LOAN AND SECURITY AGREEMENT


     This  Agreement is between the  undersigned  Borrower  and the  undersigned
Lender concerning loans and other credit  accommodations to be made by Lender to
Borrower.


SECTION 1. PARTIES

     1.1 The  "Borrower"  is the  person,  firm,  corporation  or other  entity,
identified as the Borrower in Section 10.6(c) and its successors and assigns. If
more than one  Borrower is  specified  in Section  10.6(c),  all  references  to
Borrower  shall  mean each of them,  jointly  and  severally,  individually  and
collectively, and the successors and assigns of each.

     1.2 The "Lender" is The CIT Group/Credit  Finance,  Inc. and its successors
and assigns.


SECTION 2. LOANS AND OTHER CREDIT ACCOMMODATIONS

     2.1  Revolving  Loans.  Lender shall,  subject to the terms and  conditions
contained  herein,  make  revolving  loans to  Borrower  ("Revolving  Loans") in
amounts  requested by Borrower  from time to time,  but not in excess of the Net
Availability  existing immediately prior to the making of the requested loan and
provided  the  requested  loan would not cause the  outstanding  Obligations  to
exceed the Maximum Credit.

     (a) The "Maximum Credit" is set forth in Section 10.1(a) hereof.

     (b) The "Gross Availability" shall be calculated at any time as the product
obtained by multiplying the outstanding amount of Eligible Accounts,  net of all
taxes,  discounts,  allowances  and credits  given or claimed,  by the  Eligible
Accounts Percentage set forth in Section 10.1(b) minus Reserves.

     (c) The "Net  Availability"  shall be  calculated  at any time as an amount
equal  to  the   Gross   Availability   minus  the   aggregate   amount  of  all
then-outstanding Obligations to Lender other than the then outstanding principal
balance of the Term Loan, if any.

     (d) "Eligible  Accounts"  are accounts  created by Borrower in the ordinary
course of its  business  which are and remain  acceptable  to Lender for lending
purposes.  General criteria for Eligible Accounts are set forth below but may be
revised from time to time by Lender, in its sole judgment, on fifteen (15) days'
prior written notice to Borrower.  Lender shall,  in general,  deem the accounts
set forth below to be Eligible  Accounts,  in each case a receivable due from an
account debtor arising in connection with:

          (x) 1+ Direct Dial Long Distance Service Accounts;


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          (y) 1+ Coin Sent Paid Long Distance Accounts; and

          (z) Dial Around Pay Phone Compensation Plan Accounts.

All of which  accounts  Lender,  in its sole  judgment,  deems to be an Eligible
Account,  provided,  however,  that no such account shall be an Eligible Account
if: (i) the Dial Around Pay Phone  Compensation  Plan Accounts are more than one
hundred  eighty  (180) days past invoice  date;  (ii) the 1+ Coin Sent Paid Long
Distance Accounts and the 1+ Direct Dial Long Distance Service Accounts are more
than ninety (90) days past invoice  date;  (iii) the account is billed more than
sixty (60) days past the  origination  call; (iv) such account arises out of the
rendering of services to an Affiliate of Borrower or to a Person  controlled  by
an Affiliate of Borrower;  or (v) such account is unpaid more than the number of
days set forth above; or (vi) any covenant, representation or warranty contained
in this Agreement  with respect to such account has been breached;  or (vii) the
account  debtor has disputed  liability with respect to a receivable or has made
any claim with respect to any other  account due to  Borrower,  to the extent of
any dispute or claim,  or (viii)  such  account is due from or  processed  by an
account debtor that has commenced a voluntary case under the federal  bankruptcy
laws,  as now  constituted  or hereafter  amended,  or made  assignment  for the
benefit of  creditors,  or a decree or order for  relief  has been  entered by a
court having  jurisdiction over such account debtor in an involuntary case under
the federal  bankruptcy  laws, as now constituted or hereafter  amended,  or any
other petition or other application for relief under the federal bankruptcy laws
has been filed against the account debtor,  or if the account debtor has failed,
suspended  business,  ceased  to be  solvent,  or  consented  to or  suffered  a
receiver, trustee, liquidator, or custodian to be appointed for it or for all or
a significant portion of its assets or affairs; or (ix) Lender believes,  in its
reasonable judgment, that collection of such Account is insecure or that payment
thereof is  doubtful  or will be delayed by reason of another  account  debtor's
financial  condition;  or (x)  the  account  is  subject  to a lien  other  than
Lender's; or (xi) the account is evidenced by chattel paper or an instrument (as
defined in the Uniform  Commercial  Code) or has been  reduced to  judgment;  or
(xii)  Borrower has made any agreement  with another  account  debtor(s) for any
deduction therefrom,  except for post-billing  adjustments which are made in the
ordinary  course of business and except as provided in the applicable  agreement
for  billing  services,  but only to the  extent  of such  deduction;  or (xiii)
Borrower  has made an  agreement  with the account  debtor to extend the time of
payment thereof, unless,  notwithstanding such agreement, payment is made within
ninety  (90) days of the  applicable  invoice  date;  or (xiv)  such  account is
subject to setoff,  carve-out  or other  adjustment;  or (xv) such  account is a
duplicate  billing;  (xvi) such accounts  have  dilution  rates (as set forth in
sections  10.1(b)(i) and (ii) hereof) which are  unacceptable to Lender;  (xvii)
such accounts are not accounts  with respect to which the account  debtor is the
United States or any State or political  subdivision  thereof or any department,
agency  or  instrumentality  of  the  United  States,  any  State  or  political
subdivision,  unless there has been compliance with the Assignment of Claims Act
or any similar State or local law, if applicable; (xviii) Borrower has delivered
to Lender or Lender's representative such documents as Lender may have requested
in connection  with such accounts and Lender shall have received a  verification
of such account,  satisfactory to it, if sent to the account debtor or any other
obligor or any bailee;  (xix) there are no facts  existing or  threatened  which
might result in any adverse change in the account debtor's financial  condition;



<PAGE>


(xx) such  accounts  owed by a single  account  debtor or its  affiliates do not
represent  more than  thirty  five  percent  (35%) (or in the event the  account
debtor is AT&T,  does not exceed fifty percent (50%)) of all otherwise  Eligible
Accounts provided however,  that accounts excluded from Eligible Accounts solely
by reason of this  subsection  (xx) shall  nevertheless  be considered  Eligible
Accounts  to the  extent of the  amount of such  accounts  which does not exceed
thirty five percent (35%) (or in the event the account debtor is AT&T,  does not
exceed fifty  percent  (50%)) of all  otherwise  Eligible  Accounts;  (xxi) such
accounts are not owed by an account  debtor who is or whose  Affiliates are past
due upon other  accounts  owed to Borrower  comprising  more than fifty  percent
(50%) of the accounts of such account debtor or its affiliates owed to Borrower;
(xxii) such  accounts are owed by account  debtors whose total  indebtedness  to
Borrower  does  not  exceed  the  amount  of  any  customer   credit  limits  as
established,  and  changed,  from time to time by  Lender on notice to  Borrower
(accounts  excluded from Eligible  Accounts  solely by reason of this subsection
(xxii) shall  nevertheless  be  considered  Eligible  Accounts to the extent the
amount of such accounts does not exceed such customer credit limit);  or (xxiii)
such accounts are owed by account  debtors deemed  creditworthy  at all times by
Lender.

     (e)  "Eligible  Inventory"  is  inventory  owned by  Borrower  which is and
remains  acceptable to Lender for lending  purposes and is located at one of the
addresses set forth in Section 10.6(e).

     (f) Lender shall have a continuing  right to deduct reserves in determining
the Gross Availability ("Reserves"),  and to increase and decrease such Reserves
from time to time, if and to the extent that, in Lender's  sole  judgment,  such
Reserves are necessary to protect  Lender against any state of facts which does,
or would, with notice or passage of time or both, constitute an Event of Default
or  have an  adverse  effect  on any  Collateral.  Lender  may,  at its  option,
implement  Reserves by designating as ineligible a sufficient amount of accounts
or inventory which would otherwise be Eligible Accounts or Eligible Inventory so
as to reduce Gross Availability by the amount of the intended Reserve.

     (g) Subject to the terms and conditions  hereof,  including but not limited
to the existence of sufficient Gross Availability and Net Availability, Borrower
agrees to borrow  sufficient  amounts from time to time so that the  outstanding
Revolving  Loan or the  Term  Loan,  shall at all  times  equal  or  exceed  the
principal  amount  set  forth  in  Section  10.1(d)  as the  Minimum  Borrowing;
provided, that if Borrower fails to do so, interest shall nevertheless accrue on
the  Obligations  as if Borrower had at all times borrowed such amounts as would
have been sufficient to maintain the  outstanding  Revolving Loans and Term Loan
at an amount equal to the Minimum  Borrowing (and Lender shall have the right to
charge  Borrower's  loan  account for such  additional  interest),  and provided

<PAGE>

further that such accrual  shall not impose upon Lender any  obligation  to make
loans to Borrower to increase the  outstanding  Revolving  Loans or Term Loan to
such Minimum Borrowing.

     2.2 Term Loan. Any term loan and the terms of such loan,  made by Lender to
Borrower are set forth in Section 10.2 ("Term Loan"). 

     2.3 Accommodations.

     (a) Lender may, in its sole discretion,  issue or cause to be issued,  from
time to time at Borrower's  request and on terms and conditions and for purposes
satisfactory to Lender, credit  accommodations  consisting of letters of credit,
bankers'  acceptances,  merchandise  purchase  guaranties or other guaranties or
indemnities for Borrower's  account  ("Accommodations").  Borrower shall execute
and perform  additional  agreements  relating to the  Accommodations in form and
substance  acceptable  to Lender  and the issuer of any  Accommodations,  all of
which shall supplement the rights and remedies granted herein. Any payments made
by Lender or any affiliate of Lender in connection with the Accommodations shall
constitute additional Revolving Loans to Borrower.

     (b) In  addition  to the fees and costs of any  issuer in  connection  with
issuing or administering  Accommodations,  Borrower shall pay monthly to Lender,
on the first day of each month, a charge on open  Accommodations at the rate per
annum set forth in Section 10.3 (the "Accommodation Charges").

     (c)  No  Accommodation  will  be  issued  unless  the  full  amount  of the
Accommodation requested,  plus fees and costs for issuance, is less than the Net
Availability  existing  immediately  prior  to the  issuance  of  the  requested
Accommodation,  or if the requested  Accommodation  would cause the  outstanding
Obligations  to  exceed  the  Maximum  Credit,  or  cause  the  open  amount  of
Accommodations to exceed,  at any time, the Accommodation  sublimit set forth in
Section 10.3.

     (d) All  indebtedness,  liabilities and obligations of any sort whatsoever,
however  arising,  whether  present or future,  fixed or contingent,  secured or
unsecured,  due or to become  due,  paid or  incurred,  arising or  incurred  in
connection with any Accommodation  shall be included in the term  "Obligations",
as defined herein, and shall include, without limitation, (i) all amounts due or
which may  become  due under any  Accommodation;  (ii) all  amounts  charged  or
chargeable to Borrower or to Lender by any bank, other financial  institution or
correspondent bank which opens, issues or is involved with such  Accommodations;
(iii) Lender's  Accommodation  Charges and all fees,  costs and other charges of
any issuer of any Accommodation;  and (iv) all duties,  freight,  taxes,  costs,
insurance and all such other charges and expenses which may pertain  directly or
indirectly to any  Obligations  or  Accommodations  or to the goods or documents
relating thereto.

     (e) Borrower  unconditionally  agrees to indemnify and hold Lender harmless
from any and all loss, claim or liability (including reasonable attorneys' fees)
arising  from any  transactions  or  occurrences  relating to any  Accommodation
established or opened for Borrower's  account,  the Collateral  relating thereto
and any drafts or acceptances  thereunder,  including any such loss or claim due
to any action taken by an issuer of any  Accommodation.  Borrower further agrees
to indemnify and hold Lender  harmless for any errors or omissions in connection
with  the  Accommodations,  whether  caused  by  Lender,  by the  issuer  of any
Accommodation or otherwise. Borrower's unconditional obligation to indemnify and
hold Lender  harmless under this  provision  shall not be modified or diminished
for  any  reason  or in any  manner  whatsoever,  except  for  Lender's  willful
misconduct. Borrower agrees that any charges made to Lender by any issuer of any
Accommodation  shall be  conclusive on Borrower and may be charged to Borrower's
account.
<PAGE>

     (f) Lender shall not be responsible  for: the conformity of any services to
the documents  presented;  the validity or genuineness of any documents;  delay,
default,  or  fraud  by the  Borrower  or  anyone  else in  connection  with the
Accommodations or any underlying transaction.

     (g)  Borrower  agrees  that any action  taken by  Lender,  if taken in good
faith,  or any  action  taken by an  issuer  of any  Accommodation,  under or in
connection  with any  Accommodation,  shall be binding on Borrower and shall not
create any resulting liability to Lender. In furtherance  thereof,  Lender shall
have the full  right  and  authority  to clear  and  resolve  any  questions  of
non-compliance  of  documents;  to give any  instructions  as to  acceptance  or
rejection of any documents or goods;  to execute fo  Borrower's  account any and
all  applications  for steamship or airway  guarantees,  indemnities or delivery
orders; to grant any extensions of the maturity of, time of payment for, or time
of presentation of, any drafts,  acceptances,  or documents; and to agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications or Accommodations.  All of
the foregoing actions may be taken in Lender's sole name, and the issuer thereof
shall be  entitled  to  comply  with and  honor  any and all such  documents  or
instruments  executed by or received solely from Lender,  all without any notice
to or any consent from Borrower. None of the foregoing actions described in this
subsection  (g) may be  taken  by  Borrower  without  Lender's  express  written
consent.

SECTION 3. INTEREST AND FEES

     3.1 Interest.  (a) Interest on the Revolving  Loans and Term Loans shall be
payable by Borrower on the first day of each month,  calculated upon the closing
daily  balances  in the  loan  account  of  Borrower  for each  day  during  the
immediately  preceding  month,  at the per annum rate set forth as the  Interest
Rate in Section  10.4(a).  The  interest  rate shall  increase or decrease by an
amount equal to each increase or decrease,  respectively,  in the Prime Rate (as
defined below),  effective as of the date of each such change.  On and after any
Event of Default or termination or  non-renewal  hereof,  interest on all unpaid
Obligations shall accrue at a rate equal to two percent (2%) per annum in excess
of the Prime  Rate  otherwise  payable  until such time as all  Obligations  are
indefeasibly  paid  in  full  (notwithstanding  entry  of any  judgment  against
Borrower or the  exercise of any other right or remedy by Lender),  and all such
interest shall be payable on demand. Interest shall in no month be less than the
interest  rate  multiplied by the Minimum  Borrowing.  In no event shall charges
constituting  interest  exceed the rate  permitted  under any  applicable law or
regulation,  and if any provision of this Agreement is in  contravention  of any
such law or  regulation,  such  provision  shall be deemed  amended  to  conform
thereto.

     (b) The "Prime  Rate" is the rate of  interest  publicly  announced  by The
Chase Manhattan Bank in New York, New York, or its successors,  and assigns from
time to time as its prime rate (the prime rate is not  intended to be the lowest
rate of interest charged by The Chase Manhattan Bank to its borrowers).


     3.2  Closing  Facility  Fee.  Borrower  shall have paid  Lender the Closing
Facility Fee set forth in Section  10.4(b)  hereof which fee is fully earned and
payable as of the date hereof. 

     3.3 Annual Facility Fee.  Borrower shall pay Lender on each  anniversary of
the date  hereof,  an Annual  Facility  Fee in the  amount  set forth in Section
10.4(c),  which fee is fully earned as of the date hereof,  for each year in the
initial  Term,  and shall be fully  earned  for each year in any  renewal  Term,
effective upon the first day of such renewal Term.
<PAGE>

     3.4 Minimum  Borrowing Fee. Borrower shall pay Lender the Minimum Borrowing
Fee set forth in Section 10.4(d) hereof. 

     3.5 Unused Line Fee. Borrower shall pay Lender monthly, on the first day of
each month, in arrears, an Unused Line Fee for each month during the initial and
each renewal Term at the rate per annum set forth in Section 10.4(e), calculated
upon the amount,  if any, by which the Maximum Credit exceeds the greater of (i)
the average  outstanding  daily principal  balance during the preceding month of
all Revolving Loans or (ii) $2,500,000. 

     3.6 Account  Servicing  Collateral  Handling Fee. Borrower shall pay Lender
monthly, on the first day of each month during the initial and each renewal Term
an Account  Servicing Fee for the immediately  preceding month (or part thereof)
in      the      amount       set      forth      in      Section       10.4(f).

     3.7 Charges to Loan Account. At Lender's option, all payments of principal,
interest,  fees,  costs,  expenses  and  other  charges  provided  for  in  this
Agreement,  or in any other agreement now or hereafter  existing  between Lender
and  Borrower,  may be charged on the date when due,  as  principal  to any loan
account of Borrower maintained by Lender. Interest, fees for Accommodations, the
Unused Line Fee and any other  amounts  payable by Borrower to Lender based on a
per annum rate shall be  calculated on the basis of actual days  elapsed  over a
360-day year.

SECTION 4. GRANT OF SECURITY INTEREST

     4.1 Grant of Security  Interest.  To secure the payment and  performance in
full of all Obligations,  Borrower hereby grants to Lender a continuing security
interest in and lien upon, and a right of setoff  against,  and Borrower  hereby
assigns  and  pledges to  Lender,  all of the  Collateral  (as  defined  below),
including any Collateral not deemed eligible for lending purposes.

     4.2  "Obligations"  shall mean any and all  Revolving  Loans,  Term  Loans,
Accommodations and all other indebtedness,  liabilities and obligations of every
kind,  nature and description owing by Borrower to Lender and/or its affiliates,
including principal,  interest,  charges, fees and expenses,  however evidenced,
whether as principal,  surety, endorser, guarantor or otherwise, whether arising
under this  Agreement or otherwise,  whether now existing or hereafter  arising,
whether arising before, during or after the initial or any renewal Term or after
the  commencement  of any case with respect to Borrower  under the United States
Bankruptcy Code or any similar statute, whether direct or indirect,  absolute or
contingent,  joint or several, due or not due, primary or secondary,  liquidated
or unliquidated, secured or unsecured, original, renewed or extended and whether
arising directly or howsoever acquired by Lender including from any other entity
outright, conditionally or as collateral security, by assignment merger with any
other  entity,  participations  or  interests  of Lender in the  obligations  of
Borrower to others,  assumption,  operation of law, subrogation or otherwise and
shall also include all amounts chargeable to Borrower under this Agreement or in
connection with any of the foregoing.
<PAGE>

     4.3 "Collateral" shall mean all of the following property of Borrower:

     All now owned and hereafter  acquired right, title and interest of Borrower
in, to and in respect of all accounts  receivable  including but not limited to:
(i) 1+ Coin Sent Paid Long  Distance  Services  Accounts;  (ii) Dial  Around Pay
Phone  Compensation  Plan  Accounts;  and  (iii) 1+ Direct  Dial  Long  Distance
Services Accounts, but expressly excluding (a) those accounts receivable derived
from 0+/0- Operator  Services Accounts which are sold to and /or financed by OAN
Services,  Inc., Zero Plus Dialing, Inc., or any other third party billing agent
(by  whatever  name,  and  inclusive  of any  successor  or assignee  thereto or
thereof);  (b) all  commissions  receivable  on non-coin  revenues  and any coin
revenues derived from pay telephones and related  equipment which are pledged as
collateral to Lyon Credit Corporation, Southbridge Financial Corp., or any other
third party equipment  financing  source (by whatever name, and inclusive of any
participant,  successor or assignee  thereto or  thereof);  and (c) all accounts
receivable  derived  from the sale or lease of any pay  telephones  and  related
equipment or any other  equipment  pledged as collateral to any third party,  or
derived from the sale or lease of any chattel paper  evidencing  such collateral
(items  (a),  (b) and (c)  being  hereinafter  collectively  referred  to as the
"Excluded   Accounts"  or  "Excluded  Accounts   Receivable"),   and,  expressly
including,  interests in goods  (excluding  equipment)  represented  by accounts
other than the  Excluded  Accounts,  returned,  reclaimed or  repossessed  goods
(excluding  equipment) with respect to accounts other than the Excluded Accounts
and rights as an unpaid vendor;  contract rights other than those relating to or
arising out of 0+/0- Operator Services Accounts or pay telephone location lease,
license,   placement  or  similar   agreements   (collectively,   the  "Excluded
Contracts");  chattel paper; investment property; general intangibles other than
the  Excluded  Contracts  including,  but not limited to, tax and duty  refunds,
registered and  unregistered  patents,  trademarks,  service marks,  copyrights,
trade names, applications for the foregoing, trade secrets, goodwill, processes,
drawings, blueprints, customer lists, licenses, whether as licensor or licensee,
choses in action and other claims,  and existing and future leasehold  interests
in real  property;  documents  other than the Excluded  Contracts;  instruments;
letters of credit,  bankers' acceptances or guaranties;  cash monies,  deposits,
securities,  bank accounts,  deposit accounts, credits and other property now or
hereafter held in any capacity by Lender, its affiliates or any entity which, at
any  time,  participates  in  Lender's  financing  of  Borrower  or at any other
depository or other  institution;  agreements  or property  securing or creating
entitlements  to any of the items  referred  to above  other  than the  Excluded
Contracts or the Excluded Accounts Receivable.
<PAGE>

     All now owned and hereafter  acquired right, title and interest of Borrower
in, to and in respect of:

     All inventory,  wherever located,  whether now owned or hereafter acquired,
of  whatever  kind,   nature  or  description,   including  all  raw  materials,
work-in-process,  finished goods (excluding equipment), and materials to be used
or consumed in Borrower's  business;  and all names or marks affixed to or to be
affixed thereto for purposes of selling same by the seller, manufacturer, lessor
or licensor thereof;

     All motor vehicles,  furniture wherever located, and any and all additions,
substitutions, replacements, and accessions thereof and thereto;

     Any personal  property in or upon which Lender has or may hereafter  have a
security interest, lien or right of setoff;

     All present and future books and records relating to any of the above other
than the  Excluded  Contracts or the Excluded  Accounts  Receivable,  including,
without  limitation,  all computer  programs  (other than those  installed in or
maintained  in  connection  with  any pay  telephones  and  related  equipment),
computer discs,  Billing Tapes, printed output and computer readable data in the
possession or control of the Borrower or Borrower's  agents,  licensees,  or any
computer service bureau or other third party; and

     All  products  and  proceeds  of the  foregoing  other  than  the  Excluded
Contracts or the Excluded  Accounts  Receivable,  in whatever  form and wherever
located, including,  without limitation, all insurance proceeds, if any, and all
claims against third parties, if any, for loss, impairment, or destruction of or
damage to any of the foregoing.

SECTION 5. COLLECTION AND ADMINISTRATION

     5.1  Collections.  Borrower shall, at Borrower's  expense and in the manner
requested  by Lender from time to time,  direct that  remittances  and all other
proceeds of accounts and other Collateral shall be sent to a lock box designated
by and/or  maintained in the name of Lender,  and deposited  into a bank account
now or hereafter  selected by Lender and  maintained in the name of Lender under
arrangements  with the depository  bank under which all funds  deposited to such
bank account are required to be  transferred  solely to Lender.  Borrower  shall
bear all risk of loss of any funds  deposited  into such account.  In connection
therewith,  Borrower shall execute such lock box and bank account  agreements as
Lender shall specify.  Any  collections  or other proceeds  received by Borrower
shall be held in trust for Lender and immediately remitted to Lender in kind.

     5.2 Payments. All Obligations shall be payable at Lender's office set forth
below or at Lender's bank designated in Section 10.6(b) or at such other bank or
place as Lender may expressly  designate  from time to time for purposes of this
Section.  Lender  shall  apply all  proceeds  of  accounts  or other  Collateral
received by Lender and all other  payments in respect of the  Obligations to the
Revolving Loans whether or not then due or to any other Obligations then due, in
whatever  order or manner Lender shall  determine.  For purposes of  determining
Gross  and Net  Availability  and for the  calculation  of  Minimum  Borrowings,
remittances  and other payments with respect to the  Collateral and  Obligations
will be treated as credited to the loan account of Borrower maintained by Lender
and Collateral  balances to which they relate, upon the date of Lender's receipt
of advice from Lender's bank that such  remittances  or other payments have been
credited  to Lender's  account or in the case of  remittances  or othe  payments
received  directly in kind by Lender,  upon the date of Lender's deposit thereof
at Lender's bank, subject to final payment and collection. In computing interest
charges, the loan account of Borrower maintained by Lender will be credited with
remittances  and other payments three (3) Business Days after the day Lender has
received advice of receipt of remittances in Lender's  account at Lender's Bank.
For purposes of this  Agreement,  "Business Day" shall mean any day other than a
Saturday,  Sunday or any other day on which banks located in states where Lender
has its offices, are authorized to close.
<PAGE>

     5.3 Loan Account Statements. Lender shall render to Borrower monthly a loan
account  statement.  Each statement shall be considered correct and binding upon
Borrower as an account stated, except to the extent that Lender receives, within
sixty  (60) days  after the  mailing  of such  statement,  written  notice  from
Borrower  of  any   specific   exceptions   by   Borrower  to  that   statement.

     5.4 Direct Collections. Lender may, at any time, whether or not an Event of
Default has occurred,  without  notice to or assent of Borrower,  (a) notify any
account debtor that the accounts and other  Collateral which includes a monetary
obligation  have been assigned to Lender by Borrower and that payment thereof is
to be made to the order of and directly to Lender, (b) send, or cause to be sent
by its  designee,  requests  (which may identify the sender by a pseudonym)  for
verification of accounts and other Collateral  directly to any account debtor or
any other obligor or any bailee with respect thereto, and (c) demand, collect or
enforce payment of any accounts or such other  Collateral,  but without any duty
to do so, and Lender  shall not be liable for any  failure to collect or enforce
payment thereof.  At Lender's  request,  all invoices and statements sent to any
account debtor,  other obligor or bailee, shall state that the accounts and such
other  Collateral have been assigned to Lender and are payable directly and only
to Lender.

     5.5  Attorney-in-Fact.  Borrower hereby appoints Lender and any designee of
Lender as Borrower's attorney-in-fact and authorizes Lender or such designee, at
Borrower's sole expense, to exercise at any times in Lender's or such designee's
discretion all or any of the following powers,  which powers of attorney,  being
coupled with an interest,  shall be irrevocable  until all Obligations have been
paid in full: (a) receive, take, endorse,  assign,  deliver, accept and deposit,
in the name of Lender o Borrower,  any and all cash,  checks,  commercial paper,
drafts,  remittances  and  other  instruments  and  documents  relating  to  the
Collateral  or the  proceeds  thereof,  (b) transmit to account  debtors,  other
obligors or any bailees  notice of the interest of Lender in the  Collateral  or
request from account  debtors or such other  obligors or bailees at any time, in
the name of Borrower or Lender or any designee of Lender, information concerning
the  Collateral and any amounts owing with respect  thereto,  (c) notify account
debtors or other obligors to make payment directly to Lender,  or notify bailees
as to the disposition of Collateral, (d) take or bring, in the name of Lender or
Borrower, all steps, actions, suits or proceedings deemed by Lender necessary or
desirable to effect  collection  of or other  realization  upon the accounts and
other Collateral, (e) after an Event of Default, change the address for delivery
of mail to Borrower  and to receive and open mail  addressed  to  Borrower,  (f)
after an Event of Default,  extend the time of payment of,  compromise or settle
for cash, credit, return of merchandise,  and upon any terms or conditions,  any
and all accounts or other  Collateral  which includes a monetary  obligation and
discharge or release the account debtor or other obligor,  without affecting any
of the  Obligations,  and (g) execute in the name of Borrower  and file  against
Borrower in favor of Lender  financing  statements or amendments with respect to
the Collateral.

     5.6  Liability.   Borrower  hereby  releases  and  exculpates  Lender,  its
officers,  employees and  designees,  from any  liability  arising from any acts
under this Agreement or in furtherance  thereof,  whether as attorney-in-fact or
otherwise,  whether of omission or commission,  and whether based upon any error
of judgment or mistake of law or fact,  except for gross  negligence  or willful
misconduct.  In no event will Lender  have any  liability  to Borrower  for lost
profits or other special or consequential damages.

     5.7 Administration of Accounts.  After written notice by Lender to Borrower
and  automatically,  without notice,  after an Event of Default,  Borrower shall
not, without the prior written consent of Lender in each instance, (a) grant any
extension  of time of payment  of any of the  accounts  or any other  Collateral
which  includes  a  monetary  obligation,  (b)  compromise  or settle any of the
accounts or any such other Collateral for less than the full amount thereof, (c)
release in whole or in part any account  debtor or other  person  liable for the
payment of any of the  accounts or any such other  Collateral,  or (d) grant any
credits, discounts,  allowances,  deductions,  return authorizations or the like
with  respect to any of the  accounts  or any such other  Collateral;  provided,
however,  that this  restriction  shall not limit  Borrower=s  ability to comply
fully  with all  applicable  laws,  rules and  regulations  of any  governmental
authority relating to Borrower's  business,  including all rules and regulations
promulgated by the Federal Communication Commission.
<PAGE>

     5.8  Documents.  At such  times as Lender  may  request  and in the  manner
specified   by  Lender,   Borrower   shall   deliver   to  Lender  or   Lender's
representative,   as  Lender  shall  designate,  copies  or  original  invoices,
agreements,  proofs of  rendition  of services  and  delivery of goods and other
documents evidencing or relating to the transactions which gave rise to accounts
or other Collateral, together with customer statements, schedules describing the
accounts or other  Collateral  and/or  statements  of account  and  confirmatory
assignments to Lender of the accounts or other Collateral, in form and substance
satisfactory  to Lender and duly  executed by  Borrower.  Without  limiting  the
provisions  of  Section  5.7,   Borrower's   granting  of  credits,   discounts,
allowances,  deductions,  return  authorizations  or the like  will be  promptly
reported  to  Lender  in  writing.  In no  event  shall  any  such  schedule  or
confirmatory  assignment  (or the  absence  thereof  or  omission  of any of the
accounts or other  Collateral  therefrom)  limit or in any way be construed as a
waiver, limitation or modification of the security interests or rights of Lender
or  the  warranties,  representations  and  covenants  of  Borrower  under  this
Agreement. Any documents, schedules, invoices or other paper delivered to Lender
by Borrower may be  destroyed or otherwise  disposed of by Lender six (6) months
after receipt by Lender,  unless  Borrower  requests  their return in writing in
advance and makes prior arrangements for their return at Borrower's expense. All
documents  delivered  by Borrower to Lender  pursuant to this  provision  or any
other  provision  in  this  Agreement  are  subject  to the  Non-Disclosure  and
Confidentiality  Agreements  between  Borrower and Lender,  which agreements are
being executed simultaneously with this Agreement.

     5.9 Access.  From time to time as requested by Lender,  at the sole expense
of  Borrower,  Lender or its designee  shall have  access,  prior to an Event of
Default during reasonable  business hours and on or after an Event of Default at
any time, to all of the premises where Collateral is located for the purposes of
inspecting the Collateral,  and all Borrower's  books and records,  and Borrower
shall  permit  Lender  or its  designee  to make such  copies of such  books and
records or extracts therefrom as Lender may request.  Without expense to Lender,
Lender  may use such of  Borrower's  personnel,  equipment,  including  computer
equipment,  programs,  printed output and computer readable media,  supplies and
premises for the collection of accounts and  realization on other  Collateral as
Lender, in its sole discretion,  deems appropriate.  Borrower hereby irrevocably
authorizes all  accountants  and third parties to disclose and deliver to Lender
at Borrower's expense all financial information, books and records, work papers,
management reports and other information in their possession regarding Borrower.


     5.10  Environmental  Audits.  From time to time, as requested by Lender, at
the sole expense of Borrower,  Borrower shall provide  Lender,  or its designee,
complete access to all of Borrower's facilities for the purpose of conducting an
environmental  audit of such  facilities  as  Lender or its  designees  may deem
necessary.  Borrower  agrees  to  cooperate  with  Lender  with  respect  to any
environmental audit conducted by Lender or its designee pursuant to this Section
5.10. 

     5.11 Compliance  with Laws. In exercising its rights and remedies  pursuant
to this Section 5, Lender shall comply with the requirements of all laws, rules,
regulations  and orders of any  governmental  authority  relating to  Borrower=s
business,  including  all  rules  and  regulations  promulgated  by the  Federal
Communications Commission as same apply. 

SECTION 6. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS

     Borrower hereby represents, warrants and covenants to Lender the following,
the truth and accuracy of which, and compliance with which,  shall be continuing
conditions  of the making of loans or other credit  accommodations  by Lender to
Borrower:
<PAGE>

     6.1 Financial and Other Reports. Borrower shall keep and maintain its books
and  records  in  accordance  with  generally  accepted  accounting  principles,
consistently  applied.  Borrower shall, at its expense,  deliver to Lender:  (a)
true and complete  monthly agings of accounts  receivable,  accounts payable and
notes payable on or before the fifteenth  (15th) day of the month  following the
month they reflect;  (b) true and complete financial  statements certified by an
officer  of  Borrower  on or  before  the  thirtieth  (30th)  day of each  month
following  the  month  they  reflect;   (c)  quarterly  financials  reviewed  by
independent  certified public accountants  acceptable to Lender and certified by
an officer of  Borrower  on or before the  fifteenth  (15th) day  following  the
filing of such financials with the Securities and Exchange  Commission  ("SEC");
and (d) annually  audited  financial  statements of Borrower  accompanied by the
report  and  opinion  thereon  of  independent   certified  public   accountants
acceptable to Lender,  as soon as available,  but in no event later than fifteen
(15) days following the filing of such audited annual financial  statements with
the SEC.  Borrowers and Guarantor  shall also forward copies of all filings made
with the SEC. All of the foregoing  shall be in such form and together with such
information with respect to the business of Borrower or any Guarantor, as Lender
may in each case request.

     6.2 Trade Names.  Borrower may from time to time render invoices to account
debtors  under its trade  names set forth in Section  10.6(g)  after  Lender has
received  prior written  notice from Borrower of the use of such trade names and
as to which, Borrower agrees that: (a) the trade name "Coastal Payphones,  Inc."
has been  obtained  from the  Secretary  of State of the State of New Jersey and
Borrower shall maintain  same, (b) Borrower and its related  corporate  entities
have the right to use the  registered  federal  service  mark  "AMNEX",  (c) all
accounts and proceeds thereof invoiced by Borrower under either of the foregoing
trade names are owned  exclusively  by Borrower  and are subject to the security
interest of Lender and the other terms of this  Agreement,  (d) all schedules of
accounts and confirmatory  assignments by Borrower,  including any sales made or
services  rendered by Borrower using either of the foregoing  trade names shall,
to the extent  feasible and permitted by applicable law, show Borrower's name as
assignor,  and (e) Lender is authorized  to receive,  endorse and deposit to any
loan account of Borrower  maintained  by lender all checks or other  remittances
made  payable to any such  trade  name of  Borrower  representing  payment  with
respect to such sales or service.

     6.3 Losses.  Borrower shall promptly  notify Lender in writing of any loss,
damage, investigation,  action, suit, proceeding or claim relating to a material
portion of the Collateral or which may result in any material  adverse change in
Borrower's business, assets,  liabilities or condition,  financial or otherwise.

     6.4 Books and Records. Borrower's books and records concerning accounts are
and shall be  maintained  only at the  addresses  set forth in Section  10.6(d).
Borrower's  only  other  places of  business  and the only  other  locations  of
Collateral,  if any, are and shall be the addresses set forth in Section 10.6(f)
hereof,  except  Borrower  may  change  such  locations  or open a new  place of
business  after thirty (30) days prior  written  notice to Lender.  Prior to any
change in  location  or opening  of any new place of  business,  Borrower  shall
execute  and  deliver  or cause to be  executed  and  delivered  to Lender  such
financing  statements,  financing documents and security and other agreements as
Lender may reasonably require, including, without limitation, those described in
Section 6.14.

     6.5 Title.  Borrower  has and at all times will  continue  to have good and
marketable title to all of the Collateral, free and clear of all liens, security
interests,  claims or  encumbrances  of any kind  except in favor of Lender  and
except, if any, those set forth on Schedule A hereto. 

     6.6 Disposition of Assets.  Borrower shall not directly or indirectly:  (a)
sell, lease,  transfer,  assign, abandon or otherwise dispose of any part of the
Collateral or any material  portion of its other assets or; (b) consolidate with
or  merge  with or into  any  other  entity,  or  permit  any  other  entity  to
consolidate  with or merge with or into Borrower  without Lender's prior written
consent,   which  consent  will  not  be  unreasonably  withheld  provided  such
consolidation  or merger  will not impair  Borrower's  ability o comply with the
terms of this  Agreement  or;  (c) form or  acquire  any  interest  in any firm,
corporation  or other entity or permit any other entity to  consolidate  with or
merge with or into  Borrower  without  Lender's  prior  written  consent,  which
consent will not be unreasonably withheld provided such formation or acquisition
will not impair Borrower's ability to comply with the terms of this Agreement.
<PAGE>

     6.7 Insurance. Borrower shall at all times maintain, with financially sound
and reputable insurers, insurance (including,  without limitation, at the option
of  Lender,  earthquake  insurance)  with  respect to the  Collateral  and other
assets.  All such insurance policies shall be in such form,  substance,  amounts
and coverage as may be  satisfactory to Lender and shall provide for thirty (30)
days' prior written notice to Lender of  cancellation  or reduction of coverage.
Borrower  hereby  irrevocably  appoints  Lender  and any  designee  of Lender as
attorney-in-fact  for  Borrower  to  obtain  at  Borrower's  expense,  any  such
insurance  should  Borrower  fail to do so and,  after an Event of  Default,  to
adjust or settle any claim or other  matter  under or arising  pursuant  to such
insurance or to amend or cancel such insurance. Borrower shall deliver to Lender
evidence of such insurance and a lender's loss payable endorsement  satisfactory
to Lender as to all existing and future  insurance  policies with respect to the
Collateral.   Borrower  shall  deliver  to  Lender,  in  kind,  all  instruments
representing  proceeds of insurance  received by Borrower.  Lender may apply any
insurance proceeds received at any time to the cost of repairs to or replacement
of any portion of the Collateral and/or, at Lender's option, to payment of or as
security for any of the Obligations,  whether or not due, in any order or manner
as Lender determines.

     6.8 Compliance With Laws.  Borrower is and at all times will continue to be
in compliance with the requirements of all material laws, rules, regulations and
orders of any governmental  authority relating to its business  (including those
promulgated  by the Federal  Communications  Commission  and those laws,  rules,
regulations  and orders  relating to taxes,  payment and  withholding of payroll
taxes,  employer  and  employee  contributions  and similar  items,  securities,
employee  retirement  and  welfare  benefits,  employee  health and  safety,  or
environmental  matters) and all material agreements or other instruments binding
on Borrower or its property.  All of Borrower's  inventory  shall be produced in
accordance  with the  requirements  of the Federal Fair Labor  Standards  Act of
1938, as amended and all rules, regulations and orders related thereto. Borrower
shall pay and discharge all taxes,  assessments and governmental charges against
Borrower or any  Collateral  prior to the date on which  penalties are impose or
liens attach with respect  thereto,  unless the same are being contested in good
faith and, at Lender's option, Reserves are established for the amount contested
and penalties which may accrue thereon.

     6.9  Accounts.  With  respect to each account  deemed an Eligible  Account,
except as reported in writing to Lender,  Borrower has no knowledge  that any of
the  criteria for  eligibility  are not or are no longer  satisfied.  As to each
account,  except as  disclosed  in  writing  to Lender at the time such  account
arises (a) each is valid and legally  enforceable  and  represents an undisputed
bona fide  indebtedness  incurred by the account  debtor for the sum reported to
Lender, (b) each arises from a completed rendition of services, (c) each is not,
at the time such account arises, subject to any defense, offset, dispute, contra
relationship,  counterclaim,  or any  given  or  claimed  credit,  allowance  or
discount,  and  (d) all  statements  made  and all  unpaid  balances  and  other
information  appearing  in the  invoices,  agreements,  proofs of  rendition  of
services and delivery of goods and other documentation relating to the accounts,
and all confirmatory assignments, schedules, statements of account and books and
records with respect thereto, are true and correct and in all respects what they
purport to be.

     6.10 Equipment.  With respect to Borrower's equipment,  Borrower shall keep
the equipment in good order and repair, and in running and marketable condition,
ordinary wear and tear excepted. 
<PAGE>

     6.11 Financial Covenants. Borrower shall at all times: (i) maintain working
capital and net worth (each as determined in accordance with generally  accepted
accounting  principles,  in  effect  on the date  hereof,  consistently  applied
("GAAP"))  in the  amounts  set forth in Section  10.5 and  Borrower  shall not,
directly or indirectly,  expend or commit to expend, for fixed or capital assets
(including  capital  lease  obligations)  an amount  in  excess  of the  capital
expenditure limit set forth in Section 10.5 in any fiscal year of Borrower;  and
(ii) not suffer net losses as reflected in  Borrower's  audited  fiscal year end
financial statements submitted pursuant to Section 6.1(d).

     6.12 Affiliated  Transactions.  Borrower will not,  directly or indirectly:
(a)  without  Lender's  prior  written  consent,   which  consent  will  not  be
unreasonably  withheld provided same will not impair Borrower=s  ability to meet
its Obligations  hereunder,  lend or advance money or property to,  guarantee or
assume indebtedness of, or invest (by capital  contribution or otherwise) in any
person,  firm,  corporation  or other entity in excess of  $6,000,000.00  in the
aggregate per annum;  or (b) declare,  pay or make any  dividend,  redemption or
other  distribution  on account of any shares of any class of stock of  Borrower
now or hereafter  outstanding;  or (c) without  Lender's prior written  consent,
which consent will not be  unreasonably  withheld  provided same will not impair
Borrower's  ability to meet its  Obligations  hereunder  make any payment of the
principal  amount  of or  interest  on any  indebtedness  owing to any  officer,
director,  shareholder,  or affiliate of Borrower in excess of  $3,800,000.00 in
the aggregate per annum; or (d) without  Lender's prior written  consent,  which
consent  will  not be  unreasonably  withheld  provided  same  will  not  impair
Borrower's ability to meet its Obligations  hereunder make any loans or advances
to any officer,  director,  employee,  shareholder or affiliate of Borrower,  in
excess of  $200,000.00  in the aggregate per annum;  or (e) enter into any sale,
lease or other transaction with any officer, director, employee,  shareholder or
affiliate of Borrower on terms that are less  favorable  to Borrower  than those
which  might  be  obtained  at the time  from  persons  who are not an  officer,
director, employee, shareholder or affiliate of Borrower.

     6.13 Fees and Expenses.  Borrower shall pay, on Lender's demand, all costs,
expenses,  filing fees and taxes  payable in  connection  with the  preparation,
execution,  delivery,  recording,   administration,   collection,   liquidation,
enforcement and defense of the  Obligations,  Lender's rights in the Collateral,
this  Agreement  and all other  existing  and  future  agreements  or  documents
contemplated  herein or  related  hereto,  including  any  amendments,  waivers,
supplements  or consents  which may  hereafter be mad or entered into in respect
hereof,  or in any way involving  claims or defense asserted by Lender or claims
or defense against Lender asserted by Borrower, any guarantor or any third party
directly or  indirectly  arising out of or related to the  relationship  between
Borrower and Lender or any guarantor and Lender,  including,  but not limited to
the  following,  whether  incurred  before,  during or after the  initial or any
renewal Term or after the  commencement  of any case with respect to Borrower or
any guarantor under the United States  Bankruptcy  Code or any similar  statute:
(a) all costs and expenses of filing or recording  (including Uniform Commercial
Code financing statement filing taxes and fees,  documentary taxes,  intangibles
taxes and  mortgage  recording  taxes and fees,  if  applicable);  (b) all title
insurance  and other  insurance  premiums,  appraisal  fees,  fees  incurred  in
connection with any environmental  report,  audit or survey and search fees; (c)
all fees as then in effect  relating to the wire  transfer of loan  proceeds and
other funds and fees then in effect for returned checks and credit reports;  (d)
all expenses and costs  heretofore and from time to time  hereafter  incurred by
Lender during the course of periodic  field  examinations  of the Collateral and
Borrower's  operations,  plus a per diem charge at the rate set forth in Section
10.4(g) for Lender's  examiners in the field and office; and (e) the costs, fees
and  disbursements of in-house and outside counsel to Lender,  including but not
limited  to such  fees and  disbursements  incurred  as a result  of  litigation
between  the  parties  hereto,  any  third  party  and  in any  appeals  arising
therefrom.
<PAGE>

     6.14  Further  Assurances.  At the request of Lender,  at any time and from
time to time, at Borrower's sole expense,  Borrower shall execute and deliver or
cause to be executed and  delivered to Lender,  such  agreements,  documents and
instruments,  including  waivers,  consents and  subordination  agreements  from
mortgagees  or other  holders  of  security  interests  or liens,  landlords  or
bailees,  and do or  cause  to be  done  such  further  acts as  Lender,  in its
discretion,  deems  necessary  or  desirable  to  create,  preserve,  perfect or
validate  any  security  interest  of  Lender  or the  priority  thereof  in the
Collateral  and  otherwise to  effectuate  the  provisions  and purposes of this
Agreement.  Borrower hereby  authorizes  Lender to file financing  statements or
amendments  against  Borrower in favor of Lender with respect to the Collateral,
without  Borrower's  signature and to file as financing  statements  any carbon,
photographic  or  other   reproductions  of  this  Agreement  or  any  financing
statements signed by Borrower.

     6.15  Revolving  Loan.  The Revolving  Loan will not at any time exceed the
Gross Availability unless Lender has consented. 

     6.16 Environmental  Condition.  None of Borrower's properties or assets has
ever been designated or identified in any manner  pursuant to any  environmental
protection statute as a hazardous waste or hazardous substance disposal site, or
a candidate for closure pursuant to any  environmental  protection  statute.  No
lien  arising  under any  environmental  protection  statute has attached to any
revenues or to any real or personal property owned by Borrower. Borrower has not
received  a summons,  citation,  notice,  or  directive  from the  Environmental
Protection Agency or any other federal or state  governmental  agency any action
or omission by Borrower  resulting in the  releasing,  or otherwise  exposing of
hazardous  waste or hazardous  substances into the  environment.  Borrower is in
compliance (in all material respects) with all statutes, regulations, ordinances
and other legal requirements  pertaining to the production,  storage,  handling,
treatment,  release,  transportation  or  disposal  of any  hazardous  waste  or
hazardous substance.


SECTION 7. EVENTS OF DEFAULT AND REMEDIES

     7.1  Events  of  Default.  All  Obligations  shall be  immediately  due and
payable,  without  notice or demand,  and any provisions of this Agreement as to
future loans and credit accommodations by Lender shall terminate  automatically,
upon the  termination or  non-renewal of this Agreement or, at Lender's  option,
upon or at any time after the  occurrence or existence of any one or more of the
following "Events of Default": 

     (a) Borrower fails to pay when due any of the  Obligations  (or any portion
thereof)  or fails to perform  any of the terms of this  Agreement  or any other
existing or future  financing,  security or other agreement between Borrower and
Lender or any affiliate of Lender;

     (b) Any  representation,  warranty or statement of fact made by Borrower to
Lender  in  this  Agreement  or  any  other  agreement,  schedule,  confirmatory
assignment or otherwise,  or to any affiliate of Lender,  shall prove inaccurate
or misleading;
<PAGE>

     (c) Any guarantor revokes, terminates,  attempts to revoke or terminate, or
fails  to  perform  any of the  terms  of any  guaranty,  endorsement  or  other
agreement of such party in favor of Lender or any affiliate of Lender;

     (d) Any  judgment  or  judgments  aggregating  in excess of $250,000 or any
injunction  or attachment is obtained  against  Borrower or any guarantor  which
remains unstayed for a period of ten (10) days or is enforced;

     (e)  Borrower  or any  guarantor  or a general  partner of a  guarantor  or
Borrower (which is a partnership),  being a natural person, dies, or Borrower or
any guarantor which is a partnership or corporation,  is dissolved,  or Borrower
or any  guarantor  which  is a  corporation  fails  to  maintain  its  corporate
existence in good  standing,  or the usual business of Borrower or any guarantor
ceases or is suspended;

     (f) Any change in the controlling ownership of Borrower;

     (g) Borrower or any guarantor  becomes  insolvent,  makes an assignment for
the benefit of  creditors,  makes or sends notice of a bulk  transfer or calls a
general meeting of its creditors or principal creditors;

     (h) Any petition or application for any relief under the bankruptcy laws of
the  United  States  now  or  hereafter  in  effect  or  under  any  insolvency,
reorganization,  receivership,  readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed by or against  Borrower or any guarantor and, in the case of
an involuntary  filing,  is not discharged  within sixty (60) days, during which
time Lender shall have no obligation to fund;

     (i) The  indictment or  threatened  indictment of Borrower or any guarantor
under any criminal  statute,  or  commencement  or  threatened  commencement  of
criminal or civil  proceedings  against  Borrower or any guarantor,  pursuant to
which  statute or  proceedings  the  penalties  or remedies  sought or available
include forfeiture of any of the property of Borrower or such guarantor;

<PAGE>

     (j) Any default or event of default  occurs on the part of  Borrower  under
any  agreement,  document or instrument to which Borrower is a party or by which
Borrower  or  any  of  its  property  is  bound,  creating  or  relating  to any
indebtedness  of Borrower to any person or entity other than Lender in an amount
exceeding $250,000, if the effect of such default is to accelerate, or to permit
the  acceleration of, the maturity of all or any part of such  indebtedness,  or
all or any part of any such indebtedness shall be declared to be due and payable
or  required  to be prepaid or any other  reason,  in either  event prior to the
stated maturity thereof;

     (k) Lender in good faith  believes  that either (i) the prospect of payment
or  performance  of the  Obligations  is impaired or (ii) the  Collateral is not
sufficient to secure fully the Obligations; and

     (l) Any  material  change  occurs in the nature or  conduct  of  Borrower's
business.

     7.2  Remedies.  Upon the  occurrence of an Event of Default and at any time
thereafter,  Lender  shall  have  all  rights  and  remedies  provided  in  this
Agreement,  any other  agreements  between  Borrower  and  Lender,  the  Uniform
Commercial Code or other applicable law, all of which rights and remedies may be
exercised  without  notice to Borrower,  all such notices  being hereby  waived,
except such notice as is  expressly  provided  for  hereunder or is not waivable
under  applicable  law. All rights and remedies of Lender are cumulative and not
exclusive  and  are   enforceable,   in  Lender's   discretion,   alternatively,
successively,  or  concurrently  on any one or more  occasions  and in any order
Lender may determine.  Without limiting the foregoing, Lender may (a) accelerate
the payment of all Obligations and demand  immediate  payment thereof to Lender,
(b) with or without judicial  process or the aid or assistance of others,  enter
upon any premises on or in which any of the  Collateral  may be located and take
possession of the Collateral or complete processing, manufacturing and repair of
all or any  portion of the  Collateral,  (c)  require  Borrower,  at  Borrower's
expense,  to  assemble  and  make  available  to  Lender  any part or all of the
Collateral at any place and time designated by Lender,  (d) collect,  foreclose,
receive, appropriate, setoff and realize upon any and all Collateral, (e) extend
the time of  payment  of,  compromise  or  settle  for cash,  credit,  return of
merchandise,  and upon any terms or  conditions,  any and all  accounts or other
Collateral  which  includes a monetary  obligation  and discharge or release the
account debtor or other obligor,  without affecting any of the Obligations,  (f)
sell,  lease,  transfer,  assign,  deliver or  otherwise  dispose of any and all
Collateral (including, without limitation,  entering into contracts with respect
thereto, by public or private sales at any exchange,  broker's board, any office
of Lender or elsewhere)  at such prices or terms as Lender may deem  reasonable,
for cash, upon credit or for future  delivery,  with the Lender having the right
to purchase the whole or any part of the Collateral at any such public sale, all
of the foregoing  being free from any right or equity of redemption of Borrower,
which right or equity of redemption is hereby  expressly  waived and released by
Borrower. If any of the Collateral is sold or leased by Lender upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally  collected by Lender. If notice of disposition
of  Collateral  is  required  by law,  seven (7) days prior  notice by Lender to
Borrower  designating  the time and place of any  public  sale or the time after
which any private sale or other  intended  disposition  of  Collateral  is to be
made,  shall be deemed to be reasonable  notice thereof and Borrower  waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks  recovery of any  Collateral  by way of  prejudgment  remedy,  Borrower
waives the posting of any bond which might otherwise be required.
<PAGE>

     7.3  Application  of  Proceeds.  Lender  may  apply  the cash  proceeds  of
Collateral  actually  received by Lender from any sale,  lease,  foreclosure  or
other  disposition  of the Collateral to payment of any of the  Obligations,  in
whole  or in part  (including  reasonable  attorneys'  fees and  legal  expenses
incurred by Lender with respect thereto or otherwise chargeable to Borrower) and
in such  order as Lender  may elect,  whether  or not then due.  Borrower  shall
remain liable to Lender for the payment of any deficiency together with interest
at the highest rate provided for herein and all costs and expenses of collection
or enforcement, including reasonable attorneys' fees and legal expenses.

     7.4  Lender's  Cure of Third Party  Agreement  Default.  Lender may, at its
option,  cure any default by Borrower  under any agreement with a third party or
pay or bond on appeal any judgment  entered against  Borrower,  discharge taxes,
liens,  security  interests  or  other  encumbrances  at any time  levied  on or
existing with respect to the Collateral and pay any amount, incur any expense or
perform any act which, in Lender's sole judgment, is necessary or appropriate to
preserve, protect, insure, maintain, or realize upon the Collateral.  Lender may
charge  Borrower's loan account for any amounts so expended,  such amounts to be
repayable by Borrower on demand.  Lender shall be under no  obligation to effect
such cure, payment,  bonding or discharge, and shall not, by doing so, be deemed
to have assumed any obligation or liability of Borrower.

SECTION 8. JURY TRIAL WAIVER; CERTAIN OTHER WAIVERS AND CONSENTS

     8.1 JURY TRIAL  WAIVER.  BORROWER AND LENDER EACH WAIVE ALL RIGHTS TO TRIAL
BY JURY IN ANY ACTION OR  PROCEEDING  INSTITUTED  BY EITHER OF THEM  AGAINST THE
OTHER WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS AGREEMENT,  THE OBLIGATIONS,
THE COLLATERAL,  ANY ALLEGED TORTUOUS CONDUCT BY BORROWER OR LENDER,  OR, IN ANY
WAY,  DIRECTLY  OR  INDIRECTLY,  ARISES OUT OF OR  RELATES  TO THE  RELATIONSHIP
BETWEEN BORROWER AND LENDER.  IN NO EVENT WILL LENDER BE LIABLE FOR LOST PROFITS
OR OTHER SPECIAL OR CONSEQUENTIAL DAMAGES.

     8.2  Counterclaims.  Borrower  waives all rights to  interpose  any claims,
deductions,  setoffs or counterclaims of any kind,  nature or description in any
action or proceeding  instituted by Lender with respect to this  Agreement,  the
Obligations, the Collateral or any matter arising therefrom or relating thereto,
except compulsory counterclaims. 

     8.3 Jurisdiction.  Borrower hereby irrevocably  submits and consents to the
nonexclusive  jurisdiction  of the State and Federal Courts located in the State
in which the office of Lender  designated in Section  10.6(a) is located and any
other  State  where any  Collateral  is  located  with  respect to any action or
proceeding arising out of this Agreement, the Obligations, the Collateral or any
matter arising therefrom or relating thereto.  In any such action or proceeding,
Borrower waives  personal  service of the summons and complaint or other process
and papers  therein  and agrees  that the  service  thereof  may be made by mail
directed  to Borrower at its chief  executive  office set forth  herein or other
address thereof of which Lender has received notice as provided herein,  service
to be deemed  complete five (5) days after  mailing,  or as permitted  under the
rules of either of said  Courts.  Any such  action or  proceeding  commenced  by
Borrower against Lender will be litigated only in a Federal Court located in the
district,  or a State  Court in the State  and  County,  in which the  office of
Lender  designated  in  Section  10.6(a)  is  located  and  Borrower  waives any
objection based on forum non conveniens and any objection to venue in connection
therewith.

     8.4 No Waiver by Lender.  Lender shall not, by any act, delay,  omission or
otherwise be deemed to have  expressly or impliedly  waived any of its rights or
remedies  unless  such waiver  shall be in writing  and signed by an  authorized
officer of Lender. A waiver by Lender of any right or remedy on any one occasion
shall not be  construed  as a bar to or waiver of any such right or remedy which
Lender would otherwise have on any future  occasion,  whether similar in kind or
otherwise. 
<PAGE>

SECTION 9. TERM OF AGREEMENT; MISCELLANEOUS

     9.1 Term.  This  Agreement  shall only become  effective upon execution and
delivery by Borrower and Lender and shall  continue in full force and effect for
a term of three (3) years from the date hereof and shall be deemed automatically
renewed for successive terms of two (2) years thereafter unless terminated as of
the end of the  initial or any  renewal  term  (each a "Term")  by either  party
giving the other  written  notice at least  sixty (60) days' prior to the end of
the then-current Term. 

     9.2 Early Termination. Borrower may also terminate this Agreement by giving
Lender at least thirty (30) days prior  written  notice at any time upon payment
in full of all of the  Obligations  as  provided  herein,  including  the  early
termination  fee provided  below.  Lender shall also have the right to terminate
this  Agreement at any time upon or after the occurrence of an Event of Default.
If Lender  terminates this Agreement upon or after the occurrence of an Event of
Default,  or if Borrower  shall  terminate  this  Agreement as permitted  herein
effective  prior to the end of the  then-current  Term, in addition to all other
Obligations,   Borrower  shall  pay  to  Lender,  upon  the  effective  date  of
termination,   in  view  of  the   impracticality   and  extreme  difficulty  of
ascertaining  actual  damages  and by mutual  agreement  of the  parties as to a
reasonable  calculation of Lender's lost profits, an early termination fee equal
to:

     (a) five percent (5%) of the Maximum  Credit during the first (1st) year of
the initial Term hereof;

     (b) three  percent (3%) of the Maximum  Credit during the second (2nd) year
of the initial Term hereof; and

     (c) one percent (1%) of the Maximum  Credit  during the third (3rd) year of
the initial Term hereof and during any year of any renewal Term thereafter.

     9.3 Termination  Indemnity  Deposit.  Upon termination of this Agreement by
Borrower,  as permitted  herein, in addition to payment of all Obligations which
are not  contingent,  Borrower  shall deposit such amount of cash  collateral as
Lender  determines  is necessary  to secure  Lender from loss,  cost,  damage or
expense,  including  reasonable  attorneys'  fees, in  connection  with any open
Accommodations or remittance items or other payments  provisionally  credited to
the  Obligations  and/or  to  which  Lender  has  not  yet  received  final  and
indefeasible payment.

     9.4  Notices.  Except as  otherwise  provided,  all  notices,  requests and
demands  hereunder  shall be (a) made to  Lender  at its  address  set  forth in
Section  10.6(a)  and to  Borrower  at its chief  executive  office set forth in
Section  10.6(c),  or to such other  address as either  party may  designate  by
written notice to the other in accordance with this provision, and (b) deemed to
have been given or made: if by hand,  immediately  upon  delivery;  if by telex,
telegram or telecopy (fax),  immediately upon receipt;  if by overnight delivery
service, one day after dispatch;  and if by first class or certified mail, three
(3) days after mailing.

     9.5 Severability.  If any provision of this Agreement is held to be invalid
or unenforceable, such provision shall not affect this Agreement as a whole, but
this  Agreement  shall be construed as though it did not contain the  particular
provision held to be invalid or unenforceable. 

     9.6 Entire  Agreement;  Amendments;  Assignments.  This  Agreement  and the
agreements  referred to herein contain the entire agreement of the parties as to
the subject matter hereof,  all prior  commitments,  proposals and  negotiations
concerning the subject matter hereof being merged herein. Neither this Agreement
nor any provision hereof shall be amended,  modified or discharged  orally or by
course of  conduct,  but only by a  written  agreement  signed by an  authorized
officer of each of Borrower and Lender. This Agreement shall be binding upon and
inure  to the  benefit  of each  of the  parties  hereto  and  their  respective
successors  and  assigns,  except  that any  obligation  of  Lender  under  this
Agreement  shall not be assignable  nor inure to the  successors  and assigns of
Borrower.
<PAGE>

     9.7 Discharge of Borrower.  No termination of this Agreement  shall relieve
or  discharge  Borrower of its  Obligations,  grants of  Collateral,  duties and
covenants  hereunder or otherwise  until such time as all  Obligations to Lender
have  been  indefeasibly  paid  and  satisfied  in  full,   including,   without
limitation,  the  continuation  and  survival  in full  force and  effect of all
security  interests  and  liens of  Lender  in and upon  all then  existing  and
thereafter-arising  or acquired  Collateral  and all  warranties  and waivers of
Borrower.

     9.8  Usage.  All  terms  used  herein  which  are  defined  in the  Uniform
Commercial Code shall have the meanings given therein unless  otherwise  defined
in this Agreement and all references to the singular or plural herein shall also
mean the plural or singular, respectively. 

     9.9  Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State in which the office of Lender set forth in
Section 10.6(a) below is located. 


SECTION 10. ADDITIONAL DEFINITIONS AND TERMS

     10.1 (a) Maximum Credit: Five Million Dollars ($5,000,000.00)

          (b) Gross Availability Formulas:

          Eligible Accounts Percentage:

               (i)  Fifty  five   percent   (50%)  of  Dial   Around  Pay  Phone
          Compensation Plan Accounts;

               (ii)  Eighty  five  percent  (85%) of the 1+ Coin  Sent Paid Long
          Distance Services Accounts so long as the Dilution  Percentage of such
          accounts (ADilution  Percentage@ is defined as the sum of all credits,
          discounts, allowances, write-offs,  contra-accounts, and other offsets
          which reduce the value of accounts receivable, as determined by Lender
          in its sole discretion,  divided by the gross sales), as calculated on
          a rolling 90 day  basis,  remains  less than or equal to five  percent
          (5%).  If the  Dilution  Percentage  is greater than five percent (5%)
          then the advance formula will be decreased by one percentage point for
          each  percentage   point  or  fraction   thereof  that  such  dilution
          percentage exceeds five percent (5%);

               (iii)  Eighty  percent  (80%) of 1+  Direct  Dial  Long  Distance
          Services Accounts so long as the Dilution Percentage of such accounts,
          as calculated on a rolling 90 day basis, remains less than or equal to
          ten percent  (10%).  If the  Dilution  Percentage  is greater than ten
          percent  (10%)  then the  advance  formula  will be  decreased  by one
          percentage  point for each percentage  point or fraction  thereof that
          such dilution percentage exceeds ten percent (10%); and

               (iv)   The   above   sections   10.1(b)(i),    (ii)   and   (iii)
          notwithstanding,  without  in  any  way  limiting  Lender's  right  to
          institute  other  Reserves  from time to time  during  the Term of the
          Revolving  Loans,  Lender may establish such Reserves in amounts as it
          shall deem  appropriate  from Gross  Availability,  including  but not
          limited to, a reserve for federal  excise taxes,  state taxes,  public
          utility charges,  commissions due agents or sales persons, billing and
          collection charges, a reserve for commissions due to NYNEX of at least
          fifty-five  percent  (55%) of  amounts  due with  respect  to  prepaid
          calling cards,  and a reserve of at least five percent (5%) for all 1+
          Coin Sent Paid Long  Distance  Services  Accounts  and Dial Around Pay
          Phone Compensation Plan Accounts.


<PAGE>

                         Eligible Inventory Percentages:

          Finished Goods: Not Applicable
          Raw Materials:  Not Applicable

          (c)  Sublimits:  Not Applicable

          (d)  Minimum Borrowing:  Two Million Five Hundred Thousand Dollars
                                   ($2,500,000)

          10.2 Term Loan: Not Applicable.

          10.3 Accommodations: None.

          10.4 Interest, Fees and Charges :

               (a) Interest Rate: Prime Rate plus one percent (1.0%) per annum;


               (b) Closing Facility Fee:  Eighteen  Thousand Seven Hundred Fifty
          Dollars ($18,750) earned and payable in full at Closing;

               (c) Annual Facility Fee: Three quarters of one percent (.75%) per
          annum of the Maximum Credit.

               (d) Minimum Borrowing Fee: If the average monthly loan balance is
          below Two Million Five Hundred Thousand Dollars ($2,500,000) ("Minimum
          Borrowing")  Lender  shall  receive a fee equal to the interest on the
          difference  between the actual  average  monthly  loan balance and the
          Minimum Borrowing, payable monthly;

               (e) Unused Line Fee: (.25%) per annum.;

               (f) Account Servicing Collateral Handling Fee: None; and

               (g) Field Examinations: $650.00 per examiner per day.

          10.5  Financial  Covenants:  None,  except  as set  forth  in  Section
     6.11(ii).

          10.6 (a) Lender's  Office:  The CIT  Group/Credit  Finance,  Inc.
                                      1211 Avenue of the Americas
                                      New York, NY 10036
                                      Telecopier: (212) 790-9123 Attn.:
                                      Marcia L. Karetsky, Vice President

                (b) Lender's Bank:    The Chase Manhattan Bank
                                      270 Park Avenue
                                      New York, New York  10017

                     With a copy to:  Blank Rome Comisky & McCauley
                                      Woodland Falls Corporate Park
                                      210 Lake Drive East
                                      Cherry Hill, NJ  08002
                                      Attn.:  Peter W. Leibundgut, Esquire

                (c)  Borrowers:       American Network Exchange, Inc.
                                      100 West Lucerne Circle,  Suite 100
                                      Orlando, FL  32801
                                      Telecopier: (407) 481-2560
                                      Attn.:  Amy Gross, Esquire

                                      Crescent Public Communications Inc.
                                      6 Nevada Drive,  Building C
                                      Lake Success, NY  11042
                                      Telecopier:  (516) 437-0807
                                      Attn.:  Renee Brandner, Esquire
<PAGE>

                 (d)  Borrower's Locations of Books and Records of Account:

                                      100 W. Lucerne Circle,  Suite 100
                                      Orlando, FL  32801-4400

                                      6 Nevada Drive
                                      Lake Success, NY  11042

                                      1675 Highway 34 South
                                      Farmingdale, NJ  07727

                 (e)  Locations of Eligible Inventory Collateral:
                                      Not Applicable.

                 (f)  Borrower's Other Offices and Locations of Collateral:

                                       1516 E. Colonial Drive
                                       Orlando, FL  32803


                                       350 Camino Gardens Boulevard,  Suite 201
                                       Boca Raton, FL  33432

                 (g)  Borrower's Trade Names for Invoicing:

                                       1.  AMNEX
                                       2.  Coastal Payphones, Inc.

                 (h)  Subsidiary of Borowers

                                        1.  Suntel, Inc.


          10.7 Term: Three (3) years.

<PAGE>


     IN WITNESS  WHEREOF,  Borrower and Lender have duly executed this Agreement
this _____ day of September, 1997.





LENDER:                                     BORROWERS:

THE CIT GROUP/CREDIT FINANCE, INC.          AMERICAN NETWORK EXCHANGE, INC.



By: ________________________________        By:  _____________________________
    Andrew S. Hausspiegel, Vice President


                                            CRESCENT PUBLIC COMMUNICATIONS INC.



                                            By:  ______________________________



<PAGE>

                                   SCHEDULE A


     First  lien and  security  interest  of OAN  Services,  Inc.  in, to and in
respect of accounts  receivable derived from 0+/0- Operator Services Accounts of
American  Network  Exchange,  Inc. other than those of such accounts  receivable
which are sold to and/or financed by OAN Services, Inc., Zero Plus Dialing, Inc.
or any other third party billing agent (by whatever  name,  and inclusive of any
successor or assignee thereto to thereof).