Document:

<PAGE>

                                                                   Exhibit 10.21

                           STOCK PURCHASE AGREEMENT

                                by and between

                                 TELLIUM, INC.

                                      and

                                  AT&T CORP.

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

                                 COMMON STOCK

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

                         Dated as of September 1, 2000
<PAGE>

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

<TABLE>
<S>                                                                                                            <C>
                                                                                                               Page

SECTION 1.         Definitions.............................................................................     -1-
                   -----------
      1.1.         Affiliate...............................................................................     -1-
                   ---------
      1.2.         Common Stock............................................................................     -1-
                   ------------
      1.3.         License Agreement.......................................................................     -1-
                   ------------------
      1.4.         Person..................................................................................     -1-
                   -------
      1.5.         Preferred Stock.........................................................................     -1-
                   ---------------

SECTION 2.         [INTENTIONALLY OMITTED].................................................................     -1-
----------         -----------------------

SECTION 3.         Issuance and Sale of Common Shares; Closing.............................................     -1-
                   -------------------------------------------
      3.1.         Issuance of Common Shares...............................................................     -1-
                   -------------------------
      3.2.         Agreement to Sell and Purchase Common Shares............................................     -2-
                   --------------------------------------------
      3.3.         The Closing.............................................................................     -2-
                   -----------
      3.4.         Conveyances at Closing..................................................................     -2-
                   ----------------------

SECTION 4.         Representations and Warranties of the Corporation.......................................     -2-
                   -------------------------------------------------
      4.1.         Corporate Organization..................................................................     -2-
                   ----------------------
      4.2.         Capitalization; Issuance of Common Shares...............................................     -3-
                   -----------------------------------------
      4.3.         Subsidiaries............................................................................     -4-
                   ------------
      4.4.         Authority...............................................................................     -4-
                   ---------
      4.5.         No Violation; No Consent or Approval Required...........................................     -4-
                   ---------------------------------------------
      4.6.         Common Stock Issuance...................................................................     -5-
                   ---------------------
      4.7.         Financial Statements....................................................................     -5-
                   --------------------
      4.8.         Change..................................................................................     -5-
                   ------
      4.9.         Title to Property and Assets............................................................     -5-
                   ----------------------------
      4.10.        Litigation..............................................................................     -5-
                   ----------
      4.11.        Employees...............................................................................     -5-
                   ---------
      4.12.        Taxes...................................................................................     -6-
                   -----
      4.13.        Intellectual Property...................................................................     -6-
                   ---------------------
      4.14.        Disclosure..............................................................................     -6-
                   ----------

SECTION 5.         Representations and Warranties of AT&T..................................................     -6-
                   --------------------------------------
      5.1.         Power and Authority.....................................................................     -7-
                   -------------------
      5.2.         No Consent or Approval Required.........................................................     -7-
                   -------------------------------
      5.3.         Investment Representations..............................................................     -7-
                   --------------------------
      5.4.         Certain Representations of AT&T.........................................................     -8-
                   -------------------------------

SECTION 6.         Conditions to the Closing...............................................................     -8-
                   -------------------------
      6.1.         Representations and Warranties of the Corporation.......................................     -8-
                   -------------------------------------------------
</TABLE>

                                      ii
<PAGE>

<TABLE>
<S>                                                                                                             <C>
      6.2.         Performance.............................................................................     -8-
                   -----------
      6.3.         Compliance Certificate..................................................................     -8-
                   ----------------------
      6.4.         Legal Opinion...........................................................................     -8-
                   -------------
      6.5.         Secretary's Certificate.................................................................     -8-
                   -----------------------
      6.6.         Corporate Proceedings...................................................................     -9-
                   ---------------------
      6.7.         No Action...............................................................................     -9-
                   ---------
      6.8.         License Agreement.......................................................................     -9-
                   -----------------

SECTION 7.         Registration Rights.....................................................................     -9-
                   -------------------

SECTION 8.         Restriction on Transfer.................................................................     -9-
                   -----------------------

SECTION 9.         Transfer Taxes..........................................................................    -11-
                   --------------

SECTION 10.        Exchanges; Lost, Stolen or Mutilated Certificates.......................................    -11-
                   -------------------------------------------------

SECTION 11.        Survival of Representations, Warranties and Agreements, Etc.............................    -11-
                   -----------------------------------------------------------

SECTION 12.        Entire Agreement........................................................................    -11-
                   ----------------

SECTION 13.        Notices.................................................................................    -12-
                   -------

SECTION 14.        Changes.................................................................................    -12-
                   -------

SECTION 15.        Counterparts............................................................................    -12-
                   ------------

SECTION 16.        Headings................................................................................    -13-
                   --------

SECTION 17.        Nouns and Pronouns......................................................................    -13-
                   ------------------

SECTION 18.        Governing Law...........................................................................    -13-
                   -------------
      ANNEX I
                   REGISTRATION RIGHTS.....................................................................     -1-
                   -------------------
      1.                   Piggyback Registration Rights...................................................     -1-
                           -----------------------------
      2.                   Restrictions on Public Sale.....................................................     -2-
                           ---------------------------
      3.                   Registration Expenses...........................................................     -2-
                           ---------------------
      4.                   Indemnification.................................................................     -3-
                           ---------------
      5.                   Participation in Underwritten Registrations.....................................     -4-
                           -------------------------------------------
</TABLE>

                                      iii
<PAGE>

                                   ATTACHMENTS
                                   -----------

EXHIBITS
--------

Exhibit A          -       License Agreement
Exhibit B          -       Form of Escrow Agreement
Exhibit C          -       Certificate of Incorporation
Exhibit D          -       Form of Legal Opinion of Finn Dixon & Herling LLP

ANNEX I            -       Registration Rights
-------

Schedule 4.2       -       Capitalization
------------

                                      iv
<PAGE>

                           STOCK PURCHASE AGREEMENT

       This Stock Purchase Agreement (this "Agreement"), dated as of September
1, 2000, is entered into by and among Tellium, Inc., a Delaware corporation (the
"Corporation"), and AT&T Corp., a New York corporation ("AT&T").

       SECTION 1.  Definitions.  As used herein, the terms below shall have the
       ----------  -----------
following meanings.  Any of such terms, unless the context otherwise requires,
may be used in the singular or the plural, depending upon the reference.  Share
amounts herein give effect to a three for one stock split effected as of August
11, 2000.

       1.1. Affiliate.  The term "Affiliate" shall mean with respect to any
            ---------
person or entity, any other person or entity directly or indirectly controlling,
controlled by or under common control with such first person or entity (for
purposes of this definition, "control" as used with respect to a person or
entity, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of such person or
entity, whether by ownership of voting securities, by contract or otherwise).

       1.2. Common Stock.  The term "Common Stock" shall mean the Common Stock
            ------------
of the Corporation, par value $0.001 per share.

       1.3. License Agreement.  The term "License Agreement" shall mean the
            -----------------
License Agreement between the Corporation and AT&T,  dated as the date hereof,
substantially in the form of Exhibit A hereto, pursuant to which AT&T has agreed
                             ---------
to license certain patents (the "AT&T Patents") to the Corporation.

       1.4. Person.     The term "Person" shall mean any individual, firm,
            ------
corporation, partnership, limited liability company, trust, joint venture,
Governmental Entity or other entity.

       1.5. Preferred Stock.  The term "Preferred Stock" shall mean the
            ---------------
Preferred Stock of the Corporation, par value $0.001 per share, including the
Series A Preferred Stock of the Corporation, the Series B Preferred Stock of the
Corporation, the Series C Preferred Stock of the Corporation and the Series D
Preferred Stock of the Corporation.

       SECTION 2.  [INTENTIONALLY OMITTED]
       ----------  -----------------------

       SECTION 3.  Issuance and Sale of Common Shares; Closing.
       ----------  -------------------------------------------

       3.1. Issuance of Common Shares.  Subject to the terms and conditions
            -------------------------
hereof, the Corporation has authorized the issuance on the Closing Date (as
defined in Section 3.3 hereof) of an aggregate of One Million Five Hundred
Thousand (1,500,000) shares of Common Stock, par
<PAGE>

value $0.001 per share (such shares of Common Stock being sometimes hereinafter
referred to as the "Common Shares").

      3.2. Agreement to Sell and Purchase Common Shares.  Subject to the terms
           --------------------------------------------
and conditions hereof, the Corporation shall issue to AT&T and AT&T shall
acquire from the Corporation at the Closing the Common Shares free and clear of
all liens, encumbrances and restrictions of any kind (except for those imposed
by the Certificate of Incorporation, this Agreement, the Escrow Agreement (as
defined below) or applicable securities laws).  The consideration for such
Common Shares shall be the license by AT&T of the AT&T Patents pursuant to the
License Agreement.

      3.3. The Closing.  The closing (the "Closing") hereunder with respect to
           -----------
the transactions contemplated hereby is taking place on the date hereof at the
offices of Finn Dixon & Herling LLP, One Landmark Square, Stamford, Connecticut
06901 (the date hereof sometimes being referred to herein as the "Closing
Date").

      3.4. Conveyances at Closing. At the Closing, the Corporation shall deliver
           ----------------------
(i) to AT&T a certificate or certificates, registered in the name of AT&T,
representing One Million Fifty Thousand (1,050,000) Common Shares and (ii) to a
mutually agreed upon escrow agent (the "Escrow Agent") a certificate or
certificates, registered in the name of AT&T, representing Four Hundred Fifty
Thousand (450,000) Common Shares (the "Escrow Shares") to be held in escrow
pursuant to an escrow agreement substantially in the form of Exhibit B hereto
                                                             ---------
(the "Escrow Agreement"), against receipt by the Corporation of a fully executed
License Agreement.

      3.5. Escrow Shares.  The Escrow Shares will be held for, and dividends
           -------------
distributed on such Escrow Shares will be paid to the Escrow Agent for,
distribution as specified in the Escrow Agreement and subject to the terms of
Section 4.2 of the License Agreement.

      SECTION 4.  Representations and Warranties of the Corporation.  As of the
      ---------   -------------------------------------------------
date hereof, the Corporation hereby represents and warrants to AT&T as follows:

      4.1. Corporate Organization.  The Corporation is a corporation duly
           ----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority and all necessary
governmental franchises, licenses, permits, authorizations and approvals to own
or lease and operate its properties and assets and to carry on its business as
it is now being conducted, and is duly qualified or licensed as a foreign
corporation to do business and in good standing in each jurisdiction in which
the conduct or nature of the business conducted by it or the character or
location of the properties owned or leased by it makes such qualification or
licensing necessary, except where the failure to be so qualified or licensed
would not have a Material Adverse Effect. As used herein the term "Material
Adverse Effect" means any change or effect that, individually or in the
aggregate, is or is reasonably likely to be materially adverse to the business,
assets, prospects, results of operations or condition (financial or otherwise)
of the Corporation taken as a whole or on the ability of the Corporation to
consummate the transactions contemplated hereby.

                                      -2-
<PAGE>

A true and complete copy of the Corporation's Amended and Restated Certificate
of Incorporation (the "Certificate of Incorporation") is attached hereto as
Exhibit C.
---------

      4.2.  Capitalization; Issuance of Common Shares.
            -----------------------------------------

            (a) As of the date hereof, the authorized capital stock of the
Corporation consists of the following:

                (i) 21,112,268 shares of Preferred Stock, of which (A)
10,433,334 shares are designated as Series A Preferred Stock, 10,089,584 of
which are issued and outstanding, and 250,000 of which are reserved for issuance
upon conversion of the Series B Preferred Stock, (B) 250,000 shares are
designated Series B Preferred Stock, 233,333 of which are issued and
outstanding, (C) 4,403,934 shares are designated Series C Preferred Stock, of
which 2,593,974 are outstanding and 29,509 are reserved for issuance upon
exercise of certain warrants to purchase Series C Preferred Stock, and (D)
6,025,000 shares are designated Series D Preferred Stock, of which 6,010,927
shares are issued and outstanding. Such shares of outstanding Preferred Stock
have been duly authorized and validly issued, are nonassessable and fully paid
and are convertible into an aggregate of 56,783,454 shares of Common Stock. The
rights, privileges and preferences of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock are as
stated in the Certificate of Incorporation.

                (ii)  250,000,000 shares of Common Stock, 22,961,973 shares of
which are outstanding and are duly authorized and validly issued, nonassessable
and fully paid. The Common Shares that are being purchased by AT&T hereunder,
when issued, sold and delivered in accordance with the terms of this Agreement
for the consideration expressed herein, will be duly authorized and validly
issued, nonassessable and fully paid, and free and clear of all liens,
encumbrances and restrictions of any kind (except for those imposed by the
Certificate of Incorporation, this Agreement or applicable securities laws).

            (b) Schedule 4.2 hereto contains capitalization tables for the
Corporation showing the current ownership of the Common Stock and Preferred
Stock, without giving effect to the transactions contemplated by this Agreement.
There are no treasury shares held by the Corporation.  Except as set forth on
Schedule 4.2 or as provided in the Stockholders Agreement (as defined below),
there are no outstanding options, warrants, rights (including conversion or
preemptive rights and rights of first refusal or similar rights) or other
agreements, orally or in writing, for the purchase or acquisition from the
Corporation of any shares of its capital stock, and no shares of capital stock
are reserved for issuance, other than as provided in this Agreement.  The
issuance of the Common Shares to AT&T for the consideration set forth above will
not result in or cause an adjustment to the current conversion or exercise price
for any outstanding shares of capital stock or stock options or warrants of the
Corporation.

                                      -3-
<PAGE>

           (c) Schedule 4.2 hereto sets forth a complete and accurate list of
all outstanding stock options and warrants of the Corporation, indicating the
number of shares and type of capital stock issuable upon exercise thereof.

           (d) Except for the Certificate of Incorporation and the Stockholders
Agreement dated as of December 2, 1999 among the Corporation and the
stockholders party thereto (the "Stockholders Agreement") and except for
restricted stock and similar agreements, there are no voting trusts or other
agreements or understandings to which the Corporation or, to the knowledge of
the Corporation, any shareholder is a party with respect to the voting of the
capital stock of the Corporation or relating to dividends or dispositions or
providing for registration rights of any kind.

      4.3. Subsidiaries.  The Corporation does not own, directly or indirectly,
           ------------
any equity or similar interest in, or any interest convertible into or
exchangeable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business association or entity.

      4.4. Authority.  The Corporation has the full power and authority to enter
           ---------
into this Agreement and the License Agreement, to issue and sell the Common
Shares to be sold hereunder, to perform its obligations hereunder and to
consummate the transactions contemplated hereby.  All necessary action has been
taken by the Corporation with respect to the execution and delivery of this
Agreement and the License Agreement and the consummation of the transactions
contemplated hereby and thereby.  Each of this Agreement and the License
Agreement has been duly executed and delivered by, and, assuming the due
authorization, execution and delivery thereof by AT&T, constitutes a valid and
binding obligation of, the Corporation, enforceable against the Corporation in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general applicability affecting creditors' rights
and to general equity principles.

      4.5. No Violation; No Consent or Approval Required.
           ---------------------------------------------

           (a) Neither the execution and delivery of this Agreement or the
License Agreement by the Corporation nor the consummation by the Corporation of
the transactions contemplated hereby or thereby will conflict with or result in
any breach or violation of any provision of the Certificate of Incorporation or
Bylaws of the Corporation or any term or provision of any material mortgage,
indenture, contract, agreement, instrument, judgment or decree to which it is a
party or by which it is bound, or any order, statute, rule or regulation
applicable to the Corporation.

           (b) No consent, approval or authorization of, or declaration to or
filing with, any court, administrative agency, commission or other governmental
or regulatory authority or instrumentality, domestic or foreign (a "Governmental
Entity"), or other third party is required to be made by or obtained for
consummation of the transactions contemplated hereby, other than those consents,
approvals, authorizations, declarations or filings which have been or will
timely be obtained or made, as the case may be.

                                      -4-
<PAGE>

      4.6.  Common Stock Issuance.  Subject to the truth and accuracy of the
            ---------------------
representations and warranties of AT&T set forth in Section 5, the offer, sale
and issuance of the Common Shares as contemplated by this Agreement are exempt
from the registration requirements of any applicable state and federal
securities laws, subject to any post-Closing filings required by state "blue
sky" laws.

      4.7.  Financial Statements.  The Corporation has delivered to AT&T its (a)
            --------------------
audited financial statements (including balance sheet, statement of
shareholders' equity/income statement and statement of cash flows) as of and for
the twelve-month period ended December 31, 1999 (the "Audited Balance Sheet
Date"), together with a report thereon from the Corporation's independent
auditors, and (b) unaudited financial statements (including balance sheet,
statement of shareholders' equity/income statement and statement of cash flows)
as of and for the six-month period ended June 30, 2000 (collectively, the
"Financial Statements").  The Financial Statements have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated, except that the unaudited Financial
Statements may not contain all footnotes required by generally accepted
accounting principles and may be subject to year end audit adjustments.  The
Financial Statements fairly present the financial condition and operating
results of the Corporation as of the dates, and for the periods, indicated
therein.

      4.8.  Change. Since the Audited Balance Sheet Date, there has not been any
            ------
material change in the assets, liabilities, financial condition or operating
results of the Corporation from that reflected in the Financial Statements,
except changes in the ordinary course of business that have not been, in the
aggregate, materially adverse.

      4.9.  Title to Property and Assets.  The Corporation owns its property and
            ----------------------------
assets that it purports to own free and clear of all mortgages, liens, loans and
encumbrances, except such encumbrances and liens which arise in the ordinary
course of business and do not materially impair the Corporation's ownership or
use of such property or assets.  With respect to the property and assets it
leases, the Corporation is in compliance with such leases and, to its knowledge,
holds a valid leasehold interest free of any liens, claims or encumbrances.

      4.10. Litigation.  There is no action, suit, proceeding or investigation
            ----------
pending or, to the Corporation's knowledge, currently threatened against the
Corporation that questions the validity of this Agreement or the License
Agreement or the right of the Corporation to enter into them, or to consummate
the transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse change in the assets,
condition, prospects or affairs of the Corporation, financially or otherwise, or
any change in the current equity ownership of the Corporation.  The Corporation
is not a party or subject to the provisions of any order, writ, injunction or
decree of any court or government agency or instrumentality.

      4.11. Employees.  To the Corporation's knowledge, there is no strike,
            ---------
labor dispute or union organization activities pending or threatened between it
and its employees and none of the Corporation's employees belongs to any union
or collective bargaining unit. The Corporation has complied in all material
respects with all applicable state and federal equal opportunity and other

                                      -5-
<PAGE>

laws related to employment. To the Corporation's knowledge, no employee of the
Corporation is or will be in violation of any judgment, decree or order, or any
term or any employment contract, patent disclosure agreement, or other contract
or agreement relating to the relationship of any employee with the Corporation,
or any other party because of the nature of the business conducted or presently
proposed to be conducted by the Corporation or to the use by the employee of his
or her best efforts with respect to such business. The Corporation is presently
not aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Corporation, nor does the
Corporation have a present intention to terminate the employment of any of the
foregoing. Each key employee of the Corporation has entered into a non-
disclosure and inventions assignment agreement in customary form.

      4.12  Taxes.  All federal tax returns and material, state, local and
            -----
foreign tax returns required to be filed by the Corporation have been filed, or
if not yet filed have been granted extensions of the filing dates, which
extensions have not expired, and all taxes, assessments, fees, and other
governmental charges upon the Corporation, or upon any of its properties, income
or franchises, shown in such returns and on assessments received by the
Corporation to be due and payable have been paid, or adequate reserves therefor
have been set up and have been disclosed in the Corporation's financial
statements. No such taxes are being contested.

      4.13. Intellectual Property.    To the best of the Corporation's
            ---------------------
knowledge, the Corporation has good and marketable title to its material
intellectual property rights, including, without limitation, all technology,
patents, copyrights, trademarks, tradenames, service marks (and any applications
for any of the foregoing) and trade secrets (the "Intellectual Property
Rights"), free and clear of any and all material mortgages, pledges, security
interests, liens, assignments, licenses, leases, charges or other encumbrances
or material restrictions. To the best of the Corporation's knowledge, the
Corporation owns or has valid rights to use all such material Intellectual
Property Rights, and the Corporation's business as now conducted and as
presently proposed to be conducted is not reasonably expected to infringe or
conflict with the rights of others, except such infringements of conflicts which
would not reasonably be expected to have a Material Adverse Effect. To the best
of the Corporation's knowledge, no person or entity has made or threatened to
make any claims that the operation of the business of the Corporation is in
violation of or infringes any intellectual property rights or any other
proprietary or trade rights of any third party except such claims which would
not reasonably be expected to cause a Material Adverse Effect.

      4.14. Disclosure.  To the best of the Corporation's knowledge, neither
            ----------
this Agreement nor any certificate, instrument or written statement furnished or
made to AT&T by or on behalf of the Corporation in connection with this
Agreement contains any untrue statement of a material fact or, taken as a whole
with all other statements, omits to state a material fact necessary in order to
make the statements contained herein and therein not misleading, in light of the
circumstances under which they were made.

      SECTION 5.  Representations and Warranties of AT&T.  AT&T hereby
      ---------   --------------------------------------
represents and warrants to the Corporation as follows:

                                      -6-
<PAGE>

      5.1. Power and Authority.  AT&T has full power and authority to enter into
           -------------------
this Agreement and the License Agreement, to purchase Common Shares to be sold
by the Corporation hereunder, to perform its obligations hereunder and under the
License Agreement and to consummate the transactions contemplated hereby and
thereby.  All necessary action has been taken by AT&T with respect to the
execution and delivery of this Agreement and the License Agreement and the
consummation of the transactions contemplated hereby and thereby.  Each of this
Agreement and the License Agreement has been duly executed and delivered by,
and, assuming the due authorization, execution and delivery thereof by the
Corporation, constitutes a valid and binding obligation of, AT&T, enforceable
against AT&T in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general applicability affecting
creditors' rights and to general equity principles.

      5.2. No Consent or Approval Required.  No consent, approval or
           -------------------------------
authorization of, or declaration to or filing with, any Governmental Entity or
other third party is required for consummation of the transactions contemplated
hereby or by the License Agreement.  AT&T is acquiring the Common Shares solely
for the purpose of investment, as defined in the regulations promulgated under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

      5.3. Investment Representations.
           --------------------------

          (a) AT&T is and will be acquiring the Common Shares to be purchased
hereunder for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), except that AT&T may make certain transfers as
provided herein.

          (b) AT&T understands that (i) the Common Shares have not been
registered under the Securities Act, by reason of their issuance by the
Corporation in transactions exempt from the registration requirements of the
Securities Act and the Corporation's reliance on such exemption is predicated
upon AT&T's representations set forth herein and (ii) the Common Shares must be
held by AT&T indefinitely unless a subsequent disposition thereof is registered
under the Securities Act or is exempt from registration.

          (c) AT&T further understands that, with respect to the Common Shares,
the exemption from registration afforded by Rule 144 (the provisions of which
are known to AT&T) promulgated under the Securities Act depends on the
satisfaction of various conditions, and that, if applicable, Rule 144 may afford
a basis for sales only in limited amounts.

          (d) AT&T is an "accredited investor" as such term is defined in Rule
501(a) promulgated under the Securities Act, with its principal executive office
located at the address set forth under AT&T's name on its signature page hereto.

          (e) AT&T agrees that the Corporation may place a legend on the
certificates delivered hereunder stating that the Common Shares have not been
registered under the Securities

                                      -7-
<PAGE>

Act or state securities laws, and, therefore cannot be offered, sold or
transferred unless they are registered under the Securities Act or state
securities laws or an exemption from such registration is available, and that
the Corporation may place stop transfer orders on the transfer books of the
Corporation.

      5.4. Certain Representations of AT&T.   AT&T represents and warrants on
           -------------------------------
behalf of itself and its affiliates that the issuance of Common Shares to it at
the Closing satisfies all payment obligations and all obligations of the
Corporation to issue capital stock or other securities of the Corporation to
AT&T or its affiliates under the License Agreement.

      SECTION 6.  Conditions to the Closing.  The obligations of AT&T to
      ---------   -------------------------
purchase the Common Shares at the Closing are subject to satisfaction of the
following conditions, any of which may be waived by AT&T:

      6.1.   Representations and Warranties of the Corporation.  The
             -------------------------------------------------
representations and warranties of the Corporation contained in this Agreement
and in the License Agreement shall be true and correct in all material respects
on and as of the Closing with the same effect as though such representations and
warranties had been made on and as of the date of the Closing.

      6.2. Performance.  The Corporation shall have performed and complied with
           -----------
all covenants, agreements, obligations and conditions contained in this
Agreement and in the License Agreement that are required to be performed or
complied with by it on or before the Closing.

      6.3. Compliance Certificate.  The President of the Corporation shall
           ----------------------
deliver to AT&T at the Closing a certificate certifying that the conditions
specified in Sections 6.1 and 6.2 above have been fulfilled.

      6.4. Legal Opinion.  On the Closing Date, AT&T shall have received from
           -------------
Finn Dixon & Herling LLP, counsel to the Corporation, an opinion in
substantially the form of Exhibit D.
                          ---------

      6.5. Secretary's Certificate.  AT&T shall have received copies of a
           -----------------------
certificate from the Secretary or an Assistant Secretary of the Corporation
dated as of the date of the Closing certifying: (i) that attached thereto is a
true and complete copy of the By-laws of the Corporation as in effect on the
date of such certification; (ii) that attached thereto is a true and complete
copy of all resolutions and votes adopted by the Board of Directors of the
Corporation authorizing the execution, delivery and performance of this
Agreement and the License Agreement and the transactions contemplated hereby and
thereby and that all such votes are in full force and effect; (iii) that
attached thereto is a true and complete copy of the Certificate of Incorporation
of the Corporation, certified as of a recent date by the Secretary of State of
Delaware and as in effect on the date of such certification and that the
Certificate of Incorporation has not been amended since the date of the
certificate of the Secretary of State of Delaware; and (iv) to the incumbency
and specimen signature of each officer of the Corporation executing on behalf of
the Corporation this Agreement and the License Agreement, the stock certificates
representing the Common Shares and

                                      -8-
<PAGE>

any certificate or instrument furnished pursuant in connection herewith and
therewith, and a certification by another officer of the Corporation as to the
incumbency and signature of the officer signing the certificate referred to in
this clause.

      6.6. Corporate Proceedings.  All corporate and other proceedings to be
           ---------------------
taken and all waivers and consents, approvals, qualifications and/or
registrations required to be obtained or effected in connection with the
execution, delivery and performance of the transactions contemplated thereby,
including, but not limited to, the issuance, sale and delivery of the Common
Shares, shall have been taken, obtained or effected (except for the filing of
any notice subsequent to such Closing which may be required under applicable
federal and state securities or "blue sky" laws which, if required, shall be
filed on a timely basis as may be so required), and all documents incident
thereto shall be satisfactory in form and substance to AT&T and to its counsel.

      6.7. No Action.  No action or proceeding shall have been instituted before
           ---------
a court or other governmental body or by any governmental agency or public
authority to restrain or prohibit the transactions contemplated by this
Agreement or the License Agreement or to obtain an amount of damages or other
material relief in connection with the execution of this Agreement or the
License Agreement or the consummation of the transactions contemplated hereby;
and no governmental agency shall have given notice to any party hereto to the
effect that consummation of the transactions contemplated by this Agreement
would constitute a violation of any law or that it intends to commence
proceedings to restrain consummation of such transactions.

      6.8. License Agreement.  The Corporation shall have executed and delivered
           -----------------
to AT&T the License Agreement.

      SECTION 7.  Registration Rights.  The Corporation hereby grants to AT&T
      ---------   -------------------
the registration rights described on Annex I hereto with respect to the Common
Shares.

      SECTION 8.  Restriction on Transfer.
      ---------   -----------------------

          (a) Common Shares held by AT&T shall not be sold, transferred,
assigned, pledged, encumbered or otherwise disposed of (each, a "Transfer")
except upon the conditions specified in this Section 8, which conditions are
intended to ensure compliance with the provisions of the Securities Act.

          (b) Each certificate for shares of the capital stock of the
Corporation held by AT&T and each certificate for any such securities issued to
subsequent transferees of any such certificate shall (unless otherwise permitted
by the provisions of Sections 8(c) and 8(d)) be stamped or otherwise imprinted
with a legend in substantially the following form:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
          INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
          1933.  THESE

                                      -9-
<PAGE>

          SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
          REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. ADDITIONALLY,
          THE TRANSFER OF THESE SECURITIES IS SUBJECT TO THE CONDITIONS
          SPECIFIED IN SECTION 8 OF A STOCK PURCHASE AGREEMENT AMONG TELLIUM,
          INC. AND AT&T CORP., AND NO TRANSFER OF THESE SECURITIES SHALL BE
          VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE
          FULFILLMENT OF CERTAIN SUCH CONDITIONS, THE SECRETARY OF TELLIUM, INC.
          HAS AGREED TO DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT
          BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY REGISTERED
          IN THE NAME OF THE HOLDER HEREOF. COPIES OF SUCH AGREEMENT MAY BE
          OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF
          THIS CERTIFICATE TO THE SECRETARY OF TELLIUM, INC."

          (c) AT&T agrees, prior to any Transfer of such shares, to give written
notice to the Corporation of AT&T's intention to effect such Transfer and to
comply in all other respects with the provisions of this Section 8.  Each such
notice shall describe the manner and circumstances of the proposed Transfer and
shall be accompanied by the written opinion, addressed to the Corporation, of
counsel for the holder of such shares, stating that in the opinion of such
counsel (which opinion and counsel shall be reasonably satisfactory to the
Corporation) such proposed Transfer does not involve a transaction requiring
registration or qualification of such shares under the Securities Act or the
securities "blue sky" laws of any relevant state of the United States; provided,
                                                                       --------
however, that no such opinion of counsel shall be necessary for a Transfer by
-------
AT&T to a wholly-owned subsidiary if the transferee agrees in writing to be
subject to the terms of this Section 8 to the same extent as if such transferee
were originally a signatory to this Agreement. AT&T shall thereupon be entitled
to Transfer such shares in accordance with the terms of the notice delivered by
it to the Corporation.  Each certificate or other instrument evidencing the
securities issued upon the Transfer of any such shares (and each certificate or
other instrument evidencing any untransferred balance of such shares) shall bear
the legend set forth in Section 8(b) unless (x) in such opinion of counsel
registration of any future Transfer is not required by the applicable provisions
of the Securities Act or (y) the Corporation shall have waived the requirement
of such legends; provided, however, that such legend shall not be required on
                 --------  -------
any certificate or other instrument evidencing the securities issued upon such
Transfer in the event such Transfer shall be made in compliance with the
requirements of Rule 144 and the transferee is not an affiliate of the
Corporation.  AT&T shall not Transfer any shares until such opinion of counsel
has been given (unless waived by the Corporation or unless such opinion is not
required in accordance with the provisions of this Section 8(c)).

          (d) AT&T agrees that it shall not Transfer such shares to a transferee
that is a competitor of the Corporation (as determinated in good faith by the
Board of Directors of the Corporation).  Each transferee of Common Shares from
AT&T or a subsequent transferee shall take
<PAGE>

such Common Shares subject to the same restrictions as existed in the hands of
the transferor, including, without limitation, the restrictions imposed by this
Section 8.

          (e)       Notwithstanding the foregoing provisions of this Section 8,
the restrictions imposed by this Section 8 upon the transferability of any
shares of the capital stock of the Corporation held by AT&T shall cease and
terminate and not apply (i) when any such shares are sold or otherwise disposed
of pursuant to an effective registration statement under the Securities Act or
as otherwise contemplated by Section 8(c) and, pursuant to Section 8(c), the
securities so transferred are not required to bear the legend set forth in
Section 8(b) or (ii) when the holder of such shares has met the requirements for
Transfer of such shares pursuant to subparagraph (k) of Rule 144 or (iii) as
part of a change in control of the Corporation (provided that this Section 8
shall continue to apply thereafter, except Section 8(d), which shall not apply
in a sale of the Corporation to a public company). Whenever the restrictions
imposed by this Section 8 shall terminate, as herein provided, the holder of
such shares shall be entitled to receive from the Corporation, without expense,
a new certificate not bearing the restrictive legend set forth in Section 8(b)
and not containing any other reference to the restrictions imposed by this
Section 8.

       SECTION 9.   Transfer Taxes. The Corporation agrees that it will pay, and
       ---------    --------------
will hold AT&T harmless from, any and all liability with respect to any stamp,
transfer or similar taxes which may be determined to be payable in connection
with the execution, delivery and performance of this Agreement, or any
modification, amendment or alteration of the terms or provisions of this
Agreement; provided that this Section 9 shall not apply to Transfers of the
           --------
Common Shares.

       SECTION 10.  Exchanges; Lost, Stolen or Mutilated Certificates. Upon
       ----------   -------------------------------------------------
surrender by AT&T to the Corporation of any certificate representing Common
Shares, the Corporation at its expense will issue in exchange therefor, and
deliver to AT&T, a new certificate or certificates representing such shares, in
such denominations as may be requested by AT&T. Upon receipt of evidence
satisfactory to the Corporation of the loss, theft, destruction or mutilation of
any certificate representing any Common Shares, and in case of any such loss,
theft or destruction, upon delivery of any indemnity agreement satisfactory to
the Corporation, or in case of any such mutilation, upon surrender and
cancellation of such certificate, the Corporation at its expense will issue and
deliver to AT&T a new certificate for such shares of like tenor, in lieu of such
lost, stolen or mutilated certificate.

       SECTION 11.  Survival of Representations, Warranties and Agreements, Etc.
       ----------   ------------------------------------------------------------
All representations and warranties hereunder shall survive the Closing and
expire on the date that is two years after the Closing Date, and all agreements
contained herein shall survive indefinitely until, by their respective terms,
they are no longer operative.

       SECTION 12.  Entire Agreement. This Agreement, the License Agreement and
       ----------   ----------------
the other writings referred to herein or delivered pursuant hereto which form a
part hereof contain the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous arrangements
or understandings with respect thereto.

                                     -11-
<PAGE>

       SECTION 13.  Notices. All notices, requests, consents and other
       -----------  -------
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally-recognized overnight courier or first class registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:

          (a)   if to the Corporation, to:

                Tellium, Inc.
                2 Crescent Place
                Oceanport, NJ 07757
                Attention: Richard Barcus and Michael Losch
                Telecopy No. (732) 923-9805

          (b)   if to AT&T, to:

                AT&T Corp.
                180 Park Avenue
                Building 2, Room NJ0814
                Florham Park, NJ 07932
                Attention: Thomas Darcie and Michael C. Varley
                Telecopy: (908) 903-6193

                with a copy to:

                AT&T Corp.
                295 North Maple Avenue
                Basking Ridge, New Jersey 07920
                Attention: VP Law and Secretary
                Telecopy: (908) 221-6618

     All such notices, requests, consents and other communications shall be
deemed to have been delivered (a) in the case of personal delivery or delivery
by telecopy, on the date of such delivery, (b) in the case of dispatch by
nationally-recognized overnight courier, on the next business day following such
dispatch and (c) in the case of mailing, on the third business day after the
posting thereof.

       SECTION 14.  Changes. The terms and provisions of this Agreement may not
       -----------  -------
be modified or amended, nor may any of the provisions hereof be waived,
temporarily or permanently, except pursuant to a written instrument executed by
the Corporation and AT&T.

       SECTION 15.  Counterparts. This Agreement may be executed in any number
       -----------  ------------
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but one
agreement.

                                     -12-
<PAGE>

       SECTION 16.  Headings. The headings of the sections of this Agreement
       -----------  --------
have been inserted for convenience of reference only and shall not be deemed to
be a part of this Agreement.

       SECTION 17.  Nouns and Pronouns. Whenever the context may require, any
       -----------  ------------------
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.

       SECTION 18.  Governing Law. This Agreement shall be governed by and
       -----------  -------------
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed wholly therein.

                (BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK)

                                     -13-
<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Stock Purchase
Agreement as of the day and year first written above.

TELLIUM, INC., a Delaware corporation

By:   /s/
   ------------------------------------
   Name:
   Title:

AT&T CORP., a New York corporation

By:   /s/
   ------------------------------------
   Name:
   Title:

                                     -14-
<PAGE>

                                    ANNEX I
                              REGISTRATION RIGHTS
                              -------------------

 1.   Piggyback Registration Rights.
      -----------------------------

     (a)  Right to Piggyback. Subject to Sections 1(b) and 1(c) below, whenever
          ------------------
the Corporation proposes to register any shares of Common Stock (or securities
convertible into or exercisable or exchangeable for, or options to purchase,
Common Stock) with the Securities and Exchange Commission (the "Commission")
under the Securities Act of 1933, as amended (the "Securities Act") (other than
pursuant to an initial public offering or a registration on Form S-4 or S-8, or
any successor forms thereto) (a "Piggyback Registration"), the Corporation (i)
will give written notice to AT&T, so long as AT&T holds Registrable Securities
(as defined below), at least 30 days prior to the anticipated filing date, of
its intention to effect such a registration, which notice will specify the
proposed offering price, the kind and number of securities proposed to be
registered, the distribution arrangements and such other information that at the
time would be appropriate to include in such notice, and (ii) will, subject to
Section 1(c) below, include in such Piggyback Registration all Registrable
Securities with respect to which the Corporation has received written requests
for inclusion therein within 20 days after the date of the Corporation's notice.
Except as may otherwise be provided herein, Registrable Securities with respect
to which such request for registration has been received will be registered by
the Corporation and offered to the public in a Piggyback Registration pursuant
to this Annex on terms and conditions at least as favorable as those applicable
to the registration of shares of Common Stock to be sold by the Corporation and
by any other person selling under such Piggyback Registration.

     (b)  Number of Piggyback Registrations. AT&T shall be entitled to unlimited
          ---------------------------------
Piggyback Registrations.

     (c)  Priority on Piggyback Registrations. If the managing underwriter or
          -----------------------------------
underwriters, if any, advise AT&T in writing that in its or their reasonable
opinion or, in the case of a Piggyback Registration not being underwritten, the
Corporation shall reasonably determine (and notify AT&T of such determination),
after consultation with an investment banker of nationally recognized standing,
that the number or kind of securities proposed to be sold in such registration
(including Registrable Securities to be included pursuant to Section 1(a) above)
is inconsistent with that which can be sold in such registration without having
a material effect on the success of the offering (including, without limitation,
an impact on the selling price or the number of securities that any participant
may sell), the Corporation will include in such registration the number of
securities, if any, which, in the opinion of such underwriter or underwriters,
or the Corporation, as the case may be, can be sold as follows: (i) first, the
shares the Corporation proposes to sell, (ii) second, the Common Stock requested
to be included in such registration by the "Holders" under the Corporation's
Stockholders Agreement, as amended from time to time, (iii) third, shares of
Common Stock requested to be included in such registration statement by
stockholders pursuant to the conversion of any shares of preferred stock or debt
of the Corporation, in each case, sold after the date hereof, and (iv) fourth,
the Registrable Securities requested to be included in such registration by AT&T
and other holders of common stock of the Corporation which possess at least as
favorable

                                      -1-
<PAGE>

registration rights as AT&T.

     (d)  Selection of Underwriters. If any Piggyback Registration is an
          -------------------------
underwritten offering, the Corporation will (i) select a managing underwriter or
underwriters to administer the offering, which managing underwriter or
underwriters will be of nationally recognized standing, and (ii) determine the
terms under which such underwriting shall take place.

     (e)  Withdrawal and Postponement. If, at any time after giving written
          ---------------------------
notice of its intention to register any equity securities and prior to the
effective date of the registration statement filed in connection with such
registration, the Corporation shall determine for any reason not to register or
to delay registration of such equity securities, the Corporation may, at its
election, give written notice of such determination to AT&T and (i) in the case
of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such abandoned
registration and (ii) in the case of a determination to delay such registration
of its equity securities, shall be permitted to delay the registration of such
Registrable Securities requested by AT&T to be included therein for the same
period as the delay in registering such other equity securities.

2.   Restrictions on Public Sale.  To the extent not inconsistent with
     ---------------------------
applicable law, (i) AT&T agrees not to effect any public sale or distribution of
Common Shares, including a sale pursuant to Rule 144 (or any similar provision
then in force) under the Securities Act, during the 180-day period (or such
shorter period as may be consented to by the managing underwriter or
underwriters, and the Corporation agrees to use its best efforts to cause any
such consent granted by any underwriter to be made available to all other
holders of Registrable Securities on a ratable basis) following its initial
public offering (whether or not a Qualified IPO (as defined below)), and (ii)
AT&T, if its Registrable Securities are included in a Registration Statement (as
defined below) hereunder, if requested by the managing underwriter or
underwriters for such Piggyback Registration, agrees not to effect any public
sale or distribution of Registrable Securities, including a sale pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act,
during the 15 business days prior to, and during the 90-day period (or such
shorter period as may be consented to by such underwriter or underwriters, which
consent, if granted, will be made available to all other holders of Registrable
Securities on a ratable basis) following the effective date of a Registration
Statement pursuant to such Piggyback Registration (except, in the case of
clauses (i) and (ii), as part of such Piggyback Registration).

3.   Registration Expenses.
     ---------------------

     (a)  Generally. All expenses incident to the Corporation's performance of
          ---------
or compliance with this Annex I will be borne by the Corporation, including,
without limitation, all registration and filing fees, the fees and expenses of
the counsel and accountants for the Corporation (including the expenses of any
"cold comfort" letters and special audits required by or incident to the
performance of such persons), all other costs and expenses of the Corporation
incident to the preparation, printing and filing under the Securities Act of the
registration statement (the "Registration Statement") (and all amendments and
supplements thereto) and furnishing copies thereof and of the prospectus (the
"Prospectus") included therein, the costs and expenses incurred by the
Corporation in connection

                                      -2-
<PAGE>

with the qualification of the Registrable Securities under the state securities
or "Blue Sky" laws of various jurisdictions, the costs and expenses associated
with filings required to be made with the National Association of Securities
Dealers, Inc. ("NASD") (including, if applicable, the fees and expenses of any
"qualified independent underwriter" and its counsel as may be required by the
rules and regulations of the NASD), the costs and expenses of listing the
Registrable Securities for trading on a national securities exchange or
authorizing them for trading on the NASDAQ National Market System and all other
costs and expenses incurred by the Corporation in connection with any Piggyback
Registration hereunder; provided, however, that the Corporation shall not bear
                        --------  -------
the costs and expenses of AT&T for underwriters' commissions, brokerage fees or
transfer taxes, or, the fees and expenses of any counsel, accountants or other
representative retained by AT&T.

4.   Indemnification.
     ---------------

     (a)  Indemnification by the Corporation. The Corporation agrees to
          ----------------------------------
indemnify, to the full extent permitted by law, AT&T, its officers, directors
and agents and each person who controls AT&T within the meaning of the
Securities Act and the Exchange Act (each, an "Indemnified Holder"), against all
losses, claims, damages, liabilities and expenses caused by any untrue or
alleged untrue statement of a material fact contained in any Registration
Statement, Prospectus or preliminary Prospectus, or any omission or alleged
omission to state therein a material fact necessary to make the statements
therein (in the case of a Prospectus or any preliminary Prospectus, in light of
the circumstances under which they were made) not misleading, except to the
extent that such untrue statement or omission is caused by any information with
respect to such Indemnified Holder furnished in writing to the Corporation by
such Indemnified Holder or its representative expressly for use therein. The
Corporation shall take commercially reasonable steps necessary in order to cause
AT&T to receive indemnities from underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the distribution,
to the same extent as provided above with respect to information with respect to
such persons or entities so furnished in writing by such persons or entities or
their representatives specifically for inclusion in any Registration Statement,
Prospectus or preliminary Prospectus.

     (b)  Indemnification by AT&T. In connection with any Piggyback Registration
          -----------------------
in which AT&T participates, AT&T will furnish to the Corporation in writing such
information with respect to it as the Corporation reasonably requests for use in
connection with any Registration Statement, Prospectus or preliminary
Prospectus, and agrees to indemnify, to the full extent permitted by law, the
Corporation, the directors and officers of the Corporation signing the
Registration Statement and each person who controls the Corporation (within the
meaning of the Securities Act and the Exchange Act) against any losses, claims,
damages, liabilities and expenses resulting from any untrue statement of a
material fact or any omission to state a material fact required to be stated
therein or necessary to make the statements in the Registration Statement,
Prospectus or preliminary Prospectus (in the case of the Prospectus or any
preliminary Prospectus, in light of the circumstances under which they were
made) not misleading, to the extent, and only to the extent, that such untrue
statement or omission is caused by any information with respect to AT&T so
furnished in writing by it or its representative specifically for inclusion
therein. In no event shall the liability of AT&T be greater in amount than the
dollar amount of the net proceeds (after deducting commissions and expenses)
received by AT&T upon the sale of the Registrable Securities giving rise to such

                                      -3-
<PAGE>

indemnification obligation. The Corporation shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the distribution, to the same
extent as provided above with respect to information with respect to such
persons or entities so furnished in writing by such persons or entities or their
representatives specifically for inclusion in any Registration Statement,
Prospectus or preliminary Prospectus.

     (c)  Conduct of Indemnification Proceedings. Any person or entity entitled
          --------------------------------------
to indemnification hereunder will (i) give prompt written notice to the
indemnifying party after the receipt by the indemnified party of a written
notice of the commencement of any action, suit, proceeding or investigation or
threat thereof made in writing for which such indemnified party will claim
indemnification or contribution pursuant to this Agreement; provided, however,
                                                            --------  -------
that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under the preceding
Section 4(a) or 4(b), as applicable, except to the extent that the indemnifying
party is actually prejudiced by such failure to give notice and (ii) unless in
such indemnified party's reasonable judgment a conflict of interest may exist
between such indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether or not such defense is
assumed by the indemnifying party, the indemnifying party will not be subject to
any liability for any settlement made without its consent (but such consent will
not be unreasonably withheld). No indemnifying party will be required to consent
to the entry of any judgment or to enter into any settlement that does not
include as an unconditional term thereof the giving by the claimant or plaintiff
of a release from all liability in respect of such claim or litigation. An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel in any one jurisdiction for all parties indemnified by such indemnifying
party with respect to such claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between such indemnified
party and any other of such indemnified parties with respect to such claim, in
which event the indemnifying party shall be obligated to pay the fees and
expenses of such additional counsel or counsels.

     (d)  Contribution. If for any reason the indemnification provided for in
          ------------
the preceding Section 4(a) or 4(b), as applicable, is unavailable to an
indemnified party as contemplated by such Section, then the indemnifying party,
in lieu of indemnification, shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage, liability or
expense in such proportion as is appropriate to reflect not only the relative
benefits received by the indemnified party and the indemnifying party, but also
the relative fault of the indemnified party and the indemnifying party, as well
as any other relevant equitable considerations; provided, however, that AT&T
                                                --------  -------
shall not be required to contribute in an amount greater than the difference
between the net proceeds received by AT&T with respect to the sale of
Registrable Securities and all amounts already contributed by AT&T with respect
to such claims, including amounts paid for any legal or other fees or expenses
incurred by AT&T and amounts paid or incurred by AT&T pursuant to Section 4(b).

5.   Participation in Underwritten Registrations. AT&T may not participate
     -------------------------------------------
in any underwritten registration hereunder unless AT&T (i) agrees to sell its
Registrable Securities on the basis provided

                                      -4-
<PAGE>

in any underwriting arrangements approved by the Corporation, and (ii)
accurately completes in a timely manner and executes all questionnaires, powers
of attorney, underwriting agreements and other documents customarily required
under the terms of such underwriting arrangements.

6.   Definitions.  The following terms shall have the following meanings:
     -----------

     "Qualified IPO" shall mean the closing of a firm commitment underwritten
public offering of the Corporation's Common Stock under the Securities Act which
results in gross proceeds to the Corporation of not less than $50 million at an
offering price per share of Common Stock of not less than $22.88 (subject to
appropriate adjustment to reflect any stock splits, reverse splits or similar
recapitalizations affecting shares of Common Stock, including the proposed
three-for-one stock split).

     "Registrable Securities" shall mean the shares of Common Stock held by
AT&T, and any shares issued in respect thereof; provided, however, that a
                                                --------  -------
Registrable Security shall cease to be a Registrable Security at such time that
(i) the Registrable Security has been effectively registered under the
Securities Act and disposed of in accordance with the registration statement
covering it or (ii) has been sold to the public pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act and any legend
required under federal or state securities laws has been removed from the
certificate representing such Registrable Security, or (iii) the Security may be
sold pursuant to Rule 144(k), or (iv) when all the Registrable Securities may be
sold within a three month period pursuant to Rule 144.

7.   Assignment of Rights. AT&T may assign its rights to participate in any
     --------------------
Piggyback Registration a maximum of one time in connection with the Transfer to
an Affiliate of AT&T of any Registrable Securities, and AT&T (to the extent it
holds Registrable Securities) and such assignee shall have the rights set forth
in this Annex I, provided that such assignee agrees to be bound by the
obligations set forth herein applicable to a holder of Registrable Securities.

                                      -5-<PAGE>

                                                                   Exhibit 10.24

[LOGO OF AT&T]

                            PATENT LICENSE AGREEMENT
                                   Cover Sheet
<TABLE>
<CAPTION>

     -------------------------------------------------------------------------------------------------------------------------
     LICENSEE                                                        AT&T
     -------------------------------------------------------------------------------------------------------------------------
    <S>                                                             <C>
     Tellium, Inc.                                                   AT&T Corp.
     2 Crescent Place                                                A New York corporation, having an office at
     P.O. Box 901                                                    32 Avenue of the Americas
     Oceanport, New Jersey 07757-0901                                New York, New York 10013

     -------------------------------------------------------------------------------------------------------------------------
     Address for notice purposes:                                    Address for notice purposes:

     Tellium, Inc.                                                   AT&T Corp.
     2 Crescent Place                                                180 Park Avenue
     P.O. Box 901                                                    Building 2, Room NJ0814
     Oceanport, New Jersey  07757-0901                               Florham Park, New Jersey 07932
     Facsimile no: (732) 923-9804                                    Facsimile no.: (973) 236-6760
     Attn:  Richard W. Barcus, President                             Attn:  Thomas Frost , Licensing Executive
                                                                            Intellectual Property & Management Group
     -------------------------------------------------------------------------------------------------------------------------
     EFFECTIVE DATE:   September 1, 2000

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

     This Patent License Agreement (the "Agreement") consists of this Cover
     Sheet, the attached General Terms and Conditions and any schedules (each, a
     "Schedule") referenced in the General Terms and Conditions, and the
     Transaction Agreements (as hereinafter defined). The provisions of each
     Schedule shall be construed so as to be fully consistent with all of the
     provisions of the General Terms and Conditions and, in the case of any
     conflict, the General Terms and Conditions shall prevail unless a Schedule
     separately executed by both Parties expressly amends particular provisions
     of the General Terms and Conditions, in which case the amendments of such
     Schedule shall prevail over such particular provisions of the General Terms
     and Conditions.

     Unless otherwise provided above, this Agreement shall become effective when
     signed by both Parties (the "Effective Date") and shall continue in effect
     during the Term.

<TABLE>
    <S>                                                           <C>

   AT&T CORP.                                                     LICENSEE:  TELLIUM, INC.

   By:  /s/ Doreen Yochum                                         By:  /s/ Richard W. Barcus
      ---------------------------------------                        -------------------------------------
            (Authorized Signature)                                        (Authorized Signature)

                                                                            Richard Barcus
   __________________________________________                    _________________________________________
                  Doreen Yochum                                  (Typed or Printed Name)

                                                                            President & COO
   __________________________________________                    _________________________________________
   Chief Operating Officer and Vice President                    (Title)
   Technology Management, AT&T Labs

               September 1, 2000                                          September 1, 2000
   __________________________________________                    _________________________________________
   (Date)                                                        (Date)

------------------------------------------------------------------------------------------------------------
                       THIS AGREEMENT DOES NOT BIND OR OBLIGATE EITHER PARTY IN ANY MANNER
                       UNLESS DULY EXECUTED BY AUTHORIZED REPRESENTATIVES OF BOTH PARTIES
------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

                          GENERAL TERMS AND CONDITIONS

In consideration of the terms, conditions and other covenants and agreements
contained in this Agreement and in the Stock Purchase Agreement and the Escrow
Agreement entered into simultaneously herewith as of the Effective Date of this
Agreement, and for and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged and confessed, the Licensee and AT&T (the
"Parties", each a "Party") agree as follows:

1.   DEFINITIONS

     For the purposes of this Agreement, certain terms have been defined below
and elsewhere in this Agreement to encompass meanings that may differ from, or
be in addition to, the normal connotation of the defined word.

1.1. "AT&T Competitor" shall mean any third party, excluding AT&T Subsidiaries,
whose primary business is offering telecommunication services, including local,
long distance, cable, wireless or Internet services.

1.2. "Common Shares " shall mean the same as defined in the Stock Purchase
Agreement.

1.3. "Licensed Patents" shall mean collectively the "Licensed Tier 1 Patents"
and "Licensed Tier 2 Patents".

1.4. "Licensed Tier 1 Patents" shall mean those U.S. patents and patent
applications identified as such in Schedule A, any patents issuing in any and
all countries of the world corresponding to the scheduled U.S. patents, as well
as any continuations, divisions, reexaminations and reissues thereof.

1.5. "Licensed Tier 2 Patents" shall mean those U.S. patents and patent
applications identified as such in Schedule B, any patents issuing in any and
all countries of the world corresponding to the scheduled U.S. patents, as well
as any continuations, divisions, reexaminations and reissues thereof.

1.6. "Subsidiary" of a Party shall mean a corporation or other legal entity: (a)
the majority of whose shares or other securities entitled to vote for election
of directors (or other managing authority) is now or hereafter owned and
controlled by such Party either directly or indirectly; (b) the majority of
whose equity interest is now or hereafter owned and controlled by such Party
either directly or indirectly; or (c) which does not have outstanding shares or
securities, as may be the case in a partnership, joint venture, or
unincorporated association, but at least 50% or more of the ownership interest
representing the right to make decisions for the entity is now or hereafter
owned and controlled by such Party either directly or indirectly.
Notwithstanding the foregoing to the contrary, any corporation or other legal
entity shall be deemed to be a Subsidiary only so long as such ownership and
control exists.

1.7. "Tellium Competitor" shall mean any third party in the field of intelligent
optical networking systems.

1.8. "Term" means the period beginning on the Effective Date and terminating at
the time of the last expired Licensed Patents.

1.9. "Territory" shall mean all countries where the Licensed Patents have
issued.

2.   LICENSE

2.1. Grant. Subject to the terms and conditions of this Agreement and the
     -----
consideration set forth in the Transaction Agreements, AT&T grants to Licensee
during the Term:

     (a)  a personal, non-transferable and non-exclusive license under the
     Licensed Tier 1 Patents as of the Effective Date to make, have made, use,
     import, sell and offer to sell products and services in the Territory;
     provided that, AT&T shall not grant any patent license under the Licensed
     -------- ----
     Tier 1 Patents to any Tellium Competitor for the period beginning on the
     Effective Date and terminating six (6) months thereafter; and

     (b)  a personal, non-transferable and non-exclusive license under the
     Licensed Tier 2 Patents as of the Effective Date to make, have made, use,
     import, sell and offer to sell products and services in the Territory.

2.2. No Consent. Licenses granted by AT&T under this Agreement are not to be
     ----------
construed as consent by AT&T to any act which may be performed by Licensee,
except as expressly licensed herein.

2.3. No Implied Rights. Except as expressly set forth in Section 2 of this
     -----------------
Agreement, no other rights or licenses under AT&T's intellectual property rights
are granted or implied. Nothing contained herein shall be construed as
conferring by implication, estoppel or otherwise any license or

                                       1
<PAGE>

right in favor of Licensee in any patents or other intellectual property rights
of AT&T other than the Licensed Patents.

2.4. Unauthorized Activities. Without limiting any of AT&T's rights under this
     -----------------------
Agreement or at law or in equity, or otherwise expanding the scope of the
license and rights granted hereunder, if Licensee fails to perform any of its
obligations under this Agreement, including breaching any of the terms and
conditions of the Transaction Agreements, then such product or service of
Licensee shall not be considered licensed or otherwise authorized under this
Agreement if the product or service falls within the scope of one or more claims
of the Licensed Patents. Notwithstanding the above, AT&T shall provide written
notice to Licensee sufficient to identify any alleged breach, and Licensee shall
have no more than thirty (30) days from the time of its receipt of such written
notice to cure that breach ("Cure Period"), provided that, such thirty (30) day
                                            -------------
period may be extendable upon the written consent of AT&T.

3.   CONSIDERATION

3.1. Transfer of Ownership Interest. In consideration of the license and rights
     ------------------------------
granted in Section 2 of this Agreement, Licensee shall provide for the ownership
of certain shares of Common Shares to AT&T as set forth in the Stock Purchase
Agreement.

3.2. Taxes. Licensee shall bear all taxes, duties, levies and other similar
     -----
charges (and any related interest and penalties), however designated
(hereinafter, "governmental charges"), imposed as a result of the existence or
operation of this Agreement, including any tax which Licensee is required to
withhold or deduct from the transfer of ownership of Common Shares to AT&T,
except (a) any tax imposed upon AT&T in a jurisdiction outside the United States
if and only to the extent such tax is allowable as a credit against the United
States income taxes of AT&T, and (b) any net income tax imposed upon AT&T by the
United States or any governmental entity within the United States proper (the
fifty (50) states and the District of Columbia). In order for the exception
contained in (a) to apply, Licensee must reduce such tax to the extent possible
giving effect to the applicable Income Tax Convention between the United States
and Licensee's country of incorporation, and furnish AT&T with such evidence as
may be required by United States taxing authorities to establish that such tax
has been paid so that AT&T may claim the credit. If Licensee is required to bear
any governmental charges pursuant to this paragraph, then Licensee shall pay any
additional taxes, charges and amounts as are necessary to ensure that the net
amounts received by AT&T after all such governmental charges are made are equal
to the amounts which AT&T is otherwise entitled under this Agreement as if such
governmental charges did not exist.

3.3. Other Costs. Other than those payments expressly set forth in this Section
     -----------
3, each Party will be responsible for the costs it incurs in carrying out its
obligations under this Agreement.

4.   OTHER OBLIGATIONS

4.1. Marking. Licensee shall mark all products or services that encompass one or
     -------
more claims of the Licensed Patents with the word "Patent" or "Patents" and the
number or numbers of the Licensed Patents applicable thereto, or otherwise in
accordance with the provisions of 35 U.S.C. ss.287. Within thirty (30) days
after any of the Licensed Patents issue, AT&T shall provide written notice to
Licensee of the number or numbers of the Licensed Patents applicable thereto, if
not already provided in the attached Schedules. In its discretion and depending
on the extent of any failure to so mark, AT&T may deem such failure as a breach
of this Agreement which cannot be cured. However, in the absence of AT&T's
written notice to Licensee as provided above, Licensee's failure to so mark
shall not be deemed a breach of this Agreement which cannot be cured.

4.2. Infringement by Others. During the six month term, and only during that
     ----------------------
term referenced in Section 2.1(a), Licensee may notify AT&T of what Licensee in
good faith believes is an infringement of any claim of the Licensed Tier 1
Patents by a Tellium Competitor. Together with such notice, Licensee shall
provide AT&T credible evidence establishing that at least one claim of the
Licensed Tier 1 Patents is infringed by such unauthorized use by the Tellium
Competitor. AT&T shall analyze the evidence to determine whether at least one
claim of the Licensed Tier 1 Patents is infringed. AT&T shall have the option,
but not the obligation, to seek redress for such infringement at its own expense
and shall be entitled to any recovery therefor. In any action for such
infringement, Licensee shall reasonably cooperate with AT&T at AT&T's reasonable
expense. Licensee shall have no right, authority or standing to bring any action
against any third party relating to the third party's infringement of the
Licensed Patents. If AT&T determines that Licensee's evidence does not establish
infringement and Licensee desires an independent assessment of the evidence
provided to AT&T, the Parties shall agree to submit the issue of infringement to
outside patent counsel, mutually acceptable to the Parties, for an opinion as to

                                       2
<PAGE>

whether or not infringement exists. The outside patent counsel shall agree to
represent both Parties in the matter of the opinion and shall render its opinion
based solely on the evidence previously provided by Licensee to AT&T. The
opinion shall be rendered within a short time frame, with the cost shared
equally by the Parties. Both Parties shall maintain the opinion and all
information concerning any alleged infringement in strict confidence and shall
not provide information regarding the opinion, including the fact that an
opinion was sought and rendered, to any third party without the express written
consent of the other Party. In the event that AT&T or the outside patent counsel
determines that the evidence provided by Licensee establishes infringement, and
AT&T, in its sole discretion, determines not to seek redress for such
infringement during the six month term referenced in Section 2.1(a), those
shares, and only those shares, held in escrow as set forth in Section 3.4 in the
Stock Purchase Agreement shall be returned to Licensee, as set forth in Exhibit
B to the Escrow Agreement. However, in the event that during the six month term
referenced in Section 2.1(a) herein (i) Licensee fails to provide evidence of
infringement of the Licensed Tier 1 Patents, (ii) AT&T determines that
Licensee's evidence of infringement does not establish infringement and Licensee
does not desire an outside patent counsel opinion of the evidence provided to
AT&T, (iii) outside patent counsel has opined that Licensee's evidence of
infringement is not established, or (iv) AT&T has sought redress for
infringement of the Licensed Tier 1 Patents, in a manner consistent with normal
AT&T practice, those shares, and only those shares, held in escrow shall be
delivered to AT&T, as set forth in Exhibit A to the Escrow Agreement. For the
avoidance of doubt, in the event of a transfer of shares, such transfer shall
occur only once regardless of the number of infringements identified by Licensee
during such six month term. Notwithstanding any other provision in this
Agreement, (a) AT&T shall have no obligation to seek redress for any
infringement of any of the Licensed Patents and (b) AT&T shall have sole
discretion as to the conduct of any action (including settlement) against any
infringer of the Licensed Patents.

4.3. Grantback. Licensee hereby grants to AT&T and its Subsidiaries under any
     ---------
Improvement Patents owned or controlled by Licensee or its Subsidiaries a
non-exclusive, non-transferable, fully paid up, perpetual license to make have
made, and use, but not sell, offer to sell, or import any products or services.
For purposes of this Section 4.3, an "Improvement Patent" means a patent that
includes a claim which is encompassed within the scope of one or more claims of
the Licensed Patents. The license and rights hereby granted to AT&T and its
Subsidiaries (a) shall survive termination of this Agreement, and (b) shall, in
the case of an Improvement Patent owned or controlled by a Subsidiary of
Licensee, continue after such Subsidiary is no longer a Subsidiary of Licensee.

5.   PUBLICITY

5.1. No Use of AT&T Marks. Licensee shall not, in any manner, reference AT&T,
     --------------------
its trade names, trademarks, service marks or any other indicia of origin owned
by AT&T, or indicate that Licensee's products or services are in any way
sponsored, approved or endorsed by AT&T. Notwithstanding the foregoing, Licensee
may disclose that it is licensed by AT&T.

5.2. Public Disclosures. No Party shall make any public disclosures inconsistent
     ------------------
with the rights and obligations created hereunder. Any announcement of the terms
and conditions of this Agreement shall only occur after the Parties mutually
agree on the content of such disclosure. Furthermore, Licensee shall not
disclose to any third party, by any means, any information related to Section
4.2 of this Agreement or related to any side letter agreements between the
Parties, including any rights or obligations of Licensee or AT&T under that
Section, the content of any counsel opinions sought or delivered under that
Section, and/or the existence of the Section itself.

5.3. AT&T's Rights. Notwithstanding any provision of this Agreement to the
     -------------
contrary, if Licensee should violate the prohibition of Section 5.1, AT&T shall
be entitled to terminate this Agreement and seek all relief permitted by law to
redress the harm caused by such violation, and, in any action to obtain such
relief, shall be entitled to a recovery of its attorneys' fees, if such
violation is not cured within two (2) business days of Licensee's receipt of
AT&T's written notice.

6.   NO PAST INFRINGING CONDUCT

6.1. Representation. Licensee represents that it did not make, use, sell, offer
     --------------
to sell, import, license, lease, or otherwise provide to others any products or
service that fell within the scope of one or more claims of the Licensed Patents
("Infringing Conduct") prior to the Effective Date.

6.2. AT&T's Rights. Notwithstanding any provision of this Agreement to the
     -------------
contrary, if the representation made in Section 6.1 shall be false, AT&T shall
be entitled to immediately terminate this Agreement and seek all relief
permitted by law with respect to any Infringing Conduct, including

                                       3
<PAGE>

all relief permitted under 35 U.S.C. Sections 284 and 285.

7.   RISK ALLOCATION

7.1. No Warranties. NEITHER PARTY MAKES ANY WARRANTIES OF ANY KIND, EXPRESS OR
     -------------
IMPLIED, INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OR WARRANTIES AGAINST INFRINGEMENT OF ANY INTELLECTUAL PROPERTY RIGHTS,
EXCEPT AS MAY BE EXPRESSLY PROVIDED IN THIS AGREEMENT.

7.2. No Special Damages. NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR
     ------------------
INCIDENTAL, INDIRECT, CONSEQUENTIAL, SPECIAL, PUNITIVE, OR EXEMPLARY DAMAGES OF
ANY KIND (INCLUDING LOST REVENUES OR PROFITS, OR LOSS OF BUSINESS) IN ANY WAY
RELATED TO THIS AGREEMENT, REGARDLESS OF WHETHER THE PARTY LIABLE OR ALLEGEDLY
LIABLE WAS ADVISED, HAD OTHER REASON TO KNOW, OR IN FACT KNEW OF THE POSSIBILITY
THEREOF.

8.   TERM AND TERMINATION

8.1. Term. This Agreement shall be effective during the Term unless sooner
     ----
terminated in accordance with this Agreement.

8.2. Early Termination - Either Party. Either Party may terminate this
     --------------------------------
Agreement:

     (a)  in accordance with any terms of this Agreement or any side agreements
     between the Parties which expressly provide for such Party to terminate
     this Agreement;

     (b)  immediately if Licensee has not cured the breach within the Cure
     Period;

     (c)  upon thirty (30) days prior written notice, if the other Party has
     breached its obligations under this Agreement and such breach remains
     uncured during such thirty (30) day period; or

     (d)  immediately upon the other Party, or a third party with respect to the
     other Party, filing a petition requesting liquidation or dissolution in any
     form, of the other Party's debts under the laws of the United States, or
     any other bankruptcy or insolvency law.

8.3. Effect of Termination. Upon termination of this Agreement:
     ---------------------

     (a) all rights and obligations of the Parties, including the licenses
     granted to Licensee under Section 2, shall terminate except that the rights
     and obligations of the Parties under this Agreement which expressly or by
     their nature would continue beyond the termination of this Agreement shall
     remain in effect and survive termination of this Agreement, including the
     Sections pertaining to "PUBLICITY", "RISK ALLOCATION" and "Grantback"; and

     (b) notwithstanding such specific termination rights, each Party reserves
     all of its other legal rights and equitable remedies.

9.   GENERAL TERMS

9.1. Relationship of the Parties. In performing this Agreement, each of the
     ---------------------------
Parties will operate as, and have the status of, an independent contractor.
Except as may be expressly set forth in this Agreement, neither Party will have
the right or authority to assume or create any obligations or to make any
representations, warranties or commitments on behalf of the other Party, whether
express or implied, or to bind the other Party in any respect whatsoever.
Nothing in this Agreement shall be construed as forming any partnership, joint
venture, agency, employment, franchise, distributorship, dealership or other
similar or special relationship between the Parties, except as provided in the
Transaction Agreements.

9.2. Rules of Construction. As used in this Agreement, (a) neutral pronouns and
     ---------------------
any derivations thereof shall be deemed to include the feminine and masculine
and all terms used in the singular shall be deemed to include the plural and
vice versa, as the context may require; (b) the words "hereof," "herein,"
"hereunder" and other words of similar import refer to this Agreement as a
whole, including all exhibits and schedules as the same may be amended or
supplemented from time to time, and not to any subdivision of this Agreement;
(c) the words "Party" and "Parties" refer, respectively, to a party or to both
of the parties to this Agreement; (d) the word "including" or any variation
thereof means "including, without limitation" and shall not be construed to
limit any general statement that it follows to the specific or similar items or
matters immediately following it; (e) descriptive headings and titles used in
this Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement;
and (f) explicit references to a particular Section hereof shall be deemed to
include a reference to

                                       4
<PAGE>

the subsections, if any, associated with the Section as well. This Agreement
shall be fairly interpreted in accordance with its terms and without any strict
construction in favor of or against either Party.

9.3. Computation of Time. If a time period provided in this Agreement requires a
     -------------------
certain action be performed within ten (10) or less days, then intervening
Saturdays, Sundays and legal holidays shall not be included in the computation
of time. If a time period requires a certain action be performed within eleven
(11) or more days, then intervening Saturdays, Sundays and legal holidays shall
be included in the computation of time. In the event that a time period expires
on a Saturday, Sunday or legal holiday, the time period shall be deemed to
expire on the next day that is not a Saturday, Sunday or legal holiday. "Legal
holidays" shall mean New Year's Day, Birthday of Martin Luther King, Jr.,
President's Day, Memorial Day, Independence Day, Labor Day, Columbus Day,
Veterans Day, Thanksgiving Day and the Friday thereafter, and Christmas Day.

9.4. Notice. Unless otherwise provided in this Agreement, all notices, consents,
     ------
approvals, waivers and the like made hereunder shall be in written English to
the addresses set forth on the Cover Sheet, shall reference this Agreement and
shall be sent by any of the following methods: (a) certified mail,
postage-prepaid, return-receipt requested, (b) a delivery service which requires
proof of delivery signed by the recipient or (c) properly-transmitted facsimile
followed by written confirmation in accordance with methods (a), (b) or
first-class U.S. mail. The date of notice shall be deemed to be the date it was
received (in the case of method (c) above, the date of notice shall be deemed to
be the date that the facsimile copy is received). A Party may change its address
for notice by written notice delivered in accordance with this Section.

9.5. Applicable Law. This Agreement shall be governed by and construed in
     --------------
accordance with the laws of the State of New York without regard to its
conflicts of law rules. Any suit and/or arbitration proceeding relating to any
Claim shall be brought and prosecuted only in New York, New York.

9.6. Dispute Resolution. Any and all controversies or claims of any nature
     ------------------
arising out of or relating to this Agreement or the breach, termination or
validity thereof, whether based on contract, tort, statute, fraud,
misrepresentation or any other legal or equitable theory (the "Claim") shall be
resolved solely and exclusively by arbitration by the CPR Institute for Dispute
Resolution ("CPR") in accordance with the provisions of this paragraph and the
CPR Rules for Non-Administered Arbitration to the extent such rules do not
conflict with this paragraph and Agreement. The Respondent's notice of defense
shall be served upon the Claimant within ten (10) days after it receives the
notice of arbitration (the date of receipt of notice of arbitration being
"Commencement"). The arbitration shall be conducted by one (1) arbitrator
selected by the Parties or, if the Parties cannot mutually agree upon the
arbitrator within fifteen (15) days after Commencement, the Parties shall notify
CPR and an arbitrator knowledgeable in the legal and technical aspects of the
Claim shall be appointed by CPR within twenty-five (25) days of Commencement.
The arbitrator shall strictly limit discovery to the production of documents
directly relevant to the facts alleged in the notices of arbitration and defense
and, if depositions are required, each Party shall be limited to three (3)
depositions of no longer than three (3) hours each. If the arbitrator decides to
hold an evidentiary hearing, each Party's presentation of its case, including
its direct and rebuttal testimony, shall be limited to three (3) days. The
arbitrator shall issue an order preventing the Parties, CPR and any other
participants to the arbitration from disclosing to any third party any
information obtained via the arbitration, including discovery documents,
evidence, testimony and the award except as may be required by law. All requests
for injunctive relief shall be decided by the arbitrator, provided, however,
that requests for temporary injunctive relief may be submitted to a court of
competent jurisdiction if the arbitrator has not yet been appointed. The
arbitrator shall have the authority to modify any injunctive relief granted by
such a court. The arbitration award shall: (a) be in writing; (b) state only the
damages and injunctive relief granted, if any; (c) not exceed the damages and
relief requested by the prevailing Party; (d) be made final within six (6)
months of Commencement; and (e) be entered by either Party in any court having
competent jurisdiction, provided that the Party entering the award shall request
                        -------------
that the court prevent the award from becoming publicly available except as may
be required by law. The arbitrator shall not limit, expand or otherwise modify
the terms of this Agreement and shall not award punitive or other damages in
excess of compensatory damages. The arbitrator shall orally state the reasoning
on which the award rests but shall not state such reasoning in any writing. Each
Party shall bear its own expenses, but those related to the compensation of the
arbitrator shall be borne equally. The Parties agree that the existence and
contents of the entire arbitration, including the award, shall be deemed a
compromise of a dispute under Rule 408 of the Federal Rules of Evidence, shall
not be discoverable in any proceeding, shall

                                       5
<PAGE>

not be admissible in any court (except to enforce the same as provided herein)
or arbitration and shall not bind or collaterally estop either Party with
respect to any claim or defense made by any third party.

9.7. Patent Issues. Notwithstanding Section 9.6 to the contrary, AT&T, in its
     -------------
sole discretion, may decide that any Claim, including defenses thereto, which
potentially concerns the validity, enforceability or infringement of the
Licensed Patents, or any of AT&T's trade names, trademarks, service marks, or
any other indicia of origin owned or controlled by AT&T, shall not be resolved
by binding arbitration and instead must be resolved before a court of competent
jurisdiction. If an arbitration is commenced by Licensee with regard to a Claim
which potentially includes consideration of the validity, enforceability or
infringement of the Licensed Patents, or any of AT&T's trade names, trademarks,
service marks, or any other indicia of origin owned or controlled by AT&T, AT&T
shall advise Licensee of its decision under this Section within 25 days after
Commencement or, failing which, such issues shall be resolved by binding
arbitration in accordance with Section 9.6. If AT&T decides that such Claim is
not subject to binding arbitration, Licensee shall immediately advise CPR and
withdraw such claim from consideration by CPR.

9.8. Equitable Remedies. The Parties recognize that money damages may not be an
     ------------------
adequate remedy for any breach or threatened breach of any obligation hereunder
by Licensee involving intellectual property or Licensee exceeding the scope of
its license. The Parties therefore agree that in addition to any other remedies
available hereunder, by law or otherwise, AT&T shall be entitled to obtain
injunctive relief against any such continued breach by Licensee of such
obligations.

9.9. Third Party Beneficiaries. This Agreement is not intended to be for the
     -------------------------
benefit of and shall not be enforceable by any third party. Nothing in this
Agreement, express or implied, is intended to or shall confer on any third party
any rights (including third-party beneficiary rights), remedies, obligations or
liabilities under or by reason of this Agreement. This Agreement shall not
provide third parties with any remedy, claim, liability, reimbursement, cause of
action or other right in excess of those existing without reference to the terms
of this Agreement. No third party shall have any right, independent of any right
that exists irrespective of this Agreement, to bring any suit at law or equity
for any matter governed by or subject to the provisions of this Agreement.

9.10. Change of Control. In the event that Licensee shall be acquired by or its
      -----------------
management shall otherwise be controlled by a new entity or third party, AT&T
shall have the right, in its discretion, to terminate this Agreement upon ninety
(90) days written notice to Licensee. Except by written consent of AT&T, the
license and rights granted to Licensee in Section 2 of this Agreement shall not
extend to any entity or person other than Licensee pursuant to this Agreement,
provided that such consent shall not be unreasonably withheld, if such change of
-------------
control does not involve an AT&T Competitor.

9.11. Assignment. The Parties hereto have entered this Agreement in
      ----------
contemplation of personal performance by Licensee and intend that the rights
granted to Licensee hereunder not extend to other entities without AT&T's
express written consent, which consent will not be unreasonably withheld.
Notwithstanding the foregoing, Licensee shall not seek consent from AT&T to
assign or transfer, in whole or in part, any rights under this Agreement to an
AT&T Competitor. Accordingly, neither this Agreement nor any of Licensee's
rights or obligations hereunder shall be assigned, sublicensed, or transferred
(in insolvency proceedings, by mergers, acquisitions or otherwise) by Licensee
without AT&T's consent. Any assignment or other transfer which is inconsistent
with the foregoing shall be null and void ab initio. AT&T may assign all or a
portion of its rights and obligations hereunder.

9.12. Entire Agreement; No Modification or Waiver. This Agreement, the
      -------------------------------------------
Transaction Agreements, and any side agreements constitute the entire agreement
between the Parties concerning its subject matter and supersedes all prior
written or oral negotiations, correspondence, understandings and agreements
between the Parties respecting such subject matter. This Agreement shall not be
modified or rescinded, except by a writing signed by both Parties. No provision
of this Agreement shall be deemed modified by any action or omission or failure
to object to any action which may be inconsistent with the terms of this
Agreement. No waiver of a breach committed by a Party in one instance shall
constitute a waiver or license to commit or continue breaches in other or like
instances. By way of example only and without limiting the foregoing, this
Agreement may not be modified by any statement appearing on any check or similar
transfer of money, or by any provision appearing in any preprinted form of one
Party unless expressly accepted by the other Party in a writing which expressly
refers to such preprinted form and this Agreement.

                                       6
<PAGE>

                       END OF GENERAL TERMS AND CONDITIONS

                                       7

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