VISUAL NETWORKS INC
CELESTICA AGREEMENT
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>3
<FILENAME>vn10q2002a.txt
<DESCRIPTION>CELESTICA AGREEMENT
<TEXT>

                                                Exhibit 10.36



                                  AGREEMENT FOR
                        ELECTRONIC MANUFACTURING SERVICES


     This Agreement for Electronic  Manufacturing  Services (this  "Agreement"),
dated as of March 1, 2000 (the "Effective Date"), by and between Visual Networks
Operations,  Inc.,  a  Delaware  corporation,   located  at  2092  Gaither  Road
Rockville,  Maryland 20850 ("Customer"),  and Celestica Corporation,  a Delaware
corporation,  located at 3600  Tarheel  Drive,  Raleigh,  North  Carolina  27609
("Contract Manufacturer").

     In  consideration  of mutual  promises,  covenants and agreements set forth
below, the parties agree as follows:

I.   Term

     A. This Agreement shall become  effective upon the Effective Date and shall
remain in effect  for  twenty-four  (24)  months  from the  Effective  Date (the
"Initial Term").  The term of this Agreement shall be automatically  renewed for
successive  terms of  twenty-four  (24) months each  immediately  following  the
expiration of the then-current  twenty-four month term (each, a "Renewal Term").
The Initial Term and the Renewal  Terms are  collectively  referred to herein as
the "Term."

II.  Scope of Work Performed

     A. Contract  Manufacturer shall manufacture a range of electronics products
or  assemblies as  instructed  by Customer in the  quantities  and at the prices
(subject to adjustment in accordance with the terms of this Agreement) set forth
in Exhibit A (unless otherwise specifically identified, the "Products").

     B. The  Customer  and  Contract  Manufacturer  may  from  time to time add
additional  Products  to  Exhibit  A  pursuant  to  written  amendments  to this
Agreement mutually agreed upon by both parties.

     C. Contract  Manufacturer  is authorized by the Customer to, and shall only
proceed to,  manufacture  Products  upon receipt of a purchase  order  (each,  a
"Purchase  Order")  issued by the Customer.  Each Purchase Order shall include a
requested delivery date for the Products ordered therein.

     D. Immediately after receipt of Customer's  initial Purchase Order for each
Product,   Contract   Manufacturer   shall   commence   development  of  product
enhancements,  improving  testability,  enhancing  manufacturability,  and  cost
reductions for the  manufacture of the Product  pursuant to Section IX. Customer
and Contract  Manufacturer  shall review such matters at each Semi-Annual Review
(as defined in Section VIII (A)).

     E. The parties agree to the pricing  schedule as set forth in Exhibit A, so
long  as  the  Forecast  provided  by  Customer  to  Contract  Manufacturer  for
manufacture  of the  Products,  or a like  product,  is equal to or exceeds  the
quantity of the  Products  required by Customer  during the Term as set forth on
Exhibit A. If the  Forecast  (as defined in Section III (A) below) of  estimated
annual  usage is  projected  to exceed the  quantity  of  Products  set forth in
Exhibit A, Contract  Manufacturer shall provide to Customer cost savings,  which
amount  shall  be  mutually  agreed  to by both  parties  in good  faith  at the
Semi-Annual  Review.  In the  event  that the  Customer  does not  purchase  the
anticipated volume of Product, the Contract  Manufacturer  reserves the right to
adjust Prices,  which amount shall be mutually agreed to by both parties in good
faith at the Semi-Annual Review.

     F. Contract  Manufacturer  shall purchase  materials for the manufacture of
Products  ("Materials") from vendors (each, an "Approved Vendor")  identified in
the approved vendor list ("AVL") provided by the Customer. In the event Contract
Manufacturer  cannot purchase  Materials from an Approved Vendor for any reason,
including   unavailability  of  the  Material  or  because  it  is  commercially
unreasonable  to do so, upon prior  written  consent of the  Customer,  Contract
Manufacturer  shall be authorized to purchase such  components from a vendor not
identified in the AVL.






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>


III. General Planning and Procurement Process

     A. At  least  monthly  during  the  Term  the  Customer  shall  provide  a
non-binding  forecast (the "Forecast")  stating the expected number and types of
Products that Customer  plans to order on an estimated  annual usage basis.  The
parties understand and agree that the Customer provides the Forecast to Contract
Manufacturer solely for informational  purposes and Contract  Manufacturer shall
not rely or forebear upon reliance of the  information  provided in the Forecast
unless the Customer  specifically states otherwise in writing. In the event that
the  Customer   deems  it  appropriate   for  purposes  of  assisting   Contract
Manufacturer  plan  for  procurement  of  Materials  that  require   significant
lead-time,  Customer shall, at its sole discretion, make commercially reasonable
efforts to provide  specific  instructions for procurement  purposes.  As of the
Effective Date, the Customer has provided Contract  Manufacturer with an initial
Forecast  for the  Initial  Term,  which  initial  Forecast is the basis for the
prices set forth on Exhibit A.

     B.  Contract  Manufacturer  shall  develop,  generate,  and disclose to the
Customer an "Open Order Status Report" that will provide  Customer with a status
report for each Purchase  Order,  including an anticipated  delivery date.  Each
Open Order Status  Report will be subject to revision on a rolling  weekly basis
in accordance  with Section III (C) below and based upon the Purchase Orders and
the Forecasts.

     C.  Subject  to  Article  III(G),   Contract   Manufacturer  shall  procure
materials,  determine  manufacturing  capacity  projections,  and make  internal
capacity  commitments  in order to achieve the delivery  dates  scheduled in the
Open Order Status Report (i.e.  based on the Purchase Orders and Forecasts).  1.
Contract Manufacturer shall use the information provided by the initial Purchase
Order and Forecast to establish  the first three months of the Open Order Status
Report.  2. Contract  Manufacturer  will use the Forecast referred to in Section
III (A) to revise the Open Order Status Report on a rolling weekly basis. 3. The
parties  agree that the Open Order Status  Report is for planning  purposes only
and, except  pursuant to Section X, is not a binding  obligation on either party
unless otherwise  specifically  agreed to in writing by the parties. 4. Contract
Manufacturer  shall obtain  Customer  approval for purchases of  individual  BOM
items where Minimum Order Quantities are [***] in excess of purchase  quantities
supported by the Open Order Status Report.  Contract Manufacturer shall provided
Customer a detailed report of such purchases monthly.

     D. The Materials that Contract Manufacturer  purchases or orders to fulfill
the Purchase Orders on behalf of the Customer to manufacture  the Products,  and
any  associated   expenses  related  to  purchasing,   ordering,   manufacturing
(including labor and overhead), shipping, storing and eliminating such Materials
shall  constitute a part of the Customer's  total liability under Section XV (B)
of  this  Agreement.  The  cost,  and  disposal,  of  unused  Materials  will be
determined pursuant to Section IV.

     E. Contract  Manufacturer shall provide or contract for all maintenance and
calibration  required for the process  tooling,  manufacturing  tooling and test
equipment,  whether  purchased  by Contract  Manufacturer  or  consigned  by the
Customer,   while  in  the   possession  of  Contract   Manufacturer.   Required
preventative maintenance and scheduled calibration shall be at (i) the sole cost
and expense of Contract  Manufacturer  for tooling and test  equipment  Contract
Manufacturer  owns,  and (ii) at the sole cost and expense of the  Customer  for
tooling and test equipment Customer owns. Contract Manufacturer shall tag all of
the Customer's  equipment on loan to Contract  Manufacturer with consigned asset
tags as per Contract  Manufacturer's  Standard Operating  Procedures,  a copy of
which Standard Operating Procedures has been delivered to the Customer.

     F. If deemed  necessary,  and upon  Customer's  written  consent,  Contract
Manufacturer  shall purchase or lease the tools required to fulfill the Purchase
Orders.  The  Customer  shall  pay for the cost of,  and  own,  all such  tools.
Contract  Manufacturer  shall be deemed to be a bailee of any such tools, and no
interest  in the  title  to such  tools  shall  vest in  Contract  Manufacturer.
Contract  Manufacturer  shall ensure that no lien shall attach to such tools and
shall maintain such tools in good repair and working order,  subject to ordinary
wear and tear.






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

<PAGE>

     G. The  parties  acknowledge  that,  from  time to time  during  the  Term,
Contract  Manufacturer  will be  required  to  place  purchase  orders  with its
suppliers  for certain  parts in order to meet  Customer's  forecasted  delivery
dates that are beyond the  Product  delivery  dates  reflected  in the  Purchase
Order(s) issued by the Customer.  Contract  Manufacturer will not issue purchase
orders to its suppliers for such parts without the express,  written  consent of
Customer (a "Long Lead Item Request").

IV.  Materials

     A. Customer  shall be  responsible  for the cost of Materials that Contract
Manufacturer  has procured on behalf of the Customer for use in the  manufacture
of the Products and that are surplus to the Contract Manufacturer's requirements
because the Customer has reduced or canceled a Purchase  Order or Long Lead Item
Request  pursuant to Section VII below,  respectively;  provided,  however,  and
notwithstanding  anything  stated  to the  contrary  herein,  that  such cost is
limited  to only  Materials  that  Contract  Manufacturer  ordered  pursuant  to
purchase orders that cannot be canceled prior to their receipt or are surplus to
committed or Forecast  requirements for the following [***]. This includes parts
that cannot be canceled because of insufficient  time between the  Manufacturing
Resource  Planning  ("MRP")  signal to cancel and the expected or actual receipt
date at Contract Manufacturer's place of business.

     B. For a period  of [***]  from the date  Customer  reduces  or  cancels  a
Purchase Order or Long Lead Item Request,  the Contract  Manufacturer  shall use
commercially  reasonable  efforts  to:  (i) cancel  outstanding  orders for such
Materials;  (ii) sell such Materials back to the original supplier or to a third
party     on     commercially     reasonable     terms;     or     (iii)     use
excess/uncancellable/unreturnable   Materials  for  the   manufacture  of  other
products.

     C. After such [***],  Contract Manufacturer shall be entitled to deliver to
the  Customer  (or,  if the  Customer  so  requests,  otherwise  dispose of) all
obsolete and/or surplus Materials then held by the Contract Manufacturer.

     D. The Contract Manufacturer shall provide the Customer an itemized bill so
that the  Customer  can  confirm its charges  under this  Section IV,  which may
include a Materials  handling  charge of no more than [***].  Such itemized bill
may invoice the Customer for (i) the full cost of Material  disposed of pursuant
to Section IV (C), (ii) any price variance incurred by Contract  Manufacturer in
connection  with the resale or disposal of Materials  pursuant to Section IV (B)
and, (iii) a reasonable  handling charge of no more than [***].  Such bill shall
be paid by the Customer in US Dollars [***] of the date of invoice.


     E. In  addition,  only with  respect to Purchase  Orders  canceled in their
entirety,  Customer shall be liable for any investment  incurred by the Contract
Manufacturer that has been specifically agreed in writing by the Customer,  that
has not been recovered by the Contract  Manufacturer  from the Customer  through
amortization or other means and which the Customer agrees in writing will not be
recovered  in the  foreseeable  future  under  future  Purchase  Orders and that
relates directly to the products included in the cancelled Purchase Order.

V.   Rescheduling Delivery of Ordered Products

     A.  The  Customer  may  reschedule  the  delivery  dates  of the  following
quantities  (expressed  as a percentage of the amount of a Product type ordered)
of a Product type as follows:

     Notice Prior  to                               Percent of Scheduled
     Rescheduled Delivery                           Quantity that can be
     Date                                           Rescheduled
     --------------------                           --------------------

          [***]                                           [***]






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

<PAGE>

     The Customer will be responsible for carrying charges for costs incurred by
the Supplier to accommodate  any such  rescheduling  of Purchase  Orders or Long
Lead Item Requests by the Customer at the rate of [***].  per month of the value
of the held inventory.

     B. In the event  that,  pursuant  to  Section  V (A)  above,  the  Customer
requests a reduction in the number of a type of Product  designated for delivery
on a specific  delivery  date,  Contract  Manufacturer  and the  Customer  shall
mutually agree [***] of such request to a new delivery date.

     C. Contract  Manufacturer  shall use  commercially  reasonable  efforts to
accommodate any increase in the number of Products  requested by the Customer to
be delivered at a specific date.

VI.  Engineering Change Orders

     A. In the event the  Customer  requests  engineering  changes  to a Product
(each request,  an "Engineering Change Order" or "ECO"),  Contract  Manufacturer
shall advise and notify the Customer of any impact, if any, an ECO would have on
the cost and scheduled delivery of the affected Product within five (5) business
days after Contract  Manufacturer's  receipt of Customer's  ECO. If the Customer
does not consent to the change in the cost as notified by Contract Manufacturer,
the requested ECO shall be deemed canceled.  If the Customer does consent to the
change in cost,  any  increases in the cost of the Products  resulting  from ECO
shall be borne by the Customer.

     B. Any  Materials  made  obsolete  or  unused  because  of an ECO  shall be
disposed  in  accordance  with  Section  IV,  unless  Contract  Manufacturer  is
otherwise instructed in writing by the Customer.

VII. Cancellations

     A. The Customer may cancel:

     1.  [***] of a  Purchase  Order for any one type of  Product  by  notifying
Contract  Manufacturer  in writing at least [***] prior to the delivery  date of
such Purchase Order.

     2.  [***] of a  Purchase  Order for any one type of  Product  by  notifying
Contract  Manufacturer  in writing at least [***] prior to the delivery  date of
such Purchase Order.

     3. [***] of a Purchase Order for any type of Product by notifying  Contract
Manufacturer  in  writing  at least  [***]  prior to the  delivery  date of such
Purchase Order.

     B. Within thirty (30) days after any cancellation  made pursuant to Section
VII (A) above, Contract Manufacturer shall provide the Customer the cancellation
charges  incurred  pursuant  to Section IV for the  canceled  Purchase  Order or
portion thereof.  The Customer shall pay such  cancellation  charges to Contract
Manufacturer within thirty (30) days from the date of the invoice. Any Materials
that are unused  because of a  cancellation  shall be disposed of in  accordance
with Section IV, unless Contract Manufacturer is otherwise instructed in writing
by the Customer.

     C. Nothing in this Section VII shall be construed to prevent  Customer from
rejecting   defective   Products  or  rejecting   Products   that  do  not  meet
specifications set forth in the Purchase Order for the respective Product.

VIII. Pricing

      A. The price for each Product  shall be as set forth in Exhibit A.  Prices
will be subject to a good faith  review by the  Parties on a  semi-annual  basis
(the  "Semi-Annual  Review") at a price review to be arranged by the  authorized
representatives  of each of the parties.  Changes to prices,  and the manner and
timing of their  implementation,  will be  mutually  agreed to by the parties in
good faith. The pricing changes at the Semi-Annual Review shall include, but not
be limited to:

      1. Any increases or decreases in costs of procuring Materials arising from
exchange rate variances.

      2. The cost reductions or increases of an ECO.

      3. Any cost reduction  resulting from Contract Manufacturer's  exercise of
its rights under Section XVI (M) to manufacture competing similar or competitive
products.






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



      4. Where  Prices are related to volume and (a) Customer  does not purchase
the  anticipated  volume of Product,  Contract  Manufacturer  and Customer  will
mutually  agree upon an  adjusted  price to reflect  the  actual  quantities  of
Product  shipped  to  Customer  and  Contract  Manufacturer  shall be allowed to
invoice  Customer  for the  difference  between the price paid and the  adjusted
price or (b) Customer  purchases  more than the  anticipated  volume of product,
Contract Manufacturer and Customer will mutually agree upon an adjusted price to
reflect  Contract   Manufacturer's   savings  and  Contract  Manufacturer  shall
reimburse or credit  Customer the difference  between the adjusted price and the
price paid.

      B.  Notwithstanding  anything  in Section  VIII (A) to the  contrary, cost
reductions made pursuant to Section IX will be reflected in pricing  pursuant to
Section IX (B).

     C. The parties have agreed that the non-recurring expenses are as set forth
in Exhibit C.

IX.   Cost & Price Reductions

      A. Contract  Manufacturer  shall use  commercially  reasonable  efforts to
reduce  the price of each  Product  initially  set  forth in  Exhibit A by [***]
within the first [***] from the Effective Date and by an additional  [***] on or
before  the [***] of the  Effective  Date.  This will be a  compound  reduction.
Contract  Manufacturer  shall use commercially  reasonable efforts to reduce the
price of each new Product added to Exhibit A after the  Effective  Date pursuant
to an  amendment  to this  Agreement  by [***] on or within  the [***]  from the
effective  date of the  amendment  adding  such  Product  to Exhibit A and by an
additional  [***] on or before [***] after the  effective  date of the amendment
adding such Product to Exhibit A.

      B. Contract Manufacturer covenants that the reduction in the manufacturing
costs of the Products  will be predicated  on (i)  implementation  of DFT/DFM as
identified by Contract Manufacturer to the Customer and subsequently approved by
the  Customer  in  writing,  (ii)  Contract  Manufacturer's  efficient  material
acquisition and alternative  sourcing as presented by Contract  Manufacturer and
subsequently  approved by the  Customer in  writing,  and (iii) any  increase in
Purchase  Orders in excess of the initial  Forecast  set forth in Exhibit A. The
actual cost  reduction per period may be less than listed if the Customer  fails
to approve the cost reductions as identified by Contract  Manufacturer or if the
forecasted   quantity   is   reduced,   therefore   impairing   cost   reduction
opportunities.  Contract Manufacturer agrees to reduce the price of the Products
in the event that such  manufacturing  cost is reduced  in  accordance  with the
following:

      1. [***] of all cost reductions that result from a proposal  identified by
the  Customer,  which costs  reduction  will be  reflected in the price [***] of
submission.

      2. [***] of all cost  reductions  arising  from  proposals  identified  by
Contract  Manufacturer,  which costs  reduction  will be  reflected in the price
[***]  after  Customer's  written  approval.   Customer  must  approve  Contract
Manufacturer's  cost  reductions  in  advance  of  implementation  of such  cost
reductions. X. Delivery

      A. Delivery of all the Products  shall be delivered  F.O.B.  from Contract
Manufacturer's  plant  located at the address  specified in Exhibit B ("Delivery
Point"),  at which time the risk of loss and title  shall pass to the  Customer.
Products held or stored by Contract  Manufacturer  at the Delivery  Point or any
other  location  because of a request of the Customer shall be held or stored at
the risk and expense of the Customer.

      B. Contract  Manufacturer  shall use  reasonable  efforts to  deliver  the
Products on or prior to the agreed upon  delivery  dates.  In the event that the
Contract Manufacturer  determines that there is a reasonable  possibility that a
delay in any delivery may occur,  the Contract  Manufacturer  shall  immediately
notify Customer,  in writing, and shall specify in such notice all actions to be
taken by the Contract Manufacturer to prevent or minimize such delay. TIME IS OF
THE ESSENCE WITH RESPECT TO ALL  DELIVERIES.  Delivery dates will be agreed upon
by the following procedure:






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



      1. Customer will provide Contract Manufacturer a requested delivery date
in each Purchase Order.

      2. Contract Manufacturer will provide an anticipated delivery date in each
Open Order Status  Report.  If such delivery  dates match  Customer's  requested
delivery date,  then that shall be the delivery date. If such delivery date does
not match the Customer's  requested delivery date, and Customer does not respond
in writing  within  [***] after  receipt of an Open Order  Status  Report,  then
Customer shall be deemed to have accepted such date as the delivery date.

      3. In the event that Customer rejects Contract Manufacturer's  anticipated
delivery  date in writing  within  [***] after  receipt of an Open Order  Status
Report, then Customer and Contract Manufacturer shall negotiate in good faith to
determine a delivery date.

      C. Contract  Manufacturer  shall  notify the  Customer on the changes to a
Product's  price when Contract  Manufacturer is required to meet delivery within
[***]  after  the  receipt  of each  Purchase  Order  ("ARO")  or when  Contract
Manufacturer  is required to identify the components the Customer must supply to
meet stated delivery date.  Contract  Manufacturer shall also advise Customer on
the  best  delivery  date  ARO if no  premium  or  expedited  charges  are to be
incurred.

      D. Unless otherwise specified by the Customer, Contract Manufacturer shall
arrange for delivery of the Products to a Delivery  Point in a manner  deemed by
Contract Manufacturer to be most efficient and expeditious to the Customer.  All
freight,  insurance and other shipping expenses from the Delivery Point shall be
borne by the Customer. When special packaging is requested or, in the opinion of
Contract  Manufacturer,  is required  under the  circumstances,  the  additional
expenses related to such special packaging shall also be borne by the Customer.

XI.   Payment and Invoicing

      A. Contract  Manufacturer shall invoice  Customer on the date of delivery.
Customer shall pay Contract Manufacturer [***] from the date of the invoice.

      B. The Customer shall pay all non-recurring expenses set forth on Exhibit
C on or  before  the date it places  the  first  production  Purchase  Order.
The Contract  Manufacturer  shall have the right to delay  delivery of the
Products until it receives payment for the non-recurring expenses.

      C. In the event that the Customer has outstanding  invoices of more [***],
Contract  Manufacturer  may,  at its  sole  discretion,  stop  shipments  of the
Products to Customer until the Customer makes  sufficient  payment to return the
account to current status.  If the Customer fails to make any payment by the due
date,  the Contract  Manufacturer  may charge an annual late payment charge at a
rate of [***]  together with any  additional  costs and charges  incurred by the
Contract  Manufacturer  in  collecting  the overdue  payment.  Furthermore,  the
Contract  Manufacturer  may elect not to perform any further  obligations  under
this Agreement and/or any Purchase Order until payment is received.

      If the Customer disputes any invoice  rendered, Customer shall promptly so
notify  Contract  Manufacturer  and the parties  will use their best  efforts to
resolve  such  dispute  expeditiously.  Provided  that the  Customer so notifies
Contract  Manufacturer of a disputed invoice and there is a good-faith basis for
such dispute, the portion of the invoice in dispute shall not be subject to late
payment  charges.  The Customer shall pay for  non-disputed  items in accordance
with the terms of this Agreement.

XII.  Warranty

      A. Contract  Manufacturer warrants that Products  manufactured by Contract
Manufacturer shall be free from defects in workmanship and title and shall be of
the kind and quality  specified or designated in this  Agreement or any Purchase
Order. Contract  Manufacturer's  obligation shall apply only to failures to meet
the foregoing  warranties  (except as to title) occurring within [***] from date
of delivery of such Products. Furthermore,  Contract Manufacturer will assign to
Customer all warranties for Materials provided by vendors.






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



      B. If any Product or part thereof fails to meet the  foregoing  warranties
(except as to title), Contract Manufacturer shall repair same or, at its option,
replace same; provided,  however,  that Contract Manufacturer is not required to
repair or replace  Products that are defective for reasons of Customer's  faulty
design, or arises from the supply or selection of improper or defective parts or
materials  used by the  Customer,  or as a result of  changes  requested  by the
Customer,  or due to  damages  caused  by the  Customer's  misuse,  unauthorized
repair, or negligence..  Contract Manufacturer reserves the right to inspect the
Products  and  verify  that  they  are  defective  or  non-conforming.  Contract
Manufacturer's  liability  for failure to meet the warranty as set forth in this
Section  XII shall be limited to the value of the  Product  supplied  under this
Agreement,  and,  if any  failure  or defect  cannot be  corrected  by  Contract
Manufacturer's  reasonable  efforts,  the parties  shall  negotiate an equitable
adjustment.  The Customer shall obtain a Return Material  Authorization  ("RMA")
from the Contract  Manufacturer  prior to returning any  Products.  All returned
Product shall include documentation  describing the nature of the defect, how it
was discovered and under what conditions it occurred.

      C. Contract  Manufacturer's  obligations under Section XII (B) above shall
not apply to:  (i) any  Product,  or part  thereof,  which  are not  within  the
capability of existing test  equipment,  program and processes;  (ii) any defect
caused by (a) the Customer's or a third party's  handling of the Product,  (b) a
design or other fault in any Customer drawings,  documentation,  data, software,
information or know-how (the "Customer  Information") or (c) Materials  provided
or specified by the  Customer;  (iii)  prototypes  and  pre-production  or pilot
versions of  Products,  which will be supplied  "as is" without  warranty of any
kind;  or (iv)  Products  for which  Contract  Manufacturer,  at the  request of
Customer,  has not performed the standard  inspection and test  procedures.  The
performance  of any repair or  replacement  by  Contract  Manufacturer  does not
extend  the  warranty  period  for  any  Products  beyond  the  warranty  period
applicable to the Products originally delivered.

      D. In the event  that no defects are found or defects  are a result of the
product  design  attributable  to the  Customer,  than the cost of shipments for
defective Product and a no defect found charge of [***] shall be paid for by the
Customer.  Contract  Manufacturer  shall pay for the total cost of the shipments
for Product for which warranty applies.


      ARTICLE XII "WARRANTY", ARTICLE XIV "QUALITY, INSPECTION AND REPORTING"
AND EXHIBIT D SETS OUT CONTRACT  MANUFACTURER'S  SOLE OBLIGATION AND LIABILITY,
AND CUSTOMER'S EXCLUSIVE REMEDIES,  FOR CLAIMS BASED ON DEFECTS IN OR FAILURE OF
ANY PRODUCT OR SERVICE OR THE SUBJECT  MATTER OF ANY SERVICE AND  REPLACES ALL
OTHER WARRANTIES, EXPRESS OR IMPLIED PROVIDED THAT CONTRACT  MANUFACTURER  DOES
NOT EXCLUDE OR LIMIT ITS LIABILITY FOR DEATH OR PERSONAL  INJURY  RESULTING FROM
ITS NEGLIGENCE NOR LIABILITY FOR BREACH OF ANY TERM IMPLIED BY STATUTE TO THE
EXTENT THAT SUCH LIABILITY CANNOT BY LAW BE LIMITED OR EXCLUDED.


      E. The Customer warrants  that the design for the Products and the tooling
and  test  equipment  provided  by the  Customer  (collectively,  the  "Customer
Materials")  and any other items or  information  supplied by the  Customer  are
accurate and contain all items and information of the Customer necessary for the
Contract  Manufacturer  to  manufacture  and deliver the  Products  and Services
pursuant to Purchase Orders.

      F. The  Contract  Manufacturer will  promptly  notify the  Customer of any
manufacturing  problems  which it  encounters  and  believes  are related to the
Customer Material. The parties will jointly determine whether such manufacturing
problems are  attributable  to the Customer  Materials.  Where such problems are
attributable to the Customer Material,  the Customer will be responsible for all
costs  incurred by the  Contract  Manufacturer  to correct  such  problems.  The
Contract  Manufacturer will not implement any changes to the Customer  Materials
without the  Customer's  prior  approval.  Where any such changes  result in the
delay of any scheduled delivery date for Product, the Contract Manufacturer will
have no  liability  for such  delay and  Customer  may not cancel any orders for
Products affected thereby.







*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>

XIII. Indemnity; Limitation on Liability



      A. The Customer shall indemnify Contract Manufacturer against, and hold it
harmless from, any loss, cost,  liability and expense (including court costs and
the  reasonable  fees of attorneys and other  professionals)  to the extent that
such loss,  cost,  liability  or  expense  (i) arises out of, any claim that any
product  or  information  owned by or  supplied  by  Customer  in the  course of
performance  of this  Agreement  infringes,  in whole or in  part,  any  patent,
trademark,  copyright,  or other intellectual property right, of any third party
or (ii) occurs as a result of the  Contract  Manufacturer  having  followed  the
specifications,  instructions or other  information given by or on behalf of the
Customer.  After receipt of notice of any claim or proceeding where the Customer
may be liable under such indemnification, Contract Manufacturer shall notify the
Customer in writing in sufficient  time to enable  Customer to timely respond to
the  claim  or  proceeding.  The  Customer  shall  have the  right,  but not the
obligation,  to settle or defend any claim or proceeding, at the Customer's sole
cost and expense.  The Customer agrees that, if it exercises its right to settle
or defend any such claim or proceeding, that Contract Manufacturer,  at its sole
cost and expense, has the right to retain its own counsel and participate in the
defense  of any  such  claim  or  proceeding  and to  assist  in any  settlement
negotiations.  Notwithstanding  the foregoing,  Customer shall have no liability
for any claim of  infringement  arising as a result of the use of any product or
information in a manner not specifically  authorized by Customer or in the event
that any product or information is modified without the Customer's express prior
written consent.

      B. The Contract  Manufacturer shall indemnify Customer against and hold it
harmless from, any loss, cost,  liability and expense (including court costs and
the  reasonable  fees of attorneys and other  professionals)  to the extent that
such  loss,  cost,  liability  or  expense  arises  out of,  any claim  that any
manufacturing  process or  information  owned by,  supplied  by, or  utilized by
Contract  Manufacturer in the course of performance of this Agreement infringes,
in whole or in part, any patent,  trademark,  copyright,  or other  intellectual
property  right,  of any third  party.  After  receipt of notice of any claim or
proceeding   where  the   Contract   Manufacturer   may  be  liable  under  such
indemnification,  Customer shall notify the Contract  Manufacturer in writing in
sufficient time to enable  Contract  Manufacturer to timely respond to the claim
or  proceeding.  The  Contract  Manufacturer  shall have the right,  but not the
obligation,  to settle  or  defend  any  claim or  proceeding,  at the  Contract
Manufacturer's sole cost and expense. The Contract  Manufacturer agrees that, if
it exercises  its right to settle or defend any such claim or  proceeding,  that
Customer,  at its sole cost and expense, has the right to retain its own counsel
and  participate in the defense of any such claim or proceeding and to assist in
any settlement negotiations.

      C. Subject  only to Contract  Manufacturer's  indemnity  obligation  under
Section XIII (B), under no  circumstances  will Contract  Manufacturer  have any
liability in respect of this Agreement, whether in contract or for negligence or
otherwise and whether related to any single event or series of connected events,
for any of the  following:  (i) any  liability  in  excess of (a) in the case of
damage to or loss of tangible property,  the value of such property; and (ii) in
the  event of any other  liability,  the  total of the  amount  (if any) paid by
Customer under this Agreement or [***] (whichever is the lesser).

      D. Neither Contract  Manufacturer nor Customer shall be liable for (i) any
incidental,  indirect  or  consequential  damages or loss of  business,  loss of
records or data, loss of use, loss of profits, revenue or anticipated savings or
other  economic  loss whether or not the such party was informed or was aware of
the  possibility of such loss, or (ii) except pursuant to this Section XIII, any
third  party  claims  against  the other  party for any loss,  damage,  costs or
expenses.

      E. Neither party may bring an action under this Agreement more than two
(2)years after the cause of action arose.

XIV.  Quality, Inspection and Reporting

      A. The  Customer  will  have  the  right  at all  reasonable  times,  upon
reasonable advance notice, to visit Contract Manufacturer's plant to inspect the
work  performed  on the  Products.  Inspection  of the work  shall  not  relieve
Contract  Manufacturer of any of its obligations under the Agreement or purchase
orders.  Contract  Manufacturer  shall provide Customer with Pareto Analysis for
Incoming  Inspection and Process Work Center quality  reports on a monthly basis
by the 15th day of each month.  Contract  Manufacturer  shall ensure  Customer's
product  is  built  to  IPC-A-610B  Class  II  workmanship  standards.  Contract
Manufacturer  reserves the right to restrict the Customer's  access to the plant
or any area  within it as  necessary  to  protect  confidential  information  of
Contract Manufacturer or its other customers.



*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

<PAGE>



     B. The  Customer  may reject a Product  (each,  a  "Rejected  Product"  and
collectively,  the "Rejected  Products")  which is established  (i) to have been
materially damaged prior to delivery by the Contract Manufacturer or (ii) not to
have met, in all material respects, the relevant  specifications provided by the
Customer.  The  Customer  will notify the  Contract  Manufacturer  in writing of
Rejected  Products  within [***] of original  delivery and will return  Rejected
Products at Contract  Manufacturer's risk to the Contract  Manufacturer within a
further  [***].  In the  event  that  Contract  Manufacturer  delivers  Products
directly to customers of the Customer,  then the Customer shall have [***] after
the date of original  delivery to provide  such  written  notice to the Contract
Manufacturer.  The Customer  shall obtain an RMA from the Contract  Manufacturer
prior to  returning  any  Product.  In the  absence of earlier  notification  of
rejection,  the Customer  will be deemed to have accepted  Products  [***] after
delivery [***] after  delivery if Products are shipped  directly to customers of
the Customer).

      C. The Contract Manufacturer will, at its election, either repair, replace
or credit the Customer in respect of Rejected  Products.  Contract  Manufacturer
shall make such election within five (5) business days after receipt of Rejected
Products.  All rework and repairs  performed by the Contract  Manufacturer  must
meet IPC 7711 and IPC 7721 workmanship  standards.  The cost associated with any
such repair or  replacement of Rejected  Products  (including the cost of return
shipment  to  the  Customer)  will  be  the   responsibility   of  the  Contract
Manufacturer.  If the  Contract  Manufacturer  elects to  replace  the  Rejected
Product or credit the Customer,  title to the Rejected Product shall pass to the
Contract Manufacturer on delivery to the Contract Manufacturer.

      D. Acceptance of any Product  pursuant to Section  XIV(B) shall not effect
any warranty given by the Contract Manufacturer under Section XII.

      E. The parties agree that the provisions of the attached Exhibit D
entitled "Epidemic Condition" shall be incorporated herein.

XV.   Termination

      A. Either party may, without penalty, terminate this Agreement (i) upon no
less than one  hundred  twenty  days  (120)  days  written  notice  prior to the
expiration of the  then-current  Term or (ii) upon one hundred twenty (120) days
written notice to the other party for either one of the following events:

      1. The other  party  materially  breaches this  Agreement  and such breach
remains  uncured for thirty (30) days following  written notice of breach by the
non-breaching party.

      2. The  other  party  becomes  involved  in any voluntary  or  involuntary
bankruptcy or other  insolvency  petition or  proceeding  for the benefit of its
creditors,  and such petition,  assignment or proceeding is not dismissed within
sixty (60) days after it was filed.

      B. Contract  Manufacturer  may  terminate  this  Agreement  or cancel  any
Purchase Order if the Customer's approved credit rating declines below the level
approved by Contract  Manufacturer or the  established  credit limit is exceeded
and  Customer  fails to  satisfy  Contract  Manufacturer's  credit  requirements
through the  provision of a valid letter of credit or other means  acceptable to
Contract   Manufacturer   within  30  days  of  written   notice  from  Contract
Manufacturer.

      C. Upon  termination  for  reasons  of breach  by the  Customer,  Contract
Manufacturer  shall  provide the Customer  with an invoice for the cost incurred
for the  work-in-progress  and any outstanding  charges  determined  pursuant to
Sections III (E) and IV of this agreement. Upon termination,  Customer shall pay
all invoiced charges within sixty (60) days.






*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>

      D. Except as specifically agreed in writing, termination shall not relieve
either  party  of  any  obligation  arising  out  of  work  performed  prior  to
termination, or any liability which at the time of expiration or termination has
already accrued to the other party,  or, which  thereafter may accrue in respect
to any event prior to expiration or termination.

XVI.  Miscellaneous

     A. Governing Law; Jury Trial. The validity, construction and performance of
this Agreement  shall be governed by and interpreted in accordance with the laws
of the State of Maryland  without  reference to conflict of law principles.  The
parties  expressly  disclaim the United Nations  Convention on the International
Sale of Goods.  The  parties  expressly  waive any right they may have to a jury
trial and agree that any  proceedings  under this Agreement  shall be tried by a
judge without a jury.

     B. Jurisdiction. For any dispute arising out of this Agreement, the parties
consent to the  non-exclusive  jurisdiction of the federal courts located in the
State of Maryland.

     C. Entire Agreement;  Enforcement of Rights. This Agreement,  including the
Exhibits,  which are attached hereto and incorporated  herein,  and the Purchase
Orders comprises all the terms,  conditions and agreements of the parties hereto
with  respect  to  the  subject   matter  hereof  and  supersedes  all  previous
negotiations,  proposals, commitments, writings, publications and understandings
of any nature whatsoever. No modification of or amendment to this Agreement, nor
any waiver of any rights under this Agreement,  will be effective  unless agreed
in writing and  executed by duly  authorized  representative  of each party.  If
there is any conflict or inconsistency  between the terms of any Purchase Order,
Open Order Status Report or other documents delivered pursuant to this Agreement
and the terms of this  Agreement,  then the terms of this Agreement will prevail
unless such conflict or  inconsistency  is agreed to in writing by an authorized
representative of each party.

     D. Subcontracting and Assignment. Contract Manufacturer may not subcontract
any of its obligations  under this Agreement  without the written consent of the
Customer.  Neither  party may assign or transfer  this  Agreement  or any of its
rights  hereunder  without the prior  written  consent of the other party,  such
consent not to be unreasonably withheld.

     E. Notices. Any required notices thereunder will be given in writing at the
address of each party set forth above,  or to such other address as either party
may substitute by written notice to the other in the manner contemplated herein,
and will be deemed  served when  delivered by facsimile or mail or when tendered
in person.

     F. Force Majeure. Neither party will be liable to the other for any default
thereunder  if such default is caused by an event  beyond such party's  control,
including without limitation acts or failures to act of the other party, strikes
or  labor  disputes,  component  shortages,  unavailability  of  transportation,
floods, fires,  governmental  requirements and acts of God ("Force Majeure"). In
the  event of  threatened  or actual  non-performance  as a result of any of the
above causes, the  non-performing  party will exercise  commercially  reasonable
efforts to avoid and cure such  non-performance.  Should a Force  Majeure  Event
prevent a party's  performance  thereunder for a period in excess of ninety (90)
days,  then the other party may elect to  terminate  this  Agreement  by written
notice thereof.

      G. Relationship of the Parties. The provisions of this Agreement shall not
be construed to establish  any form of  partnership,  agency or joint venture of
any kind  between the  parties,  nor to  constitute  either  party as the agent,
employee or legal  representative  of the other. All persons furnished by either
party to accomplish the intent of this Agreement  shall be considered  solely as
the furnishing  party's  employees or agents and the  furnishing  party shall be
solely  responsible  for compliance with respect to its employees with all laws,
rules and regulations involving,  but not limited to, employment of labor, hours
of labor,  working  conditions,  workers'  compensation,  payment of wages,  and
withholding  and  payment of  applicable  taxes,  including,  but not limited to
income taxes, unemployment taxes, and social security taxes.








*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.



<PAGE>

      H. Non-Waiver. The failure by either  party  hereto at any time to require
performance  by the other  party or to claim a breach of any  provision  of this
Agreement shall not be construed as affecting any subsequent breach or the right
to require  the  performance  with  respect  thereto  or to claim a breach  with
respect thereto.

      I. Counterparts.  This Agreement may be executed in multiple counterparts,
each of which will be deemed an original and all of which together will
constitute one instrument.

      J. Severability. If any provision contained in this Agreement is held to
be invalid  or  unenforceable  in any  respect under the laws of any
jurisdiction  where  enforcement is sought,  such invalidity or  unenforceablity
will not affect any other provision of this  Agreement,  and this Agreement will
be construed as if such invalid or unenforceable provision were not present.

      K. Intellectual   Property.   All   intellectual   property  rights  (the
"Intellectual  Property Rights"),  including,  without limitation,  all patents,
owned or licensed by the Customer,  will continue to be owned or licensed by the
Customer (the "Customer Intellectual Property Rights"). Contract Manufacturer is
hereby  licensed to use the Customer  Intellectual  Property Rights set forth on
Exhibit  D to  perform  its  obligations  under  this  Agreement.  All  existing
Intellectual  Property  Rights  of  the  Contract  Manufacturer  (the  "Contract
Manufacturer  Intellectual  Property  Rights")  will continue to be owned by the
Contract  Manufacturer.  All improvements to the Customer  Intellectual Property
Rights, whether developed by the Customer or Contract  Manufacturer,  arising in
the course of the Contract  Manufacturer's  performance  of the Contract will be
owned  by  the  Customer.   All   improvements  to  the  Contract   Manufacturer
Intellectual  Property  Rights,  whether  developed  by the Customer or Contract
Manufacturer,  arising in the course of the Contract Manufacturer's  performance
of the Contract will be owned by the Contract Manufacturer.

      L. Confidentiality.  Each party may receive  confidential,  proprietary or
trade secret  information  ("Information") of the other party in connection with
this Agreement. Each party will exercise reasonable care to preserve and protect
the confidentiality of such Information of the other party and will at a minimum
use the same level of care and  security  if affords its own  Information.  Each
party agrees not to disclose  such  Information  to third parties or to use such
Information for any purposes  whatsoever other than as permitted or contemplated
under  this  Agreement,  and to  advise  each  of  its  employees,  agents,  and
representatives  who will have access to the  Information  of the other party of
the requirements of this Agreement.

     Despite anything to the contrary contained herein, receiving party may only
disclose  Information  to the following  persons on a need to know basis for the
purposes hereof:  (a) its employees and agents,  (b) the employees and agents of
its subsidiary  companies and affiliated  companies,  and (c) in the case of the
Contract Manufacturer,  to its suppliers of products and services used on behalf
of the Customer; provided that, in all such cases, receiving party requires that
such  party  treat  the  Information   substantially  in  accordance  with  this
Agreement.  Receiving  party  may  also  disclose  Information  if  required  by
operation of law, provided  receiving party gives disclosing party prompt notice
to allow disclosing party a reasonable opportunity to obtain a protective order.
Disclosing  party  warrants its right to disclose its  Information  to receiving
party.

     This Agreement does not restrict disclosure or use of Information that: (a)
is   already   in   receiving   party's   possession   without   obligation   of
confidentiality;  (b)  is  developed  independently;  (c)  is  received  without
obligation  of  confidentiality  from another  party that has not entered into a
confidentiality  agreement with any party to this Agreement; (d) is, or becomes,
publicly  available  without  breach of this  Agreement;  or (e) is disclosed by
disclosing party to another without obligation of confidentiality.










*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>


     Information includes,  but is not limited to, Customer Materials,  Customer
Intellectual  Property  Rights,  Contract  Manufacturer   Intellectual  Property
Rights,   information  related  to  data  on  Products,   financial,   research,
development,  pricing or business affairs of a party and any other confidential,
proprietary  or trade secret  information  which has been  designated as such by
legend or written notice. The parties' obligations of confidentiality under this
Agreement  shall  survive  the  expiration  or  termination  of this  Agreement,
however,  with  respect to each  disclosure,  receiving  party's  obligation  to
protect Information expires five (5) years from the date of disclosure.  Nothing
in this  Agreement  gives  either party a right to use the other  party's  name,
trade mark(s),  trade name(s) or to refer to, or disclose, the existence of this
Agreement,  or any terms and conditions of this Agreement,  whether  directly or
indirectly in  connection  with any  marketing or other  activities  without the
other party's prior written  consent.  Contract  Manufacturer and Customer shall
have the right to disclose  the  existence of this  agreement to  third-party's;
provided,  however,  that neither  party to this  Agreement  shall  disclose the
economic  terms and  conditions  of this  Agreement  without  the prior  written
approval of the other party.

      M. Freedom  of  Action.  Except  as  expressly  provided  pursuant  to the
Confidentiality provision set forth in Section XVI (L), this Agreement shall not
prevent the Contract  Manufacturer or its affiliates from marketing,  acquiring,
or developing  materials,  products or services which are similar or competitive
to those of the  Customer.  The  Contract  Manufacturer  may  pursue  activities
independently with any third party, even if similar to the activities under this
Agreement.  Any cost savings that Contract  Manufacturer  gains pursuant to such
activities shall be passed on to Customer at the next Semi-Annual Review.

      N. Headings.  The headings in this  Agreement are inserted for convenience
only and do not constitute a part of any Contract nor are they to be referred to
in its interpretation.

      O.  Compliance  with Law. Each party shall comply with all applicable laws
and  regulations  and obtain all necessary  licenses and consents.  In addition,
Customer will comply with all applicable  laws and  regulations  and will obtain
all  necessary  licenses  and  consents  for the  resale,  import  or  export of
Products.

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

                             VISUAL NETWORKS OPERATIONS, INC.

                             By:      /s/ Richard H. Deily
                                 ----------------------------------------

                             Name:    Richard H. Deily
                                   -----------------------------

                             Title:   Director, Treasury Operations



                             CELESTICA CORPORATION

                             By:      /s/ DC McDougall
                                 -------------------------------

                             Name:    DC McDougall
                                   -----------------------------

                             Title:   Senior Vice President
                                    -------------------------------------









*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>




                                    EXHIBIT A

                             INITIAL PRICE SCHEDULE


     This schedule sets forth the initial  prices for the Products.  Such prices
may be  changed  by  mutual  written  agreement  of  the  parties  outside  this
Agreement.  The parties acknowledge that the initial prices summarized below are
based on  estimated  minimum  annual year 1 volumes of a) [***] units (in total)
for the group of Products  referred  to as the "Metal  Chassis"  series,  and b)
[***] units (in total) for the group of  Products  referred to as the "Model 24"
series, and estimated minimum annual year 2 volumes of a) [***] units (in total)
for the group of Products  referred  to as the "Metal  Chassis"  series,  and b)
[***] units (in total) for the group of  Products  referred to as the "Model 24"
series.  Prototype,  pre-production  and lower  volume  prices are not  included
herein and shall be quoted  separately.  The initial unit prices (in US dollars)
are as follows:

                              Metal Chassis Series
                              --------------------

         SKU           Initial Price                      Minimum Batch Size
         ---           -------------                      ------------------
         296               [***]                               [***]
         225               [***]                               [***]
         586               [***]                               [***]
         585               [***]                               [***]
         584               [***]                               [***]
         587               [***]                               [***]
         152               [***]                               [***]
         176               [***]                               [***]
         164               [***]                               [***]
         114                __                                  __
         709                __                                  __
         124                __                                  __


                                 Model 24 Series
                                 ---------------

         SKU           Initial Price                      Minimum Batch Size
         ---           -------------                      ------------------
         434               [***]                               [***]
         207               [***]                               [***]












*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



                                    EXHIBIT B

                                    NOT USED







                                    EXHIBIT C

                               INITIAL NRE CHARGES

     (This schedule sets out initial Non-Recurring Engineering charges which may
be amended by mutual written agreement of the parties outside this Agreement)

                   Estimated Non-Recurring Engineering Charges

     Non-Recurring  Engineering  (NRE)  charges are  payable in  advance,  or if
preferred,  amortized  into the piece price on the first purchase  order.  These
estimated NRE charges cover the engineering  effort for this specific project as
well as the cost of  specialized  tooling,  fixtures,  etc.  It does not pay for
proprietary  knowledge used in the design of the tooling, and as such, ownership
of tooling (stencils,  vacuum plates,  partial-wave fixtures,  etc) or software,
which contains intellectual property, remains with Celestica.

807-0021-3 SKU 296
------------------

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0009                                       [***]         [***]
805-0016                                       [***]         [***]

PCB NRE and Test
805-0016                                       [***]         [***]
805-0009                                       [***]         [***]

SMT Programming
805-0009                                       [***]         [***]
805-0016-3 (Re-programming)                    [***]         [***]

ICT Programming
805-0016-3                                     [***]         [***]

*These charges have been processed on a prior purchase order.
--------------------------------------------------------------------------------









*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



SKU00225

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0009                                       [***]         [***]
805-0016                                       [***]         [***]

PCB NRE and Test
805-0016                                       [***]         [***]
805-0009                                       [***]         [***]

SMT Programming
805-0009                                       [***]         [***]
805-0016-1 (Re-programming)                    [***]         [***]

ICT Programming
805-0016-1                                     [***]         [***]

*These charges have been processed on a prior purchase order.
--------------------------------------------------------------------------------

807-0044-2 SKU 586

Description                                     Qty       Total Price
Engineering NPI                                [***]         [***]

Stencils
805-0034                                       [***]         [***]
805-0043                                       [***]         [***]
805-0009                                       [***]         [***]

PCB NRE and Test
805-0034                                       [***]         [***]
805-0043                                       [***]         [***]
805-0009                                       [***]         [***]

Setup of Test Equipment
SMT Programming
805-0034                                       [***]         [***]
805-0043                                       [***]         [***]
805-0009                                       [***]         [***]











*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>




807-0042-2 SKU 585

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]

SMT Programming
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]

PCB NRE and Test
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]


SKU00434 Model 24

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0030-1                                     [***]         [***]

SMT Programming
805-0030-1                                     [***]         [***]


     **   Additional   NRE  charges  for  wave  solder   pallets  and  ICT  test
reconditioning  have been  consumed on the quote for SKU00207  Model 24 (2986-4)
--------------------------------------------------------------------------------

807-0041-2 SKU 584

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0034                                       [***]         [***]
805-0043                                       [***]         [***]


PCB NRE and Test
805-0034                                       [***]         [***]
805-0043                                       [***]         [***]













*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>

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


807-0042-2 SKU 587

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]
Stencils
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]
805-0009                                       [***]         [***]

SMT Programming
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]
805-0009                                       [***]         [***]

PCB NRE and Test
805-0034                                       [***]         [***]
805-0044                                       [***]         [***]
805-009                                        [***]         [***]

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

807-0021-2 SKU 152

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0009                                       [***]         [***]
805-0016                                       [***]         [***]

PCB NRE and Test for 805-0016 and 805-0009     [***]         [***]
Setup of Test Equipment                        [***]         [***]
SMT Programming                                [***]         [***]
805-0009                                       [***]         [***]
805-0016                                       [***]         [***]


*These charges have been processed on a prior purchase order.
--------------------------------------------------------------------------------

















*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

<PAGE>



807-0020-2 SKU 176

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils
805-0009                                       [***]         [***]
805-0014M                                      [***]         [***]

PCB NRE and Test                               [***]         [***]
 805-0014M                                     [***]         [***]
 805-0009                                      [***]         [***]

Setup of Test Equipment                        [***]         [***]
SMT Programming                                [***]         [***]
805-0009                                       [***]         [***]
805-0014M                                      [***]         [***]
Flying Probe Programming                       [***]         [***]

*These charges have been processed on a prior purchase order.
--------------------------------------------------------------------------------

807-0019-2 SKU00164

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                [***]         [***]

Stencils                                       [***]         [***]
805-0009                                       [***]         [***]
805-0011M                                      [***]         [***]

Set up of Test Equipment                       [***]         [***]
SMT Programming                                [***]         [***]
805-0009                                       [***]         [***]
805-0011M                                      [***]         [***]

PCB NRE and Test                               [***]         [***]
 805-0009                                      [***]         [***]
 805-0011M                                     [***]         [***]

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

SKU00207 Model 24

Description                                     Qty       Total Price
-----------                                     ---       -----------
Engineering NPI                                 [***]        [***]

Stencils
805-0030-2                                      [***]        [***]

SMT Programming
805-0030-2                                      [***]        [***]

Wave Solder Pallets                             [***]        [***]
ICT Fixture Reconditioning Charge               [***]        [***]













*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.


<PAGE>



                                    EXHIBIT D
                               EPIDEMIC CONDITION

      If during  the  term of this  Agreement  and for one year  after  the last
shipment  date of  Products  under this  Agreement  CUSTOMER  notifies  CONTRACT
MANUFACURER that the Products show evidence of an "Epidemic Condition," CONTRACT
MANUFACURER  shall  prepare and propose a  Corrective  Action Plan  ("CAP") with
respect to such  material  within  five (5) working  days of such  notification,
addressing  implementation and procedure  milestones for remedying such Epidemic
Condition(s). An extension of this time-frame is permissible upon mutual written
agreement of the parties.

      For  the   purpose   of  this   Agreement,   only  major   functional  and
visual/mechanical/appearance   defects  caused  by   deficiencies   in  CONTRACT
MANUFACTURER'S  workmanship are considered for determining  Epidemic  Condition.
Functional  Dead on Arrival  ("DOA") shall be defined as any Product that during
the test,  installation  or upon its first use fails to operate per the relevant
specification supplied by CUSTOMER.  Visual/mechanical/appearance DOA is defined
as any Product  containing one or more major defects that would make the Product
unfit  for  use  or  installation.  Products  that  shall  be  excluded  in  the
determination of an Epidemic Condition are:

     (1)  Products which have been  misused,  modified,  damaged,  placed in an
unsuitable physical or operating  environment or maintained improperly or caused
to fail by any product or service not  supplied by CONTRACT  MANUFACTURER  or to
any Products which have been subjected to any repair not in accordance  with the
CUSTOMER service instructions;

      (2) Products with any defect  caused by CUSTOMER or a third party or by an
error or omission  or design or other  fault in any Product  Data or other items
and information supplied by CUSTOMER for Manufacturing; or

     (3) Prototypes and  pre-production or pilot versions of Products which will
be supplied "as is" without warranty of any kind,

      Products may be either  sampled or, at CUSTOMER's option,  100% audited at
CUSTOMER premises or CUSTOMER's customers'  locations.  If Products are sampled,
the data must have 80% or better statistical  confidence.  An Epidemic Condition
will be considered to exist when one or more of the following conditions occur:

      (1) Failure  reports or  statistical samplings  show that [***] percent or
more of Products  shipped  during the Term or [***]  percent or more of Products
shipped  during any two  consecutive  months  contain a potential  safety hazard
(such as personal injury or death, fire, explosion,  toxic emissions,  etc.), or
exhibit a highly objectionable symptom (such as emissions of smoke, loud noises,
deformation of housing) or other disconcerting symptoms of this type.

     (2) Reliability plots of relevant data indicate that the Product has actual
Mean Time Between  Failures  (MTBF) of less than [***] of the MTBF stipulated in
the  relevant  specifications  supplied by  CUSTOMER.  A failure in this context
occurs when a major function of the Product is compromised due to the mechanical
or  electrical  (i.e.  hardware)  faults and the  resolution  of this  condition
requires a physical  modification (e.g. swap out, re-work etc). A condition that
can be  corrected  with a new  software  load or patch  would not  constitute  a
failure in this context.

      (3) Product DOA failures  exceed [***] of the  affected  Products received
during any 2 consecutive months.

      Upon  notification  of the  Epidemic  Condition  to  CONTRACT MANUFACURER,
CUSTOMER  shall  have the  right to  postpone  all or part of the  shipments  of
unshipped  Products,  by giving written notice of such  postponement to CONTRACT
MANUFACURER,  pending  correction of the Epidemic  Condition.  Such postponement
shall  temporarily  relieve CONTRACT  MANUFACURER of its shipment  liability and
CUSTOMER of its shipment acceptance  liability.  Should CONTRACT MANUFACURER not
agree to the existence of an Epidemic  Condition or should CUSTOMER not agree to
the CAP,  then  CUSTOMER  shall  have the  right to  suspend  all or part of its
unshipped  orders  without  liability to CUSTOMER  until such time as a mutually
acceptable solution is reached.








*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

<PAGE>




      In the event that CONTRACT MANUFACURER develops a remedy for the defect(s)
that caused the  Epidemic  Condition  and  CUSTOMER  agrees in writing  that the
remedy is acceptable, CONTRACT MANUFACURER shall:

      (a) incorporate the remedy in affected unshipped Products;

      (b) ship all subsequent  Products  incorporating the required modification
correcting the defect(s) at no additional charge to CUSTOMER; and

      (c) repair and/or replace Products that caused the Epidemic  Condition. In
the event  that  CUSTOMER  reasonably  incurs  costs due to such  repair  and/or
replacement, as agreed in advance with CONTRACT MANUFACTURER,  including but not
limited  to labor and  shipping  costs,  CONTRACT  MANUFACURER  shall  reimburse
CUSTOMER for such costs. CONTRACT MANUFACURER shall bear risk of in transit loss
and damage for such repaired and/or replaced material.

     CONTRACT MANUFACURER and CUSTOMER shall mutually agree in writing as to the
remedy's  implementation  schedule.  CONTRACT  MANUFACURER  shall  use its  best
efforts to implement the remedy in accordance with the agreed-upon schedule.

      If CONTRACT  MANUFACURER is unable to develop a mutually agreeable remedy,
or does not adequately take into account the business interests of CUSTOMER,  as
reasonably  agreed by the parties,  CUSTOMER may (1) develop and implement  such
remedy and, in such case,  implementation  costs and risk of in-transit loss and
damage  shall be  allocated  between  the  parties as set forth in this  clause,
and/or (2) cancel postponed  orders without  liability and/or (3) terminate this
Agreement in accordance with Article XV(A).

     In no event shall CONTRACT  MANUFACTURER's  liability  under this Exhibit D
exceed the sale price of the affected PRODUCTS.






















*** Confidential Information has been omitted and filed separately with the
Securities and Exchange Commission pursuant to a confidential treatment request.

</TEXT>
</DOCUMENT>
