<PAGE>   1
                                 
                                GENERAL AGREEMENT
                                 
                                     BETWEEN
                                 
                                LOCAL FIBER. LLC
                                 
                                       AND
                                 
                            LUCENT TECHNOLOGIES INC.
<PAGE>   2

      The mailing, delivery or negotiation of this Agreement by Lucent or its
agent or attorney shall not be deemed an offer by Lucent to enter into any
transaction or to enter into any other relationship, whether on the terms
contained herein or on any other terms. This Agreement shall not be binding upon
Lucent, nor shall Lucent have any obligations or liabilities or Customer any
rights with respect thereto, or with respect to the transactions contemplated by
the Agreement, unless and until the Agreement has been approved by the executive
officers and/or Board of Directors of Lucent and Lucent has executed and
delivered this Agreement. Until such execution and delivery of this Agreement,
Lucent may terminate all negotiation and discussion of the subject matter
hereof, without cause and for any reason, without recourse or liability.
<PAGE>   3

                               TABLE OF CONTENTS
                               GENERAL AGREEMENT
Section                                                                     Page
-------                                                                     ----

1. ARTICLE I GENERAL TERMS AND CONDITIONS ____________________________________ 1
1.1  DEFINITIONS: ____________________________________________________________ 1
1.2  TERM OF AGREEMENT: ______________________________________________________ 3
1.3  SCOPE: __________________________________________________________________ 3
1.4  CUSTOMER RESPONSIBILITY: ________________________________________________ 4
1.5  ORDERS: _________________________________________________________________ 4
1.6  CHANGES IN CUSTOMER'S ORDERS: ___________________________________________ 6
1.7  CHANGES IN PRODUCTS: ____________________________________________________ 6
1.8  PRICES: _________________________________________________________________ 7
1.9  INVOICES AND TERMS OF PAYMENT: __________________________________________ 7
1.10 PURCHASE MONEY SECURITY INTEREST: _______________________________________ 8
1.11 TAXES: __________________________________________________________________ 9
1.12 TRANSPORTATION AND PACKING: _____________________________________________ 9
1.13 TITLE AND RISK OF LOSS: _________________________________________________ 9
1.14 WARRANTY: _______________________________________________________________ 9
1.15 INFRINGEMENT: __________________________________________________________ 12
1.16 CUSTOMER'S REMEDIES: ___________________________________________________ 13
1.17 USE OF INFORMATION: ____________________________________________________ 14
1.18 DOCUMENTATION: _________________________________________________________ 14
1.19 5ESS(R) DOCUMENTATION: _________________________________________________ 15
1.20 NOTICES: _______________________________________________________________ 15
1.21 CANCELLATION OF ORDERS FOR CONVENIENCE: ________________________________ 15
1.22 FORCE MAJEURE: _________________________________________________________ 16
1.23 ASSIGNMENT: ____________________________________________________________ 16
1.24 TERMINATION OF AGREEMENT FOR BREACH: ___________________________________ 17
1.25 ARBITRATION: ___________________________________________________________ 17
1.26 NON-SOLICITATION: ______________________________________________________ 18
1.27 INDEPENDENT CONTRACTOR: ________________________________________________ 18
1.28 RELEASES VOID: _________________________________________________________ 18
1.29 PUBLICITY: _____________________________________________________________ 18
1.30 CONFIDENTIALITY OF AGREEMENT: __________________________________________ 19
<PAGE>   4

1.31 AMENDMENTS: ____________________________________________________________ 19
1.32 SEVERABILITY: __________________________________________________________ 19
1.33 WAIVER: ________________________________________________________________ 19
1.34 SURVIVAL: ______________________________________________________________ 19
1.35 SECTION HEADINGS: ______________________________________________________ 19
1.36 CHOICE OF LAW: _________________________________________________________ 20
1.37 AMBIGUITIES: ___________________________________________________________ 20
2. ARTICLE II PROVISIONS APPLICABLE TO LICENSED MATERIALS ___________________ 21
2.1  LICENSE FOR LICENSED MATERIALS: ________________________________________ 21
2.2  CHANGES IN LICENSED MATERIALS: _________________________________________ 21
2.3  CANCELLATION OF LICENSE: _______________________________________________ 22
2.4  OPTIONAL SOFTWARE FEATURES: ____________________________________________ 22
2.5  ADDITIONAL RIGHTS IN LICENSED MATERIALS: _______________________________ 22
2.6  INSTALLATION OF SOFTWARE: ______________________________________________ 22
2.7  SOFTWARE ACCEPTANCE: ___________________________________________________ 22
2.8  MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES: __________________ 23
2.9  ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS _______ 23
3. ARTICLE III PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND
OTHER SERVICES ______________________________________________________________ 25
3.1  SITE REQUIREMENTS: _____________________________________________________ 25
3.2  ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER: ___________________________ 26
3.3  ITEMS TO BE FURNISHED BY SELLER ________________________________________ 29
  3.3.1 ENGINEERING: ________________________________________________________ 29
  3.3.2 INSTALLATION: _______________________________________________________ 29
3.4 ACCEPTANCE ______________________________________________________________ 33
3.5 WORK OR SERVICES PERFORMED BY OTHERS: ___________________________________ 33
4. ARTICLE IV ENTIRE AGREEMENT: _____________________________________________ 37
4.1 ENTIRE AGREEMENT ________________________________________________________ 37
<PAGE>   5

This General Agreement Number LNM970929RPLF (hereinafter "General Agreement" or
"Agreement") is made effective as of the 17th day of December, 1997 ("Effective
Date") by and between Local Fiber, LLC, a New York Limited Liability Company
Pursuant to Section 203 of the Limited Liability Company Act of the State of New
York, with offices located at 121 Erie Canal Drive, Suite A, Rochester, New York
14626 (hereinafter "Customer"), and Lucent Technologies Inc., a Delaware
corporation, acting through its Network Systems Group, with offices located at
600 Mountain Avenue, Murray Hill, New Jersey 07974 (hereinafter "Seller").

WHEREAS, Seller desires to supply to Customer and Customer desires to procure
from Seller the products and services described herein, pursuant to the terms
and conditions contained herein.

NOW, THEREFORE, in consideration of the mutual promises herein contained and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties intending to be lawfully bound agree as
follows:

                                  1. ARTICLE I

                          GENERAL TERMS AND CONDITIONS

1.1 DEFINITIONS:

For the purpose of this Agreement, the following definitions will apply:

(a)   "Affiliate" of a corporation means its Subsidiaries, any company of which
      it is a Subsidiary, and other Subsidiaries of such company.

(b)   "Bill and Hold Products" means Products, Licensed Materials, and/or parts
      thereof, which the Customer requests and Seller agrees to inventory or
      warehouse, at a price mutually agreed to by the parties, until final
      delivery to the Customer.

(c)   "Customer Price List" means Seller's published "Ordering and Price Guides"
      or other price notification releases furnished by Seller for the purpose
      of communicating Seller's prices or pricing related information to
      Customer; however, this does not include firm price quotations.

(d)   "Cutover" means, the verification by Seller and Customer of actual usage
      over the installed Products. This function occurs after Turnover and is
      not performed by Seller unless specifically requested by Customer and is
      usually covered under a separate Professional Services Agreement.

(e)   "Delivery Date" means the date required under this Agreement by which all
      deliverables ordered by Customer are to be delivered to the destination
      specified in the order.


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                                       1
<PAGE>   6

(f)   "Designated Processor" means the Product for which licenses to Use
      Licensed Materials are granted.

(g)   "Firmware" means a combination of (1) hardware and (2) Software
      represented by a pattern of bits contained in such Hardware.

(h)   "Fit" means physical size or mounting arrangement (e.g., electrical or
      mechanical connections).

(i)   "Form" means physical shape.

(j)   "Function" means the operation the Product performs.

(k)   "Hazardous Materials" means material designated as a "hazardous chemical
      substance or mixture" pursuant to Section 6 of the Toxic Substance Control
      Act; a "hazardous material" as defined in the Hazardous Materials
      Transportation Act (49 U.S.C. 1801, et seq.); "hazardous substance" as
      defined in the Occupational Safety and Health Act Hazard Communication
      Standard (29 CFR 1910.1200) or as defined in the Comprehensive
      Governmental Response, Compensation and Liability Act, 42 U.S.C. 9601
      (14), or other pollutant or contaminant.

(l)   "Installation Complete Date" means the date on which OS Software or
      transmission systems Software is installed by Seller at the location
      specified in the order and determined by Seller to be ready for Use by
      Customer.

(m)   "Licensed Materials" means the Software and Related Documentation for
      which licenses are granted by Seller under this Agreement; no Source Code
      versions of Software are included in Licensed Materials.

(n)   "OS Software" means the object code Software, for operations systems,
      embodied in any medium, including firmware.

(o)   "Product" means equipment hardware, and parts thereof, but the term does
      not mean Software whether or not such Software is part of Firmware.

(p)   "Related Documentation" means materials useful in connection with Software
      such as, but not limited to, flowcharts, logic diagrams and listings,
      program descriptions and Specifications.

(q)   "Seller's Standard Charges" means Seller's applicable rates and charges
      for labor and materials as determined from Seller's Customer Price Lists
      and other pricing information provided by Seller to Customer, less any
      discounts applicable thereto.


                         Lucent Technologies Proprietary
                                       2
<PAGE>   7

(r)   "Services" means any engineering, installation or repair services to be
      performed by Seller under this Agreement, but the term "Services" does not
      include any services provided by the Professional Services Division of
      Seller's Network Systems Group unless otherwise expressly agreed to in
      writing by the parties.

(s)   "Software" means a computer program consisting of a set of logical
      instructions and tables of information that guide the functioning of a
      processor. Such program may be contained in any medium whatsoever,
      including hardware containing a pattern of bits, representing such
      program. However, the term "Software" does not mean or include such
      medium.

(t)   "Source Code" means any version of Software incorporating high-level or
      assembly language that generally is not directly executable by a
      processor.

(u)   "Specifications" means Seller's or its vendor's technical specifications
      for particular Products or Software furnished hereunder.

(v)   "Statement of Work" (SOW) means the detailed description of the actual
      Services to be performed.

(w)   "Subsidiary" of a company means a corporation the majority of whose shares
      or others securities entitled to vote for election of directors is now or
      hereafter owned or controlled by such company either directly or
      indirectly, but such corporation shall be deemed to be a Subsidiary of
      such company only as long as such ownership or control exists.

(x)   "Turnover" means, with respect to Products and Software to be installed by
      Seller, the point at which Seller has completed the installation and
      notifies Customer that the installation is completed and that Seller has
      confirmed that the installed Product and/or Software comply with Seller's
      specifications. This term does not mean Cutover which is separately
      defined herein.

(y)   "Use," with respect to Licensed Materials means loading the Licensed
      Materials, or any portion thereof, into a Designated Processor for
      execution of the instructions and tables contained in such Licensed
      Materials.

1.2 TERM OF AGREEMENT:

      The term of this Agreement shall commence on the Effective Date and shall
continue in effect thereafter for a period of three (3) years ("Term").

1.3 SCOPE:

(a) The parties acknowledge that Customer intends to obtain financing from [GE
Capital] for its anticipated procurements from Seller under this Agreement (the
"Financing"). Notwithstanding anything contained in this Agreement to the
contrary, this Agreement and the effectiveness hereof are subject to the closing
of the Financing. Until such time as the financing


                         Lucent Technologies Proprietary
                                       3
<PAGE>   8

facility is closed, Customer agrees not to place any purchase orders under this
Agreement and no such orders shall be accepted by Seller. In the event the
Financing is not closed by January 31, 1998, Seller reserves the right to
immediately terminate this Agreement by notifying Customer thereof and,
thereupon, this Agreement shall be null and void and of no further force and
effect.

(b) The terms and conditions of this Agreement shall apply to all transactions
occurring during the Term whereby Products, Licensed Materials or Services are
provided by Seller's Network Systems Group to Customer. Except as expressly
stated in this Agreement, this Agreement shall not apply to any products,
licensed materials or services offered for supply by any of the following
business units or divisions of Seller: Microelectronics, Consumer Products,
Business Communications Systems, Network Wireless division of Network Systems
Group, or the Professional Services division of Network Systems Group. By
placing orders with Seller, including change and/or addition orders, or using
any Products, Licensed Materials, or Services provided hereunder, Customer
agrees to be bound to the terms of this Agreement. Customer understands and
agrees that all Products, Licensed Materials, or Services furnished by Seller to
Customer pursuant to this Agreement shall be for Customer's own internal use in
the United States only. Products, Licensed Materials or Services furnished under
this Agreement are not being supplied for resale and shall not be resold by
Customer.

(c) All firm price quotes made by Seller to Customer shall incorporate the terms
and conditions of this Agreement. Any conflicting terms and conditions of a firm
price quote, signed by an authorized representative of Seller and Customer and
dated after the effective date of this Agreement, will supersede the comparable
terms of this Agreement.

1.4 CUSTOMER RESPONSIBILITY:

Customer shall, at no charge to Seller, provide Seller with such technical
information, data, technical support or assistance as may reasonably be required
by Seller to fulfill its obligations under this Agreement, any subordinate
agreement or order. If Customer fails to provide the technical information,
data, support or assistance, Seller shall be discharged from any such
obligation.

1.5 ORDERS:

All orders submitted by Customer for Products, Licensed Materials, and Services
shall incorporate and be subject to the terms and conditions of this Agreement.
Any order submitted pursuant to a firm price quotation shall include such firm
price quotation number. All orders, including electronic orders, shall contain
the information as detailed below:

      (i)   Complete and correct ship to and bill to address;
      (ii)  The quantity and type of Products, Licensed Materials, and Services
            being ordered;
      (iii) The price;
      (iv)  The requested Delivery Date in accordance with Seller's standard
            interval for the Products, Licensed Materials, and Services being
            ordered. In the event a non


                         Lucent Technologies Proprietary
                                       4
<PAGE>   9

            standard interval has been mutually agreed to by the parties,
            reference to the specific document agreeing to the interval needs to
            be included;
      (v)   The requested completion date in accordance with Seller's standard
            interval for the Products, Licensed Materials, and Services being
            ordered;
      (vi)  Reference to this Agreement;
      (vii) If an order is for Bill and Hold Products, the phrase "Bill and
            Hold" must be clearly and conspicuously stated in the order.

The requested Delivery Date of any order must be in accordance with Seller's
published standard order intervals in effect on the date of receipt of order by
Seller. The current standard order interval is contained herein. Seller reserves
the right to change such standard order intervals without notification to
Customer but only with respect to future orders. Such change shall not affect
orders accepted by Seller prior to the change to the standard order intervals.
Electronic orders shall be binding on Customer notwithstanding the absence of a
signature. All orders are subject to acceptance by Seller. Seller reserves the
right to place any order on hold, delay shipment, and/or reject any order due
to, but not limited to the breach or default by Customer of its obligations
under this Agreement or Customer's insufficient credit limits. Terms and
conditions on Customer's purchase order which are inconsistent with the
provisions of this Agreement and any pre-printed terms and conditions on
Customer's purchase order shall be ineffective, void and of no force and effect.
Orders shall be sent to the following address:

      Lucent Technologies Inc.
      Customer Service
      6701 Roswell Road
      Building D - 3rd Floor
      Atlanta, GA 30328-2501

(b) If an order is for Bill and Hold Products, the phrase "Bill and Hold" must
clearly and conspicuously appear on the Order. In the event Customer orders Bill
and Hold Products, Seller will defer final shipment of such Product(s) until the
final ship date indicated on the purchase order or such final ship date as is
mutually agreed between the parties provided that in no event shall Seller be
obligated to hold Bill and Hold Products longer than one (1) year from the date
of the applicable purchase order. Customer agrees to pay to Seller a monthly
stocking fee for any Bill and Hold Products held beyond the final ship date
indicated on the purchase order or otherwise mutually agreed to date.

<TABLE>
<CAPTION>
================================================================================
          SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
                            INTERVALS (Furnish Only)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
<S>                                 <C>                                         
Switching Systems Products          Twenty Two Weeks
--------------------------------------------------------------------------------
Central Office Power Equipment      Twenty Two Weeks
--------------------------------------------------------------------------------
Transmission Systems Products:
--------------------------------------------------------------------------------
DACS-IV 2000                        Two Weeks
--------------------------------------------------------------------------------
FT-2000 OC-48                       Two Weeks
================================================================================
</TABLE>


                         Lucent Technologies Proprietary
                                       5
<PAGE>   10

<TABLE>
<CAPTION>
================================================================================
          SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE STANDARD ORDERING
                            INTERVALS (Furnish Only)
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
<S>                                     <C>                                     
DDM-2000 OC-3/OC-12                     Two Weeks
--------------------------------------------------------------------------------
DDM-2000 FIBER REACH                    Two Weeks
--------------------------------------------------------------------------------
SLC 2000 Access System                  One Week
--------------------------------------------------------------------------------
SLC 2000 MSDT                           One Week
--------------------------------------------------------------------------------
SLC Series 5 (System and Plug In)       Two Weeks
--------------------------------------------------------------------------------
Other Transmission Products (i.e.,      One Week
DDM Plus, Repeater Cases)
--------------------------------------------------------------------------------
Network Cable Systems Products          Contact Lucent Sales Person
--------------------------------------------------------------------------------
All Other Products                      Contact Lucent Sales Person
--------------------------------------------------------------------------------
Software:
--------------------------------------------------------------------------------
Switching System Software               Same as associated Product
--------------------------------------------------------------------------------
Transmission Systems Software           Same as associated Product
--------------------------------------------------------------------------------
Operations Systems Software             Same as associated Product
--------------------------------------------------------------------------------
All other Software                      Contact Lucent Sales Person
================================================================================
</TABLE>

1.6 CHANGES IN CUSTOMER'S ORDERS:

      Changes by Customer to an order which has been previously accepted by
Seller (a "Change Order") are subject to acceptance by Seller. Change Orders
shall be treated as a separate order and shall follow Seller's change order
process. In the event Seller accepts a Change Order and such change affects
Seller's ability to meet its obligations under the original order, any price (or
discount, if applicable), shipment date or Services completion date quoted by
Seller with respect to such original order is subject to change. Seller will
provide to Customer written quotations and expected completion dates for any
requested Change Orders.

1.7 CHANGES IN PRODUCTS:

      Prior to shipment, Seller may at any time make changes in Products. Seller
may modify the Product(s) drawings and Specifications or substitute Products of
later design. Seller agrees that such modifications or substitutions will not
impact upon Form, Fit, or Function under normal and proper use of the ordered
Product as provided in Seller's Specifications. With respect to changes,
modifications, and substitutions that do impact the Form, Fit, or Function of
the ordered Product, Seller shall notify Customer in writing thirty (30) days
prior to the date the changes become effective. In the event the Customer
objects to the change, Customer shall notify Seller within thirty (30) days from
the date of notice. Upon receipt of notice, Seller shall not furnish modified
Products to Customer on any orders in process.


                         Lucent Technologies Proprietary
                                       6
<PAGE>   11

1.8 PRICES:

(a)   To the extent Customer's order is subject to a firm price quotation made
      by Seller, prices, fees and charges (hereinafter "Prices") shall be as set
      forth in Seller's firm price quotation.

(b)   Except as expressly stated in this Agreement, in all other cases, Prices
      shall be those contained in Seller's Customer Price Lists. The applicable
      Customer Price List shall be the issue that is in effect on the date of
      Seller's receipt of the order. The requested Delivery Date of such order
      must be in accordance with Seller's published shipping or planning
      interval or thirty (30) days from the date of order receipt, whichever is
      longer. Prices for Products and license fees for Licensed Materials to be
      shipped, or Services to be performed beyond the published shipping
      interval will be based upon the date required for order entry by Seller in
      accordance with Customer's requested date and applying the price from the
      Customer Price List as of that date.

(c)   Seller may amend its Prices, other than those subject to firm price
      quotations and, except when applicable Prices are adjusted for changes in
      raw material prices, Seller agrees to provide thirty (30) days written
      notice of any increase in Prices contained in Seller's Customer Price
      Lists. When prices contained in Seller's Customer Price Lists are adjusted
      for changes in raw material prices, Seller's new Prices will be revised
      effective the first day of any given month. The basis for raw material
      adjustments will be provided to Customer upon request.

1.9 INVOICES AND TERMS OF PAYMENT

(a) Payment for Products, Licensed Materials and Services (including
transportation charges and taxes, if applicable) will be billed by Seller when
shipped, or as soon thereafter as practicable. Engineering will be billed upon
main shipment of Products. If Seller is responsible for installation, the final
payment will be invoiced upon Turnover or as soon thereafter as practical. For
furnish only orders the final payment will be invoiced upon shipment or as soon
as practical thereafter. In either case the payment is due for receipt by Seller
within thirty (30) days of the date of the invoice. In the event that Customer
enters into a loan agreement with lender (GE Capital) to finance the procurement
of the Products, Licensed Materials and Services, under this Agreement, then
Seller agrees to accept payment from lender (GE Capital) in satisfaction of
Customer's payment obligation hereunder; however, that the Terms of Payment set
forth in this Section 1.9 shall be complied in full.

(b) For Products, Licensed Materials and Services (including transportation
charges and taxes, if applicable) that are not required to be paid in advance
Seller will invoice Customer, all amounts due for Products and Licensed
Materials upon shipment and all amounts due for Services, upon completion of
Services or, in either event, as soon as practical thereafter. Customer shall
pay such invoiced amounts for receipt by Lucent within thirty (30) days of the
invoice date. Bill and Hold Products will be invoiced by Seller upon the earlier
of (i) completion of assembly at Seller's facility or (ii) upon stocking at
Customer's designated location. Such invoice will serve as Seller's notification
that Bill and Hold Products are complete and ready to be


                         Lucent Technologies Proprietary
                                       7
<PAGE>   12

released by Customer for final shipment. A sample invoice is provided in Exhibit
1 for informational purposes only.

(c) Customer shall pay all amounts due Seller hereunder using Electronic Funds
Transfer ("EFT") whether amounts have been invoiced by Seller or are due as
advance payments. EFT payments by Customer shall be made to the following
account of Seller or such other account as is subsequently designated by Seller
in writing and, concurrent with the EFT payment, Customer shall fax a copy of
the remittal to Seller's Manager Cash Operations at 770-750-4288.

      Chase Manhattan Bank
      New York, New York
      Account Name: Lucent Technologies Inc.
      ACCT. 910144-9099
      ABA 021000021

(d) If Customer fails to pay any invoiced amount when due, the invoiced amount
will be subject to a late payment charge at the rate of one and one half percent
(1-1/2%) per month, or portion thereof, of the amount due (but not to exceed the
maximum lawful rate). Customer agrees to pay Seller's attorneys' fees and other
costs incurred by Seller in the collection of any amounts invoiced hereunder.

(e) Customer agrees to review all invoices furnished by Seller hereunder upon
receipt and, notify Seller of any billing discrepancies within thirty (30) days
of receipt of the applicable invoice. Such inquiries can be directed to Seller
in writing or by telephone. Inquiries shall be made to the telephone number or,
if in writing, to the address identified on the invoice.

1.10 PURCHASE MONEY SECURITY INTEREST:

(a) Seller reserves and Customer agrees that Seller shall have a purchase money
security interest in all Products and Licensed Materials heretofore supplied or
hereafter supplied to Customer by Seller under this Agreement until any and all
payments and charges due Seller under this Agreement including, without
limitation, shipping and installation charges, are paid in full. Seller shall
have the right, at any time during the Term and without notice to Customer, to
file in any state or local jurisdiction such financing statements (e.g., UCC-I
financing statements) as Seller deems necessary to perfect its purchase money
security interest hereunder. Upon request by Seller, Customer hereby agrees to
execute all documents necessary to secure Seller's purchase money security
interest including without limitation, UCC-1 or such other documents Seller
deems reasonably necessary. Notwithstanding the foregoing obligation of Customer
to execute. Customer hereby irrevocably appoints Seller as its attorney-in-fact
for purposes of executing and filing such financing statements and such other
documents prepared by Seller or its designated agent for purposes of perfecting
Seller's security interest hereunder. Customer also agrees that this Agreement
may be filed by Seller in any state or local jurisdiction as a financing
statement (or as other evidence of the Seller's purchase money security
interest).

(b) In addition to any other remedy available to Seller as provided herein, by
common law and by statute, Seller may exercise its right to reclaim all Products
and Licensed Materials sold


                         Lucent Technologies Proprietary
                                       8
<PAGE>   13

to Customer pursuant to UCC-702 or such other applicable provision as it may
exist from state to state, upon discovery of Customer's insolvency, provided
Seller demands in writing reclamation of such goods before ten (10) days after
receipt of such goods by Customer, or if such ten (10) day period expires after
the commencement of a bankruptcy case, before twenty (20) days after receipt of
such goods by the Customer.

1.11 TAXES:

      Customer shall be liable for all taxes and related charges, however
designated, imposed upon or based upon the provision, sale, license or Use of
Products, Licensed Materials or Services levied upon the sale, excluding taxes
on Seller's net income, unless Customer provides Seller with a valid tax exempt
certificate. Seller's failure to collect taxes in accordance herewith shall not
be deemed to be an authorization to resell Products or Services or sublicense
Licensed Materials.

1.12 TRANSPORTATION AND PACKING:

      Seller, in accordance with its normal practices, shall arrange for prepaid
transportation to destinations in the contiguous United States and shall invoice
transportation charges to Customer. Premium transportation will be used only at
Customer's request. Seller shall pack Products for delivery in the contiguous
United States, in accordance with its standard practices for domestic shipments.
Where, in order to meet Customer's requests, Seller packs Products in other than
its normal manner or for destinations outside the contiguous United States,
Customer shall pay the additional charges for such packing and transportation.

1.13 TITLE AND RISK OF LOSS:

      Title to Products only and risk of loss to Products and Licensed Materials
shall pass to Customer upon delivery to the Customer. Title to all Licensed
Materials (whether or not part of Firmware) furnished by Seller, and all copies
thereof made by Customer, including translations, compilations, and partial
copies are, and shall remain, the property of Seller. Title to Products only and
risk of loss for Products and Licensed Material for Bill and Hold Products shall
pass to Customer upon stocking at Seller's facility or Customer's designated
location, whichever occurs earlier. Customer shall notify Seller promptly of any
claim with respect to loss which occurs while Seller has the risk of loss and
shall cooperate in every reasonable way to facilitate the settlement of any
claim. For purposes of this section, "delivery" shall mean the point at which
Seller or Seller's supplier or agent turns over possession of the Product or
Licensed Materials to Customer, Customer's employee, Customer's designated
carrier, Customer's warehouse, or other Customer's agent and not necessarily the
final destination shown on the order.

1.14 WARRANTY

(a) Seller warrants to Customer only, that during the applicable Warranty
Periods set forth below (i) Seller's manufactured products (exclusive of
Software) will be free from defects in


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                                       9
<PAGE>   14

material and workmanship and will conform to Seller's Specifications for such
Products; (ii) Software developed by Seller will be free from those defects
which materially affect performance in accordance with Seller's Specifications;
and (iii) Services will be performed in a workmanlike manner and in accordance
with good usage and accepted practices in the community in which Services are
provided. With respect to Products or Software or partial assembly of Products
furnished by Seller but neither manufactured by Seller nor purchased by Seller
pursuant to its procurement specifications ("Vendor Items"), Seller, to the
extent permitted, does hereby assign to Customer the warranties given to Seller
by its vendor(s) of such Vendor Items.

(b) For purposes of this Agreement the term "Warranty Period" means the period
of time listed below which, unless otherwise stated, commences on date of
shipment or, if installed by Seller the earliest of either: (i) acceptance by
Customer; or (ii) thirty (30) days from the date Seller submits its notice of
completion of its installation; or (iii) the date Customer first puts Products
and/or Licensed Materials into service. For Bill and Hold Products the warranty
will commence upon the date of stocking at Seller's facility or Customer's
designated location. The Warranty Period for any Product or Software (or part
thereof) repaired or replaced under this Section 1.14 is the period listed in
the right column below or the unexpired portion of the new Product Warranty
Period, whichever is longer.

<TABLE>
<CAPTION>
================================================================================
                   SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
                                 WARRANTY PERIOD

--------------------------------------------------------------------------------
                                             Base           Repaired
                                             ----           --------
                                             Period         Product or
                                             ------         ----------
                                             New            Part
                                             ---            ----
                                             Product
                                             -------
--------------------------------------------------------------------------------
<S>                                          <C>            <C>     
Switching Systems Products                   24 Months      6 Months
--------------------------------------------------------------------------------
Central Office Power Equipment:
--------------------------------------------------------------------------------
Associated with Switching Systems            24 Months      6 Months
--------------------------------------------------------------------------------
Not Associated with Switching Systems        12 Months      6 Months
--------------------------------------------------------------------------------
Transmission Systems Products:
--------------------------------------------------------------------------------
DACS-IV 2000,                                60 Months      6 Months
--------------------------------------------------------------------------------
FT-2000 OC-48                                60 Months      6 Months
--------------------------------------------------------------------------------
DDM-2000 OC-3/OC-12                          60 Months      6 Months
--------------------------------------------------------------------------------
DDM-2000 FIBER REACH                         60 Months      6 Months
--------------------------------------------------------------------------------
SLC 2000 Access System                       60 Months      6 Months
--------------------------------------------------------------------------------
SLC 2000 MSDT                                60 Months      6 Months
--------------------------------------------------------------------------------
SLC Series 5 (System and Plug In)            60 Months      6 Months
--------------------------------------------------------------------------------
Other Transmission Products (i.e., DDM       24 Months      6 Months
Plus Repeater Cases)
--------------------------------------------------------------------------------
Network Cable Systems Products               12 Months      3 Months
--------------------------------------------------------------------------------
All Other Products                           2 Months       2 Months
--------------------------------------------------------------------------------
Software:
================================================================================
</TABLE>


                         Lucent Technologies Proprietary
                                       10
<PAGE>   15

<TABLE>
<CAPTION>
================================================================================
                   SELLER'S MANUFACTURED PRODUCTS AND SOFTWARE
                                 WARRANTY PERIOD

--------------------------------------------------------------------------------
                                             Base           Repaired
                                             ----           --------
                                             Period         Product or
                                             ------         ----------
                                             New            Part
                                             ---            ----
                                             Product
                                             -------
--------------------------------------------------------------------------------
<S>                                          <C>            <C>     
Switching System Software                    12 Months      6 Months
--------------------------------------------------------------------------------
Transmission Systems Software                12 Months      6 Months
--------------------------------------------------------------------------------
Operations Systems Software                  3 Months       1 Month
--------------------------------------------------------------------------------
All Other Software                           3 Months       1 Month
================================================================================
</TABLE>

(c) If, under normal and proper use, a defect or non-conformity appears in
Seller's manufactured products or Software during the applicable Warranty Period
and Customer promptly notifies Seller in writing of such defect or
non-conformance and follows Seller's instructions regarding return of defective
or non-conforming Product or Software, Seller, at its option, will either
repair, replace or correct the same without charge at its manufacturing or
repair facility or provide a refund or credit based on the original purchase
price or license fee. If engineering or installation Services prove not to be
performed as warranted within a six (6) month period commencing on the date of
completion of the Services, Seller, at its option, either will correct the
defect or non-conforming Services or render a full or pro-rated refund or credit
based on the original charges for the Services. No Product or Software will be
accepted for repair or replacement without the written authorization of and in
accordance with instructions of Seller. Removal and reinstallation expenses as
well as transportation expenses associated with returning such Product or
Software to Seller shall be borne by Customer. Seller shall pay the costs of
transportation of the repaired or replacing Product or Software to any United
States destination designated by Customer. If Seller determines that returned
Product or Software is not defective, Customer shall pay Seller's costs of
handling, inspecting, testing and transportation and, if applicable, travel and
related expenses. In repairing or replacing any Product, part of Product, or
Software medium under this warranty, Seller may use either new, remanufactured,
reconditioned, refurbished or functionally equivalent Products or parts.
Replaced Products or parts shall become Seller's property.

(d) With respect to Seller's manufactured products which Seller has ascertained
are not readily returnable for repair, Seller, at its option, may elect to
repair or replace the Products at Customer's site. Customer, at its expense,
shall make the Products accessible for repair or replacement and shall restore
the site after Seller has completed its repairs or replacement.

(e) Seller makes no warranty with respect to defective conditions or
non-conformities resulting from any of the following: Customer's modifications,
misuse, neglect, accident or abuse; improper wiring, repairing, splicing,
alteration, installation, storage or maintenance; use in a manner not in
accordance with Seller's or its vendor's Specifications, or operating
instructions or failure of Customer to apply previously applicable Seller's
modifications or corrections. In addition, Seller makes no warranty with respect
to Products which have had their serial numbers


                         Lucent Technologies Proprietary
                                       11
<PAGE>   16

or month and year of manufacture removed, altered and with respect to expendable
items, including, without limitation, fuses, light bulbs, motor brushes and the
like. No warranty is made that Software will run uninterrupted or error free,
and in addition Seller makes no warranty with respect to defects related to
Customer's data base errors.

(f) THE FOREGOING WARRANTIES ARE EXCLUSIVE AND ARE IN LIEU OF ALL OTHER EXPRESS
AND IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. CUSTOMER'S SOLE AND
EXCLUSIVE REMEDY SHALL BE SELLER'S OBLIGATION TO REPAIR, REPLACE, CREDIT, OR
REFUND AS SET FORTH ABOVE IN THIS WARRANTY.

1.15 INFRINGEMENT:

(a) In the event of any claim, action, proceeding or suit by a third party
against Customer alleging an infringement of any United States patent, United
States copyright, or United States trademark, or a violation in the United
States of any trade secret or proprietary rights by reason of the use, in
accordance with Seller's Specifications, of any Product or Licensed Materials
furnished by Seller to Customer under this Agreement. Seller, at its expense,
will defend Customer, subject to the conditions and exceptions stated below.
Seller will reimburse Customer for any cost, expense or attorneys' fees,
incurred at Seller's written request or authorization, and will indemnify
Customer against any liability assessed against Customer by final judgment on
account of such infringement or violation arising out of such use.

(b) If Customer's use shall be enjoined or in Seller's opinion is likely to be
enjoined, Seller will, at its expense and at its option, either (1) replace the
enjoined Product or Licensed Materials furnished pursuant to this Agreement with
a suitable substitute free of any infringement; (2) modify it so that it will be
free of the infringement; or (3) procure for Customer a license or other right
to use it. If none of the foregoing options are practical, Seller will remove
the enjoined Product or Licensed Materials and refund to Customer any amounts
paid to Seller therefor less a reasonable charge for any actual period of use by
Customer.

(c) Customer shall give Seller prompt written notice of all such claims,
actions, proceedings or suits alleging infringement or violation and Seller
shall have full and complete authority to assume the sole defense thereof,
including appeals, and to settle same. Customer shall, upon Seller's request and
at Seller's expense, furnish all information and assistance available to
Customer and cooperate in every reasonable way to facilitate the defense and/or
settlement of any such claim, action, proceeding or suit.

(d) No undertaking of Seller under this section shall extend to any such alleged
infringement or violation to the extent that it: (1) arises from adherence to
design modifications, specifications, drawings, or written instructions which
Seller is directed by Customer to follow, but only if such alleged infringement
or violation does not reside in corresponding commercial Product or Licensed
Materials of Seller's design or selection; or (2) arises from adherence to
instructions to apply Customer's trademark, trade name or other company
identification; or (3) resides in a Product or Licensed Materials which are not
of Seller's origin and which are


                         Lucent Technologies Proprietary
                                       12
<PAGE>   17

furnished by Customer to Seller for use under this Agreement; or (4) relates to
uses of Product or Licensed Materials provided by Seller in combinations with
other Product or Licensed Materials, furnished either by Seller or others, which
combination was not installed, recommended or otherwise approved by Seller. In
the foregoing cases numbered (1) through (4), Customer will defend and save
Seller harmless, subject to the same terms and conditions and exceptions stated
above, with respect to the Seller's rights and obligations under this section.

(e) The liability of Seller and Customer with respect to any and all claims,
actions, proceedings or suits by third parties alleging infringement of patents,
trademarks or copyrights or violation of trade secrets or proprietary rights
because of, or in connection with, any Products or Licensed Materials furnished
pursuant to this Agreement shall be limited to the specific undertakings
contained in this section.

1.16 CUSTOMER'S REMEDIES:

a) CUSTOMER'S EXCLUSIVE REMEDIES AND THE ENTIRE LIABILITY OF SELLER, ITS
AFFILIATES AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS FOR ANY CLAIM,
LOSS, DAMAGE OR EXPENSE OF CUSTOMER OR ANY OTHER ENTITY ARISING OUT OF THIS
AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT, LICENSED MATERIALS, OR
SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF BREACH OF CONTRACT, TORT,
INCLUDING NEGLIGENCE, INDEMNITY, OR STRICT LIABILITY, SHALL BE AS FOLLOWS:

      1) FOR INFRINGEMENT -- THE REMEDY SET FORTH IN THE "INFRINGEMENT" SECTION;

      2) FOR THE NON-PERFORMANCE OF PRODUCTS, SOFTWARE, AND SERVICES DURING THE
      WARRANTY PERIOD -- THE REMEDY SET FORTH IN THE APPLICABLE "WARRANTY"
      SECTION;

      3) FOR TANGIBLE PROPERTY DAMAGE AND PERSONAL INJURY CAUSED BY SELLER'S
      NEGLIGENCE -- THE AMOUNT OF THE PROVEN DIRECT DAMAGES;

      4) FOR EVERYTHING OTHER THAN AS SET FORTH ABOVE -- THE AMOUNT OF THE
      PROVEN DIRECT DAMAGES NOT TO EXCEED $100,000 PER OCCURRENCE INCLUDING
      AWARDED COUNSEL FEES AND COSTS.

b) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, SELLER, ITS AFFILIATES
AND THEIR EMPLOYEES, AND AGENTS, AND ITS SUPPLIERS SHALL NOT BE LIABLE FOR ANY
INCIDENTAL, INDIRECT, OR CONSEQUENTIAL DAMAGES OR LOST PROFITS, REVENUES OR
SAVINGS ARISING OUT OF THIS AGREEMENT, OR THE USE OR PERFORMANCE OF ANY PRODUCT,
LICENSED MATERIALS, OR SERVICES, WHETHER IN AN ACTION FOR OR ARISING OUT OF
BREACH OF CONTRACT, TORT,


                         Lucent Technologies Proprietary
                                       13
<PAGE>   18

INCLUDING NEGLIGENCE, OR STRICT LIABILITY. THIS SECTION, 1.16(B), SHALL SURVIVE
FAILURE OF AN EXCLUSIVE OR LIMITED REMEDY.

c) CUSTOMER SHALL GIVE SELLER PROMPT WRITTEN NOTICE OF ANY CLAIM. ANY ACTION OR
PROCEEDING AGAINST SELLER MUST BE BROUGHT WITHIN TWENTY-FOUR (24) MONTHS AFTER
THE CAUSE OF ACTION ACCRUES.

1.17 USE OF INFORMATION:

      All technical and business information in whatever form recorded which
bears a legend or notice restricting its use, copying, or dissemination or, if
not in tangible form, is described as being proprietary or confidential at the
time of disclosure and is subsequently summarized in a writing so marked and
delivered to the receiving party within thirty (30) days of disclosure to the
receiving party (all hereinafter designated "Information") shall remain the
property of the furnishing party. The furnishing party grants the receiving
party the right to use such Information only for purposes expressly permitted in
this section. Such Information (1) shall not be reproduced or copied, in whole
or part, except for use as authorized in this Agreement; and (2) shall, together
with any full or partial copies thereof, be returned or destroyed when no longer
needed. Moreover, when Seller is the receiving party, Seller shall use such
Information only for the purpose of performing under this Agreement, and when
Customer is the receiving party, Customer shall use such Information only (1) to
order; (2) to evaluate Seller's Products, Licensed Materials and Services; or
(3) to install, operate and maintain the particular Products and Licensed
Materials for which it was originally furnished. Unless the furnishing party
consents in writing, such Information, except for that part, if any, which is
known to the receiving party free of any confidential obligation, or which
becomes generally known to the public through acts not attributable to the
receiving party, shall be held in confidence by the receiving party. The
receiving party may disclose such Information to other persons, upon the
furnishing party's prior written authorization, but solely to perform acts which
this section expressly authorizes the receiving party to perform itself and
further provided such other person agrees in writing (a copy of which writing
will be provided to the furnishing party at its request) to the same conditions
respecting use of Information contained in this section and to any other
reasonable conditions requested by the furnishing party. Customer may provide
Confidential Information to Customer's bankers and investors with a need to know
for the purposes of consummating the transactions contemplated by this
Agreement, under the same conditions respecting use of Confidential Information
contained in this clause, provided such bankers and investors have signed a
Non-Disclosure Agreement reasonably acceptable to Seller.

1.18 DOCUMENTATION:

      Seller shall furnish to Customer, at no additional charge, one (1) copy of
the documentation for Products and/or one (1) copy of the Related Documentation
for Software licensed to Customer. Such documentation shall be that which is
customarily provided by Seller to its Customers at no additional charge. Such
documentation shall be sufficient to enable Customer to operate and maintain
such Products and Software in accordance with Seller's


                         Lucent Technologies Proprietary
                                       14
<PAGE>   19

specifications. Such documentation shall be provided either prior to, included
with, or shortly after shipment of Products and/or Software from Seller to
Customer. Additional copies of such documentation are available at prices set
forth in Sellers Customer Price Lists.

1.19 5ESS(R) DOCUMENTATION:

      Seller will provide to Customer at no charge one (1) copy each of the most
recent text and drawing CD-ROM or one (1) login to the 5ESS(R) Switch
Documentation Dial-Up Service for each new host/standalone Switch site. No
documentation will be provided to RSMs (Remote Site Module) or ORMs (Optical
Remote Module). In addition, Seller will provide updates at no charge to the
host/standalone site for a period of two (2) years following Switch Turnover.
After the initial two (2) year update period, Customer may purchase an update
subscription at the standard subscription rate.

1.20 NOTICES:

(a) Any notice, demand or other communication (other than an order) required, or
which may be given, under this Agreement shall, unless specifically otherwise
provided in this Agreement, be in writing and shall be given or made by
nationally recognized overnight courier service, confirmed facsimile, or
certified mail, return receipt requested and shall be addressed to the
respective parties as follows:

If to Seller:
      Lucent Technologies Inc.
      Global Commercial Markets
      5440 Millstream Road, E2N32
      1-85 & Mt. Hope Church Road
      Mc Leansville, North Carolina 27301
      Attn: Contract Manager

If to Customer:
      Local Fiber, LLC
      121 Erie Canal Drive, Suite A
      Rochester, New York 14626
      Attn: Comptroller

(b) Any such notice shall be effective upon receipt. Each party may change its
designated representative who is to receive communications and notices and/or
the applicable address for such communications and notices by giving notice
thereof to the other party provided herein.

1.21 CANCELLATION OF ORDERS FOR CONVENIENCE:


                         Lucent Technologies Proprietary
                                       15
<PAGE>   20

(a) Customer may, upon prior written notice to Seller and payment to Seller of
the cancellation fee set forth in this Section, cancel an order under this
Agreement or a portion thereof except with respect to Products and Licensed
Materials that have already been shipped and Services that have already been
performed. For Services in process, Customer agrees to pay a cancellation fee
equal to the price for all Services rendered to date, plus Seller's incurred
expenses, including a reasonable profit, for those Services ordered by Customer
and subsequently canceled. For those Products and Licensed Materials not shipped
Customer agrees that it will pay Seller an order cancellation fee as described
below.

<TABLE>
<CAPTION>
================================================================================
Calendar Days Prior to      Percent(%) of Purchase      Percent(%) of Purchase
      Shipment            Price Charged for Products  Price Charged for Products
                            that are NOT Customized       that ARE Customized
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
  Day of Shipment             Full Purchase Price        Full Purchase Price
--------------------------------------------------------------------------------
       <S>                        <C>                            <C>           
       09-01                         50%                         60%
--------------------------------------------------------------------------------
       19-10                         35%                         50%
--------------------------------------------------------------------------------
       29-20                         25%                         35%
--------------------------------------------------------------------------------
       39-30                         20%                         30%
--------------------------------------------------------------------------------
       49-40                         15%                         25%
--------------------------------------------------------------------------------
       54-50                         10%                         20%
--------------------------------------------------------------------------------
       60-55                      No Charge                      10%
================================================================================
</TABLE>

1.22 FORCE MAJEURE:

      Except for payment obligations, neither party shall be held responsible
for any delay or failure in performance to the extent that such delay or failure
is caused by fires, strikes, embargoes, explosions, earthquakes, floods, wars,
water, the elements, labor disputes, government requirements, civil or military
authorities, acts of God or by the public enemy, inability to secure raw
materials or transportation facilities, acts or omissions of carriers or
suppliers, or other causes beyond its control whether or not similar to the
foregoing.

1.23 ASSIGNMENT:

      Except as provided in this clause, neither party shall assign this
Agreement or any right or interest under this Agreement, nor delegate any work
or obligation to be performed under this Agreement (any such assignment or
delegation constituting an "Assignment") without the prior written consent of
the other party, which shall not be unreasonably conditioned, delayed or
withheld. Any attempted assignment in contravention of the provisions of this
paragraph shall be void and ineffective. Nothing shall preclude a party from
employing a subcontractor in carrying out its obligations under this Agreement;
but a party's use of such subcontractor shall not release or discharge the party
from its obligations under this Agreement.

      Notwithstanding the foregoing, nothing herein shall preclude an Assignment
by either party to [an Affiliate] an entity controlling, controlled by or under
common control with, or which acquires or succeeds to ownership of substantially
all of the assets and operations of, such


                         Lucent Technologies Proprietary
                                       16
<PAGE>   21

party, without the consent of the other party (any such Assignment constituting
a "Permitted Assignment"); provided, however, that (a) a party seeking to
perform a Permitted Assignment is not in breach or default of this Agreement and
(b) with respect to a Permitted Assignment by Customer, the assignee is not (i),
in the reasonable opinion of Seller, [materially] inferior in creditworthiness
to Customer or (ii), an entity principally engaged in the manufacture or sale of
telecommunications products or services in competition with Seller.

      In no event shall a Permitted Assignment supersede, or operate to diminish
the rights or increase the obligations of Seller under this Agreement or any
existing agreement between Seller and the assignee for purchase of the Products,
Licensed Materials or Services available for procurement by Customer under this
Agreement ("Preexisting Agreement"). Notwithstanding anything herein contained
to the contrary, no Assignment or Permitted Assignment shall act to release or
discharge Customer or any assignee of its obligations with respect to any
purchase commitment contained in this Agreement or any Preexisting Agreement
("Purchase Commitment") or to modify the terms of such Purchase Commitment. In
the event of a Permitted Assignment to an assignee with a Preexisting Agreement,
the parties agree that upon the full satisfaction of any Purchase Commitments
the assignee shall elect and may thereafter only procure Products, License
Materials, and Services from Seller under this Agreement or the Preexisting
Agreement, but not both. A party that makes any Permitted Assignment shall
provide prompt notice thereof to the other party. For purposes of this clause,
the term "Agreement" includes this Agreement, any subordinate agreement placed
under this Agreement and any order placed under this Agreement or subordinate
agreement.

1.24 TERMINATION OF AGREEMENT FOR BREACH:

      In the event either party is in material breach or default of the terms of
this Agreement and such breach or default continues for a period of ten (10)
days with respect to payment obligations or thirty (30) days with respect to any
other obligations after the receipt of written notice from the other party, then
the party not in breach or default shall have the right to terminate this
Agreement without any charge, obligation or liability except for Products or
Licensed Materials already delivered and Services already performed. The party
not in breach or default shall provide full cooperation to the other party in
every reasonable way to facilitate the remedy of the breach or default hereunder
within the applicable cure period. Notwithstanding the foregoing, if the nature
of the material breach or default is such that it is not a payment obligation
and it is incapable of cure within the foregoing thirty (30) day period, then
the thirty (30) day cure period may be extended for a reasonable period of time
(in no event to exceed an additional thirty (30) days), provided that the party
in breach or default is proceeding diligently and in good faith to effectuate a
cure.

1.25 ARBITRATION:

      If a dispute arises out of or relates to this Agreement, or its breach,
the parties agree to escalate such dispute to their respective senior executives
for good faith negotiations seeking a mutually agreeable resolution. This demand
for escalation shall be in writing and notice shall be


                         Lucent Technologies Proprietary
                                       17
<PAGE>   22

served in accordance with the notice provision of this Agreement. If the dispute
is not resolved through such escalation within fifteen (15) days after the date
of escalation, either party shall have the right to submit the dispute to a sole
mediator selected by the parties or, at any time at the option of a party, to
mediation by the American Arbitration Association ("AAA"). If not thus resolved,
it shall be referred to a sole arbitrator selected by the parties within thirty
(30) days of the mediation or, in the absence of such selection, to AAA
arbitration which shall be governed by the United States Arbitration Act, and
judgment on the award may be entered in any court having jurisdiction. The
arbitrator may determine issues of arbitrability, but may not award punitive
damages or limit, expand or otherwise modify the terms of this Agreement. The
parties, their representatives, other participants and the mediator and
arbitrator shall hold the existence, content and result of mediation and
arbitration in confidence, except as such disclosure may be necessary for the
purpose of recording or otherwise acting upon the arbitrator's award.

1.26 NON-SOLICITATION:

      During the term of this Agreement and for a period of one (1) year from
the termination of this Agreement or a Statement of Work, the parties agree not
to employ, make an offer of employment to, or enter into a consulting
relationship with any employee, subcontractors or consultant of the other party
who is directly involved with the delivery of Services under this Agreement,
except upon the prior written consent of the affected party.

1.27 INDEPENDENT CONTRACTOR:

      All work performed by either party under this Agreement shall be performed
as an independent contractor and not as an agent of the other, and no persons
furnished by the performing party shall be considered the employees or agents of
the other.

1.28 RELEASES VOID:

      Neither party shall require releases or waivers of any personal rights
from representatives or employees of the other in connection with visits to its
premises, nor shall such parties plead such releases or waivers in any action or
proceeding.

1.29 PUBLICITY:

      Neither party shall issue or release for publication any articles,
advertising, or publicity material relating to Products, Licensed Materials, or
Services under this Agreement or mentioning or implying the name, trademarks,
logos, trade name, service mark or other company identification of the other
party or any of its Affiliates or any of its personnel without the prior written
consent of the other party.


                         Lucent Technologies Proprietary
                                       18
<PAGE>   23

1.30 CONFIDENTIALITY OF AGREEMENT:

      Notwithstanding the obligations contained in Section 1.17 (Use of
Information) of this Agreement the parties shall keep all provisions of this
Agreement and any order submitted hereunder (including, without limitation,
prices and pricing related information) confidential except as reasonably
necessary for performance by the parties hereunder and except to the extent
disclosure may be required by applicable laws or regulations, in which latter
case, the party required to make such disclosure shall promptly inform the other
prior to such disclosure in sufficient time to enable such other party to make
known any objections it may have to such disclosure. The disclosing party shall
take all reasonable steps and exercise all reasonable efforts directed by Seller
to secure a protective order, seek confidential treatment, or otherwise assure
that this Agreement and/or any order will be withheld from the public record.

1.31 AMENDMENTS:

      Any supplement, modification or waiver of any provision of this Agreement
must be in writing and signed by authorized representatives of both parties.

1.32 SEVERABILITY:

      If any portion of this Agreement is found to be invalid or unenforceable,
the parties agree that the remaining portions shall remain in effect. The
parties further agree that in the event such invalid or unenforceable portion is
an essential part of this Agreement, they will immediately begin negotiations
for a replacement.

1.33 WAIVER:

      If either party fails to enforce any right or remedy available under this
Agreement, that failure shall not be construed as a waiver of any right or
remedy with respect to any other breach or failure by the other party.

1.34 SURVIVAL:

      The rights and obligations of the parties which by their nature would
continue beyond the termination cancellation, or expiration of this Agreement,
shall survive such termination, cancellation or expiration.

1.35 SECTION HEADINGS:

      The section headings in this Agreement are inserted for convenience only
and are not intended to affect the meaning or interpretation of this Agreement.


                         Lucent Technologies Proprietary
                                       19
<PAGE>   24

1.36 CHOICE OF LAW:

      The construction and interpretation of, and the rights and obligations of
the parties pursuant to this Agreement, shall be governed by the laws of the
State of New York without regard to its conflict of laws provision.

1.37 AMBIGUITIES:

      The parties represent that they are sophisticated businesses with access
to their own legal, financial and business advisors and that each party has had
the opportunity to consult with advisors and that each party has had the
opportunity to consult with advisors of their own choosing before entering into
this Agreement. The parties therefore acknowledge and agree that the rule of law
that ambiguities are construed against the drafter shall not apply to the
interpretation of this Agreement.


                         Lucent Technologies Proprietary
                                       20
<PAGE>   25

                                  2. ARTICLE II

                   PROVISIONS APPLICABLE TO LICENSED MATERIALS

2.1 LICENSE FOR LICENSED MATERIALS:

(a) Upon delivery of Licensed Materials pursuant to this Agreement, Seller
grants to Customer a personal, nontransferable, and nonexclusive license to Use
Licensed Materials on a Designated Processor in the United States for its own
business operations. No license is granted to Customer to Use the Licensed
Materials outside the United States or to sublicense such Licensed Materials
furnished by Seller. Customer shall not reverse engineer, decompile or
disassemble Software furnished as object code to generate corresponding Source
Code. Unless otherwise agreed in writing by Seller, Customer shall not modify
Software furnished by Seller under this Agreement. If the Designated Processor
becomes temporarily inoperative, Customer shall have the right to Use the
Licensed Materials temporarily on a backup processor until operable status is
restored and processing on the backup processor is completed.

(b) Customer shall not copy Software embodied in Firmware. Customer shall not
make any copies of any other Licensed Materials except as necessary in
connection with the rights granted hereunder. Customer shall reproduce and
include any Seller copyright and proprietary notice on all such necessary copies
of the Licensed Materials. Customer shall also mark all media containing such
copies with a warning that the Licensed Materials are subject to restrictions
contained in an agreement between Seller and Customer and that such Licensed
Materials are the property of Seller. Customer shall maintain records of the
number and location of all copies of the Licensed Materials. Customer shall take
appropriate action, by instruction, agreement, or otherwise, with the persons
permitted access to the Licensed Materials so as to enable Customer to satisfy
its obligations under this Agreement. If Customer's license is canceled or
terminated, or when the Licensed Materials are no longer needed by Customer,
Customer shall return all copies of such Licensed Materials to Seller or follow
written disposition instructions provided by Seller.

2.2 CHANGES IN LICENSED MATERIALS:

      Prior to shipment, Seller at its option may at any time modify the
Specifications relating to its Licensed Materials, provided the modifications,
under normal and proper Use, do not materially adversely affect the Use,
function, or performance of the ordered Licensed Materials. Unless otherwise
agreed in writing, such substitution shall not result in any additional charges
to Customer with respect to licenses for which Seller has quoted fees to
Customer.


                         Lucent Technologies Proprietary
                                       21
<PAGE>   26

2.3 CANCELLATION OF LICENSE:

      Notwithstanding any other section in this Agreement to the contrary, if
Customer fails to comply with any of the material terms and conditions of this
Agreement with respect to the Use of Licensed Materials, and such failure is not
corrected within ten (10) days of receipt of written notice thereof by Customer,
Seller, upon written notice to Customer, may cancel any affected license for
Licensed Materials without further notification.

2.4 OPTIONAL SOFTWARE FEATURES:

      Software provided to Customer under this Agreement may contain optional
features which are separately licensed and priced. Customer understands and
agrees that such optional features will not be activated without written
authorization from Seller and Customer's payment of the appropriate license
fees. If, in spite of Customer's best efforts to comply with this restriction,
such features are activated, Customer agrees to so notify Seller within five (5)
business days from the date of Customer's knowledge that such features were
activated and to pay Seller the current license fees charged by Seller for the
activated features, as well as the reasonable cost of money for the period in
which such features were activated.

2.5 ADDITIONAL RIGHTS IN LICENSED MATERIALS:

(a) Upon thirty (30) days advance written notice, Customer may relocate the
Software permanently to a new processor of Customer. This new processor shall
then become the Designated Processor in lieu of the former Designated Processor.

(b) Customer may retain an archival copy of the Software for as long as such
Software is relevant to Customer's operations.

2.6 INSTALLATION OF SOFTWARE:

(a) Where Customer is responsible for Software installation, Seller's sole
responsibility is to deliver the Software to Customer on or before the scheduled
Delivery Date agreed to by Seller. However, if the order specifies that Seller
is responsible for such installation, Seller shall deliver the Software to
Customer in sufficient time for it to be installed on or before the scheduled
Installation Complete Date agreed to by Seller, and Seller shall complete its
installation and associated testing on or before such date.

(b) Where Customer has assumed responsibility for the installation of newly
licensed Software and in the event that Customer encounters installation
difficulties, at Customer's request, Seller will, at the standard rate in effect
at the time of the request, provide technical assistance.

2.7 SOFTWARE ACCEPTANCE:

(a) Prior to Software acceptance by Customer, Customer has the right to operate
the Software furnished by Seller on the Designated Processor solely for the
purpose of conducting


                         Lucent Technologies Proprietary
                                       22
<PAGE>   27

an Acceptance Test (means the test which may be performed by Customer during the
Acceptance Test Period to determine whether Software will be free from defects
which materially affect performance in accordance with the Seller's
Specifications). Unless otherwise agreed by the parties, the Acceptance Test
Period (means the period of time in days agreed to by the parties and specified
in this section) for Software shall be thirty (30) consecutive calendar days
from the ship date if Customer performs installation or from the Installation
Complete Date if Seller performs installation. The Software shall be deemed
accepted by Customer unless Customer notifies Seller in writing to the contrary
within the applicable Acceptance Test Period described above. If Seller receives
written notice from Customer during the Acceptance Test Period that the Software
failed the Acceptance Test, the Acceptance Date (the date on which the Software
successfully completes the Acceptance Test) shall be extended on a day-to-day
basis until such time as the Software passes the Acceptance Test.

(b) If Customer elects in the order not to perform Acceptance Tests for any
Software, the Acceptance Date for such Software shall be the Delivery Date if
not installed by Seller or the Installation Complete Date if installed by
Seller, as applicable.

(c) For any Acceptance Test conducted by Customer on newly licensed Software,
and in the event that Customer encounters difficulties, Seller will, at
Customer's request and for the standard rate in effect at the time of the
request, provide technical assistance to Customer.

(d) If Customer performs installation and elects to perform applicable tests for
any Software, the warranty for such Software shall commence on the Delivery
Date.

2.8 MODIFICATIONS BY CUSTOMER TO USER CONTROLLED MODULES:

      Customer may add to, delete from, or modify user controlled Software
modules or menus as contemplated in the Seller's Related Documentation. Such
changes or modifications, however extensive, shall not affect Seller's title to
the licensed Software. Seller shall have no liability for Customer's errors in
making such changes or modifications.

2.9 ADDITIONAL SOFTWARE RIGHTS FOR 5ESS(R) SWITCH LICENSED MATERIALS

      The following provisions also apply to the granting of licenses by Seller
to Customer for 5ESS(R) Switch Licensed Materials.

(a) Customer may transfer its right-to-use 5ESS(R) Switch Software furnished
under this Agreement without the payment of an additional right-to-use fee by
transferee, except where size sensitive units are a factor. Such transfer can be
made to an end user for their own internal use and only under the following
conditions:

      (i)   Such software shall be used only within the United States; however,
            Seller will not unreasonably withhold its consent to Use outside the
            United States provided that, in


                         Lucent Technologies Proprietary
                                       23
<PAGE>   28

            the sole opinion of the Seller, the proprietary information
            associated with the Use can be adequately protected and any other
            reasonable concerns of Seller are adequately addressed;

      (ii)  Except as otherwise provided in the agreement, the right to use such
            Software may be transferred only together with the 5ESS(R) Switch
            Product with which customer has a right to use such Software, and
            such right to use the Software shall continue to be limited to Use
            with such Product;

      (iii) Before any such Software shall be transferred, Customer shall notify
            Seller of such transfer and the transferee shall have agreed in
            writing (a copy of which will be provided to Seller at its request)
            to keep such Software in confidence and to comply with corresponding
            conditions respecting Use of Licensed Materials as those imposed on
            customer; and

      (iv)  Within the United States, the transferee shall have the same right
            to Software warranty or Software maintenance for such Software as
            the transferor, provided the transferee continues to pay the fees,
            if any, associated with such Software or Software maintenance.

      (v)   In no event shall such transfer be made to any competitor of Seller
            who is in the business of manufacturing comparable systems or to any
            other party who presents a competitive or strategic conflict to
            Seller.

(b) Upon advance written notice to Seller, Customer may remove 5ESS(R) Switch
Software or optional feature packages, which Customer has the right to Use under
this Agreement from one Customer-owned 5ESS(R) Switch Product and relocate them
to another Customer-owned 5ESS(R) Switch Product within the same company as
Customer. Customer shall not be required to pay additional right-to-use fees as
a result of such relocation, except where size sensitive units are a factor.
Seller may charge customer for services requested by customer in support of such
relocation. Such Software shall not be used or transferred to Customer's
affiliate that is a manufacturer of telecommunication products in direct
competition with Seller.

(c) If Seller ceases to maintain a standard, supported version of Software for
the 5ESS(R) Switch Product furnished pursuant to this Agreement, and these
support services are not available from another entity (either working with or
independently from Seller), then Seller shall furnish Customer, under a
confidentiality agreement acceptable to Seller, Seller's then existing Software
Source Code, Software development programs, and associated documentation for
such standard version to the extent necessary for Customer to maintain and
enhance for its own use the standard version of that Software which it has the
right to use under this Agreement.


                         Lucent Technologies Proprietary
                                       24
<PAGE>   29

                                 3. ARTICLE III

      PROVISIONS APPLICABLE TO ENGINEERING, INSTALLATION AND OTHER SERVICES

      GENERAL: The provisions of this Article III shall apply to the Services
ordered by Customer and furnished by Seller under this Agreement.

3.1 SITE REQUIREMENTS:

(a) Customer is solely responsible for ensuring that the installation site is
compliant with any site requirements identified by Seller for the installation
and/or operation of any Products, Licensed Materials, or Services furnished by
Seller under this Agreement. Such site requirements shall include, without
limitation, those site requirements set forth in this Section 3.1 below. Seller
agrees to cooperate with Customer to ensure compliance with all site
requirements, provided that such cooperation shall not require Seller to incur
any out-of-pocket costs unless the parties expressly agree otherwise in writing.

(b) Customer shall be solely responsible for ensuring that the installation site
complies with all applicable laws, orders, and regulations of federal, state and
local governmental entities including, without limitation, those relating to
environmental conditions.

(c) Notwithstanding anything contained in this Agreement to the contrary, Seller
shall have no liability to Customer, its employees, agents, and customers for
any delay by Seller in completion of any installation or other Service to be
provided by Seller under this Agreement if such delay is attributable to the
failure by Customer to comply with any site requirements or to provide any other
items which are the responsibility of Customer under this Article III.

(d) The site requirements which are solely the Customer's responsibility shall
include but are not limited to the following:

      (i)    Participate in a joint site survey with Seller
      (ii)   Interior Space -Clears ten feet (10') from floor to bottom of
             lowest obstruction
      (iii)  Floor Loading (minimum requirements) Structural Analysis always
             required
      (iv)   Power Room 150 lb. per sq. ft
      (v)    Switch Room 100 lb. per sq. ft.
      (vi)   Floor Thickness: In accordance with local seismic requirements for
             the equipment
      (vii)  Conduit access to all floors in building
      (viii) Local exchange carrier cable available
      (ix)   Commercial electrical current
      (x)    Existing building grounding is 5 ohm or less metered
      (xi)   Battery room ventilation in accordance with local requirements
      (xii)  Fire suppression system
      (xiii) Freight access for a 48' trailer off loading equipment.


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<PAGE>   30

3.2 ADDITIONAL ITEMS TO BE PROVIDED BY CUSTOMER:

(a)   Customer will also be responsible for furnishing the items described in
      this Section 3.2 as required by the conditions of the particular
      installation or other on-site Service at no cost to Seller and such items
      are not included in Seller's price for the Services. Seller shall have the
      right to invoice Customer for any costs or expenses incurred by Seller as
      a result of Customer's failure to provide any of these items described in
      this Section 3.2 and all such invoices shall be paid by Customer in
      accordance with this Agreement.

      (i)   Access to Building and Work Site Customer shall provide employees of
            Seller and its subcontractors free access to premises and facilities
            at all hours during the scheduled Service or at such other times as
            are requested by Seller. Customer shall obtain for Seller's
            employees and its subcontractors' employees any identification and
            clearance credentials which are necessary to enable Seller and its
            subcontractors to have access to the work site.

      (ii)  Site Coordination At Seller's request Customer shall coordinate with
            Customer's sub contractors, property managers, Regional Bell
            Operating Company, Local Exchange Carrier and any other parties and
            tenants having rights to the work site or whose participation is
            necessary in order for Seller to perform the applicable Services.

      (iii) Environmental Conditions Prior to the Services start date, Customer
            shall insure that the premises will be dry and free from dust and
            Hazardous Materials, including but not limited to asbestos, and that
            the premises are in such condition as not to be injurious to
            Seller's or its subcontractors' employees or to the Products and
            Licensed Materials to be installed. Prior to Services start date and
            during the performance of the Services, Customer shall, if requested
            by Seller, provide Seller with sufficient data to assist Seller and
            its subcontractors in evaluating the environmental conditions at the
            work site (including without limitation, the presence of Hazardous
            Materials). The price quoted by Seller for Services does not include
            the cost of removal or disposal of the Hazardous Materials from the
            work site. Customer is responsible for the removal and disposal in
            accordance with applicable laws, rules and regulation of the
            Hazardous Materials, including but not limited to asbestos, prior to
            commencement of Services.

      (iv)  Sensitive Equipment Prior to the Services start date, Customer shall
            inform Seller of the presence of any sensitive equipment at the work
            site (e.g., equipment sensitive to static electricity or light).

      (v)   Repairs to Buildings Prior to the Services start date, Customer
            shall make such alterations and repairs to the work site as are
            necessary for proper installation of Products and Licensed
            Materials.


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<PAGE>   31

      (vi)  Building Readiness Prior to the Services start date, Customer shall
            provide extraordinary hauling and hoisting services such as, rigging
            or crane services, if applicable, and shall arrange for traffic
            control, if necessary for the delivery of Products.

      (vii) Openings in Buildings - Customer shall furnish suitable openings in
            buildings, including, without limitation, elevators and windows as
            needed to allow Products to be placed in position, and shall provide
            necessary openings and ducts for cable and conductors in floors and
            walls as designated on engineering drawings furnished by Seller.
            Customer shall fireproof (with steel covers and as otherwise
            required by applicable laws, rules, regulations, and codes) all
            unopened paths throughout such buildings.

     (viii) Surveys Prior to the Services start date, Customer shall provide to
            Seller (and, if requested by Seller, to Seller's subcontractors)
            surveys (describing the physical characteristics, legal limitations,
            and utility locations for the work site) and a legal description of
            the site.

      (ix)  Electrical Current, Heat, Light, and Water Customer shall, in
            amounts no less than that ordinarily furnished for similar purposes
            in a working office, provide electric power, run all leads to
            Seller's power board; provide temperature control and general
            illumination (regular and emergency) in rooms in which services are
            to be performed or Products stored, provide exit lights; and provide
            water and other necessary utilities for the proper execution of
            Services.

      (x)   Building Evacuation Prior to the Services start date, Customer shall
            provide building evacuation plans in case of a fire or other
            emergency.

      (xi)  Material Furnished by Customer Unless expressly stated to the
            contrary, Seller's prices do not include costs for any Customer
            furnished material nor do they include any Seller charges for
            engineering, installation, modification, or repair Services to
            Customer furnished material. New or used material furnished by
            Customer shall be in such condition that it requires no repair and
            no adjustment or test effort in excess of that normal for new
            equipment. Customer assumes all responsibility for the proper
            functioning of such material. Customer shall also provide the
            necessary technical assistance and information for Seller to
            properly install such material.

      (xii) Floor Space and Storage Facilities Customer shall provide, for the
            duration of Services, suitable and easily accessible floor space and
            storage facilities to permit storing of Products and other material,
            tools and other property of Seller and its subcontractors in close
            proximity to where they will be used. Where the Services are to be
            performed outside of a building or in a building under construction,
            Customer shall, in addition to the above requirements, permit or
            secure any necessary


                         Lucent Technologies Proprietary
                                       27
<PAGE>   32

            permission for Seller and its subcontractors to maintain at the work
            site, storage facilities for Products, material, tools, and
            equipment needed to complete the Services. As appropriate Customer
            shall provide Seller's and its subcontractors' personnel access to
            toilet facilities.

     (xiii) Easements, Permits, and Rights of Way Customer shall secure prior
            to the Services start date and shall maintain for the duration of
            the Services all rights-of-way, easements, licenses, and permits and
            such other rights and approvals as are necessary to enable Seller to
            perform the Services including, without limitation, all construction
            and building permits for work to be performed at the work site and
            other areas ancillary to the work site such as sidewalks, streets,
            alleys, and highways.

      (xiv) Security Service Customer shall provide such levels of security as
            are necessary to prevent admission of unauthorized persons to
            building and other areas where installation Services are performed
            and to prevent unauthorized removal of the Products and other
            materials. Seller will inform Customer as to which storage
            facilities at the work site Seller will keep locked. Such storage
            facilities will remain closed to Customer's building surveillance.

      (xv)  Access to Existing Equipment Customer shall permit Seller reasonable
            use of such portions of the existing equipment as are necessary for
            the proper completion of such tests as require coordination with
            existing equipment. Such use shall not interfere with the Customer's
            normal maintenance of equipment.

      (xvi) Grounds Customer shall provide access to suitable and isolated
            building ground as required for Seller's standard grounding of
            equipment. Where installation is performed outside or in a building
            under construction, Customer shall also furnish lightning protection
            ground.

     (xvii) Requirements for Customer Designed Circuits Customer shall furnish
            information covering the proper test and readjust requirements for
            apparatus and shall furnish requirements for circuit performance
            associated with circuits designed by Customer or standard circuits
            modified by Customer's drawings such as alarm and environmental
            circuits.

    (xviii) Cross-Connecting Main Distributing Frames and Installing Heat
            Coils Customer shall install such cross-connections and heat coils
            as are necessary in connection with the Services.

      (xix) Clearing Equipment for Modifications Customer shall remove
            cross-connections, transfer service on trunks and sundry working
            equipment, and make other arrangements required to permit Seller to
            modify existing equipment.


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<PAGE>   33

(b) In the event the joint site survey conducted by the parties pursuant to
Section 3.3.2(a) determines that the necessary requirements are not met at the
commencement of the installation of the Products and the Customer needs to
arrange for alterations and/or repairs, the order will be placed on hold until
such time as requirements are met. During such interval, Seller reserves the
right to determine any schedule and price impacts, to treat such product as Bill
and Hold, or to cancel such order. Customer shall be responsible for and agrees
to pay the applicable cancellation fee if such order is canceled by Seller.

3.3 ITEMS TO BE FURNISHED BY SELLER

3.3.1 ENGINEERING:

(a) General Review Seller will review the following items as Seller deems
appropriate; switching Products (Products and Software); transmission Products
(Products and Software); power/energy equipment hardware; engineering drawings;
site survey; grounding of the switch; appliance outlets; front and rear aisle
lighting as required; timing cables; distributing frame engineering and
equipment; cable rack and hardware; stanchions; end guards auxiliary framing;
existing cable holes; fiber cable protection systems.

(b) Needs Analysis Seller will perform a needs analysis of the Telephone
Equipment Order (TEO) and the Customer's specified requirements to determine the
equipment solution that meets those requirements.

(c) Records Upon Installation Complete, Seller will turn over to Customer a
complete set of records. Such records include but are not limited to wiring
lists, front equipment drawings, assignment drawings, and interface schematics.

3.3.2 INSTALLATION:

(a) Site Survey Prior to the commencement of installation Services, Seller and
Customer will perform a joint site survey to determine whether the installation
site meets the site requirements referenced in Section 3.1 and whether Customer
has provided the items in Section 3.2. Should Seller determine that the site
does not comply with such site requirements or that Customer has not provided
any item required under Section 3.2, Seller shall specify such deficiencies to
Customer in writing. Seller and Customer shall jointly agree on a course of
action to correct such deficiencies prior to the start of installation Services.
During the joint site survey, Seller and Customer shall also jointly agree upon
the layouts and arrangements for the Products and Licensed Materials to be
installed. Upon the start of installation all changes shall be subject to
additional charges.

(b) Method of Procedure Seller shall prepare a detailed Method of Procedure
("MOP") and review with Customer before starting work. Customer shall review the
MOP prepared by Seller and shall give Seller written acceptance of the MOP by
signing a copy thereof prior to the


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<PAGE>   34

Services start date. Any changes to the MOP requested by Customer shall be
agreed upon subject to the Change Order process.

The MOP shall contain the following details:

      (i)   A concise statement that covers the installation Services to be
            performed including the equipment that will be affected and the
            hours that such Services are to be performed;

      (ii)  Specific responsibilities of Seller and Customer;

      (iii) Service protection procedures that include, general service
            protection rules and special service precautions for the specific
            project;

      (iv)  A time and release schedule of the work operations involving working
            equipment and/or circuits in service and;

      (v)   A method of identifying equipment and cabling to ensure that the
            circuits are "cleared" before start of work

      (vi)  A detailed account of the work operations that the installer will
            follow

      (vii) The methodology to be used to halt installation Services if trouble
            occurs and a general procedure to correct/resume work operations;

     (viii) Provide environmental safety concerns, if applicable; 

      (ix)  Obtain Customer signature.

(c) Warehousing, Delivery, Receipt & On-site Storage of Equipment, and General
Cleaning Seller will stage the delivery of Products. Seller's personnel will be
on-site at the time the Products are delivered. Such personnel will accept the
Products, unpack for inventory purposes and inspect such Products for damage.
Seller will resolve all shipping errors inventory discrepancies and damage
issues. This function shall be performed in an area previously designated for
the storage and unpacking of equipment and Product(s). Such area will be
selected based on a location that minimizes movement of material and personnel
through the work site. In the event storage is limited or inadequate, as
determined by Seller, temporary storage facilities such as trailers or
containers may be required. Any fees associated with the procurement of
temporary storage facilities are not included in Seller's quoted prices and
shall be solely the responsibility of the Customer. Materials such as plywood or
masonite will be utilized as necessary, to prevent cable reels, iron work and
other heavy objects from damaging floors, walls and doors. Seller shall perform
general cleaning of the equipment and storage areas (e.g. clearing floors of
debris, packing material, etc.) on a regular basis throughout the installation
period. Rubbish shall be disposed of at Seller's expense and in compliance with
local requirements.

(d) Hardware Assembly Hardware assemblies and overhead cable rack, iron work and
conduit (collectively "Components") will be delivered for specific bays and
cabinets as identified in the firm price quote provided or in the Statement of
Work, attached hereto. Unless included in the SOW, additions of these components
to provide access to other locations (i.e. power rooms, computer rooms,
distributing frames not located with Products, or Products located on separate
floors) will be specifically excluded from the installation Services. Such
additions will only be included in the installation Services for an additional
charge. Seller will place and secure all


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                                       30
<PAGE>   35

ordered Products in the location specified in the engineering specifications.
Such activity includes but is not limited to:

      (i)   Mark and drill floors

      (ii)  Assemble and place floor mounted Products

      (iii) Assemble distribution frames 

      (iv)  Erect frames

      (v)   Align and junction frames
          
      (vi)  Install end guards and covers

      (vii) Assemble and install fiber protection ductwork

     (viii) Mount units and apparatus 

      (ix)  Place batteries

      Seller will also erect supporting hardware compatible with purchased
Products. Such activity includes but is not limited to:

      (i)   Fabricate and install cable racks, bars, rod or stations as
            identified in Statement of Work attached hereto

      (ii)  Erect ladder rack and ladders

      (iii) Open and close existing cable holes and slots. Any new cable to
            facilitate Products designs the responsibility of the Customer

      (iv)  Fabricate and install framing aisle lighting conduit and fittings

      In addition, Seller will place and designate connecting appliances (MDF
terminal blocks, DSX panels, etc.) provided with order. Such as but not limited
to:

      (i)   Stamp and/or affix aisle, shelf and unit designations

      (ii)  Mount and stencil terminal strips

      Seller will also extend lighting, A/C circuits and grounding to include
added Products if Products is ordered in job specification. Such activities
include but are not limited to:

      (i)   Assemble and install lighting fixtures

      (ii)  Install switches and receptacles

(e) Cable and Wire For cable and wire to be installed by Seller, Seller will
run, tag, and secure metallic and fiber optic cables in an unobstructed
environment a maximum of one hundred (100) feet and power cables a maximum of
fifty (50) feet for the Products and apparatus (this specifically excludes
primary power cables, except on power equipment orders) identified in the
Product order or Statement of Work attached hereto. Seller will wire, attach,
terminate and affix all cable and wire including fiber optic cables supplied
with purchased Products. This may include but is not limited to mechanical wire
wrapping, soldering, crimping, plugging in of pre-terminated cables or polishing
of fiber optics for purchased Product. Seller will run alarm cabling, terminate
and test for the identified equipment including Customer provided


                         Lucent Technologies Proprietary
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<PAGE>   36

environmental scan points of fire detection and door entry which are less than
fifty (50) feet away and pre-terminated. Seller will verify all copper wiring
placed by the Seller for continuity to detect and analyze opens, shorts,
reversals, and incorrect wiring. Where pairs, quads or groupings are indicated,
the grouping will be verified. Seller will ensure the functionality and
integrity of all fiber directly associated with the installed Products and the
fiber optic cables installed by Seller within the building structure. Seller
will "Dress" all cabling and wiring and provide physical protection. Seller will
properly protect cables at all "break-off" locations, such as the vertical turns
from the overhead cable rack to bay frame work.

(f) Testing Specific test procedures are dependent upon the type of Product
installed and are identified in the installation guide for the particular
product. To ensure that technical design and performance criteria are being met,
testing shall be performed by Seller to obtain an evaluation of the functional,
operational, electrical and mechanical integrity of all Products installed by
Seller. In general the following tests are required for all Product types
furnished and installed by Seller: Seller's activities associated with testing
will include, but not be limited to the following:

      (i)   Turn on and verify power to installed Products

      (ii)  Load product software and default parameters required to conduct
            local unit loop-back testing to demarcation points.

      (iii) Run and connect test specific cross-connects. Remove upon completion
            of test(s).

      (iv)  Perform all unit and system-level tests to ensure Products pass
            system and technician evoked diagnostics

      (v)   Test functionality of circuit packs required by job, at time of
            original installation, within the installed unit. Testing of spares
            is specifically excluded and will be included only for an additional
            charge.

      (vi)  Test functionality and integrity of Seller installed local alarms.

      (vii) Resolve troubles encountered with Products purchased on order. Refer
            to Customer any trouble found in Customer provided equipment.

      (viii) Maintain test logs and trouble reports and turn over to Customer.

(g) Seller will perform the following Turnover procedures for all installation
Services provided by Seller:

      (i)   Inform Customer of completion of installation cycle

      (ii)  Provide Customer with all drawings, invoices, logs and test results
            per the contract.

      (iii) Remove from Customer premises tools and scrap generated from
            installation effort.

      (iv)  Issue job completion notice to Customer.


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                                       32
<PAGE>   37

3.4 ACCEPTANCE

(a) All installation Services shall be considered complete and ready for
acceptance by Customer on Turnover. Upon completion of the installation, Seller
will submit to Customer a notice of completion or, if Customer has elected
advance-Turnover of subsystems, a notice of completion of advance-Turnover.

(b) Customer shall promptly make its final inspection of substantial conformance
with the Specifications and do everything necessary to expedite acceptance of
the job. Seller will promptly correct any defects for which it is responsible.
All work will be considered as fully accepted unless Seller receives
notification to the contrary within thirty (30) days after submitting its notice
of completion. Notwithstanding the foregoing, Customer shall be deemed to have
accepted any Products and Licensed Materials upon the placement of the same into
service.

3.5 WORK OR SERVICES PERFORMED BY OTHERS:

      Work or services performed at the site by Customer or its other vendors or
contractors shall not interfere with Seller's performance of Services. Seller
shall have no responsibility or liability with respect to such work or Services
performed by others. If Customer or its other vendors or contractors fail to
timely complete the site readiness or if Customer's or its other vendors' or
contractors' work interferes with Seller's performance, the scheduled completion
date of Seller's Services under this Agreement shall be extended as necessary to
compensate for such delay or interference.


                         Lucent Technologies Proprietary
                                       33
<PAGE>   38


                         Lucent Technologies Proprietary
                                       34
<PAGE>   39

                                STATEMENT OF WORK

                             IMPLEMENTATION SCHEDULE

      The parties recognize that the following milestones must be met in order
to keep the project on schedule. Each party agrees to adhere to this schedule
and in the event a circumstance arises that will cause a delay the party
knowledgeable of the delay will notify the other party and the schedule will be
adjusted accordingly.

<TABLE>
<CAPTION>
================================================================================
       Milestone                 Stakeholder                Expected Completion
                                                                    Date
--------------------------------------------------------------------------------
<S>                              <C>                        <C>    
Develop Implementation
Plan
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Identify Project Site

--------------------------------------------------------------------------------
Receive Customer
Purchase Order
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Site Ready
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Switch Software
Questionnaire Complete
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Installation and Testing
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Turnover/Acceptance
================================================================================
</TABLE>

If separately ordered by Customer the following will be included in the
implementation.

<TABLE>
<CAPTION>
================================================================================
       Milestone                 Stakeholder                Expected Completion
                                                                    Date
--------------------------------------------------------------------------------
<S>                              <C>                        <C>    
Network Planning
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cutover
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Monitor
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Maintenance
================================================================================
</TABLE>


                         Lucent Technologies Proprietary
                                       35
<PAGE>   40

                                                                       EXHIBIT 1

                                     INVOICE

                                                    INVOICE NUMBER______________
                                                    INVOICE DATE________________
                                                    ACCOUNT NUMBER______________
                                                    PAGE NUMBER_________________

Lucent Technologies      [LOGO]
       Bell Labs Innovations

SHIP TO:                       BILL TO:

<TABLE>
<CAPTION>
      ------------------------------------------------------------------------------------------------------
      CUSTOMER P.O. #         LUC REFERENCE #     CUSTOMER CODE    TERMS        CONTRACT #           FOB
-------------------------------------------------------------------------------------------------------------------------------
ITEM    LUCENT                          BILL OF                              QUANTITY  QUANTITY
NO.      ORDER   SHIP DATE   SHIP METH  LADING #   PART NUMBER/DESCRIPTION    ORDERED   SHIPPED   UNIT PRICE   PM   TOTAL PRICE
-------------------------------------------------------------------------------------------------------------------------------
<S>    <C>         <C>       <C>        <C>            <C>                   <C>          <C>     <C>          <C> <C>
1      J7888KK     2/2/00                                5ESS Material                     1      $25,000.00   E   $25,000.00
2      J7888KK     2/2/00                                   Spares                         1       $5,000.00   E    $5,000.00
3      J7888KK     2/2/00                                 Engineering                              $2,000.00        $2,000.00
4      J7888KK     2/2/00                                Installation                              $4,000.00        $4,000.00
5      J7888KK     2/2/00                               Transportation                             $1,000.00        $1,000.00


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

                                     -------------------------
QUESTIONS ABOUT YOUR ACCOUNT?        MAKE CHECK PAYABLE TO:     INVOICES ARE PAYABLE                     SUBTOTAL  $36,000.00
CALL:                                Lucent Technologies Inc.   IN U.S. CURRENCY AND         LESS ADVANCE PAYMENT   $9,250.00
                                     P.O. Box 100317            OVERDUE AMOUNT SHALL               TRANSPORTATION   $1,000.00
REMARKS                              Atlanta, GA 30384-0317     BEAR INTEREST AT A REASONABLE                 TAX  
                                     Attn: Accounts Receivable  RATE OR IS SUBJECT TO LATE              TOTAL DUE  $27,750.00
                                     -------------------------  PAYMENT CHARGES PER AGREEMENT
</TABLE>


                         Lucent Technologies Proprietary
                                       36
<PAGE>   41

                                  4. ARTICLE IV

                                ENTIRE AGREEMENT:

4.1 ENTIRE AGREEMENT

      The terms and conditions contained in this General Agreement supersede all
prior oral or written understandings between the parties with respect to the
subject matter hereof and constitute the entire agreement between the parties
with respect to such subject matter. The preprinted terms and conditions on
Customer's purchase orders or Seller's sales forms are deleted. The typed or
handwritten provisions of an order which are consistent with the terms of this
General Agreement along with the terms of this General Agreement shall
constitute the entire Agreement between the parties relating to said order.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives on the date(s) indicated.

LUCENT TECHNOLOGIES INC.                     FIBERNET EQUAL ACCESS, LLC


By: /s/ C.L. Naylor                          By: /s/ J.J. Marchaesi
   ------------------------                     ------------------------

Name: C.L. Naylor                            Name: John J. Marchaesi

Title: AVP-CLEC                              Title: VP Administration

Date: 12/30/97                               Date: 12/19/97


                         Lucent Technologies Proprietary
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