Document:

<PAGE>

                                                                   Exhibit 10.27

                             WAIVER AGREEMENT NO. 1
                                       TO
                           SECOND AMENDED AND RESTATED
                                    LOAN AND
                              SECURITY AGREEMENT

         THIS WAIVER AGREEMENT NO. 1 dated as of December 31, 1999 (the "Waiver
Agreement No. 1), to the Loan and Security Agreement dated as of October 22,
1999 (as may be further amended, supplemented, amended and restated or otherwise
modified from time to time, the "Loan Agreement"), is among Broadview Networks
Holdings, Inc., a Delaware corporation ("BNH"), Broadview Networks, Inc., a Now
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, and the Subsidiaries of BNH which
subsequently become a party to the Loan Agreement pursuant to Section 2.11 of
the Loan Agreement (individually a "Borrower" and collectively the "Borrowers"),
and NTFC Capital Corporation, a Delaware corporation (the "Lender").

                                   WITNESSETH:

     WHEREAS, the Borrowers have requested that certain provisions of the Loan
Agreement be waived in certain respects as set forth herein; and

     WHEREAS, the Lender is willing to waive such provisions of the Loan
Agreement and to take or permit the taking of certain actions as set forth
herein, but only on the terms and conditions set forth herein;

     NOW, THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

     SECTION 1.1. Certain Definitions. Unless otherwise defined herein or the
context otherwise requires, capitalized terms used in this Waiver Agreement
No. 1, including its preamble and recitals, have the meanings
<PAGE>

     provided in the Loan Agreement.

                                   ARTICLE II
                            WAIVER OF LOAN AGREEMENT
                         AS OF THE WAIVER EFFECTIVE DATE

     Effective on (and subject to the occurrence of) the Waiver Effective Date,
the provisions of the Loan Agreement referred to below are hereby waived in
accordance with this Article II. Except as expressly so waived, the Loan
Agreement shall continue in full force and effect in accordance with its terms.

     SECTION 2.1. Limited Waiver of Article VII (Covenants). ArticIe VII of the
Loan Agreement is hereby waived to the extent, but only to the extent, necessary
so that the Borrower's obligation to comply with the financial covenant of a
minimum Fixed Charge Coverage Ratio set forth in Schedule 7.15 of the Loan
Agreement is hereby waived for the period measured ending December 31,1999.

                                   ARTICLE III
                           CONDITIONS TO EFFECTIVENESS

     SECTION 3.1. Waiver Effective Date. This Waiver Agreement No. 1 shall
become effective as of the date fist above written (the "Waiver Effective
Date"), when all of the conditions set forth in Sections 3.1.1 through 3.1.2
shall have been satisfied:

     SECTION 3.1.1. Execution of Counterparts. The Lender Shall have received
counterparts of this Waiver Agreement No. 1 duly executed by each Borrower and
the Lender.

     SECTION 3.1.2. Compliance with Warranties; No Default etc. The Lender
shall have received from a Responsible Officer of BNH a certificate, dated the
date first above written, stating that

               (a) the representations and warranties of the Borrowers set forth
               in the Loan Agreement and the representations and warranties of
               the Borrowers set forth in each of the other Loan Documents, in
               each case as waived in accordance herewith, are true and correct
               in all material respects with the same effect as if then made
               (unless stated to relate solely to an earlier date, in which case
               such representations and warranties were true and correct as of
               such earlier date); and
<PAGE>

               (b) no Default or Event of Default has occurred and is
               continuing.

                                   ARTICLE IV
                                  MISCELLANEOUS

     SECTION 4.1. Cross References. References in this Waiver Agreement No. 1 to
any article or section are, unless otherwise specified, to such article or
section of this Waiver Agreement No. 1.

     SECTION 4.2. Instrument Pursuant to Loan Agreement. This Waiver Agreement
No. 1 is a Loan Document executed pursuant to the Loan Agreement and shall
(unless otherwise expressly indicated therein) be construed, administered, and
applied in accordance with all of the terms and provisions of the Loan
Agreement. Except to the extent otherwise provided in the Loan Agreement, this
First Amendment shall be governed by and construed in accordance with the laws
of the State of New York. Any term or provision of and any waiver effected by
this Waiver Agreement No. 1 may be modified in any manner by an instrument in
writing executed by the Borrowers and the Lender. Except as expressly waived
hereby, all of the representations, warranties, terms, covenants and conditions
of the Loan Agreement shall remain unmodified and unwaived. The waivers set
forth herein shall be limited precisely as provided for herein to the provisions
expressly waived herein and shall not be deemed to be a waiver of, amendment of,
consent to or modification of any other term or provision of any other Loan
Document or of any transaction or further or future action on the part of any
Borrower which could require the consent of the Lender under the Loan Agreement.

     SECTION 4.3. Successors and Assigns. This Waiver Agreement No. 1 shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

     SECTION 4.4. Counteparts. This Waiver Agreement No. 1 may be executed by
the parties hereto in several counterparts which shall be executed by the
Borrowers and the Lender, as the case may be, all of which shall be deemed to be
an original and which shall constitute together but one and the same agreement.

     SECTION 4.5. Event of Default. It is understood and agreed that any breach
of any representation or warranty or covenant contained herein shall constitute
an Event of Default.
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Waiver Agreement
No. 1 to be executed by the respective officers hereunder duly authorized as of
the day and year first above written.

                                       BROADVIEW NETWORKS HOLDINGS,
                                       INC.

                                       BY: /s/ Terrence J. Anderson

                                       TITLE: Executive Vice President - Finance

                                        BROADVIEW NETWORKS INC.

                                        BY: /s/ Terrence J. Anderson

                                        TITLE: Executive Vice President

                                        BROADVIEW NETWORKS OF
                                        MASSACHUSETTES, INC.

                                        BY: /s/ Terrence J. Anderson

                                        TITLE: Executive Vice President -
                                               Finance

                                        LENDER:
                                        ------

                                        NTFC CAPITAL CORPORATION

                                        BY: /s/ Henry Cruz

                                        TITLE: Vice President - Portfolio Mgr.<PAGE>

                                                                   EXHIBIT 10.28

                                                        Community NetWorks, Inc.
                                                                             MPA

                           MASTER PURCHASE AGREEMENT

                                    BETWEEN

                           COMMUNITY NETWORKS, INC.

                                      AND

                             NORTHERN TELECOM INC.
<PAGE>

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

Articles:
--------

Article 1 - Definitions

Article 2 - Scope of Agreement

Article 3 - Placement of Orders

Article 4 - Price and Payment

Article 5 - Shipment, Title and Risk of Loss

Article 6 - Testing, Turnover and Acceptance

Article 7 - Order Cancellation

Article 8 - Warranty

Article 9 - Nortel's Additional Obligations

Article 10 - Software License

Article 11 - Liability for Bodily Injury, Property Damage and Patent
             Infringement

Article 12 - Remedies and Limitation of Liability

Article 13 - Term and Termination

Article 14 - Confidentiality

Article 15 - Miscellaneous

                                       2
<PAGE>

Exhibits:
--------

Exhibit A - Product Annexes including Lists of Product and Prices

Exhibit B - Master Services Agreement

                                       3
<PAGE>

                           MASTER PURCHASE AGREEMENT

This Master Purchase Agreement ("Agreement"), effective as of the 30 day of
March, 1999, is entered into by and between Community NetWorks. Inc.
(hereinafter "Company"), a New York corporation with offices located at 45-18
Court Square, Suite 502, Long Island City, New York 11101, and Northern Telecom
Inc. (hereinafter "Nortel"), a Delaware corporation with offices located at 2350
Lakeside Boulevard, Richardson, Texas 75082-4399.

WHEREAS, Company is engaged in providing communication services and products,
and providing and maintaining public and private communication networks; and

WHEREAS, Nortel, in conjunction with Nortel Affiliates, is engaged in the
design, development, manufacture and sale of various products and offers
services associated with such products, which can be used in connection with the
communication services, products and networks of Company; and

WHEREAS, Company wishes to be able to purchase and/or license various products
and services for delivery and installation in the United States from Nortel,
which Company will use for its own internal use and not for resale or as stock
in trade, and Nortel is willing to sell and/or license such products to Company,
subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, the parties agree as follows:

ARTICLE 1.  DEFINITIONS

The following words shall have the meanings set forth below.  Words in the
singular shall be held to include the plural and vice versa, and words of gender
shall be held to include the other gender as the context requires.

     1.1  "Acceptance" shall mean that either (i) Company has indicated that an
ordered Product is operating substantially in accordance with the applicable
Specification; or (ii) an ordered Product has been deemed to be accepted
pursuant to criteria set forth in Article 6.

     1.2  "Applications" shall mean any program, product, service, development
or invention developed by a party using the Building Blocks, including any
modified or created Building Blocks, created by Company.

     1.3  "Building Block(s)" shall mean those Software files provided by Nortel
with

                                       4
<PAGE>

Modifiable Software that are manipulatable or which may be created by Company
with such Modifiable Software and which can be used, created or manipulated by
Company to create Applications.

     1.4  "Confidential Information" shall mean all information, including
without limitation, specifications, drawings, documentation, know-how and
pricing information, of every kind or description which may be disclosed by one
party to the other party in connection with this Agreement; provided that, the
disclosing party shall clearly mark all such information disclosed in writing as
the confidential or proprietary property of the disclosing party and, in the
case of oral disclosure, the disclosing party shall identify the confidential or
proprietary nature of any such information at the time of such oral disclosure
and shall provide a written summary (labeled as confidential or proprietary) of
the orally disclosed information to the recipient within fifteen (15) business
days following such disclosure.

     1.5  "Customer" shall mean entities to whom Company provides communication
services as a result of Company's internal use of the Products.

     1.6  "Customer Information" or "CT" shall mean the information provided by
Company to Nortel in order for Nortel to engineer and/or provide the components
of Systems.

     1.7  "Documentation" shall mean the documents which Nortel generally makes
available to its customers containing descriptive, operating, installation,
engineering and maintenance information for Products, including Specifications,
as such documents may be amended from time to time.

     1.8  "Effective Date" shall mean the date this Agreement becomes effective
which shall be the date first identified above.

     1.9  "Extension" shall mean Hardware and/or Software which is engineered by
Nortel and added to an Initial System after the Turnover Date of the Initial
System.

     1.10 "Hardware" shall mean, individually and collectively, the Nortel
equipment listed in the Product Annexes of Exhibit A, and shall be deemed to
include any equipment which Nortel adds to its generally available Hardware
price lists or so identifies to Company in a Quotation.

     1.11 "Hazardous Material" shall mean any pollutants or dangerous, toxic or
hazardous substances (including without limitation, asbestos) as defined in, or
pursuant to the OSHA Hazard Communication Standard (29 CFR Part 1910, Subpart
Z), the Resource Conservation and Recovery Act (15 USC Section 6901, et seq.),
the Toxic Substances Control Act (15 USC Section 2601, et

                                       5
<PAGE>

seq.), the Comprehensive Environmental Response Compensation and Liability Act
(42 USC Section 9601, et seq.), and any other federal, state or local
environmental law, ordinance, rule or regulation or equivalent law or regulation
in the location to which the Product is shipped by Nortel.

     1.12 "Initial System" shall mean Hardware and Software, inclusive of a
central processor unit, included in a configuration which Nortel identifies as a
System and which is initially engineered by Nortel and installed at a specific
Installation Site.

     1.13 "Installation Site" shall mean the location or facility identified in
an Order at which the applicable Products will be installed.

     1.14 "Licensed Software" shall mean the Software which Company has licensed
pursuant to this Agreement.

     1.15 "Merchandise" shall mean any Hardware or other parts or components
which are not ordered as part of a System and with respect to which no
engineering, installation or other Services are provided by Nortel.

     1.16 "Modifiable Software" shall mean Software, or a portion of Software
that is identified as such by Nortel in its applicable Documentation, which
Company may have certain rights to modify and potentially create Applications or
Building Blocks in accordance with the applicable Documentation.

     1.17 "Non-Licensed Software" shall mean Software for which Company has not
yet obtained a license nor paid applicable right to use fees, but which Software
may be included with Software loads delivered to Company hereunder.

     1.18 "Nortel Affiliate" shall mean Nortel's parent corporation, Northern
Telecom Limited and any corporation controlled directly or indirectly by
Northern Telecom Limited through the ownership or control of shares or other
securities in such corporation.

     1.19 "Order" shall mean a numerically controlled purchase authorization
document issued by Company to Nortel specifying the types and quantities of
Products and Services to be furnished by Nortel,

     1.20 "Product(s)" shall mean, individually and collectively, the Hardware,
Software, and Documentation.

     1.21 "Product Annex" shall mean, with respect to a specific Product,
additional or

                                       6
<PAGE>

modified terms and conditions as set forth in Exhibit A, inclusive of but not
limited to those that may apply to any Third Party Hardware or Third Party
Software, unique to such Product.

     1.22 "Quotation" shall mean a written budgetary or firm price quotation
issued by Nortel to Company for the supply of any Products or Services pursuant
to this Agreement.

     1.23 "Service(s)" shall mean, individually and collectively, any of the
services set forth in this Agreement that Company may acquire from Nortel, such
as but not limited to maintenance, engineering, installation, training, data
management, program management, project management, commissioning, testing,
technical assistance Service with respect to Products and installation, and
consulting.

     1.24 "Services Software" shall mean that Software and related documentation
made available by Nortel which may be used by Company for estimation, planning
or information purposes.

     1.25 "Ship Date" shall mean the date as agreed to by the parties, on which
a Product ordered by Company is scheduled to be shipped from Nortel's facility
or, in the case of Software which is downloaded, the date upon which such
Software is to be downloaded to the System; however, Ship Date shall not mean
the date on which Non-Licensed Software is activated.

     1.26 "Software" shall mean (i) computer programs in object code form or
firmware which (a) are owned by, or licensed to, Nortel, (b) reside in Product
memories, tapes, disks or other media, and (c) provide basic logic operating
instructions and user-related application instructions; and (ii) documentation
associated with such computer programs, which may be furnished by Nortel to
Company from time to time, including both Licensed Software and Non-Licensed
Software, but in no event shall Software include source code.

     1.27 "Software Release" shall mean Software or revisions to Software
containing problem fixes, new features and/or enhancements.

     1.28 "Specifications" shall mean with respect to any Product the
specifications and/or practices set forth in Northern Telecom Practices ("NTPs")
or similar documents published by Nortel which Nortel identifies as the standard
performance specifications and practices for such Product.

     1.29 "System" shall mean a configuration of Hardware and Software providing
a specified functionality and includes an Initial System and its Extensions, if
any.

                                       7
<PAGE>

     1.30 "Third Party Hardware" shall mean any hardware not of Nortel's
manufacture which shall be deemed to include any such hardware which Nortel adds
to its generally available Third Party Hardware price lists or so identifies to
Company in a Quotation.

     1.31 "Third Party Software" shall mean any Software not owned by Nortel
which is included within Licensed Software or Non-Licensed Software.

     1.32 "Turnover" shall mean, with respect to any System installed by Nortel,
that Nortel has completed its standard manufacturing test procedures, as
applicable, and that the System is ready for acceptance testing by Company.

     1.33 "Turnover Date" shall mean, with respect to any Product installed by
Nortel hereunder, the date on which Nortel provides a notice of Turnover to
Company.

ARTICLE 2.  SCOPE OF AGREEMENT

     2.1  This Agreement sets forth the terms and conditions under which Company
may order Products and/or Services from Nortel.  Company may use the Products
itself, including use to provide services to others, subject to the terms and
conditions of this Agreement.  Company expressly represents that it is not
buying Product for resale.  All Products shall be delivered and installed in the
United States.

     2.2  To the extent any terms and conditions set forth in this Agreement are
inapplicable to a Product, the applicable terms and conditions and any
additional terms and conditions for such Product shall be set forth in a Product
Annex.

     2.3  If specified in a Product Annex as a requirement, Company shall,
fifteen (15) days prior to each calendar quarter, submit to Nortel a
consolidated non-binding forecast of Products by geographic region, that Company
anticipates purchasing or licensing over the next four (4) calendar quarters.
In addition to the type, quantity and cumulative dollar amount of Products, the
parties may agree upon additional information to be included in such forecast.

     2.4  All references to prices, charges, fees or other amounts herein shall
be in U.S. dollars and all documentation, correspondence and communication shall
be in the English language.

ARTICLE 3.  PLACEMENT OF ORDERS

     3.1  To order Products and/or Services, Company shall submit to such person
as Nortel shall designate, an Order which shall at a minimum specify the
following, if applicable:

                                       8
<PAGE>

          (i)    the types and quantities of Products and Services to be
          furnished by Nortel;

          (ii)   the applicable prices, charges and fees with respect to such
          Products and Services;

          (iii)  the location or facility to which the Products are to be
          delivered;

          (iv)   the incorporation by reference of this Agreement;

          (v)    the Installation Site, if known;

          (vi)   the requested Ship Date and Turnover Date of the System; and

          (vii)  any other information required under this Agreement to be
          included in an Order.

     3.2  All purchases pursuant to this Agreement shall be made by means of
Orders issued from time to time by Company and accepted by Nortel in writing
within fifteen (15) days after receipt of the Order.  In the event that Nortel
fails to provide its acceptance of an Order in writing within such fifteen (15)
day period, such Order shall be deemed to be accepted; subject to Section 3.3.
Nortel shall have the right to reject any Order, or the applicable portion of
such Order, placed hereunder where Company has a separate agreement with Nortel
for the provision of the Products or Services requested in such Order or the
Order is otherwise not in accordance with this Agreement.

     3.3  All Orders issued by Company pursuant to this Agreement shall refer to
and specifically incorporate this Agreement by reference and the terms and
conditions herein shall govern the transaction resulting from such Order;
provided that such Order is accepted or deemed accepted by Nortel.  Additional
or conflicting terms and conditions set forth in or otherwise incorporated into
Orders issued by Company, or in any prior Quotations, acknowledgments or other
related documentation issued by any party, shall be considered null and void and
shall have no force or effect.  Any additional or conflicting terms and
conditions set forth in or otherwise incorporated into an Order shall, upon
express acceptance of the same in writing by Nortel, and for such Order only,
supersede the terms and conditions contained in this Agreement, including all
Exhibits attached hereto, which are in conflict, but only to the extent of such
conflict.

     3.4  Company may at any time request additions, alterations, deductions or
deviations to an Order, subject to the condition that such changes and any
adjustments resulting from such changes, including, but not limited to,
schedules and prices, shall be mutually agreed upon and, if so agreed,
subsequently detailed in a written revision to the applicable Order ("Change
Order").

                                       9
<PAGE>

Company acknowledges that a premium charge may be applied by Nortel should
Nortel agree to process a Change Order outside of its standard Order processing
cycle for a Product or in the event that a Change Order requires an additional
amount of work (such as engineering) to be undertaken to comply with such
changes.

     3.5  If Company desires to receive a budgetary or firm Quotation from
Nortel for a Product or Service, Company shall submit such request in writing to
Nortel's Director.  Commercial Marketing, or such other person as designated by
Nortel.  The request for Quotation shall include the information listed in
Section 3.1, as applicable.

     3.6  Nortel shall respond in writing to requests for budgetary Quotations
and requests for firm Quotations.  Unless otherwise specified in the firm
Quotation, such firm Quotation shall be valid for ninety (90) days from the date
of such Quotation.  Budgetary Quotations shall be provided for information and
planning purposes only and shall not be considered to be a final or firm
statement binding on either party.  The Quotations shall include the following
information:

          (i)  Budgetary Quotations
               (a) preliminary Hardware and Software lists;
               (b) the estimated charges for the Products;
               (c) the estimated charges for Services requested; and
               (d) any other information requested by Company.

          (ii) Firm Quotations
               (a) the price to be paid by Company for the Products, after
                   applying the applicable discounts, if any;
               (b) fixed charges for Services requested;
               (c) complete Hardware and Software lists and project schedules;
                   and
               (d) any other information requested by Company.

     3.7  The Ship Date shall be based on Nortel's standard intervals for the
applicable Product; however, the parties shall always mutually agree on the Ship
Date and take into consideration any unique aspect of the applicable project.

     3.8  Orders may be issued either electronically, such as through electronic
data interchange, or via traditional manual methods, as mutually agreed to by
the parties.

ARTICLE 4.  PRICE AND PAYMENT

     4.1  Nortel shall charge Company for each Product and/or Service ordered by
Company

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<PAGE>

in accordance with the prices set forth in each accepted Order, which prices
shall be based upon prices identified in one of (i) a Product Annex; (ii) a Firm
Quotation; (iii) Nortel's then current prices; or (iv) as specified elsewhere in
this Agreement or as otherwise mutually agreed in writing.

     4.2  For all Orders, Nortel shall invoice Company for Products and Services
as follows, unless otherwise agreed to in writing:

          (i)    for Systems, whether or not installation has been ordered from
          Nortel, one hundred percent (100%) of the price of the Products on the
          Ship Date, one hundred percent (100%) of the price of any Services
          upon the date of completion of such Services, except with respect to
          installation Services, if any, which shall be invoiced one hundred
          percent (100%) upon Turnover.  Except for installation Services, for
          Services that have a duration of more than one (1) month to complete,
          Nortel may invoice Company monthly for that portion of such Services
          which have been performed as of such invoicing date];

          (ii)   for Merchandise or Documentation provided on a furnish-only
          basis, one hundred percent (100%) of the price on the Ship Date; and

          (iii)  for Orders covering Services only, one hundred percent (100%)
          of the price for such Services following completion of performance,
          except for recurring support Services which shall be billed quarterly
          in advance unless otherwise agreed. Some Services may be subject to
          monthly invoicing as set out in a Product Annex or separate Services
          agreement. To the extent such Services are to be invoiced differently
          than set out in this paragraph (iii), such differences shall be set
          forth in the applicable Product Annex or separate Services agreement
          and such provisions shall take precedence.

     4.3  Each invoice shall be paid in full within thirty (30) days after the
date of such invoice. In the event that Company does not pay an invoice in full
within such thirty (30) day period, then Nortel may charge Company interest on
the outstanding portion of such invoice, from day thirty one (31) forward, at
the rate of one and one half percent (1.5%) simple compound interest per month,
or such lesser amount as may be the maximum permissible rate under applicable
law, until such time as the outstanding invoice is paid.  In addition, Company
agrees to pay all collection costs and reasonable legal fees incurred by Nortel
as a result of late payment or non-payment by Company.

                                       11
<PAGE>

ARTICLE 5.  SHIPMENT, TITLE AND RISK OF LOSS

     5.1  Prior to the Ship Date, Company shall have the right to reschedule any
pending Orders; provided that (i) a minimum period of notice prior to such Ship
Date is given to Nortel by Company in accordance with the applicable Product
Annex; and (ii) the new Ship Date is within ninety (90) days of the original
Ship Date.  However, each Order may only be rescheduled once. Company shall
reimburse Nortel for any storage fees, insurance and demurrage costs incurred
with respect to such rescheduled Orders.

     5.2  Risk of loss and damage to Products shall pass to Company upon
delivery to the loading dock at the Installation Site or other delivery location
specified by Company in an Order. Company shall keep such Products fully insured
for the total amount then due Nortel for such Products.  Company shall pay
transportation charges, including insurance, associated with the shipment of
Products; provided however, that if the parties agree, Nortel shall prepay
transportation charges, and insurance for delivery of Products to the
Installation Site or other delivery location or other designated receiving point
as specified in an Order.  The charges therefor shall be invoiced by Nortel and
paid by Company to Nortel in accordance, with Article 4 above.

     5.3  Good title to Hardware furnished hereunder, free and clear of all
liens and encumbrances, shall vest in Company upon full payment to Nortel of the
total amount payable by Company for such Hardware and any related Licensed
Software or Services ("Total Fee") furnished by Nortel in connection with such
Hardware.  Prior to payment of the Total Fee for the Products and Services in an
Order, Company shall not sell or lease the Hardware, or allow any liens or
encumbrances to attach to the Hardware or Software, or remove the Hardware or
Software from the Installation Site without the prior written consent of Nortel,
such consent not to be unreasonably withheld.

     5.4  If Company notifies Nortel prior to a Ship Date that Company does not
wish to receive such Product on the Ship Date, or the Installation Site or other
delivery location is not prepared in sufficient time for Nortel to make delivery
in accordance with such date, or Company fails to take delivery of any portion
of the Products in an Order when shipped, Nortel may place the applicable
Products in storage.  In that event, Company shall be liable for all additional
costs thereby incurred by Nortel.  Delivery by Nortel of any Products to a
storage location as provided above shall be deemed to constitute delivery of the
Products to Company for purposes of this Agreement, including, without
limitation, provisions for payment, invoicing, passage of risk of loss, and
commencement of the warranty period.

     5.5  Until the Total Fee is paid, Company grants to Nortel and/or its
agents a purchase money security interest in the Products in an Order and their
proceeds or such other similar

                                       12
<PAGE>

protection as may be available in the applicable jurisdiction. Company shall
cooperate with Nortel in preserving and perfecting Nortel's security interest in
the Products and Company shall promptly (i) execute and deliver to Nortel such
financing statements as Nortel may require; and (ii) execute and deliver to
Nortel such other agreements, documents and instruments as Nortel may require to
perfect and maintain the validity, effectiveness and priority of the security
interest created or intended to be created by this Agreement.

     5.5.1  Company authorizes Nortel to file one or more financing or
continuation statements and amendments thereto, relating to all or any part of
the Products in an Order without signature of the Company where permitted by
law.  A carbon, photographic or other reproduction of any financing statement
covering the Products or any part thereof shall be sufficient as a financing
statement and may be filed as a financing statement.

     5.6    Company shall provide Nortel or its subcontractors with access to
its Installation Sites or other Company facilities during the times specified by
Nortel and as are reasonably necessary for Nortel to perform its obligations
hereunder. Nortel shall comply with Company's reasonable site and security
regulations of which Nortel is informed by Company.

     5.6.1  All sites at which the Products shall be delivered or installed
shall be prepared by Company in accordance with Nortel's standards, including,
without limitation, environmental requirements. Prior to and during
installation, Company shall ensure the timely and adequate delivery,
installation and functioning of the electrical and communications connections
and other environmental requirements, including but not limited to, HVAC
systems, specified in Nortel's instructions, Specifications, Documentation or in
a Product Annex.

     5.6.2  Company shall provide reasonable working space and facilities,
including heat, light, ventilation, telephones, electrical current, waste
removal and other necessary utilities, for use by Nortel personnel performing
installation or other Services, and adequate secure storage space, if required
by Nortel, for Products and materials.  Company shall also provide adequate
security against theft, damage or other loss for the Products while on Company's
Installation Site or other delivery location specified by Company.

     5.6.3  Company shall obtain all necessary governmental permits applicable
to Company in connection with the installation, operation, and maintenance of
Products furnished hereunder, excluding any applicable permits required in the
normal course of Nortel's doing business. Any information which Nortel
reasonably requests from Company and which is necessary for Nortel to properly
install or maintain the Products shall be provided by Company to Nortel in a
timely fashion and in a form reasonably specified by Nortel.

                                       13
<PAGE>

ARTICLE 6.  TESTING, TURNOVER AND ACCEPTANCE

     6.1  If installation Services are ordered by Company, Nortel shall, upon
completion of such installation, test the Products in accordance with Nortel's
Turnover procedures to verify that such Products function substantially in
accordance with the applicable Specifications.  Upon completion of such
verification, Nortel shall provide to Company a written notice of Turnover.
Company shall be permitted an opportunity to have an appropriately qualified
individual in attendance to observe the performance of such tests, however, the
absence of such Company individual for any reason shall not invalidate the tests
nor be a reason for Company to withhold Acceptance.

     6.2  Within ten (10) business days after the Turnover Date, Company shall
either accept the Product in writing by execution of a notice of Acceptance, or
notify Nortel in writing, specifying in reasonable detail those particulars in
which, in Company's opinion, the Product is not in material conformance with the
Specifications.  If Acceptance does not occur within such ten (10) days after
the Turnover Date and Company has not indicated to Nortel in writing its basis
for not accepting such Product, then Acceptance shall be deemed to have
occurred.

     6.3  If Nortel does not install Products furnished hereunder, Nortel shall,
prior to delivery of the Products, perform such factory tests as Nortel
determines to be appropriate in order to confirm that such Products perform
substantially in accordance with the applicable Specifications.  Company shall
be deemed to have accepted the Products based upon such tests and Acceptance
shall be deemed to have occurred upon the Ship Date.  In the event that Company
or any other entity intends to perform installation of Products, (except for
installation of Products which are not permitted to be installed other than by
Nortel, as specified in the applicable Product Annex or Documentation) Company
or such entity may be required to complete prerequisite training or
certification prior to Company being allowed to install such Products.

     6.4  In the event that Company is utilizing any Product in a revenue-
generating capacity, Acceptance shall be deemed to have occurred without
limitation or restriction, upon the date of placement of such Product into
revenue-generating service.

     6.5  Products, such as Merchandise, which are purchased separately from a
System, shall be deemed accepted upon the Ship Date.  Services which are
purchased separately from a Product shall be deemed to be accepted upon
completion of such Services or upon specific milestones as may be identified in
a Product Annex.

     6.6  Company shall not unreasonably withhold Acceptance.  Nortel shall
correct any deficiencies identified by Company in the manner described in this
Article whereby such Products

                                       14
<PAGE>

do not materially conform to the Specifications. When Nortel has corrected such
deficiencies, Company shall accept the Products in writing, Company's failure to
either accept or provide notice of non-conformance within the time frame from
the Turnover Date, as prescribed in Section 6.2, shall constitute Acceptance of
the Products.

     6.7  Following Acceptance of Products, Company shall execute Nortel's
Acceptance notice, confirming Acceptance without any conditions, restrictions,
or limitations of any nature whatsoever.

     6.8  Acceptance shall not be withheld or postponed due to:

          (i)    Deficiencies of such Products resulting from causes not
          attributable to Nortel, such as, but not limited to (a) material
          change or inaccuracy of Customer Information, (b) inadequacy or
          deficiencies of any materials, information, facilities or services
          provided directly or indirectly by Company and tested in conjunction
          with the applicable Products, or spurious outputs from adjacent
          material, or (c) other conditions external to the Products which are
          beyond the limits specified by Nortel in the Specifications for the
          Products; or

          (ii)   Minor deficiencies or shortages with respect to such Products
          which are attributable to Nortel, but of a nature that do not prevent
          operation of the Products in revenue-generating service.

     6.9  With respect to any deficiencies of the type described in Section
6.8(i), Nortel shall at Company's request and expense assist Company in the
elimination or minimization of any such deficiencies.  With respect to any
deficiencies or shortages as described in Section 6.8(ii), Nortel shall, at
Nortel's expense, correct any such deficiencies or shortages within thirty (30)
days of the date of Acceptance or as otherwise agreed by the parties.

     6.10 In the event that Company notifies Nortel of non-acceptance of a
Product and Nortel personnel travels to the Installation Site to remedy such
non-acceptance and determines that non-acceptance is due to a deficiency of the
type described in Section 6.8(i), Nortel will invoice Company for Nortel's
investigation of the matter, consisting of the standard labor rate for Nortel's
personnel who travel to the Installation Site and the reasonable travel and
living expenses incurred by such personnel.

ARTICLE 7.  ORDER CANCELLATION

     7.1  If, prior to the Ship Date, Company cancels all or any part of an
Order, Company

                                       15
<PAGE>

shall pay to Nortel a cancellation charge for the Products or each item of Third
Party Hardware or Third Party Software that has been canceled in accordance with
the schedule set forth in the applicable Product Annex.

     7.2  Orders for Products that have been shipped may not be canceled.
Furthermore, Orders for Products which Nortel customizes in accordance with a
specific Company request may not be canceled.

ARTICLE 8.  WARRANTY

     8.1  Nortel warrants that for a period of twelve (12) months from the Ship
Date of a System, the Hardware contained in such System under normal use and
service will be free from defective material and faulty workmanship and shall
comply with the applicable Specifications.  The warranty period for Merchandise
shall be ninety (90) days from the Ship Date of such Merchandise. The foregoing
warranties shall not apply to items normally consumed during operation of a
System such as, but not limited to, lamps and fuses.

     8.2  Nortel warrants that any installation Services performed by Nortel
with respect to a System will be free from defects in workmanship for a period
of twelve (12) months from the completion date of such Services.

     8.3  Nortel warrants that any Licensed Software shall function during the
warranty period of the Hardware with respect to which such Licensed Software is
furnished without any material, service-affecting, non-conformance to the
applicable Specifications.  Licensed Software that is delivered separately from
Hardware is warranted for a period of twelve (12) months from the applicable
Ship Date.  If the Licensed Software fails to so function, Company's exclusive
remedy and Nortel's sole obligation under this warranty is for Nortel to correct
such failure through, at Nortel's option, the replacement or modification of the
Licensed Software or such other actions as Nortel reasonably determines to be
appropriate, all within a reasonable time having regard to all of the
circumstances and failing which the parties agree to negotiate a commercially
reasonable solution.  Any modification to the Software not performed by Nortel,
other than with respect to Modifiable Software, shall void this warranty.

     8.4  If Hardware is not free from defects in material or workmanship and
fails to comply with the applicable Specifications during the warranty period,
Nortel will repair, replace or modify at its sole option the defective Hardware
so that it substantially complies with the applicable Specifications.  The
warranty service shall be performed at the Installation Site or Nortel's
facility as determined by Nortel.  If Nortel is unable to repair or modify the
defective Hardware within a reasonable period of time so that such Hardware
conforms to the applicable Specification, Nortel

                                       16
<PAGE>

shall replace the defective Hardware with Hardware that conforms to such
Specifications. Replacement Hardware may be new or reconditioned at Nortel's
option. Nortel's sole obligation and Company's exclusive remedy under the
warranty provisions of this Article with respect to Hardware and installation
Services shall be limited to repair, modification or replacement of the
defective Hardware or correction of the defective installation Services.

     8.5  Notwithstanding the foregoing, the warranty period of Hardware which
has been subject to repair or replacement by Nortel shall commence upon the Ship
Date of the repaired or replacement Hardware to Company and shall expire on the
later of ninety (90) days or the last day of the original warranty period with
respect to the Hardware which was repaired or replaced.  The warranty period of
Licensed Software which has been corrected, due to a material, service-affecting
non-conformance found in such Licensed Software, shall expire on the later of
ninety (90) days from the Ship Date of the corrected Licensed Software to
Company or the last day of the original warranty period with respect to such
Licensed Software.

     8.6  Nortel warrants that its Products shall comply in all material aspects
with all applicable laws and regulations known to Nortel, which are in force on
the date of acceptance of the applicable Order therefor, which laws or
regulations directly impose obligations upon any manufacturer, seller or, if
applicable, installer of such Products.

     8.7  The performance by Nortel of any of its obligations described in this
Article 8 shall not extend the applicable warranty period.

     8.8  The warranties set forth in this Article shall not apply to any
Products where the defect or non-conformance is due to (i) accident, fire,
explosion, power failure, power surge or other power irregularity, lightning,
alteration, abuse, misuse or repair not performed by Nortel; (ii) improper
storage; (iii) failure to comply with all applicable environmental requirements
for the Products as specified by Nortel or any other applicable supplier, such
as but not limited to temperature or humidity ranges; (iv) improper performance
of installation, maintenance, operation or other service in connection with the
Products, provided that such service was not performed by Nortel or on Nortel's
behalf; (v) use in conjunction with an incompatible product or a product not
purchased under this Agreement; (vi) any error, act or omission by anyone other
than Nortel; or (vii) where written notice of the defect has not been given to
Nortel within the applicable warranty period. The warranties set forth in this
Article shall not apply to (i) Non-Licensed Software for which the applicable
right to use fees have not been paid; or (ii) Third Party Software or Third
Party Hardware, provided however that Nortel shall assign to Company (to the
extent of Nortel's right to do so) the warranty rights granted to Nortel by the
appropriate vendor of such Third Party Software or Third Party Hardware.

                                       17
<PAGE>

     8.9   Unless Nortel elects to repair or replace defective Hardware at
Company's facility, all Hardware to be repaired or replaced, whether in or out
of warranty, shall be de-installed and packed by Company in accordance with
Nortel's instructions. Nortel shall use reasonable efforts to ship repaired or
replacement Hardware within thirty (30) days of receipt of the defective
Hardware. To facilitate the processing of the defective Hardware returned
hereunder, Nortel may ship replacement Hardware prior to Nortel receiving the
defective Hardware. In the event that Company fails to return defective Hardware
and Nortel has shipped such replacement Hardware, Nortel shall invoice Company
at Nortel's applicable then-current prices for such replacement Hardware, thirty
(30) days after the Ship Date of such replacement Hardware. If mutually agreed,
Nortel will make repairs on-site at Nortel's then-current charge for such
repairs.

     8.10  If the Hardware returned to Nortel pursuant to Section 8.9 is
determined by Nortel to be beyond repair and is outside the warranty period,
Nortel shall notify Company and if requested Nortel shall sell Company
replacement Hardware at Nortel's then-current prices for such replacement
Hardware.

     8.11  Company shall bear risk of loss or damage and shall pay for all
transportation charges for Hardware returned to Nortel, and Nortel shall bear
risk of loss or damage and pay for transportation charges for repaired or
replacement Hardware shipped to Company.  Title to returned Hardware shall pass
to Nortel upon receipt.  Title to replacement Hardware shall pass to Company
upon receipt.

     8.12  Nortel and Nortel's vendors of Third Party Hardware and Third Party
Software, as appropriate, shall not have any responsibility to Customers for
warranties offered by Company to such Customers and Company hereby indemnifies
and holds harmless Nortel and Nortel's vendors, as appropriate, from any claims,
damages or liabilities arising out of, or relating to, any warranties offered by
Company to such Customers.

     8.13  THE WARRANTIES, CONDITIONS AND REMEDIES SET FORTH HEREIN CONSTITUTE
THE ONLY WARRANTIES, OBLIGATIONS OR CONDITIONS OF NORTEL WITH RESPECT TO THE
PRODUCTS AND SERVICES AND ARE COMPANY'S SOLE AND EXCLUSIVE REMEDIES IN THE EVENT
THAT SUCH WARRANTIES OR CONDITIONS ARE BREACHED.  THEY ARE IN LIEU OF ALL OTHER
WARRANTIES OR CONDITIONS, WRITTEN OR ORAL, STATUTORY, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND
FITNESS FOR A PARTICULAR PURPOSE.  NORTEL SHALL NOT BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT
LIMITATION LOST REVENUES OR PROFITS OR OTHER ECONOMIC LOSS, OF ANY NATURE
WHATSOEVER ARISING OUT OF NORTEL'S BREACH OF WARRANTY OR

                                       18
<PAGE>

CONDITION.

ARTICLE 9.  NORTEL'S ADDITIONAL OBLIGATIONS

     9.1  Nortel shall make training available to representatives of Company
with respect to the operation, configuration, installation, service, maintenance
and support of the Products at Nortel's then current prices and at Nortel's
facilities, subject to course and class availability.  Nortel shall provide
Company with a certain number of training credits ("Training Credits"), as set
forth in the applicable Product Annex, to be used by Company in any of Nortel's
training courses related to the Products that Company has purchased.  The
Training Credits for each Product may only be used in connection with such
Product and must be used within one (1) year from the date such Training Credits
were earned, after which such Training Credits will be forfeited by Company.

     9.2  Upon request, Nortel shall provide Company with copies of its then
current training catalogue.  Company shall provide Nortel with a reasonable
number of names and addresses of people to whom this catalogue should be sent.
Upon the request of Company, Nortel shall provide to Company such additional
training as Company requests, at a time and place mutually agreed upon and at
the prices to be quoted for such training.  The cancellation fees set forth in
the training catalogues shall apply.

     9.3  Nortel shall include its standard Documentation package, if any, with
each shipment of Products.  Nortel shall make the Documentation available on its
choice of media, which may include CD-ROM or other electronic media.  Nortel
shall provide Company with any other Documentation that is ordered at its then-
current prices therefor.  Documentation provided via Nortel's CD-ROM media may
be printed and copied and Documentation provided in paper format may be copied,
to the extent such Documentation so provides, and only to the extent such
printing or copying is necessary for the operation and maintenance of the
Products to which the Documentation pertains.  However, Company may not press or
burn any copies of CD-ROM discs.

     9.4  During the Term of this Agreement, Company may acquire various support
Services from Nortel in connection with the Products that Company acquires from
Nortel under this Agreement.  These Services may include, but are not limited to
the following: technical assistance Services, installation Services, Hardware
maintenance Services, Software maintenance Services and parts repair and
replacement Services.  Certain support Services that Company may acquire are
described in Exhibit B, the Master Services Agreement, which is attached hereto
and incorporated herein.  The fees for such Services, if ascertained upon
execution of this Agreement, are set forth in Exhibit B.  Fees for any support
Services not specified in Exhibit B shall be provided on an as-quoted basis
pursuant to Nortel's applicable terms and conditions.

                                       19
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

ARTICLE 10.  SOFTWARE LICENSE

     10.1  Company acknowledges that the Software may contain programs which
have been supplied by, and are proprietary to, Third Party Software vendors. In
addition to the terms and conditions herein, Company shall abide by any
additional terms and conditions specified in a Product Annex with respect to any
Software provided by any Third Party Software vendor.

     10.2  Upon Company's payment to Nortel of the applicable fees with respect
to any Software furnished to Company pursuant to this Agreement, Nortel hereby
grants to Company, subject to the applicable terms and conditions of this
Article 10, a personal, non-exclusive, right and license to use the Licensed
Software furnished to Company, but only in conjunction with Company's use of the
Hardware or the Documentation with respect to which such Licensed Software was
furnished.  The duration of such right to use shall last (i) with respect to
Licensed Software furnished in connection with Hardware, for the life of that
Hardware as it may be repaired or modified, and (ii) with respect to Licensed
Software furnished in connection with Documentation, for the duration of
Company's right to use the Documentation.  Company shall be granted no title or
ownership rights to the Software, which rights shall remain in Nortel or its
suppliers.

     10.3  As a condition precedent to this license and to the supply of
Software by Nortel pursuant to this Agreement, Nortel requires Company to give
proper assurances to Nortel for the protection of the Software. Accordingly, all
Software supplied by Nortel under or in implementation of this Agreement shall
be treated by Company as the exclusive property, and as proprietary and a trade
secret, of Nortel and/or its suppliers, as appropriate, and Company shall: (i)
hold the Software, including, without limitation, any methods or concepts
utilized therein in confidence for the benefit of Nortel and/or its suppliers,
as appropriate; (ii) not provide or make the Software available to any person
except to its employees on a 'need to know' basis and then only under
confidentiality obligations; (iii) not reproduce, copy, or modify the Software
in whole or in part except as authorized by Nortel; (iv) not attempt to
decompile, reverse engineer, disassemble, reverse translate, or in any other
manner decode the Software; (v) issue adequate instructions to all persons, and
take all actions reasonably necessary to satisfy Company's obligations under
this license; and (vi) forthwith return to Nortel, or with Nortel's consent
destroy (a) upon termination of the license for any reason, or (b) upon receipt
of replacement, modified, or updated Software, any magnetic tape, disc,
semiconductor device or other memory device or system memory and/or
Documentation or other material regarding such Software, including, but not
limited to all printed material furnished by Nortel to Company.

     10.4  The obligations of Company hereunder shall not extend to any
information or data relating to the Software which is now available to the
general public or becomes available by reason of acts or failures to act not
attributable to Company.

                                       20
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

     10.5  Nortel may issue updates to the Software from time to time, and upon
Company's payment of applicable right to use fees, if any, shall license such
updates to Company.  The right to use fees for such updates do not include the
price of any associated Hardware that may be required to use such updates.

     10.6  Neither Company nor any successor to Company's title in the
applicable Hardware shall have the right to (i) assign this license as to the
applicable Licensed Software to any other person who acquires legal title to
such Hardware; or (ii) sublicense the rights herein granted as to such Licensed
Software to any other person who subsequently acquires the right to use such
Hardware, unless agreed to in writing by both Nortel and Company. Such consent
shall not be unreasonably withheld.

     10.7  Company shall indemnify and hold Nortel and its suppliers, as
appropriate, harmless from any loss or damage resulting from a breach of this
Article 10.  The obligations of Company under this Article 10 shall survive the
termination of the Agreement and shall continue if the Software is removed from
service.

Non-Licensed Software
---------------------

     10.8  Certain Software delivered by Nortel may include Non-Licensed
Software.  Non-Licensed Software includes (i) any Software for which the
applicable right to use fees have not been paid; and (ii) Software for which a
periodic right to use fee has expired and the applicable additional periodic
right to use fees have not been paid.  Company shall submit to Nortel an Order
for any Non-Licensed Software that Company desires to license or renew.

     10.9  When Non-Licensed Software is placed into service, the applicable
right to use fees shall be payable.  Company shall also have the option to pay
the applicable right to use fees for any Non-Licensed Software upon installation
of a Software load containing such Non-Licensed Software.

     10.10 To ensure Company's proper activation and/or usage of only the
appropriate Software, Company shall complete the appropriate form designated by
Nortel prior to the activation and/or usage by Company of any Non-Licensed
Software.  Company shall identify all Software desired to be activated and/or
used (including the number of lines or other units activated, if applicable) in
each System and shall transmit such form to Nortel.

     10.11 Nortel shall promptly review any form submitted pursuant to Section
10.10 and respond in writing, identifying whether (i) any applicable
prerequisite Hardware or Software is required by Company prior to activation
and/or usage of the applicable Software; or (ii) whether the

                                       21
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

use of such Software requires Nortel to determine whether the current System
configuration will require additional elements, such as Hardware, other hardware
and/or System memory, prior to activation and/or usage; or (iii) whether Company
can use such Software without the addition of any additional Hardware or
Software.

     10.12  Nortel reserves the right to access by remote polling any site in
which Software has been installed to determine which Software has been
activated.  Such polling shall be done so as not to unreasonably interfere with
Company's use of the Products.

     10.13  Nortel shall issue invoices to Company, in addition to those amounts
previously invoiced, for amounts found to be payable as a result of Company's
activation and/or usage of any Software which Nortel determines as a result of
the remote polling of a site and for which Company has not previously paid the
appropriate right to use fees.

     10.14  The warranty period for Software activated later than the original
Ship Date of the Software load shall be for the same period as such original
Software load and shall not be extended to provide for an additional period of
warranty based upon the date individual features or units are activated and/or
utilized by Company or the date Company pays any applicable right to use fees.

     10.15  Nortel shall provide the Software support Services specified in
Article 9 or in a separate Services agreement, provided that Company operates
the Software at Nortel's current Software release level or within at least two
previous Software release levels, or as otherwise specified in the Services
agreement.

Modifiable Software
-------------------

     10.16.1  Notwithstanding anything to the contrary above, upon payment to
Nortel of the applicable fees, Nortel hereby grants to Company, subject to the
applicable terms and conditions of this Article 10, a personal, non-
transferable, non-assignable and non-exclusive right and license to modify
Licensed Software which Nortel identifies as Modifiable Software. Upon the
modification or creation of any Applications, or the modification or creation of
any Building Blocks, Nortel shall have no obligations with regard to warranty
under Article 8 or indemnity under Article 11 for such Applications or Building
Blocks.

     10.16.2  Nothing contained in Sections 10.16.1 through 10.16.5 shall
transfer, or be deemed to transfer, or contemplate the transfer of, any rights
in or to the Software other than those rights specifically granted herein, and
in particular but without restricting the generality of the foregoing, Nortel
does not in any way transfer any right, title or interest in or to the Software
or any element constituting a portion thereof to Company, other than the right
of Company to modify or

                                       22
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

create Building Blocks and Applications.

     10.16.3  For any Building Blocks and Applications created solely by
Company, and for all Company-modified portions of the Nortel-provided Building
Blocks with respect to such modified portion only, Company shall own all forms
of intellectual property rights (including but not limited to patent, trade
secret, copyright and mask rights) pertaining to such Applications, Building
Blocks or portions thereof and shall have the right to file for or otherwise
secure and protect such rights. For all such Company created Applications or
Building Blocks or modified portions of Building Blocks, the parties shall, on a
case by case basis, negotiate in good faith to determine whether Company may
desire to license any such Applications or Building Blocks to Nortel.

     10.16.4  For any Applications created solely by Nortel, and for the Nortel
provided Building Blocks, Nortel shall own all forms of intellectual property
rights (including but not limited to patent, trade secret, copyright and mask
rights) pertaining to such Applications or Building Blocks and shall have the
right to file for or otherwise secure and protect such rights.  For all such
Nortel Applications or Building Blocks, Company may license any such additional
Nortel Products upon Nortel making such software generally available to its
customers.

     10.16.5  In the event that Company and Nortel intend to jointly create
Applications or Building Blocks, the parties shall mutually agree as to
applicable terms and conditions.

Services Software
-----------------

     10.17.1  With respect to Services Software, Company shall: (i) utilize such
Services Software and the results thereof solely for the purposes described in
Section 1.24; and (ii) comply with additional terms, if any, applicable to such
Services Software as specified in a Product Annex. Nortel may, at any time and
without liability or obligation to Company, modify the Services Software, any
computer equipment of Nortel or suppliers used in connection with such Services
Software, and identification codes, manuals or other information or
Documentation used in connection with the Services Software.

     10.17.2  SERVICES SOFTWARE IS PROVIDED AS IS AND WITHOUT WARRANTY OR
CONDITION OF ANY KIND, EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO,
THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
NORTEL DOES NOT AND CANNOT WARRANT THE PERFORMANCE OR RESULTS THAT MAY BE
OBTAINED BY USING SERVICES SOFTWARE, COMPANY ASSUMES SOLE RESPONSIBILITY FOR THE
SELECTION OF THE SERVICES SOFTWARE TO ACHIEVE COMPANY'S INTENDED

                                       23
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

RESULTS, AND FOR THE INSTALLATION, USE, AND RESULTS OBTAINED FROM THE SERVICES
SOFTWARE. IN NO EVENT SHALL NORTEL BE LIABLE FOR ANY INDIRECT, INCIDENTAL,
SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING WITHOUT LIMITATION, LOST
REVENUES OR PROFITS OR OTHER ECONOMIC LOSS, OF ANY NATURE WHATSOEVER ARISING OUT
OF COMPANY'S USE OF SERVICES SOFTWARE.

ARTICLE 11.  LIABILITY FOR BODILY INJURY, PROPERTY DAMAGE AND PATENT
             INFRINGEMENT

     11.1  A party hereto shall defend the other party against any suit, claim,
or proceeding brought against the other party for direct damages due to bodily
injuries (including death) or damage to tangible property which allegedly result
from the negligence or willful misconduct of the defending party in the
performance of this Agreement.  The defending party shall pay all litigation
costs, reasonable attorney's fees, settlement payments and such direct damages
awarded or resulting from any such suit, claim or proceeding.

     11.2  Nortel shall defend Company against any suit, claim or proceeding
brought against Company alleging that the sale to, or use by Company of, any
Products, excluding Third Party Hardware or Third Party Software, furnished
hereunder infringes any patent ("Infringement Claim"). Nortel shall pay, subject
to Section 11.3 below, all litigation costs, reasonable attorney's fees,
settlement payments and damages awarded or resulting from any such suit, claim
or proceeding. With respect to Third Party Hardware or Third Party Software,
Nortel shall assign any rights with respect to infringement of patents granted
to Nortel by the supplier of such items to the extent of Nortel's right to do
so.

     11.3  Nortel's cumulative liability, pursuant to this Article 11, other
than Section 11.1, and including its costs and expenses included in satisfying
its obligations set forth below, shall not exceed one hundred percent (100%) of
the purchase price of the Products giving rise to the Infringement Claim.

     11.4  Nortel shall not be liable and Company shall indemnify Nortel for any
costs incurred by Nortel or liabilities of Nortel arising under this Article in
excess of the amounts so stated above.

     11.5  Nortel shall have no liability, in respect of any Infringement Claim
based on the use of a Product in the event that such Product: (i) is
manufactured, designed or supplied by Nortel in accordance with any design or
any special instruction furnished by Company; (ii) is used by Company in a
manner or for a purpose not contemplated or authorized by this Agreement; (iii)
is used by Company in combination with other products not provided by Nortel,
including, without

                                       24
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

limitation, any software developed solely by Company through the permitted use
of Products furnished hereunder, provided that the Infringement Claim arises
from such combination or the use thereof; or (iv) is modified by Company where
such modification is not authorized by Nortel. In the excepted cases stated
above, Company shall indemnify and hold Nortel harmless against any loss, cost,
expense, damage, settlement or other liability, including, but not limited to,
attorneys' fees, which may be incurred by Nortel with respect to any suit,
claim, or proceeding described in this Section 11.5.

     11.6  Nortel shall not be liable for, and Company shall indemnify Nortel in
respect of, any damages awarded based on Company's willful, knowing or
deliberate infringement of a patent, copyright, trade secret, trademark or other
proprietary right where such infringement results in a pecuniary damage award.

     11.7  Nortel may provide Company with notice of an actual or potential
Infringement Claim.  Nortel shall consult with Company regarding the
Infringement Claim and the course of action to be pursued as a result thereof.
In the event that the parties fail to agree on a satisfactory course of action
for dealing with the matter, Company may either:

           (i)   return to Nortel the affected portion of the Product(s) in
           return for a refund of the depreciated value (as carried on the books
           of Company) of the Product(s) so returned; or

           (ii)  continue to use the Product(s) at Company's own risk.

     11.8  Nortel shall not be liable for, and Company shall indemnify Nortel in
respect of any Infringement Claim(s) where Nortel has provided notice to Company
of the Infringement Claim(s) and Company elects to continue its use of the
Product(s) covered by the Infringement Claim.

     11.9  If as a result of an Infringement Claim, other than those
contemplated in Section 11.7(i) and 11.7(ii) above, an injunction is obtained
against Company's use of any Product, Nortel shall, at Nortel's option:

           (i)   procure for Company the right to continue using the alleged
           infringing Product(s);

           (ii)  replace or modify the same with equivalent or better Product(s)
           so that Company's use is non-infringing; or

           (iii) accept return of the affected portion of the Product(s) and
           refund to Company

                                       25
<PAGE>

           the depreciated value (as carried on the books of Company) of the
           Product(s) so returned.

     11.10  The defense of any claim which is predominantly covered by the
provisions of this Agreement shall be controlled by the party upon whom the
majority of the ultimate liability is likely to be imposed.  Such controlling
party shall give the other party a reasonable opportunity to participate in
negotiation or defense of the claim so that such other Party may reasonably
protect its own interests.  Neither Party shall be liable for any settlement
obligation incurred without its written consent.

     11.11  Company shall waive any and all claims that Company may have against
Nortel that Company may have due to any use by Company of Modifiable Software
and any modification Company may have made to a Product as a result of such use.
Further, Company shall be responsible for any additional hardware, software or
services required as a result of such use.

     11.12  THE REMEDIES SET FORTH IN THIS ARTICLE 11 ESTABLISH THE ENTIRE
OBLIGATION OF THE PARTIES IN REGARD TO CLAIMS RELATING TO INTELLECTUAL PROPERTY
RIGHTS INCLUDING CLAIMS DIRECTED TO THE INFRINGEMENT OF PATENTS, COPYRIGHT,
TRADE SECRETS AND OTHER PROPRIETARY RIGHTS.  IN NO EVENT SHALL EITHER PARTY BE
LIABLE FOR ANY INDIRECT, INCIDENTAL, SPECIAL, PUNITIVE OR CONSEQUENTIAL DAMAGES,
INCLUDING WITHOUT LIMITATION, LOST REVENUES OR PROFITS OR OTHER ECONOMIC LOSS OF
ANY NATURE WHATSOEVER, ARISING FROM SUCH INFRINGEMENT CLAIMS AND/OR RELATED
MATTERS, OTHER THAN AS SPECIFICALLY SET FORTH HEREIN.

ARTICLE 12.  REMEDIES AND LIMITATIONS OF LIABILITY

     12.1   Nortel shall have the right to suspend its performance, upon written
notice to Company, and forthwith remove and take possession of all Products that
shall have been delivered to Company, if, prior to payment to Nortel of any
amounts due pursuant to this Agreement with respect to such Products, Company
shall (i) become insolvent or bankrupt or cease, be unable, or admit in writing
its inability, to pay all debts as they mature, or make a general assignment for
the benefit of, or enter into any arrangement with, creditors; (ii) authorize,
apply for, or consent to the appointment of, a receiver, trustee, or liquidator
of all or a substantial part of its assets or have proceedings seeking such
appointment commenced against it which are not terminated within sixty (60) days
of such commencement; or (iii) file a voluntary petition under any bankruptcy or
insolvency law or under the reorganization or arrangement provisions of the
United States Bankruptcy Code or any similar law of any jurisdiction or have
proceedings under any such law instituted against it which are not terminated
within sixty (60) days of such commencement.

                                       26
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

     12.2  In the event of any material breach of this Agreement which shall
continue for thirty (30) or more days after written notice of such breach
(including a reasonably detailed statement of the nature of such breach) shall
have been given to the breaching party by the aggrieved party, the aggrieved
party shall be entitled at its option to avail itself of any and all remedies
available at law or equity, except as otherwise limited in this Agreement,
provided, however, that nothing contained in this Section 12.2 or elsewhere in
this Agreement shall make Nortel liable for any indirect, incidental, punitive,
special, or consequential damages of any nature whatsoever for any breach of
this Agreement whether the claims for such damages arise in tort (including
negligence regardless of degree of fault), contract, or otherwise.

     12.3  Nortel shall not be liable for any additional costs, expenses, losses
or damages resulting from errors, acts or omissions of Company, including, but
not limited to, inaccuracy, incompleteness or untimeliness in the provision of
information by Company to Nortel or fulfillment by Company of any of its
obligations under this Agreement.  Company shall pay Nortel the amount of any
such costs, expenses, losses or damage incurred by Nortel.

     12.4  Any action for breach of this Agreement or to enforce any right
hereunder shall be commenced within two (2) years after the cause of action
accrues or it shall be deemed waived and barred, except any action for
nonpayment by Company of any prices, charges, fees or other amounts payable
hereunder may be brought by Nortel at any time permitted by applicable law, and
Nortel may suspend performance of any of its obligations hereunder until all
such payments are made.

ARTICLE 13.  TERM AND TERMINATION

     13.1  This Agreement will be in effect from the Effective Date for a period
of three (3) years (the "Original Term").  Thereafter, this Agreement shall
automatically renew for one (1) year terms (each, a "Renewal Period" and
collectively and together with the Original Term, the "Term"), unless either
party provides the other party with written notice of its intent not to renew at
least sixty (60) days prior to the end of the Original Term or any Renewal
Period.

     13.2  Either party may delay performance under this Agreement or terminate
this Agreement, in whole or in part, in the event of a default by the other,
provided that the non-defaulting party so advises the defaulting party in
writing of the event of alleged default and the defaulting party does not remedy
the alleged default within thirty (30) days after written notice thereof.  If
the alleged default is not capable of being remedied within thirty (30) days,
the defaulting party must commence to remedy the alleged default within such
thirty (30) day period and provide to the non-defaulting party a plan for timely
remedying the alleged default in order to avoid termination.  A default shall
include:

                                       27
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

          (i)   a party's insolvency or initiation of bankruptcy or receivership
          proceedings by or against a party or the execution of an assignment
          for the benefit of creditors; or

          (ii)  either party's material breach of any of the terms or conditions
          hereof including the failure to make any payment when due.

     13.3 The expiration or termination of this Agreement for any cause shall
not release either party from:

          (i)   any obligations and duties remaining under any Order accepted by
          Nortel prior to such expiration or termination;

          (ii)  any liability which at the time of expiration or termination has
          already accrued to the other party, or, which thereafter may accrue in
          respect to any event prior to expiration or termination; or

          (iii) any liability from any obligation specified in Section 15.18
          below to survive expiration or termination.

ARTICLE 14.  CONFIDENTIALITY

     14.1  Each party which receives the other party's Confidential Information
shall use reasonable care to hold such Confidential Information in confidence
and not disclose such Confidential Information to anyone other than to its
employees and employees of a Nortel Affiliate, as applicable, with a need to
know. A party that receives the other party's Confidential Information shall not
reproduce such Confidential Information, except to the extent reasonably
required for the performance of its obligations pursuant to this Agreement and
in connection with any permitted use of such Confidential Information.

     14.2  Company shall take reasonable care to use Nortel's Confidential
Information only for study, operating, or maintenance purposes in connection
with Company's use of Products furnished by Nortel pursuant to this Agreement.

     14.3  Notwithstanding the foregoing, either party shall be free to use that
portion of the Confidential Information which may be retained in intangible form
by those employees who have had access to the Confidential Information, for any
purpose, including use in the development, manufacture, marketing and
maintenance of its products and services.  The marketing of any product or
service, including the dissemination of supporting documentation, which
inherently discloses the

                                       28
<PAGE>

disclosing party's Confidential Information shall not be deemed a breach by the
recipient of such obligations; provided however, that ownership of the
Confidential Information and all intellectual property rights to such
Confidential Information remain with the disclosing party.

     14.4  The obligations of either party pursuant to this Article 14 shall not
extend to any Confidential Information which a recipient can demonstrate through
written documentation was already known to the recipient prior to its disclosure
to the recipient and without confidential obligations was known or generally
available to the public at the time of disclosure to the recipient, becomes
known or generally available to the public (other than by act of the recipient)
subsequent to its disclosure to the recipient, is disclosed or made available in
writing to the recipient by a third party having a bona fide right to do so and
without similar confidentiality obligations, is independently developed by
recipient, or is required to be disclosed by subpoena or other process of law,
provided that the recipient shall notify the disclosing party promptly of any
such subpoena or other process of law requiring disclosure.

ARTICLE 15.  MISCELLANEOUS

     15.1   Publicity -  A party shall not release any advertising or other
            ---------
publicity relating to this Agreement or the contents hereof wherein such other
party may reasonably be identified without the prior written approval of the
other party.  In addition, each party shall take reasonable precautions to keep
the existence and the contents of this Agreement confidential so long as this
Agreement remains in effect and for a period of five (5) years thereafter,
except as may be otherwise expressly provided in this Agreement or as may be
reasonably required to enforce this Agreement by law.

     15.2   Applicable Law -  The validity, construction and performance of this
            --------------
Agreement shall be governed by and interpreted in accordance with the laws of
the State of Texas, except for its rules with regard to the conflict of laws.

     15.3   Effects of Headings -  All headings used herein are for index and
            -------------------
reference purposes only, and shall not be given any substantive effect.  This
Agreement has been created jointly by the parties and no rule of construction
requiring interpretation against the drafter of this Agreement shall apply in
its interpretation.

     15.4.1 Assignment -  Other than as explicitly stated below, neither party
            ----------
may assign or transfer this Agreement or any of its rights hereunder without the
prior written consent of the other party, such consent not to be unreasonably
withheld. A change in control of Company shall be deemed an assignment
hereunder. A change in control shall occur if ownership or control of more than
fifty percent (50%) of the shares of the Company entitled to elect the board of
directors changes during the Term of this Agreement. Company's consent shall not
be required for any assignment

                                       29
<PAGE>

or transfer by Nortel (i) to any Nortel Affiliate of all or any part of this
Agreement or of Nortel's rights hereunder; or (ii) to any third party of
Nortel's right to receive any monies ("Receivables") which may become due to
Nortel pursuant to this Agreement.

     15.4.2  Company hereby consents to the sale of Receivables by Nortel
without the necessity for any further notice and without any qualification on
such consent. Company grants permission for Nortel to disclose the provisions of
this Agreement to purchasers and prospective purchasers of Receivables, or their
affiliates and others with a present or prospective financial interest in such
Receivables, and their respective agents, attorneys, auditors, rating agencies
and other advisors.

     15.5    Subcontracting - Nortel may subcontract any of its obligations
             --------------
under this Agreement, but no such subcontract shall relieve Nortel of primary
responsibility for performance of its obligations.

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

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

     15.8    Force Majeure -  If the performance by a party of any of its
             -------------
obligations under this Agreement shall be interfered with by reason of any
circumstances beyond the reasonable control of that party, including without
limitation, fire, explosion, acts of God, war, revolution, civil commotion,
unavailability of supplies or sources of energy, power failure, breakdown of
machinery, delays regarding zoning, easements or deed restrictions, any legal
proceedings between third parties or labor difficulties, including without
limitation, strikes, slowdowns, picketing or boycotts, then that party shall be
excused from such performance for a period equal to the delay resulting from the
applicable circumstances and such additional period as may be reasonably
necessary to allow that party to resume its performance.  With respect to labor
difficulties as described above, a party shall not be obligated to accede to any
demands being made by employees or other personnel.

                                       30
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

     15.9    Taxes - Company shall at Nortel's direction promptly reimburse
             -----
Nortel or pay directly to the applicable government or taxing authority all
taxes and charges arising hereunder, including, without limitation, penalties
and interest, except for taxes computed upon the net income of Nortel. If
Company provides Nortel with a certificate of exemption for the applicable
taxes, in a timely manner, then Nortel shall not invoice Company for such taxes.

     15.10.1  Hazardous Materials - Prior to issuing any Order for Services to
              -------------------
be performed at Company's facilities, Company shall identify and notify Nortel
in writing of the existence of all Hazardous Materials which Nortel may
encounter during the performance of such Services, including without limitation,
any Hazardous Materials contained within any equipment to be removed by Nortel.

     15.10.2 If Company breaches its obligations pursuant to Section 15.10.1,
(i) Nortel may discontinue the performance of the applicable Services until all
the Hazardous Materials have been removed or abated to Nortel's satisfaction by
Company at Company's sole expense; and (ii) Company shall defend, indemnify and
hold Nortel harmless from any and all damages, claims, losses, liabilities and
expenses, including without limitation, attorney's fees, which arise out of
Company's breach of such obligations.

     15.11   Notice -  All notices required or permitted to be given hereunder
             ------
shall be in writing and shall be deemed given when delivered (i) by hand; or
(ii) by facsimile transmission (confirming the same by mail); or (iii) by
certified or next-day mail addressed as follows:

     If to Company:
              Community NetWorks, Inc.
              45-18 Court Square, Suite 502
              Long Island City, New York 11101
              Attention: Mr. Eric Roden, Chief Operating Officer
              Facsimile: (718) 706-9411

     If to Nortel:
              Northern Telecom Inc.
              2350 Lakeside Boulevard
              Richardson, Texas 75082-4399
              Attention: Senior Manager, Contracts Mgmt & Negotiations
              Facsimile: (972) 685-3284

Either party hereto may change its address by a notice given to the other party
hereto in the manner set forth above.

                                       31
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

     15.12   Information and Documentation - Company shall provide any
             -----------------------------
information and/or documentation that Nortel reasonably requests from Company
and that is necessary for Nortel to properly perform any of its obligations
hereunder. Such information shall be provided in a form reasonably specified by
Nortel by the dates specified by Nortel.

     15.13   Export -  Company shall not export any Products or technical data
             ------
received from Nortel pursuant to this Agreement, or release any such Products or
technical data with the knowledge or intent that such Products or technical data
will be exported or transmitted to any country or to foreign nationals of any
country, except in accordance with applicable U.S. laws and regulations
concerning exporting and with written consent of Nortel.  Company shall obtain
all government authorizations, in accordance with applicable law prior to
exporting or transmitting any such Products or technical data.

     15.14   Severability -  If any provision of this Agreement is declared or
             ------------
determined to be invalid or unenforceable under applicable law, the remaining
provisions shall continue in full force and effect and the parties shall
substitute for the invalid provision a valid provision which most closely
approximates the economic effect and intent of the invalid provision.

     15.15   Modification of Agreement -  No addition to or modification of this
             -------------------------
Agreement shall be effective or binding on either of the parties hereto unless
reduced to writing and executed by the respective duly authorized
representatives of each of the parties hereto.

     15.16   Regulatory Compliance -  In the event of any change in the
             ---------------------
Specifications or Nortel's manufacturing or delivery processes for any Products
as a result of the imposition of requirements by any government, Nortel may upon
notice to Company, increase its prices, charges and fees to cover the added
costs and expenses directly and indirectly incurred by Nortel as a result of
such change.

     15.17   Entire Agreement -  This Agreement, including the Exhibits and
Annexes which are attached hereto and incorporated herein, comprises all the
terms, conditions and agreements of the parties hereto with respect to the
subject matter hereof and supersedes all previous negotiations, proposals,
commitments, writings, publications and understandings of any nature whatsoever.
No Exhibits or Annexes modified or created subsequent to the execution of this
Agreement shall be deemed to be incorporated into this Agreement unless mutually
agreed in a writing and executed by a duly authorized representative of each
party. Company hereby acknowledges and agrees that it has not relied on any
representations or warranties other than those expressly set forth in this
Agreement.

     15.18  Survivorship -  Any terms of this Agreement, which by their nature
            ------------
are intended to

                                       32
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

survive, including but not limited to Articles 8, 10, 11, 12, 14 and 15 and
Sections 4.4, 9.3 and 13.3, shall survive the termination or expiration of this
Agreement.

                                       33
<PAGE>

                                                        Community NetWorks, Inc.
                                                                             MPA

IN WITNESS WHEREOF, the parties have executed this Agreement.

NORTHERN TELECOM INC.              COMMUNITY NETWORKS, INC.

By:___________________________     By:______________________________

     ILLEGIBLE                          ILLEGIBLE
Name:_________________________     Name:____________________________

Title:________________________     Title:___________________________

Date:_________________________     Date:____________________________

                                       34

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