Execution Copy

                           SECURITY AGREEMENT NO. 001

         This Security Agreement (the "Security Agreement"), dated as of October
4, 1995 made by and among Lyon Credit Corporation,  a corporation  organized and
existing under the laws of the State of Delaware, with an office address at 1266
East Main Street, Stamford, Connecticut 06902, (together with its successors and
assigns, if any, "Secured Party"),  American Network Exchange,  Inc. ("ANEI"), a
corporation organized and existing under the laws of the State of Delaware,  and
Crescent Public  Communications Inc.  ("Crescent"),  a corporation organized and
existing under the laws of the State of New York, each with their address at 101
Park Avenue, New York, New York 10178 (collectively, "Borrower");

                              W I T N E S S E T H :

         1. Grant of Security  Interest:  To secure payment on each Note made by
Borrower in the form attached hereto as Exhibit "A" together with any extensions
or renewals thereof, and any amendments or modifications thereto (each, a "Note"
and,  collectively,  the  "Notes"),  and  also  to  secure  any  and  all  other
indebtedness,  obligation  or liability  of the  Borrower to the Secured  Party,
whether direct or indirect,  absolute or  contingent,  due or to become due, now
existing  or  hereafter  arising and no matter how  acquired  by Secured  Party,
including, but not limited to, all future advances or loans which may be made at
the option of the Secured  Party to or on behalf of Borrower  (all the foregoing
hereinafter  called the  "Indebtedness"),  Crescent hereby grants and conveys to
the Secured Party a first security  interest in, and mortgages and  collaterally
assigns to the Secured  Party,  (i) each unit of property (such unit, an "Item")
described  in a  Schedule  in  the  form  attached  hereto  as  Exhibit  "B"  (a
"Schedule")  and each unit of property  constituting  Replacement  Equipment  as
defined in Section 9 hereof,  (ii) each Pay Telephone Location Agreement between
Crescent  and the  owner or  lessee  of any  location  on which  any Item may be
located (such agreement,  a "Contract"),  and (iii) all products and proceeds of
each Item, if any,  which Crescent may be entitled to receive,  i.e.,  excluding
any and all non-coin revenues but including  commissions  receivable on non-coin
revenues and any coin revenues derived from an Item, all additions, attachments,
accessories and accessions thereto and any and all  substitutions,  replacements
or exchanges thereto,  and any and all insurance and insurance proceeds thereof,
including,  but not limited to, every permitted lease or sublease (collectively,
"Proceeds  and  Additions"),  howsoever  designated,  covering  all or any  part
thereof  (all  or any of  the  foregoing  hereinafter  collectively  called  the
"Collateral");

         TO HAVE AND TO HOLD the  Collateral  with the power and  authority  and
subject to the terms and conditions set forth in this Security Agreement.

         2.  Repayment:  Borrower will duly and punctually pay the  Indebtedness
secured by this Security Agreement in accordance with the terms of the Notes and
this Security Agreement. Payments of Indebtedness shall be made to Secured Party
at its office  address  stated  above,  except as otherwise  directed by Secured
Party, and shall not be prorated for any cause or reason except as herein may be
specifically  provided.  Payments shall be due  periodically as specified in the
applicable  Note,  except  that in the event any month in which a payment is due
does not contain a


<PAGE>



numbered day equal to such payment day  specified,  payment shall be made on the
last day of such  month.  If any  payment is not made within ten (10) days after
its due date,  Borrower  agrees to pay a late charge of five cents (5(cent)) per
dollar on, and in addition to, the amount of such payment, but not exceeding the
lawful maximum, if any.

         3.  Obligations  Absolute:  The  obligations  of  Borrower  under  this
Security  Agreement shall be absolute and unconditional  under all circumstances
whatsoever,  including, but not limited to, the existence of any claim, set-off,
defense,  counterclaim  or recoupment to any present or future claim of Borrower
against  Secured Party under this Security  Agreement or otherwise,  against the
manufacturer  or seller of any of the  Collateral or against any other person or
entity for whatever  reason.  This Security  Agreement shall not terminate,  nor
shall the obligations of Borrower be affected,  by reason of any defect in title
to, damage to or any loss or  destruction  of, the  Collateral  from  whatsoever
cause, or the interference  with the use thereof by any person or entity, or the
invalidity or  unenforceability  or lack of due authorization in respect of this
Security Agreement or any lack of right, power or authority of the Secured Party
to enter into this  Security  Agreement,  or any  failure  of  Secured  Party to
perform any  obligation  of Secured  Party or  Borrower  or any other  person or
entity under this Security  Agreement or any instrument or document  executed in
connection  herewith,  or for any other cause,  whether similar or dissimilar to
the  foregoing,  any  present  or  future  law or  regulation  to  the  contrary
notwithstanding,  it being the express  intention of Secured  Party and Borrower
that all  payments by  Borrower  shall be, and  continue  to be,  payable in all
events unless the  obligation to pay the same,  shall be terminated  pursuant to
the express provisions of his Security Agreement.

         4. Representations and Warranties:  Borrower represents and warrants as
of the date of this Security  Agreement that: (a) Borrower is a corporation duly
organized and validly  existing in good standing  under the laws of its state of
organization  and  has the  corporate  power  to  enter  into  and  perform  its
obligations under this Security Agreement,  (b) this Security Agreement has been
duly  authorized,   executed  and  delivered  by  Borrower  and,   assuming  due
authorization,  execution and delivery by Secured Party,  is a legal,  valid and
binding obligation of Borrower,  enforceable in accordance with its terms except
as  may  be  limited  by  applicable  bankruptcy,  insolvency,   reorganization,
moratorium  or other similar laws  affecting the rights of creditors  generally,
and general principles of equity,  regardless of whether such  enforceability is
considered  in a proceeding  in equity or at law, (c) the execution and delivery
by Borrower of this Security  Agreement is not, and the performance by it of its
obligations  hereunder will not be,  inconsistent  with  Borrower's  articles or
certificate of incorporation or bylaws,  do not and will not contravene any law,
governmental rule or regulation,  judgment or order applicable to Borrower,  and
do not and will not  contravene any provision of, or constitute a default under,
any  indenture,  mortgage,  contract or other  instrument to which Borrower is a
party or by which it is bound,  (d) no consent or approval of,  giving of notice
to,  registration  with,  or taking of any other action in respect to or by, any
federal,  state or local  governmental  authority  or agency or other  entity is
required with respect to the execution,  delivery and performance by Borrower of
this Security Agreement, or if any such approval, notice, registration or action
is  required,  it has been  duly  given or  obtained,  (e) there are no suits or
proceedings  pending or threatened in court or before any  commission,  board or
other

                                        2

<PAGE>



administrative agency against or affecting Borrower,  which will have a material
adverse effect on the ability of Borrower to fulfill its obligations  under this
Security  Agreement,  (f) each financial statement and other related information
furnished  to  Secured  Party by Amnex,  Inc.,  the parent  company of  Borrower
("Parent"),  has been prepared in accordance with generally accepted  accounting
principles  and,  since  the  date of the most  recent  financial  statement  so
delivered, there has been no material adverse change (as that term is defined in
paragraph 12 (k) below),  (g) this Security Agreement shall be effective against
all creditors of Borrower under applicable law,  including,  without limitation,
fraudulent conveyance and bulk transfer laws, and (h) the Collateral will at all
times be used  solely in the  conduct of the  business  of  Crescent  and be and
remain in the possession and control of Crescent.

         5. Liens:  Borrower shall keep the  Collateral  free and clear from all
liens,  charges,  encumbrances  and security  interests  of any kind  ("Liens"),
except  for (i)  subject to clause  (iv) of this  Section 5, the Lien of Secured
Party, as provided in this Security  Agreement,  (ii) Liens for taxes either not
yet due or being  contested by crescent in good faith with due  diligence and by
appropriate  proceedings,  so long as such proceedings do not, in the opinion of
Secured  Party,  involve  any  material  danger of sale,  forfeiture  or loss of
Collateral  or any part  thereof or title  thereto or  interest  therein,  (iii)
inchoate  materialmen's,   mechanics',   workmen's,   repairmen's,   employees',
carriers',  warehousemen's or other like Liens arising in the ordinary course of
business  of Crescent  and not  delinquent  and  Crescent  shall be  maintaining
adequate  reserves  therefor  and (iv) in the  absence  of any Event of  Default
hereunder,  any  Lien  of any  third  party  providing  financing  to  Borrower,
provided,  that (A) Secured Party retains a perfected  first  priority  security
interest  in at least 1500  Items of  Collateral  and (B) each of the  Contracts
related to such Items has a term which  extends at least to the  maturity of the
Note.  Secured  Party  shall,  at its own cost and expense,  promptly  take such
action as may be necessary to discharge duly all Secured Party's Liens upon full
payment and satisfaction of all Indebtedness.

         6. Use and Operation:  (a) Borrower shall not assign, sublet, mortgage,
hypothecate  or modify any of the  Collateral  or any interest in this  Security
Agreement,  without  the prior  written  consent of Secured  Party,  except that
Crescent  shall  have the right to  modify  any Item in the  ordinary  course of
business or for the  purposes of  compliance  with  applicable  laws,  rules and
regulations so long as such  modification  does not decrease the value,  utility
and  remaining  useful  life of such Item.  Any  attempt  so to assign,  sublet,
mortgage,  hypothecate or modify any Item in violation of the preceding sentence
shall be void and without  effect.  Borrower shall not remove from the specified
place of Collateral any Item, except that Borrower may so remove any Item in the
ordinary  course of business or for purposes of compliance  with applicable laws
and  regulations  so long as Secured  Party retains a perfected  first  priority
security interest in at least 1500 Items and the related Contracts and each such
related  Contract has a term which extends at least to the maturity of the Note.
Notwithstanding  the  foregoing,  in order to replace an Item,  the Borrower may
remove an Item from the  specified  place of such Item  irregardless  of whether
such removal  would cause the number of Items in which  Secured  Party retains a
perfected first priority security interest to decline to less than 1500 Items if
Borrower  immediately  replaces such Item in accordance  with the provisions set
forth in Section 9 hereof.

                                        3

<PAGE>




                  (b) Borrower will not,  without the prior  written  consent of
Secured  Party,  affix or install  any  accessory,  equipment,  or device on any
Collateral if such  addition  will  materially  impair the  originally  intended
function or use of any such  Collateral or its value in place.  Borrower  agrees
that  each  Item of  Collateral  shall  prior to its  installation  be  personal
property under applicable law. Borrower agrees to take such reasonable action as
shall be required  by Secured  Party from time to time to protect the rights and
interests of Secured  Party in each such Item.  Borrower  will not,  without the
prior written consent of Secured Party and subject to such conditions as Secured
Party may reasonably impose for its protection,  affix or install any Item to or
in any other personal  property  except to the extent  necessary in the ordinary
course of business of Crescent.  Secured Party and Crescent agree that each Item
of Collateral  and every part thereof shall be treated as being severed from any
real property and, even if physically  attached to any real property,  it is the
intention  of Secured  Party and  Borrower  that such Item (i) shall  retain the
character of personal property, (ii) shall be removable,  (iii) shall be treated
as personal  property  with  respect to the rights of all persons and  entities,
(iv) shall not become part of any real property, and (v) by virtue of its nature
as personal property, shall not be affected in any way by any instrument dealing
with any real property.  Borrower  represents  that it has not entered into, and
agrees that it will not enter into, any agreement or other arrangement,  without
the consent of Secured Party, which consent shall not be unreasonably  withheld,
which  prohibits  or  restricts  in any  manner  the right of  Secured  Party or
Crescent to sever Items of  Collateral  from the real property on which they are
located,  to sever  Items of  Collateral  from any other  equipment  or personal
property to which such Items are attached or to remove Items of Collateral  from
the place where they are then  located  except as may be required by  applicable
laws and regulations.

          7. Maintenance and Service: (a) Items of Collateral shall be used only
in the manner for which they were designed and intended and Crescent will at its
sole expense at all times  maintain each Item in good operating  order,  repair,
condition  and  appearance  and keep  each  Item  protected  from the  elements,
ordinary wear and tear excepted.  Crescent shall, if at any time requested to do
so by Secured  Party,  affix in a prominent  position on each Item of Collateral
plates,  tags or other identifying  labels showing the interest of Secured Party
in the Collateral.  Crescent will, at all times,  operate and maintain each Item
of  Collateral in  accordance  with (i) the  standards  applied by Crescent with
respect to similar  equipment  owned or leased by it and (ii) prudent  operating
and maintenance standards and manufacturer's requirements. Borrower will not use
or  operate  any  Item  of  Collateral  in  violation  of  applicable  laws  and
regulations  (including all applicable  environmental  and  occupational  safety
laws)  except as shall  not have a  material  adverse  effect on such Item or on
Borrower.

                   (b)  Any  alterations  or   modifications   with  respect  to
Collateral  that may at any time  prior to full  repayment  of the  Indebtedness
secured hereby be required to comply with any applicable law or any governmental
rule or regulation shall be made by Crescent as required and at the sole expense
of Crescent.

         8.  Reports:  (i) Borrower agrees that Secured Party shall not be 
responsible for any loss or damage to Borrower, its customers or any other third
parties caused by the Collateral, any failure

                                        4

<PAGE>



thereof or defect therein, or otherwise. Nevertheless, Borrower will immediately
notify  Secured  Party of each  personal  injury or property  damage to property
other  than the Items,  if any,  valued by  Crescent  to be in excess of $25,000
arising out of any alleged or apparent  improper  manufacturing,  functioning or
operation of any Item, the time, place and nature of the injury and damage,  the
names and addresses of parties involved,  persons injured,  witnesses and owners
of property  damaged,  and such other  information as may be known, and promptly
advise  Secured  Party of all  correspondence,  papers,  notices  and  documents
whatsoever received by Borrower in connection with any claim or demand involving
or relating to improper  manufacturing,  operation or functioning of any Item or
charging  Secured  Party with  liability  therefor;  (ii)  Borrower  will notify
Secured  Party in writing  within ten (10) days  after it has  knowledge  of the
attachment of any Lien to any Collateral  which lien is not expressly  permitted
hereby  of the  full  particulars  thereof  and of the  then  location  of  such
Collateral on such day;  (iii) Borrower will notify Secured Party on a quarterly
basis in writing of the location of any  Collateral  moved by Borrower  from the
location  specified  in this  Security  Agreement  or any  subsequent  agreement
executed  by the  parties  during the three  months  preceeding  such report and
Borrower  shall notify  Secured  Party in writing 45 days prior to any change of
its place or places of business  and/or  residence  and/or name ; (iv)  Borrower
will  within  the later of ninety  (90) days of the close of each of its  fiscal
years  or five (5)  business  days  after  the date  such  information  which is
required to be filed with the  Securities  and  Exchange  Commission  ("SEC") is
actually filed therewith,  deliver,  or cause to be delivered,  to Secured Party
Parent's  consolidated  balance sheet and profit and loss statement  prepared in
accordance  with generally  accepted  accounting  principles  and, to the extent
available,  certified to by a recognized firm of certified  public  accountants.
Borrower will deliver,  or cause to be delivered,  to Secured Party,  within the
later of sixty  (60) days of the close of each of its  fiscal  quarters  or five
business days after the date such information which is required to be filed with
the SEC is actually filed therewith,  Parent's quarterly  consolidated financial
report  (which  shall be in  reasonable  detail)  prepared  in  accordance  with
generally accepted accounting principles and certified to by the chief financial
officer of Parent or other permitted  officer;  (v) Crescent will permit Secured
Party to  inspect  and  examine  Collateral  at such times and from time to time
during normal  business hours as Secured Party may wish (and at such other times
as may be mutually agreeable) and upon reasonable prior notice,  provided,  that
such examination and inspection shall not unreasonably interfere with Crescent's
normal  business  operations;  and (vi)  Crescent  will provide or arrange to be
provided to Secured Party (A) call activity and  commission  reports with regard
to the  Items of  Collateral  no later  than the 20th day of each  month and (B)
revenue  reports with respect to coin revenue from Items of  Collateral no later
than the 15th day of each month.

         9. Risk of Loss: (a) Crescent is solely responsible for the entire risk
of use and operation,  and for each and every cause or hazard,  and all loss and
damage to any and all Items whether arising through  operation or otherwise.  In
the  event  of  damage  to any  Item of  Collateral,  Crescent,  at its cost and
expense,  shall promptly repair or cause to be repaired such Item,  restoring it
to its  previous  condition  or the  condition  in which it was  required to be,
assuming Crescent had met all its obligations for maintenance of the Collateral.
Upon the  occurrence  of an Event of Loss  (defined  below) with  respect to any
Item, Crescent shall, if such Event of Loss will result in there being less than
1500 Items of Collateral subject to this Security Agreement, replace the Item of
Collateral in

                                        5

<PAGE>



respect of which such Event of Loss has occurred as provided in paragraph (c) of
this  Section  9. The  Borrower  may only  replace  an Item of  Collateral  with
equipment that performs the same function as the Item of Collateral with respect
to which the Event of Loss has occurred,  such replacement  equipment to be free
and clear of all Liens  (excepting  those expressly agreed to by Secured Party),
and to have a fair market value, condition, remaining useful life and utility at
least equal to the Items so replaced  (assuming  such Item was in the  condition
and repair  required by the terms hereof)  ("Replacement  Equipment").  Provided
Borrower is not in breach or default of this Security Agreement, any proceeds of
insurance  received by Secured Party with respect to any such loss shall be paid
to Crescent to the extent necessary to reimburse Crescent for costs incurred and
paid by Crescent in repairing  damaged  Equipment or as a credit  against  total
amount payable by Borrower with respect to the Collateral involved,  as the case
may be, all as provided in this Security Agreement.

                  (b) For the purposes hereof,  "Event of Loss" shall mean, with
respect to any Item of  Collateral,  if such Item is (i)  destroyed,  condemned,
irreparably  damaged or damaged beyond economic repair,  (ii)  requisitioned for
use by a governmental entity for an indefinite period or stated period extending
beyond  a  period  in  excess  of  ninety  (90)  consecutive  days or the  final
installment  payment date stated on the applicable  Note,  whichever is earlier,
(iii) the  subject  of an  insurance  settlement  with  respect  to such Item of
Collateral on the basis of a  constructive  total loss,  (iv) stolen or lost and
not recovered  within  thirty (30) days,  (v) the subject of a  condemnation  or
requisition of title by a governmental  entity, or (vi) prohibited by applicable
law from being used by Borrower for a period of ninety (90)  consecutive days or
the final installment payment date on the applicable Note, whichever is earlier.

                  (c) The Borrower's  right to replace any Item of Collateral as
provided in paragraph  (a) above and Section 6(a) hereof shall be subject to the
fulfillment,  at  the  Borrower's  sole  cost  and  expense,  of  the  following
conditions precedent:

                           (A)  on the date of such replacement the following 
documents shall have been duly  authorized,  executed  and  delivered by the 
respective  party or parties thereto and shall be in full force and effect,  and
an executed  counterpart  of each thereof shall have been delivered to the 
Secured Party:

                                    (1)  a Schedule covering the Replacement 
Equipment and any location agreement related thereto ("Replacement Contract");

                                    (2)  evidence of the making of such Uniform
Commercial Code financing statements and fixture filings covering the security 
interests created by this Security  Agreement as are deemed  necessary or 
desirable by counsel for the Secured  Party to protect the security  interest of
the Secured Party in the Replacement Equipment and such related Contract or 
Replacement Contract;

                                        6

<PAGE>


                           (B)  on such replacement date, the Secured Party 
shall receive a valid, first priority  security  interest in the  Replacement  
Equipment and such Contract or Replacement  Contract free and clear of Liens  
(excepting those expressly agreed to by Secured Party);

                           (C)  the Secured Party shall have received evidence
reasonably satisfactory to it with  respect to the  Replacement  Equipment,  its
function,  fair market value, condition, utility and remaining useful life.

         10. Insurance:  (a) Crescent, at its own cost and expense shall obtain,
maintain  and shall keep the Items  insured  against all risks of loss or damage
from every cause whatsoever  (other than vandalism or malicious  mischief) in an
amount not less than the greater of actual cash value or the aggregate amount of
all unpaid  Indebtedness as at any time,  with such  reasonable  deductibles and
co-insurance (as are consistent with industry  standards or as Secured Party may
approve in writing).  Secured Party agrees that Crescent may self-insure against
such casualty risks for any Item of  Collateral.  Crescent shall also obtain and
maintain,  until  repayment  in  full  of  the  Indebtedness,  public  liability
insurance  covering  liability for bodily injury,  including death, and property
damage  resulting from the purchase,  ownership,  leasing,  maintenance,  use or
operation of the Items in an amount of at least  $1,000,000 with respect to each
separate  Schedule hereto,  or in such greater amounts as Secured Party may from
time to time require. If not self-insured, Secured Party shall be the sole named
loss-payee  with  respect  to  damage  or loss to the Items and shall be a named
additional  insured on the public  liability  insurance.  All insurance shall be
with insurers and in form  satisfactory  to Secured Party;  shall provide for at
least  thirty  (30) days  advance  written  notice to Secured  Party  before any
cancellation or material  modification thereof (or ten (10) days advance written
notice for  cancellation  for nonpayment of premium);  shall waive any claim for
premium  against  Secured  Party;  and shall not be  invalidated or the insurers
liability to or for or on behalf of Secured  Party be  diminished or affected by
any  breach  of  warranty  or  representation  or other act or  omission  of the
Borrower.  Crescent  shall  deliver  to  Secured  Party the  original  policy or
policies of insurance,  certificates of insurance or other evidence satisfactory
to Secured  Party  evidencing  the  insurance  required  hereby along with proof
satisfactory  to Secured Party of the payment of the premium  therefor.  Secured
Party may, at its option,  apply proceeds of insurance,  in whole or in part, to
(A)  repair or replace  any Item or any  portion  thereof,  or (B)  satisfy  any
obligation of Borrower to Secured Party hereunder,  provided that in the absence
of any Event of Default,  ten (10) business  days' prior written notice is given
to Crescent.

                  (b) Secured Party is authorized,  but under no duty, to obtain
such insurance  upon failure of Crescent to do so. In obtaining such  insurance,
Secured  Party  agrees to use  reasonable  efforts to  maintain  the cost of the
premiums for such insurance to reasonable amounts. Crescent shall give immediate
written  notice to the Secured  Party of loss or damage to the Items  reasonably
estimated  by  Crescent  to be in  excess of $1,500  per Item.  Crescent  hereby
irrevocably  appoints  the Secured  Party as  attorney-in-fact,  coupled with an
interest, for Crescent in obtaining,  adjusting and canceling any such insurance
and endorsing settlement drafts and hereby assigns to the Secured Party all sums
which may become payable under such  insurance,  including  return  premiums and
dividends, as additional security for the Indebtedness.


                                        7

<PAGE>



         11. Indemnification: Borrower hereby agrees to indemnify, save and keep
harmless Secured Party, its agents, employees,  successors and assigns, from and
against  any  and  all  losses,   damages   (including   indirect,   special  or
consequential),  penalties,  injuries,  claims,  actions  and  suits  including,
without limitation,  legal expenses,  of whatsoever kind and nature, in contract
or tort,  including,  but in no way limited to, Secured Party's strict liability
in tort,  unless and except to the extent  Secured  Party's gross  negligence or
willful  misconduct is the proximate  cause of any such loss,  damage,  penalty,
injury,  claim, action or suit, and Borrower shall at its own expense defend any
and all such  actions,  arising out of the  selection,  modification,  purchase,
ownership,  acceptance or rejection of any of the  Collateral  and the delivery,
possession,  maintenance, use, condition (including,  without limitation, latent
and other defects, whether or not discoverable by Secured Party or Borrower, and
any claim for patent, trademark or copyright infringement),  or operation of any
Item of Collateral by whomsoever used or operated or arising out of or resulting
from the  condition of any Item of  Collateral  sold or disposed of after use by
Borrower,  any lessee,  sublessee or employee of Borrower.  The  indemnities and
assumptions  of liability  herein  provided for shall continue in full force and
effect  notwithstanding  the termination of this Security  Agreement  whether by
expiration of time, operation or law or otherwise.  BORROWER AGREES THAT SECURED
PARTY  SHALL  NOT BE  LIABLE  TO  BORROWER  FOR ANY  CLAIM  CAUSED  DIRECTLY  OR
INDIRECTLY BY THE  INADEQUACY  OF ANY ITEM OF COLLATERAL  FOR ANY PURPOSE OR ANY
DEFICIENCY OR DEFECT THEREIN OR THE USE OR  MAINTENANCE  THEREOF OR ANY REPAIRS,
SERVICING OR ADJUSTMENTS THERETO OR ANY DELAY IN PROVIDING OR FAILURE TO PROVIDE
ANY THEREOF OR ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF OR ANY LOSS OF
BUSINESS, ALL OF WHICH SHALL BE THE SOLE RISK AND RESPONSIBILITY OF BORROWER.

         12.  Default;  Remedies:  If any of the following  (herein an "Event of
Default") shall occur: (a) Borrower shall default in the payment of Indebtedness
to Secured Party or in making any other payment hereunder or under any Note when
due, and such default shall continue for a period of ten (10) days after written
notice  thereof to Borrower from Secured Party without its cure by Borrower,  or
(b)  Borrower  shall  default  in the  payment  when due of any  obligations  of
Borrower (A) equal to or greater than $50,000,  whether or not to Secured Party,
arising  independently of this Security  Agreement or any Note, and such default
shall  continue for a period of ten (10) days after  written  notice  thereof to
Borrower  from Secured Party after any  applicable  cure period set forth in the
document  creating  such  obligation  without  its cure by Borrower or (B) which
default would permit the acceleration of such obligation,  or (c) Borrower shall
default in the performance of any other material covenant contained herein other
than those referred to in clause (d) herein (including any Schedule hereto), any
Certificate in respect hereof or any Note or any other document  entered into in
connection with this Security  Agreement and such default shall continue for ten
(10) days after  written  notice  thereof to Borrower by Secured  Party,  or (d)
Crescent shall breach any of its material insurance  obligations under paragraph
10 hereof,  or (e) any  representation  or  warranty  made by  Borrower  in this
Security  Agreement or any other documents  entered into in connection with this
Security  Agreement shall prove to be incorrect in any material respect when any
such  representation  or warranty was made or given,  or (f)  Crescent,  ANEI or
Parent shall become insolvent or make an

                                        8

<PAGE>



assignment for the benefit of creditors,  or (g) Crescent,  ANEI or Parent shall
apply for or consent to the appointment of a receiver, trustee or liquidator for
a substantial  part of its property or such  receiver,  trustee or liquidator is
appointed without the application or consent of Crescent, ANEI or Parent, or (h)
a  petition  shall be filed by or  against  Crescent,  ANEI or Parent  under the
federal  bankruptcy  laws  (including,   without  limitation,   a  petition  for
reorganization,  arrangement or extension) or under any other  insolvency law or
law  providing  for the relief of  debtors,  or (i) there is,  without the prior
consent of Secured  Party which consent shall not be  unreasonably  withheld,  a
change  in  control  (defined  to be a change  in the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the management and
policies of Borrower,  whether  through the ownership of voting  securities,  by
contract  or  otherwise  but not to include a change in the  composition  of the
boards of  directors of  Borrower),  or (j) there is a material  adverse  change
(defined  to be a  decrease  of at  least  one-third  (1/3)  of  net  worth,  as
determined in accordance  with  generally  accepted  accounting  principles)  in
Parent's financial  condition;  then, to the extent permitted by applicable law,
Secured  Party shall have the right to exercise any one or more of the following
remedies one or more times: (A) declare this Security Agreement in default, such
declaration  being applicable to all Schedules  hereunder except as specifically
excepted  by  Secured  Party;  (B)  declare  the entire  amount of unpaid  total
Indebtedness immediately due and payable; (C) declare due and payable the amount
of any indemnification hereunder if then determinable, with interest as provided
herein;  (D) upon  notice to any  lessees or  sublessees  permitted  pursuant to
paragraph  6(a),  to obtain and retain all rentals  thereafter  due, paid and/or
payable;  (E) without  demand or legal process to enter into any premises  where
the  Collateral  may be found  and  take  possession  of and  remove  the  same,
whereupon all rights of Borrower in the Collateral  shall terminate  absolutely,
and either (i) retain all prior payments of Indebtedness and sell the Collateral
at public or private sale,  with or without notice to Borrower,  with or without
having the  Collateral at the sale, at which sale Secured Party may purchase all
or any of the Collateral,  the proceeds of such sale, less expenses of retaking,
storage,  repairing and reselling,  and reasonable  attorneys'  fees incurred by
Secured  Party,  to be applied to the payment of the unpaid total  Indebtedness,
Borrower remaining liable for the balance of said unpaid total Indebtedness, and
any surplus  thereafter  remaining to be for the account of Borrower  (except as
otherwise  provided under  applicable law) or (ii) retain the Collateral and all
prior  payments  of  Indebtedness,  in  satisfaction  of  the  remaining  unpaid
Indebtedness in accordance with Section 9-505(2) of the Uniform  Commercial Code
as in effect  in the  State of New  York;  (F)  pursue  any  other  remedy  then
available to Secured Party at law or in equity.  Borrower  hereby  covenants and
agrees to notify  Secured Party  immediately  of the  occurrence of any Event of
Default  specified  in this  paragraph  12 and  promptly  after such  occurrence
provide Secured Party with a means of access to the coin boxes of pay telephones
which constitute Items of Collateral.

         13. Remedies Cumulative:  Time of performance of Borrower's obligations
hereunder  is of the  essence.  All  remedies  of Secured  Party  hereunder  are
cumulative,  and may, to the extent permitted by law, be exercised  concurrently
or  separately,  and the exercise of any one remedy shall not be deemed to be an
election of such remedy to the  exclusion of any other remedy or to preclude the
exercise  of any  other  remedy at any other  time.  Failure  on the part of the
Secured Party to exercise, or delay in exercising, any right or remedy hereunder
or Secured Party's failure at any time

                                        9

<PAGE>



to restrict  performance by Borrower of any of the  provisions  hereof shall not
operate as a waiver thereof; nor shall any single or partial exercise by Secured
Party of any right or remedy  hereunder  preclude  any  other  further  exercise
thereof or the exercise of any other right or remedy.

         14.  Assignment:  Borrower  acknowledges,  understands  and agrees that
Secured Party may assign this Security Agreement, any Schedule or Certificate or
any Note to any bank or any  other  lending  institution  or any  other  person,
organization or agency upon ten (10) days' prior written notice to Borrower, and
Borrower shall (a) recognize any such assignment,  (b) accept the lawful demands
of such assignee,  (c) surrender assigned Collateral only to such assignee,  (d)
pay all  Indebtedness  payable  hereunder and do any and all things  required of
Borrower  hereunder,  notwithstanding  any default of the  Secured  Party or the
existence of any claim,  defense or offset  between  Borrower and Secured Party,
and (e) not require any assignee of the Security  Agreement to perform any duty,
covenant or condition  required to be performed by Secured Party under the terms
of this Security  Agreement  provided that Secured Party shall remain liable for
such performance.  The obligations of Borrower shall not be subject,  as against
any such  assignee  or  transferee,  to any  defense,  set-off  or  counterclaim
available to Borrower  against  Secured Party and any such  defense,  set-off or
counterclaim may be asserted only against Secured Party.

         15.  Filings:  Borrower agrees to execute any instrument or instruments
necessary or expedient for filing,  recording,  perfecting,  or notifying of the
interest of Secured  Party upon  request of, and as  reasonably  determined  by,
Secured Party.  Borrower hereby  specifically  authorizes  Secured Party to file
financing statements not signed by Borrower or to execute same for and on behalf
of Borrower as  Borrower's  attorney-in-fact,  irrevocably  and coupled  with an
interest, for such purposes. A carbon, photographic or other reproduction of the
Security  Agreement or a financing  statement shall be sufficient as a financing
statement for filing purposes.

         16.  Notes:  (a) Upon ten (10) days'  prior  written  notice by Secured
Party to Borrower  that Secured  Party  intends to transfer  any Note,  Borrower
shall, in exchange for the Note to be transferred,  promptly  execute a new note
in the amount of the exchanged Note,  naming the transferee as payee thereunder,
and  deliver  the  same  to  such  transferee,   provided,  that  Secured  Party
simultaneously surrenders the old Note to Crescent or ANEI.

                  (b) If any Note shall become  mutilated or shall be destroyed,
lost or stolen,  Borrower  shall,  upon the written  request of payee under such
Note,  execute and deliver in replacement  thereof,  the new Note payable in the
same amount and dated the same date as the Note so mutilated, destroyed, lost or
stolen,  provided,  that such payee delivers to Crescent or ANEI  simultaneously
therewith,  the  mutilated  Note  or  a  signed  affidavit  in  form  reasonably
satisfactory  to Crescent or ANEI stating that such Note was destroyed,  lost or
stolen.

         17.  Borrower's Representations and Covenants Regarding Collateral.  
The Borrower represents, warrants, and covenants to the Secured Party as 
follows:   (i) Crescent is the sole and lawful owner of all of the Collateral, 
with good title thereto free of all Liens except for the rights of the Secured 
Party as provided in this Security Agreement; (ii) Crescent has the power and 
authority

                                       10

<PAGE>



to, and does hereby convey to the Secured  Party,  a valid and  perfected  first
priority  security  interest in all of the Collateral as security for the prompt
and full payment of all of the Indebtedness;  (iii) none of the Collateral,  nor
any interest therein, has been previously  transferred,  conveyed,  assigned, or
pledged by the  Borrower in any manner that would  result in  impairment  of the
Secured Party's first priority  security  interest in the Collateral  granted to
the Secured Party pursuant hereto; (iv) the Note, this Security Agreement,  each
Schedule, and the Contracts, create legal, valid, and binding obligations of the
respective  parties thereto,  enforceable  against them in accordance with their
respective terms, subject to applicable bankruptcy,  insolvency,  reorganization
or other similar laws  affecting the  enforceability  generally of the rights of
creditors  or  lessors;  (v) except as  otherwise  provided in Section 5 hereof,
Crescent  shall  not  assign  any of its  rights to the  Collateral,  or grant a
security  interest  in or lien upon any  thereof,  to any person  other than the
Secured Party without the Secured Party's prior written  consent;  (vi) Borrower
shall execute such financing statements,  continuation financing statements, and
assignment  financing statements in connection herewith as the Secured Party may
reasonably request concurrently with the delivery of the Security Agreement, and
at any time or times  thereafter;  (vii)  Borrower shall not amend or modify any
provision  of any  Contract  if such  amendment  or  modification  would  have a
material  adverse  effect on  Lender's  rights as granted  herein or on Lender's
first priority  security  interest  therein without the prior written consent of
the Secured Party (viii) each of the  Contracts is, by its terms,  assignable by
Crescent  (except as  prohibited  by applicable  laws and  regulations),  and no
Contract  provides  for  any  claim  (other  than  a  claim  for  nonpayment  of
commissions  due  thereunder)  or lien by the owner of the premises on which any
Item is  located  on any such  Item,  and  each  Contract  (other  than 2 of the
Contracts)  allows Crescent to remove the Collateral from the premises  whenever
Crescent  or  its  assigns  feels  it is  necessary  to do  so  to  prevent  the
deterioration of the value of the Collateral without liability or accountability
to such owner; (ix) if Crescent shall replace any item of Equipment  pursuant to
Section 9 hereof,  Borrower agrees that the Contract related to such Replacement
Equipment  shall  automatically,  without  further action by Borrower or Secured
Party, be assigned to Secured Party; (x) the related Contracts for at least 1500
of the Items have  terms,  including  automatic  renewals  thereof,  of at least
forty-eight  (48) months from the date  hereof;  (xi)  Crescent  shall  promptly
notify Secured Party if any Contract is terminated or is not renewed at any time
the Note secured by such Contract is  outstanding;(xii)  each Item of Collateral
which is a pay telephone contains an Elcotel number 4 or 5 board and constitutes
a  "smart  phone"  as such  term  is  currently  used in the  telecommunications
industry;  and (xiii)  the  Collateral  is and shall  remain  personal  property
notwithstanding  the  manner in which it is,  may be or become  affixed  to, any
premises,  and title  thereto  shall remain at all times in Crescent,  its legal
representatives, successors, agents or permitted assigns.

         18.  No  Assumption  of  Obligations.   By  virtue  of  the  collateral
assignment under this Security  Agreement,  the Secured Party will not be deemed
to have assumed (or to have agreed to perform) any of the obligations,  or to be
subject to any  liabilities,  of the Borrower under any Contract.  This Security
Agreement  will  not  relieve  the  Borrower  from  any  of the  obligations  or
liabilities of the Borrower under each Contract.

         19.  Power of Attorney.  Borrower hereby names and appoints the Secured
Party as Crescent's

                                       11

<PAGE>



true and lawful  attorney-in-fact  for the following  purposes (all of which the
Secured Party may undertake, at any time an Event of Default has occurred and is
continuing in Crescent's  name or in the Secured  Party's name,  without further
consent  of or notice  to  Crescent  and  without  affecting  or  impairing  the
obligations of Crescent  hereunder):  (i) to sign  Crescent's name and otherwise
endorse all checks, notes, drafts, and other receipts or remittances received or
given with respect to any obligations owing by or to Crescent under any Contract
and under the  agreement  with the B&C Agent (as  defined  in Section 20 hereof)
(collectively, the "Contract Obligations"); (ii) renew, extend, modify, perform,
release or  discharge  any  Contract  Obligation;  (iii)  accept full or partial
payments  with  respect to any of the Contract  Obligations;  (iv) accept new or
additional documents,  instruments or agreements relating to, or in substitution
of, the  Contract  Obligations;  (v)  settle,  release (by  operation  of law or
otherwise),  compound,  compromise,  collect,  or liquidate  any of the Contract
Obligations  and all  security  therefor  (including,  but not  limited  to, the
Collateral);  (vi) consent to the transfer,  release, or return of security, and
take and hold  additional or substitute  security for the Contract  Obligations;
(vii) amend,  modify,  exchange,  release or waive any security or guarantee for
any of the  Contract  Obligations;  and  (viii)  bid and  purchase  at any sale,
foreclosure or other  disposition  of any of the Contract  Obligations or any of
the security therefor.

         20. Operator Service  Revenues.  ANEI  acknowledges that it has entered
into a  contractual  arrangement  with OAN  Services,  Inc.  (the "B&C  Agent"),
pursuant  to which the B&C Agent is  obligated  to  forward to ANEI on a regular
basis certain monies in respect of long distance  operator-assisted  calls which
are generated by each Item of  Collateral  which is a pay telephone and actually
billed and collected by the B&C Agent (the "Crescent-Derived OS Revenue").  ANEI
represents and warrants that it has directed the B&C Agent, pursuant to a letter
of  direction  substantially  in the form of Exhibit C hereto,  to  forward  the
Crescent-Derived  OS Revenue  directly  to an account  specified  by the Secured
Party. Pursuant to the terms of a lockbox agreement with a collection agent, the
Secured Party agrees that, after deducting from such Crescent-Derived OS Revenue
the amount  necessary  to satisfy  the  monthly  debt  service on the Note,  the
remainder shall be available to the Borrower.

         21.  Release of  Collateral.  Notwithstanding  anything to the contrary
contained herein,  it is expressly  understood and agreed that in the event that
Borrower shall obtain financing from a third party,  Secured Party shall, in the
absence of any Event of Default  hereunder,  release its security interest in up
to 386 Items,  the  Contracts  with  respect to such Items and all  Proceeds and
Additions of such Items  provided,  that (i) Secured Party  receives at least 30
days' prior written notice of such proposed release,  (ii) Secured Party retains
a perfected first priority  security  interest in at least 1500 Items which have
related  Contracts  with terms which extend at least to the maturity of the Note
and (iii) Secured Party  receives an executed  copy of the  commitment  for such
financing. If the foregoing conditions are met, Secured Party agrees to promptly
execute and deliver,  at  Borrower's  sole cost and  expense,  one or more UCC-3
financing  statements and such other documents and instruments as are reasonably
necessary to effectuate such release.

         22.  Miscellaneous:  (a)  In case of failure of Borrower to comply with
any provision of this Security Agreement, Secured Party shall have the right, 
but shall not be obligated, to effect such

                                       12

<PAGE>



compliance  in  whole  or in  part,  and  all  moneys  spent  and  expenses  and
obligations  incurred or assumed by Secured Party in effecting  such  compliance
(including but not limited to,  attorneys' fees and costs incurred in attempting
to effect compliance against Borrower and/or others) shall constitute additional
Indebtedness  hereby  secured due to Secured  Party ten (10) days after the date
Secured  Party  sends  notice to Crescent or ANEI  requesting  payment.  Secured
Party's  effecting such  compliance  shall not be waiver of Borrower's  default.
Interest on any payments  made by Secured  Party  hereunder on amounts due after
Secured Party  declares  default under  paragraph 12 and interest on any overdue
payment under  paragraph 11 shall be at the default rate prescribed in the Note,
(or,  if there is more than one Note,  at the highest  among the  default  rates
prescribed  in such  Notes),  but not to exceed the  maximum  lawful  rate.  Any
provisions in this Security  Agreement,  any Schedule  hereto or  Certificate in
respect  hereof which are in conflict with any statute,  law or rule  applicable
shall be deemed omitted, modified or altered to conform thereto.

                  (b)  If  any  provision  of  this  Security   Agreement  shall
contravene or be invalid under applicable law or regulation  (including  federal
law and  regulation),  such  contravention  or  invalidity  shall not affect the
entire  Security  Agreement,  the  provisions  held to be  invalid  to be deemed
deleted or modified  and the Security  Agreement  interpreted  and  construed as
though such invalid  provision or  provisions  were not part hereof or conformed
thereto.

                  (c)  Secured  Party  may give  notice  to  Borrower  or make a
request of Borrower by depositing such notice or request in the U.S. mail, first
class  postage  prepaid,  addressed  to the  Borrower at its address  above,  an
address furnished by Borrower to Secured Party or at the option of Borrower,  at
the principal place of business of Crescent (7 Mayflower Place,  Floral Park, NY
11101) or the  principal  place of  business of ANEI (100 West  Lucerne  Circle,
Suite 100,  Orlando,  FL 32801).  All  notices  required to be given by Borrower
hereunder  shall be deemed  adequately  given if sent by registered or certified
mail or by overnight delivery service to Secured Party at the address of Secured
Party stated  herein,  or at such other place as Secured  Party may designate to
Borrower in writing.

                  (d)  This Security Agreement, any addendum hereto attached and
signed by Secured Party and Borrower, any Schedule hereto and any Certificate in
respect hereof, constitute the entire agreement of the parties with respect to 
the subject matter hereof.  THIS SECURITY AGREEMENT,  ANY VARIATION OR 
MODIFICATION OF THIS SECURITY AGREEMENT, ANY WAIVER OF ANY OF ITS  PROVISIONS OR
CONDITIONS  AND ALL  SCHEDULES  SHALL NOT BE VALID UNLESS IN  WRITING AND SIGNED
BY AN  AUTHORIZED  OFFICER OR MANAGER OF SECURED PARTY.

                  (e)  BORROWER WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
LITIGATION ARISING HEREFROM OR IN RELATION HERETO.

                  (f)  THIS SECURITY AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO CONFLICTS OF LAW RULES.

                                       13

<PAGE>




                  (g) BORROWER  SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL
ACTION OR PROCEEDING  RELATING TO THIS AGREEMENT OR ANY NOTE, OR FOR RECOGNITION
AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE NONEXCLUSIVE  GENERAL
JURISDICTION  OF ANY STATE OR FEDERAL COURT SITTING IN THE CITY OF NEW YORK, NEW
YORK AND  APPELLATE  COURTS FROM ANY THEREOF;  CONSENTS  THAT ANY SUCH ACTION OR
PROCEEDING  MAY BE BROUGHT IN SUCH COURTS AND WAIVES ANY  OBJECTION  THAT IT MAY
NOW OR HEREAFTER  HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
COURT OR THAT SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND
AGREES NOT TO PLEAD OR CLAIM THE SAME;  AND AGREES  THAT  SERVICE MAY BE MADE ON
BORROWER IN ANY SUCH  PROCEEDING  BY DELIVERING A COPY OF PROCESS TO BORROWER AT
BORROWER'S ABOVE ADDRESS, SUCH SERVICE TO BE EFFECTIVE UPON RECEIPT.

                  (h) With respect to the Borrower, all words used herein in the
singular shall be deemed to have been used in the plural;  "Borrower" shall mean
each and any one or more of them.


                                       14

<PAGE>




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

                                        CRESCENT PUBLIC COMMUNICATIONS
                                        Inc., as Borrower


                                        By:   /s/   Kenneth Baritz
                                             Name:  Kenneth Baritz
                                             Title:  Chairman


                                        ATTEST: /s/   Renee A. Brander
                                              Name: Renee A. Brandner
                                              Title:  Secretary


                                        AMERICAN NETWORK EXCHANGE, Inc.


                                        By:   /s/   Kenneth Baritz
                                             Name:  Kenneth Baritz
                                             Title:  Chairman


                                        ATTEST: /s/    Amy S. Gross
                                              Name: Amy S. Gross
                                              Title:  Secretary


LYON CREDIT CORPORATION,
as Secured Party

By:/s/ F. S. Snipes
     Name:
     Title:

                                       15

<PAGE>



                      SCHEDULE NO. 1 TO SECURITY AGREEMENT


Description of Collateral:  See Schedule A hereto.

Collateral currently located at:  The locations set forth on Schedule A hereto

         Reference is made to that certain Security Agreement No. 001, dated as
of October 4, 1995 (as it may be modified or amended, now or hereafter, called
the "Security Agreement") between Lyon Credit Corporation ("Secured Party"), 
American Network Exchange, Inc. and Crescent Public Communications Inc. 
(collectively, "Borrower" ).

         All of the terms and  provisions  of the Security  Agreement are hereby
incorporated by reference into and made part of this Schedule to the same extent
as if fully set forth  herein.  Borrower  and Secured  Party  hereby agree to be
bound by the terms and  provisions,  and hereby make,  as if made as of the date
hereof, the representations  and warranties  contained in the Security Agreement
as each relates to the Collateral described above.

         IN WITNESS  WHEREOF,  the parties hereto have executed this Schedule as
of the 4th day of October, 1995.

AMERICAN NETWORK EXCHANGE, INC.,            CRESCENT PUBLIC COMMUNICATIONS
   as Borrower                              INC., as Borrower

By:  /s/   Kenneth Baritz                   By:  /s/  Kenneth Baritz
Name: Kennth Baritz                         Name:  Kenneth Baritz
Title:  Chairman                            Title:  Chairman

Attest: /s/  Amy S. Gross                   By: /s/ Renee A. Brandner
Name:  Amy S. Gross                         Name:  Renee A. Brandner
Title  Secretary                            Title:  Secretary

LYON CREDIT CORPORATION,
         as Secured Party

By:/s/   F. S. Snipes
Name:
Title:

                                            AMERICAN NETWORK EXCHANGE, Inc.

                                            By:
                                            Name:
                                            Title:

LYON CREDIT CORPORATION,
         as Secured Party

By:/s/
Name:
Title:




                                       16

<PAGE>




                                 Exhibit "B" to

                             Security Agreement No.

                     SCHEDULE NO. ___ TO SECURITY AGREEMENT

Description of Collateral:  Installed Pay Telephones

Collateral be located at:  see attached

         Reference is made to that certain Security Agreement No. ___, dated as
of ______, 19__ (as it may be modified or amended, now or hereafter, called the
"Security Agreement") between Lyon Credit Corporation ("Secured Party"), 
Crescent Public Communications Inc. and American Network Exchange, Inc. 
(collectively, "Borrower").

         All of the terms and  provisions  of the Security  Agreement are hereby
incorporated by reference into and made part of this Schedule to the same extent
as if fully set forth  herein.  Borrower  and Secured  Party  hereby agree to be
bound by the terms and  provisions,  and hereby make,  as if made as of the date
hereof, the representations and warranties applicable to each Borrower contained
in the Security Agreement as each relates to the Collateral described below.

         IN WITNESS  WHEREOF,  the parties hereto have executed this Schedule as
of the ___ day of ____, 19__.


                                        CRESCENT PUBLIC COMMUNICATIONS
                                        Inc., as Borrower


                                        By:
                                        Name:
                                        Title:


                                        ATTEST:
                                        Name:
                                        Title:


                                       18

<PAGE>