Document:

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                                                                   EXHIBIT 10.25

          INTERCONNECTION AGREEMENT UNDER SECTIONS 251 AND 252 OF THE
                        TELECOMMUNICATIONS ACT OF 1996

                         Dated as of December 18, 1998

                                by and between

                          NEW YORK TELEPHONE COMPANY,
                                     d/b/a
                           BELL ATLANTIC - NEW YORK

                                      and

                           COMMUNITY NETWORKS, INC.
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                                                                      APPENDIX 1

          INTERCONNECTION AGREEMENT UNDER SECTIONS 251 AND 252 OF THE
                        TELECOMMUNICATIONS ACT OF 1996

                           Dated as of April 3, 1998

                                by and between

                           BELL ATLANTIC - NEW YORK

                                      and

                           MGC COMMUNICATIONS, INC.
<PAGE>

       MGC COMMUNICATIONS, INC.- BELL ATLANTIC Interconnection Agreement

                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section                                                                    Page
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<S>                                                                        <C>
1.0       DEFINITIONS.....................................................   2

2.0       INTERPRETATION AND CONSTRUCTION.................................  13

3.0       SCOPE...........................................................  13

4.0       INTERCONNECTION PURSUANT TO SECTION 251(c)(2)...................  14
          4.1    Scope....................................................  14
          4.2    Physical Architecture....................................  15
          4.3    Technical Specifications.................................  16
          4.4    Interconnection in Additional LATAs......................  17

5.0       TRANSMISSION AND ROUTING OF TELEPHONE EXCHANGE SERVICE
          TRAFFIC PURSUANT TO SECTION 251(c)(2)...........................  17
          5.1    Scope of Traffic.........................................  17
          5.2    Switching System Hierarchy...............................  18
          5.3    Trunk Group Architecture and Traffic Routing.............  19
          5.4    Signaling................................................  20
          5.5    Grades of Service........................................  20
          5.6    Measurement and Billing..................................  21
          5.7    Reciprocal Compensation Arrangements -- Section 251(b)(5)  21

6.0       TRANSMISSION AND ROUTING OF EXCHANGE ACCESS TRAFFIC
          PURSUANT TO 251(c)(2)...........................................  23
          6.1    Scope of Traffic.........................................  23
          6.2    Trunk Group Architecture and Traffic Routing.............  23
          6.3    Meet-Point Billing Arrangements..........................  24

7.0       TRANSPORT AND TERMINATION OF OTHER TYPES OF TRAFFIC.............  24
          7.1    Information Services Traffic.............................  24
          7.2    Tandem Transit Service ("Transit Service")...............  26
          7.3    911/E911 Arrangements....................................  27

8.0       NUMBER RESOURCES, RATE CENTERS AND RATING POINTS................  28
</TABLE>

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<TABLE>
<S>                                                                         <C>
9.0       NETWORK MAINTENANCE AND MANAGEMENT; OUTAGES.....................  29
          9.1    Cooperation..............................................  29
          9.2    Responsibility for Following Standards...................  29
          9.3    Interference or Impairment...............................  29
          9.4    Repeated or Willful Noncompliance........................  30
          9.5    Outage Repair Standard...................................  30
          9.6    Notice of Changes -- Section 251(c)(5)...................  30
          9.7    Fraud....................................................  30

10.0      JOINT NETWORK CONFIGURATION AND GROOMING PROCESS; AND
          INSTALLATION, MAINTENANCE, TESTING AND REPAIR...................  31
          10.1   Joint Network Configuration and Grooming Process.........  31
          10.2   Installation, Maintenance, Testing and Repair............  31
          10.3   Network Reliability Council..............................  32
          10.4   Forecasting, Requirements for Trunk Provisioning.........  32
          10.5   Demand Management Forecasts..............................  33

11.0      UNBUNDLED ACCESS -- SECTION 251(c)(3)...........................  33
          11.1   Available Network Elements...............................  34
          11.2   Unbundled Local Loop ("ULL") Types.......................  34
          11.3   Unbundled Switching Elements.............................  36
          11.4   Unbundled Inter Office Facilities........................  36
          11.5   Operations Support Systems...............................  36
          11.6   Limitations on Unbundled Access..........................  36
          11.7   Availability of Other Network Elements on
                 an Unbundled Basis.......................................  37
          11.8   Provisioning of Unbundled Local Loops....................  38
          11.9   Maintenance of Unbundled Network Elements................  39
          11.10  Other Terms and Conditions Including Rates and Charges...  40

12.0      RESALE -- SECTIONS 251(c)(4) and 251(b)(1)......................  40
          12.1   Availability of Wholesale Rates for Resale...............  40
          12.2   Availability of Retail Rates for Resale..................  40
          12.3   Additional Terms Governing Resale and Use of BA Services.  40

13.0      COLLOCATION -- SECTION 251(c)(6)................................  41
          13.6   Dedicated Transit Service................................  43
</TABLE>

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<TABLE>
<S>                                                                         <C>
14.0      NUMBER PORTABILITY -- SECTION 251(b)(2).........................  43
          14.1   Scope....................................................  43
          14.2   Procedures for Providing INP Through Remote
                 Call Forwarding..........................................  44
          14.3   Procedures for Providing INP Through Route Indexing......  45
          14.4   Procedures for Providing INP Through Full NXX
                 Code Migration...........................................  46
          14.5   Other Interim Number Portability Options.................  46
          14.6   Receipt of Terminating Compensation on Traffic
                 to INP'ed Numbers........................................  46
          14.7   Recovery of INP Costs Pursuant to FCC Order
                 and Rulemaking...........................................  47

15.0      DIALING PARITY -- SECTION 251(b)(3).............................  48

16.0      ACCESS TO RIGHTS-OF-WAY -- SECTION 251(b)(4)....................  48

17.0      DATABASES AND SIGNALING.........................................  48

18.0      COORDINATED SERVICE ARRANGEMENTS................................  48
          18.1   Intercept and Referral Announcements.....................  48
          18.2   Coordinated Repair Calls.................................  49
          18.3   Customer Authorization...................................  49

19.0      DIRECTORY SERVICES ARRANGEMENTS.................................  50
          19.1   Directory Listings and Directory Distributions...........  50
          19.2   Directory Assistance and Operator Services...............  52
          19.3   Directory Assistance Call Completion.....................  53
          19.4   Directory Assistance Credits.............................  54
          19.5   Direct Access to Directory Assistance....................  55
          19.6   Inward Operator Services.................................  55
          19.7   Operator Services........................................  56
          19.8   0+ Mechanized Operator Calls (Calling Card,
                 Collect, Bill to Third Number)...........................  57
          19.9   0- Operator Handled Calls (Calling Card, Collect, Bill to
                 Third Number)............................................  57
          19.10  Operator Emergency Bulletin Service......................  58
          19.11  Operator Passthrough Service.............................  58

20.0      COORDINATION WITH TARIFF TERMS..................................  59

21.0      INSURANCE.......................................................  60
</TABLE>

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<TABLE>
<S>                                                                         <C>
22.0      TERM AND TERMINATION............................................  61

23.0      DISCLAIMER OF REPRESENTATIONS AND WARRANTIES....................  61

24.0      CANCELLATION CHARGES............................................  62

25.0      INDEMNIFICATION.................................................  62

26.0      LIMITATION OF LIABILITY.........................................  63

27.0      PERFORMANCE STANDARDS FOR SPECIFIED ACTIVITIES..................  64
          27.1   Performance Standards....................................  64
          27.2   Performance Reporting....................................  64

28.0      COMPLIANCE WITH LAWS; REGULATORY APPROVAL.......................  64

29.0      MISCELLANEOUS...................................................  66
          29.1   Authorization............................................  66
          29.2   Independent Contractor...................................  66
          29.3   Force Majeure............................................  66
          29.4   Confidentiality..........................................  67
          29.5   Choice of Law............................................  68
          29.6   Taxes....................................................  68
          29.7   Assignment...............................................  69
          29.8   Billing and Payment; Disputed Amounts....................  69
          29.9   Dispute Resolution.......................................  70
          29.10  Notices..................................................  72
          29.11  Section 252(i) Obligations...............................  73
          29.12  Joint Work Product.......................................  73
          29.13  No Third Party Beneficiaries; Disclaimer of Agency.......  73
          29.14  No License...............................................  74
          29.15  Technology Upgrades......................................  75
          29.16  Survival.................................................  75
          29.17  Entire Agreement.........................................  75
          29.18  Counterparts.............................................  75
          29.19  Modification, Amendment, Supplement, or Waiver...........  75
          29.20  Successors and Assigns...................................  76
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<TABLE>
          <S>                                                               <C>
          29.21  Publicity and Use of Trademarks or Service Marks.........  76
          29.22  Restructured/New Rates...................................  76
          29.23  Integrity of BELL ATLANTIC Network.......................  76
</TABLE>

LIST OF SCHEDULES AND EXHIBITS

Schedules
---------

Schedule 1.0        Certain Terms As Defined in the Act

Schedule 4.0        Network Interconnection Schedule

Schedule 7.1.4      Billing Arrangements for Variable-Rated Information Services
                    Calls

Exhibits
--------

Exhibit A           Bell Atlantic - New York and MGC Pricing Schedule

Exhibit B           Network Element Bona Fide Request

                                      -v-
<PAGE>

       MGC COMMUNICATIONS, INC.-BELL ATLANTIC Interconnection Agreement

          INTERCONNECTION AGREEMENT UNDER SECTIONS 251 AND 252 OF THE
                        TELECOMMUNICATIONS ACT OF 1996

     This Interconnection Agreement under Sections 251 and 252 of the
Telecommunications Act of 1996 ("Agreement"), is effective as of the Third day
of April, 1998 (the "Effective Date"), by and between New York Telephone Company
d/b/a Bell Atlantic-New York ("BA" or "Bell Atlantic"), a New York corporation
with offices at 1095 Avenue of the Americas, New York NY 10036, and MGC
Communications, Inc. ("MGC"), a Nevada corporation, with offices at 3301 North
Buffalo Drive, Las Vegas, Nevada 89129.

     WHEREAS, the Parties want to interconnect their networks at mutually agreed
upon points of interconnection to provide Telephone Exchange Services, Switched
Exchange Access Services, and other Telecommunications Services (all as defined
below) to their respective customers;

     WHEREAS, the Parties are entering into this Agreement to set forth the
respective obligations of the Parties and the terms and conditions under which
the Parties will interconnect their networks and provide other services as
required by the Act (as defined below) and additional services as set forth
herein; and

     WHEREAS, Sections 251, 252, and 271 of the Telecommunications Act of 1996
have specific requirements for interconnection, unbundling, and service resale,
commonly referred to as the "Checklist", and the Parties intend that this
Agreement meet those Checklist requirements.

     NOW, THEREFORE, in consideration of the mutual provisions contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, MGC and BA hereby agree as follows:

     This Agreement sets forth the terms, conditions and pricing under which BA
and MGC (individually, a "Party" and collectively, the "Parties") will offer and
provide to each other network Interconnection, access to Network Elements,
ancillary services, and wholesale Telecommunications Services available for
resale within each LATA in which they both operate within New York State. As
such, this Agreement is an integrated package that reflects a balancing of
interests critical to the Parties. It will be submitted to the New York Public
Service Commission, and the Parties will specifically request that the
Commission refrain from taking any action to change, suspend or otherwise delay
implementation of the Agreement. So long as the Agreement remains in effect,
neither Party shall advocate before any legislative, regulatory, or other public
forum that any terms of this Agreement be modified or eliminated, unless
mutually agreed to by the Parties.
<PAGE>

 1.0 DEFINITIONS

     As used in this Agreement, the following terms shall have the meanings
specified below in this Section 1.0. For convenience of reference only, the
definitions of certain terms that are As Defined in the Act (as defined below)
are set forth on Schedule 1.0. Schedule 1.0 sets forth the definitions of such
terms as of the date specified on such Schedule and neither Schedule 1.0 nor any
revision, amendment or supplement thereof intended to reflect any revised or
subsequent interpretation of any term that is set forth in the Act is intended
to be a part of or to affect the meaning or interpretation of this Agreement.

     1.1  "Act" means the Communications Act of 1934 (47 U.S.C.(S)151 et seq.)
                                                                      ------
as amended by the Telecommunications Act of 1996, and as from time to time
interpreted in the duly authorized rules and regulations of the FCC or a
Commission within its state of jurisdiction.

     1.2  "ADSL" or "Asymmetrical Digital Subscriber Line" is a digital loop
transmission technology which permits the transmission of up to 6 Mbps
downstream (from the CO to the end-user customer) and up to 640 kbps digital
signal upstream (from the end-user customer to the CO).

     1.3  "Affiliate" is As Defined in the Act.

     1.4  "Agreement" means this Interconnection Agreement under Sections 251
and 252 of the Act and all the Exhibits, Schedules, addenda, and attachments
referenced herein and/or appended hereto.

     1.5  "Agreement for Switched Access Meet Point Billing" means the Agreement
for Switched Access Meet Point Billing between the Parties.

     1.6  "Ancillary Traffic" means all traffic that is destined for ancillary
services, or that may have special billing requirements, including but not
limited to the following: BLV/BLVI, Directory Assistance, 911/E911, Operator
Services (IntraLATA call completion), IntraLATA third party, collect and calling
card, 800/888 database query, LIDB, and information services requiring special
billing arrangements between the Parties.

     1.7  "Applicable Laws" or "Applicable Law" means all laws, regulations, and
orders applicable to each Party's performance of its obligations hereunder.

                                      -2-
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     1.8   "As Defined in the Act" means as specifically defined by the Act and
as from time to time interpreted in the duly authorized rules and regulations of
the FCC or the Commission.

     1.9   "As Described in the Act" means as described in or required by the
Act and as from time to time interpreted in the duly authorized rules and
regulations of the FCC or the Commission.

     1.10  "Automatic Number Identification" or "ANI" means a Feature Group D
signaling parameter which refers to the number transmitted through a network
identifying the billing number of the calling party.

     1.11  "Bona Fide Request" or "BFR" means the process described on Exhibit B
that prescribes the terms and conditions relating to a Party's request that the
other Party provide a BFR Item (as defined in Exhibit B) not otherwise provided
by the terms of this Agreement.

     1.12  "Busy Line Verification" or "BLV" means an operator request for a
status check on the line of a called party.  The request is made by one Party's
operator to an operator of the other Party.  The verification of the status
check is provided to the requesting operator.

     1.13  "Busy Line Verification Interrupt" or "BLVI" means a service that may
be requested and provided when Busy Line Verification has determined that a line
is busy due to an ongoing call. BLVI is an operator interruption of that ongoing
call to inform the called party that a calling party is seeking to complete his
or her call to the called party.

     1.14  "Calling Party Number" or "CPN" is a Common Channel Signaling ("CCS")
parameter which refers to the number transmitted through a network identifying
the calling Party.

     1.15  "Central Office Switch" means a switch used to provide
Telecommunications Services, including, but not limited to:

           (a) "End Office Switch" or "End Office" is a switching entity that is
     used to terminate Customer station Loops for the purpose of Interconnection
     to each other and to trunks; and

           (b) "Tandem Office Switch" or "Tandem Office" or "Tandem" is a
     switching entity that has billing and recording capabilities and is used to
     connect and switch trunk circuits between and among End Office Switches and
     between and among

                                      -3-
<PAGE>

     End Office Switches and carriers' aggregation points, points of
     termination, or points of presence, and to provide Switched Exchange Access
     Services.

     A Central Office Switch may also be employed as a combination End
Office/Tandem Office Switch.

     1.16  "CLASS Features" means certain CCS-based features available to
Customers including, but not limited to: Automatic Call Back; Call Trace; Caller
Identification; Call Return and future CCS-based offerings.

     1.17  "Collocation" means an arrangement whereby one Party's (the
"Collocating Party") facilities are terminated in its equipment necessary for
Interconnection or for access to Network Elements offered by the second Party on
an unbundled basis that has been installed and maintained at the premises of a
second Party (the "Housing Party"). For purposes of Collocation, the "premises"
of a Housing Party is limited to a Housing Party Wire Center, other mutually
agreed-upon locations of the Housing Party, or any location for which
Collocation has been ordered by the FCC or Commission. Collocation may be
"physical" or "virtual". In "Physical Collocation", the Collocating Party
installs and maintains its own equipment in the Housing Party's premises. In
"Virtual Collocation", the Housing Party owns, installs, and maintains equipment
dedicated to use by the Collocating Party in the Housing Party's premises. BA
currently provides Collocation under terms, rates, and conditions as described
in tariffs on file or soon to be filed with the FCC or the Commission.

     1.18  "Commission" or "PSC" means the New York State Public Service
Commission.

     1.19  "Common Channel Signaling" or "CCS" means the signaling system,
developed for use between switching systems with stored-program control, in
which all of the signaling information for one or more groups of trunks is
transmitted over a dedicated high-speed data link rather than on a per-trunk
basis and, unless otherwise agreed by the Parties, the CCS used by the Parties
shall be SS7.

     1.20  "Competitive Local Exchange Carrier" or "CLEC" means any Local
Exchange Carrier other than BA, operating as such in BA's service territory in
New York. MGC is or will shortly become a CLEC.

     1.21  "Cross Connection" means a jumper cable or similar connection
provided pursuant to Collocation at the Digital Signal Cross Connect, Main
Distribution Frame or other

                                      -4-
<PAGE>

suitable frame or panel between (i) the Collocating Party's equipment and (ii)
the equipment or facilities of the Housing Party.

     1.22  "Customer" means a third-Party residence or business that subscribes
to Telecommunications Services provided by either of the Parties.

     1.23  "Customer Proprietary Network Information" or "CPNI" is as Defined in
the Act.

     1.24  "Dialing Parity" is As Defined in the Act. As used in this Agreement,
Dialing Parity refers to both Local Dialing Parity and Toll Dialing Parity.
"Local Dialing Parity" means the ability of Telephone Exchange Service Customers
of one LEC to select a provider and make local calls without dialing extra
digits. "Toll Dialing Parity" means the ability of Telephone Exchange Service
Customers of a LEC to place toll calls (inter or IntraLATA) which are routed to
a toll carrier (IntraLATA or InterLATA) of their selection without dialing
access codes or additional digits and with no unreasonable dialing delay.

     1.25  "Digital Signal Level" means one of several transmission rates in the
time-division multiplex hierarchy.

     1.26  "Digital Signal Level 0" or "DS0" means the 64 Kbps zero-level signal
in the time-division multiplex hierarchy.

     1.27  "Digital Signal Level 1" or "DS1" means the 1.544 Mbps first-level
signal in the time-division multiplex hierarchy.  In the time-division
multiplexing hierarchy of the telephone network, DS1 is the initial level of
multiplexing.

     1.28  "Digital Signal Level 3" or "DS3" means the 44.736 Mbps third-level
in the time-division multiplex hierarchy. In the time-division multiplexing
hierarchy of the telephone network, DS3 is defined as the third level of
multiplexing.

     1.29  "Exchange Access" is As Defined in the Act.

     1.30  "Exchange Message Record" or "EMR" means the standard used for
exchange of telecommunications message information among Telecommunications
Carriers for billable, nonbillable, sample, settlement and study data. EMR
format is contained in Bellcore Practice BR-010-200-010 CRIS Exchange Message
Record, a Bell Communications Research, Inc. ("Bellcore") document that defines
industry standards for Exchange Message Records.

                                      -5-
<PAGE>

     1.31  "FCC" means the Federal Communications Commission.

     1.32  "FCC Regulations" means Title 47 of the Code of Federal Regulations.

     1.33  "Fiber Meet" means an Interconnection architecture method whereby the
Parties physically Interconnect their networks via an optical fiber interface
(as opposed to an electrical interface) at a mutually agreed upon location.

     1.34  HDSL is a digital loop transmission technology which permits the
transmission of up to 768 kbps simultaneously in both directions on a single
non-loaded, twisted copper pair or up to 1544 kbps simultaneously in both
directions on two non-loaded, twisted copper pairs.

     1.35  "Incumbent Local Exchange Carrier" or "ILEC" is As Defined in the
Act. For purposes of this Agreement, BA is an Incumbent Local Exchange Carrier.

     1.36  "Independent Telephone Company" or "ITC" means any entity other than
BA which, with respect to its operations within [STATE), is an Incumbent Local
Exchange Carrier.

     1.37  "Information Services" is As Defined in the Act.

     1.38  "Information Service Traffic" means Local Traffic or IntraLATA Toll
Traffic which originates on a Telephone Exchange Service line and which is
addressed to an information service provided over a Party's switched voice
information services platform (i.e., 976, 550, 540, 970, 940).
                              -----

     1.39  "Inside Wire" or "Inside Wiring" means all wire, cable, terminals,
hardware, and other equipment or materials on the Customer's side of the Rate
Demarcation Point.

     1.40  "Integrated Digital Loop Carrier" or "IDLC" means a subscriber loop
carrier system which integrates within the switch at a DS1 level that is twenty-
four (24) loop transmission paths combined into a 1.544 Mbps digital signal.

     1.41  "Integrated Services Digital Network" or "ISDN" means a switched
network service that provides end-to-end digital connectivity for the
simultaneous transmission of voice and data. Basic Rate Interface-ISDN (BRI-
ISDN) provides for a digital transmission of two 64 Kbps bearer channels and one
16 Kbps data and signaling channel (2B+D). Primary Rate Interface-ISDN ("PRI-
ISDN") provides for digital transmission of twenty three (23) 64 kbps bearer
channels and one (1) 64 kpbs data and signaling channel (23 B+D).

                                      -6-
<PAGE>

     1.42  "Interconnection" is As Described in the Act and refers to the
connection of separate pieces of equipment or transmission facilities within,
between, or among networks for the purpose of transmission and routing of
Telephone Exchange Service traffic and Exchange Access traffic.

     1.43  "Interexchange Carrier" or "IXC" means a carrier that provides,
directly or indirectly, InterLATA or IntraLATA Telephone Toll Services.

     1.44  "Interim Telecommunications Number Portability" or "INP" is As
Described in the Act.

     1.45  "InterLATA Service" is As Defined in the Act.

     1.46  "IntraLATA Toll Traffic" means those intraLATA calls that are not
defined as Local Traffic in this Agreement.

     1.47  "Line Side" means an End Office Switch connection that provides
transmission, switching and optional features suitable for Customer connection
to the public switched network, including loop start supervision, ground start
supervision, and signaling for basic rate ISDN service.

     1.48  "Local Access and Transport Area" or "LATA" is As Defined in the Act.

     1.49  "Local Exchange Carrier" or "LEC" is As Defined in the Act.  The
Parties to this Agreement are or will shortly become Local Exchange Carriers.

     1.50  "Local Traffic", means traffic that is originated by a Customer of
one Party on that Party's network and terminates to a Customer of the other
Party on that other Party's network, within a given local calling area, or
expanded area service ("EAS") area, as defined in BA's effective Customer
tariffs, or, if the Commission has defined local calling areas applicable to all
LEC's, then as so defined by the Commission.

     1.51  "Main Distribution Frame" or "MDF" means the ultimate point at which
outside plant facilities terminate within a Wire Center, for interconnection to
other telecommunications facilities within the Wire Center.

                                      -7-
<PAGE>

     1.52  "Meet-Point Billing" or "MPB" means the process whereby each Party
bills the appropriate tariffed rate for its portion of a jointly provided
Switched Exchange Access Service as agreed to in the Agreement for Switched
Access Meet Point Billing.

     1.53  "Network Element" is As Defined in the Act.

     1.54  "Network Interface Device" or "NID" means the BA-provided interface
terminating BA's telecommunications network on the property where the Customer's
service is located at a point determined by BA.

     1.55  "North American Numbering Plan" or "NANP" means the numbering plan
used in the United States, Canada, Bermuda, Puerto Rico and certain Caribbean
Islands. The NANP format is a 10-digit number that consists of a 3-digit NPA
code (commonly referred to as the area code), followed by a 3-digit NXX code and
4-digit line number.

     1.56  "Numbering Plan Area", or "NPA" is also sometimes referred to as an
area code. there are two general categories of NPAs. "Geographic NPAs" and "Non-
Geographic NPAs". A Geographic NPA is associated with a defined geographic area,
and all telephone numbers bearing such NPA are associated with services provided
within that geographic area. A Non-Geographic NPA, also known as a "Service
Access Code" or "SAC Code", is typically associated with a specialized
telecommunications service which may be provided across multiple geographic NPA
areas; 800, 900, 700, 500 and 888 are examples of Non-Geographic NPAs.

     1.57  "Number Portability" or "NP" is As Defined in the Act.

     1.58  "NXX", "NXX Code", or "End Office Code" means the three-digit switch
entity indicator (i.e. the first three digits of a seven digit telephone
number).

     1.59  "Party" means either BA or MGC and "Parties" means BA and MGC.

     1.60  "Permanent Number Portability" or "PNP" means the use of a database
or other technical solution that comports with regulations issued by the FCC to
provide Number Portability for all customers and service providers.

     1.61  "Port Element" or "Port" means a termination on a Central Office
Switch that permits Customers to send or receive Telecommunications over the
public switched network, but does not include switch features or switching
functionality.

                                      -8-
<PAGE>

     1.62  "POT Bay" or "Point of Termination Bay" means the intermediate
distributing frame system which serves as the point of demarcation for
collocated Interconnection.

     1.63  "Rate Center" or "Rate Center Area" or "Exchange Area" means the
geographic area that has been identified by a given LEC as being associated with
a particular NPA-NXX code which has been assigned to the LEC for its provision
of Telephone Exchange Services. The Rate Center Area is the exclusive geographic
area which the LEC has identified as the area within which it will provide
Telephone Exchange Services bearing the particular NPA-NXX designation
associated with the specific Rate Center Area. A "Rate Center Point" is the
finite geographic point identified by a specific V&H coordinate (as defined in
Bellcore Special Report SR-TSV-002275), located within the Rate Center Area and
used by that LEC to measure distance for the purpose of billing Customers for
distance sensitive Telephone Exchange Services and Toll Traffic. Rate Centers
will be identical for each Party until such time as MGC is permitted by an
appropriate regulatory body to create its own Rate Centers within an area.

     1.64  "Rate Demarcation Point" means the point where network access
recurring charges and BA responsibility stop and beyond which Customer
responsibility begins, determined in accordance with FCC rules and BA standard
operating practices.

     1.65  "Rating Point" or "Routing Point" means a specific geographic point
identified by a specific V&H coordinate.  The Rating Point is used to route
inbound traffic to specified NPA-NXXs and to calculate mileage measurements for
the distance-sensitive transport charges of switched access services.  Pursuant
to Bell Communications Research, Inc. ("Bellcore") Practice BR 795-100-100 (the
"Bellcore Practice"), the Rating Point may be an End Office location. or a "LEC
Consortium Point of Interconnection." Pursuant to that same Bellcore Practice,
each "LEC Consortium Point of Interconnection" shall be designated by a common
language location identifier ("CLLI") code with (x)KD in positions 9, 10, 11,
where (x) may be any alphanumeric A-Z or 0-9.  The Rating Point must be located
within the LATA in which the corresponding NPA-NXX is located.  However, the
Rating Point associated with each NPA-NXX need not be the same as the
corresponding Rate Center Point, nor must it be located within the corresponding
Rate Center Area, nor must there be a unique and separate Rating Point
corresponding to each unique and separate Rate Center.

     1.66  "Reciprocal Compensation" is As Described in the Act, and refers to
the payment arrangements that recover costs incurred for the transport and
termination of Reciprocal Compensation Traffic originating on one Party's
network and terminating on the other Party's network.

                                      -9-
<PAGE>

     1.67  "Reciprocal Compensation Call" or "Reciprocal Compensation Traffic"
means a Telephone Exchange Service Call completed between the Parties, which
qualifies for Reciprocal Compensation pursuant to the terms of this Agreement
and prevailing Commission or FCC rules that may exist.

     1.68  "Route Indexing" means the provision of Interim Number Portability
through the use of direct trunks provisioned between end offices of BA and MGC
over which inbound traffic to a ported number will be routed.

     1.69  "Service Control Point" or "SCP" means a node in the Common Channel
Signaling network to which informational requests for service handling, such as
routing, are directed and processed.  The SCP is a real time database system
that, based on a query from a service switching point and via a Signaling
Transfer Point, performs subscriber or application-specific service logic, and
then sends instructions back to the SSP on how to continue call processing.

     1.70  "Signaling Transfer Point" or "STP" means a specialized switch that
provides SS7 network access and performs SS7 message routing and screening.

     1.71  "Single Bill/Multiple Tariff' shall mean that one bill is rendered to
the IXC from all LECs who are jointly providing access service.  A single bill
consists of all rate elements applicable to access services billed on one
statement of charges under one billing account number using each Party's
appropriate access tariffs.  The bill could be rendered by or on behalf of,
either of the Parties.

     1.72  "Strapping" means the act of installing a permanent connection
between a point of termination bay and a collocated interconnector's physical
Collocation node.

     1.73  "Switched Access Detail Usage Data" means a category 1101XX record as
defined in the EMR Bellcore Practice BR-010-200-100.

     1.74  "Switched Access Summary Usage Data" means a category 1150XX record
as defined in the EMR Bellcore Practice BR-010-200-010.

     1.75  "Switched Exchange Access Service" means the offering of transmission
or switching services to Telecommunications Carriers for the purpose of the
origination or termination of Telephone Toll Service. Switched Exchange Access
Services include but may not

                                      -10-
<PAGE>

be limited to: Feature Group A, Feature Group B, Feature Group D, 700 access,
800 access, 888 access, and 900 access.

     1.76  "Switching Element" is the unbundled Network Element that provides a
CLEC the ability to use switching functionality in a BA End Office switch,
including all vertical services that are available on that switch, to provide
Telephone Exchange Service to its end user customer(s).

     1.77  "Synchronous Optical Network" or "SONET" means an optical interface
standard that allows inter-networking of transmission products from multiple
vendors. The base transmission rate is 51.84 Mbps (OC-1/STS-1) and higher rates
are direct multiples of the base rate.

     1.78  "Tariff" means any applicable federal or state tariff of a Party, or
standard agreement or other document that sets forth the generally available
terms and conditions, each as may be amended by the Party from time to time,
under which a Party offers a particular service, facility, or arrangement. A
Tariff shall not include BA's "Statement of Generally Available Terms and
Conditions for Interconnection, Unbundled Network Elements, Ancillary Services
and Resale of Telecommunications Services" which has been approved or is pending
approval by the Commission pursuant to Section 252(f) of the Communications Act
of 1934, 47 U.S.C. (S)252(f).

     1.79  "Technically Feasible Point" is As Described in the Act.

     1.80  "Telecommunications" is As Defined in the Act.

     1.81  "Telecommunications Act" means the Telecommunications Act of 1996 and
any rules and regulations promulgated thereunder.

     1.82  "Telecommunications Carrier" is As Defined in the Act.

     1.83  "Telecommunications Service" is As Defined in the Act.

     1.84  "Telephone Exchange Service" sometimes also referred to as "Exchange
Service," is As Defined in the Act. Telephone Exchange Service generally
provides the Customer with a telephonic connection to, and a unique telephone
number address on, the public switched telecommunications network, and enables
such Customer to place or receive calls to all other stations on the public
switched telecommunications network.

                                      -11-
<PAGE>

     1.85  "Telephone Exchange Service Call" or "Telephone Exchange Service
Traffic" means a call completed between two Telephone Exchange Service Customers
of the Parties located in the same LATA, originated on one Party's network and
terminated on the other Party's network where such call was not carried by a
third Party as either a presubscribed call (1+) or a casual dialed (10XXX) or
(101XXX) call.  Telephone Exchange Service Traffic is transported over Traffic
Exchange Trunks.

     1.86  "Telephone Toll Service" (or "Toll Traffic"), is as defined in the
Act.

     1.87  "Transit Traffic" means any traffic that originates from or
terminates at MGC's network, "transits" BA's network substantially unchanged,
and terminates to or originates from a third carrier's network, as the case may
be. "Transit Service" provides MGC with the ability to use its connection to a
BA Tandem for the delivery of calls which originate or terminate with MGC and
terminate or originate from a carrier other than BA, such as another CLEC, a LEC
other than BA, or a wireless carrier. In these cases, neither the originating
nor terminating Customer is a Customer of BA. This service is provided through
BA's Tandems and applies only where the terminating End Office of the third
carrier subtends the BA Tandem. "Transit Traffic" and "Transit Service" do not
include or apply to traffic that is subject to an effective Meet-Point Billing
arrangement.

     1.88  "Trunk Side" means a Central Office Switch connection that is capable
of, and has been programmed to treat the circuit as, connecting to another
switching entity (e.g. another carrier's network).  Trunk Side connections offer
                  ----
those transmission and signaling features appropriate for the connection of
switching entities.

     1.89  "Unbundled Local Loop" or "ULL" or "Loop" means a transmission path
that extends from the Main Distribution Frame, DSX panel or functionally
comparable piece of equipment in the Customer's serving End Office to the Rate
Demarcation Point (or network interface device (NID) if installed) in or at a
Customer's premises.  The actual loop transmission facilities used to provide an
ULL may utilize any of several technologies.

     1.90  "Undefined Terms" means the Parties acknowledge that terms may appear
in this Agreement which are not defined and agree that any such terms shall be
construed in accordance with their customary usage in the telecommunications
industry as of the effective date of this Agreement, except that any undefined
term herein shall be interpreted in accordance with the definition or its use in
the FCC Interconnection Order and the FCC Further Interconnection Order.

                                      -12-
<PAGE>

     1.91  "Voice Grade" means either an analog signal of 300 to 3000 Hz or a
digital signal of 56/64 kilobits per second.  When referring to digital voice
grade service (a 56/64 kbps channel), the terms "DS-0" or "sub-DS-1" may also be
used.

     1.92  "Wire Center" means a building or portion thereof in which a Party
has the exclusive right of occupancy and which serves as Routing Point for
Switched Exchange Access Service.

2.0  INTERPRETATION AND CONSTRUCTION

     2.1  All references to Sections, Exhibits and Schedules shall be deemed to
be references to Sections of, and Exhibits and Schedules to, this Agreement
unless the context shall otherwise require.  The headings used in this Agreement
are inserted for convenience of reference only and are not intended to be a part
of or to affect the meaning of this Agreement. Unless the context shall
otherwise require, any reference to any agreement, other instrument (including
BA or other third Party offerings, guides or practices), statute, regulation,
rule or tariff is to such agreement, instrument, statute, regulation, or rule or
tariff as amended and supplemented from time to time (and, in the case of a
statute, regulation, rule or tariff, to any successor provision).

     2.2  Subject to the terms set forth in Section 20 regarding rates and
charges, each Party hereby incorporates by reference those provisions of its
tariffs that govern the provision of any of the services or facilities provided
hereunder.  If any provision of this Agreement and an applicable tariff cannot
be reasonably construed or interpreted to avoid conflict, the provision
contained in this Agreement shall prevail, provided that in all cases the more
specific shall prevail over the more general.  If any provision contained in
this main body of the Agreement and any Schedule or Exhibit hereto cannot be
reasonably construed or interpreted to avoid conflict, the provision contained
in this main body of the Agreement shall prevail.  The fact that a condition,
right, obligation, or other term appears in this Agreement but not in any such
tariff shall not be interpreted as, or be deemed grounds for finding, a conflict
for purposes of this Section 2.

3.0  SCOPE

     This Agreement sets forth the terms and conditions under which MGC can
obtain access to Unbundled Network Elements, Resale and Interconnection from BA,
consistent with the rights and obligations set forth in the Act, in order for
MGC to provide Telecommunication Services to its own customers.  MGC warrants
and represents that it is a Telecommunications Carrier ("TC")

                                      -13-
<PAGE>

under the Act. Each Party is solely responsible for the services it provides to
its Customers and to other Telecommunications Carriers.

4.0  INTERCONNECTION PURSUANT TO SECTION 251(c)(2)

     The types of Traffic to be exchanged under this Agreement shall be Local
Traffic, IntraLATA Toll (and InterLATA Toll, as applicable) Traffic, Transit
Traffic, Meet Point Billing Traffic, and Ancillary Traffic.  Subject to the
terms and conditions of this Agreement, Interconnection of the Parties
facilities and equipment pursuant to this Section 4.0 for the transmission and
routing of Telephone Exchange Service traffic and Exchange Access traffic shall
be established on or before the corresponding "Interconnection Activation Date"
shown for each such LATA within the State of New York on Schedule 4.0. Schedule
4.0 may be revised and supplemented from time to time upon the mutual agreement
of the Parties to reflect additional or changed Interconnection Points in New
York State pursuant to subsection 4.4 by attaching one or more supplementary
addenda to such Schedule.  Interconnection in the LATA shall be accomplished
through either (i) Collocation as provided in Section 13.0, (ii) a Fiber Meet as
provided in subsection 4.2, (iii) any other Interconnection method provided by
applicable tariff, law, rule or regulation, or (iv) any other Interconnection
method to which the Parties may agree.

     4.1  Scope

     4.1  Section 4 describes the architecture for interconnection of the
Parties' facilities and equipment over which the Parties shall configure the
following separate and distinct trunk groups:

          Traffic Exchange Trunks for the transmission and routing of
          -----------------------
terminating Local Traffic, Transit Traffic, translated LEC IntraLATA 800/888
traffic, IntraLATA Toll Traffic, and, where agreed to between the Parties and as
set forth in subsection 5.3.3 below, InterLATA Toll Traffic between their
respective Telephone Exchange Service customers pursuant to Section 251(c)(2) of
the Act, in accordance with Section 5 below;

          Access Toll Connecting Trunks for the transmission and routing of
          -----------------------------
Exchange Access traffic, including translated InterLATA 800/888 traffic, between
MGC Telephone Exchange Service customers and purchasers of Switched Exchange
Access Service via a BA Tandem, pursuant to Section 251(c)(2) of the Act, in
accordance with Section 6 below;

                                      -14-
<PAGE>

          Information Services Trunks for the transmission and routing of
          ---------------------------
terminating Information Services Traffic in accordance with Section 7 below;

          BLV/BLVI Trunks for the transmission and routing of terminating
          ---------------
BLV/BLVI traffic, in accordance with Section 19 below;

          911/E911 Trunks for the transmission and routing of terminating
          ---------------
E911/911 traffic, in accordance with Section 7 below;

          Directory Assistance Trunks for the transmission and routing of
          ---------------------------
terminating directory assistance traffic, in accordance with Section 19.0 below;

          Operator Services (IntraLATA call completion) Trunks for the
          ----------------------------------------------------
transmission and routing of terminating IntraLATA call completion traffic, in
accordance with Section 19.0 below;

          Choke Trunks for traffic congestion and testing; and
          ------------

          Others as may be requested and agreed to by the Parties.
          ------

     4.1.2     The Parties shall configure separate trunk groups (as described
in subsection 4.1.1 above) for traffic from MGC to BA, and for traffic from BA
to MGC, respectively; however, the trunk groups shall be equipped as two-way
trunks for testing purposes. As provided in Section 10 below, the Parties agree
to consider as part of the Joint Grooming Process the feasibility of combining
any of the separate trunk groups into a single two-way trunk group.

     4.2       Physical Architecture

     In each LATA identified on Schedule 4.0, MGC and BA shall utilize the
Interconnection points designated in such Schedule to configure a network
Interconnection arrangement under a joint network configuration and Grooming
Process ("Joint Grooming Process" as defined in Section 10.1).  Both Parties
will endeavor to provision a diverse, reliable network that incorporates the
most practicable technologies.

          4.2.1     Network architecture shall be defined under the Joint
Grooming Process.

                    4.2  The Parties shall establish physical Interconnection
          points at the locations designated on Schedule 4.0. Points on the MGC
          network from which MGC will provide transport and termination of
          traffic are designated as the MGC

                                      -15-
<PAGE>

          Interconnection Points ("MGC-IP" or "[C]-IP"). Points on the BA
          network from which BA will provide transport and termination of
          traffic are designated as the BA Interconnection Points ("BA-IP").
          Additional Interconnection points may be established by mutual
          agreement of both parties at any technically feasible points
          consistent with Act.

               4.2.1.2   Each Party will provide owned or leased facilities to
          deliver traffic originated on its respective networks to the
          designated Interconnection Points of the other Party's network.  The
          Party terminating the traffic will be responsible for all transport
          and termination of calls beyond the designated Interconnection point.

          4.2.2  The Parties may implement one of the following configurations
as part of the Joint Grooming Process, unless an alternative plan is mutually
agreed to by both Parties.

               (a)  a jointly maintained SONET network, in which each Party is
                    responsible for the procurement, installation, and
                    maintenance of mutually agreed-upon Optical Line Terminating
                    Multiplexer ("OLTM") equipment at its respective premises.
                    Additionally, each Party will be responsible for the
                    installation and maintenance of one-half of a fiber optic
                    ring;

               (b)  Interconnection of networks at an optical level via a Fiber
                    Meet or other comparable means.

     4.3  Technical Specifications

          4.3.1     MGC and BA shall work cooperatively to install and maintain
a reliable network. MGC and BA shall exchange appropriate information (e.g.,
                                                                       ---
maintenance contact numbers, network information, information required to comply
with law enforcement and other security agencies of the Government and such
other information as the Parties shall mutually agree) to achieve this desired
reliability.

          4.3.2     MGC and BA shall work cooperatively to apply sound network
management principles by invoking network management controls to alleviate or to
prevent congestion.

                                      -16-
<PAGE>

          4.3.3     The publication "Bellcore Technical Publication GR-342-CORE;
High Capacity Digital Special Access Service, Transmission Parameter Limits and
Interface Combinations" describes the practices, procedures, specifications and
interfaces generally utilized by BA and is referenced herein to assist the
Parties in meeting their respective Interconnection responsibilities related to
electrical/optical interfaces.

     4.4  Interconnection in Additional LATAs

          4.4.1     If MGC determines to offer Telephone Exchange Services in
any other LATA in which BA also offers Telephone Exchange Services in New York
State, MGC shall provide written notice to BA of the need to establish
Interconnection in such LATA pursuant to this Agreement.

          4.4.2     The notice provided in subsection 4.4.1 shall include (i)
the initial Rating Point MGC has designated in the new LATA; (ii) MGC's
requested Interconnection Activation Date; and (iii) a non-binding forecast of
MGC's trunking requirements.

          4.4.3     Unless otherwise agreed by the Parties, the Parties shall
designate the Wire Center(s) MGC has identified as its initial Rating Point(s)
in the LATA as the MGC-IP(s) in that LATA and shall designate the BA Tandem
Office Wire Center within the LATA nearest to the MGC-IP (as measured in airline
miles utilizing the V&H coordinates method as defined in Bellcore Special Report
SR-TSV-002275) as the BA-IP in that LATA.

5.0  TRANSMISSION AND ROUTING OF TELEPHONE EXCHANGE SERVICE TRAFFIC PURSUANT
     TO SECTION 251(c)(2)

     5.1  Scope of Traffic

     Section 5.0 prescribes parameters for trunk groups (the "Traffic Exchange
Trunks") to be effected over the Interconnections specified in Section 4.0 for
the transmission and routing of Local Traffic, Transit Traffic, translated LEC
IntraLATA 800/888 traffic, InterLATA Toll Traffic (to the extent applicable),
and IntraLATA Toll Traffic between the Parties' respective Telephone Exchange
Service Customers.

                                      -17-
<PAGE>

     5.2  Switching System Hierarchy

          5.2.1     For purposes of this Section 5.0, each of the following
Central Office Switches shall be designated as a "Primary Switch":

          (a)  Each Tandem Office BA operates in the LATA;

          (b)  The initial switch MGC employs to provide Telephone Exchange
               Service in the LATA;

          (c)  Any Tandem Office MGC may establish for provision of Exchange
               Access in the LATA;

          (d)  Any additional switch MGC may subsequently employ to provide
               Telephone Exchange Service in the LATA which MGC may at its sole
               option designate as a Primary Switch; provided that the total
               number of MGC Primary Switches for a LATA may not exceed the
               total number of BA Primary Switches for that LATA.  To the extent
               MGC chooses to designate any additional switch as a Primary
               Switch, it shall provide notice to BA of such designation at
               least ninety (90) days in advance of the date on which MGC
               activates such switch as a Primary Switch; and

          (e)  Any additional tandem switch BA may subsequently employ to
               provide access and/or sector traffic capacity within a LATA.
               Traffic destined to sub-tending Secondary Switches routed via
               such a tandem(s) would be determined by network requirements and
               notice made available to all LECs at least one hundred and eighty
               (180) days prior to service introduction.

          5.2.2     For purposes of this Section 5.0, each of the following
Central Office Switches shall be designated as a "Secondary Switch".

          (a)  Each Central Office Switch operated by the Parties which is not
               designated as a Primary Switch pursuant to Section 5.2.1 shall be
               designated as a "Secondary Switch".

                                      -18-
<PAGE>

          (b)  A geographically relevant End Office or functional equivalent, at
               a technically feasible IP established by one Party at the other
               Party's request (collectively, a "Virtual End Office").  For
               purposes of this Agreement, a "geographically relevant" IP shall
               mean an IP that is located within the same Rate Center Area as
               the NXX's to which traffic is to be terminated are assigned, or,
               with the mutual agreement of the Parties, an existing and
               currently utilized IP within the LATA but outside the applicable
               Rate Center Area.  If after sixty (60) days following said
               request, the Parties have been unable to reach agreement on the
               additional Interconnection Point(s), then either Party may file a
               complaint with the Commission to resolve such impasse or pursue
               any other remedy available under law or equity.

          5.2.3   For purposes of MGC routing traffic to BA, the sub-tending
arrangements between BA Primary Switches and BA Secondary Switches shall be the
same as the Tandem/End Office sub-tending arrangements which BA maintains for
the routing of its own or other carriers' traffic.  For purposes of BA routing
traffic to MGC, the sub-tending arrangements between MGC Primary Switches and
MGC Secondary Switches shall be the same as the Tandem/End Office sub-tending
arrangements which MGC maintains for the routing of its own or other carriers'
traffic.

     5.3  Trunk Group Architecture and Traffic Routing

     The Parties shall jointly engineer and configure Traffic Exchange Trunks
over the physical Interconnection arrangements where such arrangements exist for
the transport and termination of Telephone Exchange Service Traffic as follows:

          5.3.1   The Parties shall each initially configure a separate two-way
trunk group as direct transmission path between each MGC Primary Switch and each
BA Primary Switch.

          5.3.2   Notwithstanding anything to the contrary in this Section 5.0,
if the individual trunk group volumes between any two Central Office Switches
(whether Primary-Primary, Primary-Secondary, or Secondary-Secondary)
consistently exceed the blocking parameters established in the Joint Grooming
Process, the Parties will augment such trunk groups so as to achieve established
service objectives. Such augmentation shall be consistent with established
network design methods using modular trunk engineering techniques where
practical.

                                      -19-
<PAGE>

          5.3.3   BA and MGC will allow each other to route their intrastate and
interstate switched access service traffic over the Traffic Exchange Trunk
Groups, pursuant to the rates, terms and conditions specified in each Party's
effective intrastate and interstate access tariffs or at Generally available and
prevailing rates, terms and conditions.

     5.4  Signaling

     Each Party will provide the other Party with access to its databases and
associated signaling necessary for the routine and completion of the other
Party's traffic in accordance with the following, provisions, and with Section
17.0 below:

          5.4.1   Where available, CCS signaling shall be used by the Parties to
set up calls between the Parties' Telephone Exchange Service networks.  If CCS
signaling is unavailable, MF ("Multi-Frequency") signaling shall be used by the
Parties.  Each Party shall charge the other Party equal and reciprocal rates for
CCS signaling in accordance with applicable tariffs.

          5.4.2   The publication "Bellcore Special Report SR-TSV-002275, BOC
Notes on the LEC Networks-Signaling" describes the practices, procedures and
specifications Generally utilized by BA for signaling, purposes and is
referenced herein to assist the Parties in meeting their respective
Interconnection responsibilities related to signaling.

          5.4.3   The Parties will cooperate on the exchange of Transactional
Capabilities Application Part ("TCAP") messages to facilitate interoperability
of CCS-based features between their respective networks, including all CLASS
features and functions, to the extent each Party offers such features and
functions to its Customers.  All CCS signaling parameters will be provided
including, calling Party number ("CPN"), originating line information ("OLI"),
calling Party category and charge number.

          5.4.4   Upon request, each Party shall provide trunk groups where
available that are configured utilizing the B8ZS ESF protocol for 64 Kbps clear
channel transmission to allow for ISDN interoperability between the Parties'
respective networks.

     5.5  Grades of Service

     The Parties shall engineer and shall jointly monitor and enhance all trunk
groups consistent with the Joint Grooming Process as set forth in Section 10.

                                      -20-
<PAGE>

     5.6  Measurement and Billing

          5.6.1   For billing purposes, each Party shall pass Calling Party
Number ("CPN") information on each call carried over the Traffic Exchange
Trunks; provided, however, that so long as the percentage of calls passed with
CPN is greater than ninety percent (90%), all calls exchanged without CPN
information shall be billed as either Local Traffic or IntraLATA Toll Traffic in
direct proportion to the minutes of use of calls exchanged with CPN information.

          5.6.2   Measurement of billing minutes (except for originating 800/888
calls) shall be in actual conversation seconds.  Measurement of billing minutes
for originating 800/888 calls shall be in accordance with applicable tariffs.

          5.6.3   Where CPN is not available in a LATA for greater than ten
percent (10%) of the traffic, the Party sending the traffic shall provide
factors to determine the jurisdiction, as well as local vs. toll distinction, of
the traffic.  Such factors shall be supported by call record details that will
be made available for review upon request when a Party is passing CPN but the
receiving Party is not properly receiving or recording the information.  The
Parties shall cooperatively work to correctly identify the traffic, and
establish a mutually agreeable mechanism that will prevent improperly rated
traffic.  Notwithstanding this, if any improperly rated traffic occurs, the
Parties agree to reconcile it.

      5.7 Reciprocal Compensation Arrangements -- Section 251(b)(5)

          5.7.1   Reciprocal Compensation only applies to the transport and
termination of Reciprocal Compensation Traffic billable by BA or MGC which a
Telephone Exchange Service Customer originates on BA's or MGC's network for
termination on the other Party's network within the same LATA except as provided
in Section 5.7.6 below.

          5.7.2   The Parties shall compensate each other for transport and
termination of Reciprocal Compensation Traffic in an equal and symmetrical
manner for the application of rates as provided in the Pricing Schedule (Exhibit
A hereto).These rates are to be applied at the MGC-IP for traffic delivered by
BA, and at the BA-IP for traffic delivered by MGC.  Tandem rates will be applied
for traffic terminated to a Primary Switch; End Office rates will be applied for
traffic terminated to a Secondary Switch.  No additional charges, including port
or transport charges, shall apply for the termination of Reciprocal Compensation
Traffic delivered to the MGC-IP or the BA-IP.  When Reciprocal Compensation
Traffic is terminated over the same trunks as Switched Exchange Access Service,
any port or transport or other applicable access charges

                                      -21-
<PAGE>

related to the Switched Exchange Access Service shall be prorated to be applied
only to such other Switched Exchange Access Service.

          5.7.3   The Reciprocal Compensation arrangements set forth in this
Agreement are not applicable to Switched Exchange Access Service or to any other
IntraLATA or InterLATA calls originated on a third party carrier's network on a
1+ presubscribed basis or a casual dialed (10XXX or 101XXXX) basis.  All
Switched Exchange Access Service and all Toll Traffic shall continue to be
governed by the terms and conditions of the applicable federal and state Tariffs
or the terms and conditions of section 6.3, if applicable.  Similarly, the
Parties agree that the issue of what, if any, compensation is applicable to
traffic handed off from one Party to the other Party, within a BA local calling
area (or other calling area otherwise applicable for Reciprocal Compensation),
for delivery to an Internet Service Provider (ISP) for carriage over the
Internet is currently pending before the FCC.  Until such time as the issue is
resolved by the FCC or by an applicable order of the Commission or Court with
jurisdiction over the appropriate compensation for such traffic exchange, the
Parties agree that the Reciprocal Compensation arrangements contained in this
subsection 5.7 shall not apply to such traffic.  To the extent that either Party
is unable to measure the volume of such traffic, the Parties agree to work
cooperatively to estimate such traffic volume.  Unless otherwise provided under
Applicable Law, Reciprocal Compensation arrangements shall apply to IntraLATA
Toll Traffic originated on one Party's network and delivered by that Party to
the other Party's network.

          5.7.4   The rates for termination of Reciprocal Compensation Traffic
are set forth in Exhibit A which is incorporated by reference herein.

          5.7.5   The designation of Traffic as Local or Toll for purposes of
compensation shall be based on the actual originating and terminating points of
the complete end-to-end call, regardless of the entities involved in carrying
any segment of the call.

          5.7.6   Compensation for transport and termination of all traffic
which is subject to performance of INP by one Party for the other Party pursuant
to Section 14.0 shall be as specified in subsection 14.6.

          5.7.7   Each Party reserves the right to measure and audit all
Reciprocal Compensation Traffic, up to a maximum of two audits per calendar
year, to ensure that proper rates are being applied appropriately, provided,
however, that either Party shall have the right to conduct additional audit(s)
if the preceding audit disclosed material errors or discrepancies.  Each Party
agrees to provide the necessary Reciprocal Compensation Traffic data or permit
the other

                                      -22-
<PAGE>

Party's recording equipment to be installed for sampling purposes in conjunction
with any such audit.

          5.7.8   When either Party delivers seven (7) or ten (10) digit
translated IntraLATA toll-free service access codes (e.g., 800/888) service to
                                                     ----
the other Party for termination, the originating Party shall provide the
terminating Party with billing records in industry standard format (EMR) if
required by the terminating Party.  The originating Party may bill the
terminating, Party for the delivery of the traffic at local reciprocal
compensation rates. The terminating Party may not bill the originating Party
reciprocal compensation under this Agreement.  The Party that is providing the
toll-free service access codes (e.g. 800/888) service shall pay the database
                                ----
inquiry charge per the Pricing Schedule to the Party that performed the database
inquiry.

 6.0  TRANSMISSION AND ROUTING OF EXCHANGE ACCESS TRAFFIC PURSUANT TO 251(c)(2)

      6.1 Scope of Traffic

      Section 6.0 prescribes parameters for certain trunk groups ("Access Toll
Connecting Trunks") to be established over the Interconnections specified in
Section 4.0 for the transmission and routing of Exchange Access traffic between
MGC's Telephone Exchange Service Customers and Interexchange Carriers ("IXC's").

      6.2 Trunk Group Architecture and Traffic Routing

          6.2.1   The Parties shall jointly establish Access Toll Connecting
Trunks by which they will jointly provide tandem-transported Switched Exchange
Access Services to Interexchange Carriers to enable such Interexchange Carriers
to originate and terminate traffic from/to MGC's Customers.

          6.2.2   Access Toll Connecting Trunks shall be used solely for the
transmission and routing of Exchange Access to allow MGC's Customers to connect
to or be connected to the interexchange trunks of any Interexchange Carrier
which is connected to a BA Tandem.

          6.2.3   The Access Toll Connecting Trunks shall be two-way trunks
connecting an End Office Switch MGC utilizes to provide Telephone Exchange
Service and Switched Exchange Access in a given LATA to a Tandem Switch BA
utilizes to provide Exchange Access in such LATA.

                                      -23-
<PAGE>

          6.2.4   The Parties shall jointly determine which BA Tandem(s) will be
subtended by each MGC End Office Switch.  MGC's end office switch shall sub-tend
the BA Tandem that would have served the same rate center on BA's network.

      6.3 Meet-Point Billing Arrangements

          6.3.1   Meet-Point Billing arrangements between the Parties for
jointly-provided Switched Exchange Access Services on Access Toll Connecting
Trunks will be governed by the terms and conditions of a mutually agreeable
arrangement which the Parties will work to develop.

          6.3.2   With respect to the Meet Point Billing arrangements, until and
unless changed by the FCC on a going forward basis, MGC shall retain one hundred
percent (100%) of the Residual Interconnection Charge in instances in which MGC
provides the end office switching.

 7.0 TRANSPORT AND TERMINATION OF OTHER TYPES OF TRAFFIC

     7.1  Information Services Traffic

     The following provisions shall apply only to MGC-originated Information
Services Traffic directed to an information services platform connected to BA's
network.  At such time as MGC connects information services platforms to its
network, the Parties shall agree upon a comparable arrangement for BA-originated
Information Services Traffic.  The Information Services Traffic subject to the
following provisions is switched voice traffic, delivered to service providers
who offer recorded announcement information or open discussion information
programs to the general public; it is not Internet traffic.

          7.1.1   MGC shall have the option to route Information Services
Traffic that originates on its own network to the appropriate information
services platform(s) connected to BA's network. In the event MGC exercises such
option, MGC will establish a dedicated trunk group to the BA information
services serving switch. This trunk group will be utilized to allow MGC to route
information service traffic originated on its network to BA.

     Where MGC serves a Customer through the purchase of a BA unbundled Port
Element, information service traffic from that Customer may be routed over BA
information service trunks on a shared basis.

                                      -24-
<PAGE>

          7.1.2   Nothing in this Agreement shall restrict either Party from
offering or obviate either Party's obligations, if any, under Applicable Laws,
to offer to its Telephone Exchange Service Customers the ability to block the
completion of Information Service Traffic.

          7.1.3   For calls to an "Information Mass Announcement Service"
("IMAS"), which service is only available in the New York Metro LATA (LATA 132),
MGC shall bill and collect the information services provider charges as defined
in the existing New York PSC No. 900 Tariff, as may be amended from time to
time.  BA will bill MGC for such charges less the Information Services Billing
and Collection fee set forth in Exhibit A. MGC shall pay BA in full regardless
of uncollectible charges to its own Customers.  BA may request recorded call
information from MGC, to be delivered in unrated EMR format via electronic file
transfer or other medium mutually agreeable to the two Parties, at the customer
usage detail charges specified in Exhibit A.  This arrangement shall apply
whether MGC serves its customer from switching facilities outside the BA
network, or from a BA unbundled Port Element.

          7.1.4   For calls to variable rated information services (e.g., NXX
                                                                    ---
550, 540, 976, 970, 940 as applicable), the Parties shall agree to implement
either of two separate billing arrangements, as set forth in Schedule 7.1.4.
Under either arrangement, MGC shall bill and collect information services
provider charges from its Customers. BA shall charge MGC, and the Parties shall
exchange call detail information and handle adjustments, according to the terms
set forth in the agreed upon billing arrangement, at customer usage detail rates
specified in Exhibit A. Applicable information shall be provided in as timely a
fashion as practical in order to facilitate record review and reflect actual
prices set by the individual information services providers. The same billing
arrangements shall apply whether MGC serves its Customer from switching
facilities outside the BA network, or from BA unbundled Local Switching
Elements, and agreement to mutually support one or the other billing arrangement
shall precede interconnection of the MGC network to the appropriate information
services platform(s) connected to BA's network. BA may require reasonable
demonstration, as defined in the applicable billing arrangement, that the agreed
upon arrangement has been implemented by MGC prior to establishing such
interconnection.

          7.1.5   Where BA agrees to accept adjustments from MGC for calls
originated by MGC Customers to information services platform(s) connected to
BA's network, MGC shall follow the same policy in allowing adjustments to its
Customers as BA follows with its own Customers.  MGC shall provide to BA
sufficient information regarding uncollectibles and Customer adjustments to
allow BA to pass through the adjustments to the information services provider,
and BA shall pass through such adjustments.  However, if the information
services provider disputes such adjustments and refuses to accept such
adjustments, MGC shall reimburse

                                      -25-
<PAGE>

BA for all such disputed adjustments. Final resolution regarding all disputed
adjustments shall be solely between MGC and the information services provider.

          7.1.6   The Information Services Traffic addressed herein does not
include 555 traffic or similar traffic with AIN service interfaces, which
traffic shall be subject to separate arrangements between the Parties.

      7.2 Tandem Transit Service ("Transit Service")

          7.2.1   "Transit Service" means the delivery of certain traffic
between MGC and another Local Exchange Carrier by BA over the Telephone Exchange
Service Trunks, where both carriers' End Offices subtend a BA tandem. The
following traffic types will be delivered: (i) Local Traffic or IntraLATA Toll
originated from MGC to such LEC and (ii) Local or IntraLATA Toll Traffic
originated from such LEC and terminated to MGC where BA carries such traffic
pursuant to the Commission's primary toll carrier plan or other similar plan.

          7.2.2   Subject to Section 7.2.4, the Parties shall compensate each
other for Transit Service as follows:

          (a)     MGC shall pay BA for Local Traffic that MGC originates over
                  the Transit Service at the rate specified in Pricing Schedule
                  plus any additional charges or costs such terminating LEC
                  imposes or levies on BA for the delivery or termination of
                  such traffic, including any switched access charges; and

          (b)     BA shall pay MGC for Local, InterLATA, or IntraLATA Toll
                  Traffic terminated to MGC from such LEC at the appropriate
                  reciprocal compensation rates described in Section 5.7,
                  InterLATA access rates, or (where BA delivers such traffic
                  pursuant to the Commission's primary toll carrier plan or
                  other similar plan) at MGC's applicable switched access rates
                  or local termination rate, whichever is appropriate.

          7.2.3   BA expects that all networks involved in Transit traffic will
deliver each call to each involved network with CCS and the appropriate
Transactional Capabilities Application Part ("TCAP") message to facilitate full
interoperability of those CLASS Features supported by BA and billing functions.
In all cases, each Party shall follow the Exchange Message Record ("EMR")
standard and exchange records between the Parties and [?] with the terminating
carrier to facilitate the billing process to the originating network.

                                      -26-
<PAGE>

          7.2.4   Each Party shall exercise all reasonable efforts to enter into
a reciprocal local traffic exchange arrangement (either via written agreement or
mutual tariffs) with any wireless carrier, ITC, CLEC or other LEC to which it
sends, or from which it receives, local traffic that transits the other Party's
facilities over Traffic Exchange Trunks. Each Party will, upon request, provide
the other Party with all reasonable cooperation and assistance in obtaining such
arrangements. In addition, neither Party shall take any actions to prevent the
other Party from entering into a direct and reciprocal local traffic exchange
arrangement (either via written agreement or mutual tariffs) with any wireless
carrier, ITC, CLEC, or other LEC to which it sends, or from which it receives,
local traffic that does not utilize the Transit Service of the first Party. The
Parties agree to work cooperatively in appropriate industry fora to promote the
adoption of reasonable industry guidelines relating to Transit Traffic.

      7.3 911/E911 Arrangements

          7.3.1   MGC will interconnect to the BA 911/E911 selective router or
911 Tandem Offices, as appropriate, that serve the areas in which MGC provides
exchange services, for the provision of 911/E911 services and for access to all
sub-tending Public Safety Answering Points ("PSAP"). BA will provide MGC with
the appropriate CLLI codes and specifications of the tandem serving area.

          7.3.2   Path and route diverse Interconnections for 911/E911 shall be
made at the MGC-IP, the BA-IP, or other points as necessary and mutually agreed,
and as required by law or regulation.

          7.3.3   BA will provide MGC with an electronic interface through which
MGC shall input and provide a daily update of 911/E911 database information
related to appropriate MGC customers.  BA will provide, as permitted by the PSC,
MGC with the Master Street Address Guide ("MSAG") so that MGC can ensure the
accuracy of the data transfer. Additionally, BA shall assist MGC in identifying
the appropriate person in each municipality for the purpose of obtaining the
ten-digit Subscriber number of each PSAP.

          7.3.4   BA and MGC will use their best efforts to facilitate the
prompt, robust, reliable and efficient Interconnection of MGC systems to the
911/E911 platforms.

          7.3.5   BA and MGC will work cooperatively to arrange meetings with
PSAPs to answer any technical questions the PSAPS, or county or municipal
coordinators may have regarding the 911/E911 arrangements.

                                      -27-
<PAGE>

          7.3.6   MGC will compensate BA for connections to its 911/E911
pursuant to Exhibit A.

          7.3.7   MGC comply with all applicable rules and regulations
pertaining to the provision of 911/E911 services in the State of New York.

 8.0 NUMBER RESOURCES, RATE CENTERS AND RATING POINTS

     8.1  Nothing in this Agreement shall be construed to limit or otherwise
adversely affect in any manner either Party's right to employ or to request and
be assigned any Central Office (NXX) Codes pursuant to the Central Office Code
Assignment Guidelines, as may be amended from time to time, or to establish, by
Tariff or otherwise, Rate Centers and Rating Points corresponding to such NXX
codes.  Until such time as number administration is provided by a third party,
BA shall provide MGC access to telephone numbers by assigning NXX codes to MGC
in accordance with such Assignment Guidelines.

     8.2  It shall be the responsibility of each Party to program and update its
own switches and network systems in accordance with the Local Exchange Routing
Guide ("LERG") in order to recognize and route traffic to the other Party's
assigned NXX codes at all times.  Neither Party shall impose any fees or charges
whatsoever on the other Party for such activities, except as expressly set forth
in this Agreement.

     8.3  Unless mandated otherwise by a Commission order, the Rate Center Areas
will be the same for each Party.  During the term of this Agreement, MGC shall
adopt the Rate Center Areas and Rate Center Points that the Commission has
approved for BA, in all areas where BA and MGC service areas overlap, and MGC
shall assign whole NPA-NXX codes to each Rate Center unless the LEC industry
adopts alternative methods of utilizing NXXs in the manner adopted by the NANP.

     8.4  MGC will also designate a Rating Point for each assigned NXX code.
MGC shall designate one location for each Rate Center Area as the Rating Point
for the NPA-NXXs associated with that Area and such Rating Point shall be within
the same LATA as the Rate Center Area but not necessarily within the Rate Center
Area itself

     8.5  Notwithstanding anything to the contrary contained herein, nothing in
this Agreement is intended to, and nothing, in this Agreement shall be construed
to, in any way constrain MGC's choices regarding the size of the local calling
area(s) that MGC may establish

                                      -28-
<PAGE>

for its Customers, which local calling areas may be larger than, smaller than,
or identical to, BA's local calling areas.

9.0  NETWORK MAINTENANCE AND MANAGEMENT; OUTAGES

     9.1 Cooperation

     The Parties will work cooperatively to install and maintain a reliable
network.  MGC and BA will exchange appropriate information (e.g., maintenance
                                                            ----
contact numbers, escalation procedures, network information, information
required to comply with law enforcement and other security agencies of the
Government) to achieve this desired reliability.  In addition, the Parties will
work cooperatively to apply sound network management principles to alleviate or
to prevent congestion.

     9.2 Responsibility for Following Standards

     Each Party recognizes a responsibility to follow the standards that may be
agreed to between the Parties and to employ characteristics and methods of
operation that will not interfere with or impair the service or any facilities
of the other or any third parties connected with or involved directly in the
network of the other.

     9.3 Interference or Impairment

     If Bell Atlantic reasonably determines that the characteristics and methods
of operation used by MGC will or may interfere with or impair its provision of
services, BA shall have the right to discontinue service subject, however, to
the following:

          9.3.1   BA shall have given MGC at least ten (10) days' prior written
notice of the interference or impairment or potential interference or impairment
and the need to correct the condition within said time period.

          9.3.2   BA shall have concurrently provided a copy of the notice
provided to MGC under (9.3.1) above to the appropriate federal and/or state
regulatory bodies.

          9.3.3   Notice in accord with subsections 9.3.1 and 9.3.2 above shall
not be required in emergencies and BA may immediately discontinue service if
reasonably necessary to meet its obligations.  In such case, however, BA shall
use all reasonable means to notify MGC and the appropriate federal and/or state
regulatory bodies.

                                      -29-
<PAGE>

          9.3.4   Upon correction of the interference or impairment, BA will
promptly renew service to MGC.  During such period of discontinuance, there will
be no compensation or credit allowance by BA to MGC for interruptions.

     9.4 Repeated or Willful Noncompliance

     The Interconnection, unbundled Network Elements, and services provided
hereunder may be discontinued by either Party upon thirty (30) days' written
notice to the other for repeated or willful violation of and/or a refusal to
comply with this Agreement in any material respect.  The Party discontinuing
will notify the appropriate federal and/or state regulatory bodies concurrently
with the notice to the other Party of the prospective discontinuance.

     9.5 Outage Repair Standard

     In the event of an outage or trouble in any arrangement, facility, or
service being provided by a Party hereunder, the providing Party will follow
procedures for isolating and clearing the outage or trouble that are no less
favorable than those that apply to comparable arrangements, facilities, or
services being provided by the providing Party to any other carrier whose
network is connected to that of the providing Party.  MGC and BA may agree to
modify those procedures from time to time based on their experience with
comparable Interconnection arrangements with other carriers.

     9.6 Notice of Changes -- Section 251(c)(5)

     If a Party makes a change in the information necessary for the
transmission and routing of services using that Party's network, or any other
change in its network which it believes will materially affect the inter-
operability of its network with the other Party's network, the Party making the
change shall provide at least ninety (90) days' advance written notice of such
change to the other Party. In addition, the Parties will comply with the Network
Disclosure rules adopted by the FCC in CC Docket No. 86-79 as may be amended
from time to time.

     9.7 Fraud

     The Parties shall work cooperatively to minimize fraud associated with
third-number billed calls, calling card calls, and any other services related to
this Agreement.

                                      -30-
<PAGE>

  10.0    JOINT NETWORK CONFIGURATION AND GROOMING PROCESS; AND INSTALLATION,
          MAINTENANCE, TESTING AND REPAIR.

          10.1 Joint Network Configuration and Grooming Process

          Upon request of either Party, the Parties shall jointly develop an
implementation and grooming process (the "Joint Grooming Process" or "Joint
Process") which may define and detail, inter alia,
                                       ----- ----

          (a) agreement on Physical Architecture consistent with the guidelines
              defined in Section 4.0;

          (b) standards to ensure that Interconnection trunk groups experience a
              grade of service, availability and quality which is comparable to
              that achieved on interoffice trunks within BA's network and in
              accord with all appropriate relevant industry-accepted quality,
              reliability and availability standards;

          (c) the respective duties and responsibilities of the Parties with
              respect to the administration and maintenance of the trunk groups,
              including but not limited to standards and procedures for
              notification and discoveries of trunk disconnects;

          (d) disaster recovery provision escalations;

          (e) additional technically feasible IP(s) in a LATA as provided in
              Section 4.0 above; and

          (f) such other matters as the Parties may agree, including, e.g., End
                                                                 ----
              Office to End Office high usage trunks as good engineering
              practices may dictate.

The initial mutual Interconnection is not dependent upon completion of the Joint
Grooming Process.

          10.2 Installation, Maintenance, Testing and Repair

          Unless otherwise agreed to by the Parties, Interconnection shall be
provided at parity. For purposes of this Agreement, a Party's obligation to
provide parity shall be in accordance with Applicable Laws.  If either Party is
unable to fulfill its obligations under this subsection 10.2, it shall notify
the other Party of its inability to do so and will negotiate alternative
intervals in good

                                      -31-
<PAGE>

faith. The Parties agree that the standards to be used by each Party for
isolating and clearing any disconnections and/or other outages or troubles shall
be at parity.

      10.3 Network Reliability Council

      The Parties will carefully review the Network Reliability Council's
recommendations and, as part of the Joint Grooming Plan, implement such
recommendations where technically and economically feasible pursuant to the
NYPSC Order in Case 96-C-0917, released December 2, 1996.

      10.4 Forecasting, Requirements for Trunk Provisioning

      Within ninety (90) days of executing this Agreement, each Party shall
provide the other Party a one (1) year traffic forecast.  This initial forecast
will provide the amount of traffic to be delivered to BA over each of the
Traffic Exchange Trunk groups over the next four (4) quarters. The forecast
shall be updated and provided to BA on an as-needed but no less frequently than
quarterly.  All forecasts shall include Access Carrier Terminal Location (ACTL),
traffic type (local/toll, operator services, 911, etc.), code (identifies trunk
group), A locations/Z location (CLLI codes for MGC-IPs and BA-IPs, interface
type (e.g., DS1), and trunks in service each year (cumulative).
      ----

          10.4.1   Trunk Provisioning Pursuant to Forecasts. Because BA's
trunking requirements will be dependent on the Customer segments and service
segments within Customer segments to whom MGC decides to market its services, BA
will be dependent on MGC to provide accurate trunk forecasts for both inbound
(from BA) and outbound (from MGC) traffic. BA will, as an initial matter and
upon request, provide the same number of trunks to terminate local traffic to
MGC as MGC provides to terminate local traffic to BA, unless MGC expressly
identifies particular situations that are expected to produce traffic that is
substantially skewed in either the inbound or outbound direction, in which case
BA will provide the number of trunks MGC suggests; provided, however, that in
all cases BA's provision of the forecasted number of trunks to MGC is
conditioned on the following: that such forecast is based on reasonable
engineering criteria, there are no capacity constraints, and MGC's previous
forecasts have proven to be reliable and accurate.

          10.4.2   Monitoring and Adjusting Forecasts.  BA will, for ninety (90)
days, monitor traffic on each trunk group that it establishes at MGC's
suggestion or request pursuant to the procedures identified in subsection 10.4.1
above.  At the end of such ninety (90) day period, BA may disconnect trunks
that, based on reasonable engineering criteria and capacity constraints,

                                      -32-
<PAGE>

are not warranted by the actual traffic volume experienced. If, after such
initial ninety (90) day period for a trunk group, BA determines that any trunks
in the trunk group in excess of four (4) DS-1s are not warranted by actual
traffic volumes (considering engineering criteria for busy hour CCS and
blocking, percentages), then BA may hold MGC financially responsible for the
excess facilities. In subsequent periods, BA may also monitor traffic for ninety
(90) days on additional trunk groups that MGC suggests or requests BA to
establish. If, after any such (90) day period, BA determines that any trunks in
the trunk group are not warranted by actual traffic volumes (considering
engineering criteria for busy hour call seconds and blocking, percentages), then
BA may hold MGC financially responsible for the excess facilities. At any time
during the relevant ninety (90) day period, MGC may request that BA disconnect
trunks to meet a revised forecast. In such instances, BA may hold MGC
financially responsible for the disconnected trunks retroactive to the start of
the ninety (90) day period through the date such trunks are disconnected.

          10.4.3   Reciprocal Responsibility. To the extent that BA requires MGC
to install trunks for delivery of traffic to BA, MGC may apply the same
procedures with respect to BA's trunking requirements.

      10.5 Demand Management Forecasts

           10.5.1   MGC will furnish BA with good faith demand management
forecasts to enable BA to effectively plan its network infrastructure and work
force levels to accommodate anticipated MGC demand for BA services and products.
Such forecasts will describe MGC's expected needs for service volumes, and
timeframes for service deployment, by wire center. MGC agrees to provide such
forecasts to BA thirty (30) days following the Effective Date, with updates to
follow every six months thereafter. BA agrees that such forecasts shall be
subject to the confidentiality provisions defined in subsection 29.4 below, and
that such Information will only be used by BA to provide Interconnection
pursuant to this Agreement.

 11.0     UNBUNDLED ACCESS -- SECTION 251(c)(3)

     To the extent required of each Party by Section 251 of the Act, each Party
shall offer to the other Party nondiscriminatory access to Network Elements on
an unbundled basis at any technically feasible point.  BA shall unbundle and
separately price and offer Network Elements such that MGC will be able to lease
and interconnect to whichever of the Network Elements MGC requires, and to allow
MGC to combine the BA-provided elements with any facilities and services that
MGC may itself provide, except that MGC shall not recombine Network Elements
purchased from BA for use as a substitute for the purchase at wholesale rates of

                                      -33-
<PAGE>

Telecommunications Services that BA provides unless otherwise mandated by the
FCC or the Commission or agreed to by BA with other carriers. Any combination by
MGC of unbundled Network Elements purchased from BA shall be through a
Collocation arrangement pursuant to Section 13.0.

      11.1 Available Network Elements

     At the request of MGC, BA shall provide MGC access to the following
unbundled Network Elements in accordance with the requirements of the FCC
Regulations:

          11.1.1 Local Loops, as set forth in subsection 11.2;

          11.1.2 The Network Interface Device;

          11.1.3 Switching Capability, as set forth in subsection 11.3;

          11.1.4 Interoffice Transmission Facilities, as set forth in subsection
                 11.4;

          11.1.5 Signaling Links and Call-Related Databases, as set forth in
                 subsection 5.4 and Section 17;

          11.1.6 Operations Support Systems, as set forth in subsection 11.5:

          11.1.7 Operator Services and Direction, Assistance, as set forth in
                 Section 19;

and

          11.1.8 such other Network Elements in accordance with subsection 11.7
                 below.

      11.2 Unbundled Local Loop ("ULL") Types

      Subject to subsection 11.7, BA shall allow MGC to access the following
Unbundled Local Loop ("ULL") types unbundled from local switching and local
transport in accordance with the terms and conditions set forth in this
subsection 11.2.

          11.2.1 "2-Wire Analog Voice Grade ULL" or "Analog 2W" which support
analog transmission of 300-3000 Hz, repeat link start, link reverse battery, or
ground start seizure and disconnect in one direction (toward the End Office
Switch), and repeat ringing in the other

                                      -34-
<PAGE>

direction (toward the Customer). Analog 2W include Loops sufficient for the
provision of PBX trunks, pay telephone lines and electronic key system lines.

          11.2.2 "4-Wire Analog, Voice Grade ULL" or "Analog 4W" which support
transmission of voice grade signals using separate transmit and receive paths
and terminate in a 4-wire electrical interface.

          11.2.3 "2-Wire ISDN Digital Grade ULL" or "BRI ISDN" (Premium Link)
which support digital transmission of two 64 Kbps bearer channels and one 16
Kbps data channel. BRI ISDN is a 2B+D Basic Rate Interface-Integrated Services
Digital Network (BRI-ISDN) Loop which will meet national ISDN standards and
conform to ANSI T1.601-1992 & TlEl.4 90-004R3).

          11.2.4 2-Wire ADSL-Compatible ULL or ADSL 2W is a 2-wire, non-loaded,
twisted copper pair that meets revised resistance design or carrier serving area
design guidelines. The upstream and downstream ADSL power spectral density masks
and dc line power limits in BA TR 72575, Issue 2 must be met. ADSL-compatible
local loops are subject to availability.

          11.2.5 2-Wire HDSL-Compatible ULL or HDSL 2W consists of a single 2-
wire, non-loaded, twisted copper pair that meets the carrier serving area design
criteria. The HDSL power spectral density mask and dc line power limits
referenced in BA TR 72575, Issue 2 must be met. 2-Wire HDSL-compatible local
loops are subject to availability.

          11.2.6 4-Wire HDSL-Compatible ULL or HDSL 4W consists of two 2-wire,
non-loaded, twisted copper pairs that meet the carrier serving area design
criteria. The HDSL power spectral density mask and dc line power limits
referenced in BA TR 72575, Issue 2 must be met. 4-Wire HDSL-compatible local
loops are subject to availability.

          11.2.7 "4-Wire DS-1-compatible ULL" (Digital Grade Loop) provides a
channel which provides 1.544 Mbps digital transmission path between a Customer
premises and a MGC Collocation node at a BA central office, and is capable of
operating in a full duplex, time division (digital) multiplexing mode. A DS-1
Digital Grade Loop provides transmission capacity equivalent to 24 voice grade
channels with associated signaling, twenty-four 56 Kbps digital channels when in
band signaling is provided or twenty-four 64 Kbps channels with the selection of
the Clear Channel signaling option.

                                      -35-
<PAGE>

          11.2.8 BA will make Analog 2-Wire ULLS, BRI ISDN ULLS, Analog 4-Wire
ULLs and 4-Wire DS-1-compatible ULLs available for purchase by MGC at any time
after the Effective Date.

          11.2.9 BA will make HDSL 4-Wire, HDSL 2-Wire, and ADSL 2-Wire ULLs
available to MGC no later than the date on which it makes such ULLs commercially
available to any other Telecommunications Carrier in New York State. The Parties
shall amend Exhibit A to add the appropriate rates and charges.

      11.3 Unbundled Switching Elements

      BA shall make available to MGC the local Switching Element and tandem
Switching Element unbundled from transport, local loop transmission, or other
services in accordance with the terms and conditions of and at the rates
specified in BA's New York PSC No. 916 Tariff, as amended from time to time.

      11.4 Unbundled Inter Office Facilities

      BA shall provide MGC Inter Office Facilities ("IOF"), unbundled from
switching, unbundled interoffice facilities, and other services as required by
Applicable Law, at the rates, terms and conditions set forth in BA's NYPSC No.
916 Tariff, as amended from time to time.

      11.5 Operations Support Systems

      BA shall provide MGC with access via electronic interfaces to databases
required for pre-ordering, ordering, provisioning, maintenance and repair, and
billing as soon as practicable.

      11.6 Limitations on Unbundled Access

           11.6.1 BA shall only be required to provide ULLs and Ports where such
Loops and Ports are available.

           11.6.2 MGC shall access BA's unbundled Network Elements specifically
identified in this Agreement via Collocation in accordance with Section 13 at
the BA Wire Center where those elements exist, and each ULL or Port shall, in
the case of Collocation, be delivered to MGC's Collocation node by means of a
Cross Connection or Strapping.

                                      -36-
<PAGE>

           11.6.3 BA shall provide MGC access to its Unbundled Local Loops at
each of BA's Wire Centers for loops terminating in that Wire Center. In
addition, if MGC orders one or more ULL provisioned via Integrated Digital Link
Carrier or Remote Switching technology deployed as a ULL concentrator, BA shall,
where available, move the requested ULL(s) to a spare, existing physical ULL at
no additional charge to MGC. If, however, no spare physical ULL is available, BA
shall within three (3) Business days of MGC's request notify MGC of the lack of
available facilities. MGC may then at its discretion make a Network Element Bona
Fide Request to BA to provide the unbundled Local Loop through the
demultiplexing of the integrated digitized ULL(s). MGC may also make a Network
Element Bona Fide Request for access to Unbundled Local Loops at the ULL
concentration site point. Notwithstanding anything to the contrary in this
Agreement, standard provisioning intervals shall not apply to ULL provided under
this subsection 11.6.3.

           11.6.4 If MGC orders a ULL type and the distance requested on such
ULL exceeds the transmission characteristics in applicable technical references,
as specified below, distance extensions may be required and additional rates and
charges shall apply as set forth in Exhibit A or applicable Tariffs.

              Loop Type                Technical Reference/Limitation
              Electronic Key Line      2.5 miles
              ISDN                     Bellcore TA-NWT-000393
              HDSL 2W                  T1E1 Technical Report Number 28
              HDSL 4W                  T1E1 Technical Report Number 2S
              ADSL 2W                  ANSI T1.413 1995 Specification

      11.7 Availability of Other Network Elements on an Unbundled Basis

           11.7.1 BA shall, upon request of MGC, and to the extent required by
Applicable Law, provide to MGC access to its Network Elements on an unbundled
basis for the provision of MGC's Telecommunications Service. Any request by MGC
for access to a BA Network Element that is not already available shall be
treated as a Network Element Bona Fide Request. MGC shall provide BA access to
its Network Elements as mutually agreed by the Parties or as required by
Applicable Laws.

           11.7.2 A Network Element obtained by one Party from the other Party
under this subsection 11.7 may be used in combination with the facilities of the
requesting Party only to provide a Telecommunications Service, including
obtaining billing and collection, transmission, and routing of the
Telecommunications Service.

                                      -37-
<PAGE>

           11.7.3 Notwithstanding anything to the contrary in this subsection
11.7, a Party shall not be required to provide a proprietary Network Element to
the other Party under this subsection 11.7 except as required by the Commission
or FCC.

      11.8 Provisioning of Unbundled Local Loops

      The following coordination procedures shall apply for conversions of
"live" Telephone Exchange Services to Unbundled Local Loops (also referred to as
"hot cuts"). These and other mutually agreed-upon procedures shall apply
reciprocally for the "live" cutover of Customers from BA to MGC and from MGC to
BA.

           11.8.1 MGC shall request ULLs from BA by delivering to BA a valid
electronic transmittal Service Order using the BA electronic ordering platform
or another mutually agreed upon system. Within two (2) business days of BA's
receipt of such valid Service Order, BA shall provide MGC the firm order
commitment ("FOC") date by which the Loop(s) covered by such Service Order will
be installed.

           11.8.2 BA agrees to accept from MGC at the time the service request
is submitted for scheduled conversion of hot cut ULL orders, a desired date and
A.M. or P.M. designation (the "Scheduled Conversion Time") to the extent
available (as applicable, the "Conversion Window") for the hot cut.

           11.8.3 BA shall test for MGC dial tone at the POT bay by testing
through the tie cable provisioned between the BA main distributing frame and the
MGC expanded Inter-connection node forty-eight (48) hours prior to the Scheduled
Conversion Time.

           11.8.4 Not less than one hour prior to the Scheduled Conversion Time,
either Party may contact the other Party and unilaterally designate a new
Scheduled Conversion Time (the "New Conversion Time"). If the New Conversion
Time is within the Conversion Window, no charges shall be assessed on or waived
by either Party. If, however, the New Conversion Time is outside of the
Conversion Window, the Party requesting such New Conversion Time shall be
subject to the following:

          If BA requests the New Conversion Time, the applicable Line Connection
          Charge shall be waived; and

                                      -38-
<PAGE>

          If MGC requests the New Conversion Time, MGC shall be assessed a Line
          Connection Charge in addition to the Line Connection Charge that will
          be incurred for the New Conversion Time.

           11.8.5 Except as otherwise agreed by the Parties for a specific
conversion such as large cutovers of ten (10) lines or more that have been
negotiated, the Parties agree that the time interval expected from disconnection
of BA's "live" Telephone Exchange Service to the connection of an unbundled
Network Element at the MGC Collocation node will be accomplished within a window
of time of sixty (60) minutes or less. If MGC has ordered INP with the
installation of a Loop, BA will coordinate the implementation of INP with the
Loop conversion during with the above stated intervals at no additional charge.

           11.8.6 If MGC requests or approves a BA technician to perform
services in excess of or not otherwise contemplated by the Line Connection
Service Charge BA may Charge MGC for any additional and reasonable labor charges
to perform such services.

           11.8.7 If as the result of end user actions (e.g. Customer not ready
                                                        ---
["CNR"]), BA cannot complete requested work activity when technician has been
dispatched to the site, MGC will be assessed a non-recurring charge associated
with this visit. This charge will be the sum of the Service Order Charge and
Premises Visit Charge as specified in the NYPSC Tariffs Nos. 900/914.

      11.9 Maintenance of Unbundled Network Elements

      If (i) MGC reports to BA a Customer trouble, (ii) MGC requests a dispatch,
(iii) BA dispatches a technician, and (iv) such trouble was not caused by BA
facilities or equipment in whole or in part, then MGC shall pay BA a charge set
forth in Exhibit A for time associated with said dispatch. In addition, this
charge also applies when the Customer contact as designated by MGC is not
available at the appointed time. MGC accepts responsibility for initial trouble
isolation and providing BA with appropriate dispatch information based on its
test results. If as the result of MGC instructions, BA is erroneously requested
to dispatch within a BA Central Office or to a POT Bav ("dispatch in"), a charge
set forth in Exhibit A will be assessed per occurrence to MGC by BA. If as the
result of MGC instructions, BA is erroneously requested to dispatch outside a BA
Central Office or to a POT Bay ("dispatch out"), a charge set forth in Exhibit A
will be assessed per occurrence to MGC by BA. BA agrees to respond to MGC
trouble reports on a non-discriminatory basis consistent with the manner in
which it provides service to its own retail customers or to any other similarly
initiated Telecommunications Carrier.

                                      -39-
<PAGE>

      11.10 Other Terms and Conditions Including Rates and Charges

           11.10.1 ULLs and other Network Elements will be offered on the terms
and conditions, including rates and charges, specified herein and on such other
terms as stated in applicable Tariffs, as amended from time to time, that are
not inconsistent with the terms and conditions set forth herein.

           11.10.2 BA shall charge the non-recurring and monthly recurring,
rates for ULLs and other Network Elements set forth in Exhibit A as interim
rates until such time as the Commission adopts permanent rates consistent with
the requirements of the FCC Regulations. Such permanent rates shall be applied
in the manner described in Exhibit A and subsection 20.1.2 below.

12.0  RESALE -- SECTIONS 251(c)(4) and 251(b)(1)

      12.1 Availability of Wholesale Rates for Resale

      BA shall make available to MGC for resale all Telecommunications Services
as described in Section 251(c)(4) of the Act, pursuant to the rates, terms and
conditions of BA's NYPSC No. 915 tariff, as may be amended from time to time.

       12.2 Availability of Retail Rates for Resale

       Each Party shall make available its Telecommunications Services for
resale at the retail rates set forth in its Tariffs to the other Party in
accordance with Section 251 (b)(1) of the Act. In addition, BA and MGC shall
each allow the resale by the other of all Telecommunications Services that are
offered primarily or entirely to other Telecommunications Carriers (e.g.
Switched and special Exchange Access Services) at the rates already applicable
to such services. BA shall also allow the resale by MGC of such other non-
Telecommunications Services as BA, in its sole discretion, determines to provide
for resale under terms and conditions to be agreed to by the Parties.

       12.3 Additional Terms Governing Resale and Use of BA Services

           12.3.1 MGC shall comply with the provisions of this Agreement
(including, but not limited to, all applicable BA Tariffs) regarding resale or
use of BA services. In addition, MGC shall undertake in good faith to ensure
that its Customers comply with the provisions of BA's Tariffs applicable to
their use of BA's Telecommunications Services.

                                      -40-
<PAGE>

           12.3.2 Without in any way limiting subsection 12.3.1, MGC shall not
resell (a) residential service to business or other nonresidential Customers of
MGC, (b) Lifeline or other means-tested service offerings, or grandfathered
service offerings, to persons not eligible to subscribe to such service
offerings from BA, or (c) any other BA service in violation of any user or user
group restriction that may be contained in the BA Tariff applicable to such
service to the extent such restriction is not prohibited by Applicable Laws. In
addition, MGC shall be subject to the same limitations that BA's own retail
Customers may be subject to with respect to any Telecommunications Service that
BA may, in its discretion and to the extent not prohibited by Applicable Law,
discontinue offering.

           12.3.3 BA shall not be obligated to offer to MGC at a wholesale
discount Telecommunications Services that BA offers at a special promotional
rate if such promotions are for a limited duration of ninety (90) days or less.

           12.3.4 Upon request by BA, MGC shall provide to BA adequate assurance
of payment of charges due to BA in connection with MGC's purchase of BA services
for resale. Assurance of payment of charges may be requested by BA: if MGC (a)
in BA's reasonable judgment, at the Effective Date or at any time thereafter, is
unable to show itself to be creditworthy; (b) in BA's reasonable judgment, at
the Effective Date or at any time thereafter, is not creditworthy; or, (c) fails
to timely pay a bill rendered to MGC by BA. Unless otherwise agreed by the
Parties, the assurance of payment shall be in the form of a cash deposit and
shall be in an amount equal to the charges for BA services that MGC may
reasonably be expected to incur during, a period of two (2) months. BA may at
any time use the deposit or other assurance of payment to pay amounts due from
MGC.

           12.3.5 MGC shall not be eligible to participate in any BA plan or
program under which BA end user retail Customers may obtain products or
merchandise, or services which are not BA Retail Telecommunications Services, in
return for trying, agreeing to purchase, purchasing, or using BA Retail
Telecommunications Services.

           12.3.6 BA may impose additional restrictions on MGC's resale of BA's
retail Telecommunications Services to the extent permitted by Applicable Laws.

13.0   COLLOCATION -- SECTION 251(c)(6)

       13.1 BA shall offer to MGC Physical Collocation of equipment necessary
for Interconnection (pursuant to Section 4.0) or for access to unbundled Network
Elements (pursuant to Section 11.0), except that BA may offer only Virtual
Collocation if BA demonstrates to the

                                      -41-
<PAGE>

Commission that Physical Collocation is not practical for technical reasons or
because of space limitations, as provided in Section 251 (c)(6) of the Act. BA
shall provide Collocation solely for the purpose of Interconnection with
facilities or services of BA or access to unbundled Network Elements of BA,
except as otherwise mutually agreed to in writing by the Parties or as required
by the FCC or the Commission, subject to applicable federal and state Tariffs
and license agreements.

       13.2  MGC agrees to offer to BA Collocation of equipment for purposes of
Interconnection (pursuant to Section 4) on a non-discriminatory basis and at
comparable rates, terms and conditions as MGC may provide to other third
parties. MGC shall provide such collocation subject to applicable Tariffs.

       13.3  In the course of implementation of a Collocation project, BA shall:

             (a) identify the Collocation project manager assigned to the
                 project;

             (b) develop a written comprehensive "critical tasks" timeline
                 detailing the work (and relative sequence thereof) that is to
                 be performed by each Party or jointly by both Parties; and

             (c) provide MGC with the relevant engineering, requirements.

       13.4  The Collocating Party shall purchase Cross Connection to services
or facilities as described in applicable Tariffs.

       13.5  Collocation shall occur under the terms of each Party's applicable
and available Tariffs, except that MGC reserves the right to collocate Remote
Switching Concentrators ("RSCs") only to the extent that any and all switching
functionality of such equipment has been rendered inoperative and constitutes
equipment that is used solely for the purpose of interconnection and access to
unbundled network elements to provide Telephone Exchange Service to its end user
customer(s). MGC recognizes and agrees that BA shall only be required to provide
an environment suitable for placement of toll transmission equipment ("Toll
Transmission Environment"). If, pursuant to Applicable Law, BA is required at
any future time to provide other than a Toll Transmission Environment, then MGC
shall pay all additional costs incurred by BA to provide such an environment.

                                      -42-
<PAGE>

       13.6  Dedicated Transit Service

             13.6.1 "Dedicated Transit Service" provides for the dedicated
connection between a MGC Collocation arrangement established pursuant to
applicable tariffs and/or license agreements at a BA premises and a Collocation
arrangement of a third Party carrier that maintains a Collocation arrangement at
the same premises. Dedicated Transit Service shall be provided using a cross-
connection (dedicated connection) using suitable BA -provided cable or
transmission facilities or any other mutually agreed upon arrangement.

             13.6.2 The carrier that requests the Dedicated Transit Service
shall be the customer of record for both ends of the service in terms of
ordering, provisioning, maintenance, and billing. Alternative arrangements may
be utilized if agreed upon by all three parties. Rates and charges for Dedicated
Transit Service are stated in Exhibit A.

SECTION 251(b) PROVISIONS

 14.0   NUMBER PORTABILITY -- SECTION 251(b)(2)

        14.1 Scope

             14.1.1 The Parties shall provide Number Portability on a reciprocal
basis to each other to the extent technically feasible, and in accordance with
rules and regulations as from time to time prescribed by the FCC and/or the
Commission. The Parties shall provide Number Portability to each other in the
event a Customer of one Party ("Party A") elects to become a Customer of the
other Party ("Party B") and the Customer (i) remains within the same central
office district and within the boundary of the smallest geographical area that
is significant for billing (e.g. exchange zone) as defined by the LEC to whom
                            ----
the ported Customer's NXX code was originally assigned and (ii) elects to
utilize the original telephone number(s) correspondent to the Exchange
Service(s) it previously received from Party A in conjunction with the Exchange
Service(s) it will now receive from Party B.

             14.1.2 Until Permanent Number Portability is implemented by the
industry pursuant to regulations issued by the FCC and/or the Commission, the
Parties agree to reciprocally provide Interim Number Portability ("INP") to each
other at the prices listed in Exhibit A. Such agreed-upon prices for INP are not
intended to reflect either Party's views on the cost recovery mechanisms being
considered by the FCC in its current proceeding on number portability issues.

                                      -43-
<PAGE>

             14.1.3 Upon the agreement of the Parties or issuance of applicable
FCC and/or Commission order(s) or regulations mandating the adoption of a
Permanent Number Portability ("PNP") arrangement, BA and MGC will commence
migration from INP to the agreed-upon or mandated PNP arrangement as quickly as
practically possible while minimizing interruption or degradation of service to
their respective Customers. Once Permanent Number Portability is implemented,
either Party may withdraw, at any time and at its sole discretion, its INP
offerings, subject to advance notice to the other Party and coordination to
allow the seamless and transparent conversion of INTP Customer numbers to
Permanent Number Portability. Upon implementation of Permanent Number
Portability pursuant to FCC or Commission regulation, both Parties agree to
conform and provide such Permanent Number Portability. To the extent PNP rates
or cost recovery mechanisms are not established by the applicable FCC or
Commission order or regulation mandating the adoption of PNP, the Parties will
negotiate in good faith the charges or cost recovery mechanism for PNP service
at such time as a PNP arrangement is adopted by the Parties.

             14.1.4 Under either an INP or PNP arrangement, MGC and BA will
implement a process to coordinate Number Portability cutovers with ULL
conversions (as described in Section 11 of this Agreement).

       14.2  Procedures for Providing INP Through Remote Call Forwarding

       MGC and BA will provide INIP through Remote Call Forwarding as follows:

             14.2.1 A Customer of one Party ("Party A") elects to become a
Customer of the other Party ("Party B"). The Customer elects to utilize the
original telephone number(s) corresponding to the Telephone Exchange Service(s)
it previously received from Party A, in conjunction with the Telephone Exchange
Service(s) it will now receive from Party B. Upon receipt of confirmation of a
signed letter of agency ("LOA") from the Customer (and an associated service
order) assigning the number to Party B, Party A will implement an arrangement
whereby all calls to the original telephone number(s) will be forwarded to a new
telephone number(s) designated by Party B, only within the same Exchange Area as
the original telephone number(s). It is Party B's responsibility to maintain a
file of all LOAs and Party A may request, upon reasonable notice, a copy of the
LOA. Party A will route the forwarded traffic to Party B over the appropriate
Telephone Exchange Service Trunks as if the call had originated on Party A's
network.

             14.2.2 Party B will become the customer of record for the original
Party A telephone numbers subject to the INP arrangements. Party A shall use its
reasonable efforts to

                                      -44-
<PAGE>

consolidate into as few billing statements as possible all collect, calling
card, and 3rd-number billed calls associated with those numbers, with sub-
account detail by retained number. Such billing statement shall be delivered to
Party B in a mutually agreed-upon format via either electronic file transfer,
magnetic tape, or other mutually acceptable medium.

           14.2.3   Party A will update its Line Information Database ("LIDB")
listings for retained numbers, with the screening options provided by Party B on
a per order basis.  Party B shall determine which of the screening options
offered by Party A should apply to the Party B Customer account.  Party A will
cancel calling cards associated with those forwarded numbers assigned to Party
B.

           14.2.4   Party B will outpulse the telephone number to which the call
has been forwarded to the 911 Tandem Office. Party B will also provide the 911
database with both the forwarded number and the directory number, as well as the
appropriate address information of the Customer.

           14.2.5   Within two (2) business days of receiving notification from
the Customer, Party B shall notify Party A of the Customer's termination of
service with Party B, and shall further notify Party A as to that Customer's
instructions regarding its telephone number(s). Party A will reinstate service
to that Customer, cancel the INIP arrangements for that Customer's telephone
number(s), or redirect the INP arrangement to another INP-participating LEC
pursuant to the Customer's instructions at the time.

           14.2.6   Party A shall be permitted to cancel INP arrangements and
reassign the telephone number(s) upon receipt of notification from Party B or a
third party that is authorized to act on behalf of the Customer.  The Parties
agree to work cooperatively to develop procedures or adopt industry standards or
practices concerning the initiation and termination of INP service in a
multicarrier environment.

      14.3 Procedures for Providing INP Through Route Indexing

      Upon mutual agreement, BA will deploy a Route Index arrangement which
combines direct trunks, provisioned between BA's and MGC's end offices, with
trunk side routing translations and full functionality for those CLASS services
deployed in the specific BA switch. Under this arrangement, inbound calls to a
ported number will be pointed at a route index that sends the call to a
dedicated trunk group, built as a direct final, for the sole purpose of
facilitating completion of calls to a ported number.  BA will coordinate with
MGC to provide this solution in

                                      -45-
<PAGE>

a mutually agreeable and administratively manageable manner (e.g. NXX level) so
                                                             ---
as to minimize switch resource utilization for both Parties.

      14.4 Procedures for Providing INP Through Full NXX Code Migration

      Where either Party has activated an entire NXX for a single Customer, or
activated at least eighty percent (80%) of an NXX for a single Customer, with
the remaining numbers in that NXX either reserved for future use by that
Customer or otherwise unused, if such Customer chooses to receive Telephone
Exchange Service from the other Party, the first Party shall cooperate with the
second Party to have the entire NXX reassigned in the LERG (and associated
industry databases, routing tables, etc.) to an End Office operated by the
second Party.  Such transfer will be accomplished with appropriate coordination
between the Parties and subject to appropriate industry lead-times for movements
of NXXs from one switch to another.  Neither Party shall charge the other in
connection with this coordinated transfer.

      14.5 Other Interim Number Portability Options

      MGC may also request Direct Inward Dial Trunks pursuant to applicable
tariffs.

      14.6 Receipt of Terminating Compensation on Traffic to INP'ed Numbers

      The Parties agree in principle that, under the INP arrangements described
in subsections 14.2 and 14.3 above, terminating compensation on calls to INP'ed
numbers should be received by each Customer's chosen LEC as if each call to the
Customer had been originally addressed by the caller to a telephone number
bearing an NPA-NXX directly assigned to the Customer's chosen LEC.  In order to
accomplish this objective where INP is employed, the Parties shall utilize the
process set forth in this subsection 14.6 thereby terminating compensation on
calls subject to INP will be passed from the Party (the "Performing Party")
which performs the INP to the other Party (the "Receiving Party") for whose
Customer the INP is provided.

           14.6.1   The Parties shall individually and collectively make best
efforts to track and quantify INIP traffic between their networks based on the
CPN of each call by identifying CPNs which are INP'ed numbers.  The Receiving
Party shall charge the Performing Party for each minute of INP traffic at the
INP Traffic Rate specified in subsection 14.6.3 in lieu of any other
compensation charges for terminating such traffic, except as provided in
subsection 14.6.2.

           14.6.2   By the Interconnection Activation Date in each LATA, the
Parties shall jointly estimate for the prospective six months, based on historic
data of all traffic in the LATA,

                                      -46-
<PAGE>

the percentages of such traffic that, if dialed to telephone numbers bearing
NPA-NXXs directly assigned to a Receiving Party (as opposed to the INP'ed
number), would have been subject to (i) Reciprocal Compensation ("Recip
Traffic"), (ii) appropriate intrastate FGD charges ("Intra Traffic"), (iii)
interstate FGD charges ("Inter Traffic"), or (iv) handling, as Transit Traffic.
On the date which is six (6) months after the Interconnection Activation Date,
and thereafter on each succeeding six month anniversary of such Interconnection
Activation Date, the Parties shall establish new INIP traffic percentages to be
applied in the prospective six (6) month period, based on the Performing Party's
choice of actual INP traffic percentages from the preceding six (6) month period
or historic data of all traffic in the LATA.

          14.6.3   The INP Traffic Rate shall be equal to the sum of:

 (Recip Traffic percentage times the Reciprocal Compensation Rate set forth in
                           -----
                                   Exhibit A)
                                      plus
                                      ----
   (Intra Traffic percentage times Receiving Party's effective intrastate FGD
                             -----
                                     rates)
                                      plus
                                      ----
   (Inter Traffic percentage times Receiving Party's effective interstate FGD
                             -----
                                    rates).

     14.7 Recovery of INP Costs Pursuant to FCC Order and Rulemaking

     Notwithstanding anything to the contrary contained in this Section 14, in
light of the FCC's First Report and Order and Further Notice of Proposed
Rulemaking, adopted June 27, 1996, in CC Docket 95-116 (the "Order"), the
Parties stipulate and agree as follows:

          14.7.1   The rates listed in Exhibit A for the provision of INP are
appropriate amounts that each Party providing INP service should recover for the
provision of those INP functionalities in BA's operating territory on an interim
basis until the Commission mandates an alternative cost recovery mechanism for
the provision of INP.  For the INP functions it provides, each Party should be
allowed to recover these amounts in a manner consistent with any final FCC
and/or Commission order on INP cost recovery (such as a state-wide fund
contributed to by all telecommunications carriers).

          14.7.2   The Parties agree that neither Party waives its rights to
advocate its views that are consistent with this subsection 14.7 on the
appropriate INP cost recovery mechanism, or to present such views before any
relevant regulatory body or other agency as they relate to FCC or Commission
actions on INP cost recovery.

                                      -47-
<PAGE>

15.0    DIALING PARITY -- SECTION 251(b)(3)

        BA and MGC shall each provide the other with nondiscriminatory access to
such services and information as are necessary to allow the other Party to
implement Dialing Parity for Telephone Exchange Service, operator services,
directory assistance, and directory listing information with no unreasonable
dialing delays, as required under Section 251(b)(3) of the Act.

 16.0   ACCESS TO RIGHTS-OF-WAY -- SECTION 251(b)(4)

        Each Party ("Licensor") shall provide the other Party ("Licensee")
access for purposes of making attachments to the poles, ducts, rights-of-way and
conduits it owns or controls, pursuant to any existing or future license
agreement between the Parties, and in conformance with 47 U.S.C. 224, where
facilities are available, on terms, conditions and prices comparable to those
offered to any other entity pursuant to each Party's applicable Tariffs
(including generally available license agreements). Where no such Tariffs exist,
such access shall be provided in accordance with the requirements of 47 U.S.C.
224, including any applicable FCC regulations that may be issued.

 17.0   DATABASES AND SIGNALING

        BA shall provide MGC with interfaces to access BA's databases, including
LIDB and toll-free service access codes (i.e.; 800/888), and associated
signaling necessary for the routing and completion of MGC's traffic through the
provision of SS7 under its applicable tariffs.

 18.0   COORDINATED SERVICE ARRANGEMENTS

        18.1 Intercept and Referral Announcements

        When a Customer changes its service provider from BA to MGC, or from MGC
to BA, and does not retain its original telephone number, the Party formerly
providing service to such Customer shall provide a referral announcement
("Referral Announcement") on the abandoned telephone number which provides
details on the Customer's new number or provide other appropriate information to
the extent known. Referral Announcements shall be provided reciprocally, free of
charge to either the other Party or the Customer, for a period of not less than
one hundred and eighty days (180) days after the date the Customer changes its
telephone number in the case of business Customers and not less than ninety (90)
days after the date the Customer changes its telephone number in the case of
residential Customers or other time periods as may be required by the
Commission. The periods for referral announcement may be

                                      -48-
<PAGE>

shorter if a number shortage conditions is in effect for a particular NXX code.
However, if either Party provides Referral Announcements for a period different
than the above respective periods when its Customers change their telephone
numbers, such Party shall provide the same level of service to Customers of the
other Party.

        18.2 Coordinated Repair Calls

        MGC and BA will employ the following procedures for handling misdirected
repair calls:

             18.2.1   MGC and BA will educate their respective Customers as to
the correct telephone numbers to call in order to access their respective repair
bureaus.

             18.2.2   To the extent Party A is identifiable as the correct
provider of service to Customers that make misdirected repair calls to Party B,
Party B will immediately refer the Customers to the telephone number provided by
Party A, or to an information source that can provide the telephone number of
Party A, in a courteous manner and at no charge.

             18.2.3   MGC and BA will provide their respective repair contact
numbers to one another on a reciprocal basis.

      18.3 Customer Authorization

             18.3.1   Without in any way limiting either Party's obligations
under subsection 28.1, each Party shall comply with Applicable Laws with regard
to Customer selection of a primary Telephone Exchange Service provider. Until
the Commission and/or FCC adopts regulations and/or orders applicable to
Customer selection of a primary Telephone Exchange Service provider, each Party
shall adhere to the rules and procedures set forth in Section 64.1100 of the FCC
Rules, 47 CFR (S) 64.1100, in effect on the Effective Date hereof when ordering,
terminating, or otherwise changing Telephone Exchange Service on behalf of the
other Party's or another carrier's Customers.

             18.3.2   In the event either Party requests that the other Party
install, provide, change, or terminate a Customer's Telecommunications Service
(including, but not limited to, a Customer's selection of a primary Telephone
Exchange Service Provider) and (a) fails to provide documentary evidence of the
Customer's primary Telephone Exchange Service Provider selection upon request,
or (b) without having obtained authorization from the Customer for such
installation, provision, selection, change or termination in accordance with
Applicable Laws (or as provided in subsection 18.3.1 above), the requesting
Party shall be liable to the other Party for

                                      -49-
<PAGE>

all charges that would be applicable to the Customer for the initial change in
the Customer's Telecommunications Service and any charges for restoring the
Customer's Telecommunications Service to its Customer-authorized condition,
including to the appropriate primary Telephone Exchange Service provider.

             18.3.3   Without in any way limiting MGC's obligations under
subsection 28.1, MGC shall comply with Applicable Laws with regard to Customer
Proprietary Network Information, including, but not limited to, 47 U.S.C. (S)
222. MGC shall not access (including, but not limited to, through BA OSS
Services and BA Pre-OSS Services), use, or disclose Customer Proprietary Network
Information made available to MGC by BA pursuant to this Agreement unless MGC
has obtained any Customer authorization for such access, use and/or disclosure
required by Applicable Laws. By accessing, using or disclosing Customer
Proprietary Network Information, MGC represents and wan-ants that it has
obtained authorization for such action from the applicable Customer in the
manner required by Applicable Laws and this Agreement. MGC shall, upon request
by BA, provide proof of such authorization (including a copy of any written
authorization).

          18.3.4   BA shall have the right to monitor and/or audit MGC's access
to and use and/or disclosure of Customer Proprietary Network Information that is
made available by BA to MGC pursuant to this Agreement to ascertain whether MGC
is complying with the requirements of Applicable Laws and this Agreement with
regard to such access, use, and/or disclosure. To the extent permitted by
Applicable Laws, the foregoing right shall include, but not be limited to, the
right to electronically monitor MGC's access to and use of Customer Proprietary
Network Information that is made available by BA to MGC pursuant to this
Agreement.

 19.0   DIRECTORY SERVICES ARRANGEMENTS

        BA will provide certain directory services to MGC as defined herein.  In
this Section 19 of this Agreement, references to MGC customer telephone numbers
means telephone numbers falling within NXX codes directly assigned to MGC and to
numbers which are retained by MGC on the customer's behalf pursuant to Interim
Telephone Number Portability arrangements described in Section 14.0 of this
Agreement.

        19.1 Directory Listings and Directory Distributions

             19.1.1   BA will include MGC's Customers telephone numbers in all
of its "White Pages" and "Yellow Pages" directory listings (including electronic
directories) and directory assistance databases associated with the areas in
which MGC provides services to such

                                      -50-
<PAGE>

customers, and will distribute such directories to such customers, in an
identical and transparent manner in which it provides those functions for its
own customers' telephone numbers.

             19.1.2   BA will include all MGC NXX codes on appropriate existing
calling charts in the BA customer Guide section of the directory in the same
manner as it provides this conformation for its own NXX Codes.

             19.1.3   MGC will provide BA with its directory listings and daily
updates to those listings (including new, changed, and deleted listings) in a
mutually agreed upon format at no charge.

             19.1.4   BA will accord MGC's directory listing information the
same level of confidentiality which BA accords its own directory listing
information.

             19.1.5   BA will include, without charge, an Other Local Service
Provider section in its Primary White and Primary White and Yellow Page
Telephone Directories. When MGC is operating with established end users in the
geographic region covered by a specific White Page or Primary White and Yellow
Page Directory, MGC will be included, at its request, in the Other Local Service
Provider section of that specific directory. MGC will be responsible for
providing the Other Local Service Provider Information Pages Input Form to Bell
Atlantic Yellow Pages Company for each directory. MGC telephone numbers for
installation, repair and billing departments, and logo information that appears
in the directory will be in accordance with BA's generally applicable policies.
MGC shall comply with the Other Local Service Provider Information Pages General
Guidelines.

             19.1.6   BA will provide MGC with a report of all MGC customer
listings ninety (90) days prior to service order close date for that directory
in such form and format as may be mutually agreed to by both parties. Both
Parties shall use their best efforts to ensure the accurate listing of such
information. BA will process any corrections made by MGC with respect to its
listings, provided such corrections are received prior to the close date of the
particular directory. BA will provide appropriate advance notice of applicable
close dates.

             19.1.7   Yellow Page Maintenance

             BA will work cooperatively with MGC so that Yellow Page
advertisements purchased by customers who switch their service to MGC (including
customers utilizing Interim Telephone Number Portability) are maintained without
interruption. BA will allow MGC

                                      -51-
<PAGE>

customers to purchase new yellow pages advertisements without discrimination,
under the identical rates, terms and conditions that apply to BA's customers.

        19.2 Directory Assistance and Operator Services

        At the option of MGC, BA will provide Directory Assistance to MGC
Customers on behalf of MGC under the following terms and conditions:

        BA provides Directory Assistance ("DA") service to MGC's customers
served by MGC's own switching facilities over separate trunk groups ordered or
provided by MGC to the BA Traffic Operation Position Systems ("TOPS") switch(es)
designated by BA. Access to the BA DA platform from MGC's local switch requires
that MGC utilize Feature Group C ("FG-C") Modified Operator Services Signaling.
The Interoffice Transmission Facility ("IOF") mileage rate for the facility will
be based on airline mileage using V&H coordinate methods from the MGC location
to the designated BA TOPS. Trunk terminations at the TOPS switch(es) require MGC
to purchase trunk ports at rates specified in Exhibit A. For each trunk group
MGC must indicate the DA option selected from those set forth in 19.2.2 (a), (b)
and (c) below; and/or

        BA provides MGC access to DA service for MGC Customers served by BA
unbundled local Switching Elements, through dedicated IOF and trunk ports
between the BA End Office in which MGC has unbundled local switching ports and
the BA TOPS switches. Additional per minute of use ("MOU") local switching
charges, set forth in Exhibit A, will apply for all calls which interconnect
from the unbundled local switching ports to the BA TOPS.

             19.2.1   Directory Assistance

             At MGC's option, BA will provide MGC Customers access to Telephone
             Directory Assistance operators via 411, 555-1212, or 1+ (NPA) 555-
             1212 dialing.

             Rates for requests for Directory Assistance will be billed to MGC
             and are stated in Exhibit A.

             BA will not provide Directory Assistance call allowances to MGC or
             MGC's Customers.

                                      -52-
<PAGE>

             19.2.2   Directory Assistance with Branding

             This service allows MGC to select only one of the three options as
             follows:

             .  (a)     MGC may provide BA with a MGC branded, introductory
                        Directory Assistance and Operator Services announcement
                        which will be played for all MGC Customers completing DA
                        or Operator Services calls over the trunk group to the
                        BA TOPS.

             Such branding announcement may be a maximum of eighteen (18)
             seconds, recorded by MGC or, at MGC's request and subject to
             charges to be determined on an individual case basis, by BA. MGC
             must provide a minimum of two (2) audio cassette recordings of the
             MGC branding announcement.

             .  (b)     MGC may request BA branded announcement.

             .  (c)     MGC may request an unbranded, generic announcement.

             Rates for requests for Directory Assistance with branding will be
             billed to MGC and are stated in Exhibit A.

        19.3 Directory Assistance Call Completion

        At MGC's option BA will provide Directory Assistance Call Completion
("DACC") for automatic connection of a MGC Customer calling BA DA and the
published telephone number requested.

        After the BA DA operator provides the requested number, a recorded
service message will offer to connect the MGC Customer to that number for a
specified additional charge.

        The MGC Customer can accept the offer for DACC by depressing a button
(touch tone) or responding by voice (dial), as instructed by the voice message.

        The DACC charge will apply as set forth in Exhibit A.  In addition, for
calls originating from a facilities-based MGC switch or for calls from MGC
unbundled local switching line ports, there will be charges to terminate the
call from the TOPS Tandem to the called party.  These include applicable per
minute of use Unbundled Tandem Transport Charges ("UTTC") for each call
transported between the TOPS Tandem and the originating End Office, per minute
of use

                                      -53-
<PAGE>

Tandem Transit Switching Charge ("TTSC") for each call that traverses a BA
Tandem switch, and the appropriate per minute of use charges for Reciprocal
Compensation ("UNRCC" or "UCRCC") depending on the terminating End Office
Switch, as set forth in Exhibit A.

        DACC is available to MGC residence and business Customers and from
public telephones on a collect, bill to third number or calling card basis.
Appropriate charges for the selected billing option will apply in addition to
the DACC charge.

        DACC is available with all telephone numbers in the BA DA database with
the following exceptions:

               -  non-published telephone numbers
               -  interLATA numbers
               -  700, 800 and 900 numbers.

        When a caller requests more than one number for Directory Assistance,
DACC is offered only for the first eligible listing that was selected by the
operator.

        The DACC charge applies only to calls actually completed.

        The DACC charge will be credited for completion of calls to the wrong
number, incomplete connections or calls with unsatisfactory transmission as set
forth in Section 19.4 following.

        Rates for requests for DACC will be billed to MGC as set forth in
Exhibit A.

        19.4 Directory Assistance Credits

        Directory Assistance credits will apply to MGC for directory
inaccessibility, wrong numbers, cut-offs and poor transmission.  When a MGC
Customer reports such a call, i.e. the requested number, the provided number,
and the reason the provided number is incorrect, to the BA directory assistance
operator, the number of calls for which a credit will apply will be developed by
the BA DA operator and credited to MGC.  BA will identify the specific MGC
Customer to whom the credit applies.

                                      -54-
<PAGE>

        19.5 Direct Access to Directory Assistance

        Direct Access to Directory Assistance ("DADA") is a database service
that provides access to BA listings to a MGC operator. The DADA database is a
physically distinct entity from the BA DA database, populated with identical
listing data, and updated from the same source on a daily basis.

        To obtain access, MGC is required to arrange for interconnection to the
database.  BA will interconnect at any technically feasible point designated by
MGC.

        BA will provide MGC with a User Guide for training its agents.

        Rates and Charges for DADA are stated in Exhibit A.

        19.6 Inward Operator Services

        Inward Operator Services enables MGC or its operator service provider to
connect to the BA TOPS office(s) for the purpose of providing certain operator
services to MGC Customers. There are two types of Inward Operator Services:

             19.6.1   Busy Line Verification ("BLV"):

             BLV is service wherein, at the request of MGC's Customer or
operator service provider, a BA operator will attempt to determine the status of
an exchange service line (e.g., conversation in progress, available to receive a
                          ---
call or out of service) and report to MGC's Customer or operator service
provider.

             19.6.2   Busy Line Verification/Interrupt ("BLV/I")

             BLV/I is a service wherein, at the request of MGC's Customer or
operator service provider, a BA operator will determine and report whether a
conversation is in progress on an exchange service line, and then interrupt such
conversation to request that it be terminated so that MGC's Customer may
complete a call to the line.  MGC may order Inward Operator Services under the
following terms and conditions:

             Inward Operator Services are provided over trunk groups ordered by
MGC or its alternate operator service provider to BA TOPS switch(es) as
specified by BA.

                                      -55-
<PAGE>

          Inward Operator Services cannot be provided for ported telephone
numbers, or telephone numbers which forward calls using Call Forwarding Variable
service features.

          BA will provide BLV and BLV/I for telephone numbers provided in its
operating territory.

          The BA operator will respond to one telephone number per call on
requests for BLV or BLV/I.

          BA will designate the TOPS switch(es) serving specific NXXs and make
such information available to MGC.

          MGC and its Customer shall indemnify and save BA harmless against all
claims that may arise from either party to the interrupted call or any other
person.

          Rates and Charges for Inward Operator Services are set forth in
Exhibit A.

     19.7 Operator Services

     At MGC's option, BA will provide for the routing of Operator Services
("OS") calls dialed by MGC Customers directly to either the MGC Operator
Services platform or to the BA Operator Services platform.

     BA provides OS to MGC Customers served by MGC switches over separate trunk
groups ordered or provided by MGC to the BA TOPS switch(es) as specified by BA.
Access to the BA OS platform from MGC's local switch requires that MGC utilize
Feature Group C Modified Operator Services Signaling.  The Interoffice
Transmission Facility mileage rate for the facility will be based on airline
mileage using V&H coordinate methods from the MGC location to the designated BA
TOPS.  Trunk terminations at the TOPS switch(es) require MGC to purchase trunk
ports at rates specified in Exhibit A.  For each trunk group, MGC must indicate
the branding option selected as set forth in Sections 19.2.2 (a), (b), and (c)
preceding; and/or

     BA also provides MGC access to OS for MGC Customers served by BA unbundled
local Switching Elements, through dedicated IOF and trunk ports between the BA
End Office in which MGC has unbundled local switching ports and the BA TOPS
switches.  Additional per minute of use ("MOU") local switching charges, set
forth in Exhibit A, will apply for all calls which interconnect from the
unbundled local switching ports to the BA TOPS.

                                      -56-
<PAGE>

     19.8 0+ Mechanized Operator Calls (Calling Card, Collect, Bill to Third
     Number)

     At MGC's option, the mechanized BA operator interface will provide MGC's
Customer the ability to complete 0+ mechanized operator calls using alternate
billing capabilities without live operator assistance.  Alternate billing call
completions can be calling card, collect or bill-to-third-number.

     0+ mechanized calls may be routed over the same DA trunk groups which
provide interconnection from the MGC switch or from the MGC unbundled local
switching line ports to the BA TOPS.

     Rates for requests for 0+ mechanized calls will be billed to MGC and are
set forth in Exhibit A.  In addition, for calls originating from a facilities-
based MGC switch or for calls from MGC unbundled local switching line ports,
there will be charges to terminate the call from the TOPS Tandem to the called
party.  These include applicable per minute of use Unbundled

     Tandem Transport Charges ("UTTC") for each call transported between the
TOPS Tandem and the originating End Office, per minute of use Tandem Transit
Switching Charge ("TTSC') for each call that traverses a BA Tandem switch, and
the appropriate per minute of use charges for Reciprocal Compensation ("UNRCC"
or "UCRCC") depending on the terminating End Office Switch, as set forth in
Exhibit A.

     19.9 0- Operator Handled Calls (Calling Card, Collect, Bill to Third
     Number)

     At MGC's option, the BA will provide live operator assistance to the MGC
Customer for intraLATA calls completion via 0- dialing with alternate billing
capabilities.  Alternate billing capabilities include calling card, collect and
bill-to-third-number, station-to-station and person-to-person.

     0- operator handled calls may be routed over the same DA trunk groups which
provide interconnection from the MGC switch or the MGC unbundled local switching
line ports to the BA TOPS.

     Rates for requests for 0- operator handled calls will be billed to MGC and
are set forth in Exhibit A.  In addition, for calls originating from a
facilities-based MGC switch or for calls from MGC unbundled local switching line
ports, there will be charges to terminate the call from the TOPS Tandem to the
called party.  These include applicable per minute of use Unbundled Tandem
Transport Charges ("UTTC") for each call transported between the TOPS Tandem and

                                      -57-
<PAGE>

the originating End Office, per minute of use Tandem Transit Switching Charge
("TTSC") for each call that traverses a BA Tandem switch, and the appropriate
per minute of use charges for Reciprocal Compensation ("UNRCC" or "UCRCC")
depending on the terminating End Office Switch, as set forth in Exhibit A.

     19.10 Operator Emergency Bulletin Service

     At MGC's option, BA will provide MGC with emergency numbers for police,
fire, ambulance and Public Safety Answering Points (PSAP) in the BA serving area
so that MGC operators can connect callers directly to the proper emergency
bureaus.

     The BA Operator Emergency Bulletin Service lists the emergency, police,
fire, ambulance and PSAP telephone numbers by municipality and in alphabetical
order for each of the areas served by BA.

     Operator Emergency Bulletin Service is available for use by MGC operators
solely for the purpose of assisting callers in reaching an emergency bureau.

     Operator Emergency Bulletin Service provides a copy of BA's own emergency
bulletin. This service includes one annual copy of the bulletin plus periodic
updates during the year. Other Local Exchange Carrier emergency numbers are not
included.

     Rates and charges for Operator Emergency Bulletin service are set forth in
Exhibit A.

     19.11 Operator Passthrough Service

     At MGC's option, BA will, provide MGC's Customers with operator passthrough
service to access their presubscribed Interexchange Carrier's operators for
operator assisted call completion.  Such access will be available only where the
presubscribed IXC provides operator services for MGC's Customers for calls
originating from a particular LATA, and where the IXC OS has the capability to
receive calls passed from BA within the LATA.

     If an IXC does not provide operator services for MGC's Customer, BA will
provide MGC's Customer with access to an IXC designated operator services
provider or to a BA provided announcement which will direct MGC's Customer to
contact the Customer's presubscribed IXC for dialing instructions.

                                      -58-
<PAGE>

      The Operator Passthrough charge is applied on an operator work second
basis, and rated using the 0- operator handled calls in Exhibit A.

      MGC will be charged for calls passed through to either the Presubscribed
IXC's operator, or to a BA provided recording indicating that the IXC does not
provide service in that area.

      Rates and charges for operator passthrough service are stated in Exhibit
A.

20.0  COORDINATION WITH TARIFF TERMS

      20.1  The Parties acknowledge that some of the services, facilities, and
arrangements described herein are or will be available under and subject to the
terms of the federal or state tariffs of the other Party applicable to such
services, facilities, and arrangements.  To the extent a Tariff of the providing
Party applies to any service, facility, and arrangement described herein, the
Parties agree as follows:

            20.1.1   Those rates and charges set forth in Exhibit A for the
services, facilities, and arrangements described herein that reference or are
identical to a rate contained in an existing Tariff of the providing Party,
shall conform with those contained in the then-prevailing Tariff and vary in
accordance with any changes that may be made to the Tariff rates and charges
subsequent to the Effective Date.

            20.1.2   As applied to wholesale discount rates, unbundled Network
Elements or termination of Reciprocal Compensation Traffic and other
Interconnection services purchased for the provision of Telephone Exchange
Service or Exchange Access, the rates and charges set forth in Exhibit A shall
apply until such time as they are replaced by new rates as may be approved by
the Commission from time to time, subject to a stay or other order issued by any
court of competent jurisdiction.  At such time(s) as such new rates have been
approved by the Commission, the Parties shall amend Exhibit A to reflect the new
approved rates.

      20.2  Except with respect to the rates and charges described in subsection
20.1 above, all other terms contained in an applicable Tariff of the providing
Party shall apply in connection with its provision of the particular service,
facility, and arrangement hereunder.

                                      -59-
<PAGE>

 21.0     INSURANCE

          21.1  MGC shall maintain, during the term of this Agreement, all
insurance and/or bonds required by law and necessary to satisfy its obligations
under this Agreement, including, without limitation, its obligations set forth
in Section 25 hereof. At a minimum and without limiting the foregoing covenant,
MGC shall maintain the following insurance:

     (a)  Commercial General Liability Insurance, on an occurrence basis,
          including but not limited to, premises-operations, broad form property
          damage, products/completed operations, contractual liability,
          independent contractors, and personal injury, with limits of at least
          $2,000,000 combined single limit for each occurrence.

     (b)  Automobile Liability, Comprehensive Form, with limits of at least
          $500,000 combined single limit for each occurrence.

     (c)  Excess Liability, in the umbrella form, with limits of at least
          $10,000,000 combined single limit for each occurrence.

     (d)  Worker's Compensation Insurance as required by law and Employer's
          Liability Insurance with limits of not less than $1,000,000 per
          occurrence.

     21.2 MGC shall name BA as an additional insured on the foregoing insurance.

     21.3 MGC shall, within two (2) weeks of the date hereof and on a semi-
annual basis thereafter, furnish certificates or other adequate proof of the
foregoing insurance.  The certificates or other proof of the foregoing insurance
shall be sent to: [Bell Atlantic, Insurance Administration Group, 1320 N. Court
House Road, 4th Floor, Arlington, Virginia, 22201]. In addition, MGC shall
require its agents, representatives, or contractors, if any, that may enter upon
the premises of BA or BA's affiliated companies to maintain similar and
appropriate insurance and, if requested, to furnish BA certificates or other
adequate proof of such insurance. Certificates furnished by MGC or MGC's agents,
representatives, or contractors shall contain a clause stating: "BA - New York
shall be notified in writing at least thirty (30) days prior to cancellation of,
or any material change in, the insurance."

                                      -60-
<PAGE>

 22.0     TERM AND TERMINATION

          22.1  This Agreement shall be effective as of the date first above
written and continue in effect until December 31, 1999, and thereafter the
Agreement shall continue in force and effect unless and until terminated as
provided herein. Upon the expiration of the initial term, either Party may
terminate this Agreement by providing written notice of termination to the other
Party, such written notice to be provided at least ninety (90) days in advance
of the date of termination. In the event of such termination, those service
arrangements made available under this Agreement and existing at the time of
termination shall continue without interruption under (a) a new agreement
executed by the Parties, (b) standard Interconnection terms and conditions
approved and made generally effective by the Commission, (c) Tariff terms and
conditions generally available to CLECs, or (d) if none of the above is
available, under the terms of this Agreement on a month-to-month basis until
such time as (a), (b), or (c) becomes available.

          22.2  For service arrangements made available under this Agreement and
existing at the time of termination, if the standard Interconnection terms and
conditions or Tariff terms and conditions result in the non-terminating Party
physically rearranging facilities or incurring programming expense, the non-
terminating Party shall be entitled to recover such rearrangement or programming
costs from the terminating Party.

          22.3  If either Party defaults in the payment of any amount due
hereunder, or if either Party violates any other provision of this Agreement,
and such default or violation shall continue for sixty (60) days after written
notice thereof, the other Party may terminate this Agreement and services
hereunder by written notice; provided the other Party has provided the
defaulting Party and the appropriate federal and/or state regulatory bodies with
written notice at least twenty-five (25) days prior to terminating service.
Notice shall be posted by overnight mail, return receipt requested. If the
defaulting Party cures the default or violation within the twenty-five (25) day
period, the other Party will not terminate service or this Agreement but shall
be entitled to recover all costs, if any, incurred by it in connection with the
default or violation, including, without limitation, costs incurred to prepare
for the termination of service.

 23.0     DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

          EXCEPT AS EXPRESSLY PROVIDED UNDER THIS AGREEMENT, NO PARTY MAKES OR
RECEIVES ANY WARRANTY, EXPRESS OR IMPLIED, WITH RESPECT TO THE SERVICES,
FUNCTIONS AND PRODUCTS IT PROVIDES UNDER OR CONTEMPLATED BY THIS AGREEMENT AND
THE PARTIES DISCLAIM THE IMPLIED

                                      -61-
<PAGE>

WARRANTIES OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE.

 24.0     CANCELLATION CHARGES

          Except as provided in this Agreement or as otherwise provided in any
applicable Tariff, no cancellation charges shall apply.

 25.0     INDEMNIFICATION

          25.1  Each Party agrees to release, indemnify, defend and hold
harmless the other Party from and against all losses, claims, demands, damages,
expenses, suits or other actions, or any liability whatsoever, including, but
not limited to, costs and attorneys' fees (collectively, a "Loss"), (a) whether
suffered, made, instituted, or asserted by any other party or person, relating
to personal injury to or death of any person, or for loss, damage to, or
destruction of real and/or personal property, whether or not owned by others,
arising from transactions or activities relating to this Agreement and to the
extent proximately caused by the negligent or willful acts or omissions of the
indemnifying Party, regardless of the form of action, or (b) suffered, made,
instituted, or asserted by its own customer(s) against the other Party arising
out of the other Party's provision of services to the indemnifying Party under
this Agreement. Notwithstanding the foregoing indemnification, nothing in this
Section 25.0 shall affect or limit any claims, remedies, or other actions the
indemnifying Party may have against the indemnified Party under this Agreement,
any other contract, or any applicable Tariff(s), regulations or laws for the
indemnified Party's provision of said services.

          25.2  The indemnification provided herein shall be conditioned upon:

          (a)   The indemnified Party shall promptly notify the indemnifying
                Party of any action taken against the indemnified Party relating
                to the indemnification.

          (b)   The indemnifying Party shall have sole authority to defend any
                such action, including the selection of legal counsel, and the
                indemnified Party may engage separate legal counsel only at its
                sole cost and expense.

          (c)   In no event shall the indemnifying Party settle or consent to
                any judgment pertaining to any such action without the prior
                written consent of the indemnified Party, which consent shall
                not be unreasonably withheld. However, in the event the
                settlement or judgment requires a contribution from or affects
                the rights of the

                                      -62-
<PAGE>

                Indemnified Party, the Indemnified Party shall have the right to
                refuse such settlement or judgment and, at its own cost and
                expense, take over the defense against such Loss, provided that
                in such event the indemnifying Party shall not be responsible
                for, nor shall it be obligated to indemnify the indemnified
                Party against, the Loss for any amount in excess of such refused
                settlement or judgment.

          (d)   The indemnified Party shall, in all cases, assert any and all
                provisions in its Tariffs that limit liability to third parties
                as a bar to any recovery by the third party claimant in excess
                of such limitation of liability.

          (e)   The indemnified Party shall offer the indemnifying Party all
                reasonable cooperation and assistance in the defense of any such
                action.

 26.0     LIMITATION OF LIABILITY

          26.1  The liability of either Party to the other Party for damages
arising out of failure to comply with a direction to install, restore or
terminate facilities; or out of failures, mistakes, omissions, interruptions,
delays, errors, or defects (collectively, "Errors") occurring in the course of
furnishing any services, arrangements, or facilities hereunder shall be
determined in accordance with the terms of the applicable tariff(s) of the
providing Party. In the event no tariff(s) apply, the providing Party's
liability for such Errors shall not exceed an amount equal to the pro rata
monthly charge for the period in which such failures, mistakes, omissions,
interruptions, delays, errors or defects occur. Recovery of said amount shall be
the injured Party's sole and exclusive remedy against the providing Party for
such failures, mistakes, omissions, interruptions, delays, errors or defects.

          26.2  Neither Party shall be liable to the other in connection with
the provision or use of services offered under this Agreement for indirect,
incidental, consequential, reliance or special damages, including (without
limitation) damages for lost profits (collectively, "Consequential Damages"),
regardless of the form of action, whether in contract, warranty, strict
liability, or tort, including, without limitation, negligence of any kind, even
if the other Party has been advised of the possibility of such damages;
provided, that the foregoing shall not limit a Party's obligation under Section
25.

          26.3  The Parties agree that neither Party shall be liable to the
customers of the other Party in connection with its provision of services to the
other Party under this Agreement. Nothing in this Agreement shall be deemed to
create a third party beneficiary relationship between the Party providing the
service and the customers of the Party purchasing the service. In

                                      -63-
<PAGE>

the event of a dispute involving both Parties with a customer of one Party, both
Parties shall assert the applicability of any limitations on liability to
customers that may be contained in either Party's applicable Tariff(s).

 27.0     PERFORMANCE STANDARDS FOR SPECIFIED ACTIVITIES

          27.1 Performance Standards

          BA shall provide the Interconnection and unbundled Network Elements
contemplated hereunder in accordance with the performance standards set forth in
Section 251(c) of the Act and the FCC Regulations.

          27.2 Performance Reporting

               27.2.1   At such time as BA makes available the Performance
Monitoring Reports described by the FCC Order in the Application of BELL
ATLANTIC Corporation, Transferee, For Consent to Transfer Control of BELL
ATLANTIC Corporation and its Subsidiaries, NSD-L-96-10, Memorandum Opinion and
Order (August 14, 1997) ("the FCC Merger Order") to other Telecommunications
Carriers purchasing Interconnection from BA, BA shall provide MGC with the
Performance Monitoring Reports applicable to MGC in accordance with the
requirements of said FCC Merger Order.

               27.2.2   MGC agrees that the performance information included in
the Performance Monitoring Reports is confidential and proprietary to BA, and
shall be used by MGC solely for internal performance assessment purposes, for
purposes of joint MGC and BA assessments of service performance, and for
reporting to the Commission, the FCC, or courts of competent jurisdiction, under
cover of an agreed-upon protective order, for the sole purpose of enforcing BA's
obligations hereunder. MGC shall not otherwise disclose this information to
third parties.

 28.0     COMPLIANCE WITH LAWS; REGULATORY APPROVAL

          28.1  Each Party shall promptly notify the other Party in writing of
any governmental action that suspends, cancels, withdraws, limits, or otherwise
materially affects its ability to perform its obligations hereunder.

          28.2  The Parties understand and agree that this Agreement will be
filed with the Commission and may thereafter be filed with the FCC as an
integral part of BA's application

                                      -64-
<PAGE>

pursuant to Section 271(d) of the Act. The Parties covenant and agree that this
Agreement is satisfactory to them as an agreement under Section 251 of the Act.
Each Party covenants and agrees to fully support approval of this Agreement by
the Commission or the FCC under Section 252 of the Act without modification. The
Parties, however, reserve the right to seek regulatory relief and otherwise seek
redress from each other regarding performance and implementation of this
Agreement, including, without limitation, the conformance of this Agreement to
the FCC Regulations as provided in subsection 28.3 below.

          28.3  The Parties recognize that the FCC has issued and may continue
to issue regulations implementing Sections 251, 252, and 271 of the Act that
affect certain terms contained in this Agreement. In the event that any one or
more of the provisions contained herein is inconsistent with any applicable rule
contained in such FCC Regulations or, in BA's reasonable determination, affects
BA's application pursuant to Section 271(d) of the Act, the Parties agree to
make only the minimum revisions necessary to eliminate the inconsistency or
amend the application-affecting provision(s). Such minimum revisions shall not
be considered material, and shall not require further Commission approval
(beyond any Commission approval required under Section 252(e) of the Act).

          28.4  In the event any Applicable Law other than the FCC Regulations
requires modification of any material term(s) contained in this Agreement,
either Party may require a renegotiation of the term(s) that require direct
modification as well as of any term(s) that are reasonably affected thereby.  If
neither Party requests a renegotiation or if an Applicable Law requires
modification of any non-material term(s), then the Parties agree to make only
the minimum modifications necessary, and the remaining provisions of this
Agreement shall remain in full force and effect.  For purposes of this
subsection 28.4 and without limitation of any other modifications required by
Applicable Laws, the Parties agree that any modification required by Applicable
Laws (i) to the two-tier Reciprocal Call Termination compensation structure for
the transport and termination of Reciprocal Compensation Traffic described in
Exhibit A, or (ii) that affects either Party's receipt of reciprocal
compensation for the transport and termination of Reciprocal Compensation
Traffic, shall be deemed to be a modification of a material term that requires
immediate good faith renegotiation between the Parties.

          28.5  Compliance with the Communications Assistance for Law
Enforcement Act of 1994 ("CALEA"). Each Party represents and warrants that any
equipment, facilities or services provided to the other Party under this
Agreement comply with CALEA. Each Party shall indemnify and hold the other Party
harmless from any and all penalties imposed upon the other Party for such
noncompliance and shall at the non-compliant Party's sole cost and expense,

                                      -65-
<PAGE>

modify or replace any equipment, facilities or services provided to the other
Party under this Agreement to ensure that such equipment, facilities and
services fully comply with CALEA.

 29.0     MISCELLANEOUS

          29.1 Authorization

               29.1.1   BA is a corporation duly organized, validly existing and
in good standing under the laws of the State of New York and has full power and
authority to execute and deliver this Agreement and to perform the obligations
hereunder.

               29.1.2   MGC is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, and has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder.

          29.2 Independent Contractor

          Each Party shall perform services hereunder as an independent
contractor and nothing herein shall be construed as creating any other
relationship between the Parties. Each Party and each Party's contractor shall
be solely responsible for the withholding or payment of all applicable federal,
state and local income taxes, social security taxes and other payroll taxes with
respect to their employees, as well as any taxes, contributions or other
obligations imposed by applicable state unemployment or workers' compensation
acts. Each Party has sole authority and responsibility to hire, fire and
otherwise control its employees.

          29.3 Force Majeure

          Neither Party shall be responsible for delays or failures in
performance resulting from acts or occurrences beyond the reasonable control of
such Party, regardless of whether such delays or failures in performance were
foreseen or foreseeable as of the date of this Agreement, including, without
limitation: adverse weather conditions, fire, explosion, power failure, acts of
God, war, revolution, civil commotion, or acts of public enemies; any law,
order, regulation, ordinance or requirement of any government or legal body; or
labor unrest, including, without limitation, strikes, slowdowns, picketing or
boycotts; or delays caused by the other Party or by other service or equipment
vendors; or any other circumstances beyond the Party's reasonable control. In
such event, the affected Party shall, upon giving prompt notice to the other
Party, be excused from such performance on a day-to-day basis to the extent

                                      -66-
<PAGE>

such Party's obligations relate to the performance so interfered with). The
affected Party shall use its best efforts to avoid or remove the cause(s) of
non-performance and both Parties shall proceed to perform with dispatch once the
cause(s) are removed or cease.

     29.4   Confidentiality

            29.4.1  All information, including but not limited to specification,
microfilm, photocopies, magnetic disks, magnetic tapes, drawings, sketches,
models, samples, tools, technical information, data, employee records, maps,
financial reports, and market data, (i) furnished by one Party to the other
Party dealing with customer specific, facility specific, or usage specific
information, other than customer information communicated for the purpose of
publication or directory database inclusion, or (ii) in written, graphic,
electromagnetic, or other tangible form and marked at the time of delivery as
"Confidential" or "Proprietary," or (iii) communicated orally and declared to
the receiving Party at the time of delivery, and by written notice given to the
receiving Party within ten (10) days after delivery, to be "Confidential" or
"Proprietary" (collectively referred to as "Proprietary Information"), shall
remain the property of the disclosing Party.

            29.4.2  Each Party shall keep all of the other Party's Proprietary
Information confidential in the same manner it holds its own Proprietary
Information confidential (which in all cases shall be no less than reasonable)
and shall use the other Party's Proprietary Information only for performing the
covenants contained in this Agreement.  Neither Party shall use the other
Party's Proprietary Information for any other purpose except upon such terms and
conditions as may be agreed upon between the Parties in writing.

            29.4.3  Unless otherwise agreed, the obligations of confidentiality
and non-use set forth in this Agreement do not apply to such Proprietary
Information that:

            (a)     was, at the time of receipt, already known to the receiving
                    Party free of any obligation to keep it confidential as
                    evidenced by written records prepared prior to delivery by
                    the disclosing Party; or

            (b)     is or becomes publicly known through no wrongful act of the
                    receiving Party; or

            (c)     is rightfully received from a third person having no direct
                    or indirect secrecy or confidentiality obligation to the
                    disclosing Party with respect to such information; or

                                      -67-
<PAGE>

            (d)     is independently developed by an employee, agent, or
                    contractor of the receiving Party that is not involved in
                    any manner with the provision of services pursuant to this
                    Agreement and does not have any direct or indirect access to
                    the Proprietary Information; or

            (e)     is approved for release by written authorization of the
                    disclosing Party; or

            (f)     is required to be made public by the receiving Party
                    pursuant to applicable law or regulation, provided that the
                    receiving Party shall give sufficient notice of the
                    requirement to the disclosing Party to enable the disclosing
                    Party to seek protective orders.

            29.4.4  Upon request by the disclosing Party, the receiving Party
shall return all tangible copies of Proprietary Information, whether written,
graphic, electromagnetic or otherwise, except that the receiving Party may
retain one copy for archival purposes only.

            29.4.5  Notwithstanding any other provision of this Agreement, the
provisions of this subsection 29.4 shall apply to all Proprietary Information
furnished by either Party to the other in furtherance of the purpose of this
Agreement, even if furnished before the Effective Date.

     29.5   Choice of Law

     The construction, interpretation and performance of this Agreement shall be
governed by and construed in accordance with the laws of the state in which this
Agreement is to be performed, except for its conflicts of laws provisions.  In
addition, insofar as and to the extent federal law may apply, federal law will
control.

     29.6   Taxes

     Each Party purchasing services hereunder shall pay or otherwise be
responsible for all federal, state, or local sales, use, excise, gross receipts,
transaction or similar taxes, fees or surcharges levied against or upon such
purchasing Party (or the providing Party when such providing Party is permitted
to pass along to the purchasing Party such taxes, fees or surcharges), except
for any tax on either Party's corporate existence, status or income.  Whenever
possible, these amounts shall be billed as a separate item on the invoice.  To
the extent a sale is claimed to be for resale tax exemption, the purchasing
Party shall furnish the providing Party a proper resale

                                      -68-
<PAGE>

tax exemption certificate as authorized or required by statute or regulation by
the jurisdiction providing said resale tax exemption. Failure to timely provide
said resale tax exemption certificate will result in no exemption being
available to the purchasing Party.

     29.7  Assignment

     Either Party may assign this Agreement or any of its rights or obligations
hereunder to a third party, including, without limitation, its parent or other
affiliate, with the other Party's prior written consent, which consent shall not
be unreasonably withheld upon the provision of reasonable evidence by the
proposed assignee that it has the resources, ability, and authority to provide
satisfactory performance under this Agreement.  Any assignment or delegation in
violation of this subsection 29.7 shall be void and ineffective and constitute a
default of this Agreement.

     29.8  Billing and Payment; Disputed Amounts

           29.8.1  Except as may otherwise be provided in this Agreement, each
Party shall submit on a monthly basis an itemized statement of charges incurred
by the other Party during the preceding month(s) for services rendered
hereunder. Payment of billed amounts under this Agreement, whether billed on a
monthly basis or as otherwise provided herein, shall be due, in immediately
available U.S. funds, within thirty (30) days of the date of such statement.

           29.8.2  Although it is the intent of both Parties to submit timely
and accurate statements of charges, failure by either Party to present
statements to the other Party in a timely manner shall not constitute a breach
or default, or a waiver of the right to payment of the incurred charges, by the
billing Party under this Agreement, and the billed Party shall not be entitled
to dispute the billing Party's statement(s) based on such Party's failure to
submit them in a timely fashion.

           29.8.3  If any portion of an amount due to a Party (the "Billing
Party") under this Agreement is subject to a bona fide dispute between the
Parties, the Party billed (the "Non-Paying Party") shall within thirty (30) days
of its receipt of the invoice containing such disputed amount give notice to the
Billing Party of the amounts it disputes ("Disputed Amounts") and include in
such notice the specific details and reasons for disputing each item. The Non-
Paying Party shall pay when due (i) all undisputed amounts to the Billing Party
and (ii) all Disputed Amounts into an interest bearing escrow account with a
third Party escrow agent mutually agreed upon by the Parties.

                                      -69-
<PAGE>

           29.8.4  If the Parties are unable to resolve the issues related to
the Disputed Amounts in the normal course of business within ninety (90) days
after delivery to the Billing Party of notice of the Disputed Amounts, each of
the Parties shall appoint a designated representative who has authority to
settle the dispute and who is at a higher level of management than the persons
with direct responsibility for administration of this Agreement. The designated
representatives shall meet as often as they reasonably deem necessary in order
to discuss the dispute and negotiate in good faith in an effort to resolve such
dispute. The specific format for such discussions will be left to the discretion
of the designated representatives, however all reasonable requests for relevant
information made by one Party to the other Party shall be honored.

           29.8.5  If the Parties are unable to resolve issues related to the
Disputed Amounts within forty-five (45) days after the Parties' appointment of
designated representatives pursuant to subsection 29.9, then either Party may
file a complaint with the Commission to resolve such issues or proceed with any
other remedy pursuant to law or equity.  The Commission may direct release of
any or all funds (including any accrued interest) in the escrow account, plus
applicable late fees, to be paid to either Party.

           29.8.6  The Parties agree that all negotiations pursuant to this
subsection 29.8 shall remain confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of Evidence and state
rules of evidence.

           29.8.7  Any undisputed amounts not paid when due shall accrue
interest from the date such amounts were due at the lesser of (i) one and one-
half percent (1-1/2%) per month or (ii) the highest rate of interest that may be
charged under applicable law.

     29.9  Dispute Resolution

           29.9.1  Any dispute between the Parties regarding the interpretation
or enforcement of this Agreement or the provision of any services hereunder
shall be addressed by good faith negotiation between the Parties, in the first
instance, according to the escalation procedures in Subsection 29.9.2 below,
other than billing disputes which shall be addressed according to the procedures
established in Section 29.8. Should such negotiations fail to resolve the
dispute in the appropriate time periods as specified in Subsection 29.9.2,
either Party may initiate an appropriate action in any regulatory or judicial
forum of competent jurisdiction. The Parties may also agree to other informal
resolution processes for specific circumstances prior to initiating a regulatory
or judicial action.

                                      -70-
<PAGE>

           29.9.2  Escalation Procedures

           The Parties shall submit any dispute between BA and MGC for
resolution to an Inter-Company Review Board consisting of one representative
from each Party at the vice-president or above level (or such lower level as the
Parties agree) according to the following procedures:

           (a)     Each Party must designate its initial representative to the
                   Inter-Company Review Board within (15) days of the Effective
                   Date of this Agreement.

           (b)     A Party may change its designee, or select an alternative
                   designee, on one (1) day's notice to the other Party.

           (c)     A dispute will be deemed submitted to the Inter-Company
                   Review Board on the date a Party requests Inter-Company
                   Review Board action in writing, transmitted by facsimile as
                   set forth in Section 29.10 of the Agreement and to each
                   Party's representative designated pursuant to Section 29.9.2
                   (a).

           (d)     If the Inter-Company Review Board is unable to resolve a
                   service affecting dispute within five business days (or such
                   longer period as agreed to in writing by the Parties) of
                   submission to it of the dispute, a Party may initiate a
                   judicial or regulatory proceeding in accordance with the
                   requirements of Section 29.9.1.

           (e)     If the Inter-Company Review Board is unable to resolve a non-
                   service affecting dispute within thirty (30) days (or such
                   longer period as agreed to in writing by the Parties) of
                   submission to it of the dispute, a Party may initiate a
                   judicial or regulatory proceeding in accordance with the
                   requirements of Section 29.9.1.

           (f)     The Parties agree that all negotiations pursuant to this
                   Section 29.9 shall be confidential and shall be treated as
                   compromise and settlement negotiations for purposes of the
                   Federal Rules of Evidence and state rules of evidence.

                                      -71-
<PAGE>

     29.10  Notices

     Except as otherwise provided in this Agreement, notices given by one Party
to the other Party under this Agreement shall be in writing and shall be (a)
delivered personally, (b) delivered by express delivery service, (c) mailed,
certified mail or first class U.S. mail postage prepaid, return receipt
requested, or (d) delivered by telecopy to the following addresses of the
Parties:

            To MGC:

            MGC COMMUNICATIONS, INC.
            3301 North Buffalo Drive
            Las Vegas, Nevada 89129
            Attn: Kent F. Heyman
               Vice President and General Counsel
            Facsimile: 702-310-5689

            To BA:

            BELL ATLANTIC
            1095 Avenue of Americas
            40th Floor
            New York, NY 10036
            Attn: President - Telecommunications Industry Services
            Facsimile: (212) 597-2585

            with a copy to:

            BELL ATLANTIC
            1095 Avenue of Americas
            40th Floor
            New York, NY 10036
            Attn: General Counsel
            Facsimile: (212) 597-2560

or to such other address as either Party shall designate by proper notice.
Notices will be deemed given as of the earlier of (i) the date of actual
receipt, (ii) the next business day when notice is sent via express mail or
personal delivery, (iii) three (3) days after mailing in the case of first

                                     -72-
<PAGE>

class or certified U.S. mail, or (iv) on the date set forth on the confirmation
in the case of telecopy.

     29.11  Section 252(i) Obligations

            29.11.1  To the extent required under Applicable Law, BA shall make
available without unreasonable delay to MGC any individual interconnection,
service or network element contained in any agreement to which it is a party
that is approved by the Commission pursuant to Section 252 of the Act, upon the
same rates, terms, and conditions as those provided in the agreement.

            29.11.2  To the extent the exercise of the foregoing options
requires a rearrangement of facilities by the providing Party, the opting Party
shall be liable for the non-recurring charges associated therewith.

            29.11.3  The Party electing to exercise such option shall do so by
delivering written notice to the first Party.  Upon receipt of said notice by
the first Party, the Parties shall amend this Agreement to provide the same
rates, terms and conditions to the notifying Party for the remaining term of
this Agreement; provided, however, that the Party exercising its option under
this subsection 29.11 must continue to provide the same services or arrangements
to the first Party as required by this Agreement, subject either to the rates,
terms, and conditions applicable to the first Party in its agreement with the
third party or to the rates, terms, and conditions of this Agreement, whichever
is more favorable to the first Party in its sole determination.

     29.12  Joint Work Product

     This Agreement is the joint work product of the Parties and has been
negotiated by the Parties and their respective counsel and shall be fairly
interpreted in accordance with its terms and, in the event of any ambiguities,
no inferences shall be drawn against either Party.

     29.13  No Third Party Beneficiaries; Disclaimer of Agency

     This Agreement is for the sole benefit of the Parties and their permitted
assigns, and nothing herein express or implied shall create or be construed to
create any third-party beneficiary rights hereunder.  Except for provisions
herein expressly authorizing a Party to act for another, nothing in this
Agreement shall constitute a Party as a legal representative or agent of the
other Party, nor shall a Party have the right or authority to assume, create or
incur any liability

                                      -73-
<PAGE>

or any obligation of any kind, express or implied, against or in the name or on
behalf of the other Party unless otherwise expressly permitted by such other
Party. Except as otherwise expressly provided in this Agreement, no Party
undertakes to perform any obligation of the other Party, whether regulatory or
contractual, or to assume any responsibility for the management of the other
Party's business.

     29.14  No License

            29.14.1  Except as may be expressly provided herein, nothing in this
Agreement shall be construed as the grant of a license with respect to any
patent, copyright, trademark, trade name, trade secret or any other proprietary
or intellectual property now or hereafter owned, controlled or licensable by
either Party. Neither Party may use any patent, copyrightable materials,
trademark, trade name, trade secret or other intellectual property right of the
other Party except in accordance with the terms of a separate license agreement
between the Parties granting such rights.

            29.14.2  Neither Party shall have any obligation to defend,
indemnify or hold harmless, or acquire any license or right for the benefit of,
or owe any other obligation or have any liability to, the other Party or its
customers based on or arising from any, claim, demand, or proceeding by any
third party alleging or asserting that the use of any circuit, apparatus, or
system, or the use of any software, or the performance of any service or method,
or the provision of any facilities by either Party under this Agreement, alone
or in combination with that of the other Party, constitutes direct, vicarious or
contributory infringement or inducement to infringe, misuse or misappropriation
of any patent, copyright, trademark, trade secret, or any other proprietary or
intellectual property right of any Party or third party. Each Party, however,
shall offer to the other reasonable cooperation and assistance in the defense of
any such claim.

            29.14.3  NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE
PARTIES AGREE THAT NEITHER PARTY HAS MADE, AND THAT THERE DOES NOT EXIST, ANY
WARRANTY, EXPRESS OR IMPLIED, THAT THE USE BY THE PARTIES OF THE OTHER'S
FACILITIES, ARRANGEMENTS, OR SERVICES PROVIDED UNDER THIS AGREEMENT SHALL NOT
GIVE RISE TO A CLAIM BY ANY THIRD PARTY OF INFRINGEMENT, MISUSE, OR
MISAPPROPRIATION OF ANY INTELLECTUAL PROPERTY RIGHT OF SUCH THIRD PARTY.

                                      -74-
<PAGE>

     29.15  Technology Upgrades

     Nothing in this Agreement shall limit BA's ability to upgrade its network
through the incorporation of new equipment, new software or otherwise.  BA shall
provide MGC written notice at least ninety (90) days prior to the incorporation
of any such upgrades in BA's network that will materially affect MGC's service,
and shall exercise reasonable efforts to provide at least one hundred eighty
(180) days notice where practicable. In addition, BA shall comply with the FCC
Network Disclosure rules set forth in the FCC Regulations to the extent
applicable. MGC shall be solely responsible for the cost and effort of
accommodating such changes in its own network.

     29.16  Survival

     The Parties' obligations under this Agreement which by their nature are
intended to continue beyond the termination or expiration of this Agreement
shall survive the termination or expiration of this Agreement.

     29.17  Entire Agreement

     The terms contained in this Agreement and any Schedules, Exhibits, tariffs
and other documents or instruments referred to herein, which are incorporated
into this Agreement by this reference, constitute the entire agreement between
the Parties with respect to the subject matter hereof, superseding all prior
understandings, proposals and other communications, oral or written.  Neither
Party shall be bound by any preprinted terms additional to or different from
those in this Agreement that may appear subsequently in the other Party's form
documents, purchase orders, quotations, acknowledgments, invoices or other
communications.

     29.18  Counterparts

     This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.

     29.19  Modification, Amendment, Supplement, or Waiver

     No modification, amendment, supplement to, or waiver of the Agreement or
any of its provisions shall be effective and binding upon the Parties unless it
is made in writing and duly signed by the Parties.  A failure or delay of either
Party to enforce any of the provisions hereof, to

                                      -75-
<PAGE>

exercise any option which is herein provided, or to require performance of any
of the provisions hereof shall in no way be construed to be a waiver of such
provisions or options.

     29.20  Successors and Assigns

     This Agreement shall be binding on and inure to the benefit of the Parties
and their respective legal successors and permitted assigns.

     29.21  Publicity and Use of Trademarks or Service Marks

     Neither Party nor its subcontractors or agents shall use the other Party's
trademarks, service marks, logos or other proprietary trade dress in any
advertising, press releases, publicity matters or other promotional materials
without such Party's prior written consent.

     29.22  Restructured/New Rates

     Nothing in this Agreement shall affect or limit (i) BA's right with respect
to a new element or service not offered to MGC under this Agreement on the
Effective Date of this Agreement, or (ii) BA's right to modify, restructure or
change an existing element or service and to charge MGC such rates as approved
by the PSC for such modified, restructured or altered element or service.  BA
shall be entitled to recover from MGC such new, additional or restructured
rates, charges or prices effective from the date when and to the extent BA seeks
approval from the PSC of such new, additional or restructured rates, charges or
prices, either pursuant to a tariff filing or other application to the PSC,
subject to later true-up on the date such new additional or restructured rates,
charges or prices are actually approved by the PSC.

     29.23  Integrity of BELL ATLANTIC Network

     The Parties acknowledge that BELL ATLANTIC, at its election, may deploy
fiber throughout its network and that such fiber deployment may inhibit or
facilitate MGC's ability to provide service using certain technologies.
Notwithstanding any other provision of this Agreement, BELL ATLANTIC shall have
the right to deploy, upgrade, migrate and maintain its network at its
discretion.

                                      -76-
<PAGE>

     IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed as of this Third day of April, 1998.

MGC COMMUNICATIONS, INC.                 BELL ATLANTIC - NEW YORK

By:_______________________________       By:____________________________________

Printed:    Kent F. Heyman               Printed:   Jacob J. Goldberg
        --------------------------              --------------------------------

Title: Vice President and General        Title: President - Telecommunications
       ---------------------------              --------------------------------
          Counsel                                 Industry Services
          ------------------------                ------------------------------

                                      -77-<PAGE>

                                                                   EXHIBIT 10.26

                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

     This LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of October 22,
                                        ---------
1999 (the "Closing Date"), by and between the following parties:

LENDER/SECURED PARTY:  NTFC CAPITAL CORPORATION, a Delaware corporation with
                       offices at 501 Corporate Centre Drive, Franklin,
                       Tennessee 37067 ("Lender").
                                         ------

BORROWERS/DEBTORS:     BROADVIEW NETWORKS HOLDINGS, INC., a Delaware
                       corporation, Broadview Networks, Inc., a New York
                       corporation, and Broadview Networks of Massachusetts,
                       Inc., a Delaware corporation, each with its principal
                       place of business at 45-18 Court Square, Ste. 403, Long
                       Island City, NY 11101 ("BNH"), and the Subsidiaries of
                       BNH which subsequently become a party to this Agreement
                       pursuant to Section 2.11 of this Agreement (the
                       "Borrowers").
                        ---------

     This Agreement includes the general terms and conditions contained herein
and all the exhibits and schedules attached hereto, all of which are
incorporated herein.  In the event of a conflict between the general terms and
conditions and any schedule, the additional terms and conditions stated in the
schedule shall control.

     By executing this Agreement, Lender agrees to make loans to Borrowers, and
Borrowers agree to borrow from Lender and to provide collateral to secure such
loans, all on the terms and conditions set forth herein.

     IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives:

LENDER:                                 BORROWERS:
------                                  ---------

NTFC CAPITAL CORPORATION                BROADVIEW NETWORKS HOLDINGS, INC.

BY:_______________________________      BY:____________________________________
TITLE:____________________________      TITLE:_________________________________
DATE:_____________________________      DATE:__________________________________

                                        BROADVIEW NETWORKS

                                        BY:____________________________________
                                        TITLE:_________________________________
                                        DATE:__________________________________

                                        BROADVIEW NETWORKS OF
                                        MASSACHUSETTS, INC.

                                        BY:____________________________________
                                        TITLE:_________________________________
                                        DATE:__________________________________
<PAGE>

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<S>                                                                        <C>
ARTICLE 1:  DEFINITIONS....................................................   1
     1.01.  Certain Definitions............................................   1
     1.02.  Accounting Principles; Subsidiaries............................  12
     1.03.  UCC Terms......................................................  12
     1.04.  General Construction; Captions.................................  12
     1.05.  References to Documents and Laws...............................  12

ARTICLE 2:  LOANS..........................................................  12
     2.01.  Commitment.....................................................  12
     2.02.  Notes and Payment Terms........................................  13
     2.03.  Procedures for Borrowing.......................................  15
     2.04.  Prepayments....................................................  16
     2.05.  Computation of Interest........................................  17
     2.06.  Payments.......................................................  17
     2.07.  Indemnity......................................................  17
     2.08.  Use of Proceeds................................................  18
     2.09.  Fees...........................................................  18
     2.10.  Lender's Expense...............................................  18
     2.11.  Joint and Several Liability; Additional Subsidiaries...........  19
     2.12.  Taxes..........................................................  19

ARTICLE 3:  COLLATERAL AND SECURITY AGREEMENT..............................  20
     3.01.  Grant of Security Interest.....................................  20
     3.02.  Priority of Security Interests.................................  21
     3.03.  Further Documentation; Pledge of Instruments...................  21
     3.04.  Further Identification of Collateral...........................  22
     3.05.  Remedies.......................................................  22
     3.06.  Standard of Care...............................................  22
     3.07.  Advances to Protect Collateral.................................  22
     3.08.  License to Use.................................................  22
     3.09.  Collateral Assignment of NTI Purchase Agreement................  23
     3.10.  Priority of Security Interests and Liens on Equipment Outside
            United States..................................................  23

ARTICLE 4:  REPRESENTATIONS AND WARRANTIES.................................  24
     4.01.  Organization and Qualification.................................  24
     4.02.  Authority and Authorization....................................  24
     4.03.  Execution and Binding Effect...................................  24
</TABLE>
<PAGE>

<TABLE>
<S>                                                                         <C>
     4.04.  Governmental Authorizations....................................  24
     4.05.  Regulatory Authorizations......................................  24
     4.06.  Material Agreement; Absence of Conflicts.......................  25
     4.07.  No Restrictions................................................  25
     4.08.  Financial Statements...........................................  25
     4.09.  Financial Accounting Practices.................................  25
     4.10.  Accurate and Complete Disclosure...............................  26
     4.11.  No Event of Default; Compliance with Material Agreements.......  26
     4.12.  Litigation.....................................................  26
     4.13.  Rights to Property; Intellectual Property......................  26
     4.14.  Financial Condition............................................  26
     4.15.  Taxes..........................................................  26
     4.16.  No Material Adverse Change.....................................  27
     4.17.  No Regulatory Event............................................  27
     4.18.  Trade Relations................................................  27
     4.19.  No Brokerage Fees..............................................  27
     4.20.  Margin Stock; Regulation U.....................................  27
     4.21.  Investment Company; Public Utility Holding Company.............  27
     4.22.  Personal Holding Company; Subchapter S.........................  27
     4.23.  ERISA..........................................................  28
     4.24.  Environmental Warranties.......................................  28
     4.25.  Security Interests.............................................  28
     4.26.  Place of Business..............................................  28
     4.27.  Location of Collateral.........................................  28
     4.28.  Clear Title To Collateral......................................  28
     4.29.  Assumed Names..................................................  29
     4.30.  Transactions with Affiliates...................................  29
     4.31.  NTI Purchase Agreement.........................................  29

ARTICLE 5:  CONDITIONS OF CLOSING..........................................  29
     5.01.  Closing Certificates...........................................  29
     5.02.  Opinions of Counsel............................................  29
     5.03.  Closing Documents..............................................  30

ARTICLE 6:  CONDITIONS OF LENDING..........................................  30
     6.01.  Conditions for Initial Advance.................................  30
     6.02.  Conditions for All Advances....................................  31
     6.03.  Affirmation of Representations and Warranties..................  32
     6.04.  Deadline for Funding Conditions................................  33
</TABLE>

                                      ii

<PAGE>

<TABLE>
<S>                                                                         <C>
ARTICLE 7:  AFFIRMATIVE COVENANTS.......................................... 33
     7.01.  Reporting and Information Requirements......................... 33
     7.02   Other Notices.................................................. 35
     7.03.  Notice of Pension-Related Events............................... 35
     7.04.  Inspection Rights.............................................. 35
     7.05.  Preservation of Corporate Existence and Qualification.......... 36
     7.06.  Continuation of Business....................................... 36
     7.07.  Insurance...................................................... 36
     7.08.  Payment of Taxes, Charges, Claims and Current Liabilities...... 37
     7.09.  Financial Accounting Practices................................. 38
     7.10.  Compliance with Laws........................................... 38
     7.11.  Use of Proceeds................................................ 38
     7.12.  Government Authorizations; Regulatory Authorizations, Etc...... 39
     7.13.  Contracts and Franchises....................................... 39
     7.14.  Consents....................................................... 39
     7.15.  Financial Covenants............................................ 39
     7.16.  Construction and Storage....................................... 39
     7.17.  Upgrade Equipment.............................................. 39
     7.18.  Additional Subsidiaries........................................ 40

ARTICLE 8: NEGATIVE COVENANTS.............................................. 40
     8.01.  Restrictions on Additional Indebtedness........................ 40
     8.02.  Restrictions on Liens and Sale of Collateral................... 40
     8.03.  Limitation on Contingent Obligations........................... 41
     8.04.  Fees and Commissions........................................... 41
     8.05.  Prohibition of Mergers, Acquisitions, Name, Office
                    or Business Changes, Etc............................... 41
     8.07.  Limitation on Investments, Advances and Loans.................. 42
     8.08.  Capital Expenditures........................................... 42
     8.09.  Limitation on Leases........................................... 42
     8.10.  Transactions with Affiliates................................... 42
     8.11.  Termination of Purchase Agreement.............................. 43
     8.12.  Removal of Collateral.......................................... 43
     8.13.  Assumed Names.................................................. 43

ARTICLE 9:  EVENTS OF DEFAULT.............................................. 43
     9.01.  Events of Default.............................................. 43
     9.02.  Consequences of an Event of Default............................ 46
     9.03.  Exercise of Rights............................................. 46
     9.04.  Rights of Secured Party: Possession or Sale of Collateral...... 46
     9.05.  Notices, Etc., Waived.......................................... 47
     9.06.  Additional Remedies............................................ 47
</TABLE>

                                      iii
<PAGE>

<TABLE>
<S>                                                                        <C>
     9.07.   Application of Proceeds.....................................  48
     9.08.   Discontinuance of Proceeding................................  48
     9.09.   Power of Attorney...........................................  48
     9.10.   Regulatory Matters..........................................  49

ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS.............................  49
     10.01.  Modifications and Waivers...................................  49
     10.02.  Advances Not Implied Waivers................................  50
     10.03.  Deviation from Covenants....................................  50
     10.04.  Holidays....................................................  50
     10.05.  Records.....................................................  51
     10.06.  Notices.....................................................  51
     10.07.  FCC and PUC Approval........................................  51
     10.08.  Lender Sole Beneficiary.....................................  52
     10.09.  Lender's Review of Information..............................  52
     10.10.  No Joint Venture............................................  52
     10.11.  Severability................................................  52
     10.12.  Rights Cumulative...........................................  52
     10.13.  Duration: Survival..........................................  52
     10.14.  Governing Law...............................................  53
     10.15.  Counterparts................................................  53
     10.16.  Successors and Assigns......................................  53
     10.17.  Participation...............................................  54
     10.18.  Time of Essence.............................................  54
     10.19.  Disclosures and Confidentiality.............................  54
     10.20.  Jurisdiction and Venue......................................  55
     10.21.  Jury Waiver.................................................  56
     10.22.  Limitation on Liability.....................................  56
     10.23.  Borrowers' Waivers..........................................  56
     10.24.  Schedules...................................................  57
     10.25.  Agreement to Govern.........................................  57
     10.26.  Entire Agreement............................................  57
</TABLE>

                                      iv
<PAGE>

                    SCHEDULES TO LOAN AND SECURITY AGREEMENT
                    ----------------------------------------

Schedule 1        Borrowers Information and Defined Terms
Schedule 2.01     Maximum Loan Amounts
Schedule 2.02     Payment Terms and Governing Law
Schedule 2.09     Fees
Schedule 2.11     Annex A to Loan and Security Agreement
Schedule 2.11(b)  Additional Subsidiary Information
Schedule 4.04     Required Consents
Schedule 4.05     Regulatory Authorizations
Schedule 4.07     Restrictions on Loans
Schedule 4.08     Financial Statements
Schedule 4.12     Pending Litigation
Schedule 4.25     UCC Filing Offices
Schedule 4.26     Principal Offices and Location of Collateral
Schedule 4.29     Assumed Names
Schedule 4.30     Transactions with Affiliates
Schedule 4.31     NTI Purchase Agreement
Schedule 6.02     Post-Closing Items
Schedule 7.07     Insurance
Schedule 7.15     Financial Covenants
Schedule 8.01     Permitted Specific Encumbrances
Schedule 8.06     Permitted Equity Payments

                    EXHIBITS TO LOAN AND SECURITY AGREEMENT
                    ---------------------------------------

Exhibit A         Form of Notes
Exhibit B         Form of Borrowing Certificate
Exhibit C         Form of Opinion of Counsel for Borrowers
Exhibit D         Form of Opinion of Regulatory Counsel for Borrowers
Exhibit E         Form of Landlord's Consent
Exhibit F         Form of Mortgagee's Consent
Exhibit G         Form of Certificate of Financial Condition
Exhibit H         Form of Subordination Agreement
Exhibit I         Form of Collateral Assignment of Purchase Agreement
Exhibit J         Form of Consent to Collateral Assignment of Purchase
                  Agreement

                                       v
<PAGE>

                          LOAN AND SECURITY AGREEMENT
                          ---------------------------

     THIS LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of the "Closing
                                        ---------                       -------
Date" set forth on Schedule 1 hereto, by and between BROADVIEW NETWORKS
----
HOLDINGS, INC. (collectively, "BNH"), the other Borrowers (as defined below),
                               ---
and NTFC CAPITAL CORPORATION, a Delaware corporation ("Lender"), with offices at
                                                       ------
501 Corporate Centre Drive, Suite 600, Franklin, Tennessee 37067.

                                  BACKGROUND:
                                  ----------

     A.   Broadview Networks, Inc., f/k/a Community Networks, Inc., a Domestic
Subsidiary of BNH, has entered into a certain purchase agreement with Northern
Telecom Inc., as described on Schedule 4.31 hereto, providing for the purchase
                              -------------
by it or its Subsidiaries of certain telecommunications equipment and the
license of associated software, all as described therein, and has requested
Lender to extend credit to Borrowers to finance such purchase and license, as
described on Schedule 1 hereto, and to make credit available for the purchase of
             ----------
additional telecommunications equipment, in each case as described herein.

     B.   Lender is willing to extend such credit to Borrowers upon the terms
and conditions set forth in this Agreement.

     NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:

                            ARTICLE 1: DEFINITIONS
                            ----------------------

     1.01.  Certain Definitions.  Certain terms are defined on Schedule 2.01
            -------------------                                -------------
hereto. In addition to other words and terms defined in the preamble hereof or
elsewhere in this Agreement, or on the schedules hereto, the following words and
terms shall have the following meanings unless the context otherwise clearly
requires:

     "Advance(s)": any advance or loan of funds (including Capitalized Interest)
      ----------
made by Lender to Borrower pursuant to this Agreement.

     "Affiliate": as applied to any Person, any second Person directly or
      ---------
indirectly controlling, controlled by, or under common control with that Person,
or related to such Person by blood, marriage or adoption. For purposes of this
definition and the definition of "Subsidiary," a Person shall be deemed to
control another Person if such first Person possesses, directly or indirectly,
the power to direct, or to cause the direction of, the management and policies
of such other Person, whether through ownership of voting securities, by
contract or otherwise.
<PAGE>

     "Basic Agreements": a collective reference to this Agreement, each Note,
      ----------------
and the Security Documents.

     "Borrowing Certificate": a certificate substantially in the form of Exhibit
      ---------------------                                              -------
B hereto, designating the applicable Borrower(s) under this Agreement, and
-
executed by BNH and the applicable Borrower(s), if other than BNH.

     "Borrower": BNH; each Domestic Subsidiary and Foreign Subsidiary which has
      --------
signed this Agreement and which subsequently becomes a party to this Agreement
pursuant to Section 2.11 of this Agreement; and each of their respective
successors.

     "Borrowing Date": any Business Day on which an Advance is made to a
      --------------
Borrower hereunder.

     "Business Day": a day other than a Saturday, Sunday or other day on which
      ------------
commercial banks in New York, New York, are authorized or required by law to
close.

     "Business Plan": the business plan of BNH, a copy of which is attached to
      -------------
Schedule 1 to this Agreement.
----------

     "Calendar Quarter": each three month period starting on each January 1,
      ----------------
April 1, July 1, and October 1, during the term of this Agreement.

     "Capitalized Interest": the accrued but unpaid interest on any Advance that
      --------------------
accrues during the Capitalized Interest Period, if any Capitalized Interest
Period is defined on Schedule 2.02 hereto, and is added to and deemed to be
                     -------------
principal due under any Note, in accordance with Section 2.02(b) hereof.
                                                 ---------------

     "Capitalized Interest Period": as defined on Schedule 2.02 hereto.
      ---------------------------                 -------------

     "Carrier":  any interexchange carrier or other provider of
      -------
telecommunications long distance service or any local exchange company or other
provider of local telecommunications service.

     "Certificate of Financial Condition": a certificate in the form of Exhibit
      ----------------------------------                                -------
G hereto, executed by BNH.
-

     "Change in Control": any change in the direct or indirect control of, or
      -----------------
the ability or right to control, a majority of the voting shares of any class of
securities or ownership rights in a Borrower or in the right and/or the power to
control the election of the board of directors of a Borrower.

     "Closing Date": as defined on Schedule 1 hereto.
      ------------                 ----------

                                       2
<PAGE>

     "Code": the Internal Revenue Code of 1986, as amended from time to time.
      ----

     "Collateral": as defined in Section 3.01 hereof.
      ----------                 ------------

     "Co-Location Site": a space located in an ILEC central office for the
      ----------------
exclusive use of the Borrower in which a Borrower's equipment is located.

     "Commitment": as defined in Section 2.01 hereof.
      ----------                 ------------

     "Communications Law": any and all of (i) the Communications Act of 1934, as
      ------------------
amended and any similar or successor federal statute, and the rules and
regulations of the FCC thereunder, (ii) any state law governing the provision of
telecommunications services, and the rules and regulations of the PUC, all as
the same may be in effect from time to time.

     "Consent":  a consent to a collateral assignment of the NTI Purchase
      -------
Agreement, a consent to a collateral assignment of the Vendor Purchase
Agreement, a Landlord Consent, and/or a Mortgagee's Consent.

     "Contingent Obligation": as to any Person, any obligation of such Person
      ---------------------
guaranteeing, directly or indirectly, any Indebtedness, leases, dividends or
other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (c) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation or (d) otherwise to assure or hold harmless the owner of such primary
obligation against loss in respect thereof.

     "Contributed Equity": the cumulative amount of cash equity received by BNH.
      ------------------

     "Conversion Date": as defined on Schedule 2.02 hereto.
      ---------------                 -------------

     "Debt Service": for the most recent four full fiscal quarters of BNH being
      ------------
measured, the sum of (i) all amortized principal and interest payments that BNH
is required to make during such period on account of all of its Total Debt
including, without limitation, (a) amounts due during such period on account of
capitalized leases, (b) the then current portion of any long-term Total Debt of
BNH calculated in accordance with GAAP, (c) amounts due on short-term Total Debt
of BNH and (d) amounts due under this Loan Agreement and the Note, plus (ii)
capitalized expenditures not paid with proceeds of any Indebtedness.

                                       3
<PAGE>

     "Default": any of the conditions or occurrences specified in Section 9.01,
      -------                                                     ------------
whether or not any requirement for the giving of notice, the lapse of time, or
both, or any other condition has been satisfied.

     "Default Rate": a rate of interest equal to the lesser of (i) three
      ------------
percentage points in excess of the Interest Rate or (ii) the maximum permissible
rate under applicable law in effect at any time.

     "Domestic Borrower": each Borrower formed under the laws of the United
      -----------------
States; any state of the United States, the District of Columbia; or any
territory, possession or protectorate of the United States.

     "Domestic Borrower Obligations": all Obligations of all Borrowers.
      -----------------------------

     "Domestic Subsidiary":  each Subsidiary of BNH formed under the laws of the
      -------------------
United State; any state of the United States,  the District of Columbia; or any
territory, possession or protectorate of the United States.

     "EBITDA": for any fiscal period, BNH's actual operating earnings on a
      ------
consolidated basis from ongoing operations before interest, taxes, depreciation
and amortization for such fiscal period.

     "Environmental Law": any current or future federal, state and local law
      -----------------
(including common law), statute, regulation, ordinance, rulings, codes, judicial
order, administrative order or terms of licenses or permits applicable to
environmental conditions (including without limitation conditions relating to
ambient air, surface water, groundwater, land surface or subsurface strata),
including without limitation all such laws governing employment, the generation,
use, storage, disposal or transportation of toxic or hazardous substances or
wastes (including, without limitation, asbestos and petroleum products), the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendment and
Reauthorization Act of 1986, the Toxic Substances Control Act, the Clean Air
Act, the Water Pollution Control Act, the Hazardous Waste Management Act, the
Mineral Lands and Leasing Act, the Surface Mining Control and Reclamation Act,
U.S. Department of Transportation Regulations, and all similar state and local
laws, regulations, all as now or hereafter amended.

     "Equipment": the equipment defined in Section 3.01 hereof.
      ---------                            ------------

     "Equity Payment": any distribution of earnings or capital to any Owner
      --------------
that is not a Borrower hereunder, any management fee or other fee paid to any
Affiliate that is not a Borrower hereunder not reasonably related to services
actually performed, or any redemption of equity ownership interests, either
directly or indirectly, whether in cash or property or in obligations of a
Borrower held by an Owner that is not a Borrower hereunder.

                                       4
<PAGE>

     "ERISA": the Employee Retirement Income Security Act of 1974, as amended
      -----
from time to time, and any successor statute.

     "Event of Default": any of the events specified in Section 9.01 hereof,
      ----------------                                  ------------
provided that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, under Section 9.01 or otherwise, has been
                                    ------------
satisfied.

     "Excluded Indebtedness": (i) Subordinated Indebtedness, (ii) Indebtedness
      ---------------------
which by its terms is unsecured, has a stated maturity date at least twelve
months after the Maturity Date hereof, requires no principal repayments until at
least twelve months after the Maturity Date hereof, provides for no right of
prepayment, redemption or put rights (whether exercisable at the option of the
borrower or lender) prior to its stated maturity date, is issued on market terms
prevailing at the time, and which in any event provides for a cash payment of
interest at a rate not greater than the prime rate of interest most recently
announced by Citibank, N.A., plus 1000 basis points, and (iii) Indebtedness
under one or more receivables financing facility in an aggregate principal
amount not exceeding 85% of the net book value of the accounts receivables of
the Borrowers liable thereunder which are pledged as collateral for the
repayment of such Indebtedness.

     "FCC": the Federal Communications Commission of the United States of
      ---
America, and any successor, in whole or in part, to its jurisdiction.

     "Financing Termination Date": as defined on Schedule 2.02 hereto.
      --------------------------                 -------------

     "First Borrowing Date": the date of the first borrowing by a Borrower
      --------------------
hereunder.

     "Fixed Charge Coverage Ratio" means the ratio of EBITDA during the four
      ---------------------------
full fiscal quarters then ended ("the Four Quarter Period") to Debt Service for
the Four Quarter Period.

     "Foreign Borrower":  each Borrower formed under the laws of any
      ----------------
jurisdiction other than the United States; the District of Columbia; or any
territory, possession or protectorate of the United States.

     "Foreign Borrower Obligations": all Obligations of all Foreign Borrowers.
      ----------------------------

     "Foreign Subsidiary":  each Subsidiary of BNH formed under the laws of any
      ------------------
jurisdiction other than the United States; the District of Columbia; or any
territory, possession or protectorate of the United States.

     "GAAP": subject to Section 1.02 hereof, generally accepted accounting
      ----              ------------
principles in the United States of America (as such principles may change from
time to time) applied on a consistent basis (except for changes in application
in which BNH's independent certified public accountants concur), applied both to
classification of items and amounts.

                                       5
<PAGE>

  "General Intangibles": as defined in Section 3.01 hereof.
   -------------------                 ------------

  "Governmental Actions": actions by any Governmental Authority.
   --------------------

  "Governmental Authority": the federal government, any state or political
   ----------------------
subdivision thereof, any city or municipal entity, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

  "Indebtedness": as to any Person, at a particular time, (a) indebtedness for
   ------------
borrowed money or for the deferred purchase price of property or services in
respect of which such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which such Person otherwise assures a
creditor against loss; (b) obligations under leases which shall have been or
should be, in accordance with GAAP, recorded as capital leases in respect of
which obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor against loss; (c) obligations of such Person to purchase or repurchase
accounts receivable, chattel paper or other payment rights sold or assigned by
such Person; and (d) indebtedness or obligations of such Person under or with
respect to letters of credit, notes, bonds or other debt instruments.

  "Initial Payment Date": as defined on Schedule 2.02 hereto.
   --------------------                 -------------

  "Interest Payment Date": as defined on Schedule 2.02 hereto.
   ---------------------                 -------------

  "Interest Rate": as defined on Schedule 2.02 hereto.
   -------------                 -------------

  "Landlord Consent": a consent substantially in the form of Exhibit E hereto or
   ----------------                                          ---------
in other form acceptable to Lender, to be executed by the owner/landlord,
sublessor and/or licensor (including Carriers) of any real property where any of
the Collateral is to be located.

  "Law": any law (including common law), constitution, statute, regulation,
   ---
rule, ordinance, order, injunction, writ, decree or award of any governmental
body or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational safety or health law, Communications Law, Environmental Law and/or
securities laws).

  "Lender's Expenses": as defined in Section 2.10 hereof.
   -----------------                 ------------

  "Leverage Ratio": The ratio of Total Debt (other than Excluded Indebtedness
   --------------
and current trade payables incurred in the ordinary course of business payable
in accordance with customary practices and not more than 90 days past due) to
Contributed Equity.

                                       6
<PAGE>

  "Lien": any mortgage, pledge, hypothecation, lien (statutory or other),
   ----
judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including,
without limitation, any installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and the filing of any financing statement under the UCC or comparable
law of any jurisdiction.

  "Loans":  the loans and loan facilities described in Section 2.01 hereof and
   -----                                               ------------
all Advances pursuant hereto.

  "Loan Documents": a collective reference to this Agreement, each Note, the
   --------------
Security Documents, and all other documents, instruments, agreements and
certificates evidencing or securing any advance hereunder or any obligation for
the payment or performance thereof and/or executed and delivered in connection
with any of the foregoing.

  "Mandatory Prepayments": as defined in Section 2.04(b) hereof.
   ---------------------                 ---------------

  "Material Adverse Effect": or "Material Adverse Change": a material adverse
   -----------------------       -----------------------
effect on, or material adverse change in, (i) the business, operations or
financial condition of BNH and its Subsidiaries taken as a whole, (ii) the
ability of a Borrower to perform its obligations under this Loan Agreement, a
Note, or the other Loan Documents, or (iii) Lender's ability to enforce the
rights and remedies granted under this Agreement or the other Loan Documents, in
all cases whether attributable to a single circumstance or event or an
aggregation of circumstances or events.

  "Mortgagee's Consent": a consent substantially in the form of Exhibit F
   -------------------                                          ---------
hereto, to be executed by any Person holding a lien on real property leased or
otherwise provided to a Borrower, on which any of the Equipment is located.

  "Maturity Date": the date defined on Schedule 2.02 hereto, on which all
   -------------                       -------------
principal, interest, premium, expenses, fees, penalties and other amounts due
under a Note shall be finally due and payable.

  "Note": collectively, one or more promissory notes issued by a Borrower to
   ----
Lender pursuant to this Agreement, and all extensions, renewals, modifications,
replacements, amendments, restatements and refinancings thereof.

  "NTI": Northern Telecom Inc., a Delaware corporation.
   ---

  "NTI Equipment": the equipment and licensed or sub-licensed Software
   -------------
manufactured or supplied by NTI to a Borrower with respect to which Advances
hereunder are used directly or indirectly to finance the acquisition cost
thereof at any time pursuant to the NTI Purchase Agreement

                                       7
<PAGE>

or any purchase order issued by a Borrower to NTI or otherwise, including
installation and construction services provided by NTI pursuant thereto.

  "NTI Purchase Agreement": the NTI Purchase Agreement identified on Schedule
   ----------------------                                            --------
4.31 hereto, together with any amendments or supplements thereto, and any other
----
purchase agreement between NTI and a Borrower and all purchase orders and
invoices issued pursuant thereto, all subject to the approval of Lender.

  "Obligations": all indebtedness, liabilities and obligations of a Borrower to
   -----------
Lender of any class or nature, whether arising under or in connection with this
Agreement and/or the other Loan Documents or otherwise, whether now existing or
hereafter incurred, direct or indirect, absolute or contingent, secured or
unsecured, matured or unmatured, joint or several, whether for principal,
interest, fees, expenses, lease obligations, indemnities or otherwise,
including, without limitation, future advances of any sort, all future advances
made by Lender for taxes, levies, insurance and/or repairs to or maintenance of
the Collateral, the unpaid principal amount of, and accrued interest on, a Note,
and any expenses of collection or protection of Lender's rights, including
reasonable attorneys' fees.

  "Organizational Documents": with respect to a corporation, the articles of
   ------------------------
incorporation and bylaws of such corporation; with respect to a partnership, the
certificate of partnership (or limited partnership, as applicable) and
partnership agreement, together with the analogous documents for any corporate
or partnership general partner; with respect to a limited liability company, the
articles of organization and operating agreement of such limited liability
company; and in any case, any other document governing the formation and conduct
of business by such entity.

  "Owner(s)":  the owner or owners, as the context requires, of any equity
   --------
securities of BNH or any Subsidiary of BNH, now or in the future.

  "Payment Date": as defined on Schedule 2.02 hereto.
   ------------                 -------------

  "PBGC": the Pension Benefit Guaranty Corporation established under Title IV of
   ----
ERISA or any other governmental agency, department or instrumentality succeeding
to its functions.

  "Permits": all consents, licenses, notices, approvals, authorizations,
   -------
filings, orders, registrations, and permits required by any Governmental
Authority for the construction and operation of the Equipment (excluding
Regulatory Authorizations), issued or obtained as and when required in
accordance with all Requirements of Law.

  "Permitted Encumbrances": the Liens permitted under Section 8.02 hereof.
   ----------------------                             ------------

  "Person": an individual, corporation, limited liability company, partnership,
   ------
business or other trust, unincorporated association, joint venture, joint-stock
company, Governmental Authority or any other entity.

                                       8
<PAGE>

  "Plan": any employee pension benefit plan to which Section 4021 of ERISA
   ----
applies and (i) which is maintained for employees of BNH and/or its Subsidiaries
or (ii) to which a Borrower made, or was required to make, contributions at any
time within the preceding five (5) years.

  "Proceeds": as defined in Section 3.01 hereof.
   --------                 ------------

  "PUC": the public utilities commission for the state or any other jurisdiction
   ---
in which a Borrower operates its telecommunications business or any portion of
the Equipment is located, or any successor agency, and any successor, in whole
or in part, to its functions or jurisdictions, and any other Persons specified
as such on Schedule 1 hereto.
           ----------

  "Purchase Agreement": individually and collectively, the NTI Purchase
   ------------------
Agreement and the Vendor Purchase Agreement.

  "Regulatory Authorizations": all material approvals, authorizations, licenses,
   -------------------------
filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications governmental or
other regulatory authority, including, without limitation, any certificates of
public convenience and all grants, approvals, licenses, filings and
registrations from or to the FCC or PUC or under any Communications Law
necessary in order to enable BNH or any of its Subsidiaries to own, construct,
maintain and operate the Equipment, and any authorizations specified on Schedule
                                                                        --------
1 hereto.
-

  "Regulatory Event": any of the following events: (i) Lender becomes subject to
   ----------------
regulation as a "carrier," a "telephone company," a "common carrier," a "public
utility" or otherwise under any applicable law or governmental regulation,
federal, state or local, solely as a result of the transactions contemplated by
this Agreement and the other Loan Documents, or (ii) BNH or any of its
Subsidiaries becomes subject to regulation by any Governmental Authority in any
way that is materially different from the regulation existing at the Closing
Date and that could materially adversely affect BNH's ability to perform its
material obligations under the Loan Documents or Lender's rights thereunder or
the Collateral, or (iii) the FCC or PUC issues an order revoking, denying or
refusing to renew, or recommending the revocation, denial or non-renewal of, any
Regulatory Authorization.

  "Reportable Event": (i) a reportable event described in Section 4043 of ERISA
   ----------------
and regulations thereunder, (ii) a withdrawal by a substantial employer from a
Plan to which more than one employer contributes, as referred to in Section
4063(b) of ERISA, or (iii) a cessation of operations at a facility causing more
than twenty percent (20%) of Plan participants to be separated from employment,
as referred to in Section 4062(f) of ERISA.

                                       9
<PAGE>

  "Required Consents": the Governmental Authority approvals or consents of other
   -----------------
Persons required with respect to a Borrower's execution, delivery and
performance of this Agreement and the other Loan Documents, as described in
Section 4.04 hereto.
------------

  "Requirement of Law": as to any Person, the Organizational Documents of such
   ------------------
Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its properties or transactions or to
which such Person or any of its property or transactions is subject, including
without limitation, all applicable common law and equitable principles, all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies, all Permits or Regulatory
Authorizations issued to BNH and each of its Subsidiaries, all Communications
Laws, and all Environmental Laws.

  "Responsible Officer": with respect to a corporation, its President, Chief
   -------------------
Executive Officer(s), any Vice President or Treasurer; with respect to a
partnership, its general partner (or the President, Chief Executive Officer(s),
any Vice President or Treasurer of any corporate general partner, as
applicable); with respect to a limited liability company, a member or manager
(or the President, Chief Executive Officer(s), any Vice President or Treasurer
of any corporate member or manager), or the President, Chief Executive
Officer(s) or any Vice President of any other Person.

  "Security Documents": this Agreement, the Consents, all financing statements,
   ------------------
all documents and instruments executed and/or delivered by or on behalf of any
Borrower in favor of Lender granting and perfecting liens and security interests
on and in any Collateral located outside the United States as Lender may
approve, and any other documents granting, evidencing, or perfecting any
security interest or Lien with respect to or securing any of the Obligations.

  "Site(s)": any of the sites where Equipment is or is to be located.
   -------

  "Software" and "Software Licenses": any software now or hereafter owned by, or
   --------------------------------
licensed to, a Borrower or any of its Subsidiaries or with respect to which BNH
or any of its Subsidiaries has or may have license or use rights.

  "Subsidiary": as to any Person, a corporation, partnership, limited liability
   ----------
company, or other entity in which equity interests having ordinary voting power
to elect a majority of the board of directors, managers or similar persons of
the entity are at the time directly or indirectly owned or controlled by such
Person (regardless of any contingency which does or may suspend or dilute the
voting rights of such class).

  "Subordination Agreement":  one or more Subordination Agreements substantially
   -----------------------
in the form of Exhibit H hereto or otherwise as accepted by Lender.
               ---------

                                       10
<PAGE>

  "Subordinated Indebtedness": Indebtedness that (i) does not require any
   -------------------------
payment of principal until twelve (12) months after the Maturity Date, and
requires no principal repayments until at least twelve months after the Maturity
Date hereof, and provides for no right of prepayment, redemption or put rights
(whether exercisable at the option of the borrower or lender) prior to its
stated maturity date, (ii) is issued on market terms prevailing at the time, and
which in any event provides for a cash payment of interest at a rate not greater
than the prime rate of interest most recently announced by Citibank, N.A., plus
1000 basis points and (iii) is subordinated on terms reasonably acceptable to
Lender in a Subordination Agreement to the payment of Indebtedness created
hereunder and pursuant to any other Loan Document.

  "System": BNH's complete telecommunications network or system constructed
   ------
and/or operated by BNH and its Subsidiaries  (including any future development
and expansions thereof), of which the Equipment forms a part, as described on
Schedule 1 hereto.
----------

  "Total Debt": of any person means, without duplication, (a) all items of
   ----------
indebtedness or liability which in accordance with generally accepted accounting
principles, consistently applied, would be included in determining total
liabilities as shown on the liability side of a balance sheet as of the date as
of which indebtedness is to be determined, (b) indebtedness or other liabilities
secured by any mortgage, security agreement, pledge, or lien existing on or
encumbering property owned by such person, whether or not the indebtedness or
other liabilities secured thereby shall have been assumed by such person, (c)
all indebtedness of such person (i) which such person has directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), discounted with recourse, agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, (ii) in respect of
which such person has agreed to supply or advance funds (whether by way of loan,
purchase of securities or capital contribution, through a commitment to pay for
property or services regardless of the nondelivery of such property or the
nonfurnishing of such services or otherwise), or (iii) in respect of which such
person has otherwise become directly or indirectly liable, and (d) all
obligations of such person under any now or hereafter existing interest swap or
hedge agreements (net of any amounts owed to that person under any such swap or
hedge agreements).

  "UCC": the Uniform Commercial Code as the same may from time to time be in
   ---
effect in the State of Tennessee, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to apply to any item or items of
Collateral.

  "Unrestricted Subsidiary": (i) Open Support Systems, LLC, a Connecticut
   -----------------------
limited liability company and a Subsidiary of BNH ("OSS"), and (ii) wholly-owned
Subsidiaries of OSS formed after the date hereof, provided that they only engage
in businesses substantially similar to that of OSS.

  "Vendor" means any manufacturer or supplier of Vendor Equipment or licensor or
   ------
supplier of Software, in each case other than NTI.

                                       11
<PAGE>

  "Vendor Equipment" means any equipment, upgrades, switches and licensed or
   ----------------
sub-licensed Software manufactured, or supplied to a Borrower, by a Vendor.

  "Vendor Purchase Agreement": any purchase agreement, together with any
   -------------------------
amendments or supplements thereto, between a Vendor and a Borrower or an
assignor of a Borrower and all purchase orders and invoices issued pursuant
thereto for the sale of Vendor Equipment, all subject to the approval of Lender,
not to be unreasonably withheld or delayed.

  1.02.   Accounting Principles; Subsidiaries. Except as otherwise provided in
          -----------------------------------
this Agreement, all computations and determinations as to accounting or
financial matters and all financial statements to be delivered pursuant to this
Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), consistently applied, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP. All accounting and financial terms herein shall be deemed to include
references to consolidated and consolidating principles, and covenants,
representations and agreements with respect to the Borrowers and their
properties and activities shall be deemed to refer to BNH and its consolidated
Subsidiaries collectively.

  1.03.   UCC Terms. Except as otherwise provided or amplified (but not limited)
          ---------
herein, terms used in this Agreement that are defined in the UCC shall have the
same meanings herein.

  1.04.   General Construction; Captions. All definitions and other terms used
          ------------------------------
in this Agreement shall be equally applicable to the singular and plural forms
thereof, and all references to any gender shall include all other genders. The
words "hereof", "herein" and "hereunder" and words of similar import when used
in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified. The
captions and table of contents in this Agreement and the other Loan Documents
are for convenience only, and in no way limit or amplify the provisions hereof.

  1.05.   References to Documents and Laws. All defined terms and references in
          --------------------------------
this Agreement or the other Loan Documents with respect to any agreements,
notes, instruments, certificates or other documents shall be deemed to refer to
such documents and to any amendments, modifications, renewals, extensions,
replacements, restatements, substitutions and supplements of and to such
documents. All references to statutes and related regulations shall include any
amendments thereof and any successor statutes and regulations.

                               ARTICLE 2: LOANS
                               ----------------

  2.01.   Commitment. Subject to the terms and conditions herein provided, and
          ----------
so long as no Default has occurred and is continuing hereunder, Lender agrees to
lend to the Borrowers from

                                       12
<PAGE>

time to time before the Financing Termination Date, an aggregate principal
amount not to exceed the amount set forth on Schedule 2.01 hereto as the maximum
                                             -------------
principal amount, plus Capitalized Interest, if any, set forth on Schedule 2.01
                                                                  -------------
hereto (the "Commitment"). If BNH or NTI should terminate the NTI Purchase
             ----------
Agreement at any time prior to the Initial Payment Date, then the Commitment
shall automatically terminate, subject to Lender's right to make further
Advances hereunder, including, but not limited to, Advances under Section 2.03
                                                                  ------------
hereof. All amounts advanced hereunder shall be used solely for the purchase of
NTI Equipment and related services (exclusive of sales tax) associated with the
installation and operation of the NTI Equipment from NTI, and amounts not
exceeding the amount (if any) specified on Schedule 2.01 hereto may be used for
                                           -------------
legal fees, charges, expenses and closing costs and other expenses incurred by a
Borrower or incurred by Lender and payable by a Borrower under Section 2.10
                                                               ------------
hereof; provided, however, that not exceeding (i) forty percent (40%) of the
        --------  -------
aggregate of the principal amount of all Advances made hereunder may be used for
purchases of Vendor Equipment and related services associated with the
installation and operation of the Vendor Equipment, and (ii) eighteen and ten
one hundredths percent (18.10%) of the aggregate of the principal amount of all
Advances made hereunder may be used to finance the buildout, construction and
equipping of Co-Location Sites and related line conversion costs.

     2.02.  Notes and Payment Terms.
            -----------------------

            (a)  Promissory Notes. The Loans shall be a Note substantially in
                 ----------------
     the form of Exhibit A hereto, with appropriate insertions, shall be
                 ---------
     executed by the applicable Borrowers, payable to the order of Lender, and
     shall evidence the joint and several obligation of such Borrowers to repay
     all principal amounts advanced under or pursuant to the terms of the Note,
     together with interest and all other amounts due thereunder. Each Note
     shall be dated as of the Closing Date, have a stated maturity that is the
     Maturity Date, and bear interest at the Interest Rate from the Borrowing
     Date until the Note or any amount thereunder is paid in full (whether on
     the Maturity Date, by acceleration or otherwise). All schedules attached to
     a Note shall be deemed a part thereof. Any such schedule may be amended by
     Lender from time to time to reflect Advances made thereunder upon notice to
     and consent from the applicable Borrowers which consent will not be
     unreasonably withheld or delayed.

            (b)  Capitalized Interest Period. During the Capitalized Interest
                 ---------------------------
     Period applicable to each Advance, interest shall accrue on principal
     amounts of such Advance under the Note at the Interest Rate, and up to an
     aggregate of the maximum amount of Capitalized Interest set forth on
     Schedule 2.02 hereto of such interest shall be capitalized, in arrears, and
     -------------
     added to the principal amount of the Note by Lender, on behalf of the
     Borrowers, on the first day of each calendar month, thereby increasing the
     principal amount of the Note. The Lender may also evidence such increase by
     noting the date and amount of each such addition on a schedule to the Note.
     Interest accruing during the Capitalized Interest Period in excess of the
     maximum aggregate amount of Capitalized Interest set forth on Schedule 2.02
                                                                   -------------
     hereto shall be paid by the Borrowers monthly in arrears, on the first day
     of each calendar month, commencing on the first day of the month after the
     month in which such limit is exceeded.

                                       13
<PAGE>

          (c) Interest Payments.  After the expiration of the Capitalized
              -----------------
     Interest Period for an Advance, interest shall continue to accrue on the
     principal amount of such Advance under a Note (together with Capitalized
     Interest) at the Interest Rate and shall be payable, in arrears, on each
     Interest Payment Date.

          (d) Principal Payments.  On the Conversion Date for each Advance, the
              ------------------
     principal amount of such Advance (including Capitalized Interest) shall be
     payable in installments in accordance with the Payment Schedule set forth
     on Schedule 2.02 hereto, plus accrued interest, commencing on the Initial
        -------------
     Payment Date and on each Payment Date there after until the Maturity Date.
     Borrower and Lender understand that this payment schedule is intended to
     amortize fully the principal amount of the Note and any other principal and
     interest amounts outstanding will be added to the final payment on the
     Maturity Date. In any event, the entire outstanding principal amount of the
     Note and all accrued but unpaid interest and all other outstanding amounts
     due thereunder shall be paid on the Maturity Date.

          (e) Late Payments and Default Rate. Notwithstanding the foregoing, if
              ------------------------------
     the applicable Borrowers shall fail to pay within ten (10) days after the
     due date any principal amount or interest or other amount payable under
     this Agreement or under a Note, the applicable Borrowers shall pay to
     Lender, to defray the administrative costs of handling such late payments,
     an amount equal to interest on the amount unpaid, to the extent permitted
     under applicable law, at the Default Rate (instead of the Interest Rate),
     from the due date until such overdue principal amount, interest or other
     unpaid amount is paid in full (both before and after judgment) whether or
     not any notice of default in the payment thereof has been delivered under
     Section 9.01 hereof.  In addition, but without duplication, upon the
     ------------
     occurrence and during the continuance of an Event of Default, all
     outstanding amounts hereunder shall bear interest at the Default Rate
     (instead of the Interest Rate) until such amounts are paid in full or such
     Event of Default is waived in writing by Lender.

          (f) Excess Interest.  Notwithstanding any provision of a Note, this
              ---------------
     Agreement or any other Loan Document to the contrary, it is the intent of
     Lender and the Borrowers that Lender or any subsequent holder of either of
     the Notes shall never be entitled to receive, collect, reserve or apply, as
     interest, any amount in excess of the maximum rate of interest permitted to
     be charged by applicable Law, as amended or enacted from time to time.  In
     the event Lender, or any subsequent holder of a Note, ever receives,
     collects, reserves or applies, as interest, any such excess, such amount
     which would be excessive interest shall be deemed a partial prepayment of
     principal and treated as such, or, if the principal indebtedness and all
     other amounts due are paid in full, any remaining excess funds shall
     immediately be applied to any other outstanding indebtedness of the
     applicable Borrowers due to Lender, and if none is outstanding, shall be
     paid to the applicable Borrowers.  In determining whether or not the
     interest paid or payable, under any specific contingency, exceeds the
     highest lawful rate, the Borrowers and Lender shall, to the maximum extent
     permitted under applicable law, (a) exclude voluntary prepayments and the
     effects thereof as it may relate to any fees charged

                                       14
<PAGE>

     by Lender, and (b) amortize, prorate, allocate, and spread, in equal parts,
     the total amount of interest throughout the entire term of the
     indebtedness; provided that if the indebtedness is paid and performed in
     full prior to the end of the full contemplated term hereof, and if the
     interest received for the actual period of existence hereof exceeds the
     maximum lawful rate, Lender or any subsequent holder of any Note shall
     refund to the applicable Borrowers the amount of such excess or credit the
     amount of such excess against the principal portion of the indebtedness, as
     of the date it was received, and, in such event, Lender shall not be
     subject to any penalties provided by any laws for contracting for,
     charging, reserving or receiving interest in excess of the maximum lawful
     rate.

     2.03.  Procedures for Borrowing.
            ------------------------

          (a) Timing of Advances.  Advances shall not be made more than once per
              ------------------
     calendar month, and all Advances in any calendar month shall be made on the
     same Borrowing Date.  Each Advance (other than the last Advance) shall be
     in an aggregate principal amount of not less than $250,000.  No amounts may
     be borrowed hereunder on or after the Financing Termination Date.  Lender
     is hereby authorized to retain from each Advance all amounts of Lender's
     Expenses accrued and unpaid by Borrowers, for which invoices have been sent
     to Borrowers at least two (2) Business Days before such Advance. In any
     event, all outstanding legal fees, charges and expenses not paid by
     Borrowers prior to any Borrowing Date shall be paid before any Advance is
     made or concurrently with such Advance.

          (b) Borrowing Certificates.  To request an Advance hereunder, BNH, and
              ----------------------
     if the proceeds of an Advance are to be used to finance or refinance
     Collateral or the construction, buildout and equipping of a Co-Location
     Site to be owned or used by a Borrower other than BNH, such other Borrower,
     shall send to Lender, at least ten (10) Business Days prior to the
     requested Borrowing Date, a completed Borrowing Certificate, along with
     invoices and such other supporting documentation as Lender may reasonably
     request.  Lender is hereby authorized upon notice to the BNH to add to any
     Borrowing Certificate all amounts payable by Borrowers to Lender in respect
     of legal fees, charges and expenses arising or incurred by Lender, to the
     extent such fees, charges and expenses have then been incurred or charged
     and may be paid from proceeds of the Loans.

          (c) Transmission of Advances.  Advances shall be made by wire transfer
              ------------------------
     to the account(s) specified in the applicable Borrowing Certificate, except
     that (i) proceeds of the Loans may be transmitted, at Lender's option,
     directly to an NTI or Vendor account for payment of any unpaid NTI or
     Vendor invoices, and (ii) Advances shall be made to a Borrower only to the
     extent the Borrower provides Lender with satisfactory evidence that the
     amount of such Advance has been paid to NTI or the Vendor.  No further
     authorization shall be necessary for any such direct disbursements, and
     each such Advance shall satisfy pro tanto the obligations of Lender under
                                     --- -----
     this Agreement.

          (d) Borrowing Dates.  Advances shall be made by Lender on the
              ---------------
     Borrowing Date specified in the applicable Borrowing Certificate if all
     conditions for such Advance have been satisfied, or on such later Business
     Date as all conditions for such Advance shall have been satisfied, as
     determined by Lender.

          (e) Advances After Default.  At its option, after the occurrence and
              ----------------------
     continuance of a Default, Lender may but shall not be obligated to make
     advances of portions of the Loans to any Person (including without
     limitation NTI and any Vendor, suppliers, sub-contractors and materialmen)
     to whom Lender in good faith determines payment is due with respect to the
     Equipment, and any proceeds so disbursed by Lender shall be deemed
     disbursed as of the date on which the Person to whom payment is made
     receives the same.  No further authorization from a Borrower shall be
     necessary to warrant such direct advances, and the execution of this Loan
     Agreement by a Borrower shall, and hereby does, constitute an irrevocable
     authorization and power of attorney so to advance

                                       15
<PAGE>

proceeds hereunder. All such Advances shall satisfy pro tanto the obligations of
                                                    --- -----
Lender hereunder and shall be secured by the Security Documents as fully as if
made directly to the Borrower.

     2.04.  Prepayments.
            -----------

            (a) Voluntary Prepayments.  Borrowers may, at their option, at any
                ---------------------
     time after the first (1/st/) anniversary of the date of the applicable
     Advance) and from time to time thereafter, prepay such Advance in whole or
     in part, upon at least thirty (30) days prior written notice to Lender
     specifying the date and amount of prepayment, in a minimum amount of
     $50,000, plus the premium described below, and all accrued but unpaid
     interest thereon.  Such notice shall be irrevocable and the principal
     amount specified in such notice shall be due and payable on the date
     specified together with accrued interest on the amount prepaid.  Any such
     prepayment shall be subject to a prepayment premium equal to a percentage
     of the amount prepaid as follows: three percent (3%) if the prepayment is
     made after the first (1/st/) but before the second (2/nd/) anniversary of
     the date of the applicable Advance (or portion thereof) being prepaid; two
     percent (2%) if the prepayment is made after the second (2/nd/) but before
     the third (3/rd/) anniversary of the date of the applicable Advance (or
     portion thereof) being prepaid; one percent (1%) if the prepayment is made
     after the third (3/rd/) but before the fourth (4/th/) anniversary of the
     date of the applicable Advance (or portion thereof) being prepaid; and
     without a premium if the prepayment is made after the third (3/rd/) but
     before the fourth (4/th/) anniversary of the date of the applicable Advance
     (or portion thereof) being prepaid. Amounts prepaid may not be reborrowed
     and shall be applied as provided in Section 2.04(c). Mandatory Prepayments,
                                         ---------------
     excess interest payments under Section 2.02(g), or prepayments made from
                                    ---------------
     insurance proceeds pursuant to Section 6.03 or with any condemnation
                                    ------------
     proceeds shall not be subject to a prepayment premium. No voluntary
     prepayments shall be permitted prior to the Initial Payment Date.

            (b) Mandatory Prepayment.  Upon Lender's demand, Borrowers shall
                --------------------
     immediately prepay the Loans in full, including all principal, accrued
     interest, and expenses ("Mandatory Prepayments") , all of which shall be
                              ---------------------
     made upon Lender's demand and shall not be subject to any prepayment
     premium:

                (i)  If, prior to the completion of the installation of the
            subject Equipment for which an Advance has been made, the Borrowers
            fail to satisfy its purchase obligations under the related Purchase
            Agreement or terminate the related Purchase Agreement, at Lender's
            option Borrower shall prepay the Loans in full, including all
            principal, accrued interest, and expenses, within five (5) Business
            Days of Lender's demand.

                (ii) If (i) the percentage of the aggregate amount of all
            Advances made hereunder to finance the purchase of NTI Equipment and
            services under the NTI Purchase Agreement, as of the Financing
            Termination Date, is less than sixty percent
                                       16
<PAGE>

            (60%) of the total amount of Advances made hereunder (excluding
            Capitalized Interest) of (ii) the percentage of the aggregate amount
            of all Advances made hereunder to finance the buildout, construction
            and equipping of Co-Location Sites ever exceeds eighteen and ten one
            hundredths percent (18.10%) of the aggregate of the principal amount
            of all Advances made hereunder (excluding Capitalized Interest),
            then Borrower shall pay to Lender sufficient amounts to reduce the
            outstanding principal amount of the Note to a principal amount
            (excluding Capitalized Interest) necessary so as to comply with
            Section 2.01. Any such Mandatory Prepayments under this Section
            ------------                                            -------
            2.04(b)(ii) shall be deemed to be applied first to pay the amounts
            -----------
            of Advances made for purposes other than the purchase of NTI
            Equipment, and shall otherwise be applied as set forth in Section
                                                                      -------
            2.04(c) hereof.
            -------

            (c) Application of Prepayments. Any prepayments shall be applied
                --------------------------
     first to Capitalized Interest, if any, then to interest, then to premium,
     then to expenses, and then to the installments of principal in reverse
     chronological order.

     2.05.  Computation of Interest.  Interest shall be calculated daily on the
            -----------------------
basis of a 360-day year for the actual days elapsed in the period during which
it accrues.

     2.06.  Payments.  All payments and prepayments to be made in respect of
            --------
principal, interest, prepayment premiums or other amounts due from a Borrower
hereunder or under a Note shall be payable on or before 1:00 p.m., Nashville
time, on the day when due, without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived, and an action therefor shall
immediately accrue.  Such payments shall be made to Lender at Lender's office at
501 Corporate Centre Drive, Franklin, Tennessee 37067, or such other location
specified in writing by Lender, in immediately available funds, without setoff,
recoupment, counterclaims or any other deduction of any nature.

     2.07.  Indemnity.  Borrowers hereby, jointly and severally, indemnify
            ---------
Lender against any losses, claims, penalties, expenses, actions, suits,
obligations, liabilities and Liens (and all costs and expenses, including
reasonable attorneys' fees incurred in connection therewith), that Lender has
sustained or incurred or may sustain or incur in connection with any of the
Collateral, or the enforcement, performance or administration of the Loan
Documents, or as a consequence of any default by a Borrower in the performance
or observance of any covenant or condition contained in this Agreement or the
Loan Documents, including without limitation, the breach of any representation
or warranty, any failure of a Borrower to pay when due (by acceleration or
otherwise) any principal, interest, fee or any other amount due hereunder or
under a Note, and any failure of a Borrower to comply with all applicable
Requirements of Law (collectively, "Claims") except to the extent of any Claims
                                    ------
caused solely by Lender's gross negligence or willful misconduct.  Borrowers'
obligations under this Section 2.07 shall be part of the Obligations and shall
                       ------------
be secured by the Collateral.  Borrowers agree that upon written notice by
Lender of the assertion of any Claims, Borrowers shall, at Lender's option,
either assume full responsibility for, or reimburse Lender for

                                       17
<PAGE>

the reasonable costs and expenses of, the defense thereof. Lender shall have no
liability for consequential or incidental damages of any nature. The provisions
of this Section 2.07 shall survive the termination of this Agreement and payment
        ------------
of the Obligations.

     2.08.  Use of Proceeds.  The proceeds of the Advances hereunder shall be
            ---------------
used by a Borrower only for the purposes and in the amounts described in Section
                                                                         -------
2.01 hereof, and no amounts repaid may be reborrowed.
----

     2.09.  Fees.  Borrowers shall pay Lender the fees described on Schedule
            ----                                                    --------
2.09 hereto in connection with this Agreement.
----

     2.10.  Lender's Expenses.  Borrowers agree, jointly and severally, (a) to
            -----------------
pay or reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred or arising in connection with the negotiation, review, preparation and
execution of this Agreement, the Loan Documents, any commitment or proposal
letter, or any amendment, supplement, waiver, modification to, or restructuring
of this Agreement, the Obligations or the other Loan Documents, including,
without limitation, reasonable and customary legal fees and disbursements,
expenses, document charges and other charges and expenses of Lender, (b) to pay
or reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred in connection with the administration of the Loans or the enforcement,
protection or preservation of any rights under or in connection with this
Agreement or any other Loan Documents, including, without limitation, reasonable
legal fees and disbursements, audit fees and charges, and all out-of-pocket
expenses, and (c) to pay, indemnify, and to hold Lender harmless from, any and
all recording and filing fees and taxes and any and all liabilities with respect
to, or resulting from any delay in paying, stamp, excise and other taxes
(excluding income and franchise taxes and taxes of similar nature), if any,
which may be payable or determined to be payable in connection with the
execution and delivery or recordation or filing of, or consummation of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement and the
other Loan Documents subject to Schedule 2.09.  All of the amounts described as
                                -------------
payable in this Section are referred to collectively as the "Lender's Expenses",
                                                             -----------------
shall be payable upon Lender's demand, and shall accrue interest at the Interest
Rate in effect when such demand is made from fifteen (15) days after the date of
demand until paid in full. All Lender's Expenses, and interest thereon, shall be
part of the Obligations and shall be secured by the Collateral.  The agreements
in this Section 2.10 shall survive repayment of the Obligations.  All Lender's
        ------------
Expenses that are outstanding on any Borrowing Date shall be paid before or with
such advance.  If Borrowers have not paid to Lender the amount of all Lender's
Expenses billed to Borrowers at least five (5) Business Days before such
Borrowing Date, Lender shall be authorized to retain from any Advance on such
Borrowing Date the amount of such Lender's Expenses that remain unpaid or delay
funding such requested Advance until the payment of such amounts.  Borrowers'
obligation to pay Lender's Expenses shall not be limited by any limitation on
the amount of the Commitment that may be designated as available for such
purposes, and any amounts so designated shall be used to pay Lender's Expenses
accrued at the time of any Advance before any of Borrowers' legal fees or
similar expenses.

                                       18
<PAGE>

     2.11 Joint and Several Liability; Additional Subsidiaries. All Borrowers
          ----------------------------------------------------
shall be jointly and severally liable with all other Borrowers for all other
Obligations hereunder.  The undersigned Borrowers acknowledge and agree that:
(i) future Subsidiaries of BNH are required to become additional Borrowers under
the Agreement without the consent of any other Borrower by execution by such
Subsidiary of a copy of Annex A attached as Schedule 2.11 to this Agreement;
                                            -------------
(ii) Lender is willing to extend certain credit to the undersigned Borrowers,
subject to the terms and conditions set forth in the Agreement, including the
condition that the undersigned Borrowers will be jointly and severally liable
for the payment of all Indebtedness owed by BNH and any other Borrower to Lender
under the Agreement; (iii) without this condition of joint and several
liability, Lender would not be willing to extend credit to any Borrower; and
(iv) the undersigned Borrowers and other Subsidiaries of BNH which may become
additional Borrowers under the Agreement are (or will be) related entities, and
the undersigned Borrowers expect to increase their respective businesses, and to
benefit directly and indirectly, through the use of the equipment to be acquired
by it and the other Borrowers with the proceeds of the loans to be made pursuant
to the Agreement.  BNH shall cause each Person that becomes a Subsidiary of BNH
after the date of this Agreement to become a Borrower hereunder by executing a
copy of Annex A attached as Schedule 2.11 to this Agreement and provide the
                            -------------
information required to be set forth in Schedule 2.11(b) hereto, and if required
                                        ----------------
by Lender cause the delivery of an opinion of legal counsel to BNH and such
additional Subsidiary dated the date of the execution of the Annex A in form and
substance satisfactory to Lender and such other documents as the Lender may
request, including but not limited to a certificate of a responsible officer of
such additional Subsidiary as to the authority of such additional Subsidiary to
execute, deliver and perform this Agreement and the applicable Note and as to
the incumbency and signature of the officer or officers signing the Borrowing
Certificate and the applicable Note.

     2.12 Taxes.  (a)  Any and all payments by any Borrower hereunder or under a
          -----
Note executed by such Borrower shall be made, in accordance with Section 2.12,
                                                                 ------------
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of Lender, taxes that are imposed on its
                 ---------
net income by the United States or any state thereof and taxes that are imposed
on its net income (and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction under the laws of which Lender is organized or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes").  If any
                                                               -----
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note executed by such Borrower to Lender, (i)
the sum payable by such Borrower shall be increased as may be necessary so that,
after such Borrower and Lender have made all required deductions (including
deductions applicable to additional sums payable under this Section 2.12),
                                                            ------------
Lender  receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make all such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

                                       19
<PAGE>

     (b)    In addition, each Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Note executed by such Borrower or
from the execution, delivery or registration of, performance under, or otherwise
with respect to, this Agreement or the Note executed by such Borrower
(hereinafter referred to as "Other Taxes").
                             -----------

     (c)    Each Borrower shall jointly and severally indemnify Lender for and
hold it harmless against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on amounts payable
under this section imposed on or paid by Lender and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
Lender makes written demand therefor.

     (d)    Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to Lender, at its address referred to above, the original or a
certified copy of a receipt evidencing such payment.

     (e)    In the event that Lender determines in its reasonable discretion,
that it has actually and finally realized a refund of or credit for taxes
withheld or paid pursuant to this section, which credit or refund is
identifiable by Lender as being a result of taxes withheld in connection with
sums payable hereunder or under any other Loan Document, Lender shall promptly
notify such Borrower and shall remit to such Borrower, the amount of such refund
or credit allocable to payments made hereunder or under the other Loan
Documents; provided, however, that in the event of any subsequent disallowance
           --------  -------
of any such refund or credit on account of which Lender has made a payment
pursuant to this paragraph, the amount so disallowed shall be deemed to be a Tax
(notwithstanding any exclusions in the definition of "Taxes") for which Lender
                                                      -----
shall be entitled to indemnification under of this section, but only to the
extent of any payment by such Lender pursuant to this paragraph.

                 ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
                 --------------------------------------------

     3.01.  Grant of Security Interest. As security for the Obligations, in the
            --------------------------
case of the Domestic Borrowers, and for the Foreign Borrower Obligations in the
case of the Foreign Borrowers, each Borrower (as debtor) hereby assigns to
Lender as collateral, and grants to Lender (as secured party) a continuing
security interest in and to, all of Borrower's right, title and interest in and
to the following kinds and types of property, whether now owned or hereafter
acquired or arising, wherever located, together with all substitutions therefor
and all accessions, replacements and renewals thereof, and in all proceeds and
products thereof (collectively, the "Collateral"):
                                     ----------

            (a) All NTI Equipment financed or refinanced with proceeds of an
     Advance and all Vendor Equipment financed or refinanced with proceeds of an
     Advance, and in each case

                                       20
<PAGE>

     any and all additions, substitutions, and replacements to or of any of the
     foregoing, together with all attachments thereto (other than attachments
     (i) not financed or refinanced with proceeds of an Advance or which are not
     required to be attached thereto by the terms of this Loan Agreement, and
     (ii) which are not an integral part of the Collateral, and are severable
     from the Collateral without damaging the functionality or value of the
     remaining Collateral), and all components, parts, improvements, upgrades,
     and accessions installed thereon or affixed thereto, including installation
     services provided by NTI or any other Vendor in connection therewith
     (collectively, "Equipment") and each Borrower's rights under each NTI
                     ---------
     Purchase Agreement and each Vendor Purchase Agreement relating to such
     Equipment;

            (b) All general intangibles and intangible property (including all
     contracts and contract rights) constituting part of, or provided by or
     through NTI or any Vendor in connection with, the Equipment that are
     necessary for the proper operation of the Equipment, including without
     limitation licenses, license rights, rights in intellectual property,
     Software, Software Licenses, computer programming (including source codes,
     object codes and all other embodiments of computer programming or
     information), insurance proceeds and amounts due under insurance policies,
     refunds, warranties and indemnification rights, and all amounts owed at any
     time to each Borrower by Lender or NTI or by a Vendor in connection with a
     Vendor Purchase Agreement relating to Equipment (collectively, "General
                                                                     -------
     Intangibles"); and
     -----------

            (c) All proceeds and products of any of the foregoing, including
     without limitation (i) any and all proceeds of any insurance, indemnity,
     warranty or guaranty payable to each Borrower from time to time with
     respect to any of the Collateral, (ii) any and all payments (in any form
     whatsoever) made or due and payable to each Borrower from time to time in
     connection with any requisition, confiscation, condemnation, seizure or
     forfeiture of all or any part of the Collateral by any Governmental
     Authority (or any Person acting under color of governmental authority), and
     (iii) any and all cash proceeds and non-cash proceeds in the form of
     equipment, inventory, contracts, accounts, general intangibles, chattel
     paper, documents, instruments, securities, or other proceeds (collectively,
     "Proceeds").
      --------

     3.02.  Priority of Security Interests. The security interests granted by
            ------------------------------
each Borrower to Lender are and shall be continuing and indefeasible first-
priority security interests in the Collateral, subject to no Liens except for
Liens permitted under Section 8.01 hereof.
                      ------------

     3.03.  Further Documentation; Pledge of Instruments.  At any time and from
            --------------------------------------------
time to time, upon the written request of Lender, and at the sole expense of the
applicable Borrowers, each Borrower shall promptly execute, deliver and record
any documents, instruments, agreements and amendments, and take all such further
action, as Lender may reasonably deem desirable in obtaining the full benefits
of this Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing statements or amendments under
the UCC.  Each Borrower

                                       21
<PAGE>

also hereby authorizes Lender to file any such financing statement or amendment
thereto, without the signature of Borrower, or with a copy or telecopy of the
Borrower's signature, to the extent permitted by applicable law, or to execute
any financing statement or amendment thereof on behalf of the Borrower as the
Borrower's attorney-in-fact. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any promissory note or
other instrument or any certificated securities, such note, instrument or
certificate shall be immediately pledged and delivered to Lender hereunder, duly
endorsed in a manner satisfactory to Lender.

     3.04.  Further Identification of Collateral.  Each Borrower shall furnish
            ------------------------------------
to Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request, all in reasonable detail.

     3.05.  Remedies.  Lender shall have all the rights and remedies of a
            --------
secured party under the UCC, and shall be entitled to exercise any and all
remedies available under Article 9 hereof or otherwise available at law or in
                         ---------
equity upon the occurrence of an Event of Default.

     3.06.  Standard of Care.  Lender shall be deemed to have exercised
            ----------------
reasonable care in the custody and preservation of any of the Collateral in its
possession if it takes such action for that purpose as any Borrower requests in
writing, but Lender's failure to comply with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of Lender
to preserve or protect any rights with respect to such Collateral against prior
parties, or to do any act with respect to the preservation of such Collateral
not so requested by a Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.

     3.07.  Advances to Protect Collateral. All insurance expense and all
            ------------------------------
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral (including, without limitation, all rent payable by
the Borrowers to any landlord of any premises where any of the Collateral may be
located), and, any and all taxes shall be borne and paid by the Borrowers.
Lender may (but shall not be obligated to) make advances to preserve, protect or
obtain any of the Collateral, including advances to cure defaults under any
lease agreements for Sites or advances to pay taxes, insurance and the like, and
all such advances shall become part of the Obligations owing to Lender hereunder
and shall be payable to Lender on demand, with interest thereon from the date of
such advance until paid at the Default Rate in effect on the date of such
advance.

     3.08.  License to Use.  Lender is hereby granted a license or other right
            --------------
to use, after the occurrence of an Event of Default, without charge, in
advertising for the sole purpose of the sale and selling any Collateral, each
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any tangible or
intangible property or rights of a similar nature, as it pertains to the
Collateral, and each Borrower's rights under all licenses and franchise
agreements with respect to the Collateral shall inure to Lender's benefit.

                                       22
<PAGE>

     3.09.  Collateral Assignment of NTI Purchase Agreement.  (a) On the Closing
            -----------------------------------------------
Date, the Borrowers shall assign to the Lender, as additional collateral
security, all of the Borrowers' right, title and interest in and to the NTI
Purchase Agreement pursuant to the form of Collateral Assignment of Purchase
Agreement attached as Exhibit I to this Agreement and shall obtain the consent
                      ---------
of NTI to that assignment pursuant to the form of Consent to Collateral
Assignment of Purchase Agreement attached as Exhibit J to this Agreement.  The
                                             ---------
Borrowers shall make future collateral assignments to the Lender of any
additional purchase agreements subsequently entered into with NTI and shall
deliver consents to the Lender from NTI for those subsequent assignments within
10 business days after the effective date of each subsequent purchase agreement
using substantially the same forms as attached as exhibits to this Agreement.

     (b)    The Borrowers shall make collateral assignments to the Lender of
each "co-locate" agreement, arrangement or other understanding or right relating
to or providing for the use by a Borrower of a Co-Location Site at which
Collateral is located or with respect to which Advances hereunder have financed
or refinanced the construction, buildout or equipping thereof; provided,
                                                               --------
however, such collateral assignments shall expressly provide that such
-------
agreements shall be enforceable only to the extent that such co-location
agreements do not prohibit such assignment to be effected except upon the
consent of the counter-party to such agreement and the execution of such
collateral assignment would not constitute a breach (or an event that, upon
notice or the passage of time, or both, would constitute a breach) of such co-
location agreement.

     3.10   Priority of Security Interests and Liens on Equipment Outside United
            --------------------------------------------------------------------
States.  As a condition to any Advance by Lender to a Borrower to finance the
------
acquisition of NTI Equipment to be located outside the United States, such
Borrower shall (i) deliver a list identifying all NTI Equipment and specifying
where in such country such NTI Equipment will be located, (ii) at the sole
expense of such Borrower, execute, deliver and record any documents,
instruments, agreements and amendments, and take all such further action as
Lender may reasonably deem desirable, to grant and perfect a security interest
and/or lien on the Collateral in favor of Lender under the laws of such country
where such NTI Equipment will be located, which security interest and/or lien
will be enforceable against the Borrower and third parties in accordance with
its terms, and subject to no other liens or security interest other than
Permitted Encumbrances, and (iii) deliver an opinion of counsel in favor of
Lender, in form and substance to the reasonable satisfaction of the Lender,
confirming that (x) all steps have been taken to grant and perfect the security
interest and/or lien in such Collateral in favor of Lender which is enforceable
against the Borrower and third parties in accordance with its terms, subject to
no other liens or security interests, and (y) compliance with all regulatory
requirements in such jurisdiction for the installation and operation of the
Collateral in such jurisdiction and the right of Lender to exercise foreclosure
or repossession remedies without the necessity of regulatory approval or
licensing.

                                       23
<PAGE>

                   ARTICLE 4: REPRESENTATIONS AND WARRANTIES
                   -----------------------------------------

     Each Borrower hereby represents and warrants to Lender as follows:

     4.01.  Organization and Qualification. BNH and each of its Subsidiaries is
            ------------------------------
duly organized, validly existing and in good standing as a corporation under the
laws of its state of organization. BNH and each of its Subsidiaries is duly
qualified to do business and in good standing in each jurisdiction in which the
failure to receive or retain such qualification would have a Material Adverse
Effect.

     4.02.  Authority and Authorization.  BNH and each of its Subsidiaries has
            ---------------------------
all requisite corporate right, power, authority and legal right to execute and
deliver and perform its obligations under this Agreement, to make the borrowings
provided for herein, and to execute and deliver and to perform its obligations
under each Note.  BNH's and each Subsidiary's execution, delivery and
performance of the Basic Agreements have been duly and validly authorized by all
necessary corporate proceedings on the part of BNH and each Subsidiary.

     4.03.  Execution and Binding Effect.  This Agreement, each Note, and all
            ----------------------------
other Basic Agreements have been or will be duly and validly executed and
delivered by BNH and each of its Subsidiaries, and constitute or, when executed
and delivered will constitute, the legal, valid and binding obligations of BNH
and each of its Subsidiaries enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws affecting creditors'
rights generally.

     4.04.  Governmental Authorizations.  Except for the consents identified on
            ---------------------------
Schedule 4.04 hereto (the "Required Consents"), no authorization, consent,
-------------              -----------------
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Governmental
Authority (other than (i) the filing of financing statements and continuation
statements and (ii) those that have otherwise been obtained or made on or prior
to the Initial Borrowing Date and which remain in full force and effect on  the
Initial Borrowing Date) is or will be necessary in connection with execution and
delivery of this Agreement either, of the Notes, or any other Loan Documents by
BNH and each of its Subsidiaries, consummation of the transactions herein or
therein contemplated, performance of or compliance by BNH and each of its
Subsidiaries with the terms and conditions hereof or thereof or the legality,
validity and enforceability hereof or thereof.

     4.05.  Regulatory Authorizations.  BNH and each of its Subsidiaries holds
            -------------------------
all authorizations, permits and licenses required by the FCC or the PUC or any
Communications Law for the construction and operation of the System, and all
such Regulatory Authorizations are in full force and effect, are subject to no
further administrative or judicial review and are therefore final, except to the
extent described in Schedule 4.05.  With respect to the Regulatory
                    -------------
Authorizations listed in Schedule 6.02, the Borrower will use its best efforts
                         -------------
to obtain those regulatory consents in the most expedient manner possible, but
in any event prior to the first anniversary of the Initial Borrowing

                                       24
<PAGE>

Date. Lender will not by reason of the execution, delivery and performance
(other than the enforcement of remedies) of any of the Loan Documents, be
subject to the regulation or control of either the FCC or the PUC. The
Regulatory Authorizations are described on Schedule 4.05.
                                           -------------

     4.06.  Material Agreement; Absence of Conflicts.  The execution and
            ----------------------------------------
delivery of this Agreement, each Note, and the other Loan Documents; the
consummation of the transactions herein or therein contemplated; and the
performance of or compliance with the terms and conditions hereof or thereof by
BNH and each of its Subsidiaries will not (a) materially violate any applicable
Law; (b) conflict with or result in a material breach of or a default under the
Organizational Documents of BNH and each of its Subsidiaries or any agreement or
instrument to which BNH or any of its Subsidiaries is a party or by which BNH,
any of its Subsidiaries, or their properties are bound; or (c) result in the
creation or imposition of any Lien upon any property (now owned or hereafter
acquired) of BNH or any of its Subsidiaries except as otherwise contemplated by
this Agreement.

     4.07.  No Restrictions.  BNH and each of its Subsidiaries is not a party or
            ---------------
subject to any contract, agreement, or restriction in its Organizational
Documents that materially and adversely affects its business or the use or
ownership of any of its properties or operation of its business.  BNH and each
of its Subsidiaries is not a party or subject to any contract or agreement which
restricts its right or ability to incur Indebtedness, other than as set forth on
Schedule 4.07, none of which prohibit BNH's or any of its Subsidiaries'
-------------
execution of or compliance with this Agreement. BNH and each of its Subsidiaries
has not agreed or consented to cause or permit in the future (upon the happening
of a contingency or otherwise) any of the Collateral, whether now owned or
hereafter acquired, to be subject to a Lien that is not a Permitted Encumbrance.

     4.08.  Financial Statements.  BNH has furnished to Lender the most recent
            --------------------
annual or quarterly financial statements of BNH, certified by a Responsible
Officer of BNH, including balance sheets and related statements of income and
retained earnings and changes in financial position, as described on Schedule
                                                                     --------
4.08 hereof.  Such financial statements (including the notes thereto) present
----
fairly the financial condition of BNH on a consolidated basis as of the end of
such fiscal period and the results of its operations and the changes in its
financial position for the fiscal period then ended, all in conformity with GAAP
applied on a basis consistent with that of the preceding fiscal period. Any
projections and pro forma financial statements delivered by BNH to Lender were
prepared in good faith, based on reasonable assumptions, including without
limitation, the cost of capital.

     4.09.  Financial Accounting Practices.  BNH and each of its Subsidiaries
            ------------------------------
has made and kept books, records and accounts which, in reasonable detail,
accurately and fairly reflect its respective transactions and dispositions of
its assets, and BNH and each of its Subsidiaries shall maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability

                                       25
<PAGE>

for assets, (c) access to assets is permitted only in accordance with
management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

     4.10.  Accurate and Complete Disclosure.  No representation or warranty
            --------------------------------
made by any Borrower under this Agreement and no statement made by any Borrower
in any financial statement, certificate, report, exhibit or document furnished
by the Borrower to Lender pursuant to or in connection with this Agreement
(including without limitation any filings with the Securities Exchange
Commission, the FCC or the PUC) is or was false or misleading as of the date
made in any material respect (including by omission of material information
necessary to make such representation, warranty or statement not misleading).
There are no facts that evidence or create a Material Adverse Effect, or, so far
as any Borrower can now foresee, will evidence or create a Material Adverse
Effect, which has not been set forth in the financial statements referred to in
Section 4.08 hereof or otherwise disclosed in writing to Lender prior to the
------------
First Borrowing Date.

     4.11.  No Event of Default; Compliance with Material Agreements.  No event
            --------------------------------------------------------
has occurred and is continuing and no condition exists which constitutes a
Default or an Event of Default after giving effect to the Advance to be made on
the First Borrowing Date.  As of the date hereof, BNH and each of its
Subsidiaries is not in violation of any term of its material agreements or
instruments to which it is a party or by which it or its properties is bound.

     4.12.  Litigation.  Except as set forth in Schedule 4.12, there is no
            ----------                          -------------
pending action, suit or threatened proceeding by or before any Governmental
Authority against or affecting BNH, any of its Subsidiaries, or any of their
properties, rights or licenses which if adversely decided would have a Material
Adverse Effect.

     4.13.  Rights to Property; Intellectual Property.  BNH and each of its
            -----------------------------------------
Subsidiaries, as applicable, has good and marketable title, subject only to the
Permitted Encumbrances, to the Collateral and to all personal and real property
purported to be owned by it as reflected in the most recent balance sheet
referred to in Section 4.08 hereof (except as sold or otherwise disposed of in
               ------------
the ordinary course of business as no longer used or useful in the conduct of
the business).  BNH and each of its Subsidiaries, as applicable, owns or
possesses the right to use all patents, trademarks, service marks, trade names,
copyrights, know-how, franchises, software and software licenses necessary for
the operation of its business, free from burdensome restrictions.

     4.14.  Financial Condition.  BNH's financial condition is accurately
            -------------------
described in the Certificate of Financial Condition executed by BNH pursuant
hereto.

     4.15.  Taxes.  BNH's federal tax identification number is set forth on
            -----
Schedule 1 hereto. All tax returns required to be filed by BNH have been
----------
properly prepared, executed and filed, and all material taxes, assessments, fees
and other governmental charges upon BNH, each of its Subsidiaries, or upon any
of their respective properties, incomes, sales or franchises which are shown to
be due and payable thereon have been paid, other than taxes or assessments the
validity or amount

                                       26
<PAGE>

of which BNH or any of its Subsidiaries is contesting in good faith. The
reserves and provisions for taxes on the books of BNH and each of its
Subsidiaries are adequate for all open years and for its current fiscal period.

     4.16.  No Material Adverse Change.  Since the date of the financial
            --------------------------
statements referenced in Section 4.08, there has been no Material Adverse
                         ------------
Change.

     4.17.  No Regulatory Event.  No Regulatory Event has occurred and is
            -------------------
continuing.

     4.18.  Trade Relations.  There exists no actual or threatened termination,
            ---------------
cancellation or limitation of, or any modification or change in, the business
relationship between BNH or any of its Subsidiaries and any Carrier, any labor
organizations, any customer or any group thereof whose agreements with BNH or
any of its Subsidiaries or use of the System individually or in the aggregate
are material to the business of BNH and its Subsidiaries, or with any material
Supplier, and there exists no present condition or state of facts or
circumstances which would have a Material Adverse Effect or prevent BNH and each
of the Subsidiaries from conducting its business after the consummation of the
transaction contemplated by this Agreement.

     4.19.  No Brokerage Fees.  No brokerage or other fee, commission or
            -----------------
compensation is to be paid by BNH or any of its Subsidiaries to any Person in
connection with the Loans to be made hereunder. Each Borrower hereby indemnifies
Lender against any claims brought against Lender for brokerage fees or
commissions of any Person based on an agreement with BNH or any of its
Subsidiaries and agrees to pay all expenses incurred by Lender in connection
with the defense of any action or proceeding brought to collect any such
brokerage fees or commissions.

     4.20.  Margin Stock; Regulation U.  BNH or any of its Subsidiaries is not
            --------------------------
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying margin stock.  The
making of the Advances and the use of the proceeds thereof will not violate
Regulations G, U or X of the Board of Governors of the Federal Reserve System.

     4.21.  Investment Company; Public Utility Holding Company.  BNH or any of
            --------------------------------------------------
its Subsidiaries is not an "investment company" or a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.

     4.22.  Personal Holding Company; Subchapter S.  BNH is not a "personal
            --------------------------------------
holding company" as defined in Section 542 of the Code, and BNH is not a
"Subchapter S" corporation within the meaning of the Code.

                                       27
<PAGE>

     4.23.  ERISA. (i) With respect to any Plan, there is no Reportable Event
            -----
currently under consideration by the PBGC which may reasonably result in any
material liability to the PBGC with respect to any Plan, (ii) no Plan has been
terminated, (iii) no trustee has been appointed by any United States District
Court to administer any Plan, (iv) the PBGC has not instituted proceedings to
terminate any Plan or to appoint a trustee to administer any such Plan, (v)
neither BNH nor any Affiliate has withdrawn, completely or partially, from any
Plan and (vi) neither BNH nor any Affiliate has incurred secondary liability for
withdrawal liability payments under any Plan.

     4.24.  Environmental Warranties.  BNH and each of its Subsidiaries is in
            ------------------------
compliance with all Environmental Laws applicable to BNH, each of its
Subsidiaries, or its business or to the real or personal property owned, leased
or operated by BNH and each of its Subsidiaries.  BNH and each of its
Subsidiaries has not received notice of, and is not aware of, any violations or
alleged violations, or any liability or asserted liability, under any such
Environmental Laws, with respect to BNH, any of its Subsidiaries, or their
business or properties.

     4.25.  Security Interests. The provisions of Article 3 hereof are effective
            ------------------                    ---------
to create in favor of Lender a legal, valid and enforceable Lien on or security
interest in all of the Collateral, and, when the recordings and filings
described on Schedule 4.25 hereto have been effected in the public offices
             -------------
listed on said Schedule 4.25, this Agreement will create a perfected first-
               -------------
priority security interest in all right, title, estate and interest of BNH and
each of its Subsidiaries in the Collateral, and subject to no other Liens except
for Permitted Encumbrances.  All action necessary or desirable to protect and
perfect such security interest in each item of the Collateral will have been
duly taken prior to the First Borrowing Date. The recordings and filings shown
on said Schedule 4.25 are all the actions necessary or advisable in order to
        -------------
establish, protect and perfect the interest of Lender in the Collateral.

     4.26.  Place of Business.  The chief executive offices of BNH and each of
            -----------------
its Subsidiaries which are Borrowers are identified on Schedule 4.26 hereto.
                                                       -------------
BNH and each of its Subsidiaries' principal place of business in the state(s)
where the Equipment is located is identified on Schedule 4.26 hereto. BNH's and
                                                -------------
each of its Subsidiaries' records concerning the Collateral are kept at one or
both of these addresses.

     4.27.  Location of Collateral.  The Collateral is and will be kept at the
            ----------------------
locations identified on Schedule 4.26 hereto, or for subsequently acquired
                        -------------
Equipment, on the Borrowing Certificate pursuant to which Advances financing
such Equipment are made, or such other locations as may be permitted under
Section 8.12.
------------

     4.28.  Clear Title To Collateral.  Subject to Article 5 of the NTI Purchase
            -------------------------
Agreement, BNH or each of its Subsidiaries, as applicable, is the sole owner of
each item of the Collateral, having good and marketable title thereto, free and
clear of any and all Liens, claims, or rights of others, except for the security
interest granted herein to Lender and the other Permitted Encumbrances.

                                       28
<PAGE>

     4.29.  Assumed Names.  Except as set forth on Schedule 4.29 hereto, BNH or
            -------------                          -------------
any of its Subsidiaries does not conduct business under any assumed names or
trade names, and has not conducted business under any other names, or any
assumed names or trade names, at any time during the six months immediately
prior to the date hereof.

     4.30.  Transactions with Affiliates.  No Affiliate and no officer or
            ----------------------------
director of BNH or any of its Subsidiaries or any individual related by blood,
marriage, adoption or otherwise to any such officer or director, or any Person
in which any such officer, director or individual related thereto owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with BNH or any of its Subsidiaries or has any material interest in
any material property used by BNH or any of its Subsidiaries, except as set
forth on Schedule 4.30 hereto.
         -------------

     4.31.  NTI Purchase Agreement.  The NTI Purchase Agreement for NTI
            ----------------------
Equipment already acquired has been duly executed and delivered by Community
Networks, Inc., and NTI, is in full force and effect, and a true, correct and
complete copy thereof (including all annexes, attachments and amendments
thereto) has been delivered to Lender, and there are no other side letters,
waivers or other agreements affecting the terms thereof.

                        ARTICLE 5: CONDITIONS OF CLOSING
                        --------------------------------

     On or before the Closing Date, the following conditions shall have been
satisfied:

     5.01.  Closing Certificates. A certificate of the applicable Borrowers
            --------------------
signed by a duly authorized Responsible Officer, certifying as to (i) true
copies of Organizational Documents of each Borrower in effect on such date; (ii)
true copies of all corporate action taken by each Borrower relative to this
Agreement, each Note, and the other Loan Documents; (iii) the names, true
signatures and incumbency of the Responsible Officers of each Borrower
authorized to execute and deliver this Agreement, each Note, and the other Loan
Documents; (iv) a Certificate of Good Standing (or equivalent certificate) for
each Borrower duly issued by the Secretary of State of each state in which such
Borrower currently does business; and (v) such other matters as Lender shall
reasonably request.

     5.02.  Opinions of Counsel.  Lender shall have received the following
            -------------------
opinions, all dated as of the Closing Date and in form and substance
satisfactory to Lender:

            (a) A written opinion of counsel to each Borrower, substantially in
     the form of Exhibit C hereto;
                 ---------

            (b) A written opinion of regulatory counsel for each Borrower,
     substantially in the form of Exhibit D hereto; and
                                  ---------

                                       29
<PAGE>

     5.03.  Closing Documents. Lender shall have received the following
            -----------------
documents, all in form and substance satisfactory to Lender:

            (a) Agreement.  This Agreement, duly executed by each Borrower;
                ---------

            (b) Notes.  Each Note, duly executed by the applicable Borrowers;
                -----

            (c) Financing Statements.  All UCC-1 financing statements
                --------------------
     necessary to perfect the Liens granted hereby, each duly executed by the
     applicable Borrowers, and duly recorded in all the offices identified on
     Schedule 4.25 hereto;
     -------------

            (d) Collateral Assignment of Purchase Agreement.  The Collateral
                -------------------------------------------
     Assignment of Purchase Agreement, duly executed by the applicable
     Borrowers, and the Consent to Collateral Assignment of Purchase Agreement,
     duly executed by NTI;

            (e) Insurance.  Policies and certificates of insurance required by
                ---------
     Section 7.07, accompanied by evidence of the payment of the premiums
     ------------
     therefor;

            (f) Financial Statements.  The financial statements described in
                --------------------
     Section 4.08 hereof;
     ------------

            (g) Balance Sheet.  A balance sheet of BNH, dated as of the end of
                -------------
     month preceding the Closing Date, certified by a Responsible Officer as
     fairly presenting the financial condition of BNH.

            (h) Certificate of Financial Condition. A Certificate of Financial
                ----------------------------------
     Condition, duly executed by a Responsible Officer of BNH.

            (i) Pre-Closing Lien Searches.  Lien searches from all jurisdictions
                -------------------------
     reasonably determined by Lender to be appropriate, effective as of a date
     reasonably close to the Closing Date, reflecting no other Liens (other than
     Permitted Encumbrances) on any of the Collateral.

                       ARTICLE 6: CONDITIONS OF LENDING
                       --------------------------------

     6.01.  Conditions for Initial Advance.  On or before the First Borrowing
            ------------------------------
Date, the following conditions shall have been met to Lender's satisfaction:

            (a) Post-Closing Lien Searches.  Lender shall have received
                --------------------------
     satisfactory results of Lien searches in all jurisdictions reasonably
     determined by Lender to be appropriate, reflecting the filing of financing
     statements in favor of Lender pursuant hereto and no other Liens other than
     Permitted Encumbrances.

                                       30
<PAGE>

            (b) Required Consents.  Lender shall have received satisfactory
                -----------------
     evidence of Borrowers' obtaining the Required Consents.

     6.02.  Conditions for All Advances.  The obligation of Lender to make any
            ---------------------------
Advance hereunder is subject to each Borrower's performance of its obligations
hereunder on or before the date of such Advance, and to the satisfaction of the
following further conditions on or before the Borrowing Date for any Advance,
including the first Advance:

            (a) Filings, Registrations and Recordings.  Any financing statements
                -------------------------------------
     or other recordings required hereunder shall have been properly filed,
     registered or recorded in each office in each jurisdiction required in
     order to create in favor of Lender a perfected first-priority Lien on the
     Collateral, subject to no other Lien; Lender shall have received
     acknowledgment copies of all such filings, registrations and recordations
     stamped by the appropriate filing officer; and Lender shall have received
     results of searches of such filing offices, and satisfactory evidence that
     any other Liens (other than Permitted Encumbrances) on the Collateral have
     been duly released, that all necessary filing fees, recording fees, taxes
     and other expenses related to such filings, registrations and recordings
     have been paid in full.

            (b) Borrowing Certificate.  Lender shall have received a duly
                ---------------------
     executed Borrowing Certificate in the form of Exhibit B, including a
                                                   ---------
     detailed itemization of all costs of goods and services to be paid with the
     proceeds of the Advance and accompanied by supporting documentation
     satisfactory to Lender.

            (c) Reporting Requirements.  Borrowers shall have provided Lender
                ----------------------
     with all relevant reports and information required under Article 7 hereof.
                                                              ---------

            (d) No Regulatory Event.  No Regulatory Event (in either Borrowers'
                -------------------
      or Lender's reasonable determination) shall have occurred and be
     continuing or would exist upon the consummation of transactions to occur on
     such Borrowing Date.

            (e) No Default or Event of Default.  No Default or Event of Default
                ------------------------------
     shall have occurred and be continuing or would exist upon the consummation
     of transactions to occur on such Borrowing Date.

            (f) No Material Adverse Change.  No Material Adverse Change shall
                --------------------------
     have occurred, or would occur after giving effect to such Advance, since
     the date of the last financial statements delivered to Lender pursuant to
     Section 4.08 or 7.01 hereof.
     ------------    ----

            (g) Representations and Warranties.  The representations and
                ------------------------------
     warranties contained in Article 4 hereof shall be true on and as of the
                             ---------
     date of each such Advance hereunder.

                                       31
<PAGE>

            (h) Lender's Expenses.  All closing costs, and other Lender's
                -----------------
     Expenses shall have been paid in full, (or shall be paid first from such
     Advance as provided in Section 2.03 hereof).
                            ------------

            (i) Opinions.  Lender shall have received from each Borrower such
                --------
     opinions of counsel for the Borrower as may be reasonably acceptable to
     Lender in form and substance with respect to the perfection and priority of
     the Liens created by the Security Documents in each such jurisdictional
     location.

            (j) Details, Proceedings and Documents.  All legal details and
                ----------------------------------
     proceedings in connection with the transactions contemplated by this
     Agreement shall be reasonably satisfactory to Lender and Lender shall have
     received all such counterpart originals or certified or other copies of
     such documents and proceedings in connection with such transactions, in
     form and substance reasonably satisfactory to Lender, as Lender may from
     time to time request.

            (k) Consents.  Lender shall have received Consents duly executed by
                --------
     all parties and in form satisfactory to Lender.

            (l) Fees.  Lender shall have received the fee(s) described in
                ----
     Section 2.09 hereof.
     ------------

            (m) Purchase Agreements.  Lender shall have received a copy of each
                -------------------
     executed NTI Purchase Agreement and/or Vendor Purchase Agreement with
     respect to which proceeds of an Advance shall be used to acquire NTI
     Equipment or other Equipment, and Lender's shall have reviewed and approved
     the Equipment to be acquired with proceeds of an Advance, together with the
     collateral assignment and consent specified in Section 3.10 of this
                                                    ------------
     Agreement.

            (n) Post-Closing Items.  The post-closing items described on
                ------------------
     Schedule 6.02 hereto, if any, shall have been completed in the time
     -------------
     permitted, and each Borrower shall have provided Lender with satisfactory
     evidence thereof.

     6.03.  Affirmation of Representations and Warranties.  Any Borrowing
            ---------------------------------------------
Certificate or other request for any Advance hereunder shall constitute a
representation and warranty that (a) the representations and warranties
contained in Article 4 hereof are true and correct on and as of the date of such
             ---------
request with the same effect as though made on and as of the date of such
request and (b) on the date of such request no Default or Event of Default has
occurred and is continuing or exists or will occur or exist after giving effect
to such Advance (for this purpose such Advance being deemed to have been made on
the date of such request). Failure of Lender to receive notice from a Borrower
to the contrary before such Advance is made shall constitute a further
representation and warranty by the Borrower that (x) the representations and
warranties of the Borrower contained in the first sentence of this Section 6.03
                                                                   ------------
are true and correct on and as of the date of such Advance with the

                                       32
<PAGE>

same effect as though made on and as of the date of such Advance and (y) on the
date of the Advance no Default or Event of Default has occurred and is
continuing or exists or will occur or exist after giving effect to such Advance.

     6.04.  Deadline for Funding Conditions.  Lender shall have no obligation to
            -------------------------------
make any Advances hereunder if all of the conditions set forth in Article 5 and
                                                                  ---------
in Sections 6.01 and 6.02 hereof have not been fully satisfied, and the first
   -------------     ----
Advance made hereunder, within the period of twelve (12) calendar months
following the Closing Date.

                        ARTICLE 7: AFFIRMATIVE COVENANTS
                        --------------------------------

     Each Borrower hereby agrees that as long as the commitment hereunder
remains in effect, either Note remains outstanding or unpaid, or any other
amount is owing to Lender hereunder or under any of the Loan Documents, each
Borrower shall keep and perform fully each and all of the following covenants:

     7.01.  Reporting and Information Requirements.
            --------------------------------------

            (a) Annual Audit Reports. As soon as practicable, and in any event
                --------------------
     within one hundred twenty (120) days after the close of each fiscal year of
     BNH, BNH shall furnish or cause to be furnished to Lender audited
     statements of income, statements of cash flow and retained earnings for
     such fiscal year and BNH's balance sheet as of the close of such fiscal
     year, and notes to each, all in reasonable detail, and beginning with BNH's
     second full fiscal year setting forth in comparative form the corresponding
     figures for the preceding fiscal year, with such statements and balance
     sheet to be certified without qualification by independent certified public
     accountants of recognized regional or national standing selected by BNH and
     reasonably satisfactory to Lender.

            (b) Quarterly Reports.  Within forty-five (45) days after the end of
                -----------------
     each fiscal quarter, BNH shall furnish to Lender (i) unaudited consolidated
     statements of income, statements of cash flow and retained earnings for BNH
     for such quarter and for the period from the beginning of BNH's then
     current fiscal year to the end of such quarter, and an unaudited
     consolidated balance sheet of BNH as of the end of such quarter, all in
     reasonable detail and certified by a Responsible Officer of BNH as
     presenting fairly the financial position of BNH as of the end of such
     quarter and the results of its operations and the changes in its financial
     position for such quarter, in conformity with GAAP (except for accompanying
     notes thereto), subject to year-end audit adjustments, and (ii) upon
     Lender's request, an aging of accounts payable and accounts receivable.

            (c) Compliance Certificates. Within thirty (30) days after the end
                -----------------------
     of each fiscal quarter, BNH shall deliver to Lender a certificate dated as
     of the end of such fiscal quarter,

                                       33
<PAGE>

     signed on behalf of BNH by a Responsible Officer of BNH (i) stating that as
     of the date thereof no Event of Default has occurred and is continuing or
     exists, or if an Event of Default has occurred and is continuing or exists,
     specifying in detail the nature and period of existence thereof and any
     action with respect thereto taken or contemplated to be taken by BNH and/or
     any of its Subsidiaries; (ii) stating that the signer has personally
     reviewed this Agreement and that such certificate is based on an
     examination made by or under the supervision of the signer sufficient to
     assure that such certificate is accurate; and (iii) calculating and
     certifying BNH's compliance with the financial covenants set forth in
     Section 7.15 hereof.
     ------------

          (d) Accountants' Certificate.  Each set of year-end audited
              ------------------------
     consolidated statements and balance sheet delivered pursuant to Section
                                                                     -------
     7.01(a) hereof shall be accompanied by, or shall contain within, a
     -------
     certificate or report dated the date of such statement and balance sheet by
     the accountants who certified such statements and balance sheet stating in
     substance that they have reviewed this Agreement and that in making the
     examination necessary for their certification of such statements and
     balance sheet they did not become aware of any Default, or if they did
     become so aware, such certificate or report shall state the nature and
     period of existence thereof.

          (e) Projections.  If requested by Lender, BNH shall deliver to Lender
              -----------
     within thirty (30) days prior to the beginning of each calendar year
     projections of its anticipated income, expenses, cash flow, assets and
     liabilities for each month of such calendar year, prepared in good faith
     and in a manner and format consistent with other financial statements
     provided by BNH to Lender.  Such projections shall present fairly the
     anticipated financial condition of BNH and shall be certified by a
     Responsible Officer of BNH.  Upon Lender's request, or following any
     material change in BNH's financial condition or business, such reports
     shall be provided to Lender quarterly, within thirty (30) days prior to the
     beginning of each Calendar Quarter.

          (f) Other Reports and Information.  Promptly upon their becoming
              -----------------------------
     available to BNH, BNH shall deliver to Lender copies of (i) all regular or
     special reports or effective registration statements which BNH or any of
     its Subsidiaries shall file with Governmental Authorities, the FCC or the
     PUC (or any successor thereto) or any securities exchange, (ii) financial
     statements, material reports, and other information distributed by BNH or
     any of its Subsidiaries to its creditors or the financial community in
     general, and (iii) all press releases issued by or concerning BNH or the
     System.

          (g) Further Information.  Each Borrower will promptly furnish to
              -------------------
     Lender such other information (including any report by independent
     auditors) in such form as Lender may reasonably request.

                                       34
<PAGE>

     7.02.  Other Notices.  Promptly upon a Responsible Officer of a Borrower
            -------------
becoming aware of any of the following, the Borrower shall give Lender notice
thereof, together with a written statement of a Responsible Officer of the
Borrower setting forth the details thereof and any action with respect thereto
taken or contemplated to be taken by the Borrower:

          (a)  a Default or Event of Default;

          (b)  any Material Adverse Change;

          (c) a material default or breach by the Borrower under any other
     contractual obligation to which it is a party or by which it or its
     properties is bound, if the consequences of such breach of default are
     material to the business, operations or financial condition of the
     Borrower;

          (d) any event that the Borrower reasonably determines would constitute
     a Regulatory Event;

          (e) the commencement, existence or threat of any proceeding by or
     before any Governmental Authority against the Borrower which, if adversely
     decided, would have a Material Adverse Effect;

          (f) the Borrower's receipt of any notice of violation of, or liability
     under, any Environmental Laws affecting the Borrower or any of its
     properties; or

          (g) any Change in Control or any material change in the management of
     the Borrower.

     7.03.  Notice of Pension-Related Events.  Each Borrower shall promptly
            --------------------------------
furnish Lender with written notice upon the receipt by the Borrower or the
administrator of any Plan of any notice, correspondence or other communication
from the PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or
any other Person, as the case may be, relating to (i) any Reportable Event, (ii)
any funding deficiency with respect to any Plan, (iii) any liability, either
primary or secondary, with respect to complete or partial withdrawal from any
Plan, (iv) proceedings to terminate any Plan or (v) the appointment of a trustee
for any Plan.  Such notice shall be accompanied by any pertinent documents
including, but not limited to, the relevant notice, correspondence or other
communication and a statement of a Responsible Officer of the Borrower
describing the event or the action taken and the reasons therefor.

     7.04.  Inspection Rights.  Each Borrower shall upon reasonable notice
            -----------------
permit such persons as Lender may designate to visit and inspect the Collateral
or any other properties of the Borrower, to examine its books and records and
take copies and extracts therefrom and discuss its respective affairs with its
officers, employees and independent engineers, in each case during normal
business

                                       35
<PAGE>

hours and as often as Lender may reasonably request. Each Borrower hereby
authorizes such officers, employees, and independent engineers to discuss with
Lender the affairs of the Borrower.

     7.05.  Preservation of Corporate Existence and Qualification.  Each
            -----------------------------------------------------
Borrower shall maintain its existence, good standing and rights in full force
and effect in its jurisdiction of organization.  Each Borrower shall qualify to
do business and remain qualified and in good standing and obtain all necessary
authorizations to do business in each jurisdiction in which failure to receive
or retain such would have a Material Adverse Effect.

     7.06.  Continuation of Business.  Each Borrower shall continue to engage
            ------------------------
solely in the business described on Schedule 1 hereto, and shall acquire and
                                    ----------
maintain in full force and effect all rights, privileges, franchises and
licenses necessary for the operation and maintenance of the System (including,
without limitation any license or authorization required by the FCC or any PUC).

     7.07.  Insurance.
            ---------

          (a) Each Borrower shall provide and maintain or cause to be maintained
     at all times insurance in such forms and covering such risks and hazards
     and in such amounts and with an insurance corporation with a Best rating of
     "A" or above, licensed to do business in the states where the System and
     the Borrower are located, as may be satisfactory to Lender, as shown on
     Schedule 7.07 hereto, and otherwise as may be required by the Security
     -------------
     Documents.

          (b) As soon as practicable following the Closing Date, each Borrower
     shall cause (i) all liability insurance policies to name Lender as an
     additional insured, (ii) all physical damage insurance policies to contain
     a lender's or mortgagee's loss payable provision acceptable to Lender with
     respect to the Collateral, (iii) all insurance policies to provide that no
     assignment, cancellation, modification, reduction in amount or adverse
     change in coverage thereof shall be effective until at least thirty (30)
     days after receipt by Lender of written notice thereof, (iv) all insurance
     policies to insure the interests of Lender with respect to the Collateral
     regardless of any breach of or violation by any Borrower of any warranties,
     declarations or conditions contained therein and (v) all insurance policies
     to provide that Lender shall have no obligation or liability for premiums,
     commissions, assessments or calls in connection with such insurance.
     Lender shall be under no obligation to verify the adequacy or existence of
     any insurance coverage.  Each Borrower shall furnish Lender copies of, or
     acceptable certificates with respect to, all such policies prior to the
     Closing Date, and shall provide to Lender, at least thirty days prior to
     each policy expiration date, evidence of the insurance being maintained by
     the Borrower in compliance with this Section 7.07(b).  Certificates for
                                          ---------------
     insurance required under subsection (i) above shall be in ACORD Form 27
     (attached hereto at Schedule 7.07(), and all certificates shall be
                         ---------------
     satisfactory in form and substance to Lender.

                                       36
<PAGE>

          (c) If the Collateral is partially or totally damaged or destroyed,
     the applicable Borrower shall give prompt notice to Lender, and all
     insurance proceeds, less the costs of collection thereof, shall be paid to
     or retained by Lender.  Settlements, adjustments or compromises of any
     claims for loss, damage or destruction to the Collateral shall be made by
     the Borrower and Lender as long as no Event of Default has occurred and is
     continuing, and otherwise shall be made solely by Lender.  Each Borrower
     hereby authorizes and directs any affected insurance company to pay such
     proceeds directly to Lender, and to rely on Lender's statement as to
     whether an Event of Default has occurred.  Each Borrower shall pay all
     costs of collection of insurance proceeds payable on account of such damage
     or destruction.  If no Default or Event of Default has occurred and is
     continuing on the date the Collateral is partially or totally damaged or
     destroyed, Lender shall make available to the applicable Borrower the
     proceeds of any physical damage insurance actually paid to Lender in
     respect of such damage or destruction of the Collateral (after deducting
     therefrom any sums retained by Lender in reimbursement for costs of
     collection) to pay the cost of restoration, and the Borrower shall proceed
     promptly with the work of restoration of the Collateral and shall pursue
     the work of restoration diligently to completion.  If any Default or Event
     of Default has occurred and is continuing either on the date of such damage
     or destruction or on the date such insurance proceeds are paid, or if any
     Default or Event of Default shall occur prior to completion of such work of
     restoration, then Lender, at its option, may apply such insurance proceeds
     in payment of any of the Obligations, in such order as Lender may elect in
     its sole discretion.  Any insurance proceeds remaining after completion of
     work or restoration shall, at Lender's election, be applied in accordance
     with Section 2.04(c) hereof (but without prepayment premium), or paid over
          ---------------
     to the applicable Borrower. Upon completion of any restoration, the
     Borrower shall deliver to Lender a certificate stating that the restoration
     has been duly completed and accounting for the use of any insurance
     proceeds in such restoration.

     7.08.  Payment of Taxes, Charges, Claims and Current Liabilities.  Each
            ---------------------------------------------------------
Borrower shall pay or discharge:

          (a) on or prior to the date on which penalties thereto accrue, all
     material taxes, assessments and other government charges or levies imposed
     upon it or any of its properties or income (including such as may arise
     under Section 4062, Section 4063 or Section 4064 of ERISA, or any similar
     provision of law);

          (b) on or prior to the date when due, all lawful claims of
     materialmen, mechanics, carriers, warehousemen, and other like persons
     which could result in creation of a Lien upon any such property;

          (c) on or prior to the date when due, all other lawful claims which,
     if unpaid, might result in the creation of a Lien upon any such property
     (other than Permitted Encumbrances) or which, if unpaid, might give rise to
     a claim entitled to priority over

                                       37
<PAGE>

     general creditors of the Borrower in a case under Title 11 (Bankruptcy) of
     the United States Code, as amended, or in any insolvency proceeding or
     dissolution or winding-up involving the Borrower; and

          (d) all other current liabilities so that none is overdue more than
     sixty (60) days.

     Notwithstanding the foregoing, each Borrower shall be entitled to contest
or appeal the requirements of any Law or Governmental Authority or the payment
of any tax, assessment, charge, levy or claim, or any judgment entered against
the Borrower (collectively, in this Section 7.08, the "requirements"), as long
                                    ------------       ------------
as (i) such requirements are being contested in good faith by appropriate
proceedings diligently conducted; (ii) the Borrower has given Lender written
notice of such requirements and the intent to contest them, with supporting
reasons for such contest, before the addition of any interest or penalties that
may accrue on such requirements; (iii) the Borrower maintains adequate cash
reserves and makes other appropriate provisions as may be required by GAAP to
provide for any liability arising from such requirements; (iv) the contesting
of, or failure to comply with, such requirements does not in any way jeopardize
the Borrower's ability or authority to operate all or any part of the Collateral
or the continuing priority of Lender's security interests in the Collateral;
(vi) the contesting of, or failure to comply with, such requirements does not
have a Material Adverse Effect; and (vii) any foreclosure, attachment,
execution, sale or similar proceeding against the Borrower or any of its
properties in connection with any such requirements is duly stayed by posting of
a bond or security deposit or by other action sufficient under applicable law to
stay such foreclosure, attachment, execution, sale or other proceedings.

     7.09.  Financial Accounting Practices.  Each Borrower shall make and keep
            ------------------------------
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

     7.10.  Compliance with Laws.  Each Borrower shall comply in all respects
            --------------------
with all Laws applicable to the Borrower, provided that the Borrower shall not
be deemed to be in violation of this Section 7.10 as a result of any failure to
                                     ------------
comply which would not result in any liability or exposure to Lender or any
fines, penalties, injunctive relief or other civil or criminal liabilities
which, in the aggregate, would materially affect the business, operations or
financial condition of the Borrower or the ability of the Borrower to perform
its obligations under this Agreement or the applicable Note.

     7.11.  Use of Proceeds.  Each Borrower shall use the proceeds of Advances
            ---------------
hereunder only as set forth in Section 2.01 hereof.
                               ------------

                                       38
<PAGE>

     7.12.  Government Authorizations; Regulatory Authorizations, Etc.  Each
            ---------------------------------------------------------
Borrower shall at all times obtain and maintain in force all Regulatory
Authorizations and all other authorizations, permits, consents, approvals,
licenses, exemptions and other actions by, and all registrations,
qualifications, designations, declarations and other filings with, any
Governmental Authority necessary in connection with execution and delivery of
this Agreement, the applicable Note, the consummation of the transactions herein
or therein contemplated, the performance of or compliance with the terms and
conditions hereof or thereof, or to ensure the legality, validity and
enforceability hereof or thereof.

     7.13.  Contracts and Franchises.  Each Borrower shall comply with all
            ------------------------
agreements or instruments to which it is a party or by which it or any of its
properties (now owned or hereafter acquired) may be subject or bound and shall
maintain any and all franchises it may have or hereafter acquire, provided that
the Borrower shall not be deemed to be in violation of this Section 7.13 as a
                                                            ------------
result of any failure to comply with any agreement if such failure would not
have Material Adverse Effect.

     7.14.  Consents.  Each Borrower shall use all reasonable efforts to obtain
            --------
such Landlord's Consents, Mortgagee's Consents and other third party consents as
Lender shall reasonably request to protect its Liens and its access to the
Collateral.

     7.15.  Financial Covenants.  BNH shall comply with the financial covenants
            -------------------
set forth on Schedule 7.15 hereto.
             -------------

     7.16.  Construction and Storage.  The Collateral shall be installed and
            ------------------------
equipped in full compliance with the Requirements of Law affecting the
Collateral except to the extent a failure to so comply would not have a Material
Adverse Effect on the construction or operation of the Collateral.  All
Equipment financed with the proceeds of the Loans shall be safeguarded and
stored until installed in appropriate storage facilities owned or leased by the
applicable Borrower.  In the event of any cessation of construction for more
than fifteen (15) successive calendar days, the applicable Borrower shall make
adequate provision, reasonably acceptable to Lender, for the protection of all
materials stored on site against deterioration, loss or damage.

     7.17.  Upgrade Equipment.  Each Borrower shall update the software
            -----------------
customarily used in equipment of the same type as the Equipment within two
releases of the most current batch change supplement release.  Each Borrower
shall maintain its Equipment in good working order in accordance with
established maintenance procedures such that the Equipment performs to published
specifications and upgrade its functionality to include batch change supplements
releases generally available to customers of NTI or the applicable Vendor, as
the case may be, and batch change supplements upgrades included in the original
purchase price of the Purchase Agreement in the form in effect on the date of
the Closing Date.

                                       39
<PAGE>

     7.18.  Additional Subsidiaries.  BNH shall cause each direct and indirect
            -----------------------
Subsidiary formed or acquired after the date of this Agreement to become a
Borrower under this Agreement in conformity with the terms and conditions of
Section 2.11 of this Agreement.

                         ARTICLE 8: NEGATIVE COVENANTS
                         -----------------------------

     Each Borrower hereby agrees that, so long as the Commitment hereunder
remains in effect, either of the Notes remains outstanding and unpaid, or any
other amount is owing to Lender hereunder or under any of the Loan Documents,
each Borrower shall not directly or indirectly without prior written consent of
Lender, do or permit to exist any of the following:

     8.01.  Restrictions on Additional Indebtedness. Create, incur, assume or
            ---------------------------------------
suffer to exist at any one time any Indebtedness in excess of $50,000 in the
aggregate except for (a) trade payables incurred in the ordinary course of
business, and (b) any Indebtedness described on Schedule 8.01 hereto.
                                                -------------

     8.02.  Restrictions on Liens and Sale of Collateral. Create or suffer to
            --------------------------------------------
exist any Lien on the Collateral or on any other property of a Borrower, or any
                                 --------------------------------------
part thereof, whether superior or subordinate to the Lien of the Security
Documents, or assign, convey, sell or otherwise dispose of or encumber its
interest in the Collateral, or any part thereof (including, without limitation,
execution of any lease), nor permit any such action to be taken, except for the
following permitted dispositions and encumbrances (the "Permitted
                                                        ---------
Encumbrances"): (i) the Lien created hereby; (ii) Liens for taxes not yet due,
------------
or which are being contested in good faith and by appropriate proceedings in
accordance with Section 7.08 hereof; (iii) carriers', warehousemen's,
                ------------
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business which are overdue for a period not longer than
thirty (30) days or which are being contested in good faith and by appropriate
proceedings in accordance with Section 7.08 hereof; (iv) pledges or liens in
                               ------------
connection with workers' compensation, unemployment insurance and other social
security legislation; (v) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations, surety
and appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business; (vi) easements, rights-of-way,
restrictions and other similar encumbrances that are not substantial in amount,
and which do not in any case materially detract from the value of the property
subject thereto or interfere with the ordinary conduct of the business of a
Borrower; (vii) judgment liens with respect to which execution has been stayed
within ten (10) days by appropriate judicial proceedings and the posting of
adequate security which may not be any of the Collateral; and (viii) specific
liens, if any, identified on Schedule 8.02 hereto. Any of the foregoing Liens
                             -------------
shall remain "Permitted Encumbrances" as long as they are being contested by
Borrower in compliance with Section 7.08 hereof.
                            ------------

                                       40
<PAGE>

     8.03.  Limitation on Contingent Obligations. Other than for Indebtedness of
            ------------------------------------
a Borrower, agree to, or assume, guarantee, endorse or otherwise in any way be
or become responsible or liable for, directly or indirectly, any Contingent
Obligation except for those created or contemplated by the Loan Documents.

     8.04.  Fees and Commissions.
            --------------------

[INTENTIONALLY DELETED]

     8.05.  Prohibition of Mergers, Acquisitions, Name, Office or Business
            --------------------------------------------------------------
     Changes, Etc.
     ------------

          (a) Enter into or become the subject of, any transaction of merger,
     acquisition or consolidation or liquidate, wind up or dissolve itself (or
     suffer any liquidation or dissolution), or convey, sell, lease, transfer or
     otherwise dispose of, in one transaction or a series of transactions, all
     or any substantial part of a Borrower's business or assets, whether now
     owned or hereafter acquired, provided, however, that any Borrower may enter
     into a transaction of merger, acquisition or consolidation with a
     telecommunications company if such transaction is consistent with the
     Business Plan, immediately before, and after giving effect to, the
     consummation of such transaction, there is no Default or Event of Default
     under any Loan Document, and such Borrower is the surviving entity of such
     transaction.

          (b) Change its name or corporate structure without giving Lender at
     least ten (10) days advance written notice of such change, and previously
     ensuring that any steps that Lender may deem necessary to continue the
     perfection and priority of Lender's security interests in the Collateral
     shall have been taken.

          (c) Change the fiscal year end of the Borrower from December 31,
     except with the prior written consent of Lender, which consent shall not be
     unreasonably withheld.

          (d) Amend, restate or otherwise modify, or violate any terms of, its
     Organizational Documents in a manner adverse to Lenders without the prior
     written consent of Lender.

          (e) Become or agree to become a general or limited partner in any
     general or limited partnership, or a member in a limited liability company
     or a joint venturer in any joint venture, except that a Borrower may become
     so involved in the aforementioned types of entities if such entity is, or
     thereupon becomes, a Subsidiary of BNH and becomes a Borrower hereunder.

          (f) Acquire or purchase substantially all of the stock, partnership,
     membership or other ownership interests in, or substantially all of the
     business, assets, customers or operations of, any other entity unless such
     transaction is an acquisition consistent with the Business Plan.

                                       41
<PAGE>

          (g) Enter into any new business or make any material change in any of
     Borrower's business objectives, purposes and operations from those
     contemplated in the Business Plan.

     8.06.  Limitation on Equity Payments.  Make any Equity Payment to any
            -----------------------------
Person, except that, as long as no Default or Event of Default has occurred and
is continuing, or would be caused thereby, and if no other provision contained
herein will be violated by the disbursement of such Equity Payment, Borrowers
may make Equity Payments described on Schedule 8.06 hereto.  Before making any
                                      -------------
Equity Payment in accordance with this Section 8.06, a Borrower shall deliver to
                                       ------------
Lender a certificate of a Responsible Officer of such Borrower, setting forth in
detail the calculation supporting BNH's compliance with the financial covenants,
stating that no Material Adverse Change has occurred since the date of the
latest financial statement delivered pursuant to Section 7.01(a), and stating
                                                 ---------------
that no Default or Event of Default has occurred and is continuing or will be
caused by such Equity Payment.

     8.07.  Limitation on Investments, Advances and Loans. Other than in the
            ---------------------------------------------
ordinary course of business or as set forth on Schedule 8.07 and in either case
                                               -------------
only for a purpose consistent with the Business Plan, organize, create, acquire,
capitalize or own any Subsidiaries without Lender's prior written consent, or
make or commit to make any advance, loan, guarantee of any Indebtedness,
extension of credit or capital contribution to, or hold or invest in or purchase
or otherwise acquire any stock, bonds, notes, debentures or other securities of,
or make any other investment in, any Person including, without limitation, any
officers of any Borrower, any Affiliate of any Borrower or any Owner, or any
officers of any Affiliate of any Borrower except in the ordinary course of
business.

     8.08.  Capital Expenditures. Directly or indirectly make or commit to make
            --------------------
any expenditure in respect of the purchase or other acquisition (including
installment purchases or capital leases) of fixed or capital assets, except for
expenditures in accordance with the Business Plan and normal replacements and
maintenance which are properly charged to current operations.

     8.09.  Limitation on Leases. Enter into any agreement, or be or become
            --------------------
liable under any agreement, not in existence as of the date hereof and reflected
on BNH's financial statements, for the lease, hire or use of any real or
personal property in excess of $100,000 in the aggregate, including, without
limitation, capital or operating leases, except that a Borrower may, in the
ordinary course of business and on term standard in the industry, enter into
such leases or agreements if immediately before, and after giving effect to the
incurrence thereof BNH is in compliance with its financial covenants required by
Schedule 7.15.
-------------

     8.10.  Transactions with Affiliates. Except as described in Schedule 4.30
            ----------------------------                         -------------
and Schedule 8.07 hereto, enter into any transactions, including, without
    -------------
limitation, any loans or advances, any repayment of loans or advances, or the
purchase, sale or exchange of property or the rendering of any services, with
any Affiliate, or enter into, assume or suffer to exist any employment or

                                       42
<PAGE>

consulting contract with any Affiliate, or otherwise pay any fees or expenses
to, or reimburse or assume any obligation for the reimbursement of any expenses
incurred by, any Affiliate.

     8.11.  Termination of Purchase Agreement.  Prior to the completion of the
            ---------------------------------
installation of the subject Equipment (i) fail to satisfy its purchase
obligations under the related Purchase Agreement or (ii) terminate the related
Purchase Agreement.

     8.12.  Removal of Collateral. Remove or permit the removal of any material
            ---------------------
part of the Collateral from the locations identified on Schedule 4.25, without
                                                        -------------
giving Lender thirty (30) days prior written notice of such move and ensuring
that any steps the Lender may deem necessary to continue the perfection and
priority of Lender's security interest in the Collateral shall have been taken.

     8.13.  Assumed Names.  Transact or engage in business under any assumed
            -------------
name, fictitious name, tradestyle or "d/b/a"  except those identified on
Schedule 4.29.
-------------

                   ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
                   -----------------------------------------

     9.01.  Events of Default. An Event of Default shall mean the occurrence or
            -----------------
existence of one or more of the following events or conditions (whatever the
reason for such Event of Default and whether voluntary, involuntary or effected
by operation of Law):

          (a) Payment Default.  If a Borrower fails to pay any sum, whether of
              ---------------
     principal or interest on a Note or any prepayment premiums, or any other
     amount due hereunder or under a Note within five (5) Business Days after
     such amount becomes due; or

          (b) False Statement. If any statement, representation or warranty made
              ---------------
     by a Borrower in any Loan Document or made in any financial statement,
     certificate, report, exhibit or document furnished to Lender pursuant to
     any Loan Document, proves to have been untrue, incomplete, false or
     misleading in any material respect as of the time when made (including by
     omission of material information necessary to make such representation,
     warranty or statement not misleading) and such untruth, falsity, misleading
     statement or omission shall not have been corrected or remedied to the
     satisfaction of Lender within ten (10) Business Days after the earlier of a
     Borrower's (or Owner's) knowledge thereof or receipt of written notice
     thereof from Lender; or

          (c) Covenant Defaults.  If a Borrower defaults in the performance or
              -----------------
     observance of any material covenant or agreement in this Agreement, and
     such default continues for a period of ten (10) Business Days after the
     earlier of the Borrower's knowledge thereof or receipt of written notice
     from Lender thereof, except for violations of Section 7.08(d), which shall
                                                   ---------------
     become an Event of Default at the end of the sixty (60) day period stated
     therein and

                                       43
<PAGE>

     except for specific Defaults listed elsewhere in this Section 9.01, as to
     which no notice or cure period shall apply unless specified; or

          (d) Failure of Conditions.  If a Borrower fails to meet any condition
              ---------------------
     of lending under Article 6 hereof, and such condition is not waived by
                      ---------
     Lender;

          (e) Undischarged Judgments.  If one or more judgments for the payment
              ----------------------
     of money has been entered against a Borrower in an amount in excess of
     $100,000, and such judgment or judgments have remained undischarged and
     unstayed for a period of thirty (30) calendar days, unless the validity
     thereof is contested in compliance with Section 7.08 hereof; or
                                                     ----

          (f) Attachments, etc.  If a writ or warrant of attachment,
              ----------------
     garnishment, execution, distraint or similar process has been issued
     against a Borrower or any of its properties which has remained undischarged
     and unstayed for a period of thirty (30) consecutive days and is not being
     contested in compliance with Section 7.08 hereof; or
                                  ------------

          (g) Default Under Third Party Agreements.  If a default, or event or
              ------------------------------------
     condition which with notice or lapse of time or both would become a
     default, occurs that gives the creditor the right to accelerate in respect
     of any other obligation of a Borrower for borrowed money (including lease
     obligations) in the amount of $100,000 in the aggregate, or under any two
     or more such other obligations of any amount; or

          (h) Dissolution: Etc.  If a Borrower dissolves, has its Organizational
              ----------------
     Document revoked, winds up or liquidates itself or its business; or

          (i) Involuntary Bankruptcy or Receivership Proceedings.  If a
              --------------------------------------------------
     receiver, custodian, liquidator, or trustee of a Borrower or of any of its
     property is appointed by the order or decree of any court or agency or
     supervisory authority having jurisdiction; or an order is entered
     adjudicating a Borrower as bankrupt or insolvent; or any of the property of
     a Borrower is sequestered by court order; or a petition is filed against a
     Borrower under any state or federal bankruptcy, reorganization,
     arrangement, insolvency, readjustment of debt, dissolution, liquidation, or
     receivership law of any jurisdiction, whether now or hereafter in effect;
     or

          (j) Voluntary Bankruptcy.  If a Borrower takes affirmative steps to
              --------------------
     prepare to file, or files, a petition in voluntary bankruptcy or to seek
     relief under any provision of any bankruptcy, reorganization, arrangement,
     insolvency, readjustment of debt, dissolution, or liquidation law of any
     jurisdiction, whether now or hereafter in effect, or consents to the filing
     of any petition against it under any such law; or

          (k) Assignments for Benefit of Creditors, Etc.  If a Borrower makes an
              -----------------------------------------
     assignment for the benefit of creditors, or admits in writing its inability
     to pay its debts generally as they

                                       44
<PAGE>

     become due, or consents to the appointment of a receiver, trustee, or
     liquidator of itself or of all or any part of its properties; or

          (l) Non-compliance with Governmental Requirements.  If a Borrower
              ---------------------------------------------
     fails to comply with any material requirement of any Governmental Authority
     within ten (10) Business Days after notice in writing of such requirement
     shall have been given to the Borrower by such Governmental Authority, or
     such longer period of time permitted the Borrower by such Governmental
     Authority; or

          (m) Regulatory Authorizations.  If any Regulatory Authorization in
              -------------------------
     connection with this Agreement or any other Loan Document or any such
     Regulatory Authorization now or hereafter necessary or advisable to make
     this Agreement or the other Loan Documents legal, valid, enforceable and
     admissible in evidence or to permit a Borrower to conduct its business is
     not obtained or has ceased to be in full force and effect or has been
     modified or amended or has been held to be illegal or invalid or is revoked
     or terminated, and is not being contested by the Borrower in compliance
     with Section 7.08 hereof and Lender has reasonably determined in good faith
          ------------
     (which determination shall be conclusive) that such event or occurrence may
     have a Material Adverse Effect or a material adverse effect on Lender's
     rights under this Agreement or any other Loan Documents; or

          (n) Damage or Destruction.  If the proceeds of any physical damage
              ---------------------
     insurance actually paid in respect of the partial or total damage or
     destruction of the Collateral are insufficient to cover the cost of the
     restoration thereof or if Lender determines that such damage or destruction
     is so extensive that repair or restoration cannot be expected within a time
     period short enough to prevent a Material Adverse Effect;

          (o) Consents.  If a Borrower fails to provide any Consent required
              --------
     hereunder and Lender determines in its sole discretion that such failure
     results in a material impairment of Lender's security for the Loans; or

          (p) Change in Control.  If any Change in Control should occur without
              -----------------
     Lender's prior written consent, which consent may be withheld in Lender's
     sole and absolute discretion; or

          (q) ERISA Defaults.  If, with respect to any Plan, (i) there has
              --------------
     occurred a Reportable Event being considered by the PBGC which may
     reasonably result in any material liability to the PBGC with respect to any
     Plan, (ii) a Plan has been terminated, (iii) a trustee has been appointed
     by a United States District Court to administer a Plan, (iv) a PBGC or any
     other person has instituted proceedings to terminate a Plan or to appoint a
     trustee to administer any such Plan, (v) either a Borrower or any Affiliate
     has withdrawn, completely or partially, from any Plan (vi) either a
     Borrower or any Affiliate has incurred

                                       45
<PAGE>

     secondary liability for withdrawal liability payments under any Plan or
     (vii) a Plan has failed to meet the minimum funding standards established
     under the Code or ERISA; or

          (r) Defaults Under Other Loan Documents.  If any default,
              -----------------------------------
     misrepresentation or breach should occur under any Security Document or
     other Loan Document and is not cured or waived within the time permitted
     therein, or any such Loan Documents should cease to be in full force and
     effect, or any party thereto should assert any unenforceability of, or deny
     liability on, or admit inability to perform under, any such Loan Document.

     9.02.  Consequences of an Event of Default.  If any Event of Default shall
            -----------------------------------
occur and be continuing or shall exist, Lender shall be under no further
obligation to make Advances hereunder, any remaining commitment hereunder shall
immediately terminate, with no further notice, and Lender may, by notice to the
Borrowers, declare the unpaid principal amount of each Note, interest accrued
thereon and all other amounts owing by Borrowers hereunder or under each Note to
be immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived, and an action
therefor shall immediately accrue.  Such consequences shall occur automatically
upon the occurrence of an Event of Default under Section 9.01 (h), (i), (j) or
                                                 -----------------------------
(k), without any notice or demand.  Upon the occurrence and continuance of an
---
Event of Default, Lender may, in its sole discretion, exercise any and all
remedies available to it under this Article 9 or under any of the Loan Documents
                                    ---------
or under applicable law without further notice or period of grace or opportunity
to cure.

     9.03.  Exercise of Rights.  Subject to any requirements for FCC or other
            ------------------
governmental approval upon the occurrence of any Event of Default, the rights,
powers and privileges provided in this section and all other remedies available
to Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time whether or not the Obligations shall be
due and payable, and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or the Note.  No failure
to exercise nor any delay in exercising on the part of Lender, any right,
remedy, power or privilege hereunder or under any of the other Loan Documents
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power or privilege hereunder or thereunder preclude any other or
future exercise thereof or the exercise of any other right, remedy, power or
privilege.

     9.04.  Rights of Secured Party; Possession or Sale of Collateral.  Without
            ---------------------------------------------------------
limiting the generality of the foregoing, Lender shall have all the rights and
remedies of a secured party under the UCC, and Lender may, without demand and
without advertisement or notice, all of which each Borrower waives, at any time
or times, sell and deliver any or all Collateral held by or for it at public or
private sale, for cash, upon credit or otherwise, at such prices and upon such
terms as Lender deems advisable, in its sole discretion, and/or collect, or
enforce the collection of, the Collateral.  Lender may be the purchaser at any
such sale.  Upon the occurrence of an Event of Default and upon Lender's
request, the applicable Borrower shall assemble, at its own expense, any or all
Equipment and other Collateral at a convenient place acceptable to Lender and
shall pay to Lender or reimburse

                                       46
<PAGE>

Lender for, on demand, all costs of collection of all amounts due, and
enforcement of all rights hereunder, including reasonable attorneys' fees and
legal expenses, and expenses of any repairs to any realty or other property to
which any of such Collateral may be affixed. Upon an Event of Default Lender
may, to the full extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, enter upon any premises
where any of the Collateral may be located and take possession of and remove
such Collateral.

     9.05.  Notices, Etc., Waived.  Except as expressly provided in this Article
            --------------------                                         -------
9, each Borrower hereby expressly waives, to the full extent permitted by
-
applicable law, presentment, demand, protest, any and all notices of any kind,
advertisements, hearing or process of law in connection with the exercise by
Lender of any of its rights and remedies upon the occurrence of an Event of
Default.  If any notification of intended disposition of any of the Collateral
is required by law, such notification shall be deemed reasonably and properly
given if given in accordance with Section 10.06 hereto at least ten (10) days
                                  -------------
before such disposition.

     9.06.  Additional Remedies.  Lender's remedies upon the occurrence and
            -------------------
during the continuance of an Event of Default shall include, in addition to, and
not in lieu of, such remedies as are available at law or in equity or provided
for in any of the Loan Documents, the following:

            (a) Foreclosure; Receivership.  Lender shall be entitled to file one
                -------------------------
     or more suits at law or in equity to collect the Obligations and/or to
     foreclose on Lender's Liens on and security interests created by this
     Agreement or the Security Documents.  Lender may apply or require each
     Borrower to apply for any necessary transfers, assignments, orders,
     consents or licenses in connection with the operation or abandonment of the
     Collateral or any part thereof, and Lender shall also be entitled as a
     matter of right and without notice and without requiring bond (notice and
     bond being hereby waived), without regard to the solvency or insolvency of
     a Borrower at the time of application and without regard to the value of
     the Collateral at that time, to have a receiver appointed by a court of
     competent jurisdiction in order to manage, protect, and preserve the
     Collateral and to continue the operation of the business of a Borrower, and
     to collect all revenues and profits thereof and apply the same to the
     payment of all expenses and other charges of such receivership until the
     sale or other final disposition of the Collateral.  Each Borrower hereby
     consents to the appointment of such receiver.

            (b) Right to Cure.  If a Borrower fails in any material respect to
                -------------
     perform or comply with any of its agreements contained herein or in any of
     the other Loan Documents, Lender may take whatever actions it may deem
     appropriate to perform or comply or otherwise cause performance or
     compliance with such agreement, all at the risk, cost and expense of the
     Borrower.

            (c) Setoff.  If the unpaid principal amount of a Note, interest
                ------
     accrued thereon or any other amount owing by a Borrower hereunder or under
     the Note shall have become due

                                       47
<PAGE>

     and payable (by acceleration or otherwise), Lender shall have the right, in
     addition to all other rights and remedies available to it, without notice
     to the Borrower, to setoff against and to appropriate and apply to such due
     and payable amounts any debt owing to, and any other funds held in any
     manner for the account of, the Borrower by Lender. Such right shall exist
     whether or not Lender shall have given notice or made any demand hereunder
     or under the Note, whether or not such debt owing to or funds held for the
     account of the Borrower is or are matured or unmatured, and regardless of
     the existence or adequacy of any collateral, guaranty or any other
     security, right or remedy available to Lender. Each Borrower hereby
     consents to and confirms the foregoing arrangements and confirms Lender's
     rights of setoff.

     9.07.  Application of Proceeds.  Any proceeds of any of the Collateral,
            -----------------------
received by Lender through sale or disposition of the Collateral or otherwise,
may be applied by Lender toward the payment of the Obligations, including
expenses in connection with the Collateral (including reasonable fees and legal
expenses) in such order of application as Lender may from time to time elect.

     9.08.  Discontinuance of Proceedings.  If Lender should proceed to enforce
            -----------------------------
any right or remedy under this Agreement or any other Loan Document, and then
discontinue or abandon such proceeding for any reason, all rights, powers and
remedies of Lender hereunder shall continue as if no such proceeding had been
taken.

     9.09.  Power of Attorney.  For the purpose of carrying out the provisions
            -----------------
and exercising the rights, powers and privileges granted by the Loan Documents,
including, without limitation, this Article 9, each Borrower hereby irrevocably
constitutes and appoints Lender its true and lawful attorney-in-fact to execute,
acknowledge and deliver any instruments and do and perform any acts such as are
referred to in the Loan Documents, including, without limitation, this Article
                                                                       -------
9, in the name and on behalf of the Borrower, from time to time in Lender's
-
reasonable discretion after the occurrence and during the continuance of an
Event of Default, in accordance with the Loan Documents and any statute or rule
of law.  This power of attorney is a power coupled with an interest and cannot
be revoked.  Each Borrower hereby ratifies all that said attorney-in-fact shall
lawfully do or cause to be done by virtue and in accordance with the terms
hereof.  Without limiting the generality of the foregoing, Lender may after the
occurrence and during the continuance of an Event of Default do the following
without notice to or assent by the Borrower to accomplish the purposes of this
Agreement:

          (a) upon failure of a Borrower to timely pay or discharge taxes or
     Liens levied or placed on or threatened against the Collateral, effect any
     repairs or any insurance called for by the terms of this Loan Agreement or
     any other Loan Document, and pay all or any part of the premiums therefor
     and the costs thereof;

          (b) (i) direct any party liable for any payment on any Collateral to
     make payment of any and all monies due and to become due thereunder
     directly to Lender or as Lender shall

                                       48
<PAGE>

     direct; (ii) in the name of the applicable Borrower or its own name or
     otherwise, take possession of and endorse and collect any checks, drafts,
     notes, acceptances, or other instruments for the payment of monies due
     under, or otherwise receive payment of and receipt for any and all monies,
     claims and other amounts due and to become due at any time in respect of or
     arising out of any Collateral; (iii) sign and endorse any invoices, freight
     or express bills, bills of lading, storage or warehouse receipts, drafts
     against debtors, assignments, verifications and notices in connection with
     the Collateral; (iv) commence and prosecute any suits, actions or
     proceedings at law or in equity in any court of competent jurisdiction to
     collect all or any of the Collateral and to enforce any other right in
     respect of any Collateral; (v) defend any suit, action or proceeding
     brought against the Borrower with respect to any Collateral; (vi) settle,
     compromise or adjust any suit, action or proceeding described above upon
     commercially reasonable terms under the circumstances and, in connection
     therewith, give such discharges or releases as Lender may reasonably deem
     appropriate; and (vii) generally sell, use, operate, transfer, pledge, make
     any agreement with respect to or otherwise deal with any of the Collateral
     as fully and completely as though Lender were the absolute owner thereof
     for all purposes, and, at Lender's option and the Borrower's expense, at
     any time or from time to time after the occurrence and during the
     continuance of an Event of Default, all other acts and things that Lender
     reasonably deems necessary to protect, preserve or realize upon the
     Collateral and Lender's security interest therein, in order to effect the
     intent of this Agreement and the other Loan Documents all as fully and
     effectively as the Borrower might do.

     9.10.  Regulatory Matters.  Notwithstanding any provision to the contrary
            ------------------
contained herein, Lender will not exercise any right or remedy under this
Agreement that requires prior FCC or PUC approval without first obtaining such
approval.  If counsel to Lender reasonably determines that the consent of the
FCC or PUC is required in connection with any of the actions that may be taken
by Lender in the exercise of its rights hereunder or under any of the other Loan
Documents, then the applicable Borrower, at its sole cost and expense, agrees to
use its best efforts to secure such consent and to cooperate with Lender in any
action commenced by Lender to secure such consent.  Upon the occurrence and
during the continuation of an Event of Default, the applicable Borrower shall
promptly execute and/or cause the execution of all applications, certificates,
instruments and other documents and papers that may be required in order to
obtain any necessary governmental consent, approval or authorization, and if the
Borrower fails or refuses to execute such documents, the clerk of the court with
jurisdiction may execute such documents on behalf of the Borrower.

                 ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
                 --------------------------------------------

     The following conditions shall be applicable throughout the term of this
Agreement:

     10.01.  Modifications and Waivers.  This Agreement, the other Loan
             -------------------------
Documents, or any provision thereof may not be changed, waived or terminated
orally, but only by an instrument in

                                       49
<PAGE>

writing signed by the party against whom enforcement of the change, waiver or
termination is sought. No action or course of dealing on the part of Lender, its
officers, employees, consultants, or agents, nor any failure or delay by Lender
with respect to exercising any right, power, or privilege of Lender under the
Note, this Agreement, or any other Loan Document shall operate as a waiver
thereof, except as otherwise provided in this Agreement. Any waiver shall be
effective only to the extent and for the instance specifically identified in
such writing, and shall not be deemed to imply any future waivers or other
waivers. No amendment to the Loan Documents shall be effective without written
agreement signed by both the Borrowers and Lender.

     10.02.  Advances Not Implied Waivers. No waiver of the requirements
             ----------------------------
contained in any Loan Document shall be effective unless in writing duly signed
by Lender.  No Advance hereunder shall constitute a waiver of any of the
conditions of Lender's obligation to make further Advances nor, in the event a
Borrower is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Lender from thereafter declaring such
inability to be an Event of Default as herein provided.  Any Advance made by
Lender and any sums expended by Lender pursuant to the Loan Documents shall be
deemed to have been made pursuant to this Agreement, notwithstanding, the
existence of an uncured Default or Event of Default.  No Advance at a time when
an Event of Default exists shall constitute a waiver of any right or remedy of
Lender existing by reason of such Event of Default, including, without
limitation, the right to accelerate the maturity of the Indebtedness evidenced
by the Note or to foreclose the Lien on the Collateral or to refuse to make
further advances hereunder.

     10.03.  Deviation from Covenants.  The procedure to be followed by a
             ------------------------
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Loan Document shall be as follows:

             (a) The Borrower shall send a written notice to Lender setting
     forth (i) the covenant(s) relevant to the matter, (ii) the requested
     deviation from the covenant(s) involved, and (iii) the reason for the
     requested deviation from the covenant(s); and

             (b) Lender, within a reasonable time, will send a written notice to
     the Borrower, permitting or refusing the request, but in no event will any
     deviation from the covenants of this Agreement or any other Loan Document
     be effective without the express prior written consent of Lender. Lender's
     failure to provide such written notice shall be deemed a refusal of such
     request.

     10.04.  Holidays.  Except as otherwise provided herein, whenever any
             --------
payment or action to be made or taken hereunder or under a Note shall be stated
to be due on a day which is not a Business Day, such payment or action shall be
made or taken on the next following Business Day and such extension of time
shall be included in computing interest or fees, if any, in connection with such
payment or action.

                                       50
<PAGE>

     10.05.  Records. From time to time Lender may send BNH statements of the
             -------
unpaid principal amount of a Note, the unpaid interest accrued thereon, the
Interest Rate or rates applicable to such unpaid principal amount, the duration
of such applicability, and the amount remaining available on any Loan, and each
statement shall be deemed correct and conclusively binding on the Borrowers
(absent manifest error) unless Borrower notifies Lender of an error in the
statement in writing within thirty (30) days of the date of any such statement
is provided to BNH.

     10.06.  Notices. All notices, requests, demands, directions and other
             -------
communications (collectively, "notices") required under the provisions of this
Agreement or any other Loan Document shall be in writing (including
communication by facsimile transmission) unless otherwise expressly permitted
hereunder and shall be sent by hand, by registered or certified mail return
receipt requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all cases with charges prepaid, and any such properly given notice shall be
effective upon the earlier of receipt or (i) when delivered by hand, or (ii) the
third Business Day after being mailed, or (iii) the following Business Day if
sent by overnight courier service, or (iv) when sent by facsimile, answer back
received. All notices shall be addressed as follows:

     If to any Borrower:  To the Notice
                          Address set forth on Schedule 1, with
                                               ----------
                          copies, if any, as set forth on Schedule 1.
                                                          ----------

     If to Lender:        NTFC Capital Corporation
                          501 Corporate Centre Drive
                          Franklin, Tennessee 37067
                          Attention: Manager, Credit
                          Telecopy:  (615) 771-6626

     With a copy to:      NTFC Capital Corporation
                          501 Corporate Centre Drive
                          Franklin, Tennessee 37067
                          Attention: Legal Department
                          Telecopy:  (615) 771-6187

     All notices shall be sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to the other party hereto, given in accordance with the terms hereof.

     10.07.  FCC and PUC Approval.  The exercise of any rights or remedies
             --------------------
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval.  Pending the receipt of
any PUC or FCC approval, a Borrower shall not do

                                       51
<PAGE>

anything to delay, hinder, interfere with or obstruct the exercise of Lender's
rights or remedies hereunder or the obtaining of such approvals.

     10.08.  Lender Sole Beneficiary.  All conditions of the obligation of
             -----------------------
Lender to make any Advances hereunder are imposed solely and exclusively for the
benefit of Lender and its assigns and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions, and no Person shall under
any circumstances be deemed to be a beneficiary of such conditions, any or all
of which may be freely waived in whole or in part by Lender at any time if in
its sole discretion it deems it advisable to do so.  Inspections and approvals
of the System, and the workmanship and materials used therein impose no
responsibility or liability of any nature whatsoever on Lender, and no Person
shall, under any circumstances, be entitled to rely upon such inspections and
approvals by Lender for any reason. Lender's sole obligation hereunder is to
make the Advances if and to the extent required by this Agreement or the Notes.

     10.09.  Lender's Review of Information.  Each Borrower acknowledges and
             ------------------------------
agrees that any review or analysis by Lender of financial information, operating
information, marketing data or other information provided to Lender by or on
behalf of any Borrower at any time is and shall be conducted solely for Lender's
benefit and internal use and that Lender is under no duty or obligation to make
the results of such review or analysis available to any Borrower.  Each Borrower
is not relying, and will not rely, on Lender for financial or business advice.

     10.10.  No Joint Venture.  Nothing in any of the Loan Documents or in this
             ----------------
Agreement shall be deemed to constitute any kind of partnership, joint venture
or fiduciary relationship between Lender and any Borrower or between Lender and
any Owners.

     10.11.  Severability.  The provisions of this Agreement are intended to be
             ------------
severable. If any provision of this Agreement or the other Loan Documents shall
be held invalid or unenforceable in whole or in part in any jurisdiction such
provision shall, as to such jurisdiction, be ineffective to the extent of such
invalidity or unenforceability without in any manner affecting the validity or
enforceability thereof in any other jurisdiction or the remaining provisions
hereof or thereof in any jurisdiction.

     10.12.  Rights Cumulative.  All rights, powers and remedies herein given to
             -----------------
Lender are cumulative and not alternative, and are in addition to all statutes
or rules of law.

     10.13.  Duration; Survival.  All representations and warranties of each
             ------------------
Borrower contained herein or made in connection herewith shall survive the
making of and shall not be waived by the execution and delivery of this
Agreement and the other Loan Documents, any investigation by Lender, or the
making of any Advances hereunder.  All covenants and agreements of each Borrower
contained herein shall continue in full force and effect from and after the date
hereof so long as it

                                       52
<PAGE>

may borrow hereunder and until payment in full of the Notes, interest thereon,
all fees and all other Obligations of each Borrower. Without limitation, it is
understood that all obligations of each Borrower to make payments to or
indemnify Lender shall survive the payment in full of the Notes and of all other
Obligations.

     10.14.  Governing Law.  This Agreement and the Notes and each of the other
             -------------
Loan Documents shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York, except to the extent, if any,
set forth on Schedule 2.02 hereto, and except to the extent that the laws of
             -------------
jurisdictions where the Collateral is located may be required to apply to the
Collateral or the enforcement of Lender's rights therein.

     10.15.  Counterparts.  This Agreement may be executed in any number of
             ------------
counterparts (by facsimile transmission or otherwise) and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute but one and
the same instrument.

     10.16.  Successors and Assigns.  This Agreement shall be binding upon and
             ----------------------
inure to the benefit of Lender and each Borrower and their respective successors
and assigns; provided, however, that a Borrower may not assign or transfer any
             -----------------
of its rights or obligations hereunder or under the other Loan Documents (in
whole or in part) without the prior written consent of Lender.  Lender may
assign, transfer or pledge any of its respective rights or obligations hereunder
or under the other Loan Documents without notice to or the prior written consent
of any Borrower.  Upon receipt of written notice from Lender of such assignment,
each Borrower shall promptly acknowledge receipt thereof in writing.  If a
Borrower is given written notice of any assignment, it shall perform its
obligations with respect to this Agreement for the ratable benefit of the
applicable assignee(s), and, if so directed, shall pay all amounts due or to
become due hereunder directly to the applicable assignee(s) or to any other
party designated by such assignee(s).  Each Borrower shall not assert against
any such assignee any set-off, defense or counterclaim that the Borrower may
have against Lender or any person other than such assignee.  Each Borrower shall
also execute and deliver to Lender such documentation as any such assignee may
reasonably require, including but not limited to amended promissory notes and
acknowledgment of or consent to the assignment which may require the Borrower to
make certain representations or reaffirmations as to some of the basic terms and
covenants contained herein.  Lender shall not be relieved of its obligations
hereunder as a result of any such sale, assignment, transfer, grant or pledge,
unless such assignee specifically assumes all of Lender's future obligations
hereunder in a writing, a copy of which shall be delivered to the applicable
Borrower, in which event after the date of such assignment, the Borrower's
obligations to any such assignee shall be proportionately as set forth herein
with respect to Lender, and the Borrower shall not look to Lender to perform any
of such assignee's obligations hereunder which arise after the date thereof.
Any assignee shall be entitled to rely on each Borrower's agreements as stated
herein, as applicable, and shall be considered a third party beneficiary
thereof.  Except to the extent otherwise required by the context of this
Agreement, the word "Lender" where used in this Agreement shall mean and include
any holder of any Note originally issued to Lender hereunder,

                                       53
<PAGE>

and any such holder of any Note shall be bound by and have the benefits of this
Agreement the same as if such holder had been a signatory hereto.

     10.17.  Participation.  Lender shall have the right to enter into one or
             -------------
more participation agreements, syndication agreements or similar agreements with
one or more participating lenders or other parties approved by Lender on such
terms and conditions as Lender shall deem advisable.  Each Borrower shall
furnish a sufficient number of copies of reports and certificates to Lender so
that Lender and each participating lender shall receive a copy of each such
document.

     10.18.  Time of Essence.  Time is of the essence of this Agreement, each
             ---------------
Note, and the other Loan Documents.

     10.19.  Disclosures and Confidentiality.
             -------------------------------

             (a) Each Borrower agrees that it will obtain Lender's written
     consent before using or generating any press release, advertisement,
     publicity materials or other publication in which the name or logo of
     Lender or any of its Affiliates is used or may be reasonably inferred, and
     will not distribute any such materials in the absence of such prior written
     approval.

             (b) Each Borrower agrees that it will not, directly or indirectly,
     disclose to any third party the terms of this Agreement or the other Loan
     Documents or prior or future correspondence relating thereto, or the
     transactions contemplated hereby, or any other information regarding Lender
     or its Affiliates learned by the Borrower during the course of negotiation
     thereof. The term "third party" shall exclude only the Borrowers, its
     Affiliates and their respective attorney(s) and certified public
     accountant(s). This Section 10.19(b) shall not restrict the disclosure of
                         ----------------
     information if such disclosure is required by law, to the extent required
     to fulfill a duty of disclosure of a Borrower to a prospective lender, by
     order of any court or by the order, rule or regulation of any
     administrative agency, including without limitation any requirements of the
     FCC, any PUC, or any state or federal securities commissions (the
     "Commissions"); provided, however, that, except for disclosures required by
      -----------    --------  -------
     the FCC, PUC or Commissions, each Borrower shall provide Lender with
     advance notice of any such required disclosure of information so that
     Lender may seek an appropriate protective order and/or waive compliance
     with this section.  Each Borrower shall not oppose any action taken by
     Lender to obtain an appropriate protective order or other reliable
     assurance that the information will be accorded confidential treatment.
     The obligations set forth in this Section 10.19(b) shall survive the
                                       ----------------
     termination of this Agreement.

             (c) The disclosure of information by either Lender or a Borrower
     will not be restricted under this Agreement if such information (i) has
     been or becomes published or is now, or in the future, in the public domain
     through (A) no fault of the parties, (B) disclosure other than unauthorized
     disclosure by the party to whom the information is disclosed, or (C)
     disclosure to third parties by the disclosing party without similar
     restriction; (ii) is property

                                       54
<PAGE>

     (other than proposal letters, commitment letters or other correspondence
     between Lender and a Borrower) within the legitimate possession of the
     receiving party prior to disclosure hereunder; (iii) subsequent to
     disclosure hereunder, is lawfully received from a third party having rights
     therein without restriction of the third party's or receiving party's
     rights to disseminate the information and without notice of any restriction
     against its further disclosure; (iv) is disclosed with the written approval
     of the other party; (v) is or becomes publicly available free of any
     obligation to keep it confidential.

             (d) Each Borrower authorizes Lender to discuss with and furnish to
     any Affiliate of Lender, to any government or self-regulatory agency with
     jurisdiction over Lender, to any other Governmental Authority or to any
     assignee, successor, participant, successor, or prospective assignee,
     successor or participant, all financial statements, audit reports and other
     information pertaining to the Borrower whether such information was
     provided by the Borrower or prepared or obtained by Lender or third
     parties. Neither Lender nor any of its employees, officers, directors or
     agents makes any representation or warranty to any existing or prospective
     assignee, successor or participant regarding any audit reports or other
     analyses of a Borrower that Lender may distribute, whether such information
     was provided by a Borrower or prepared or obtained by Lender or third
     parties, nor shall Lender or any of its employees, officers, directors or
     agents be liable to any Person receiving a copy of such reports or analyses
     for any inaccuracy or omission contained in such reports or analyses or
     relating thereto.

             (e) Every reference in this Agreement to disclosures of a Borrower
     to Lender (except the financial statements), to the extent that such
     references refer or are intended to refer to disclosures at or prior to the
     execution of this Agreement, shall be deemed strictly to refer only to
     written disclosures delivered to Lender concurrently with the execution of
     this Agreement and referred to specifically in the Loan Documents. The
     parties intend that such disclosures are to be limited to those presented
     in an orderly manner at the time of executing this Agreement and are not to
     be deemed to include expressly or impliedly any disclosures that previously
     may have been delivered from time to time to Lender, except to the extent
     that such previous disclosures are again presented to Lender in writing
     concurrently with the execution of this Agreement.

     10.20.  Jurisdiction and Venue.  EACH BORROWER HEREBY IRREVOCABLY CONSENTS
             ----------------------
TO THE JURISDICTION OF THE COURTS LOCATED IN DAVIDSON OR WILLIAMSON COUNTY,
TENNESSEE, INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE
DISTRICT OF TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON OR WILLIAMSON COUNTY,
TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND AGREES NOT TO
CONTEST VENUE OR JURISDICTION IN ANY SUCH COURTS.  In any such litigation, each
Borrower waives personal service of any summons, complaint or other process, and
agrees that the service

                                       55
<PAGE>

thereof may be made by certified or registered mail direct to the Borrower at
its address set forth in Section 10.06 hereof. Within thirty (30) days after
                         -------------
such mailing, the Borrower shall appear and answer to such summons, complaint or
other process. Should the Borrower fail to appear or answer within the said 30-
day period, then such party shall be deemed in default and judgment may be
entered against the Borrower for the amount or other relief as demanded in any
summons, complaint or other process so served. In the alternative, in its sole
discretion, Lender may effect service upon the Borrower in any other form or
manner permitted by law. The choice of forum set forth herein shall not be
deemed to preclude the enforcement of any judgment obtained in such forum or the
taking of any action under this Agreement to enforce the same in any appropriate
jurisdiction.

     10.21.  Jury Waiver.  EACH BORROWER AND LENDER HEREBY KNOWINGLY AND
             -----------
WILLINGLY WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING
INVOLVING THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY
RELATIONSHIP BETWEEN LENDER AND THE BORROWER.  EACH BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING
CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     10.22.  Limitation on Liability.  LENDER SHALL HAVE NO LIABILITY UNDER OR
             -----------------------
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FOR
SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF
ANY SORT IN ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE
EXTENT PROHIBITED BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.

     10.23.  Borrowers Waivers.  To the full extent permitted by law, each
             -----------------
Borrower hereby waives (i) presentment, demand and protest and notice of
presentment, protest, default, non-payment, maturity, release, compromise,
settlement, extension or renewal of any or all commercial paper, accounts,
contract rights, documents, instruments, chattel paper and guaranties at any
time held by Lender on which the Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (ii) notice prior
to taking possession or control of the Collateral or any bond or security which
might be required by any court prior to allowing Lender to exercise any of
Lender's remedies, including the issuance of an immediate writ of possession,
except as expressly required in any of the Loan Documents; (iii) any marshalling
of assets, or any right to compel Lender to resort first to any Collateral or
other Persons before pursuing a Borrower for payment of the Obligations and any
defenses based on suretyship or impairment of Collateral; (iv) the benefit of
all valuation, appraisement and exemption laws; (v) any right to require Lender
to terminate its security

                                       56
<PAGE>

interest in the Collateral or in any other property of the Borrower until
termination of this Agreement and the execution by the Borrower and by any
person whose Loans to the Borrower are used in whole or in part to satisfy the
Obligations, of an agreement indemnifying Lender from any loss or damage Lender
may incur as the result of dishonored or unsatisfied items of any account debtor
applied to the Obligations; and (vi) notice of acceptance hereof. Each Borrower
acknowledges that the foregoing waivers are a material inducement to Lender's
entering into this Agreement and that Lender is relying upon the foregoing
waivers in its future dealings with all of the Borrowers.

     10.24.  Schedules.  The schedules and exhibits attached to this Agreement
             ---------
are an integral part hereof, and are hereby made a part of this Agreement.

     10.25.  Agreement to Govern.  In case of any conflict between the terms of
             -------------------
this Agreement and any of the other Loan Documents, the terms of this Agreement
shall govern.

     10.26.  Entire Agreement.  This Agreement, the other Loan Documents and
             ----------------
other documents, agreements and certificates executed by the parties
contemporaneously herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof.  Each
Borrower is not entering into this Agreement in reliance on statements or
representations made by any Person other than as set forth herein.

        [END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.]
                    [SIGNATURES APPEAR ON THE COVER PAGE. ]

                                       57
<PAGE>

                                 [EXHIBIT  A]

                                 [Floor Plan]
<PAGE>

month following the date of such Advance, interest on such Advance shall accrue
at the Interest Rate applicable to such Advance and shall be capitalized and
added to the principal amount of such Advance outstanding hereunder
("Capitalized Interest"). Following the end of the Capitalized Interest Period
  --------------------
for such Advance, interest shall accrue at the Interest Rate for such Advance on
the principal amount of such Advance (including Capitalized Interest) and shall
be payable in arrears (together with principal payable in accordance with the
amortization schedule described in the following paragraph), commencing on the
first day of the first calendar month following the Conversion Date (the
"Initial Payment Date"), and on the first day of each consecutive calendar month
thereafter (together with the Initial Payment Date, a "Payment Date").

     Principal (and Capitalized Interest thereon) of each Advance made by Lender
pursuant to the request of a Borrower under a Borrowing Certificate shall be
repaid pursuant to the following amortization schedule. At the Conversion Date
applicable to an Advance, all principal amounts of such Advance (including
Capitalized Interest thereon) shall be amortized and repaid monthly in arrears
over forty-eight (48) consecutive months in payments of principal calculated as
follows: (i) the first twelve (12) payments of principal shall each be equal to
0.833% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date; (ii) the next twelve (12) payments of
principal shall each be equal to 1.6667% of the principal amount (including
Capitalized Interest thereon) of such Advance as of the Conversion Date; (iii)
the next twelve (12) payments shall each be equal to 2.50% of the principal
amount (including Capitalized Interest thereon) of such Advance as of the
Conversion Date; and (iv) the next twelve (12) payments shall each be equal to
3.33% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date. The first payment shall be due on the first
day of the first month following the Conversion Date.

     The principal payment amounts shall be recalculated by Lender if any
Advances are made hereunder after the Financing Termination Date, based on the
aggregate amount of all Advances (including Capitalized Interest) made at any
time. It is intended that the above amortization schedule will fully amortize
the principal amounts advanced under this Note. If any principal, interest, or
other charge or expense remains outstanding on November 1, 2007 or such earlier
date as all principal amounts of Advances hereunder are required to be repaid
pursuant to the amortization schedule described in the preceding paragraph (the
"Maturity Date"), such amount shall be added to the payment due on the Maturity
Date.

     Notwithstanding the foregoing, if Makers shall fail to pay within five (5)
days after the due date any principal amount or interest or other amount payable
under this Note, Makers shall pay, jointly and severally, to Lender, to defray
the administrative costs of handling such late payments, an amount equal to
interest on the amount unpaid, to the extent permitted under applicable law, at
a rate equal to the lesser of three percent (3%) higher than the then applicable
interest rate or the maximum permissible interest rate under applicable law (the
"Default Rate") (instead of the Interest Rate), from the due date until such
 ------------
overdue principal amount, interest or other unpaid amount is paid in full (both
before and after judgment) whether or not any notice of default in the payment
thereof has been delivered under the Loan Agreement. In addition, but without
duplication, upon the occurrence and during the continuance of an Event of
Default, all outstanding amounts hereunder shall bear interest at
<PAGE>

the Default Rate (instead of the Interest Rate) until such amounts are paid in
full or such Event of Default is waived in writing by Lender.

     Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, it is the intent of the Lender and the Makers that the Lender or any
subsequent holder of this Note shall never be entitled to receive, collect,
reserve or apply, as interest, any amount in excess of the maximum rate of
interest permitted to be charged by applicable Law, as amended or enacted, from
time to time. In the event Lender, or any subsequent holder of this Note, ever
receives, collects, reserves or applies, as interest, any such excess, such
amount which would be excessive interest shall be deemed a partial prepayment of
principal and treated as such (except that no prepayment premium will be payable
thereon), or, if the principal indebtedness and all other amounts due are paid
in full, any remaining excess funds shall immediately be paid to the Makers. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, the Makers and the Lender shall,
to the maximum extent permitted under applicable law, (a) exclude voluntary
prepayments and the effects thereof as it may relate to any fees charged by the
Lender, and (b) amortize, prorate, allocate, and spread, in equal parts, the
total amount of interest throughout the entire term of the indebtedness;
provided that if the indebtedness is paid and performed in full prior to the end
of the full contemplated term hereof, and if the interest received for the
actual period of existence hereof exceeds the maximum lawful rate, the Lender or
any subsequent holder of the Note shall refund to the Makers the amount of such
excess or credit the amount of such excess against the principal portion of the
indebtedness, as of the date it was received, and, in such event, the Lender
shall not be subject to any penalties provided by any laws for contracting for,
charging, reserving or receiving interest in excess of the maximum lawful rate.

     All amounts received for payment under this Note shall at the option of
Lender be applied first to any unpaid expenses due Lender under this Note or
under any other documents evidencing or securing the obligations of any Maker to
Lender, then to any unpaid late charges, then to any unpaid interest accrued at
the Default Rate, then to all other accrued but unpaid interest due under this
Note and finally to the reduction of outstanding principal due under this Note.

     Upon the occurrence of any one or more of the Events of Default specified
in the Loan Agreement (each, an "Event of Default"), all amounts then remaining
                                 ----------------
unpaid on this Note shall be, or may be declared to be, immediately due and
payable as provided in the Loan Agreement, without further notice, at the option
of the Lender. Lender may waive any Event of Default before or after the same
has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply any additional or subsequent waiver. Time is of the
essence of this Note.

     Each Maker hereby expressly waives demand, presentment, notice and protest.
Each Maker and any and all endorsers, guarantors and other parties liable on
this Note, and any and all general partners of any Maker or of any endorsers,
guarantors or other parties liable on this Note (collectively, the "Obligors")
                                                                    --------
jointly and severally waive presentment for payment, protest, notice of protest,
notice of nonpayment of this Note, demand and all legal
<PAGE>

diligence in enforcing collection, and all other claims and defenses based on
suretyship principles, and hereby expressly consent to (i) any and all delays,
extensions, renewals or other modifications of this Note or any waivers of any
term hereof, (ii) any release or discharge by Lender of any of the Obligors,
(iii) any release, substitution or exchange of any security for the payment
hereof, (iv) any failure to act on the part of Lender, and (vi) any indulgence
shown by Lender from time to time (without notice or further assent from any of
the Obligors) and hereby agree that no such action, failure to act or failure to
exercise any right or remedy by Lender shall in any way affect or impair the
obligations of any of the Obligors.

     EACH MAKER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS
LOCATED IN DAVIDSON COUNTY, TENNESSEE, AND WILLIAMSON COUNTY, TENNESSEE,
INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF
TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, AND THE
CHANCERY COURT FOR WILLIAMSON COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION
COMMENCED IN CONNECTION WITH THIS NOTE, ANY DOCUMENTS EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, INCLUDING WITHOUT LIMITATION THE LOAN AGREEMENT, OR ANY
RELATIONSHIP BETWEEN LENDER AND ANY MAKER, AND AGREES NOT TO CONTEST OR
CHALLENGE VENUE IN ANY SUCH COURTS.

     Each Maker irrevocably consents to the service of process of any such
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, return receipt requested, to such
Maker at the address set forth in the Loan Agreement or to such other address as
such Maker may have furnished to Lender in writing, and agrees that such service
shall become effective thirty (30) days after such mailing. However, nothing
herein shall affect the right of Lender or any Maker to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Lender or any Maker in any other jurisdiction.

      EACH MAKER HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVES ITS RIGHTS
TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE, ANY
DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH INCLUDING WITHOUT
LIMITATION THE LOAN AGREEMENT OR ANY RELATIONSHIP BETWEEN SUCH MAKER AND LENDER.
EACH MAKER AGREES THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF SUCH MAKER'S EXPRESS WAIVER OF
ITS RIGHT TO TRIAL BY JURY.

     IN ANY ACTION TO ENFORCE THIS NOTE, EACH MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHTS UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION CLAIM OR RECOVER ANY
SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN ACTUAL
DIRECT DAMAGES.

     In the event this Note is placed in the hands of one or more attorneys
for collection or
<PAGE>

enforcement or protection of the holder's rights described herein or in the Loan
Agreement or the other Loan Documents, the Makers agrees to pay, jointly and
severally, all reasonable attorneys' fees and all court and other out-of-pocket
costs incurred by the holder hereof (as of which shall be due on demand and
shall bear interest at the rate then payable hereunder from five (5) days after
such demand is made until paid).

     This Note is governed by and shall be construed in accordance with the
internal laws of the State of New York. If any provision of this Note should for
any reason be invalid or unenforceable, the remaining provisions hereof shall
remain in full force and effect.
<PAGE>

     This Note may not be changed, extended or terminated except in writing. No
waiver of any term or provision hereof shall be valid unless in writing signed
by Lender.

     Executed as of the date first written above.

                              BROADVIEW NETWORKS HOLDINGS, INC.

                              By: /s/
                                 ---------------------------------

                              Title: President
                                    ------------------------------

                              BROADVIEW NETWORKS, INC.

                              By: /s/
                                 ---------------------------------

                              Title: President
                                    ------------------------------

                              BROADVIEW NETWORKS OF MASSACHUSETTS, INC.

                              By: /s/
                                  --------------------------------

                              Title: President
                                     -----------------------------
<PAGE>

                              SCHEDULE A TO NOTE
                              ------------------

                             ADVANCES AND PAYMENTS
                             ---------------------

Initial Payment Date:
Maturity Date:

Amount Advanced  Date of Advance  Payment Amount  Payment Date   Balance
---------------  ---------------  --------------  ------------   -------
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
____________     ____________     ____________    ____________   _______
<PAGE>

                              SCHEDULE B TO NOTE
                              ------------------

                             CAPITALIZED INTEREST
                             --------------------

   Original             Capitalized                      Principal
   Principal              Interest        Date            Balance
   ---------            -----------       ----           ---------

____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
____________        _____________       __________
<PAGE>

                                                                   SCHEDULE 1 TO
                                                                   -------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                    BORROWERS INFORMATION AND DEFINED TERMS
                    ---------------------------------------

Closing Date:                      October 22, 1999

Borrowers:                         Broadview Networks Holdings, Inc., a Delaware
                                   corporation Tax Identification Number: 11-
                                   3310798

                                   Broadview Networks, Inc., a New York
                                   corporation Tax Identification Number: 16-
                                   1401082

                                   Broadview Networks of Massachusetts, Inc., a
                                   Delaware corporation
                                   Tax Identification Number: 11-3448054

Chief Executive Offices:           45-18 Court Square, Ste 403
                                   Long Island City, New York 11101

Notice Address:                    45-18 Court Square, Ste 403
                                   Long Island City, New York 11101

PUC:                               The New York Public Service Commission and
                                   the Massachusetts Department of
                                   Transportation and Energy

Regulatory Authorizations:         The term "Regulatory Authorizations" shall
                                   include, without limitation, the approval of
                                   the transactions contemplated by this
                                   Agreement by the New York Public Service
                                   Commission.

Business Plan:                     Broadview Networks Holdings, Inc. (Broadview)
                                   is an Integrated Communications Provider.
                                   Broadview's business plan is to build a
                                   sizable customer base offering voice and data
                                   communications products as both a carrier and
                                   a provider of both horizontal and vertical,
                                   value-added communications related products
                                   and services. Broadview intends to build its
                                   customer base through a combination of its
                                   own sales and marketing activities, as well
                                   as strategic alliances and acquisitions of
                                   customer bases and acquisitions of corporate
                                   entities with customer bases. Broadview
                                   intends to provide such products and services
                                   utilizing a combination of its own
                                   facilities, leased facilities of other
                                   carriers and resale of other carrier services
                                   and products. Broadview intends to
                                   incorporate into its network architecture a
                                   variety of traditional Class V circuit based
                                   switching capabilities, data transport and
                                   routing capabilities, and evolving internet
                                   protocol and other switching/transmission
                                   technologies. Broadview intends
<PAGE>

                                   to offer communications services in multiple
                                   geographic markets, initially targeting the
                                   Northeast United States, with anticipated
                                   significant expansions of geographic focus.
                                   Broadview intends to differentiate itself by
                                   making significant ongoing investments in its
                                   proprietary operating software systems and
                                   other software based operational systems to
                                   develop cost efficiencies and service quality
                                   improvements.
<PAGE>

                                                                SCHEDULE 2.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                             MAXIMUM LOAN AMOUNTS
                             --------------------

Maximum Principal Amount of All Loans:       Thirty-six Million (US) Dollars
                                             ($36,000,000) (plus Capitalized
                                             Interest thereon) available for
                                             drawing on or before September 30,
                                             2001.
<PAGE>

                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                        PAYMENT TERMS AND GOVERNING LAW
                        -------------------------------

     Amortization of Term Loan or Payment Schedule: Principal (and Capitalized
Interest thereon) of each Advance made by Lender pursuant to the request of a
Borrower under a Borrowing Certificate shall be repaid pursuant to the following
amortization schedule. At the Conversion Date applicable to an Advance, all
principal amounts of such Advance (including Capitalized Interest thereon) shall
be amortized and repaid monthly in arrears over forty-eight (48) consecutive
months in payments of principal calculated as follows: (i) the first twelve (12)
payments of principal shall each be equal to 0.833% of the principal amount
(including Capitalized Interest thereon) of such Advance as of the Conversion
Date; (ii) the next twelve (12) payments of principal shall each be equal to
1.6667% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date; (iii) the next twelve (12) payments shall
each be equal to 2.50% of the principal amount (including Capitalized Interest
thereon) such of Advance as of the Conversion Date; and (iv) the next twelve
(12) payments shall each be equal to 3.33% of the principal amount (including
Capitalized Interest thereon) such Advance as of the Conversion Date. The first
payment shall be due on the first day of the first month following the
Conversion Date.

     Capitalized Interest Period: for each Advance made by Lender pursuant to
the request of a Borrower under a Borrowing Certificate, the period from the
date of such Advance through the last day of the twelfth (12th) calendar month
following the date of such Advance

     Closing Date:  October 22, 1999

     Conversion Date: For each Advance made by Lender pursuant to the request of
a Borrower under a Borrowing Certificate, the expiration of the Capitalized
Interest Period applicable to such Advance.

     Financing Termination Date:  September 30, 2001.

     Governing Law:  Determined pursuant to Section 10.14 of the Agreement.
                                            =============

     Initial Borrowing Date: The date of the first Advance hereunder.

     Initial Payment Date:  The first day of  the first calendar month next
following the Conversion Date.

     Interest Payment Date: Monthly in arrears commencing on the first day of
the calendar month next following the Conversion Date and monthly thereafter
through the Maturity Date.

     Interest Rate: For each Advance, the Five Year Swap Rate, as reported on
page 19901 of the Dow Jones & Company Telerate screen (or any successor page) on
the date such Advance is made, plus 475 basis points. If Dow Jones & Company
Telerate screen should cease service or cease publishing such rate, the Lender
shall designate a comparable reference rate for use in determining the Interest
Rate hereunder.

     Maturity Date: November 1, 2007, or such earlier date as all principal
amounts of Advances hereunder are required to be repaid pursuant to the
Amortization of Term Loan (provided that the Maturity
<PAGE>

Date shall automatically be shortened to the Initial Borrowing Date plus 364
days in the event that the Borrowers have not obtained all of the Regulatory
Authorizations and delivered, if required by Lender, evidence of same to the
Lender by such date, unless the Borrowers have delivered an opinion of FCC
regulatory counsel, in form and substance acceptable to the Lender, to the
effect that one or more of such Required Approvals are no longer necessary), on
which date all then-outstanding Obligations under a Note shall be finally due
and payable.

     Payment Date: The Initial Payment Date and the first day of each calendar
month thereafter.
<PAGE>

                                                                SCHEDULE 2.09 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                     FEES
                                     ----

     (a)  Commitment Fee. Borrower shall pay Lender at the Closing Date a
          --------------
commitment fee equal to one and one-half percent (1 1/2%) of the Commitment
Amount.
<PAGE>

                                                                SCHEDULE 2.11 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                    ANNEX A TO LOAN AND SECURITY AGREEMENT
                    --------------------------------------

     By executing this Annex to and forming a part of the Loan and Security
Agreement dated as of October 22, 1999 (the "Agreement"), by and among NTFC
Capital Corporation; Broadview Networks Holdings, Inc. ("BNH"); each direct or
indirect Subsidiary of BNH which signed the Agreement; and each Subsidiary which
subsequently becomes a party thereto pursuant to Section 2.11 of the Agreement
                                                 ============
by executing this Annex, the undersigned represents and warrants that it is a
[FOREIGN or DOMESTIC] Subsidiary of BNH, joins as a party to the Agreement,
---------------------
assumes the obligations of a [FOREIGN/DOMESTIC] Borrower under the Agreement,
                             ------------------
and confirms that it is bound by the terms and conditions of the Agreement,
including but not limited to the grant by the undersigned to Lender of a
security interest in all of its right, title and interest in and to the
Collateral as provided in the Agreement. (The execution of this instrument
constitutes a grant by the undersigned of a security interest in the
Collateral). The undersigned further acknowledges and agrees that (i) one or
more other Subsidiaries of BNH may become additional Borrowers under the
Agreement without the consent of any other Borrower by execution of a copy of
this Annex; (ii) the Lender is willing to extend certain credit to the
Borrowers, subject to the terms and conditions set forth in the Agreement,
including the condition that all Domestic Borrowers will be jointly and
severally liable for the payment of all Indebtedness owed by BNH or any Borrower
to Lender under the Agreement and the condition that all Foreign Borrowers will
be jointly and severally liable for the payment of all Indebtedness owed by any
Foreign Borrower to Lender under the Agreement; (iii) without this condition of
joint and several liability, Lender would not be willing to extend credit to any
Borrower; and (iv) the undersigned, the existing Borrowers, and the Subsidiaries
of BNH which may become additional Borrowers under the Agreement are (or will
be) related entities, and the undersigned expects to increase its business and
to benefit directly and indirectly through the use of the equipment to be
acquired by it and the other Borrowers with the proceeds of the loans to be made
pursuant to the Agreement.

     The undersigned authorizes the Lender to attach this Annex to the Agreement
and, thereby, form a part of the Agreement. This Annex shall be construed in
accordance with and governed by the laws of the jurisdiction stated in Schedule
                                                                       --------
2.02 to the Agreement under the caption "Governing Law," except to the extent
----
the internal laws of another jurisdiction are required to be applied in
connection with the exercise of rights pertaining to Collateral in that
jurisdiction. Capitalized terms used in this Annex without definition shall have
the meanings set forth in the Agreement to which this Annex is attached and form
a part.

     This Annex may be executed in any number of counterparts (by facsimile
transmission or otherwise) and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all of such counterparts shall constitute but one and the same document.

     IN WITNESS WHEREOF, the undersigned has executed this Annex to Loan and
Security Agreement by its duly authorized officer or representative this ____
day of __________, ____.

Borrower:                                _________________________________
--------
                                         By:  ____________________________
                                         Its: ____________________________
<PAGE>

                                                             SCHEDULE 2.11(b) TO
                                                             -------------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                       ADDITIONAL SUBSIDIARY INFORMATION
                       ---------------------------------

Name
----

Jurisdiction of Formation
-------------------------

Taxpayer Identification Number
------------------------------

Principal Place of Business
---------------------------

Location of Collateral Owned Directly
-------------------------------------
<PAGE>

                                                                SCHEDULE 4.04 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               REQUIRED CONSENTS
                               -----------------

The transactions contemplated by this Agreement must be approved by the New York
Public Service Commission. The following applications for such Approval were
filed on September 27, 1999 and are pending:

     1.   Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
          Approval Nunc Pro Tunc of Transfer of Assets (filed 9/27/99); and

     2.   Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
          Authority to Enter Inter Secured Financing Agreement (filed 9/27/99)
<PAGE>

                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                           REGULATORY AUTHORIZATIONS
                           -------------------------

The transactions contemplated by this Agreement must be approved by the New York
Public Service Commission. The following applications for such Approval were
filed on September 27, 1999 and are pending:

     1.   Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
          Approval Nunc Pro Tunc of Transfer of Assets (filed 9/27/99); and

     2.   Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
          Authority to Enter Inter Secured Financing Agreement (filed 9/27/99)
<PAGE>

                                                                SCHEDULE 4.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                             RESTRICTIONS ON LOANS
                             ---------------------

1.   Under the Stockholders Agreement among BNH (formerly known as Coaxicom,
     Inc.) Baker Communications Fund, L.P., Vern M. Kennedy, Terrence J.
     Anderson, Philip B. Smith, Tracey W. Korman, and those parties listed on
     Schedule I to the (i) Series A Preferred Stock Purchase Agreement (the
     "Series A Holders") dated as of January 29, 1998, by and among BNH and the
     Series A Holders and (ii) Series B Preferred Stock Purchase Agreement (the
     "Series B Holders") dated as of September 9, 1998, by and among BNH and the
     Series B Holders, BNH may not incur any debt or enter into any commitments
     to incur debt without the prior written approval of at least a majority of
     the then outstanding shares held by All Preferred Holders (as defined in
     such Shareholders Agreement). BNH has obtained the written approval of at
     least a majority of the outstanding shares held by All Preferred Holders to
     BNH's execution of this Agreement and the incurrence of the Obligations
     thereunder.

2.   Under the Certificate of Incorporation of BNH, BNH may not, without the
     affirmative vote or consent of the holders of a majority of the shares of
     (i) Series A Preferred Stock and Series B Preferred Stock then outstanding
     (voting or consenting, as the case may be, together as one class ) and (ii)
     Series C Preferred Stock and Series D Stock then outstanding (voting or
     consenting, as the case may be, together as one class), encumber, in one
     transaction or a series of related transactions, all or substantially all
     of the assets of BNH and its subsidiaries on a consolidated basis.
<PAGE>

     SCHEDULE 4.08 TO                                LOAN AND SECURITY AGREEMENT
     ----------------                                ---------------------------

                             FINANCIAL STATEMENTS
                             --------------------

                             [Separately provided]
<PAGE>

                                                                SCHEDULE 4.12 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              PENDING LITIGATION
                              ------------------

                                     None
<PAGE>

                                                                SCHEDULE 4.25 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              UCC FILING OFFICES
                              ------------------

                     [To be provided by Lender's counsel]
<PAGE>

                                                                SCHEDULE 4.26 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                 PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
                 --------------------------------------------

Broadview Networks Holdings's Chief Executive Office and that of each of its
Subsidiaries, which are Borrowers, is listed on Schedule 1:

Locations of Collateral:

                             See attached list
<PAGE>

                                                                SCHEDULE 4.29 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                 ASSUMED NAMES
                                 -------------

1.   BNH changed its name from "Coaxicom, Inc." to "Broadview Networks Holdings,
     Inc." on October 5, 1999.  Coaxicom was also authorized to do business in
     New York under the Name "Coaxicom - DE."

2.   BNI changed its name from "Community Networks, Inc." to "Broadview
     Networks, Inc." on October 6, 1999.

3.   BNI of Massachusetts changed its name from "Community Networks of
     Massachusetts, Inc." to "Broadview Networks of Massachusetts, Inc. on
     October 5, 1999.
<PAGE>

                                                                SCHEDULE 4.30 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                         TRANSACTIONS WITH AFFILIATES
                         ----------------------------

1.   Employment agreements with employees entered into in the ordinary course of
     business of such Borrower that do provide for (i) annual base compensation,
     together with any other annual base compensation under any other employment
     agreements with other Borrowers, not in excess of $250,000 and (ii)
     additional compensation subject to the consent of Lender, such consent not
     to be unreasonably withheld
<PAGE>

                                                                SCHEDULE 4.31 TO
                                                               -----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                            NTI PURCHASE AGREEMENT
                            ----------------------

Agreement dated as of March 30, 1999, as amended, between Broadview Networks,
Inc. (f/k/a Community Networks, Inc.) and Northern Telecom Inc.
<PAGE>

                                                                SCHEDULE 6.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               POST-CLOSING ITEMS
                               ------------------

1.   Regulatory Authorizations:  the approval of the transactions contemplated
     by this Agreement by the New York Public Service Commission.

<PAGE>

                                                                SCHEDULE 7.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                   INSURANCE
                                   ---------

                         [See attached certificate(s)]
<PAGE>

                                                                SCHEDULE 7.15 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              FINANCIAL COVENANTS
                              -------------------

                       BROADVIEW NETWORK HOLDINGS, Inc.

                              Financial Covenants

   All accounting and financial terms herein shall be deemed to include
   references to consolidated and consolidating principles, and covenants,
   representations and agreements with respect to the Borrowers and their
   properties and activities shall be deemed to refer to BNH and its
   consolidated Subsidiaries collectively, provided, however, the results of
   operations and activities of the Unrestricted Subsidiary shall be excluded
   for purposes of determining BNH's compliance with the covenants set forth in
   Schedule 7.15.
   -------------

   .  Minimum Revenues: BNH shall have revenues (calculated at the end of each
      fiscal quarter as the sum of the revenue of the last four consecutive
      fiscal quarters then ending) equal to or greater than the level projected
      for the sum of such fiscal quarters in the Projected Revenue Table below
      (amounts in table expressed as $millions).

   Projected Revenue Table

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Date                   1999           2000           2001           2002           2003           2004
------------------------------------------------------------------------------------------------------
<S>                    <C>            <C>            <C>            <C>            <C>            <C>
March 31               N/A            43.5           62.5           72.5           83.8           93.9
------------------------------------------------------------------------------------------------------
June 30                N/A            51.2           65.0           75.2           86.5           96.3
------------------------------------------------------------------------------------------------------
September 30           N/A            56.7           67.4           78.8           88.4           98.7
------------------------------------------------------------------------------------------------------
December 31            33.6           60.1           69.9           80.9           91.6          101.2
------------------------------------------------------------------------------------------------------
</TABLE>

   .  Minimum Gross Margins: BNH shall maintain Minimum Gross Margins
      (calculated at the end of each fiscal quarter) equal to or greater than
      those set forth below (amounts expressed as a percentage of actual
      revenues for the fiscal quarter).

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
Date                   1999           2000           2001           2002           2003           2004
------------------------------------------------------------------------------------------------------
<S>                    <C>            <C>            <C>            <C>            <C>            <C>
March 31               N/A            14.0           36.0           36.5           37.0           38.0
------------------------------------------------------------------------------------------------------
June 30                N/A            21.0           36.0           36.5           37.0           38.0
------------------------------------------------------------------------------------------------------
September 30           N/A            31.0           36.5           36.5           37.0           38.0
------------------------------------------------------------------------------------------------------
December 31            10.0           35.5           36.5           36.5           37.0           38.0
------------------------------------------------------------------------------------------------------
</TABLE>

   .  Fixed Charge Coverage Ratio: Borrower shall maintain a Fixed Charge
      Coverage Ratio of not less than 1.25:1. For purposes of calculating BNH's
      Fixed Charge Coverage Ratio for such four fiscal quarter periods ending on
      or before September 30, 2001, (i) EBITDA shall include all unrestricted
      cash on BNH's balance sheet at the beginning of such four fiscal quarter
      period, plus net proceeds received on amounts borrowed during such four
      fiscal quarter period plus any cash equity received during such four
      fiscal quarter period, and (ii) Debt Service shall include capital
      expenditures paid with proceeds of Indebtedness.
<PAGE>

   .  Leverage: BNH shall at all times maintain a Leverage Ratio not greater
      than 1.05:1. This ratio shall be calculated as a condition to each funding
      of an Advance.
<PAGE>

                                                                SCHEDULE 8.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                            PERMITTED INDEBTEDNESS
                            ----------------------

1.   Borrowers may incur Indebtedness consisting of (i) Excluded Indebtedness,
     and (ii) other Indebtedness if immediately before, and after giving effect
     to the incurrence, of such Indebtedness BNH is in compliance with its
     financial covenants required by Schedule 7.15.
                                     --------------
<PAGE>

                                                                SCHEDULE 8.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                        PERMITTED SPECIFIC ENCUMBRANCES
                        -------------------------------

1.   Liens on property of a Borrower not constituting Collateral which are
     granted to secure Indebtedness other than Indebtedness defined in clauses
     (i) and (ii) of the definition of Excluded Indebtedness.

2.   Liens evidenced by any of the following UCC searches attached hereto.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00001-of-00352.parquet"}]]