LOAN AND SECURITY AGREEMENT

                             Dated December 18, 1996

                                 by and between

                      CRESCENT PUBLIC COMMUNICATIONS INC.,
                                  as Borrower,

                                       and

                          SOUTHBRIDGE FINANCIAL CORP.,
                                    as Lender




<PAGE>



                           LOAN AND SECURITY AGREEMENT



         AGREEMENT,  dated  as  of  ,  1996,  by  and  between  CRESCENT  PUBLIC
COMMUNICATIONS INC., a New York corporation  ("Borrower"),  having its principal
place of  business at 7  Mayflower  Place,  Floral  Park,  New York  11001;  and
SOUTHBRIDGE  FINANCIAL  CORP.,  a Delaware  corporation  ("Lender"),  having its
principal place of business at 400 Madison Avenue, New York, New York 10017.

                              W I T N E S S E T H :

         WHEREAS,  Borrower has requested  Lender to make a loan to Borrower and
Lender is willing to make such loan to  Borrower  upon the terms and  conditions
hereinafter set forth.

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


                      ARTICLE 1. DEFINITIONS; CONSTRUCTION

         1.1  Certain Definitions.

         In  addition  to  other  words  and  terms  defined  elsewhere  in this
Agreement,  as used  herein the  following  words and terms  have the  following
meanings, respectively, unless the context hereof otherwise clearly requires:

         "Agreement" means this Loan and Security Agreement as amended, modified
or supplemented from time to time.

         "Assignment  Agreement"  means the  Assignment  Agreement,  in form and
substance  satisfactory  to Lender,  executed  by  Borrower,  pursuant  to which
Borrower  assigns to Lender and grants to Lender a Lien  covering all of the Pay
Telephone Placement Agreements.

         "Billing  and  Related  Services  Agreement"  means (i) the Billing and
Related  Services  Agreement  between OAN  Services,  Inc. (the "B&C Agent") and
American Network Exchange, Inc. dated February 1, 1995 with respect to which the
B&C Agent will  arrange  for  accounts  receivable  financing  and will  provide
certain  billing,  collection  and  associated  services  or  (ii)  any  similar
agreement now or hereafter in effect in place of such  agreement with respect to
the Collateral.

         "Business Day" means any day other than a Saturday, Sunday or other day
on which banking  institutions are authorized or obligated to close in New York,
New Jersey, Florida or Arizona.

         "Closing Date" means the date of this Agreement.


<PAGE>



         "Collateral" means all assets of Borrower in which Borrower has granted
or will  grant a Lien to  Lender,  pursuant  to  this  Agreement  or  otherwise,
including those assets described and defined as Collateral in Section 6.1.

         "Collection  Agreement" means (i) Collection  Agreement among Borrower,
Reliance Trust Company ("Agent"), and American Network Exchange, Inc. and Lender
dated December 18, 1996 pursuant to which,  among other things,  Agent agrees to
remit directly to Lender,  via wire transfer of funds,  the monthly payments and
all other amounts due under the Loan Documents;  and (ii) any similar  agreement
with respect to the Loan now or hereafter  entered into among Borrower,  Lender,
American  Network  Exchange Inc. and any other agent,  in all cases, as the same
have  heretofore  or may from time to time  hereafter  be  amended,  modified or
supplemented.

         "Constituent   Documents"  means  the  certificate  of   incorporation,
by-laws,  or other  similar  document  pursuant  to which  Borrower  and/or  the
Guarantor were organized or their affairs are governed.

         "Default"  means an event which with notice or lapse of time,  or both,
would constitute an Event of Default.

         "Equipment"  means  the Pay  Telephones  and any  equipment  physically
connected  to or  installed  in or  with  the  Pay  Telephones,  and any and all
accessions and additions thereto,  substitutions  therefor, and all replacements
thereof.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "Event of Default" means any of the Events of Default described in 
Section 7.1 hereof.

         "Executive  Officer" means the President,  the Chief Executive Officer,
or the Chief Financial Officer of Borrower elected from time to time.

         "GAAP" means  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  Borrower's  and/or
Guarantor's  independent  certified public accountants concur),  applied both to
classification of items and amounts.

         "Guarantor" means AMNEX, Inc., a New York corporation.

         "Guaranty"  means the  unconditional  Guaranty  of the  Obligations  of
Borrower  to  Lender,   executed  by  the  Guarantor,   in  form  and  substance
satisfactory to Lender.

         "Interest  Rate"  means the Index Rate plus five and eighty  hundredths
percent  (5.80%).  The "Index Rate" shall be the highest yield,  as published in
The Wall Street  Journal,  on the first (lst) Business Day preceding the Closing
Date,  for Treasury  Notes having a maturity  date on or closest to the Maturity
Date. Interest shall be calculated on the basis of a year of 360 days and twelve
months of thirty (30) days each and charged on a daily basis.


<PAGE>



         "'Law" means any law  (including  common law),  constitution,  statute,
treaty, regulation, rule, ordinance, order, injunction, writ, decree or award of
any government or governmental agency.

         "Legal Requirements" means any and all present and future judicial, and
administrative rulings or decisions, and any and all present and future federal,
state, and local laws, ordinances, rules, regulations, permits and certificates,
in each case, in any way  applicable to Borrower (or the ownership or use of the
Collateral or its other assets) and/or the Guarantor, or this transaction.

         "Lien" means any mortgage,  pledge,  lien, security interest (including
without  limitation any conditional  sale or other title  retention  agreement),
grant of a leasehold,  charge or other encumbrance of any nature whatsoever, and
also means the filing of or the  agreement  to give any  financing  statement or
analogous document under the UCC or analogous law of any jurisdiction.

         "Loan" has the meaning given to such term in Section 2.1 hereof.

         "Loan  Documents"  means this  Agreement,  the Note, the Guaranty,  the
Assignment Agreement,  the Insurance Letter, the Collection  Agreement,  and any
other  agreements,  instruments  and  documents  required  to be, or which  are,
executed by Borrower or the Guarantor in connection  with this  Agreement or the
Loan (as the same may from time to time be amended, modified or supplemented).

         "Maturity Date" has the meaning given to that term in Section 2.7.2
hereof.

         "Note" means the promissory note of Borrower  executed and delivered by
Borrower  under this  Agreement,  in  substantially  the form annexed  hereto as
Exhibit A with the blanks appropriately filled in.

         "Obligations"   means  all  of  the   indebtedness,   liabilities   and
obligations of every kind and nature of Borrower to Lender, whether now existing
or hereafter arising, whether or not currently contemplated,  howsoever arising,
including,  without  limitation,  all indebtedness,  liabilities and obligations
arising under, in connection with or evidenced by this Agreement,  the Note, the
other Loan Documents, or otherwise.

         "Office", when used in connection with Lender, means its office located
at 400 Madison Avenue,  New York 10017, or such other office of Lender as may be
designated in writing from time to time by Lender to Borrower.

         "Pay Telephones"  means the pay telephones listed on Schedule A annexed
hereto and any and all accessions and additions thereto,  substitutions for, and
all replacements thereof.

         "Pay  Telephone  Placement  Agreement(s)"  means each of the written or
oral  agreements now or hereafter  entered into (as the same have  heretofore or
may from time to time hereafter be amended,  modified or  supplemented)  between
Borrower and the owner,  operator,  lessee or  proprietor  of the Premises  upon
which one or more Pay Telephones is now or hereafter located.



<PAGE>



         "Person"   means   an   individual,   corporation,   national   banking
association,  partnership,  trust,  unincorporated  association,  joint venture,
joint-stock company, government (including political subdivisions), governmental
authority or agency, or any other entity.

         "Plan"  means any  employee  benefit plan which is covered by ERISA and
which is maintained by Borrower or, in the case of a plan to which more than one
employer  contributes,  to which Borrower is making or accruing an obligation to
make   contributions   or  has  within  the  preceding   five  plan  years  made
contributions.

         "Premises" means the locations at which Pay Telephones are now or 
hereafter located.

         "Term" means the period beginning on the Disbursement Date and ending 
on the Maturity Date.

         "UCC" means the Uniform Commercial Code as adopted in the State of New
York.

         1.2  General Interpretive Principals.

         For purposes of this Agreement,  except as otherwise expressly provided
herein or unless the context otherwise requires:

                  (i)  any pronoun used shall be deemed to cover both gender 
forms as well as the neuter form;

                  (ii)  all references to the plural shall include the singular,
the singular the plural and the part the whole;

                  (iii)  the word "or" has the inclusive meaning frequently 
identified by the phrase "and/or";

                  (iv)  accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;

                  (v) the words  "herein",  "hereunder" and "hereof" and similar
terms  in this  Agreement  refer  to this  Agreement  as a whole  and not to any
particular provision of this Agreement;

                  (vi)    references    herein   to   "Articles",    "Sections",
"Subsections",  "Paragraphs",  and other  subdivisions  without  reference  to a
document are to designated Articles, Sections, Subsections, Paragraphs and other
subdivisions of this Agreement;

                  (vii) a reference to a Subsection without further reference to
a Section is a reference to such  Subsection as contained in the same Section in
which the reference  appears,  and this rule shall also apply to Paragraphs  and
other subdivisions;

                  (viii)  the term "include" or "including" shall mean, without
limitation, by reason of enumeration; and


<PAGE>


                  (ix) unless otherwise  provided herein, the term "satisfactory
to Lender" or "satisfaction of the Lender" or "satisfaction to counsel" or other
similar  terms  means  satisfactory  to  Lender or its  counsel  in its sole and
absolute discretion.


                              ARTICLE 2. THE CREDIT


         2.1  The Loan.

         Subject   to  the   terms  and   conditions   and   relying   upon  the
representations and warranties herein set forth, Lender agrees to make a Loan to
Borrower in the  principal  amount of Five  Million  Dollars  ($5,000,000)  (the
"Loan")

         2.2  Use of Proceeds.

         The  proceeds  of the  Loan  shall  be used by  Borrower  to  reimburse
Borrower for its payment of a portion of the purchase Price for the  acquisition
of the Equipment and for working  capital and other valid  business  purposes of
Borrower.

         2.3  The Note.

         The  obligation  of  Borrower  to repay  the  Loan and to pay  interest
thereon shall be evidenced by the Note. The Note shall be dated the Closing Date
and shall be executed by Borrower and delivered to Lender on the Closing Date.

         2.4  Disbursement.

         Subject  to the  conditions  set forth  herein,  Lender  shall,  on the
Closing Date, credit, by wire transfer, the amount of the Loan to the account of
Borrower or the Person or Persons specified in writing by Borrower.

         2.5  Loan Account.

         Lender  shall  maintain  a loan  account  on its  books  in the name of
Borrower  for the Loan in which  will be  recorded  all  payments  of  principal
thereof and all accruals and  payments of interest  thereon.  The entries in the
loan account (in the absence of manifest  error in the making  thereof) shall be
conclusive  evidence of the outstanding  principal  thereof and accrued interest
thereon from time to time. Lender shall provide Borrower with statements of said
account from time to time on Borrower's request.





<PAGE>

         2.6  Interest Rates.

                  2.6.1  Interest Prior to Maturity.  Prior to maturity (whether
by acceleration or otherwise) the unpaid principal amount of the Loan shall bear
interest at the Interest Rate.

                  2.6.2 Interest After  Maturity.  Commencing with the day after
the  principal  amount of any part of the Loan shall have become due and payable
(by acceleration or otherwise), such part of the Loan or the entire Loan (as the
case may be) shall bear  interest  at the daily rate of three  percent  (3%) per
annum above the Interest Rate (the "Default Rate").

                  2.6.3  Maximum  Rate.  Lender  and  Borrower  intend  the Loan
Documents  to  comply  in all  respects  with all  provisions  of Law and not to
violate, in any way, any legal limitations on interest charges. Accordingly, if,
for any reason,  Borrower is required to pay, or has paid, interest at a rate in
excess of the highest  rate of interest  which may be charged by Lender or which
Borrower may legally  contract to pay under applicable law (the "Maximum Rate"),
then the  Interest  Rate  shall  be  deemed  to be  reduced,  automatically  and
immediately,  to the Maximum  Rate,  and  interest  payable  hereunder  shall be
computed and paid at the Maximum  Rate and the portion of all prior  payments of
interest in excess of the Maximum Rate shall be deemed to have been  prepayments
of the outstanding  principal of the Loan and applied to the installments in the
inverse order of their maturities.

         2.7  Payments.

                  2.7.1 Time; Place;  Manner. All payments to be made in respect
of principal,  interest,  or other amounts due from Borrower  hereunder or under
the Note  shall  become due at 5:00  P.M.,  New York  time,  on the day when due
without  presentment,  demand,  protest or notice of any kind,  all of which are
hereby expressly  waived.  Such payments shall be made to Lender in lawful money
of the United States of America in immediately available funds.

                  2.7.2 Payments of Principal and Interest.  The Loan,  together
with interest  thereon at the Interest Rate, shall be repaid in sixty (60) equal
consecutive  monthly  payments of principal and interest each in an amount which
will fully  amortize the Loan at the Interest  Rate over the Term (the date upon
which the sixtieth (60th) consecutive  monthly payment of principal and interest
is scheduled to be due is hereinafter  referred to as the "Maturity Date").  The
first such monthly payment of principal and interest shall be due and payable on
the first day of the second month  succeeding  the Closing Date and the payments
shall  continue  on a like day in each and every  month  thereafter  through and
including the Maturity Date;  provided that (i) if the Closing Date is the first
day of a month,  the first such monthly  payment of principal and interest shall
be due on the first day of the  immediately  succeeding  month,  and (ii) if the
Closing Date is not the first day of the month, Borrower shall pay, on the first
day of the month immediately  succeeding the Closing Date, interest only, at the
Interest  Rate,  from the Closing Date to the last day of the month in which the
Closing Date occurs.  Lender shall compute the amount of each payment and advise
Borrower of such amount.  Each monthly payment shall be applied,  first to fees,
costs and  charges,  if any,  owing to Lender,  then to  interest  as may be due
hereunder,  and the balance of such  payment  shall be applied to the  principal
balance of the Loan. The entire unpaid  principal  balance which was not payable
earlier, whether due to regularly scheduled payments, acceleration or otherwise,
together  with any unpaid  interest,  fees,  costs and charges  shall be due and
payable on the Maturity Date. After the


<PAGE>



maturity of all or any part of the Loan (by acceleration or otherwise), interest
on the Loan or such part thereof shall be due and payable at the Default Rate on
demand.

                  2.7.3 Net Payments.  All payments hereunder and under the Note
shall  be  made by  Borrower  to  Lender  without  defense,  set-off,  claim  or
counterclaim  and without  deduction for any present or future income,  stamp or
other taxes, levies,  imposts,  deductions,  charges or withholdings  whatsoever
imposed, assessed, levied or collected by or for the benefit of any jurisdiction
or taxing authority. In addition, Borrower shall pay any and all taxes (stamp or
otherwise) if any,  payable or  determined to be payable in connection  with the
execution and delivery of this Agreement,  the Note and the other Loan Documents
and on all payments to be made by Borrower  hereunder and under the Note and the
other Loan Documents (other than Lender's income taxes) and all taxes payable in
connection with or related to the Collateral.

         2.8  Prepayments  Subject to Section 5.2.1 hereof,  Borrower  shall not
prepay the Loan in whole or in part.

                    ARTICLE 3. REPRESENTATIONS AND WARRANTIES

         Borrower represents and warrants to Lender that:

         3.1  Organization and Qualification.

         Borrower is duly organized,  validly existing and in good standing as a
corporation  under  the Laws of the  State  of New  York  with  full  power  and
authority to own its  properties  and to transact its business as now transacted
and as contemplated to be transacted. Borrower is qualified and in good standing
to transact business in each jurisdiction  where the ownership of its properties
or the transaction of its business requires such qualification. The Guarantor is
duly organized, validly existing and in good standing as a corporation under the
Laws of the State of its incorporation  with full power and authority to own its
properties and to transact its business as now transacted and as contemplated to
be  transacted.  The  Guarantor  is qualified  and in good  standing to transact
business in each  jurisdiction  where the  ownership  of its  properties  or the
transaction of its business requires such qualification.

         3.2  Authority and Authorization.

         Borrower has full power and authority to execute, deliver and carry out
the provisions of this Agreement, the Note and the other Loan Documents to which
it is a party,  to borrow  hereunder  and under the other Loan  Documents and to
create the Liens provided for herein,  and to perform its obligations  hereunder
and thereunder,  and all such action has been duly and validly authorized by all
necessary proceedings on its part. The Guarantor has full power and authority to
execute, deliver and carry out the provisions of the Guaranty and the other Loan
Documents to which it is a party and to perform its obligations thereunder,  and
all  such  action  has  been  duly  and  validly  authorized  by  all  necessary
proceedings on its part.



<PAGE>

         3.3  Execution and-Binding Effect.


         This  Agreement,  the Note and the other Loan  Documents have been duly
and validly  executed and delivered by Borrower and constitute the legal,  valid
and  binding  obligation  of  Borrower  enforceable  in  accordance  with  their
respective  terms.  The  Guaranty and the other Loan  Documents  executed by the
Guarantor have been duly and validly executed and delivered by the Guarantor and
each  constitutes  the legal,  valid and  binding  obligation  of the  Guarantor
executing the same, enforceable in accordance with their respective terms.

         3.4  Authorizations and Filings.

         Except for the filing of UCC financing  statements,  no  authorization,
consent,  approval,  license, exemption or other action by, and no registration,
qualification,   designation,  declaration  or  filing  with,  any  governmental
authority is or will be necessary or advisable in connection  with the execution
and delivery of this Agreement, the Note, the Guaranty, the other Loan Documents
or the consummation by Borrower and the Guarantor of the transactions herein and
therein  contemplated,  or  performance  by  Borrower  and the  Guarantor  of or
compliance by Borrower and the Guarantor  with, the terms and conditions  hereof
or thereof.

         3.5  Absence of Conflicts.

         Neither the execution  and delivery of this  Agreement,  the Note,  the
Guaranty  or the other Loan  Documents,  nor  consummation  of the  transactions
herein or therein  contemplated nor performance of, or compliance with the terms
and  conditions  hereof or thereof will (a) result in any violation or breach of
(i) the provisions of Borrower's or the Guarantor's  Constituent  Documents,  or
(ii) any Law,  or the order,  rule or  regulation  of any court or  governmental
agency or body having  jurisdiction  over Borrower or the  Guarantor,  or any of
their respective properties,  or (iii) any agreement,  bond, note, instrument or
indenture to which Borrower or the Guarantor is a party or pursuant to which any
of their  respective  properties are affected,  or (b) result in the creation or
imposition  of any Lien upon any property  (now owned or hereafter  acquired) of
Borrower or the Guarantor, except for the Lien created by this Agreement.

         3.6  Financial Statements.

         Borrower and the Guarantor have heretofore  furnished to Lender certain
financial statements and related financial information ("Financial Statements").
Such  Financial  Statements  (including  the notes  thereto)  present fairly the
financial  condition of Borrower or the Guarantor (as the case may be) as of the
dates  of the  balance  sheets  contained  therein,  and the  results  of  their
respective operations for the periods then ended, all in conformity with GAAP on
a basis  consistent with that of Financial  Statements for  corresponding  prior
periods. Except as disclosed therein, neither Borrower nor the Guarantor has any
material  contingent  liabilities  (including  liabilities  for taxes),  unusual
forward or  long-term  commitments  or  unrealized  or  anticipated  losses from
unfavorable commitments.

         3.7  No Defaults.

         There is no Default under the Loan Documents.


<PAGE>



         3.8  Litigation.

         There is no  pending  or,  to the  best of  Borrower's  or  Guarantor's
knowledge, threatened claim or proceeding by or before any court or governmental
agency  against or  affecting  Borrower or the  Guarantor  which,  if  adversely
decided  would have a material  adverse  effect on the  business,  operations or
financial  condition of Borrower or the  Guarantor or on the ability of Borrower
or the Guarantor to perform their respective  obligations  under this Agreement,
the Note, the Guaranty or the other Loan Documents or on the Collateral.

         3.9  Title to Collateral.

         Borrower has good title to the Collateral,  free and clear of all liens
covering  the  Collateral,  other  than the Liens  granted  hereunder  to Lender
covering  the  Collateral,  which are and will at all  times be first  perfected
Liens covering the Collateral. Borrower has good title to, or valid leasehold or
license  interests  in, all assets  reasonably  required  for the conduct of its
business.

         3.10  Taxes.

         All tax returns  required to be filed by  Borrower  have been  properly
prepared,   executed  and  filed.  All  taxes,   assessments,   fees  and  other
governmental charges upon Borrower or upon any of its properties, incomes, sales
or  franchises  which are due and payable have been paid except for those which,
in the  aggregate  do not  have  a  material  adverse  effect  on the  business,
operations or financial  condition of Borrower or Guarantor taken as a whole, or
on the Collateral. Notwithstanding the foregoing, all personal property taxes on
the Collateral, if any, have been paid.

         3.11  Financial Accounting Practices.

         Borrower  makes  and  keeps  books,  records  and  accounts  which,  in
reasonable  detail,  accurately and fairly reflect  Borrower's  transactions and
dispositions of its assets.

         3.12  Power To Carry On Business.

         Borrower and the Guarantor  have all  requisite  power and authority to
own and operate their respective  properties and to carry on their businesses as
now conducted and as presently planned to be conducted.

         3.13  No Material Adverse Change.

         Since the date of the Financial  Statements referred to in Section 3.6,
there  has been no  material  adverse  change  in the  business,  operations  or
financial condition of Borrower or the Guarantor.

         3.14  Compliance with Laws.

         Neither Borrower nor the Guarantor is in violation of any Law, except 
for violations which


<PAGE>



in the  aggregate  do not  have  a  material  adverse  effect  on the  business,
operations or financial  condition of Borrower or the Guarantor taken as a whole
or on the Collateral.

         3.15  Compliance with Agreements.

         Neither  Borrower nor the Guarantor is in default under any  agreement,
bond, note, indenture or contract, except for defaults which in the aggregate do
not have a material  adverse  effect on the  business,  operation  or  financial
condition of Borrower or the Guarantor taken as a whole or on the Collateral.

         3.16  Accurate and Complete Disclosure.

         No representation or warranty made by Borrower in this Agreement and no
statement  made  by  Borrower  or  the  Guarantor  in the  Financial  Statements
furnished  pursuant  to Section  3.6 hereof or  otherwise,  or any  certificate,
report,  exhibit or document  furnished  by Borrower or the  Guarantor to Lender
pursuant  to or in  connection  with  this  Agreement  or the  Loan is  false or
misleading  in  any  material   respect   (including  by  omission  of  material
information  necessary to make such  representation,  warranty or statement  not
misleading).

         3.17  Regulations G and U.

         Borrower is not engaged in the  business  of  extending  credit for the
purpose  of  purchasing  or  carrying  "margin  stock",  as such term is used in
Regulations G or U promulgated by the Board of Governors of the Federal  Reserve
System as amended  from time to time No part of the proceeds of the Loan will be
used to purchase or carry any margin stock or to extend credit to others for the
purpose of purchasing or carrying any "margin stock".  Borrower does not own any
"margin stock".

         3.18  Perfection.

         Except for the filings  under Article 9 of the UCC specified in Section
4.7 hereof  (and  continuation  statements  at periodic  intervals),  no further
filing or recording  is  necessary  under the UCC or under any other Laws of any
jurisdiction,  in order to perfect in all applicable  jurisdictions the Liens of
Lender in the  Collateral.  Upon such  filings,  Lender  will be granted a first
perfected  Lien covering the  Collateral.  There are no other Liens covering the
Collateral.

         3.19  Place of Business.

         Both the place of business (or chief executive  office if there is more
than one  place of  business)  of  Borrower  and the  place  where it keeps  its
corporate  records  concerning the Collateral and all of its interest in, to and
under this  Agreement  are located at (i) the address set forth at the beginning
of this Agreement,  (ii) c/o Guarantor at 101 Park Avenue, Suite 2507, New York,
New York 10178; and (iii) 1675 Highway 34, Farmingdale, New Jersey 07727.





<PAGE>

         3.20  Location of Collateral.

         For all purposes, including, without limitation, perfection of security
interests  therein under Article 9 of the UCC, the  Collateral is deemed located
and at all times shall be located at the Premises.

         3.21 Pay Telephone Placement Agreements.

                  (a)  Borrower  has  delivered  to  Lender  true,  correct  and
complete copies of all written Pay Telephone Placement  Agreements.  None of the
Pay Telephone Placement  Agreements have been modified,  amended or supplemented
since the date of delivery to Lender,  and each is in full force and effect.  No
more than [10%] of the Pay Telephone Placement  Agreements are oral and the oral
agreements are on terms substantially  similar to those contained in the written
agreements.  Borrower, and to the best of Borrower's knowledge,  the other party
to each  Pay  Telephone  Placement  Agreement  is in full  compliance  with  the
material terms of each of the Pay Telephone Placement Agreements.

                  (b)  Not  less  than  95% of the  Pay  Telephones  are ln good
operating  order.  All Pay  Telephones  are  installed  at Premises  the owners,
operators,  lessees or  proprietors  of which have  entered  into Pay  Telephone
Placement  Agreements (i) with Coastal Telecom Payphone Company,  Inc., BEK Tel,
Inc., or Garden State  Telephone  Installation & Service Co.,  Inc.,  which have
duly assigned all of their right, title and interest therein to Borrower or (ii)
directly with Borrower.

                  (c) All of the Pay Telephone  Placement  Agreements are freely
assignable and Liens may be granted with respect thereto, without the consent of
the owner,  operator,  lessee or proprietor of the Premises  which is a party to
such Pay Telephone Placement Agreement.

                  (d) Not less than ninety  percent  (90%) of the Pay  Telephone
Placement  Agreements  have a  remaining  term  of at  least  one (1)  year  and
approximately  1800 of the Pay  Telephones  have been upgraded to include either
(i) Elcotel  Number 5 Board  Technology  or (ii) Protel,  Intellical,  or Ernest
Board  Technology  of  substantially   equivalent  quality  to  Number  5  Board
Technology  and the  balance of the Pay  Telephones  will be upgraded to include
such Technology within six (6) months after the date hereof.

         3.22 Billing and Related Services Agreement.

         Borrower has  delivered to Lender a true,  correct and complete copy of
the Billing and Related  Services  Agreement.  The Billing and Related  Services
Agreement  has not been  amended,  modified  or  supplemented  since the date of
delivery thereof to Lender,  and is in full force and effect.  Borrower,  and to
the best of Borrower's  knowledge,  all other parties to the Billing and related
Services  Agreement are in full  compliance  with the material terms thereof and
there are no material defaults thereunder.

                        ARTICLE 4. CONDITIONS OF LENDING

         The  obligation of Lender to make the Loan  hereunder is subject to the
accuracy in all material respects, as of the date hereof, of the representations
and warranties herein contained, to the


<PAGE>



performance  by Borrower of its  obligations  to be  performed  hereunder  on or
before  the  Closing  Date  and to the  satisfaction  of the  following  further
conditions. If all conditions contained herein are not satisfied by December 31,
1996, Lender shall have no obligation whatsoever to make the Loan and shall have
no liability for its refusal to do so.

         4.1  Corporate Action.

         On the Closing Date,  Borrower shall deliver to Lender a certificate in
form and substance  satisfactory to Lender,  dated the Closing Date, signed by a
duly  authorized  officer of Borrower,  certifying  as to (a) true copies of the
Constituent  Documents of Borrower and the  Guarantor,  all as in effect on such
date, (b) true copies of all action taken by Borrower and the Guarantor relative
to this  Agreement,  the Note and the other Loan  Documents,  and (c) the names,
true  signatures  and  incumbency of the officer or officers of Borrower and the
Guarantor  authorized  to execute and deliver this  Agreement,  the Note and the
other Loan  Documents  on behalf of Borrower and the  Guarantor  (and Lender may
conclusively  rely on such  certificate  unless  and  until a later  certificate
revising the prior  certificate  has been  furnished to Lender).  Borrower shall
also deliver to Lender good standing certificates for Borrower and the Guarantor
issued by the Secretary of State of its State of incorporation and each state in
which it is required by Law to be qualified.

         4.2  Opinion of Counsel.

         On the Closing  Date,  Lender shall have  received a favorable  written
opinion of counsel for Borrower and the Guarantor, dated the Closing Date and in
form and substance satisfactory to Lender and its counsel, Winick & Rich, P.C.

         4.3  No Change of Law or Facts.

         No  change  shall  have  occurred  in  applicable  Law  or  regulations
thereunder or  interpretations  thereof by  appropriate  regulatory  authorities
which, in the opinion of Lender or its counsel, would make it illegal for Lender
to acquire the Note, make the Loan, or otherwise to participate in the Loan, nor
shall any facts  come to the  attention  of  Lender,  concerning  Borrower,  its
business or financial  condition  which, in the opinion of Lender would increase
the risk to Lender of repayment of the Loan by Borrower.

         4.4  Documents.

         The following  documents shall have been duly authorized,  executed and
delivered  by the  respective  party or  parties  thereto,  shall be in form and
substance  satisfactory to Lender and its counsel and shall be in full force and
effect on the Closing Date,  and an executed  counterpart  of each thereof shall
have been delivered to Lender and its counsel:

                  4.4.1 this Agreement;

                  4.4.2 the Note;


<PAGE>



                  4.4.3 the Guaranty;

                  4.4.4 the Assignment Agreement;

                  4.4.5 the Collection Agreement;

                  4.4.6 insurance certificates or policies of insurance 
                        evidencing the coverages required by Section 5.3 hereof;

                  4.4.7 other Loan Documents, if any.

         4.5 Collateral. Borrower shall provide to Lender a complete description
of the Collateral, together with evidence, in form and substance satisfactory to
Lender in its sole discretion, that Borrower owns legal title to the Collateral,
free and clear of all Liens.

         4.6  Financing Statements.

         On the Closing  Date,  UCC financing  statements  covering the security
interest  created  by this  Agreement  in the  Collateral  shall  have been duly
executed in form  suitable for filing in the office of the Secretary of State of
the State  where the  Collateral  is  located  (i.e.  New York,  New  Jersey and
Pennsylvania)  and in all other  places as, in the  opinion  of  Lender,  or its
counsel, are necessary or desirable to perfect such Liens.

         4.7  Licenses and Permits.

         All appropriate  action shall have been taken prior to the Closing Date
in order to permit  consummation  of the  transactions  contemplated  herein and
hereby and  enforcement of all of the terms hereof,  and all licenses,  permits,
waivers,   exemptions,   authorizations  and  approvals  required  (or,  in  the
reasonable  opinion of Lender or its counsel,  advisable) to be in effect on the
Closing  Date  shall  have been  issued and shall be in full force and effect on
such date, and copies thereof shall have been delivered to Lender.

         4.8  Agreements.  Borrower  shall  have  delivered  to Lender  true and
correct copies of the written Pay Telephone Placement Agreements and the Billing
and Related Services Agreement.

         4.9  Other Matters.

                  4.9.1  Lender  shall  have  received  all  other   agreements,
instruments,  financing statements,  certificates,  waivers, searches, releases,
terminations,  reports,  confirmations,   corporate  or  other  action,  opinion
letters,  copies of acquisition  documents,  evidence of payment of obligations,
evidence of ownership of the  Collateral  and such other  documents as Lender or
its  counsel  shall  have  reasonably  requested  (each  in form  and  substance
satisfactory  to  Lender  and  its  counsel),   including,  without  limitation,
certificates of  incorporation  and by-laws,  UCC-l financing  statements,  lien
waivers,  credit  references,   consents,   approvals,   authorization  to  date
documents, casualty and liability insurance policies and endorsements related to
such insurance, and certificates, appraisals and financial statements and other
financial information.


<PAGE>





                  4.9.2  There shall be no Default hereunder or under the other
Loan Documents.

                  4.9.3  All legal matters incident to the Loan shall be 
satisfactory to Lender and its counsel.

                              ARTICLE 5. COVENANTS

         Borrower  covenants  that  from and  after  the date  hereof  and until
payment in full of the Note and interest  thereon and all other amounts due from
Borrower hereunder or under the Note or the other Loan Documents,  unless Lender
shall otherwise consent in writing:

         5.1  Reporting and Information Requirements.

                  5.1.1 Financial Statements.  Borrower shall cause Guarantor to
deliver  its Form  10-K and Forms  10-Q (or the  equivalent)  to Lender  and any
assignee  throughout  the  term of the  Agreement,  in no event  later  than one
hundred  twenty (120) days after the end of its fiscal year, in the case of such
Form 10-K or ninety (90) days after the end of its fiscal  quarter,  in the case
of each Form 10-Q,  and in each case,  together with a Certificate  of the Chief
Financial  Officer or other appropriate  officer of Guarantor  demonstrating and
certifying  compliance  with the  covenant  set forth in  paragraph  8(c) of the
Guaranty.  Borrower shall at the same time deliver a consolidating  statement of
income, retained earnings and changes in financial position of Borrower for such
fiscal  period  certified  by the Chief  Executive  Officer  of  Borrower  or an
independent certified public accountant.

                  5.1.2 Quarterly Pay Telephone  Reports.  Within fortyfive (45)
days after the end of each fiscal quarter  commencing  March 31, 1997,  Borrower
shall  furnish to Lender a written  report  certified by an  Executive  Officer,
which shall include, as of the last day of such fiscal quarter, the following on
a per Telephone  basis, in form reasonably  satisfactory to Lender:  (a) reports
with respect to revenue  generated by the Pay Telephones due to coin calls;  (b)
reports with respect to non-coin  calls  generated  by the Pay  Telephones;  (c)
reports with respect to expenses  incurred in connection with the Pay Telephones
due to (i) commissions payable to site owners, and (ii) line charges;  and (d) a
listing  of the  locations  of the Pay  Telephones,  indicating  which have been
relocated,  if any;  and (e) such  other  information  with  respect  to the Pay
Telephones  and Pay Telephone  Placement  Agreements as Lender shall  reasonably
request.

                  5.1.3  Further  Requests.  Borrower  will furnish to Lender as
soon as reasonably  practicable such other information  (financial or otherwise)
concerning  Borrower,  its assets or the  Collateral  in such form as Lender may
reasonably request.

                  5.1.4  Compliance  Certificates.  At the  same  time  Borrower
delivers the  financial  statements  required  under the  provisions  of Section
5.1.1, Borrower shall furnish to Lender a certificate of an Executive Officer to
the effect-that to the best of such officer's knowledge,  no Default or Event of
Default  exists,  or, if such cannot be so  certified,  specifying in reasonable
detail the exceptions, if any, to such statement.


<PAGE>



                  5.1.5  Monthly  Certificate.   Monthly,  not  later  than  the
twentieth  (20th) day of each  month,  Borrower  shall  furnish,  or cause to be
furnished,  to Lender a certificate of an Executive Officer,  in form reasonably
satisfactory to Lender,  certifying and setting forth, as of the last day of the
immediately  preceding  month,  the  following:  (a) the  reports  specified  in
Sections  5.1.2(a),  (b) and (c),  providing  the  information  included in such
reports  for up to twelve  months  prior to such  immediately  preceding  month,
commencing  with  information  for the month of January  1997 and  later;  (b) a
certification  that (i) no less than ninety  percent (90%) of the Pay Telephones
are  subject  to  Pay  Telephone  Placement  Agreements,  at  least  90%  of the
agreements are written agreements and, to the best of Borrower's knowledge, each
such agreement is enforceable in accordance  with its terms and no party thereto
is in  material  default  of the term;  thereof,  or,  if the same  cannot be so
certified,  the reasons for the same and (ii)  ninety  percent  (90%) of all Pay
Telephones are in working order.

                  5.1.6 Notice of Material  Proceedings.  Promptly upon becoming
aware thereof  Borrower shall give Lender  written  notice of the  commencement,
existence or threat of any  proceeding by or before any court or  administrative
agency against or affecting Borrower,  the Guarantor or the Collateral which, if
adversely  decided,  would  have a  material  adverse  effect  on the  business,
operations or financial condition of Borrower or the Guarantor or on the ability
of Borrower or the Guarantor to perform its  obligations  under this  Agreement,
the Note, or the other Loan Documents or on the Collateral.

                  5.1.7 Visitation. Borrower shall permit such persons as Lender
may designate to visit and inspect the  Collateral  and to examine the books and
records of Borrower and take copies and extracts  therefrom,  and to discuss its
affairs  with  officers of Borrower  and its  independent  accountants,  at such
reasonable times as Lender may reasonably request, upon reasonable prior notice,
provided that such  visitation,  inspection,  examination and discussions do not
unreasonably interfere with Borrower's normal business operations.

                  5.1.8  Other   Deliveries.   Promptly   upon  their   becoming
available,  Borrower  shall  furnish  to  Lender,  copies  of  all  registration
statements  of Guarantor  and any  amendments  and  supplements  thereto and any
regular  and  periodic  reports  filed by  Borrower  or the  Guarantor  with any
securities  exchange  or with the  Securities  and  Exchange  Commission  or any
governmental  authority  succeeding  to any or all  of  the  functions  of  said
commissions.

         5.2  Preservation of Existence and Franchises.

                  5.2.1 Neither  Borrower nor the Guarantor shall enter into any
merger,  reorganization  or  consolidation in which Borrower or Guarantor is not
the surviving  corporation.  or wind up, liquidate or dissolve,  nor agree to do
any of the  foregoing.  Notwithstanding  the  foregoing,  Lender  agrees  not to
unreasonably withhold or delay its consent to a request by Borrower or Guarantor
to enter into a merger,  reorganization  or  consolidation  in which Borrower or
Guarantor is not the surviving  corporation.  In the event Lender does not grant
its  consent to a proposed  merger,  reorganization  or  consolidation  in which
Borrower or Guarantor is not the surviving corporation,  Borrower shall have the
right,  upon not less than thirty (30) days prior written  notice to Lender,  on
any regularly  scheduled payment date occurring after the second  anniversary of
the Disbursement  Date, to prepay the outstanding  principal balance of the Loan
in whole, but not in part, provided


<PAGE>



that Borrower  shall pay to Lender,  together with the principal  balance of the
Loan, (i) all accrued and unpaid interest on the amount prepaid through the date
of prepayment,  (ii) all  outstanding  fees,  charges and other amounts then due
under the Loan  Documents,  and (iii) a prepayment fee in an amount equal to the
product  of (A) the  outstanding  principal  balance  of the Loan at the time of
prepayment,  times (B) the applicable  percentage set forth opposite the year of
the Term in which the prepayment is made, as set forth below:


                  Year of Term of Loan in
                  Which Prepayment is Made                    Percentage

                            3                                    1.6
                            4                                    1.14%
                            5                                    0.7%


Once given, the notice of prepayment  shall be irrevocable.  Borrower shall have
no right to prepay the Loan prior to the second  anniversary of the Disbursement
Date.

                  5.2.2  Borrower will qualify to do business and will remain in
good standing under the laws of each  jurisdiction in which it is required to be
qualified by reason of the location of the  properties  owned or leased by it or
the conduct of its business.

                  5.2.3  Borrower  will  comply  with all Laws  relative  to the
conduct of its business or the location of the properties owned or leased by it,
the  non-compliance  with  which  would have a  material  adverse  effect on the
business,  operations,  assets or  financial  condition  of Borrower  taken as a
whole,  as  contemplated  hereby,  or the  ability of  Borrower  to perform  its
obligations under this Agreement, the Note, or the other Loan Documents and will
obtain or cause to be obtained as  promptly  as  possible  any permit,  license,
consent, privilege or approval of any governmental authority and make any filing
or  registration  therewith  which at the time shall be required with respect to
the performance of its obligations  under this Agreement,  the Note or the other
Loan Documents or for the operation of its business as presently conducted or as
contemplated  by it, the  failure of which to obtain or file or  register  would
have a material adverse effect on the business,  operation,  assets or financial
condition  of the  Borrower  taken as a whole or in its  ability to perform  its
obligations to Lender.

                  5.2.4 Other than in connection with Borrower's compliance with
the provisions of Section 5.7 hereof,  Borrower shall not convey,  assign, sell,
mortgage,  encumber,  pledge,  hypothecate,  grant a security interest in, grant
options with  respect to,  lease or otherwise  dispose of all or any part of any
legal  or  beneficial  interest  in any  part  or all of the  Collateral  or any
interest therein.

         5.3  Insurance.

         Borrower shall, at its own expense, maintain and deliver evidence to 
Lender of such insurance required by Lender, written by insurers and in amounts
satisfactory to Lender.


<PAGE>





         5.4  Payment of Taxes and Other Potential Charges.

         Borrower shall pay or discharge

                  5.4.1 all taxes, assessments and other governmental charges or
levies imposed upon it or any of its properties,  including the  Collateral,  or
income  (including  such as may arise under ERISA or any  similar  provision  of
law), on or prior to the date on which penalties attach thereto; and

                  5.4.2 all lawful claims of materialmen,  mechanics,  carriers,
warehousemen, landlords and other like Persons which, if unpaid, might result in
the creation of a Lien upon any such property, on or prior to the date when due;

provided,  that unless and until foreclosure,  distraint,  levy, sale or similar
proceedings  shall have been  commenced,  Borrower need not pay or discharge any
such tax,  assessment,  charge,  levy, claim or current liability so long as (i)
the validity  thereof is contested in good faith and by appropriate  proceedings
diligently  pursued,  (ii) in  Lender's  sole  judgment  there is no  reasonably
foreseeable  risk of  forfeiture of the  Collateral,  and (iii) such reserves or
other  appropriate  provisions  as may be  required by GAAP shall have been made
therefor,  and so long as such  failure  to pay or  discharge  does  not  have a
material  adverse effect on the business,  operations or financial  condition of
Borrower taken as a whole or the Collateral.

         5.5  Financial Accounting Practices.

         Borrower  shall make and keep books,  records and  accounts  which,  in
reasonable  detail,  accurately and fairly  reflect its business,  including all
transactions and dispositions of its assets.

         5.6  Compliance with Laws.

         Borrower  shall be in  material  compliance  with all  applicable  Laws
provided,  that Borrower  shall not be deemed to be in violation of this Section
5.6 as a result of any  failures  to  comply  which  would not  result in fines,
penalties,  injunctive relief or other civil or criminal  liabilities  which, in
the  aggregate,  would not  materially  affect the  business  or  operations  of
Borrower  or the  ability of  Borrower  to perform  its  obligations  under this
Agreement, the Note or the other Loan Documents or the Collateral.

         5.7  Maintenance of Collateral.

         Borrower  will maintain and preserve the  Collateral in good  condition
subject  to  ordinary  wear and tear,  and in good  repair  and  working  order,
promptly repairing, replacing or rebuilding any part of the Collateral which may
be destroyed by any casualty, or become damaged,  worn or dilapidated;  provided
that no more than five (5%) percent of the Pay  Telephones  may be inoperable at
any one time and Borrower shall, within forty-eight (48) hours,  replace any Pay
Telephone  which  becomes  permanently  disabled  or with  respect  to which the
related Pay Telephone Placement


<PAGE>



Agreement is  terminated,  with a substitute  Pay Telephone of similar or better
technology and related Pay Telephone Placement Agreement satisfactory to Lender;
provided  further  that Lender shall  automatically  be granted a first and only
perfected  Lien  covering  such  replacement  Pay  Telephone  and Pay  Telephone
Placement Agreement.

         5.8  Maintenance of Principal Place of Business.

         Borrower  shall  maintain and keep its principal  place of business and
chief  executive  office  at the  address  set  forth at the  beginning  of this
Agreement,  and at no other location  without giving Lender at least thirty (30)
days prior  written  notice of any move.  Borrower  shall  maintain and keep its
records at such address and at no other location  without giving Lender at least
thirty (30) days prior written notice of any move.

         5.9  Certain Agreements.  Borrower shall not amend, modify or alter in
any material respect or terminate or assign any interest in the Billing and 
Related Services Agreement.

         5.10 Pay Telephone Placement  Agreements.  Not less than ninety percent
(90%) of all Pay  Telephones  shall at all  times be  subject  to Pay  Telephone
Placement  Agreements  and such  agreements  shall be in full  force and  effect
during all such times. At least: 90% of the Pay Telephone  Placement  Agreements
will be written agreements.

         5.11 Satisfaction of Certain  Obligations.  In the event Borrower fails
to make any payment or do any act as herein provided (including, but not limited
to, maintaining any insurance required to be maintained under the Loan Documents
or paying all taxes in  accordance  with the terms  hereof) or there  shall be a
claim or Lien asserted or filed against the  Collateral  which is not discharged
within thirty (30) days,  Lender may, but shall not be obligated to (and without
releasing  Borrower from any obligation  hereunder),  make all such payments and
perform all such acts or otherwise  satisfy such  obligations.  All sums paid by
Lender in respect thereof and all costs, fees and expenses, including reasonable
attorneys' fees, court costs, expenses and other charges relating thereto, which
are incurred by Lender on account  thereof,  shall bear  interest at the Default
Rate, shall be payable on demand by Borrower to Lender,  and shall be additional
Obligations hereunder secured by the Collateral.

         5.12  Cash  Flow  Coverage.  So long as any of the  Obligations  remain
outstanding,  Guarantor  shall  maintain,  on a  consolidated  basis,  Cash Flow
Coverage  in excess of 1.2.  Cash Flow  Coverage  shall be defined  as  earnings
before interest, taxes, depreciation and amortization, divided by the sum of the
current portion of long term debt,  including the current portion of any capital
leases,  interest,  dividends and capital expenditures.  All such item, shall be
determined  in  accordance  with GAAP and shall be  calculated on a rolling four
quarter basis.

         5.13 Further Assurances.

         Borrower shall cause to be done,  executed,  acknowledged and delivered
all and every such further act, conveyance and assurance as Lender shall require
for  accomplishing  the purposes of this Agreement,  the Note and the other Loan
Documents. Borrower will defend and protect its title with


<PAGE>



respect to the Collateral and will indemnify  Lender with respect  thereto.  Any
payment in respect of such indemnity shall be made directly to Lender within ten
(10) days after written demand specifying such charges in immediately  available
funds.  Forthwith  after notice from Lender,  Borrower shall  promptly,  without
further consideration, execute, acknowledge and deliver such further instruments
and documents  and will take such other actions as Lender may deem  necessary or
advisable  from time to time to ensure the  enforceability  or  priority  of the
Liens  granted  hereby,  or  otherwise  to confirm  and carry out the intent and
purpose of this Agreement.

                          ARTICLE 6. SECURITY INTEREST

         6.1   Security.

         As security for the full and timely  payment and  performance of all of
the  Obligations of Borrower to Lender,  Borrower hereby  collaterally  assigns,
pledges,  transfers and sets over to Lender, and hereby agrees that Lender shall
have,  and hereby  grants to and  creates in favor of Lender,  a first  security
interest under the UCC subject to no other Liens,  in and to the  following,  in
each case  whether now  existing or  hereafter  arising,  now owned or hereafter
acquired, wherever located ("Collateral"):

                  6.1.1  All of the Pay Telephones and the other Equipment;

                  6.1.2  All of the Pay Telephone Placement Agreements; and

                  6.1.3 All accessions and additions thereto, substitutions for,
and all replacements of, any and all of the foregoing,  and all proceeds paid or
payable to Borrower with respect to the foregoing, cash and non-cash,  including
insurance proceeds.

                  6.1.4  All  of  the   licenses,   permits   and   governmental
authorizations  relating  to the  Pay  Telephones  and Pay  Telephone  Placement
Agreements, to the extent the same are assignable.

         6.2  Lender Has Rights and Remedies of a Secured Party.

         In  addition  to all  rights  and  remedies  given  to  Lender  by this
Agreement,  Lender  shall have all the rights and  remedies  of a secured  party
under the UCC.

         6.3  Additional Provisions Applicable to the Collateral.

         Borrower  shall not affix or permit the Collateral to become affixed to
real estate, and such Collateral shall remain personal property,  whether or not
so affixed.

         6.4  Certain Covenants.

         Borrower  covenants  and agrees  with  Lender for the benefit of Lender
that:

                  6.4.1  Borrower has and will have good and merchantable title
to all of the Collateral,

<PAGE>



in each case as from time to time  owned or  acquired  by it, and shall keep the
Collateral  free and clear of all Liens,  other  than  those  granted to Lender.
Borrower  will defend  such title  against the claims and demands of all Persons
whomsoever.  Borrower  has and will have good title to or a leasehold or license
interest in all assets reasonably required for the conduct of its business.

                  6.4.2 Borrower will faithfully  preserve and protect  Lender's
Liens in the Collateral and will, at its own cost and expense,  cause said Liens
to be perfected and continued perfected, and for such purpose Borrower will from
time to time at the  request of Lender and at the  expense  of  Borrower,  make,
execute,  acknowledge and deliver,  and file or record,  or cause to be filed or
recorded,  in the proper  filing  places,  all such  instruments,  documents and
notices,  including  without  limitation  financing  statements and continuation
statements, as Lender may deem necessary or advisable from time to time in order
to perfect and continue perfected said security  interest.  Borrower will do all
such other acts and things and make,  execute,  acknowledge and deliver all such
other instruments and documents,  including without  limitation further security
agreements, pledges, endorsements, assignments and notices, as Lender reasonably
may deem  necessary  or  advisable  from  time to time in order to  perfect  and
preserve  the  priority  of said Liens as a first and only Lien on and  security
interest in the Collateral  prior to the rights of all other Persons  therein or
thereto.

                  6.4.3 Borrower will not,  without the prior written consent of
Lender,  (i) borrow or permit any Person to borrow against the Collateral  other
than the Loan to Borrower from Lender pursuant to this  Agreement;  (ii) create,
incur,  assume or suffer to exist any Lien with respect to any of the Collateral
except  for (x) the Lien of  Lender,  as  provided  herein,  (y) liens for taxes
either not yet due or being  contested  by Borrower or  Guarantor  in good faith
with  due   diligence   and  by   appropriate   proceedings   and  (z)  inchoate
materialmen's, mechanics', workmen's repairmen's and other like liens arising in
the ordinary course of business where adequate reserves are maintained therefor;
(iii) permit any levy or  attachment  to be made  against any of the  Collateral
except any levy or  attachment  relating to this  Agreement;  or (iv) permit any
financing statement to be on file with respect to any of the Collateral,  except
financing  statements in favor of Lender.  Any Lien permitted under (ii)(y) will
be discharged or bonded prior to foreclosure  and prior to the imposition of any
fire, penalty or other damage against Lender.

                  6.4.4  Risk  of  loss  of,  damage  to or  destruction  of the
Collateral  is  and  shall  remain  upon  Borrower.  Borrower  will  insure  the
Collateral as provided in Section 5.3 of this Agreement.  Lender,  its officers,
employees  and  authorized  agents and its  successors  and assigns,  are hereby
appointed  attorneys-in-fact of Borrower, for the purpose of endorsing any draft
or check which may be payable to  Borrower  in order to collect the  proceeds of
such  insurance.  Such  appointment is irrevocable and coupled with an interest.
The proceeds of insurance  shall be applied to reduction of the  Obligations  in
any order Lender may choose or, in Lender's reasonable discretion, to the repair
or replacement of the Collateral,  or any part thereof, in which case Lender may
impose such conditions on the disbursement of the proceeds as Lender in its sole
discretion deems appropriate.

                  6.4.5  Upon the  occurrence  and during  the  continuation  or
existence of any Event of Default,  Borrower  shall promptly upon written demand
by Lender make the Pay  Telephone  Placement  Agreements  and the  licenses  and
permits comprising the Collateral  available to Lender at the place or places to
be designated by Lender. The right of Lender to have the Pay Telephone


<PAGE>



Placement  Agreements  and the licenses and permits  comprising  the  Collateral
assembled  and made  available  to it is of the  essence of this  Agreement  and
Lender  may,  at its  election,  enforce  such  right  in  equity  for  specific
performance.

                  6.4.6  Lender  shall  have  no duty  as to the  collection  or
protection of the Collateral or any part thereof or any income thereon, or as to
the preservation of any rights pertaining thereto,  beyond exercising reasonable
care in the  custody of any  Collateral  actually in the  possession  of Lender.
Lender  shall be deemed to have  exercised  reasonable  care in the  custody and
preservation  of such of the  Collateral as may be in its possession if it takes
such action for that purpose as Borrower shall request in writing, provided that
such requested  action shall not, in the reasonable  judgment of Lender,  impair
Lender's  security interest in the Collateral or its rights in, or the value of,
the  Collateral,  and provided  further that such written request is received by
Lender in sufficient time to permit it to take the requested action.

                               ARTICLE 7. DEFAULTS

         7.1  Events of Default.

         The occurrence of one or more of the following  described  events is an
Event of Default:

                  7.1.1  Borrower  fails to make any payment of  principal of or
interest on the Note when due,  and such failure  continues  for a period of ten
(10) days; or

                  7.1.2  Borrower fails to perform or observe any other covenant
or agreement to be performed or observed by it hereunder or under the other Loan
Documents  and such failure  continues  unremedied  for a period of fifteen (l5)
days after written  notice of such failure has been given by Lender  pursuant to
Section 8.7 hereof; or

                  7.1.3  Other  than as  provided  in  Section  6.4.3,  Borrower
voluntarily  creates,  suffers to exist,  incurs or assumes  any Lien,  security
interest,  charge or encumbrance  on, or with respect to, any part of or all the
Collateral,  or the Liens held by Lender in and to the Collateral shall cease to
be the first perfected Lien in and to the  Collateral,  or Lender shall cease to
hold a first perfected Lien covering 2500 Pay Telephones; or

                  7.1.4 Borrower sells,  assigns,  leases, or otherwise disposes
of or relinquishes possession of, any Collateral, provided that (a) Borrower may
replace any Pay Telephone which becomes permanently  disabled or with respect to
which the  related Pay  Telephone  Placement  Agreement  is  terminated,  with a
substitute Pay Telephone and Pay Telephone Placement  Agreement  satisfactory to
Lender  in  accordance   with  Section  5.2.4  and  5.7  and  (b)  Lender  shall
automatically  be  granted  a  first  and  only  perfected  Lien  covering  such
replacement Pay Telephone; or

                  7.1.5 any material representation or warranty made by Borrower
or the  Guarantor  herein or in any other Loan  Document  or in any  document or
certificate  furnished by Borrower to Lender in connection herewith or therewith
at any time while any of the Obligations  remain outstanding proves to have been
incorrect in any material respect when made; or


<PAGE>



                  7.1.6 this  Agreement  or any Loan  Document at any time while
the Obligations remain outstanding and for any reason ceases to be in full force
and  effect  or is  declared  by a court or  governmental  agency  of  competent
jurisdiction to be null and void; or

                  7.1.7 Borrower or Guarantor breaches or defaults (after giving
effect to any notice or cure periods) under the material terms of any agreement,
instrument  or document  with or for the benefit of FINOVA  Capital  Corporation
which is not a Loan Document or under any other loan,  credit  facility or other
financial  accommodation  made by FINOVA  Capital  Corporation  to  Borrower  or
Guarantor,  including,  without  limitation,  all promissory notes,  guarantees,
equipment leases, security agreements, mortgages and deeds of trust; or

                  7.1.8  Borrower  or  the  Guarantor  is  convicted  under  any
criminal  statute or there is a judgment  against Borrower or the Guarantor in a
criminal or civil  proceeding  pursuant to which the  proceedings,  penalties or
judgment  include  forfeiture of any of the Collateral or a material  portion of
the assets of Borrower or the  Guarantor and  enforcement  of such action is not
stayed on appeal; or

                  7.1.9 an event of default shall occur and be  continuing  with
respect to any other  indebtedness or lease  obligation of Borrower or Guarantor
having a principal or rental amount outstanding in excess of $500,000; or

                  7.1.10 the  Guarantor  fails to  perform or observe  any other
covenant or agreement to be performed or observed by it under the Loan Documents
to which they are a party and such failure continues  unremedied for a period of
fifteen (15) days after written notice of such failure; or

                  7.1.11  there is a material adverse change in the financial 
condition of Borrower, the Guarantor or the Collateral;

                  7.1.12 a proceeding  is  instituted  seeking a decree or order
for relief in respect of Borrower or the Guarantor in an involuntary  case under
any applicable  bankruptcy,  insolvency or other similar law now or hereafter in
effect or for the appointment of a receiver,  liquidator,  assignee,  custodian,
trustee,  sequestrator (or other similar official) of Borrower or the Guarantor,
or for any substantial part of its properties or for the dissolution, winding-up
or liquidation of its affairs or any  substantial  part of any of its properties
and such proceeding  remains  undismissed or unstayed for a period of sixty (60)
consecutive  days or such  court  enters a decree or order  granting  the relief
sought in such proceeding; or

                  7.1.13   Borrower  or  the  Guarantor   voluntarily   suspends
transaction  of its business,  commences a voluntary  case under any  applicable
bankruptcy, insolvency or other similar law now or hereafter in effect, consents
to the entry of an order for relief in an involuntary case under any such law or
consents to the appointment of or taking  possession by a receiver,  liquidator,
assignee,  trustee,  custodian,  sequestrator  (or other  similar  official)  of
Borrower or the Guarantor for any substantial part of any of its properties,  or
makes a general assignment for the benefit of creditors,  or takes any action in
furtherance of any of the foregoing; or



<PAGE>



                  7.1.14 there shall be a judgment or judgments against Borrower
or the Guarantor for any amount in excess of [$100,000] in the aggregate,  which
shall remain unpaid, unstayed on appeal, undischarged,  unbounded or undismissed
for a period of thirty (30) days or more; or

                  7.1.15  Borrower  fails  to  perform  or  observe  any  of its
covenants  or  agreements  contained  in  Section  5.3  hereof or in the  letter
regarding  insurance  requirements  delivered by Borrower in connection herewith
dated December 12, 1996 (the "Insurance  Letter") or any such insurance shall at
any time cease to be in full force and effect; or

                  7.1.16  Borrower  shall  have  defaulted  under  or  otherwise
breached  any  of the  material  terms  of  the  Billing  and  Related  Services
Agreement.

         7.2  Consequences of Event of Default.

                  7.2.1 If an Event of Default occurs,  Lender may, by notice to
Borrower,  declare the unpaid  principal amount of the Note and interest accrued
thereon and all other Obligations and liabilities of Borrower hereunder or under
the Note or the Loan  Documents to be  immediately  due and payable and the same
shall thereupon  become and be immediately due and payable without  presentment,
demand,  protest or other notice of any kind, all of which are hereby  expressly
waived, and an action therefor shall immediately accrue.

                  7.2.2 In addition, if an Event of Default occurs, Lender shall
have all rights and remedies  granted herein and in the other Loan Documents and
all rights or remedies available at law including the UCC) or equity, whether as
a secured  party or  otherwise  (including  specifically  those  granted  by the
Uniform Commercial Code as in effect in the jurisdiction or jurisdictions  where
the Collateral is located) and, except as limited by Law, all remedies of Lender
(i)  shall  be  cumulative  and  concurrent;  (ii)  may be  pursued  separately,
successively or concurrently  against  Borrower or against all or any portion of
the  Collateral,  at the sole  discretion  of Lender;  (iii) may be exercised as
often as occasion  therefor  shall arise,  it being agreed by Borrower  that the
exercise  or failure to  exercise  any rights or  remedies  shall in no event be
construed  as a waiver  or  release  thereof  or of any other  right,  remedy or
recourse;  and (iv) are  intended  to be,  and  shall be,  nonexclusive.  To the
fullest  extent  permitted by applicable  Law,  Lender may resort to the rights,
remedies and recourses set forth herein and any other security  therefor in such
order and manner as Lender may elect.

                  7.2.3 Without  limiting any of the foregoing,  Borrower agrees
that (i) Lender may,  with or without  notice and without legal  process,  enter
upon any property owned,  leased or otherwise under the real or apparent control
of Borrower or any agent thereof or any other  location where the Collateral may
be located and disassemble,  disconnect, render unusable or repossess all or any
item of the Collateral;  (ii) written notice mailed to Borrower,  as provided in
this  Agreement for the giving of notice,  shall be reasonable if given ten (10)
days prior to (a) any public sale or (b) the date after which a private sale may
be made;  (iii) a sale of the Collateral may be made as a unit or in parcels and
for cash and upon terms;  and (iv) Lender may buy the  Collateral  at any public
sale and at any private sale as permitted by the UCC.

                  7.2.4  Any acceleration of the Loan as a consequence of the 
occurrence of an Event


<PAGE>



of Default shall be deemed a prepayment and subject to a prepayment fee of three
(3%)  percent,  in  addition  to all other  amounts  otherwise  due  under  this
Agreement and the other Loan Documents.


                            ARTICLE 8. MISCELLANEOUS

         8.1  Indemnity.

         Borrower  shall  indemnify,  defend and hold  harmless  Lender from and
against,  and,  within ten (10) days after written demand  therefor,  adequately
particularizing the nature and amount thereof, reimburse Lender for, all claims,
demands, liabilities, losses, damages, judgments, penalties, costs and expenses,
including,  without  limitation,  reasonable  attorneys' fees and disbursements,
which may be imposed upon,  asserted  against or incurred or paid by Lender,  on
account of any act  performed or omitted to be performed  under this  Agreement,
the Note or the other Loan  Documents or on account of any  transaction  arising
out of or in any way connected with the Collateral or this  Agreement,  the Note
or the other Loan  Documents  (including,  without  limitation,  any  litigation
matter  involving  claims by third  parties),  except as a result of the willful
misconduct or gross negligence of Lender.

         8.2  No Implied Waiver: Cumulative Remedies.

         No course of dealing  and no delay or  failure of Lender in  exercising
any right, power or privilege under this Agreement, the Note or any of the other
Loan Documents shall affect such right,  power or privilege except as and to the
extent that the assertion of any such right,  power or privilege shall be barred
by an  applicable  statute  of  limitations;  nor  shall any  single or  partial
exercise thereof or any abandonment or discontinuance of steps to enforce such a
right,  power or privilege preclude any further exercise thereof or of any other
right,  power or  privilege.  The  rights  and  remedies  of Lender  under  this
Agreement, the Note or the other Loan Documents are cumulative and not exclusive
of any rights or remedies which Lender would otherwise have.

         8.3  Taxes.

         Borrower  agrees  to pay or  reimburse  Lender  for any and all  stamp,
document,   transfer,  recording  or  filing  taxes  or  fees  and  all  similar
impositions payable or hereafter  reasonably  determined by Lender to be payable
in  connection  with  this  Agreement,  the  Note or the  other  Loan  Documents
(including  but not  limited to those  necessary  or  advisable  to record or to
ensure the  enforceability or priority of this Agreement,  the Note or the other
Loan Documents),  and any other documents,  instruments or transactions pursuant
to or in connection  herewith,  and Borrower agrees to save Lender harmless from
and against any and all present or future claims or liabilities  with respect to
or resulting from any delay in paying or omission to pay any such taxes, fees or
similar impositions.

         8.4  Modifications, Amendments or Waivers.

         Lender and Borrower may from time to time enter into written agreements
amending,


<PAGE>



modifying or supplementing this Agreement,  the note or the other Loan Documents
or changing the rights of Lender or Borrower hereunder or thereunder, and Lender
may from time to time grant  waivers or  consents  to a  departure  from the due
performance  of the  obligations  of Borrower  thereunder.  Any such  agreement,
waiver or consent must be in writing and shall be  effective  only to the extent
set forth in such writing. In the case of any such waiver or consent,  any Event
of  Default  so  waived  or  consented  to shall be  deemed  to be cured and not
continuing,  but no such waiver or consent  shall  extend to any  subsequent  or
other Event of Default or impair any right consequent thereto.

         8.5  Holidays.

         Except as otherwise provided herein,  whenever any payment or action to
be made or taken  hereunder  or the Note or any  other  Loan  Document  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 day shall be
included in the  calculation  of  interest  due),  unless  such next  succeeding
Business  Day falls in a  different  calendar  month,  in which case  payment or
action shall be made or taken on the next preceding Business Day.

         8.6  Notices.

                  8.6.1 Except as  otherwise  provided  herein,  all notices and
other communications  required under the terms and provisions of this Agreement,
the Note or the other  Loan  Documents  shall be in  writing  and  shall  become
effective  when  delivered  by hand or received  by  overnight  courier,  telex,
facsimile,  telegram or registered first class mail, postage prepaid,  addressed
as follows:

                           If to Lender, at:

                           Southbridge Financial Corp.
                           400 Madison Avenue
                           New York, New York  10017
                           Facsimile No. 212-593-0377
                           Attention:  Arthur Freierman
                                       President


                           If to Borrower, at:

                           Crescent Public Communications Inc.
                           7 Mayflower Place
                           Floral Park, NY 11001
                           Facsimile No. 516-437-0807
                           Attention:  Anthony M. Scalice

or at such other address as either party may, from time to time, designate in 
writing to the other party hereto.


<PAGE>





                  8.6.2 If any notice is given by telex, facsimile transmission,
or telegram, the party giving such notice shall confirm such notice by a writing
delivered by hand or overnight courier; Provided, however, that for all purposes
hereunder,  notice  shall  be  deemed  effective  at the time  given  by  telex,
telecopier or telegram.

         8.7  Reimbursement for Certain Expenses.

         Borrower  agrees to pay or cause to be paid and to save Lender harmless
against  liability  for the payment of all  reasonable  out-of-pocket  costs and
expenses,  including, without limitation, all reasonable counsel fees and costs,
incurred  by  Lender  from  time to time  (i)  arising  in  connection  with the
negotiation,  execution,  delivery, and recordation of this Agreement,  the Note
and the other  Loan  Documents,  and the  transactions  contemplated  hereby and
thereby  and all  recording  or filing  fees,  (ii)  relating  to any  requested
amendments,  waivers or consents to or in connection  with this  Agreement,  the
Note or any other Loan  Document,  (iii)  arising in  connection  with  Lender's
enforcement  or  preservation  of rights under this  Agreement,  the Note or any
other  Loan  Document,  including  but not  limited to such  expenses  as may be
incurred by Lender in the  collection  of the Note,  and (iv) any other  matters
relating to the Loan, Loan Documents, the Collateral or Borrower.

         8.8  Governing Law.

         THIS  AGREEMENT,  THE NOTE, THE OTHER LOAN DOCUMENTS AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO AND THERETO SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

         8.9  Personal Jurisdiction and Service of Process.

         BORROWER  IRREVOCABLY  CONSENTS  THAT ANY LEGAL  ACTION  OR  PROCEEDING
AGAINST  BORROWER  UNDER,  ARISING  OUT OF, OR IN ANY  MANNER  RELATING  TO THIS
AGREEMENT,  THE NOTE OR THE OTHER  LOAN  DOCUMENTS  MAY BE  BROUGHT IN ANY STATE
COURT OF THE  STATE OF NEW YORK  LOCATED  IN NEW YORK  COUNTY  OR IN THE  UNITED
STATES DISTRICT COURT FOR THE SOUTHERN  DISTRICT OF NEW YORK.  BORROWER,  BY ITS
EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY AND IRREVOCABLY CONSENTS AND
SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH COURTS IN ANY SUCH ACTION OR
PROCEEDING. BORROWER FURTHER AGREES THAT ANY LEGAL ACTION OR PROCEEDING BORROWER
MAY BRING,  ARISING OUT OF OR IN ANY MANNER  RELATING TO THIS  AGREEMENT  OR THE
OTHER LOAN  DOCUMENTS,  SHALL ONLY BE BROUGHT IN ANY STATE COURT OF THE STATE OF
NEW YORK LOCATED IN NEW YORK COUNTY OR IN THE UNITED STATES  DISTRICT  COURT FOR
THE SOUTHERN  DISTRICT OF NEW YORK.  BORROWER ALSO  IRREVOCABLY  CONSENTS TO THE
SERVICE OF ANY  COMPLAINT,  SUMMONS,  NOTICE OR OTHER  PROCESS  RELATING TO SUCH
ACTION OR PROCEEDING BY DELIVERY THEREOF TO BORROWER IN THE


<PAGE>



MANNER  PROVIDED FOR NOTICES IN THIS AGREEMENT.  BORROWER  HEREBY  EXPRESSLY AND
IRREVOCABLY  WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING  BASED
ON ANY  ALLEGED  LACK OF  PERSONAL  JURISDICTION,  IMPROPER  VENUE OR FORUM  NON
CONVENIENS  OR ANY  SIMILAR  BASIS.  BORROWER  SHALL NOT BE ENTITLED IN ANY SUCH
ACTION OR  PROCEEDING  TO ASSERT ANY DEFENSE  GIVEN OR ALLOWED UNDER THE LAWS OF
ANY STATE OTHER THAN THE STATE OF NEW YORK, UNLESS SUCH DEFENSE IS ALSO GIVEN OR
ALLOWED BY THE LAWS OF THE STATE OF NEW YORK.  NOTHING  HEREIN  SHALL  AFFECT OR
IMPAIR IN ANY  MANNER OR TO ANY  EXTENT  THE RIGHT OF LENDER TO  COMMENCE  LEGAL
PROCEEDINGS OR OTHERWISE  PROCEED AGAINST BORROWER IN ANY OTHER  JURISDICTION OR
TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

         8.10 Waiver of Jury Trial.

         BORROWER  HEREBY  WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY AGREEMENT,  INSTRUMENT OR
DOCUMENT EXECUTED AND DELIVERED IN CONNECTION  HEREWITH OR THEREWITH,  INCLUDING
THE LOAN DOCUMENTS.

         8.11 Severability.

    The provisions of this  Agreement,  the Note and any other Loan Document are
intended to be severable. If any such provision is 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 in any
jurisdiction.

         8.12 Prior Understandings.

         This  Agreement  and the  other  Loan  Documents  supersede  all  prior
understandings  and  agreements,  whether  written or oral,  between the parties
hereto relating to the transactions provided for herein or therein.

         8.13 Survival.

         All  representations  and  warranties  of  Borrower  contained  in this
Agreement or any other Loan Document or made in writing in  connection  herewith
or therewith  shall survive the execution  and delivery of this  Agreement,  the
Note and the other Loan Documents,  any  investigation  or inspection by Lender,
the making of the Loan  hereunder,  the payment of the Note or the expiration of
this Agreement.  All covenants and agreements of Borrower contained herein shall
continue  in full force  until  payment in full of the  Obligations.  Borrower's
obligation  to pay the  principal of and interest on the Note and all such other
amounts shall be absolute and unconditional under any and all circumstances .



<PAGE>




         8.14 Successors and Assigns.

         This Agreement  shall be binding upon and shall inure to the benefit of
Lender and Borrower  and their  respective  successors  and  permitted  assigns,
except that  Borrower may not assign,  delegate or transfer any of its rights or
obligations hereunder or any interest herein other than to Guarantor without the
written consent of Lender which Lender may withhold in its absolute  discretion.
Any actual or attempted assignment by Borrower without Lender's consent shall be
null, void and of no effect whatsoever.  Lender may assign or otherwise transfer
any or all of its rights,  title and interests  hereunder and under the Note and
the  other  Loan  Documents  in whole  or in  part.  If  Lender  makes,  such an
assignment, the assignee shall have all of the rights of the Lender and Borrower
shall not assert against the assignee any defense, counterclaims or setoff which
Borrower may have against Lender (although any claim Borrower might have against
the original  Lender shall be preserved  and may be separately  pursued  against
such  Lender).  Upon Lender  giving  notice to  Borrower of any such  assignment
Borrower shall promptly acknowledge its obligations  hereunder to such assignee,
and shall  comply with all written  directions  or demands of such  assignee and
shall make all  payments  and  perform all  Obligations  due  hereunder  as such
assignee may direct in writing and as otherwise provided herein. Borrower hereby
acknowledges  that it has  received  written  notice from Lender that Lender has
assigned all of its right,  title and interest in and to the Loan  Documents and
the Collateral to FINOVA Capital  Corporation  ("FINOVA") and FINOVA is entitled
to all of the rights and remedies hereunder of an assignee. Except to the extent
otherwise  required  by its  context,  the  word  "Lender"  where  used  in this
Agreement  shall mean and  include the holder of the Note  originally  issued to
Lender,  and the holder of such Note shall be bound by and have the  benefits of
this Agreement to the same extent as if such holder had been a signatory hereto.
As used in this Section 8.14, "assign" shall be deemed to include a pledge, sale
of, or grant of a mortgage on, or a security  interest in, any of the Collateral
or this Agreement or the other Loan Documents by Lender and the term  "assignee"
shall be deemed to refer to the  recipient  of such  pledge,  sale,  mortgage or
security interest.

         8.15 Counterparts.

         This Agreement may be executed in any number of counterparts and by the
different  parties  hereto  on  separate  counterparts  each of  which,  when so
executed and  delivered by the  parties,  constituting  an original but all such
counterparts together constituting but one and the same instrument.

         8.16 Publicity.

         Lender is hereby  authorized to issue appropriate press releases and to
cause  a  tombstone  to  be  published   announcing  the   consummation  of  the
transactions  contemplated in this Agreement,  including the aggregate amount of
the Loan.

         IN WITNESS  WHEREOF,  the parties hereto,  by their officers  thereunto
duly authorized,  have executed and delivered this Agreement effective as of the
day and year first above written.



<PAGE>


                                      CRESCENT PUBLIC COMMUNICATIONS INC.,
                                      a New York Corporation

                                      By:       /s/
                                      Name:  Peter M. Izzo, Jr.
                                      Title: Chief Executive Officer

                                      Federal Tax Identification No. 11-3292635

                                      SOUTHBRIDGE FINANCIAL CORP.

                                      By:    /s/
                                      Name:  Arthur P. Freierman
                                      Title: President





<PAGE>