute,
acknowledge and deliver to such prospective purchaser or lender a statement in
writing certifying whether this Agreement is unmodified and/or in full force and
effect (or, if there have been modifications, that the same is in full force and
effect as modified and stating the modifications), and the dates to which any
fees and other charges have been paid in advance, if any, and stating whether or
not to the best knowledge of the signer of such certificate the University is in
default in the performance of any covenant, agreement, term, provision or
condition contained in this Agreement and, if so, specifying each such default
of which the signer may have knowledge, it being intended that any such
statement delivered pursuant hereto may be relied upon by any prospective
purchaser of any interest of the University in the Property or any lender,
mortgagee or prospective lender or mortgagee of the University.

         SECTION 5.15. PROHIBITED ITEMS. Subject to the provisions of Section
5.07, Company agrees not to bring or permit to be brought or kept in or on the
Licensed Premises or elsewhere in the Building any radioactive, hazardous,
inflammable, combustible or explosive fluid, material, chemical or substance
(hereinafter referred to as "Hazardous Materials") (except such as are

                                       7
<PAGE>   8

related to Company's use of the Licensed Premises, provided that the Hazardous
Materials are stored, handled and disposed of in a proper fashion consistent
with applicable University and legal standards) or take any action with respect
thereto in violation of, or in a manner that would give rise to liability under
any applicable law, including without limitation, M.G.L. c. 21C or 21E. Company
shall abide by policies of, coordinate with and notify in writing the
University's Office of Environmental Health and Safety (the "Office of EHS")
with respect to (i) the use, storage, handling and disposal of any Hazardous
Materials, and (ii) any applicable training requirements. Company also agrees
that any and all disposal of its Hazardous Materials hereunder shall be made by
or at the direction of the Office of EHS. The University shall initially be
responsible for all costs and expenses of disposal of Company's and Telco's
Hazardous Materials unless the University determines, in its sole and unfettered
discretion, that the volume of Company's Hazardous Materials for disposal is too
large, all such disposal costs and expenses shall then be paid solely by Company
at rates customarily imposed.

         SECTION 5.16. REQUIREMENTS OF LAW, FINES AND PENALTIES. Company , at
its sole expense, shall comply with all laws, rules, orders and regulations of
Federal, State, County and Municipal Authorities and with any direction of any
public officer or officers, pursuant to law, which shall impose any duty upon
the University or Company with respect to and arising out of Company's use or
occupancy of the Licensed Premises, provided however that Company may contest
any such law, rule, order or regulation in good faith so long as the University
is not adversely affected thereby. Company shall reimburse and compensate the
University for all expenditures made by, or damages or fines sustained or
incurred by, the University due to nonperformance or noncompliance with or
breach or failure to observe any term, covenant or condition of this Agreement
upon Company's part to be kept, observed, performed or complied with. If Company
receives notices of any violation of law, ordinance, order or regulation
applicable to the Licensed Premises, it shall give prompt notice thereof to the
University.

         SECTION 5.17. COMPANY'S ACTS, EFFECTS ON INSURANCE. Company agrees not
to do or permit to be done any act or thing upon the Licensed Premises or
elsewhere in the Building which will invalidate or be in conflict with any
customary insurance policies covering the Building and the fixtures and property
therein and shall not do, or permit to be done, any act or thing upon the
Licensed Premises which shall subject the University to any liability or
responsibility for injury to any person or persons or to property by reason of
any business or operation being carried out on said Licensed Premises or for any
other reason. Company shall not (i) do, or permit anything to be done, in or
upon the Licensed Premises, or bring or keep anything therein, except as will
not increase the rate for any insurance applicable to the Building, or (ii) use
the Licensed Premises in a manner which shall increase such insurance rates on
the Building or on property located therein, over that applicable when Company
first took occupancy of the Licensed Premises hereunder. If by reason of failure
of Company to comply with the provisions hereof the insurance rate applicable to
any policy of insurance shall at any time thereafter be higher than it otherwise
would be, then Company shall reimburse the University for that part of any
insurance premiums thereafter paid by the University, which shall have been
charged because of such failure by Company.

         SECTION 5.18. CASUALTY AND TAKING. If during the Term all or any
substantial part of the Licensed Premises or Building is damaged materially by
fire or any other cause or by action of public or other authority in consequence
thereof or is taken by eminent domain or the University receives compensable
damage by reason of anything lawfully done in pursuance of public or other
authority, this Premises License shall terminate at the University's election,
which may be made, notwithstanding the University's entire interest may have
been divested, by notice to Company and/or Telco, as applicable, within thirty
(30) days after the occurrence of the event giving rise to the election to
terminate, which notice shall specify the effective date of termination which
shall be not less than ten nor more than thirty (30) days after the date of
notice of such termination. If in any such case the Licensed Premises are
rendered unfit for use and

                                       8
<PAGE>   9

occupation and the Agreement is not so terminated, the University shall use due
diligence to put the Licensed Premises, or, in case of a taking, what may remain
thereof (excluding any items installed or paid for by Company which Company may
be required or permitted to remove) into proper condition for use and occupation
to the extent permitted by the net award of insurance or damages available to
the University.

         SECTION 5.19. REAL ESTATE TAXES. Company covenants to pay promptly any
or all increases in real estate taxes levied or assessed or becoming payable for
or in respect of the Building and other improvements located therein,
attributable to this Agreement or to Company's use of the Licensed Premises, and
provided further that the University shall provide Company with copies of the
then current (increased) real estate tax bill, the prior bill and a breakdown of
the taxes allocable to the Licensed Premises.

         SECTION 5.20. RESERVATION OF AWARD. The University reserves to itself
any and all rights to receive awards made for damages to the Licensed Premises,
Building or Property and the license hereby created, or any one or more of them,
accruing by reason of exercise of eminent domain or by reason of anything
lawfully done in pursuance of public or other authority. Company hereby releases
and assigns to the University all of its rights to such awards and covenants to
deliver such further assignments and assurances thereof as the University may
from time to time request and hereby irrevocably designates and appoints the
University as its attorney-in-fact to execute and deliver in Company's name, as
applicable, and on its behalf all such further assignments thereof. It is agreed
and understood, however, that the University does not reserve to itself, and
neither does Company assign to the University, any damages payable for (i)
movable trade fixtures installed by Company, or any person claiming under
Company, at its own expense or (ii) relocation expenses recoverable by Company
from such authority in a separate action.

         SECTION 5.21. END OF TERM. Upon the expiration or other termination of
the Term with respect to the Company, the Company shall peaceably quit and
surrender to the University the Licensed Premises and all alterations and
additions thereto which the Company is not entitled or required to remove under
the provisions of this Agreement, broom-clean, in good order, repair and
condition excepting only reasonable use and wear and damage by fire or other
casualty for which, under other provisions of this Agreement, the Company has no
responsibility of repair or restoration.

         SECTION 5.22. ABANDONED PROPERTY. Any personal property in which
Company has an interest which shall remain in the Building or on the Licensed
Premises after the expiration or termination of the Term shall be conclusively
deemed to have been abandoned, and may be disposed of in such manner as the
University may see fit. Notwithstanding the foregoing, Company will, upon
request of the University made not later than thirty (30) days after the
expiration or termination of the Term, promptly remove from the Building any
personal property or, if any part thereof shall be sold, that the University may
receive and retain the proceeds of such sale and apply the same, at its option,
against the expenses of the sale, the cost of moving and storage, any arrears of
charges payable hereunder by Company the University and any damages to which the
University may be entitled under this Agreement or pursuant to law, with the
balance, if any, to be paid to Company.

                                       9
<PAGE>   10

                                   ARTICLE VI
                              INTELLECTUAL PROPERTY

         SECTION 6.01.  INTELLECTUAL PROPERTY RIGHTS.

         a. CONFIDENTIAL INFORMATION- Any disclosure of confidential information
between Company and the University shall be solely pursuant to the terms and
conditions of a separate Non-Disclosure Agreement between these same Parties.
Accordingly, to the extent that Company may need to disclose any of its
Confidential Information (as defined in the Cooperative Research Agreement) to
any of the University's personnel who are designated by the University as being
accessible to Company for purposes of the Project, Company shall be responsible
for entering into its own confidentiality agreements with such individuals,
pursuant and subject to the provisions of Section 4.05 above.

         b. GENERATED INFORMATION & COPYRIGHTS Each Party shall have exclusive
ownership in and to Generated Information that it creates, including the
resulting copyright to such original work, unless and to the extent expressly
agreed otherwise on a case by case basis in writing. Accordingly, each Party's
right to use its Generated Information, as defined, shall be subject to the
following provisions:

            (i) Each Party agrees to place applicable copyright and other
notices, as appropriate for the protection of copyright and mask work rights, in
human readable form onto all physical media, and in digitally encoded form in
the header of machine readable information recorded on such media such that the
notice will appear in human readable form when the digital data is off loaded or
the data is accessed for display or printout.

            (ii) Notwithstanding each Party's exclusive ownership of all
Generated Information it creates, Company shall have the exclusive right to use
all Generated Information with respect to the Developed Prototype Products as an
optical networking product within, and for use in, the telecommunications access
market segments agreed to by Telco and Company pursuant to the Cooperative
Research Agreement ("Field A") and Telco and as well as the University shall
have the non-exclusive right to use such Generated Information outside Field A
("Field B"), provided however, that the University shall make Generated
Information owned by the University available to Company only to the extent that
it applies to Field A, but the University shall be entitled to make market
related Generated Information available to service providers in both Fields.

         c. REPORTING SUBJECT INVENTIONS

            (i) The Parties agree to disclose to each other through their
respective Project Managers and maintain in confidence, each and every Subject
Invention, whether or not patentable, protectable under the Patent Act, or
otherwise reduced to practice. For the avoidance of doubt, the Parties shall be
obligated to promptly disclose, in writing and on a confidential basis,
inventive ideas conceived in connection with this project.

            (ii) These disclosures, to the extent known, shall be enabling to
the extent required under 35 USC 112. The disclosure shall also identify any
known actual or potential statutory bars (i.e. any disclosure of the invention
without restrictions as to disclosure or use imposed upon the recipient, any
offer to sell, and any public use of the invention). The Parties further agree
to promptly disclose to each other, each and any subsequently known event(s)
which is already or may later become, a statutory bar to obtaining patent
protection on any given Subject Invention(s) anywhere in the world. All
invention disclosures shall be marked as confidential

         d. TITLE TO INVENTIONS

            (i) Subject Inventions shall be owned jointly by the Parties if they
constitute joint inventions of such Parties. To the extent that either Party is
the sole inventor of any Subject Invention(s), that Party alone shall, as
between the Parties, be the sole owner thereof. However,

                                       10
<PAGE>   11

and notwithstanding ownership of any given Subject Invention, to the extent that
any Subject Invention is based on or otherwise arose out of access to any
Party's Confidential Information, each Party's right to use the Subject
Invention, including the right to pursue patent protection thereon, shall be
subject to its non-disclosure obligations with respect to the other Party's
Confidential Information. Subject to the foregoing, and with respect to all
Subject Inventions owned solely by the University or jointly by the University
with Company, the University agrees to grant Company the exclusive,
transferable, unrestricted and fully paid-up (subject, however, to the remaining
portions of this subparagraph d. as they apply to additional license terms and
conditions that may be required in order for Company to exercise any such
license and which may contain restrictions and monetary obligations) right and
license to use the Subject Inventions solely for the commercial exploitation of
the Developed Prototype Product as an optical networking product within, and for
use in Field A. In partial consideration for such grant, Company hereby grants
to the University the non-exclusive, transferable, unrestricted and fully
paid-up right and license to use Subject Inventions owned solely by Company or
jointly with the University, in all areas and for all purposes outside of Field
A ("Field B") For purposes of the University's license with respect to Company's
sole Subject Inventions, such license shall apply only to those Subject
Inventions which relate to, or which otherwise arose out of Company's access to,
Telco's Confidential Information, Telco's Background Intellectual Property
and/or the University's Background Intellectual Property. It is agreed, however,
that Company's exercise of its license grant, as well as its right to use
Subject Inventions which were conceived and reduced to practice solely by
Company, shall be subject to the Parties reaching agreement as to the terms and
conditions to govern any license grant to Company under any applicable
Background Intellectual Property Rights owned or licensed by Contractor, and/or
any Intellectual Property Rights owned or licensed by Beacon Photonics, Inc.
and/or Beacon Photonics, L.P. or any Boston University Intellectual Property to
the extent that such Intellectual Property is embodied in, or a license would
otherwise be required at law in order to use any Subject Inventions pursuant to
such license grant without infringing any Intellectual Property rights of Telco,
Beacon Photonics, Inc. Beacon Photonics, L.P. or the University.

            (ii) Notwithstanding anything to the contrary in this Agreement, all
Developed Prototype Products developed under the Cooperative Research Agreement
shall be the sole property of Company, and as between the Parties to this
Agreement, Company has the sole and exclusive right to make, use, manufacture
and otherwise commercialize such Developed Prototype Products in any market
throughout the world, including without limitation, Field A and Field B, subject
to obtaining whatever licenses are required under this Agreement, and at law,
with respect to any Subject Inventions, Generated Information which were not
expressly granted by the University under this Agreement with respect to Field
B, as well as any licenses required with respect to any Background Intellectual
Property of the University, Beacon Photonics, Inc., Beacon Photonics, L.P.,
Boston University Intellectual Property and any third party Intellectual
Property. The University covenants and agrees that any rights it may have at law
with respect to the Developed Prototype Products are expressly waived, and the
University agrees not to make, use, manufacture or otherwise commercialize the
Developed Prototype Products in any market in the world, including without
limitation, Field B. Company acknowledges and agrees, however, that no provision
of this Agreement shall be deemed to restrict the University from developing,
alone or with the cooperation of any third parties, any manner of
telecommunications products, whether or not they compete with the Developed
Prototype Products, so long as the University does not use any confidential
information received from Company pursuant to any non-disclosure agreement that
may be executed between the University and Company (which shall not be deemed to
mean or include any non-disclosure of agreements which may be executed between
Company and any University personnel) with respect to the Project, or any
Generated Information or Subject Inventions owned solely by Company that the
University was not licensed hereunder to use.

                                       11
<PAGE>   12

         e. FILING PATENT APPLICATIONS

            (i) The Parties agree that each Party shall be entitled to pursue,
at its own respective cost and expense, patent protection on any Subject
Inventions of which it is the sole inventor except to the extent that doing so
would disclose any Confidential Information of the other Party. In such event,
that other Party's prior permission shall be required, absent which the
inventing Party shall be obligated to modify the patent application to remove
any such Confidential Information content. With respect to Subject Inventions
which constitute joint inventions, the inventing Parties shall determine, on a
case by case basis, whether or not and to what extent patent protection will be
pursued, if at all, it being understood that any co-inventor Party wishing not
to pursue such protection in the interests of preserving the confidentiality of
its Confidential Information shall be entitled to make the final decision.
Subject to the preceding provision, the costs and expenses of pursuing and
maintaining patent protection in the U.S. by co-inventor Parties shall be shared
equally in every respect; to the extent that the co-inventor Parties are not in
agreement regarding the extent to which foreign patent protection should be
pursued, the co-inventor Party desirous of pursuing such protection may do so on
its own, and at its own cost and expense. In such event, the other co-inventor
Party who desired not to pursue such protection shall have no rights with
respect to any resulting foreign patent(s) unless and until it reimburses the
other co-inventor for its share of the out-of-pocket expenses incurred in
pursuing such protection. With respect to Subject Inventions where the sole
inventor Party does not itself wish to pursue patent protection but is willing
to do so in the interests of any other Party, all costs and expense incurred in
connection with the pursuit and maintenance of such protection shall be borne
solely by the non-inventor Party desiring such protection. In any event, any
Party's decision to practice a Subject Invention shall be at its own risk, cost
and expense.

            (ii) Consistent with the provisions of this Agreement as they relate
to Company's exclusive rights with respect to Field A as well as the
University's shared non-exclusive rights with respective to Field B, University
(regardless of ownership), shall not be entitled to authorize any third party to
in any manner use or practice, directly or indirectly, any Generated Information
or Subject Invention respectively, within Field A for a period of one (1) year
from expiration or termination of this Agreement at which time, all exclusive
rights shall terminate.

         SECTION 6.02. OTHER LICENSING RIGHTS. Any license granted to Company
pursuant to this Article VI shall be subject to the Boston University Charles
River Patent Policy, the provisions of the Bayh-Dole Act, Public Laws 96-517 and
98-620 (codified at 35 U.S.C. 200 et seq.)(the "Bayh-Dole Act") and the
University's prior agreements with other sponsors and shall provide (i) for a
reasonable royalty on net sales of products utilizing the licensed technology to
be paid to the University, (ii) for the University to retain a non-exclusive
license, with the right to grant sub-licenses, for research purposes only, (iii)
that the rights of the United States of America arising from the Bayh-Dole Act,
and the restrictions imposed upon the University by the Act, including any
federal agency approvals required by or restrictions imposed by ss.202(c)(7), be
specifically reserved and incorporated, and (iv) that Company (and its
sub-licensees, if any) will exert its best efforts to introduce products
utilizing the licensed technology into public use as rapidly as practicable.

                                   ARTICLE VII
                    INABILITY TO PERFORM, EXCULPATORY CLAUSE

         SECTION 7.01. INABILITY TO PERFORM, EXCULPATORY CLAUSE. Except as
otherwise expressly provided in this Agreement, this Agreement and the
obligations of Company to pay any fees or charges hereunder and perform all
other covenants, agreements, terms, provisions and conditions hereunder on the
part of Company to be performed shall in no way be affected, impaired or excused
because the University is unable to fulfill any of its obligations under this
Agreement or is unable to supply or is delayed in supplying any service
expressly or impliedly to

                                       12
<PAGE>   13
be supplied or is unable to make or is delayed in making any repairs,
replacements, additions, alterations, improvements or decorations or is unable
to supply or is delayed in supplying any equipment or fixtures if the University
is prevented or delayed from doing so by reason of strikes or labor troubles or
any other similar or dissimilar cause whatsoever beyond the University's
reasonable control, including but not limited to, governmental preemption in
connection with a national emergency or by reason of any rule, order or
regulation of any department of subdivision thereof or any governmental agency
or by reason of the conditions of supply and demand which have been or are
affected by war, hostilities or other similar or dissimilar emergency. In each
instance of inability of the University to perform, the University shall
exercise reasonable diligence to eliminate the cause of such inability to
perform.

                                  ARTICLE VIII
                     INSURANCE, EXONERATION AND EXCULPATION.

         SECTION 8.01. INSURANCE. Company shall maintain at its sole expense:
(a) Commercial General Liability Insurance naming the University, any managing
agent designated by the University, and any holder of a mortgage of the Building
as additional insureds, subject to a combined single limit of at least One
Million U.S. Dollars ($1,000,000) each occurrence and Five Million U.S. Dollars
($5,000,000) in the aggregate for bodily injury and property damages, and from
time to time thereafter in such higher amounts, if procurable, as may be
reasonably required by the University are customarily carried by responsible
office and laboratory tenants in the City of Boston; (b) so-called contents and
improvements insurance adequately insuring all property belonging to or
removable by Licensee and situated in the Licensed Premises; (c) worker's
compensation insurance providing for the payment of statutory benefits required
by law covering the persons employed by Company; and (d) employer's liability
insurance with a minimum limit of One Million U.S. Dollars ($1,000,000).

         SECTION 8.02. CERTIFICATES OF INSURANCE. Such insurances shall be
effected with insurers authorized to do business in Massachusetts under valid
and enforceable policies, and such policies shall name the University and
Company, and any additional parties designated by the University as the
insureds, as their respective interests appear. Such insurance shall provide
that it shall not be canceled without at least ten (10) days' prior written
notice to each insured named therein. On or before the Term Commencement Date
and thereafter prior to the expiration of each expiring policy, original copies
of the policies provided for in Section 8.01. issued by the respective insurers,
or certificates or binders of such policies setting forth in full the provisions
thereof and issued by such insurers, shall be delivered by Company to the
University and certificates as aforesaid of such policies shall upon the request
of the University be delivered by Company to the holder of any mortgage
affecting the Licensed Premises.

         SECTION 8.03. WAIVER OF SUBROGATION. Any insurance carried by either
party with respect to the Licensed Premises and property therein or occurrences
thereon shall include a clause or endorsement denying to the insurer rights of
subrogation against the other party to the extent rights have been waived by the
insured prior to occurrences of injury or loss. Each party, notwithstanding any
provisions of this License to the contrary, hereby waives any rights of recovery
against the other for injury or loss due to hazards covered by insurance
containing such clause or endorsement to the extent of the indemnification
received thereunder.

         SECTION 8.04. PROPERTY OF COMPANY. In addition to and not in limitation
to the foregoing, Company covenants and agrees that all of its merchandise,
furniture, fixtures and property of every kind, nature and description which may
be in or upon the Licensed Premises or Building, in the public corridors, or on
the sidewalks, areaways and approaches adjacent thereto, during the Term of this
Agreement, shall be at the sole risk and hazard of Company, and that if the
whole or any part thereof shall be damaged, destroyed, stolen or removed from
any cause or

                                       13
<PAGE>   14

reason whatsoever, no part of said damage or loss shall be charged to, or borne
by University, unless such damage or loss is due solely to University's
negligence or willful misconduct.

                                   ARTICLE IX
                                 INDEMNIFICATION

         SECTION 9.01. Company agrees to defend (with counsel reasonably
acceptable to the University), hold harmless and indemnify the University, its
employees and agents, from and against any liability for injury, loss, accident,
damages (however characterized), judgements, or settlements, with respect to any
person or property and from any claims, actions, proceedings and expenses and
costs in connection therewith (including, without implied limitation, reasonable
counsel fees): (i) arising from the omission, fault, willful act, negligence or
other misconduct of Company or any of its officers, directors, employees,
agents, representatives or others for whose conduct Company may be responsible,
or from any use made or thing done or occurring on the Licensed Premises not due
to the negligence of the University (ii) resulting from the failure of Company,
or any of its officers, directors, employees, agents, representatives or others
for whose conduct Company may be responsible, to perform and discharge its
covenants and obligations under this Agreement; and/or (iii) otherwise arising
directly or indirectly out of the Project, including but not limited to, any
products liability or intellectual property infringement and/or trade secret
misappropriation claims with respect to the Developed Prototype Product(s) as
well as any follow on products, whether or not considered to be successors of
such Prototype Products.

                                    ARTICLE X
                             LIMITATION OF LIABILITY

         SECTION 10.01. With the exception of Company's obligations pursuant to
the preceding Article IX, Company shall not be liable and in no event shall the
University be liable with respect to any consequential, incidental, special or
other indirect damages, such as lost profits, even if the such party has
knowledge of the likelihood of such damages. Company acknowledges and agrees
that any and all service(s) performed and input provided by University personnel
are being supplied without charge and on an AS-IS basis only and University
shall accordingly have no responsibility or liability with respect to any such
services or input. For any claim concerning the performance or nonperformance of
services by the University hereunder, Company's sole remedy shall be, at the
University's option, to reperform the services at no charge to Company Subject
to the foregoing, for any claims related whatsoever to the subject matter of
this Agreement, regardless of the form of action, whether in contract or in
tort, the liability of the each Party and its employees and agents for damages
shall be restricted to direct damages, and such Party's maximum aggregate
liability to the other with respect to any and all such claims shall not exceed
the fees paid by Company to the University under this Agreement for the right to
use the Licensed Premises.

                                       14
<PAGE>   15

                                   ARTICLE XI
                      ASSIGNMENT, MORTGAGING, SUBLICENCING

         SECTION 11.01. Company covenants and agrees that neither this Agreement
nor the term and estate hereby granted nor any interest herein, including any
services, will be assigned, mortgaged, pledged, encumbered or otherwise
transferred (whether voluntarily or by operation of law), and that neither the
Licensed Premises, nor any part thereof, will be encumbered in any manner by
reason of any act or omission on the part of Company, or used or occupied, or
permitted to be used or occupied, or utilized for any reason whatsoever, by
anyone other than Company, or for any use or purpose other than Permitted Uses
of Licensed Premises, or be sublicensed, or offered or advertised for
sublicensing, without prior written consent of the University in every case,
which consent shall be at the University's sole and unfettered discretion.
Notwithstanding the foregoing, this Agreement may be transferred or assigned
without University consent to any wholly-owned subsidiary of Company or to any
party that acquires all or substantially all of the stock or assets of the
Company.

                                   ARTICLE XII
                                      BILLS

         SECTION 12.01. All bills and statements for reimbursement or other
payments or charges due from Company and Telco to the University hereunder shall
be due and payable in full thirty (30) days, unless herein otherwise provided,
after submission thereof by the University to Company and/or Telco, as
applicable. Company's failure to make timely payment of any undisputed amounts
indicated by such bills and statements, for work done by the University at
Company's, reimbursement provided for by this Agreement, or any other sums
properly owing by Company to the University under this Agreement, shall be
treated as default of this Agreement, in which event the University shall have
the right to terminate this Agreement as to the defaulting Party upon thirty
(30) days written notice to Company the defaulting Party in addition to all
rights and remedies provided in this Agreement.

         SECTION 12.02. INCREMENTAL COSTS. Company agrees to reimburse the
University for all incremental costs incurred by the University with respect to
any and all University personnel that are designated by the University as being
available to the Company with respect to the Project. Incremental costs shall be
deemed to include the University's out-of-pocket costs and expenses such as
travel and living expenses for University personnel engaged in the Project,
provided that (i) all travel and living expenses are incurred only in accordance
with Company's Travel Expense Reimbursement Policy, a copy of which has been
provided to the University, as amended from time to time by Company for its own
business operations, and (ii) any other individual incremental expenses in
excess of $10,000 individually, shall require the prior written approval of the
Company. Incremental costs shall further include all hiring costs, commissions
and salaries of any part-time or full-time personnel who are hired or are
otherwise retained by the University solely for the duration of the Project or
any portion thereof

                                       15
<PAGE>   16

                                  ARTICLE XIII
                                    PUBLICITY

         SECTION 13.01. Either party may publish or otherwise publicly disclose
the fact that the parties have entered into an agreement to incubate and
accelerate Company at the Photonics Center; provided that, no party may disclose
the specific terms of this Agreement without the prior written consent of the
other party. Beyond this, no party shall use the name of the other party or of
any of their respective personnel in any publication, advertising or promotional
material without the prior written consent of the other, which consent will not
unreasonably be withheld. In any such statements, the relationship of the
parties shall be accurately and appropriately described.

                                   ARTICLE XIV

                               GENERAL PROVISIONS

         SECTION 14.01. SURVIVAL OF OBLIGATIONS. In the event of any termination
of this Agreement, (i) the provisions of Articles III, VI, IX, X, XIII, XIV and
Sections 2.02, 5.19., as well as any accrued payment obligation under this
Agreement, shall survive any such termination; and (ii) such termination shall
not affect either party's rights with respect to any breach or non-performance
by any other party prior to such termination.

         SECTION 14.02. GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the internal laws of the Commonwealth of
Massachusetts, without regard to its rules concerning conflicts of laws.

         SECTION 14.03. EXCLUSIVE VENUE; CONSENT TO JURISDICTION. Any action,
suit or other proceeding pursuant to, arising under, or touching or concerning
this Agreement or the transactions contemplated hereby shall be brought
exclusively in any court of competent jurisdiction in Suffolk County,
Commonwealth of Massachusetts. The parties agree to take any and all necessary
or appropriate action to submit to the exclusive jurisdiction of any such court.
In any such action, suit or proceeding, in addition to any other relief to which
such party may be entitled.

         SECTION 14.04. AMENDMENT AND WAIVER. No provision of or right under
this Agreement shall be deemed to have been waived by any act or acquiescence on
the part of either party, its agents or employees, but only by an instrument in
writing signed by an authorized officer of each party. No waiver by either party
of any breach of this Agreement by the other party shall be effective as to any
other breach, whether of the same or any other term or condition and whether
occurring before or after the date of such waiver.

         SECTION 14.05. INDEPENDENT CONTRACTORS. Each party represents that it
is acting on its own behalf as an independent contractor and is not acting as an
agent for or otherwise on behalf of any other Party to this Agreement nor any
third party. This Agreement and the relations hereby established by and between
the University and the Company do not constitute a partnership, joint venture,
agency or contract of employment between them.

         SECTION 14.06. SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.

         SECTION 14.07. NOTICES. All communications hereunder shall be in
writing and shall be deemed to have been duly given upon receipt by the
addressee at the addresses set forth below, or such other address as either
party may specify by notice sent in accordance with this section 15.06:

                                       16
<PAGE>   17

         If to the University:   Boston University Photonics Center
                                 8 Saint Mary's Street
                                 Boston, MA  02215
                                 Attention:  Deputy Director of the
                                 Photonics Center

         With a copy to:         Boston University
                                 Office of the General Counsel
                                 125 Bay State Road
                                 Boston, MA  02215
                                 Attention:  General Counsel

         If to Telco:            Beacon Telco, L.P.
                                 c/o Beacon Photonics, Inc., its General Partner
                                 8 Saint Mary's Street, suite 910
                                 Boston, MA 02215
                                 Attention: Alok Prasad

         With a copy to:         Bingham Dana LLP
                                 150 Federal Street
                                 Boston, MA 02110
                                 Attention:  Jack Concannon

         If to Company:          Verilink Corporation
                                 950 Explorer Blvd.
                                 Huntsville, AL 35806
                                 Attention:  Vice President and CFO

         With a copy to:         Powell, Goldstein, Frazer & Murphy LLP
                                 191 Peachtree Street, N.E., 16th Floor
                                 Atlanta, GA 30303
                                 Attention:  Eliot Robinson

         SECTION 14.08. SEVERABILITY. In the event any provision of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other term or provision hereof. The parties agree that they will negotiate
in good faith or will permit a court or arbitrator to replace any provision
hereof so held invalid, illegal or unenforceable with a valid provision which is
as similar as possible in substance to the invalid, illegal or unenforceable
provision.

         SECTION 14.09. CONFLICT OR INCONSISTENCY. In the event of any conflict
or inconsistency between the terms and conditions hereof and any terms or
conditions set forth in any purchase order or other document relating to the
transactions contemplated by this Agreement, the terms and conditions set forth
in this Agreement shall prevail.

         SECTION 14.10. CAPTIONS. Captions of the sections and subsections of
this Agreement are for reference purposes only and do not constitute terms or
conditions of this Agreement and shall not limit or affect the terms and
conditions hereof.

                                       17
<PAGE>   18

         SECTION 14.11. WORD MEANINGS. Words such as herein, hereinafter, hereof
and hereunder refer to this Agreement as a whole and not merely to a section or
paragraph in which such words appear, unless the context otherwise requires. The
singular shall include the plural, and each masculine, feminine and neuter
reference shall include and refer also to the others, unless the context
otherwise requires.

         SECTION 14.12. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties hereto with respect to the transactions and matters
contemplated hereby, supersedes all prior agreements and understandings relating
to the subject mater hereof, and no representations, inducements, promises or
agreements, whether oral or otherwise, between such parties not contained herein
or incorporated herein by reference shall be of any force or effect.

         SECTION 14.13. RULES OF CONSTRUCTION. The parties agree that they have
participated equally in the formation of this Agreement and that the language
and terms of this Agreement shall not be presumptively construed against either
of them.

         SECTION 14.14. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.

                  (Remainder of page intentionally left blank.)

                                       18
<PAGE>   19

         IN WITNESS WHEREOF, the University, Telco and Company have caused this
instrument to be executed under seal, as of the day and year first above
written.

                                    TRUSTEES OF BOSTON UNIVERSITY

                                    By: /s/ Martin J. Howard
                                        ----------------------------------------
                                    Name: Martin J. Howard
                                    Title: Assistant Treasurer

                                    VERILINK CORPORATION

                                    By: /s/ Graham G. Pattison
                                        ----------------------------------------
                                    Name: Graham G. Pattison
                                    Title: President and Chief Executive Officer

                                    BEACON TELCO, L.P.
                                    BY BEACON PHOTONICS, INC., ITS GENERAL
                                      PARTNER

                                    By: /s/ Alok Prasad
                                        ----------------------------------------
                                    Name: Alok Prasad
                                    Title: President

                                       19

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