EXHIBIT 10.4

                        CONFIDENTIAL TREATMENT REQUESTED

                                                                        REDACTED
================================================================================

                            CREDIT FACILITY AGREEMENT

                                  BY AND AMONG

                             TALK.COM HOLDING CORP.

                                       AND

                         ACCESS ONE COMMUNICATIONS CORP.

                                       AND

        CERTAIN OF THEIR AFFILIATES AND DIRECT AND INDIRECT SUBSIDIARIES

                                       AND

                             MCG FINANCE CORPORATION
                   (AS AGENT FOR ITSELF AND THE OTHER LENDERS)

                  Executed and Effective as of October 20, 2000

================================================================================

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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
<S>                                                                                                                  <C>
ARTICLE 1:  THE CREDIT FACILITIES.....................................................................................1
         1.1.     Term Loan Facility..................................................................................1
                  1.1.1.    Establishment of Credit Facility..........................................................1
                  1.1.2.    Facility Maturity.........................................................................1
                  1.1.3.    Use of Proceeds...........................................................................2
                  1.1.4.    Term Loan Notes...........................................................................2
                  1.1.5.    Interest..................................................................................3
                           1.1.5.1.    Reserved.......................................................................3
                           1.1.5.2.    Establishment of Portions......................................................3
                           1.1.5.3.    Interest Rate Determination....................................................3
                           1.1.5.4.    Selection of Rate Index........................................................3
                           1.1.5.5.    Applicable Rate Margins........................................................3
                           1.1.5.6.    Calculation of Interest........................................................4
                           1.1.5.7.    Special LIBO Rate Provisions...................................................4
                  1.1.6.    Repayment and Prepayment..................................................................5
                           1.1.6.1.    Interest Payments..............................................................6
                           1.2.6.2.    Principal Payments.............................................................6
                           1.1.6.3.    Reserved.......................................................................6
                           1.1.6.4.    Payments at Maturity...........................................................6
                           1.1.6.5.    Prepayments....................................................................6
                           1.1.6.6.    Availability for Reborrowing...................................................8
         1.2.     Line of Credit Facility.............................................................................7
                  1.2.1.    Establishment of Credit Facility..........................................................7
                  1.2.2.    Facility Maturity.........................................................................8
                  1.2.3.    Use of Proceeds...........................................................................8
                  1.2.4.    Line of Credit Notes......................................................................8
                  1.2.5.    Interest..................................................................................9
                           1.2.5.1.    Reserved.......................................................................9
                           1.2.5.2.    Establishment of Portions......................................................9
                           1.2.5.3.    Interest Rate Determination....................................................9
                           1.2.5.4.    Selection of Rate Index........................................................9
                           1.2.5.5.    Applicable Rate Margins.......................................................10
                           1.2.5.6.    Calculation of Interest.......................................................10
                           1.2.5.7.    Special LIBO Rate Provisions..................................................10
                  1.2.6.    Repayment and Prepayment.................................................................12
                           1.2.6.1.    Interest Payments.............................................................12
                           1.2.6.2.    Reserved......................................................................12
                           1.2.6.3.    Reserved......................................................................12
                           1.2.6.4.    Payments at Maturity..........................................................12
                           1.2.6.5.    Prepayments...................................................................12
                           1.2.6.6.    Availability for Reborrowing..................................................13
         1.3.     Determination of Commitment Amounts and Available Credit Portion...................................13
                  1.3.1.    Initial Commitments......................................................................14
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<TABLE>
<CAPTION>
<S>                                                                                                                  <C>
                  1.3.2.    Available Credit Portion for Line of Credit..............................................14
                  1.3.3.    Voluntary Reduction of Commitment........................................................14
         1.4.     Advances...........................................................................................14
                  1.4.1.    Requesting Advances......................................................................14
                  1.4.2.    Funding Advances.........................................................................15
                  1.4.3.    Indemnification for Revocation or Failure to Satisfy Conditions..........................15
                  1.4.4.    Obligation to Advance....................................................................15
         1.5.     Payments in General................................................................................15
                  1.5.1.    Manner and Place of Payments.............................................................15
                  1.5.2.    Special Payment Timing Issues............................................................15
                  1.5.3.    Application of Payments..................................................................16
                  1.5.4.    LIBO Rate Payments Not at End of Interest Period.........................................16
                  1.5.5.    Capital Adequacy, Taxes and Other Adjustments............................................16
                  1.5.6.    Payment of Expenses, Indemnities and Protective Advances.................................17
                  1.5.7.    Payments upon Termination................................................................17
                  1.5.8.    Late Payments............................................................................17
                  1.5.9.    Default Interest.........................................................................17
                  1.5.10.    Usury Savings Provision.................................................................17
         1.6.     Release of Security................................................................................18
         1.7.     Fees and Other Compensation........................................................................18
                  1.7.1.    Structuring Fee..........................................................................18
                  1.7.2.    Origination Fee for Term Facility........................................................18
                  1.7.3.    Origination Fee for Line of Credit Facility..............................................18
                  1.7.4.    Periodic Unused Fee......................................................................18
                  1.7.5.    Issuance of Warrants upon Establishment of Line Facility.................................18
                  1.7.6.    Issuance of Warrants Associated with EBITDA Shortfall....................................19
                  1.7.7.    AoL Disbursement Fee.....................................................................19
                  1.7.8.    Other Fees...............................................................................20
ARTICLE 2:  CONDITIONS PRECEDENT.....................................................................................20
         2.1.     Closing Conditions.................................................................................20
                  2.1.1.    Compliance...............................................................................20
                  2.1.2.    Documents................................................................................20
         2.2.     Effectiveness of Line of Credit Facility...........................................................22
         2.3.     All Line Advances..................................................................................23
ARTICLE 3:  REPRESENTATIONS AND WARRANTIES...........................................................................23
         3.1.     Organization and Good Standing.....................................................................23
         3.2.     Power and Authority................................................................................24
         3.3.     Validity and Legal Effect..........................................................................24
         3.4.     No Violation of Laws or Agreements.................................................................24
         3.5.     Title to Assets; Existing Encumbrances; Identification of Intellectual and Real Property...........24
         3.6.     Capital Structure and Equity Ownership.............................................................25
         3.7.     Subsidiaries, Affiliates and Investments...........................................................25
         3.8.     Material Contracts.................................................................................25
         3.9.     Licenses and Authorizations........................................................................25
         3.10.    Taxes and Assessments..............................................................................26
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<TABLE>
<CAPTION>
<S>                                                                                                                  <C>
         3.11.    Litigation and Legal Proceedings...................................................................26
         3.12.    Accuracy of Financial Information..................................................................26
         3.13.    Accuracy of Other Information......................................................................26
         3.14.    Compliance with Laws Generally.....................................................................26
         3.15.    ERISA Compliance...................................................................................26
         3.16.    Environmental Compliance...........................................................................26
         3.17.    Margin Rule Compliance.............................................................................27
         3.18.    Fees and Commissions...............................................................................27
         3.19.    Solvency...........................................................................................27
         3.20.    Reserved...........................................................................................27
ARTICLE 4:  AFFIRMATIVE COVENANTS....................................................................................27
         4.1.     Financial Covenants and Ratios.....................................................................27
                  4.1.1.    Minimum Revenue by Subscriber Type.......................................................27
                  4.1.2.    Maximum Subscriber Acquisition Costs.....................................................27
                  4.1.3.    Minimum Gross Profit Margin..............................................................27
                  4.1.4.    Interest Coverage Ratio..................................................................27
                  4.1.5.    Total Charge Coverage Ratio..............................................................27
                  4.1.6.    Funded Debt-Revenue Leverage Covenants...................................................27
                  4.1.7.    Funded Debt-OCF Leverage Covenants.......................................................27
                  4.1.8.    Liquidity Covenant Prior to Line Effective Date..........................................27
         4.2.     Periodic Financial Statements and Compliance Certificates..........................................27
                  4.2.1.    Quarterly Financial Statements...........................................................27
                  4.2.2.    Annual Financial Statements..............................................................28
         4.3.     Other Financial and Specialized Reports............................................................28
                  4.3.1.    Reserved.................................................................................28
                  4.3.2.    SEC Filings, Shareholder Communications and Press Releases...............................28
         4.4.     Reserved...........................................................................................29
         4.5.     Books and Records; Maintenance of Properties.......................................................29
         4.6.     Existence and Good Standing........................................................................29
         4.7.     Deposit Accounts...................................................................................29
         4.8.     Insurance; Disaster Contingency....................................................................29
                  4.8.1.    General Insurance Provisions.............................................................29
                  4.8.2.    Disaster Recovery and Contingency Program................................................30
         4.9.     Loan Purpose.......................................................................................30
         4.10.    Taxes..............................................................................................30
         4.11.    Reserved...........................................................................................30
         4.12.    Litigation and Administrative Proceedings..........................................................30
         4.13.    Monitoring Compliance; Occurrence of Certain Events................................................30
         4.14.    Compliance with Laws...............................................................................30
         4.15.    Further Actions....................................................................................31
                  4.15.1.    Additional Collateral...................................................................31
                  4.15.2.    Further Assurances......................................................................31
                  4.15.3.    Estoppel Certificates...................................................................31
                  4.15.4.    Waivers and Consents....................................................................32
                  4.15.5.    Access and Audits.......................................................................32
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                                      iii
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<S>                                                                                                                  <C>
                  4.15.6.    Updating of Loan Document Schedules.....................................................32
         4.16.    Costs and Expenses.................................................................................32
         4.17.    Other Information..................................................................................33
         4.18.    Reserved...........................................................................................33
         4.19.    Post-Closing Items.................................................................................33
ARTICLE 5:  NEGATIVE COVENANTS.......................................................................................35
         5.1.     Capital Expenditures...............................................................................35
         5.2.     Additional Indebtedness............................................................................35
         5.3.     Guaranties.........................................................................................35
         5.4.     Reserved...........................................................................................35
         5.5.     Liens and Encumbrances; Negative Pledge............................................................35
         5.6.     Transfer of Assets.................................................................................37
         5.7.     Acquisitions and Investments.......................................................................37
         5.8.     New Ventures; Mergers..............................................................................39
         5.9.     Transactions with Affiliates.......................................................................39
         5.10.    Distributions or Dividends.........................................................................39
         5.11.    Payment of Subordinated Indebtedness...............................................................40
         5.12.    Reserved...........................................................................................40
         5.13.    Issuance of Additional Equity......................................................................40
         5.14.    Removal of Assets..................................................................................40
         5.15.    Modifications to Organic Documents.................................................................41
         5.16.    Terms of and Modifications to Material Relationships...............................................41
         5.17.    Margin Stock Restrictions; Other Federal Statutes..................................................41
ARTICLE 6:  ADDITIONAL COLLATERAL AND RIGHT OF SET OFF...............................................................41
         6.1.     Additional Collateral..............................................................................41
         6.2.     Right of Set-Off...................................................................................41
         6.3.     Additional Rights..................................................................................42
ARTICLE 7:  DEFAULT AND REMEDIES.....................................................................................42
         7.1.     Events of Default..................................................................................42
                  7.1.1.    Payment Obligations......................................................................42
                  7.1.2.    Representations and Warranties...........................................................42
                  7.1.3.    Financial Covenants......................................................................42
                  7.1.4.    Other Covenants in Loan Documents........................................................42
                  7.1.5.    Default Under Other Agreements with Administrative Agent or Lenders......................43
                  7.1.6.    Default Under Material Agreements with Other Parties.....................................43
                  7.1.7.    Security Interest........................................................................43
                  7.1.8.    Change of Control........................................................................44
                  7.1.9.    Government Action........................................................................44
                  7.1.10.    Insolvency..............................................................................45
                  7.1.11.    Additional Liabilities..................................................................45
                  7.1.12.    Reserved................................................................................45
                  7.1.13.    FCC and Other Regulatory-Action Defaults................................................45
                  7.1.14.    Loss or Revocation of Guaranty..........................................................45
         7.2.     Remedies...........................................................................................45
                  7.2.1.    Acceleration, Termination and Pursuit of Collateral......................................45
                  7.2.2.    Mandatory Partial Prepayments............................................................46
                  7.2.3.    Other Remedies...........................................................................46
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<TABLE>
<CAPTION>
<S>                                                                                                                  <C>
                  7.2.4.    Special Regulatory-Related Remedies......................................................46
ARTICLE 8:  RELATIONSHIP AMONG LENDERS...............................................................................47
         8.1.     Appointment, Authorization and Grant of Authority..................................................47
         8.2.     Acceptance of Appointment..........................................................................48
         8.3.     Administrative Agent's Relationship with Borrowers.................................................48
         8.4.     Non-Reliance on Administrative Agent and Other Lenders.............................................48
         8.5.     Reliance by Administrative Agent...................................................................49
         8.6.     Delegation of Duties; Additional Reliance by Administrative Agent..................................49
         8.7.     Acting on Instructions of Lenders..................................................................49
         8.8.     Actions Upon Occurrence of Default or Event of Default.............................................50
         8.9.     Administrative Agent's Rights as Lender in Individual Capacity.....................................50
         8.10.    Advances By Administrative Agent...................................................................50
         8.11.    Payments to Lenders................................................................................51
         8.12.    Pro-Rata Sharing of Setoff Proceeds................................................................51
         8.13.    Limitation on Liability of Administrative Agent....................................................51
         8.14.    Indemnification....................................................................................51
         8.15.    Resignation; Successor Administrative Agent........................................................52
ARTICLE 9:  DEFINITIONS AND RULES OF CONSTRUCTION....................................................................52
         9.1.     Definitions........................................................................................52
         9.2.     Rules of Interpretation and Construction...........................................................65
                  9.2.1.    Plural; Gender...........................................................................65
                  9.2.2.    Section and Schedule References..........................................................66
                  9.2.3.    Titles and Headings......................................................................66
                  9.2.4.    Including and Among Other References.....................................................66
                  9.2.5.    Shall, Will, Must, Can, May References...................................................66
                  9.2.6.    Time of Day References...................................................................66
                  9.2.7.    Knowledge of a Person....................................................................66
                  9.2.8.    Successors and Assigns...................................................................66
                  9.2.9.    Modifications to Documents...............................................................67
                  9.2.10.    References to Laws and Regulations......................................................67
                  9.2.11.    Financial and Accounting Terms..........................................................67
                  9.2.12.    Conflicts Among Loan Documents..........................................................67
                  9.2.13.    Independence of Covenants and Defaults..................................................67
                  9.2.14.    Administrative Agent....................................................................67
ARTICLE 10:  MISCELLANEOUS...........................................................................................67
         10.1.    Indemnification, Reliance and Assumption of Risk...................................................67
         10.2.    Assignments and Participations.....................................................................68
         10.3.    No Waiver; Delay...................................................................................69
         10.4.    Modifications and Amendments.......................................................................69
         10.5.    Disclosure of Information to Third Parties.........................................................70
         10.6.    Binding Effect and Governing Law...................................................................71
         10.7.    Notices............................................................................................71
         10.8.    Relationship with Prior Agreements.................................................................72
         10.9.    Severability.......................................................................................72
         10.10.   Termination and Survival...........................................................................72
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<S>                                                                                                                  <C>
         10.11.   Reinstatement......................................................................................73
         10.12.   Counterparts.......................................................................................73
         10.13.   Waiver of Suretyship Defenses......................................................................73
         10.14.   WAIVER OF LIABILITY................................................................................73
         10.15.   FORUM SELECTION; CONSENT TO JURISDICTION...........................................................74
         10.16.   WAIVER OF JURY TRIAL...............................................................................74
</TABLE>





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<TABLE>
<CAPTION>
                                   SCHEDULES:

<S>             <C>      <C>
Schedule        A        List of Borrowers
Schedule        3.1      Good Standing / Foreign Qualification Jurisdictions
Schedule        3.2      Missing Consents
Schedule        3.5A     Intellectual Property
Schedule        3.5B     Real Property Interests
Schedule        3.5C     Operating Names / Trade Names
Schedule        3.6      Capital Structure / Equity Ownership
Schedule        3.7      Subsidiaries, Affiliates & Investments
Schedule        3.8      Material Contracts
Schedule        3.9      Licenses and Authorizations
Schedule        3.10     Taxes and Assessments
Schedule        3.11     Material Litigation
Schedule        3.18     Fees and Commissions
Schedule        4.7      Existing Deposit Accounts
Schedule        5.2      Permitted Additional Indebtedness
Schedule        5.3      Permitted Additional Guaranties
Schedule        5.5      Permitted Additional Liens
Schedule        5.7      Permitted Additional Investments


                                    EXHIBITS:

Exhibit         1.7.6        Form of EBITDA Shortfall Warrant
Exhibit         1.4.1        Form of Advance Request
Exhibit         4.2          Form of Borrowing Base and Periodic Compliance Certificate
Exhibit         10.2         Form of Assignment and Assumption Agreement
</TABLE>





                                      vii
<PAGE>

                            CREDIT FACILITY AGREEMENT

         THIS CREDIT FACILITY AGREEMENT (as defined in Article 9, along with all
other defined terms,  this  "Agreement") is made and effective as of October 20,
2000, by and among  TALK.COM  HOLDING  CORP.  ("Talk  Holding"),  and ACCESS ONE
COMMUNICATIONS  CORP.  ("Access  One") and  CERTAIN  AFFILIATES  AND  DIRECT AND
INDIRECT SUBSIDIARIES OF TALK HOLDING AND ACCESS ONE (WHICH EITHER ARE LISTED ON
SCHEDULE A AS OF THE EFFECTIVE  DATE HEREOF OR ARE HEREAFTER  ADDED AS BORROWING
SUBSIDIARIES  PURSUANT TO THE TERMS HEREOF) (as more fully defined in Article 9,
Talk  Holding,  Access  One  and  each  such  other  borrower  are  referred  to
individually  as a "Borrower" and  collectively  as the  "Borrowers"),  and EACH
FINANCIAL  INSTITUTION  THAT FROM TIME TO TIME IS A "LENDER"  HEREUNDER (as more
fully defined in Article 9, each, a "Lender";  collectively, the "Lenders"), and
MCG  FINANCE  CORPORATION  (as  more  fully  defined  in  Article  9,  "MCG"  or
"Administrative Agent").

                                 R E C I T A L S

         WHEREAS,  Borrowers  desire and have  applied  to Lenders  for a credit
facility (to be administered by Administrative  Agent) consisting of a term loan
facility pursuant to which up to $20 million can be borrowed on the Closing Date
on a senior  secured  basis and a line of credit  arrangement  pursuant to which
(upon successful  syndication thereof by Administrative Agent) up to $30 million
can be borrowed from time to time on a senior secured basis; and

         WHEREAS,   Lenders  and  Administrative   Agent  are  each  willing  to
accommodate the request for credit upon and subject to the terms, conditions and
provisions of the Loan Documents;

         NOW,  THEREFORE,  for  good and  valuable  consideration  (receipt  and
sufficiency of which are hereby acknowledged), and intending to be legally bound
hereby, Borrowers (jointly and severally),  each Lender and Administrative Agent
each hereby agrees as follows:

                        ARTICLE 1: THE CREDIT FACILITIES

         1.1.     Term Loan Facility.

                  1.1.1.  Establishment of Credit Facility. Subject to the terms
and conditions of and in reliance upon the representations and warranties in the
Loan  Documents,  each Term Lender  (severally  and on a Pro Rata basis with the
other Term  Lenders)  will lend funds to Borrowers on a senior  secured basis on
the Closing Date in an  aggregate  principal  amount  advanced not to exceed the
Term Loan Commitment (as determined in accordance with Section 1.3).

                  1.1.2.  Facility Maturity.  The Term Loan Facility will mature
on June 30,  2001 (as may be  extended  from  time to time as set  forth in this
Section  1.1.2 or  otherwise  in the sole and  absolute  discretion  of the Term
Lenders,  "Term Loan Maturity Date").  Notwithstanding the foregoing,  Borrowers
(upon  delivery of written notice to  Administrative  Agent at any time prior to
the


                                       1
<PAGE>

then effective Term Loan Maturity Date) shall be entitled (a) to extend any such
Term Loan Maturity Date from time to time for additional  successive periods not
to exceed 364 calendar  days from the date of such notice but in no event beyond
June 30, 2005 and/or (b) to extend the then  effective  Term Loan  Maturity Date
until June 30, 2005 upon delivery to  Administrative  Agent of written  evidence
satisfactory to Administrative  Agent that Borrowers have obtained all necessary
regulatory  approvals  (in final,  non-appealable  form) for the  incurrence  of
indebtedness  as set  forth in this  Agreement  and  having a term  with  such a
requested Term Loan Maturity Date.

                  1.1.3.  Use of Proceeds.  The funds  advanced  under this Term
Loan Facility may be used exclusively as follows:

                           a. $4 million, to fund and/or reimburse Borrowers for
various costs,  fees,  expenses and other  payments made in connection  with the
Access One Merger, and

                           b.  $15.25  million,  to satisfy  and  refinance  the
indebtedness  owed by one or more  Borrowers to the various  Persons  separately
disclosed  to  Administrative  Agent  in  writing  on the  Closing  Date  (which
disclosure shall identify each payee, the corresponding amounts being satisfied,
and the  purpose  for which such  indebtedness  being  satisfied  was  initially
incurred), and

                           c. To fund the purchase of specific  property,  plant
and equipment  separately  disclosed to  Administrative  Agent in writing on the
Closing Date, and

                           d. Up to $750,000 to pay for services  and  materials
associated with a Borrower's  marketing activities (as to which, upon reasonable
request of Administrative Agent,  Borrowers shall provide supporting descriptive
information), and

                           e. The balance of the Term Loan  Commitment  (if any)
to pay (i) for fees and expenses  associated with  consummating  and documenting
the  transactions  contemplated  by this  Agreement,  and (ii)  for  such  other
purposes as specifically  authorized hereunder or in writing by the Term Lenders
and the Required Lenders (in their sole and absolute discretion).

                  1.1.4.  Term Loan Notes. The indebtedness  under the Term Loan
Facility and the  corresponding  (joint and several)  obligation of Borrowers to
repay each Term Lender with interest in accordance with the terms hereof will be
evidenced  by one or more  Term  Loan  Notes (as  amended,  restated,  replaced,
supplemented,  extended or renewed from time to time,  each, a "Term Loan Note";
collectively,  the "Term Loan Notes")  payable to the order of each Term Lender.
The  outstanding  indebtedness  evidenced by the Term Loan Notes will be due and
payable in full on the Term Loan Maturity Date. The aggregate  stated  principal
amount of the Term Loan Notes will be the Term Loan Commitment established as of
the Closing Date pursuant to Section 1.3;  provided,  however,  that the maximum
liability  under such Term Loan Notes will be limited at all times to the actual
amount of  indebtedness  (including  principal,  interest,  fees,  expenses  and
indemnities) then outstanding under the Term Loan Facility.  Each Term Lender is
authorized  to note or  endorse  the date and  amount of each  Advance  and each
payment under the Term Loan Facility on a schedule annexed to and constituting a
part of the Term Loan  Notes.  Such  notations  or  endorsements  (if made) will
constitute  prima facie  evidence of the  information  noted or endorsed on such
schedule, but the absence of any such notation


                                       2
<PAGE>

or endorsement will not limit or otherwise affect the obligations or liabilities
of Borrowers thereunder and hereunder.

                  1.1.5.  Interest.  Interest  under the Term Loan Facility (and
with  respect to any other  amounts  advanced  to or on behalf of  Borrowers  or
otherwise  outstanding  under the Loan Documents) will be determined and imposed
in accordance with the following  provisions  (and, as applicable,  Sections 1.5
and 1.7):

                           1.1.5.1. Reserved.

                           1.1.5.2.  Establishment of Portions.  For purposes of
determining  interest,  Borrowers may  designate  and subdivide the  outstanding
balance under the Term Loan Facility (including any other amounts advanced to or
on behalf of Borrowers under the Loan Documents) into a maximum of 6 Portions at
an Adjusted LIBO Rate and 1 Portion at a Prime Rate  (inclusive of the number of
Portions  permitted  under the Line of Credit  Facility).  No  Portion  accruing
interest at an Adjusted  LIBO Rate may be less than  $500,000,  and all Portions
under the Term Loan Facility  collectively  must total the  outstanding  balance
under the Term Loan Facility.

                           1.1.5.3. Interest Rate Determination. The outstanding
principal  balance  under each Portion  under the Term Loan  Facility  will bear
interest  (computed  daily until paid in immediately  available  funds,  whether
prior to or after the Term Loan Maturity Date) at the applicable  Rate Index (as
determined in accordance  with Section  1.1.5.4) plus the applicable Rate Margin
(as  determined in accordance  with Section  1.1.5.5).  If the Prime Rate is the
applicable Rate Index for a Portion, then the interest rate on such Portion will
change  when and as the Prime Rate or Rate  Margin  changes;  and if an Adjusted
LIBO Rate is the applicable Rate Index for a Portion,  then the interest rate on
such Portion will be  established  on the first day of each Interest  Period for
such  Portion  and will not  change  during  such  Interest  Period  (except  as
otherwise  permitted under Section 1.1.5).  Notwithstanding  the foregoing,  the
applicable  interest  rate for the  outstanding  balance  under  the  Term  Loan
Facility  from the Closing  Date until the first date on which the Rate Index or
Rate Margin may be changed  will be 10.76% per annum (i.e.,  the  Adjusted  LIBO
Rate  applicable for a 3-month period as of the Closing Date (6.76%) plus a Rate
Margin of 4.0% per annum).

                           1.1.5.4. Selection of Rate Index. The applicable Rate
Index for each  Portion  under the Term Loan  Facility  will be either the Prime
Rate or an Adjusted LIBO Rate. The applicable Rate Index for each Portion may be
changed  by  Borrowers  as of  the  first  calendar  day  after  the  end of the
applicable  Interest Period for such Portion.  At least 3 Business Days (but not
more  than 10  Business  Days)  before  any day on which  the Rate  Index may be
changed, Borrowers must notify Administrative Agent in writing of (a) the dollar
amount of each Portion (if more than one exists) and (b) the selected Rate Index
for each Portion during the subsequent  rate period  (including,  if applicable,
the selected length of the Interest Period for balances  accruing interest at an
Adjusted  LIBO  Rate).  If  Administrative  Agent does not timely  receive  such
written notification as to any Portion, then the then-current Rate Index will be
the  applicable  Rate  Index for the  outstanding  balance  of such  unspecified
Portion during the subsequent Interest Period.

                           1.1.5.5.  Applicable  Rate Margins.  From the Closing
Date  through the date after  December  31, 2000 on which  Administrative  Agent
receives the first periodic compliance


                                       3
<PAGE>

certificate and consolidated  financial  statements delivered in accordance with
Section 4.2 that  provides a certified  calculation  of the Leverage  Ratio (the
"Term Facility  Fixed Rate Margin  Period"),  the Rate Margin  applicable to the
Term Loan  Facility will be 4.0% for Portions  accruing  interest at an Adjusted
LIBO Rate and 2.5% for Portions accruing interest at the Prime Rate. Thereafter,
the Rate Margin will be based upon the  Leverage  Ratio of (a) Funded Debt as of
the date of  establishment of such Rate Margin to (b) TTM-OCF as of the last day
of  the  fiscal  quarter  reflected  on  the  most  recent  quarterly  financial
statements delivered to Administrative Agent in accordance with Section 4.2, and
will be determined according to the following schedule:

<TABLE>
<CAPTION>
                                                     Prime Rate                 Adjusted LIBO
                           Leverage Ratio              Margin                    Rate Margin
                           --------------            ----------                 -------------
                            <S>                        <C>                          <C>
                           <2.5                        2.00%                        3.50%

                           >2.5                        2.50%                        4.00%
                           -
</TABLE>

The Rate Margin  applicable to the Term Loan Facility will be established on the
calendar  day  immediately  following  the end of the Term  Facility  Fixed Rate
Margin Period and thereafter will be established as of the first calendar day of
each Interest Period after the date that Administrative  Agent receives the most
recent periodic  compliance  certificate and financial  statements  delivered in
accordance  with  Section  4.2.  Even  though  the  pricing  schedule  above may
contemplate  Rate Margins for Leverage  Ratios in excess of the Leverage  Ratios
from time to time permitted under Section 4.1: (1) the existence of such pricing
in the above schedule (or the  effectiveness  thereof) does not amend any of the
requirements  under Section 4.1 or waive any Default or Event of Default  caused
by any non-compliance  therewith from time to time and (2) Administrative  Agent
and Lenders may nevertheless exercise from time to time during the occurrence of
an Event of Default any and all rights and  remedies  that are  permitted by any
Loan Document or applicable law.

                           1.1.5.6.  Calculation of Interest. Interest under the
Term Loan Facility will be calculated, accrued, imposed and payable on the basis
of a 360-day year for the actual number of days elapsed.  Interest will begin to
accrue on any  amounts  advanced  to or on behalf  of  Borrowers  under the Loan
Documents on and as of the date such funds are advanced.

                           1.1.5.7. Special LIBO Rate Provisions.  The following
provisions apply with respect to Adjusted LIBO Rates  (notwithstanding any other
provision hereof).

                                    a.  Change  in  Adjusted   LIBO  Rate.   Any
Adjusted  LIBO Rate may be  prospectively  adjusted by a particular  Lender from
time to time to account for any additional or increased cost of maintaining  any
necessary  reserves  for  Eurodollar  deposits  (including  any  increase in the
Reserve  Percentage) or any increased costs due to changes in the applicable law
occurring subsequent to the commencement of the then-applicable Interest Period.
Such Lender will give Administrative  Agent notice of any such determination and
adjustment within a reasonable  period of time thereafter.  Upon receipt of such
notice, Administrative Agent will provide a copy thereof to Borrowers, and (upon
written  request) such Lender will furnish a statement to  Administrative  Agent
and Borrowers  setting forth the basis and the method for determining the amount
of such  adjustment.  A determination by any Lender hereunder will be conclusive
absent  manifest  error.  If any Lender  provides any such notice of adjustment,
then Borrowers may elect to change the then-applicable Rate


                                       4
<PAGE>

Index  (using the same Rate Margin  category)  to the Prime Rate for any Portion
then subject to an Adjusted  LIBO Rate.  Such  election to change the Rate Index
must be made by providing  Administrative  Agent written  notice  thereof at any
time  within 10  Business  Days  after  receipt  of such  notice  of  adjustment
(notwithstanding  any  restriction  hereunder  limiting  Rate  Index  changes to
certain  dates,  but  subject to the  requirement  to pay all  associated  costs
therewith).  Upon  Administrative  Agent's receipt of any such written election,
the identified Portion will thereupon begin to accrue interest at the Prime Rate
plus the Rate Margin (as  applicable  for the same Leverage  Ratio as previously
was applicable for the Adjusted LIBO Rate) for the remainder of the then-current
Interest Period for such Portion.

                                    b.  Unavailability  of Eurodollar  Funds. An
Adjusted  LIBO  Rate  will not be  available  for the Term  Loan  Facility  if a
particular  Lender  at any  time  determines  or  reasonably  believes  that (1)
Eurodollar  deposits  equal to the  amount  of  principal  under  the Term  Loan
Facility for the applicable Interest Period are unavailable,  or (2) an Adjusted
LIBO  Rate  will not  adequately  and  fairly  reflect  the cost of  maintaining
balances  under  the Term  Loan  Facility,  or (3) by  reason  of  circumstances
affecting  Eurodollar  markets,  adequate and reasonable means do not then exist
for  ascertaining  an Adjusted LIBO Rate.  Such Lender will give  Administrative
Agent notice of any such determination and adjustment within a reasonable period
of time  thereafter.  Upon  receipt of such  notice,  Administrative  Agent will
provide a copy thereof to Borrowers, and (upon written request) such Lender will
furnish to  Administrative  Agent and  Borrowers a statement  setting  forth the
basis for such  determination or reasonable belief. A determination or belief by
any Lender hereunder will be conclusive absent manifest error.

                                    c.  Illegality.  An Adjusted  LIBO Rate also
will not be available under the Term Loan Facility if a particular Lender at any
time determines or reasonably believes that it is unlawful or impossible to fund
or maintain sufficient  Eurodollar  liabilities for the Term Loan Facility under
an Adjusted LIBO Rate. Such Lender will give Administrative  Agent notice of any
such determination and adjustment within a reasonable period of time thereafter.
Upon receipt of such notice, Administrative Agent will provide a copy thereof to
Borrowers, and (upon written request) such Lender will furnish to Administrative
Agent and Borrowers a statement  setting forth the basis for such  determination
or reasonable  belief. A determination or belief by any Lender hereunder will be
conclusive absent manifest error.

                                    d.  Continuance  of a Default.  An  Adjusted
LIBO Rate, unless Required Lenders otherwise consent, also will not be available
under the Term Loan  Facility  during the  existence  of any Default or Event of
Default under the Loan Documents.

                                    e. Alternative  Rate.  During the occurrence
of any event  described in either  Clauses  "b," "c" or "d" of this  Subsection,
each Term Lender's  obligation  hereunder to fund or maintain  balances under an
Adjusted LIBO Rate will be suspended,  and during such period,  the  outstanding
balance  under the Term Loan  Facility will bear interest at the Prime Rate plus
the appropriate Rate Margin (determined in accordance with Section 1.1.5.5).

                  1.1.6.  Repayment and Prepayment.  Each Borrower  (jointly and
severally) hereby promises to pay Administrative  Agent (for the ratable benefit
of the Term Lenders) the aggregate


                                       5
<PAGE>

indebtedness  under  the Term  Loan  Facility  (and  other  Loan  Documents)  in
accordance with the following provisions (and, as applicable,  Sections 1.3, 1.5
and 1.7):

                           1.1.6.1.  Interest  Payments.  Interest accrued under
the Term  Loan  Facility  is due and  payable  monthly  in  arrears  on the last
calendar day of each month and also, at the option of the Term  Lenders,  on the
last calendar day of each Interest Period for any Portion  accruing  interest at
an Adjusted LIBO Rate. Such payments shall commence on the first such date after
the Closing Date.  Upon prior  written  notice of at least 30 calendar days from
Administrative Agent to Borrowers, Administrative Agent (with the consent of the
Term Lenders,  but not more than once prior to the Term Loan Maturity  Date) may
change the date during a month on which such payments are due and payable.

                           1.1.6.2. Principal Payments. On the last calendar day
of each fiscal  quarter,  COMMENCING  AS OF  SEPTEMBER  30,  2001,  a payment of
principal equal to $1,250,000.00 of the principal balance  outstanding under the
Term Loan Facility is due and payable in its entirety. Upon prior written notice
of  at  least  180  calendar  days  from  Administrative   Agent  to  Borrowers,
Administrative  Agent (with the consent of the Term  Lenders,  but not more than
once prior to the Term Loan Maturity  Date) may change the date during a quarter
on which such payments are due and payable.

                           1.1.6.3. Reserved.

                           1.1.6.4.   Payments  at  Maturity.   The  outstanding
indebtedness  under the Term Loan Facility  (including all principal,  interest,
fees,  expenses and  indemnities) is due and payable in its entirety on the Term
Loan Maturity Date.

                           1.1.6.5. Prepayments.

                                    a. Voluntary Prepayments.  At any time, upon
prior written  notice to  Administrative  Agent of at least 5 Business Days, the
outstanding  principal  balance  under the Term Loan  Facility may be prepaid in
whole or in part.  In connection  with any such  voluntary  prepayment  prior to
August 31,  2001,  and in  addition  to any  amounts  due under  Section  1.5.4,
Borrowers shall concurrently therewith pay Administrative Agent (for the ratable
benefit  of the Term  Lenders)  a  prepayment  fee in the  amount  of 2% of such
prepayment.  In connection with any such voluntary prepayment on or after August
31, 2001 but prior to August 31, 2002,  and in addition to any amounts due under
Section 1.5.4,  Borrowers shall concurrently  therewith pay Administrative Agent
(for the ratable  benefit of the Term Lenders) a prepayment fee in the amount of
1% of such prepayment.  As of and after August 31, 2002, Borrowers may make such
prepayments  without premium or penalty except as provided in Section 1.5.4. Any
voluntary  partial  prepayment must be in an amount of not less than $500,000 or
in multiples of $10,000 in excess thereof.

                                    b.   Mandatory   Prepayments   --  Excessive
Balance.  If the  outstanding  indebtedness  under the Term Loan Facility at any
time exceeds the Term Loan  Commitment as determined in accordance  with Section
1.3, then such excess amount outstanding must be re-paid to Administrative Agent
in its entirety (for the ratable benefit of the Term Lenders)


                                       6
<PAGE>

immediately  upon the earlier of (1)  awareness  by  Borrowers of the advance or
incurrence thereof or (2) demand by Administrative Agent for payment thereof.

                                    c. Mandatory  Prepayments -- Asset Sales. If
Borrowers  collectively  sell,  lease,  license on an exclusive  basis  (without
retaining Borrowers' absolute right to use on a royalty-free basis), transfer or
otherwise  dispose of any assets  (other than  inventory or other assets  either
sold in the ordinary  course of business  with the proceeds  thereof  reinvested
within 180 calendar days  thereafter in similar or other tangible assets or sold
to another  Borrower)  exceeding an aggregate fair market value of $2,500,000 in
any 12 consecutive  calendar months,  then a prepayment must be immediately made
on the outstanding  indebtedness  under the Term Loan Facility,  unless the Term
Lenders  otherwise  consent.   The  amount  of  any  such  mandatory  prepayment
(inclusive of the prepayment  required under the Line of Credit  Facility as set
forth in Section  1.2.6.5.c,  which amounts shall be ratably allocated among the
Facilities  based  upon  the  then-current   outstanding   balances  under  such
Facilities) will be the cash proceeds of any such asset  dispositions  (or, with
respect to any non-cash proceeds, the cash proceeds thereof as and when received
by a Borrower) net of (1) reasonable  commissions and expenses  actually paid to
unrelated  third  parties in  connection  with such  transactions  and (2) taxes
payable as a direct result of such transactions (as such taxes are estimated and
certified to Administrative  Agent by an acceptable  certified public accountant
or Borrowers' chief financial officer).

                                    d.    Mandatory    Prepayments   -   Maximum
Outstandings  During  Event of  Default.  Upon the  occurrence  and  during  the
continuance of any Event of Default,  unless the Lenders  otherwise  consent,  a
prepayment  must be made  immediately  and from time to time on the  outstanding
indebtedness  under  the  Loan  Documents  to  the  extent  that  the  aggregate
outstanding  indebtedness of Borrowers under the Loan Documents  exceeds the sum
of the following: (i) 100% of the aggregate accounts receivable of Borrowers for
the  provision  of   telecommunications   services  to  unrelated   third  party
Subscribers that are 60 calendar days or less past the initial due date therefor
(including unbilled usage or accounts receivable that are less than 30 days old)
and (ii) deposits of immediately  available  unencumbered funds held in accounts
that are legally titled and  beneficially  owned solely by one or more Borrowers
and/or  Guarantor and that are encumbered with a first priority lien in favor of
Administrative Agent (for the ratable benefit of Lenders) pursuant to a security
agreement and a control  agreement that are in form and substance  acceptable to
Administrative  Agent  (in its  commercially  reasonable  discretion).  Any such
prepayment  by Borrowers  shall be allocated  ratably among the  Facilities  and
Lenders based upon the then-current outstanding balances under such Facilities.

                                    e. In  General.  Any  prepayments  under the
Term Loan Facility must include all accrued but unpaid  interest  under the Term
Loan  Facility  allocable  to the  amount  prepaid  through  the  date  of  such
prepayment.

                           1.1.6.6.  Availability  for  Reborrowing.   Principal
amounts  repaid or prepaid under the Term Loan  Facility  prior to the Term Loan
Maturity Date will not be available for reborrowing hereunder. ---- ---

         1.2.     Line of Credit Facility.


                                       7
<PAGE>

                  1.2.1.  Establishment of Credit  Facility.  From and after the
Line Effective  Date, but subject to the terms and conditions of and in reliance
upon the representations and warranties in the Loan Documents,  each Line Lender
(severally  and on a Pro Rata basis with the other Line Lenders) will lend funds
to Borrowers on a senior secured basis through  Advances from time to time in an
aggregate  principal  amount advanced not to exceed the Available Credit Portion
(as determined in accordance with Section 1.3).

                  1.2.2.  Facility  Maturity.  The Line of Credit  Facility will
mature on June 30,  2001 (as may be  extended  from time to time as set forth in
this Section 1.2.2 or otherwise in the sole and absolute  discretion of the Line
Lenders,  "Line  of  Credit  Maturity  Date").  Notwithstanding  the  foregoing,
Borrowers (upon delivery of written notice to  Administrative  Agent at any time
prior to the then effective Line of Credit  Maturity Date) shall be entitled (a)
to extend any such Line of Credit Maturity Date from time to time for additional
successive  periods not to exceed 364 calendar days from the date of such notice
but in no event  beyond June 30,  2003  and/or (b) to extend the then  effective
Line of Credit Maturity Date until June 30, 2003 upon delivery to Administrative
Agent of written evidence  satisfactory to  Administrative  Agent that Borrowers
have obtained all necessary regulatory approvals (in final, non-appealable form)
for the incurrence of  indebtedness  as set forth in this Agreement and having a
term with such a requested Line of Credit Maturity Date.

                  1.2.3. Use of Proceeds.  The funds advanced under this Line of
Credit Facility may be used exclusively as follows:

                           a. To fund the purchase of specific property,  plant,
equipment and other capital  expenditures  as separately  identified to the Line
Lenders concurrent with any such Advance of funds, and ---

                           b. To fund marketing activities, working capital, and
other legitimate corporate expenditures of Borrowers, and ---

                           c. To pay  dividends  to TALK.COM  INC.  from time to
time if and to the extent  permitted  under Section 5.10,  and

                           d. The balance of the Line of Credit  Commitment  (if
any)  to pay  (i)  for  fees  and  expenses  associated  with  consummating  and
documenting the transactions  contemplated by this Agreement,  and (ii) for such
other purposes as  specifically  authorized  hereunder or in writing by the Line
Lenders and Required Lenders (in their sole and absolute discretion).

                  1.2.4.  Line of Credit Notes. The indebtedness  under the Line
of Credit  Facility  and the  corresponding  (joint and several)  obligation  of
Borrowers to repay each Line Lender with interest in  accordance  with the terms
hereof  will be  evidenced  by one or more  Line of Credit  Notes  (as  amended,
restated, replaced, supplemented, extended or renewed from time to time, each, a
"Line of Credit Note"; collectively,  the "Line of Credit Notes") payable to the
order of each Line Lender. The outstanding indebtedness evidenced by the Line of
Credit  Notes  will be due and  payable  in full on the Line of Credit  Maturity
Date. The aggregate  stated principal amount of the Line of Credit Notes will be
the Line of Credit  Commitment  established  pursuant to Section 1.3;  provided,
however,  that the  maximum  liability  under such Line of Credit  Notes will be
limited at all times to the actual amount of


                                       8
<PAGE>

indebtedness  (including  principal,  interest,  fees, expenses and indemnities)
then  outstanding  under  the Line of  Credit  Facility.  Each  Line  Lender  is
authorized  to note or  endorse  the date and  amount of each  Advance  and each
payment  under  the  Line  of  Credit  Facility  on a  schedule  annexed  to and
constituting a part of the Line of Credit Notes. Such notations or endorsements,
if made,  will  constitute  prima  facie  evidence of the  information  noted or
endorsed on such  schedule,  but the absence of any such notation or endorsement
will not limit or otherwise  affect the  obligations or liabilities of Borrowers
thereunder and hereunder.

                  1.2.5.  Interest.  Interest under the Line of Credit  Facility
(and with respect to any other amounts  advanced to or on behalf of Borrowers or
otherwise  outstanding  under the Loan Documents) will be determined and imposed
in accordance with the following  provisions  (and, as applicable,  Sections 1.5
and 1.7):

                           1.2.5.1. Reserved.

                           1.2.5.2.  Establishment of Portions.  For purposes of
determining  interest,  Borrowers may  designate  and subdivide the  outstanding
balance under the Line of Credit Facility  (including any other amounts advanced
to or on  behalf of  Borrowers  under the Loan  Documents)  into a maximum  of 6
Portions at an Adjusted  LIBO Rate and 1 Portion at a Prime Rate  (inclusive  of
the  number of  Portions  permitted  under the Term Loan  Facility).  No Portion
accruing  interest at an Adjusted LIBO Rate may be less than  $500,000,  and all
Portions  under  the  Line  of  Credit  Facility  collectively  must  total  the
outstanding balance under the Line of Credit Facility.

                           1.2.5.3. Interest Rate Determination. The outstanding
\rincipal  balance  under each Portion of the Line of Credit  Facility will bear
interest  (computed  daily until paid in immediately  available  funds,  whether
prior to or after the Line of Credit Maturity Date) at the applicable Rate Index
(as  determined in accordance  with Section  1.2.5.4) plus the  applicable  Rate
Margin (as determined in accordance with Section 1.2.5.5).  If the Prime Rate is
the applicable Rate Index for a Portion,  then the interest rate on such Portion
will  change  when  and as the  Prime  Rate or Rate  Margin  changes;  and if an
Adjusted LIBO Rate is the applicable Rate Index for a Portion, then the interest
rate on such  Portion  will be  established  on the first  day of each  Interest
Period for such Portion and will not change during such Interest  Period (except
as otherwise permitted under Section 1.2.5).

                           1.2.5.4. Selection of Rate Index. The applicable Rate
Index for each  Portion  under the Line of Credit  Facility  will be either  the
Prime Rate or an Adjusted LIBO Rate. The applicable  Rate Index for each Portion
may be changed by  Borrowers  as of the first  calendar day after the end of the
applicable  Interest Period for such Portion.  At least 3 Business Days (but not
more  than 10  Business  Days)  before  any day on which  the Rate  Index may be
changed, Borrowers must notify Administrative Agent in writing of (a) the dollar
amount of each Portion (if more than one exists) and (b) the selected Rate Index
for each Portion during the subsequent  rate period  (including,  if applicable,
the selected length of the Interest Period for balances  accruing interest at an
Adjusted  LIBO  Rate).  If  Administrative  Agent does not timely  receive  such
written notification as to any Portion, then the then-current Rate Index will be
the  applicable  Rate  Index for the  outstanding  balance  of such  unspecified
Portion during the subsequent  Interest Period.  With respect to the proceeds of
each  Advance  under the Line of Credit  Facility,  unless  Borrowers  request a
particular


                                       9
<PAGE>

Rate  Index  at the  time of such  Advance,  then the  Prime  Rate  shall be the
applicable  Rate Index from the  corresponding  Settlement Date for such Advance
until the next date on which the Rate Index may be changed hereunder.

                           1.2.5.5.  Applicable  Rate Margins.  From the date of
the initial  Advance  under the Line of Credit  Facility  through the date after
December 31, 2000 on which  Administrative  Agent  receives  the first  periodic
compliance  certificate  and  consolidated  financial  statements  delivered  in
accordance  with  Section  4.2 that  provides  a  certified  calculation  of the
Leverage Ratio (the "Line Facility Fixed Rate Margin  Period"),  the Rate Margin
applicable  to the Line of Credit  Facility  will be 4.0% for Portions  accruing
interest at an Adjusted LIBO Rate and 2.5% for Portions accruing interest at the
Prime Rate. Thereafter, the Rate Margin will be based upon the Leverage Ratio of
(a)  Funded  Debt as of the date of  establishment  of such  Rate  Margin to (b)
TTM-OCF as of the last day of the fiscal  quarter  reflected  on the most recent
quarterly financial  statements  delivered to Administrative Agent in accordance
with Section 4.2, and will be determined according to the following schedule:

<TABLE>
<CAPTION>
                                                     Prime Rate                 Adjusted LIBO
                           Leverage Ratio              Margin                    Rate Margin
                           --------------            ----------                 -------------
                            <S>                        <C>                          <C>
                           <2.5                        2.00%                        3.50%

                           >2.5                        2.50%                        4.00%
                           -
</TABLE>

The Rate Margin applicable to the Line of Credit Facility will be established on
the calendar day  immediately  following the end of the Line Facility Fixed Rate
Margin Period and thereafter will be established as of the first calendar day of
each Interest Period after the date that Administrative  Agent receives the most
recent periodic  compliance  certificate and financial  statements  delivered in
accordance  with  Section  4.2.  Upon the  funding  of any  Advance  under  this
Agreement  after the Closing  Date in excess of  $500,000,  then Lenders (in the
sole and absolute  discretion  of Required  Lenders) may elect to  prospectively
adjust the Rate Margin  applicable  to each  Portion to reflect  the  additional
amount of Funded Debt  thereby  outstanding.  Even  though the pricing  schedule
above may contemplate Rate Margins for Leverage Ratios in excess of the Leverage
Ratios from time to time permitted  under Section 4.1: (1) the existence of such
pricing in the above schedule (or the effectiveness  thereof) does not amend any
of the  requirements  under Section 4.1 or waive any Default or Event of Default
caused by any non-compliance  therewith from time to time and (2) Administrative
Agent  and  Lenders  may  nevertheless  exercise  from time to time  during  the
occurrence  of an Event of  Default  any and all rights  and  remedies  that are
permitted by any Loan Document or applicable law.

                           1.2.5.6.  Calculation of Interest. Interest under the
Line of Credit Facility will be calculated,  accrued, imposed and payable on the
basis of a 360-day year for the actual  number of days  elapsed.  Interest  will
begin to accrue on any amounts  advanced to or on behalf of Borrowers  under the
Loan Documents on and as of the date such funds are advanced.

                           1.2.5.7. Special LIBO Rate Provisions.  The following
provisions apply with respect to Adjusted LIBO Rates  (notwithstanding any other
provision hereof).


                                       10
<PAGE>

                                    a.  Change  in  Adjusted   LIBO  Rate.   Any
Adjusted  LIBO Rate may be  prospectively  adjusted by a particular  Lender from
time to time to account for any additional or increased cost of maintaining  any
necessary  reserves  for  Eurodollar  deposits  (including  any  increase in the
Reserve  Percentage) or any increased costs due to changes in the applicable law
occurring subsequent to the commencement of the then-applicable Interest Period.
Such Lender will give Administrative  Agent notice of any such determination and
adjustment within a reasonable  period of time thereafter.  Upon receipt of such
notice, Administrative Agent will provide a copy thereof to Borrowers, and (upon
written  request) such Lender will furnish a statement to  Administrative  Agent
and Borrowers  setting forth the basis and the method for determining the amount
of such  adjustment.  A determination by any Lender hereunder will be conclusive
absent  manifest  error.  If any Lender  provides any such notice of adjustment,
then  Borrowers  may elect to change the  then-applicable  Rate Index (using the
same Rate Margin  category) to the Prime Rate for any Portion then subject to an
Adjusted  LIBO  Rate.  Such  election  to change  the Rate Index must be made by
providing  Administrative  Agent  written  notice  thereof at any time within 10
Business Days after receipt of such notice of  adjustment  (notwithstanding  any
restriction  hereunder limiting Rate Index changes to certain dates, but subject
to the requirement to pay all associated costs therewith).  Upon  Administrative
Agent's  receipt of any such  written  election,  the  identified  Portion  will
thereupon  begin to accrue  interest  at the Prime Rate plus the Rate Margin (as
applicable  for the same Leverage  Ratio as previously  was  applicable  for the
Adjusted LIBO Rate) for the remainder of the  then-current  Interest  Period for
such Portion.

                                    b.  Unavailability  of Eurodollar  Funds. An
Adjusted  LIBO Rate will not be available  for the Line of Credit  Facility if a
particular  Lender  at any  time  determines  or  reasonably  believes  that (1)
Eurodollar  deposits  equal to the amount of principal  under the Line of Credit
Facility for the applicable Interest Period are unavailable,  or (2) an Adjusted
LIBO  Rate  will not  adequately  and  fairly  reflect  the cost of  maintaining
balances under the Line of Credit  Facility,  or (3) by reason of  circumstances
affecting  Eurodollar  markets,  adequate and reasonable means do not then exist
for  ascertaining  an Adjusted LIBO Rate.  Such Lender will give  Administrative
Agent notice of any such determination and adjustment within a reasonable period
of time  thereafter.  Upon  receipt of such  notice,  Administrative  Agent will
provide a copy thereof to Borrowers, and (upon written request) such Lender will
furnish to  Administrative  Agent and  Borrowers a statement  setting  forth the
basis for such  determination or reasonable belief. A determination or belief by
any Lender hereunder will be conclusive absent manifest error.

                                    c.  Illegality.  An Adjusted  LIBO Rate also
will not be available under the Line of Credit  Facility if a particular  Lender
at any time determines or reasonably  believes that it is unlawful or impossible
to fund or maintain  sufficient  Eurodollar  liabilities  for the Line of Credit
Facility under an Adjusted LIBO Rate. Such Lender will give Administrative Agent
notice of any such  determination  and adjustment  within a reasonable period of
time thereafter. Upon receipt of such notice,  Administrative Agent will provide
a copy thereof to Borrowers, and (upon written request) such Lender will furnish
to  Administrative  Agent and Borrowers a statement  setting forth the basis for
such determination or reasonable belief. A determination or belief by any Lender
hereunder will be conclusive absent manifest error.


                                       11
<PAGE>

                                    d.  Continuance  of a Default.  An  Adjusted
LIBO Rate, unless Required Lenders otherwise consent, also will not be available
under the Line of Credit  Facility  during the existence of any Default or Event
of Default under the Loan Documents.

                                    e. Alternative  Rate.  During the occurrence
of any event  described in either  Clauses  "b," "c" or "d" of this  Subsection,
each Line Lender's  obligation  hereunder to fund or maintain  balances under an
Adjusted LIBO Rate will be suspended,  and during such period,  the  outstanding
balance  under the Line of Credit  Facility will bear interest at the Prime Rate
plus  the  appropriate  Rate  Margin  (determined  in  accordance  with  Section
1.2.5.5).

                  1.2.6.  Repayment and Prepayment.  Each Borrower  (jointly and
severally) hereby promises to pay Administrative  Agent (for the ratable benefit
of the Line  Lenders,  except  to the  extent  otherwise  agreed  among the Line
Lenders and Administrative  Agent) the aggregate  indebtedness under the Line of
Credit  Facility (and other Loan  Documents)  in  accordance  with the following
provisions (and, as applicable, Sections 1.3, 1.5 and 1.7):

                           1.2.6.1.  Interest  Payments.  Interest accrued under
the Line of Credit  Facility is due and  payable  monthly in arrears on the last
calendar day of each month and also, at the option of the Line  Lenders,  on the
last calendar day of each Interest Period for any Portion  accruing  interest at
an Adjusted LIBO Rate. Such payments shall commence on the first such date after
the initial Advance under the Line of Credit Facility. Upon prior written notice
of  at  least  30  calendar  days  from   Administrative   Agent  to  Borrowers,
Administrative  Agent (with the consent of the Line  Lenders,  but not more than
once prior to the Line of Credit  Maturity  Date) may  change the date  during a
month on which such payments are due and payable.

                           1.2.6.2. Reserved.

                           1.2.6.3. Reserved.

                           1.2.6.4.   Payments  at  Maturity.   The  outstanding
indebtedness  under  the  Line of  Credit  Facility  (including  all  principal,
interest,  fees, expenses and indemnities) is due and payable in its entirety on
the Line of Credit Maturity Date.

                           1.2.6.5. Prepayments.

                                    a. Voluntary Prepayments.  At any time, upon
prior written  notice to  Administrative  Agent of at least 3 Business Days, the
outstanding  principal  balance under the Line of Credit Facility may be prepaid
in whole or in part  without  premium or penalty,  except as provided in Section
1.5.4.  Notwithstanding  the foregoing,  Borrowers may not make more than 4 such
prepayments  under the Line of Credit  Facility per calendar  month  without the
prior consent of the  Administrative  Agent and the Line Lenders.  Any voluntary
partial  prepayment  must  be in an  amount  of not  less  than  $500,000  or in
multiples of $10,000 in excess thereof.

                                    b.   Mandatory   Prepayments   --  Excessive
Balance.  If the outstanding  indebtedness  under the Line of Credit Facility at
any time exceeds the Available  Credit Portion as determined in accordance  with
Section  1.3,   then  such  excess  amount   outstanding   must  be  re-paid  to
Administrative  Agent  (for the  ratable  benefit  of the Line  Lenders)  in its
entirety


                                       12
<PAGE>

immediately  upon the earlier of (1)  awareness  by  Borrowers of the advance or
incurrence thereof or (2) demand by Administrative Agent for payment thereof.

                                    c. Mandatory  Prepayments -- Asset Sales. If
Borrowers  collectively  sell,  lease,  license on an exclusive  basis  (without
retaining Borrowers' absolute right to use on a royalty-free basis), transfer or
otherwise  dispose of any assets  (other than  inventory or other assets  either
sold in the ordinary  course of business  with the proceeds  thereof  reinvested
within 180 calendar days  thereafter in similar or other tangible assets or sold
to another  Borrower)  exceeding an aggregate fair market value of $2,500,000 in
any 12 consecutive  calendar months,  then a prepayment must be immediately made
on the outstanding  indebtedness  under the Line of Credit Facility,  unless the
Line Lenders  otherwise  consent.  The amount of any such  mandatory  prepayment
(inclusive of the prepayment  required under the Term Loan Facility as set forth
in  Section  1.1.6.5.c,  which  amounts  shall be  ratably  allocated  among the
Facilities  based  upon  the  then-current   outstanding   balances  under  such
Facilities) will be the cash proceeds of any such asset  dispositions  (or, with
respect to any non-cash proceeds, the cash proceeds thereof as and when received
by a Borrower) net of (1) reasonable  commissions and expenses  actually paid to
unrelated  third  parties in  connection  with such  transactions  and (2) taxes
payable as a direct result of such transactions (as such taxes are estimated and
certified to Administrative  Agent by an acceptable  certified public accountant
or Borrowers' chief financial officer).

                                    d.    Mandatory    Prepayments   -   Maximum
Outstandings  During  Event of  Default.  Upon the  occurrence  and  during  the
continuance of any Event of Default,  unless the Lenders  otherwise  consent,  a
prepayment  must be made  immediately  and from time to time on the  outstanding
indebtedness  under  the  Loan  Documents  to  the  extent  that  the  aggregate
outstanding  indebtedness of Borrowers under the Loan Documents  exceeds the sum
of the following: (i) 100% of the aggregate accounts receivable of Borrowers for
the  provision  of   telecommunications   services  to  unrelated   third  party
Subscribers  that  are 60  calendar  days or less  past  the  initial  due  date
therefore (including unbilled usage or accounts receivable that are less than 30
days old) and (ii) deposits of immediately available  unencumbered funds held in
accounts that are legally  titled and  beneficially  owned solely by one or more
Borrowers and/or Guarantor and that are encumbered with a first priority lien in
favor of Administrative Agent (for the ratable benefit of Lenders) pursuant to a
security  agreement  and a  control  agreement  that are in form  and  substance
acceptable to Administrative Agent (in its commercially  reasonable discretion).
Any such prepayment by Borrowers shall be allocated ratably among the Facilities
and  Lenders  based  upon  the  then-current  outstanding  balances  under  such
Facilities.

                                    e. In  General.  Any  prepayments  under the
Line of Credit  Facility must include all accrued but unpaid  interest under the
Line of Credit Facility allocable to the amount prepaid through the date of such
prepayment.

                           1.2.6.6.  Availability  for  Reborrowing.   Principal
amounts  paid  under  the Line of  Credit  Facility  prior to the Line of Credit
Maturity Date will be available for  re-borrowing  in accordance  with the terms
hereof up to the Available Credit Portion.

         1.3.     Determination  of  Commitment  Amounts  and  Available  Credit
                  Portion.


                                       13
<PAGE>

                  1.3.1.  Initial  Commitments.   Upon  the  execution  of  this
Agreement and  satisfaction  or written waiver of the  conditions  precedent set
forth in Section 2.1, the Term Loan Commitment established hereunder will be $20
million  ("Term Loan  Commitment").  In  addition,  upon the  execution  of this
Agreement and  satisfaction  or written waiver of the  conditions  precedent set
forth in Sections 2.1 and 2.2,  then the Line of Credit  Commitment  established
hereunder will be $30 million ("Line of Credit Commitment").

                  1.3.2.   Available   Credit   Portion   for  Line  of  Credit.
Notwithstanding  the foregoing,  the maximum  amount of credit  available at any
time under the Line of Credit Facility may not exceed the amount  resulting from
the following formula:

                                    a. The Line of Credit Commitment,

                                    b. Minus, the  then-aggregate  amount of all
prepayments relating to asset sales required to have been paid since the Closing
Date under Section  1.2.6.5.c,  unless (i) such aggregate amount does not exceed
$10 million or (ii) the Line Lenders  otherwise consent to such amount not being
excluded, and

                                    c.  Minus  the   aggregate   amount  of  all
voluntary commitment reductions requested under Section 1.3.3.

The amount resulting from the equation under categories "a" through "c" above is
referred to herein as the "Available Credit Portion";  provided,  however,  that
prior to the Line Effective Date, the "Available Credit Portion" shall be $0.00.
On the effective date of any such reduction in the Available  Credit Portion,  a
prepayment must be made to the extent required under Section 1.2.6.5.b.

                  1.3.3.   Voluntary   Reduction  of  Commitment.   Upon  giving
Administrative  Agent and each Line Lender  prior  written  notice of at least 5
Business  Days,  Borrowers at any time and from time to time may reduce the Line
of Credit Commitment in multiples of $500,000. On the effective date of any such
reduction,  a  prepayment  must be made to the  extent  required  under  Section
1.2.6.5.b.  Any  such  reduction  in the  Line  of  Credit  Commitment  will  be
permanent,  and such  Commitment  cannot  thereafter  be  increased  without the
written consent of Administrative Agent and Lenders.

         1.4.     Advances.

                  1.4.1.  Requesting Advances. To request an Advance (other than
the initial  Advances on the  Closing  Date) under the Line of Credit  Facility,
Borrowers  must give  Administrative  Agent written  notice (or verbal notice by
telephone with  immediate  written  confirmation  to follow) at least 3 Business
Days (but not more than 10 Business Days) prior to the requested Settlement Date
for such Advance  (such notice,  an "Advance  Request").  Such Advance  Request,
together  with  certain  certifications,  must be  substantially  in the form of
Exhibit 1.4.1 or such other form as Administrative Agent may reasonably request.
Each Advance under the Line of Credit  Facility  pursuant to an Advance  Request
(unless  Administrative  Agent and Line Lenders otherwise consent) must be in an
amount of at least $500,000 and may not be greater than the un-borrowed  balance
of the Available Credit Portion.  Unless  Administrative  Agent and Line Lenders
otherwise  consent,  Borrowers  may only  request up to 4 Advances  per calendar
month after the Closing Date.


                                       14
<PAGE>

                  1.4.2.  Funding  Advances.  Subject to the satisfaction of and
compliance with the terms and conditions hereof (including,  as applicable,  the
conditions  precedent  specified in Article 2),  Administrative  Agent will make
each  Lender's  Pro Rata portion of each  requested  Advance (to the extent such
funds  are  received  by  Administrative  Agent)  available  by  such  means  as
Administrative Agent may consider reasonable. At the written request and expense
of Borrowers,  Administrative  Agent will wire transfer all or any portion of an
Advance in accordance with such written instructions therefor. By executing this
Agreement,  each Borrower (jointly and severally) hereby requests Administrative
Agent and each Lender to make and fund the initial  Advances (to the extent that
Administrative  Agent  receives  each  Lender's  Pro Rata portion of the initial
Advances)  in  accordance  with the  Advance  Request  separately  delivered  to
Administrative Agent as of the Closing Date.

                  1.4.3.  Indemnification  for  Revocation or Failure to Satisfy
Conditions. Each Borrower (jointly and severally) will indemnify each Lender and
Administrative  Agent against all losses and costs  reasonably  incurred by such
Lender  and/or  Administrative  Agent  as a  result  of  any  revocation  of any
requested Advance or any failure to fulfill the applicable  conditions precedent
to such  Advance on or before the  requested  Settlement  Date  specified  in an
Advance  Request.  Such  indemnification  will include  (among other things) all
losses and costs incurred by reason of the  liquidation or reemployment of funds
required by such Lender or  Administrative  Agent to fund the Advance  when such
Advance,  as a result of such failure,  is not made on the requested  Settlement
Date. Such Lender's or  Administrative  Agent's (as  applicable)  calculation of
such losses and costs will be conclusive absent manifest error.

                  1.4.4.  Obligation to Advance.  No Lender will be obligated to
make any Advance under the following circumstances:  (a) if the principal amount
of such Advance  plus the  aggregate  amount  outstanding  under the  applicable
Facility would exceed the applicable Commitment or the Available Credit Portion,
or (b) during the  existence of a Default or an Event of Default  hereunder,  or
(c) if such Advance would cause a Default or Event of Default hereunder,  or (d)
after the applicable Maturity Date. In addition,  neither  Administrative  Agent
nor any Line Lender shall have any  obligation  or  commitment  to advance funds
under the Line of Credit  Facility  unless  and until the  conditions  precedent
under Sections 2.1 and 2.2 have been satisfied by Borrowers or waived in writing
by Administrative Agent (at the direction of Line Lenders).

         1.5.     Payments in General.

                  1.5.1.   Manner  and  Place  of  Payments.   All  payments  of
principal, interest, fees, expenses, indemnities and other amounts due under the
Loan Documents must be received by Administrative Agent by wire transfer (unless
Administrative Agent otherwise consents) in immediately  available funds in U.S.
dollars (and without any deduction,  offset,  netting,  reservation of rights or
counterclaim)  on or before Two O'clock  (2:00) p.m.  Eastern Time ("ET") on the
due date therefor at the principal office of  Administrative  Agent set forth in
Notice  Section  hereof  or at such  other  place as  Administrative  Agent  may
designate from time to time.

                  1.5.2. Special Payment Timing Issues.  Whenever any payment to
be made under any Loan Document is due on a day that is not a Business Day, then
such payment may be made on the next succeeding Business Day, and such extension
of time  will be  included  in the  computation  of


                                       15
<PAGE>

interest under such Loan Document.  Any funds received by  Administrative  Agent
after  2:00  p.m.  ET on any day  will be  deemed  to be  received  on the  next
succeeding Business Day.

                  1.5.3.  Application of Payments.  All payments and other funds
received by Administrative Agent under the Loan Documents will be applied in the
following  order: (a) first to the payment of any fees and charges due under the
Loan  Documents,  and (b) then to any  obligations  for the payment of expenses,
costs and indemnities due under the Loan Documents,  and (c) then to the payment
of  interest  due and  owing  under  the Loan  Documents  (pro  rata  among  the
Facilities),  and (d) then to the principal indebtedness due under the Term Loan
Facility, and (e) then to principal outstanding (but not yet due) under the Line
of  Credit  Facility  and the Term  Loan  Facility,  and (f)  then to any  other
interest  accrued  under  the Loan  Documents.  Notwithstanding  the  foregoing,
payments allocable to principal (other than scheduled periodic payments) will be
applied as follows:  (1) to reduce future  scheduled  principal  payments in the
inverse  order of maturity and (2) with respect to the  application  of payments
within  Clause  "(e)",  (except to the  extent  Borrowers  otherwise  request in
writing  concurrently  with such payment) first to principal  balances under the
Line of  Credit  Facility  and then to  principal  balances  under the Term Loan
Facility.

                  1.5.4. LIBO Rate Payments Not at End of Interest Period.  Upon
payment of any amount accruing  interest based upon an Adjusted LIBO Rate on any
day other than the last day of the  corresponding  Interest Period (whether such
payment is voluntary,  mandatory,  by demand,  acceleration or otherwise),  then
Borrowers must pay Administrative Agent (for the benefit of Lenders) the greater
of (a) $500 or (b) all costs and losses (including  funding costs and any losses
associated with the re-deployment of such funds for the balance of such Interest
Period) that may arise or be incurred as a result of or in connection  with such
payment (as such costs and losses may be  calculated  by Lenders).  Upon written
request, Lenders (through Administrative Agent) will furnish a statement setting
forth the basis for such  calculation.  A  determination  or  calculation by any
Lender hereunder will be conclusive absent manifest error.

                  1.5.5. Capital Adequacy,  Taxes and Other Adjustments.  If any
Lender determines that (a) the adoption,  implementation or interpretation after
the Closing Date of any law, treaty,  governmental (or quasi-governmental) rule,
regulation,  guideline,  directive,  policy or order regarding capital adequacy,
reserve requirements,  taxes or similar requirements,  or (b) compliance by such
Lender or any entity  controlling  or funding the operations of such Lender with
any request or directive regarding capital adequacy, reserve requirements, taxes
or similar  requirements  (whether or not having the force of law and whether or
not  failure to comply  therewith  would be  unlawful)  from any  central  bank,
governmental  agency,   controlling  entity,   funding  source  or  body  having
jurisdiction would, in either instance, have the effect of increasing the amount
of capital,  reserves, taxes (other than income taxes of Administrative Agent or
any Lender),  funding costs or other funds  required to be maintained or paid by
such Lender and thereby  reducing the rate of return on such Lender's capital as
a consequence of its obligations  under the Loan Documents,  then Borrowers must
pay to such Lender additional  amounts  sufficient to compensate such Lender for
such reduction.  Such Lender will give  Administrative  Agent notice of any such
determination  and payment amount within a reasonable period of time thereafter.
Upon receipt of such notice, Administrative Agent will provide a copy thereof to
Borrowers,  and (upon  written  request) such Lender will furnish a statement to
Administrative  Agent and  Borrowers  setting forth the basis and the method for
determining the


                                       16
<PAGE>

amount  of  such  payment.  A  determination  by any  Lender  hereunder  will be
conclusive absent manifest error.

                  1.5.6.   Payment  of  Expenses,   Indemnities  and  Protective
Advances.  If any funds are  advanced or costs are  incurred  by  Administrative
Agent or any Lender to or on behalf of Borrowers or otherwise as permitted under
the Loan  Documents  (including  as  protective  advances),  other than Advances
pursuant  to  Section  1.4,  then such  advances  or costs  must be  re-paid  to
Administrative  Agent (to the extent applicable,  for the benefit of Lenders) in
their entirety immediately upon the earlier of (a) awareness by Borrowers of the
advance or incurrence thereof or (b) demand by Administrative  Agent for payment
thereof.

                  1.5.7.  Payments upon Termination.  Notwithstanding  any other
provision  hereof,  the entire  outstanding  indebtedness  under  each  Facility
(including all principal,  interest,  fees, expenses and indemnities) is due and
payable in its entirety upon any termination of such Facility, the corresponding
Commitment therefor, or this Agreement.

                  1.5.8. Late Payments. If any payment (of principal,  interest,
fees, expenses, indemnities or other amounts) due under any Loan Document is not
received by Administrative Agent in immediately available funds on or before the
7th calendar day after the due date  therefor,  then each Borrower  (jointly and
severally)  hereby  agrees (to the maximum  extent not  prohibited by applicable
law) to pay to the applicable  Lenders  (through  Administrative  Agent and upon
Administrative  Agent's request) a late payment charge equal to 5% of the amount
of such late  payment.  The late  payment  charges due under this Section are in
addition to any other interest,  fees,  charges,  expenses or indemnities due or
imposable under the Loan Documents and/or any other remedies available under the
Loan Documents.

                  1.5.9. Default Interest.  During the existence of a Default or
an Event of Default  hereunder,  each Borrower  (jointly and  severally)  hereby
agrees  (to the  maximum  extent not  prohibited  by  applicable  law) to pay to
Lenders (through  Administrative  Agent and upon Administrative  Agent's request
but commencing as of the date of occurrence of such Default or Event of Default)
interest on any indebtedness  outstanding hereunder at the rate of THREE PERCENT
(3%)  per  annum  in  excess  of the  rate  then  otherwise  applicable  to such
indebtedness.  Notwithstanding  the foregoing,  if the relevant Default is under
Section 7.1.10, then such rate increase (to the maximum extent not prohibited by
applicable law) will occur  automatically  without any request by Administrative
Agent.

                  1.5.10. Usury Savings Provision. Notwithstanding any provision
of any Loan Document, Borrowers (individually and collectively) are not and will
not be  required  to pay  interest  at a rate or any fee or  charge in an amount
prohibited  by applicable  law. If interest or any fee or charge  payable on any
date would be in a prohibited amount, then such interest,  fee or charge will be
automatically  reduced to the  maximum  amount that is not  prohibited,  and any
interest,  fee or charge for subsequent periods (to the extent not prohibited by
applicable law) will be increased  accordingly  until  Administrative  Agent and
each Lender receives  payment of the full amount of each such reduction.  To the
extent that any prohibited amount is actually  received by Administrative  Agent
or any Lender,  then such amount will be  automatically  deemed to  constitute a
repayment of principal indebtedness hereunder.


                                       17
<PAGE>

         1.6.     Release of Security. Upon termination of the Loan Documents in
accordance with Section 10.10, then Administrative Agent (at the written request
and expense of Borrowers) (i) will release the Obligors and the property serving
as  Collateral  under  the Loan  Documents  (without  representation,  warranty,
recourse, liability or indemnification of any kind by or to Administrative Agent
or any  Lender),  and  (ii)  will  execute  and  deliver  such  UCC  termination
statements,  mortgage releases,  deed of trust releases, and other documentation
and   instruments   (all  in  form  and  substance   reasonably   acceptable  to
Administrative   Agent)  as  may  be   reasonably   requested  and  provided  to
Administrative  Agent to effect such releases and  terminations,  and (iii) will
terminate  and  cancel  all  Commitments  and  all  Facilities  under  the  Loan
Documents.

         1.7.     Fees and Other Compensation.

                  1.7.1.  Structuring  Fee. On the Closing Date,  Borrowers will
pay  Administrative  Agent (for the sole and exclusive benefit of Administrative
Agent) a Structuring  Fee in the amount of $100,000,  which amount is treated as
prepaid non-refundable interest.

                  1.7.2. Origination Fee for Term Facility. On the Closing Date,
Borrowers  will pay  Administrative  Agent (for the ratable  benefit of the Term
Lenders) an Origination  Fee in the amount of $400,000,  which amount is treated
as prepaid non-refundable interest.

                  1.7.3.  Origination  Fee for Line of Credit  Facility.  On the
Line  Effectiveness  Notification Date (provided such date occurs prior to March
31, 2001),  Borrowers will pay  Administrative  Agent (for the benefit of itself
and the Line Lenders in such proportions as Administrative  Agent may determine)
an Origination Fee in the amount of $750,000, which amount is treated as prepaid
non-refundable interest. Notwithstanding the foregoing, if Borrowers satisfy the
conditions  for an Advance  under the Line of Credit  Facility and a Line Lender
breaches its obligation to advance such funds under the Line of Credit  Facility
in  accordance  with the terms hereof for a period of more than 5 Business  Days
after  written  demand  by  Borrowers,  then such Line  Lender  shall  return to
Borrowers  its portion of the  Origination  Fee earned by such Line Lender under
this  Section  1.7.3.  To the extent  that such  breaching  Line  Lender did not
receive a pro rata  portion  of the  Origination  Fee under this  Section  1.7.3
because  Administrative Agent retained some of the fee, then upon the occurrence
of any such uncured breach Administrative Agent shall also return to Borrowers a
portion of the  Origination  Fee retained by  Administrative  Agent equal to the
balance  of  the  actual  pro  rata  portion  of the  Origination  Fee  that  is
represented by such breaching Line Lender's percentage of the actual Commitments
under the Line of Credit Facility.

                  1.7.4.  Periodic Unused Fee. Borrowers will pay Administrative
Agent (for the ratable benefit of the Line Lenders) a Periodic Unused Fee at the
rate of ONE AND  ONE-QUARTER  OF ONE  PERCENT  (1.25%)  per annum on the average
daily  un-borrowed  portion of the  Available  Credit  Portion under the Line of
Credit Facility. Such fee will be calculated by Administrative Agent and will be
due and payable monthly in arrears on the last calendar day of each month.

                  1.7.5.   Issuance  of  Warrants  upon  Establishment  of  Line
Facility.  On the Line of  Effectiveness  Notification  Date (provided such date
occurs  prior  to March  31,  2001),  TALK.COM  INC.  will  issue  and  grant to
Administrative Agent (or, to the extent so designated by Administrative Agent at
such time,  to one or more of the  Lenders)  warrants  exercisable  for  300,000
shares of common  stock


                                       18
<PAGE>

of  TALK.COM  INC.  (par value  $0.01 per share and as in effect on the  Closing
Date).  Such  warrants  shall contain  customary,  commercially  reasonable  and
mutually  acceptable  terms,  conditions,  rights and  protections  and shall be
substantially  similar to the form  thereof  attached  as Exhibit  1.7.  Without
limiting the foregoing,  such warrants (a) shall be immediately exercisable upon
issuance,  (b)  shall  be  effective  for a period  of 7 years  from the date of
issuance,  (c) shall provide for a cashless exercise alternative,  and (d) shall
have an exercise price equal to 115% of the average closing price of such common
stock as  reported  on the NASDAQ  during the 20  consecutive  trading  sessions
ending two trading sessions prior to the Line  Effectiveness  Notification Date.
Such warrants shall be fully earned for all purposes as of the date of issuance.
Such warrants shall be treated as additional  compensation for the cost and risk
incurred associated with underwriting,  syndicating and establishing of the Line
of Credit  Facility,  but shall in no way  affect or  relieve  any  Borrower  or
Talk.com Inc. of any of its obligations to fully and timely perform and to repay
the  entire  indebtedness  due under  the Loan  Documents.  Notwithstanding  the
foregoing,  if Borrowers satisfy the conditions for an Advance under the Line of
Credit  Facility and a Line Lender breaches its obligation to advance such funds
under the Line of Credit  Facility  in  accordance  with the terms  hereof for a
period of more than 5 Business Days after written demand by Borrowers, then such
Line Lender shall return to Borrowers or otherwise  forfeit its pro rata portion
of the  Warrants  earned by such Line Lender under this  Section  1.7.5.  To the
extent that such breaching Line Lender did not receive a pro rata portion of the
warrants earned under this Section 1.7.5 because  Administrative  Agent retained
some of the  warrants,  then  upon the  occurrence  of any such  uncured  breach
Administrative  Agent  shall also return to  Borrowers  or  otherwise  forfeit a
portion of such warrants retained by  Administrative  Agent equal to the balance
of the actual pro rata portion of the warrants  earned under this Section  1.7.5
that is represented  by such  breaching  Line Lender's  percentage of the actual
Commitments under the Line of Credit Facility.

                  1.7.6.  Issuance of Warrants Associated with EBITDA Shortfall.
On the Closing  Date,  TALK.COM  INC.  will issue and grant to Lenders  (ratably
based upon each such  Lender's  Commitment)  warrants  exercisable  for  300,000
shares of common  stock of  TALK.COM  INC.  (par value $0.01 per share and as in
effect on the Closing  Date).  Such warrants shall have the terms and conditions
as set forth in Exhibit  1.7.6.  Such  warrants  shall be treated as  additional
compensation  for the cost  and  risk  incurred  associated  with  underwriting,
syndicating  and  establishing  of the  Credit  Facilities,  but shall in no way
affect or relieve any  Borrower or TALK.COM  INC. of any of its  obligations  to
fully and timely perform and to repay the entire indebtedness due under the Loan
Documents.

                  1.7.7.  AoL  Disbursement  Fee. If at any time after the first
Advance  under  the Line of Credit  Facility  and prior to  September  1,  2001,
TALK.COM INC.  makes any "make whole" or  repurchase  payment to AoL relating to
AoL's  stock of  TALK.COM  INC.  under or as  described  in Article V of the AoL
Investment  Agreement or under any similar  provisions of any related documents,
then Borrowers  concurrently  therewith will pay  Administrative  Agent (for the
ratable  benefit  of the  Lenders)  an AoL  Disbursement  Fee in the  amount  of
$500,000.  If any such  payment  is made by  TALK.COM  INC.  prior to the  first
Advance  under the Line of Credit  Facility,  then  concurrent  with such  first
Advance,  Borrowers shall pay  Administrative  Agent (for the ratable benefit of
the Lenders) the AoL  Disbursement  Fee as described in the preceding  sentence.
Notwithstanding  the foregoing,  the fee required under this Section 1.7.7 shall
not apply with  respect to make whole  payments  relating  to


                                       19
<PAGE>

warrant  shares  by  TALK.COM  INC.  under  Section  6.5 of the  AoL  Investment
Agreement  (as  existing as of the Closing  Date) that in the  aggregate  do not
exceed $5 million.

                  1.7.8.  Other  Fees.  Other fees and charges may be imposed by
Administrative Agent or any Lender for services rendered under and in accordance
with agreements  (other than the Loan Documents)  with  Administrative  Agent or
such Lender.

                        ARTICLE 2: CONDITIONS PRECEDENT

         2.1.     Closing Conditions.  The obligation of Administrative Agent or
any Lender to execute and perform under the Loan Documents, and to establish the
Facilities,  and to fund the  Advances are subject to the  following  conditions
precedent  (unless and except to the extent expressly  waived by  Administrative
Agent and each Lender in their sole and absolute discretion):

                  2.1.1. Compliance.

                           2.1.1.1. Fees and Expenses.  Borrowers must have paid
(or made acceptable  arrangements with Administrative Agent to pay) all fees and
expenses due and payable  hereunder,  including  all fees due and payable  under
Section 1.7 and the reasonable fees and expenses of  Administrative  Agent's and
each Lender's attorneys and in-house documentation personnel with respect to the
preparation, negotiation and execution of the Loan Documents.

                           2.1.1.2.    Representations.     Each,    and    all,
representations and warranties  contained in this Agreement  (including those in
Article  3) and in each  other  Loan  Document,  certificate  or  other  writing
delivered to Administrative Agent or any Lender pursuant hereto or thereto on or
prior to the Closing  Date must be true,  correct and  complete in all  material
respects on and as of the Closing Date, except for such deviations  disclosed in
writing and acceptable to Administrative Agent and each Lender.

                           2.1.1.3. No Default. There must not be any Default or
Event of Default  hereunder or any default  under any other Loan Document on the
Closing  Date,  and  there  must not be any  such  Default  or Event of  Default
occurring as a result of executing or advancing  funds under the Loan Documents,
except for such defaults  disclosed in writing and acceptable to  Administrative
Agent and each Lender.

                           2.1.1.4. No Material Change. There must not have been
(in  Administrative  Agent's or any  Lender's  reasonable  opinion) any Material
Adverse  Change  between  the  date  for the most  recent  financial  statements
delivered to Administrative Agent and the Closing Date.

                  2.1.2. Documents.  Administrative Agent must have received the
following documents, agreements and certificates (together with all exhibits and
schedules  thereto),   each  duly  executed,   in  form,  substance  and  amount
satisfactory to Administrative Agent and, when applicable,  recorded or filed in
the appropriate public office:


                                       20
<PAGE>

                           2.1.2.1. Credit Agreement. This Agreement.

                           2.1.2.2.  Promissory  Notes.  The Term Loan  Notes as
described in Section 1.1.4.

                           2.1.2.3.  Security Agreement,  Collateral  Assignment
and Pledge.  A master security  agreement,  collateral  assignment and pledge by
EACH BORROWER in favor of  Administrative  Agent granting  Administrative  Agent
(for the benefit of Lenders) a security  interest in and collaterally  assigning
to  Administrative  Agent (for the  benefit of  Lenders)  all of such  grantor's
tangible and intangible personal property assets (including  fixtures),  whether
now owned or hereafter  acquired,  and the proceeds  and  products  thereof,  as
collateral  security for the  indebtedness and obligations  hereunder,  together
with all necessary  financing  statements and  termination  statements  (each as
filed),  stock certificates and powers executed in blank,  waivers and consents,
and  evidence  of  any  other  recordations  required  by  applicable  law or by
Administrative Agent to perfect such security interests in a manner that will be
subject only to Permitted Liens.

                           2.1.2.4.  Intellectual  Property Security Agreements.
One or more separate  intellectual property security agreements by EACH BORROWER
in favor of Administrative Agent (for the benefit of Lenders) encumbering all of
such grantor's  copyrights,  patents,  trade names,  trademarks,  service names,
service  marks  and  other   intellectual   property   (including  any  and  all
applications and licenses therefor), all as now owned or hereafter acquired, and
the proceeds and  goodwill  thereof,  together  with all  appropriate  financing
statements and termination statements (each as filed), waivers and consents, and
any other documents or  recordations  required by applicable law or by Lender to
perfect such interests.

                           2.1.2.5.  Guaranty.  A guaranty agreement by TALK.COM
INC. in favor of Administrative Agent (for the benefit of enders) absolutely and
unconditionally  guaranteeing (a) the payment of all indebtedness  hereunder and
under the other Loan Documents and (b) the performance of all other  obligations
hereunder and under the other Loan Documents.

                           2.1.2.6.  Insurance.  Current proof of insurance with
an  indication of loss payee and  additional  insured  endorsements  in favor of
Administrative Agent with respect to all of the coverages required under Section
4.8.  Such  proof  of  insurance  must  be  indicated  pursuant  to one or  more
certificates  on (a) an  ACORD 27 form  (3/93)  for  property-related  insurance
coverages  and (b) a  modified  version of an ACORD  25-S form  (3/93),  in each
instance permitting reliance by Administrative Agent and requiring  cancellation
notification.

                           2.1.2.7. Compliance Certificates.  A certificate from
an Authorized  Officer of each  Borrower and  Guarantor  dated as of the Closing
Date and certifying as to compliance  with the matters  described  under Section
2.1.1.

                           2.1.2.8.  Opinions  of Counsel.  One or more  written
opinions from legal counsel to Borrowers  addressed to Administrative  Agent and
each  Lender and dated as of the  Closing  Date  opining  as to such  matters as
Administrative Agent may reasonably request.


                                       21
<PAGE>

                           2.1.2.9. Authorization Documents. A certificate of an
Authorized Officer of EACH BORROWER and TALK.COM INC.  delivering true, accurate
and complete  versions of (a) its Articles of  Incorporation  and all amendments
thereto,  and (b) its Bylaws and all amendments thereto, and (c) the resolutions
authorizing its execution,  delivery and full  performance of the Loan Documents
and all other  documents,  certificates  and actions  required  hereunder  or in
connection  herewith,  and  (d) an  incumbency  certificate  setting  forth  its
officers (together with the corresponding signatures),  and (e) a long-form good
standing and  qualification  certificate  (issued within 30 calendar days before
the Closing  Date) with respect to its  jurisdiction  of  organization  and each
jurisdiction listed on Schedule 3.1 in which it has substantial operations.

                           2.1.2.10. Other Documents.  Administrative Agent must
have  received  any  additional   agreements,   documents  and  certificates  as
Administrative Agent or its counsel may reasonably request.

         2.2.     Effectiveness  of Line of Credit  Facility.  The obligation of
Administrative  Agent and each Line  Lender to perform  under the Line of Credit
Facility is subject to the following additional conditions precedent (unless and
except to the extent  expressly waived by  Administrative  Agent in its sole and
absolute discretion, but with the concurrence of each Line Lender):

                  2.2.1. Line Effectiveness  Notification.  Administrative Agent
shall have provided Borrowers with written  confirmation that the Line of Credit
Facility has been  syndicated and will become  available as set forth in Section
1.2 upon satisfaction by Borrowers or written waiver by Administrative Agent (at
the direction of Line Lenders) of the  conditions  precedent  under this Section
2.2.

                  2.2.2.  Promissory  Notes.   Administrative  Agent  must  have
received the Line of Credit Notes as described in Section 1.2.4.  Each such Note
shall be duly executed, and in form and substance satisfactory to Administrative
Agent.

                  2.2.3.  Additional  Warrants.  Administrative  Agent must have
received one or more separate  warrant  agreements by TALK.COM INC.  issuing and
granting to Administrative  Agent (or its designees the warrants as described in
Section 1.7.5, together with all underlying warrant certificates and evidence of
necessary  actions by TALK.COM  INC. to  authorize  and issue such  warrants and
related warrant shares.  Each such document shall be each duly executed,  and in
form and substance satisfactory to Administrative Agent.

                  2.2.4.  Line of Credit  Origination  Fee.  Borrowers must have
paid (or made acceptable arrangements with Administrative Agent to pay) the Line
of Credit Origination Fee as described in Section 1.7.3. -----

                  2.2.5.  Other  Documents.   Administrative   Agent  must  have
received such additional  documents and certificates as Administrative Agent has
determined (in its reasonable judgment) are necessary or appropriate to evidence
the effectiveness of the Line of Credit Commitment.


                                       22
<PAGE>

         2.3.     All Line Advances.  The obligation of Administrative  Agent to
perform and each Line  Lender to fund any request for an Advance  under the Line
of Credit Facility is subject to the following  additional  conditions precedent
(unless and except to the extent expressly waived by Administrative Agent in its
sole and absolute discretion, but with the concurrence of each Line Lender):

                  2.3.1.   Advance  Request.   Administrative  Agent  must  have
received an Advance Request under and in accordance with Section 1.4.1.

                  2.3.2.   Compliance.

                           2.3.2.1. Fees and Expenses.  Borrowers must have paid
(or made acceptable  arrangements with Administrative Agent to pay) all fees and
expenses due and payable hereunder,  including all reasonable  expenses incurred
in connection with or as a result of reviewing and funding such Advance Request.

                           2.3.2.2.    Representations.     Each,    and    all,
representations and warranties  contained in the Loan Documents (including those
in  Article 3) and in each  other  certificate  or other  writing  delivered  to
Administrative  Agent  pursuant  hereto or thereto on or prior to the Settlement
Date must be true,  correct and complete in all  material  respects on and as of
the  Settlement  Date,  except for such  deviations  disclosed  in  writing  and
acceptable to  Administrative  Agent and each Lender (which  disclosure will not
constitute Lenders' waiver or acceptance thereof).

                           2.3.2.3. No Default. There must not be any Default or
Event of Default  hereunder or any default  under any other Loan Document on the
Settlement  Date,  and there  must not be any such  Default  or Event of Default
occurring  as a result  of  funding  such  Advance,  except  for  such  defaults
disclosed  in writing and  acceptable  to  Administrative  Agent and each Lender
(which disclosure will not constitute Lenders' waiver or acceptance thereof).

                           2.3.2.4. No Material Change. There must not have been
(in Administrative Agent's or any Line Lender's reasonable opinion) any Material
Adverse Change between the Closing Date and the Settlement Date.

                   ARTICLE 3: REPRESENTATIONS AND WARRANTIES

         Each Borrower,  as of the Closing Date and the Settlement Date for each
Advance  hereunder,  hereby  (jointly and severally)  represents and warrants as
follows:

         3.1.     Organization  and Good  Standing.  Each Borrower and Guarantor
(a) is duly organized,  validly  existing and in good standing under the laws of
its jurisdiction of organization,  and (b) has all requisite power and authority
to own its  properties  and to conduct  its  business  as now  conducted  and as
currently  proposed  to be  conducted,  and (c) is  duly  qualified  to  conduct
business as a foreign  organization  and is currently  in good  standing in each
state and jurisdiction in which it conducts business, except where failure to be
duly  qualified and in good standing could not have a Material


                                       23
<PAGE>

Adverse Effect.  Each state and  jurisdiction in which any Borrower or Guarantor
is organized or is (or should be) qualified to conduct business under applicable
law is listed on Schedule 3.1.

         3.2.     Power and  Authority.  Each  Borrower  and  Guarantor  has all
requisite  power and  authority  under  applicable  law and  under  its  Organic
Documents,  Authorizations  and  Licenses  to  execute,  deliver and perform the
obligations under the Loan Documents to which it is a party. Except as disclosed
on Schedule 3.2, all actions,  waivers and consents  (corporate,  regulatory and
otherwise)  necessary or  appropriate  for any Borrower or Guarantor to execute,
deliver and perform  the Loan  Documents  to which it is a party have been taken
and/or received.

         3.3.     Validity and Legal Effect. This Agreement constitutes, and the
other Loan  Documents to which any  Borrower or Guarantor is a party  constitute
(or will constitute when executed and delivered),  the legal,  valid and binding
obligations  of each  Borrower  (jointly  and  severally)  and,  as  applicable,
Guarantor  enforceable  against  each such Person in  accordance  with the terms
thereof,  except as such enforceability may be limited by applicable bankruptcy,
insolvency,   reorganization,   moratorium  and  other  similar  laws  affecting
creditors' rights generally and by equitable  principles  (regardless of whether
enforcement is sought in a proceeding in equity or at law).

         3.4.     No Violation of Laws or Agreements.  The  execution,  delivery
and  performance of the Loan Documents (a) will not violate or contravene in any
material  respect any material law, rule,  regulation,  administrative  order or
judicial  decree  (federal,  state  or  local),  and (b)  will  not  violate  or
contravene any provision of the Organic  Documents of any Borrower or Guarantor,
and (c) will not result in any material  breach or violation of (or constitute a
material  default  under) any  material  agreement  or  instrument  by which any
Borrower or Guarantor  or any of property of any  Borrower or  Guarantor  may be
bound,  and (d) will not result in or require  the  creation  of any Lien (other
than pursuant to the Loan  Documents)  upon or with respect to any properties of
any Borrower, whether such properties are now owned or hereafter acquired.

         3.5.     Title to  Assets;  Existing  Encumbrances;  Identification  of
Intellectual and Real Property.

                  3.5.1.  Each Borrower has good and marketable  title to all of
its owned real and personal property assets and the right to possess and use all
of its leased or licensed real and personal  property assets.  All such property
interests  are free and  clear of any  Liens,  except  for  Permitted  Liens (as
defined in Section 5.5). Each such property and asset owned,  leased or licensed
by any Borrower is titled,  leased or licensed in the current legal name of such
Borrower.

                  3.5.2. Intellectual Property -- Schedule 3.5A lists (as of the
Closing Date or as of the date of any update to such Schedule)  each  trademark,
service mark, copyright,  patent, database,  customized application software and
systems  integration  software,  trade  secret and other  intellectual  property
owned, licensed,  leased, controlled or applied for by any Borrower,  whether or
not such  intellectual  property is recorded  with the  Copyright  Office or the
Patent and Trademark Office, together with relevant identifying information with
respect to such intellectual  property  describing (among other things) the date
of  creation,   the  method  of  protection   against  adverse  claims  and  the
registration number.


                                       24
<PAGE>

                  3.5.3. Real Property -- Schedule 3.5B lists (as of the Closing
Date or as of the  date of any  update  to such  Schedule)  each  real  property
interest owned, leased or otherwise used by any Borrower, together with relevant
identifying  information  describing  (among other  things) the use of each such
real  property  interest,  the location  and mailing  address for each such real
property,  a legal  description  for each such real  property  (if  requested by
Administrative Agent), an indication of whether such interest is owned or leased
(and, if leased,  the lessor and record owner thereof),  and the estimated value
thereof. Each such property and asset is in good order and repair (ordinary wear
and tear excepted) and is fully covered by the insurance  required under Section
4.8.

                  3.5.4.  Schedule  3.5C  identifies  each legal,  operating and
trade  name  that any  Borrower  has  used (or  permitted  the  filing  of a UCC
financing  statement under) at any time during the 5 consecutive  calendar years
immediately preceding the Closing Date.

         3.6.     Capital   Structure   and  Equity   Ownership.   Schedule  3.6
accurately and completely discloses (as of the Closing Date or as of the date of
any update to such  Schedule)  (a) the  number of shares  and  classes of equity
ownership rights and interests of each Borrower  authorized  and/or  outstanding
(including  warrants,  options  and  other  instruments  convertible  into  such
equity), and (b) with respect to each Borrower,  the ownership thereof. All such
shares  and  interests  are  validly   issued  and  existing,   fully  paid  and
non-assessable.

         3.7.     Subsidiaries,   Affiliates  and   Investments.   Schedule  3.7
accurately and completely discloses (as of the Closing Date or as of the date of
any update to such Schedule) (a) each  Subsidiary and Affiliate of each Borrower
and Guarantor (other than its officers and directors) and (b) each investment in
or loan to any other Person by any Borrower in excess of $2.5 million.

         3.8.     Material Contracts. Schedule 3.8 lists (as of the Closing Date
or as of the date of any  update  to such  Schedule)  each  "material  contract"
(within the meaning of Item  601(b)(10) of Regulation  S-K under the  Securities
Exchange Act of 1934, as amended) to which any Borrower is a party, by which any
Borrower or the  property of any  Borrower is bound or to which any  Borrower or
any such property is subject (collectively,  "Material Contracts").  No Borrower
has  committed  any  unwaived  material  breach or  default  under any  Material
Contract  (whether  or not listed on  Schedule  3.8),  and after due inquiry and
investigation, no Borrower has any knowledge or reason to believe that any other
party to any such Material  Contract (whether or not listed on Schedule 3.8) has
or might have committed any unwaived material breach or default thereof.

         3.9.     Licenses  and  Authorizations.  Each  Borrower  possesses  all
material Licenses and other Authorizations  necessary or required in the conduct
of its  businesses  and/or  the  operation  of  its  properties.  Each  material
Authorization  is  valid,  binding  and  enforceable  on,  against  and by  such
Borrower.  Each  material  Authorization  is  subsisting  without  any  defaults
thereunder or enforceable adverse limitations thereon, and no such Authorization
is subject to any  proceedings  or claims  opposing the  issuance,  continuance,
renewal,  development  or use thereof or contesting  the validity or seeking the
revocation  thereof.  Schedule 3.9 accurately  and  completely  lists (as of the
Closing  Date or as of the date of any update to such  Schedule)  each  material
Authorization of each Borrower,  together with relevant identifying  information
describing  such  Authorizations.   For  purposes  of  this  Section  3.9,  each
Authorization  issued  by  the  FCC  or any  State  PUC  will  be  deemed  to be
"material".


                                       25
<PAGE>

         3.10.    Taxes and  Assessments.  Except as disclosed on Schedule 3.10,
each Borrower (a) has timely filed all United States  Federal income tax returns
and all other  material tax returns that it is required to file and (b) has paid
all taxes due pursuant to any tax returns or pursuant to any assessment received
by such  Borrower.  The  charges,  accruals  and  reserves  on the books of each
Borrower in respect of taxes or other governmental charges are adequate.

         3.11.    Litigation  and  Legal  Proceedings.  Except as  disclosed  on
Schedule 3.11, or as otherwise  disclosed to  Administrative  Agent and Lenders,
there is no litigation,  claim, investigation,  administrative proceeding, labor
controversy or similar action that is pending or (to the best of each Borrower's
knowledge and information after due inquiry)  threatened against any Borrower or
its properties that, if adversely resolved, could reasonably be expected to have
or cause a Material Adverse Effect.

         3.12.    Accuracy of Financial  Information.  All financial  statements
previously  furnished  to  Administrative  Agent or any  Lender  concerning  the
financial  condition and  operations of any one or more  Borrowers (a) have been
prepared in accordance with GAAP  consistently  applied,  and (b) fairly present
the financial condition of the organization  covered thereby as of the dates and
for the periods covered thereby (but, with respect to interim periodic financial
statements, subject to normal and customary year end audit adjustments), and (c)
disclose all material  liabilities  (contingent and otherwise) of each Borrower.
In addition,  all written  information  previously  furnished to  Administrative
Agent or any Lender  concerning  the financial  condition and  operations of any
Borrower are true, accurate and complete in all material respects.

         3.13.    Accuracy  of  Other  Information.   All  written   information
contained  in any  application,  schedule,  report,  certificate,  or any  other
document furnished to Administrative  Agent or any Lender by any Borrower or any
other Person (on behalf of any Borrower) in connection  with the Loan  Documents
is in all material  respects  true,  accurate and  complete,  and no such Person
(including  Borrowers) has omitted to state therein (or failed to include in any
such document) any material fact or any fact necessary to make such  information
not materially  misleading.  All written projections furnished to Administrative
Agent or any  Lender  by any  Borrower  or any  other  Person  on  behalf of any
Borrower have been prepared  with a reasonable  basis and in good faith,  making
use of such information as was available at the date such projection was made.

         3.14.    Compliance with Laws Generally. Each Borrower is in compliance
in  all  material   respects  with  all  material  laws,   rules,   regulations,
administrative orders and judicial decrees (federal, state, local and otherwise)
applicable to it, its operations and its properties.

         3.15.    ERISA  Compliance.  Each  Borrower  is in  compliance  in  all
material respects with all applicable provisions of ERISA.

         3.16.    Environmental  Compliance.  Each  Borrower  has  received  all
permits  and  filed  all  notifications  necessary  under  and is  otherwise  in
compliance with the Environmental  Control  Statutes,  except to the extent that
such  non-compliance  (individually or in the aggregate) could not reasonably be
expected to have a Material Adverse Effect.


                                       26
<PAGE>

         3.17.    Margin Rule  Compliance.  No Borrower  owns or has any present
intention of acquiring  any "Margin  Stock"  within the meaning of the following
Margin Regulations of the FRB: Regulation T at 12 C.F.R. Pt. 220, and Regulation
U at 12 --- C.F.R.  Pt. 221, and  Regulation X at 12 C.F.R.  Pt. 224. The credit
extended under this  Agreement  does not constitute --- "Purpose  Credit" within
the meaning of the FRB's Margin Regulations.

         3.18.    Fees and Commissions.  Except as disclosed on Schedule 3.18 or
as required by Section 1.7, no Borrower owes any fees or commissions of any kind
in connection with this Agreement or the transactions  contemplated  hereby, and
no  Borrower  knows of any claim (or any  basis for any  claim)  for any fees or
commissions in connection with this Agreement or the  transactions  contemplated
hereby.

         3.19.    Solvency.  No Borrower is "insolvent," as such term is defined
in Section 101(32) of the Bankruptcy Code (11 U.S.C. ss. 101(32)).  No Borrower,
by virtue of its  obligations and actions in connection with the Loan Documents,
has engaged or is engaging in any  transaction  that  constitutes  a  fraudulent
transfer  or  fraudulent  conveyance  under  applicable  federal  or  state  law
(including  under  Section  548 of the  Bankruptcy  Code or  under  the  Uniform
Fraudulent Transfer Act or the Uniform Fraudulent Conveyance Act).

         3.20.    Reserved.

                        ARTICLE 4: AFFIRMATIVE COVENANTS

         Each Borrower (jointly and severally) hereby covenants and agrees that,
so long as any indebtedness  remains outstanding  hereunder,  each Borrower will
comply with the following affirmative covenants:

         4.1 Financial and Operating Covenants and Ratios. As of the end of each
fiscal quarter, as and to the extent provided below, Borrowers must satisfy each
of the following  financial and operating  ratios and  characteristics,  each of
which will be determined (as applicable) using GAAP consistently applied, except
as otherwise expressly provided:

                  4.1.1 Minimum  Revenue by Subscriber  Type.  Bundled  Services
Revenue and LD Only  Services  Revenue for the fiscal  quarter  then ended of at
least the following  amounts during the identified  periods  between the Closing
Date and December 31, 2001:

                                       ***

                  4.1.2  Maximum  Subscriber   Acquisition   Costs.   Subscriber
Acquisition Costs for Bundled Subscribers and for LD Only Subscribers during the
fiscal  quarter  then ended not to exceed the  following  during the  identified
periods between the Closing Date and December 31, 2001:

                                       ***

                  4.1.3 Minimum Gross Profit Margin. Prior to the Line Effective
Date,  a Gross Profit  Margin of not less than 36.0% during any two  consecutive
fiscal  quarters  beginning  with fiscal  quarter  ending  December 31, 2000 and
continuing  through fiscal quarter ending December 31, 2001, and as of and after
the Line Effective Date, a Gross Profit Margin of not less than 37.5% during any
two consecutive  fiscal  quarters  beginning with fiscal quarter ending December
31, 2000 and continuing through fiscal quarter ending December 31, 2001.

                  4.1.4 Interest  Coverage Ratio. A ratio of TTM-OCF to Interest
Expense of not less than the following:

                           a.       2.0-to-1.0,   for  fiscal   quarter   ending
                                    December 31, 2001; and

                           b.       3.0-to-1.0,  for each fiscal  quarter ending
                                    after December 31, 2001.

                  4.1.5 Total Charge Coverage Ratio. A ratio of TTM-OCF to Total
Charges of not less than  1.10-to-1.0  for each  fiscal  quarter as of and after
fiscal quarter ending December 31, 2001.

                  4.1.6 Funded Debt-Revenue Leverage Covenant. Funded Debt as of
the end of each fiscal  quarter  after  December  31, 2000 of not more than 3.75
times the Average Monthly Revenue during such fiscal quarter.

                  4.1.7 Funded  Debt-OCF  Leverage  Covenant.  A ratio of Funded
Debt to TTM-OCF  during the  identified  periods after  December 31, 2000 of not
more than the following:

PRIOR TO the Line Effective Date:











       ---------------------------------- ---------------------------
                QUARTER ENDING                     TTM-OCF
       ---------------------------------- ---------------------------
               December 31, 2001                  6.0-to-1.0
       ---------------------------------- ---------------------------
                March 31, 2002                    5.0-to-1.0
       ---------------------------------- ---------------------------
                 June 30, 2002                    5.0-to-1.0
       ---------------------------------- ---------------------------
              September 30, 2002                  5.0-to-1.0
       ---------------------------------- ---------------------------
               December 31, 2002                  5.0-to-1.0
       ---------------------------------- ---------------------------
              Each Quarter After                  5.0-to-1.0
              December 31, 2002
       ---------------------------------- ---------------------------


AS OF AND AFTER the Line Effective Date:

       ---------------------------------- ---------------------------
                QUARTER ENDING                     TTM-OCF
       ---------------------------------- ---------------------------
               December 31, 2001                  6.0-to-1.0
       ---------------------------------- ---------------------------
                March 31, 2002                    5.0-to-1.0
       ---------------------------------- ---------------------------
                 June 30, 2002                    5.0-to-1.0
       ---------------------------------- ---------------------------
              September 30, 2002                  5.0-to-1.0
       ---------------------------------- ---------------------------
               December 31, 2002                  5.0-to-1.0
       ---------------------------------- ---------------------------
                March 31, 2003                    4.0-to-1.0
       ---------------------------------- ---------------------------
                 June 30, 2003                    4.0-to-1.0
       ---------------------------------- ---------------------------
              September 30, 2003                  4.0-to-1.0
       ---------------------------------- ---------------------------
               December 31, 2003                  4.0-to-1.0
       ---------------------------------- ---------------------------
              Each Quarter After
               December 31, 2003                  3.0-to-1.0
       ---------------------------------- ---------------------------


                  4.1.8 Liquidity  Covenant Prior to Line Effective Date. At all
times prior to the Line Effective Date, the aggregate  outstanding  indebtedness
of Borrowers  under the Loan  Documents  must be less than 50% of the sum of the
following amounts:  (i) the aggregate  accounts  receivable of Borrowers for the
provision of  telecommunications  services to unrelated third party  Subscribers
that are 60 calendar days or less past the initial due date therefor  (including
unbilled usage or accounts  receivable  that are less than 30 days old) and (ii)
deposits of immediately  available  unencumbered funds held in accounts that are
legally titled and  beneficially  owned solely by one or more  Borrowers  and/or
Guarantor  and  that  are  encumbered  with a first  priority  lien in  favor of
Administrative Agent (for the ratable benefit of Lenders) pursuant to a security
agreement and a control  agreement that are in form and substance  acceptable to
Administrative Agent (in its commercially reasonable discretion).

         4.2.     Periodic  Financial  Statements and  Compliance  Certificates.

                  4.2.1. Quarterly Financial Statements.  As soon as practicable
after the end of each fiscal  quarter of each fiscal year (other than the fourth
fiscal  quarter),  beginning with the fiscal quarter ending  September 30, 2000,
and in any event not later than 10 calendar days  following  the filing  thereof
with the SEC,  Borrowers  must  prepare and deliver (or cause to be prepared and
delivered)  to  Administrative  Agent  and each  Lender  unaudited  consolidated
balance sheets of TALK.COM INC. and its  Subsidiaries  (including each Borrower)
as of the end of such fiscal  quarter and unaudited  consolidated  statements of
income and cash flows for TALK.COM  INC. and its  Subsidiaries  (including  each
Borrower)  for the fiscal  quarter then ended and for that portion of the fiscal
year then ended, in each case setting forth comparative  consolidated figures as
of the end of and for the corresponding period in the preceding fiscal year, all
in  reasonable  detail and  prepared  in  accordance  with GAAP  (including  any
required  schedules thereto but subject to the absence of notes required by GAAP
and subject to normal year-end  adjustments)  applied on a basis consistent with
that of the  preceding


                                       27
<PAGE>

quarter or containing  disclosure  of the effect on the  financial  condition or
results of operations of any change in the application of accounting  principles
and  practices  during  such  quarter.  Together  with the  quarterly  financial
statements, Administrative Agent and each Lender must also receive a certificate
executed  by the chief  financial  officer  or such other  executive  officer of
Borrowers  as is  acceptable  to  Administrative  Agent  (a)  stating  that  the
financial statements fairly present the financial condition of TALK.COM INC. and
its  Subsidiaries  (including  each Borrower) as of the date thereof and for the
periods   covered   thereby,   and  (b)   providing  a  reconciled   calculation
demonstrating  compliance with each of the financial and operating covenants and
ratios  under  Section  4.1 (using the form  attached as Exhibit  4.2),  and (c)
certifying  that as of the date of such  certificate  there is not any  existing
Default or Event of Default.

                  4.2.2.  Annual  Financial  Statements.  As soon as practicable
after  the end of each  fiscal  year,  beginning  with the  fiscal  year  ending
December 31, 2000,  and in any event not later than 10 calendar  days  following
the filing  thereof with the SEC and not later than 100 calendar days after then
end of each  fiscal  year,  Borrowers  must  prepare and deliver (or cause to be
prepared  and  delivered)  to  Administrative  Agent and each  Lender an audited
consolidated balance sheet of TALK.COM INC. and its Subsidiaries (including each
Borrower) as of the end of such fiscal year and audited consolidated  statements
of income and cash flows for TALK.COM INC. and its Subsidiaries  (including each
Borrower) for the fiscal year then ended  (including  the notes and any required
schedules thereto), in each case setting forth comparative figures as of the end
of and for the  preceding  fiscal year,  all (a) in reasonable  detail,  and (b)
prepared in accordance with GAAP applied on a basis  consistent with that of the
preceding year or containing disclosure of the effect on the financial condition
or  results  of  operations  of any  change  in the  application  of  accounting
principles  and practices  during such year, and (c) certified by an independent
certified  public  accounting firm of recognized  national  standing  reasonably
acceptable to Required Lenders.  Together with such annual financial statements,
Administrative  Agent and each Lender must also  receive all related  management
letters (if any) prepared by such  accountants with respect thereto and a report
thereon  by such  accountants  (1) that does not  restrict  reliance  thereon by
Administrative  Agent  or  Lenders,  and (2) that is not  qualified  as to going
concern  or scope of audit,  and (3) that is to the effect  that such  financial
statements  present fairly in all material  respects the consolidated  financial
condition  and results of  operations  of  TALK.COM  INC.  and its  Subsidiaries
(including each Borrower) as of the dates and for the periods indicated.

         4.3.     Other Financial and Specialized Reports.

                  4.3.1. Reserved.

                  4.3.2.  SEC  Filings,  Shareholder  Communications  and  Press
Releases.  Within 10 Business Days after sending,  filing, issuing or receiving,
as applicable,  any of the following documents by TALK.COM INC. or any Borrower,
Borrowers  must deliver (or cause to be  delivered)  a copy of the  following to
Administrative  Agent and each Lender:  (a) all financial  statements,  reports,
notices and proxy  statements  that TALK.COM INC.  shall send or make  generally
available  to any  class of its  shareholders,  (b) all  regular,  periodic  and
special reports,  registration  statements and  prospectuses  (including on Form
8-K,  Form 10-K and Form 10-Q,  but  excluding on Form S-8) that  TALK.COM  INC.
shall file with the SEC and (c) all press  releases  and other  statements  made
available


                                       28
<PAGE>

generally  by TALK.COM  INC. or any Borrower to the public  concerning  material
developments in the business of TALK.COM INC. or any Borrower.

         4.4.     Reserved.

         4.5.     Books and Records;  Maintenance of  Properties.  Each Borrower
will keep and maintain  satisfactory  and adequate books and records of account,
which (to the extent  applicable)  shall be maintained in accordance  with GAAP.
Each  Borrower  will also keep,  maintain  and  preserve all of its property and
assets in good order and repair  (ordinary  wear and tear excepted and except to
the extent such property has become obsolete and has been replaced).

         4.6.     Existence and Good  Standing.  Each Borrower will preserve and
maintain (a) its existence as a corporation  under the laws of its  jurisdiction
of organization (except as and to the extent otherwise expressly permitted under
Section 5.8), and (b) its good standing in all  jurisdictions  where it conducts
business (unless the failure to do so could not reasonably be expected to have a
Material Adverse  Effect),  and (c) the validity of all its  Authorizations  and
Licenses  required or  otherwise  appropriate  in the conduct of its  businesses
(unless the failure to do so could not reasonably be expected to have a Material
Adverse Effect).

         4.7.     Deposit  Accounts.  Borrowers  (a)  will  maintain  commercial
deposit  accounts only at federally  insured  depository  institutions  rated as
"well  capitalized"  by their  primary  federal  regulator  and (b) will provide
Administrative  Agent with written notice of the institution's name and location
and the account  name and number  with  respect to each such  account  within 20
calendar days after opening or acquiring  any such  account.  The  institution's
name and  location  and the  account  name and number  for each such  account in
existence  as of the  Closing  Date  (or as of the  date of any  update  to such
Schedule) are listed on Schedule 4.7.

         4.8.     Insurance; Disaster Contingency.

                  4.8.1.  General  Insurance  Provisions.   Each  Borrower  will
maintain with financial sound and reputable  insurance  companies insurance with
respect to its  assets,  properties  and  business,  against  such  hazards  and
liabilities,  of such types,  in such amounts and with such  deductibles,  as is
customarily  maintained by companies in the same or similar businesses similarly
situated.  If any  Borrower  fails or  refuses  to obtain or  maintain  any such
insurance   coverage   after  being   requested  to  do  so  in  writing,   then
Administrative  Agent (at its election) may (but is not obligated to) obtain and
maintain such insurance  coverage on behalf of such  Borrower,  and the premiums
and other  costs  thereof (a) will be  included  in the  indebtedness  hereunder
secured by the  Collateral  and (b) will be due and payable by such  Borrower to
Administrative  Agent  immediately  upon demand.  Each such policy for liability
insurance  must name  Administrative  Agent (for the benefit of Lenders) as loss
payee, and each such other policy for insurance must name  Administrative  Agent
(for the benefit of Lenders) as loss payee and as additional insured.  Each such
policy  must also  require  the  insurer  to furnish  Administrative  Agent with
written notice at least 10 calendar days prior to any termination,  cancellation
or lapse of coverage and must provide  Administrative  Agent with the right (but
not the  obligation)  to cure any  non-payment of premium.  Upon  Administrative
Agent's request,  each Borrower (from time to time) will furnish  Administrative
Agent  with  proof  of such  insurance  (in  form and  substance  acceptable  to
Administrative Agent) and a copy of the related policy.


                                       29
<PAGE>

                  4.8.2.   Disaster  Recovery  and  Contingency  Program.   Each
Borrower will  maintain  (and at least  annually  review the  sufficiency  of) a
disaster  recovery and contingency plan that addresses each Borrower's plans for
continuing  operations upon the occurrence of a natural  disaster or other event
that  destroys  or  prevents  the use of or  access to such  Borrower's  primary
computer systems, information databases, software applications, business records
and operations  facility and/or such Borrower's  switch sites.  Such contingency
plan at all  times  must be in  form  and  substance  reasonably  acceptable  to
Administrative  Agent. Upon request,  each Borrower will provide  Administrative
Agent with a current copy of such plan.

         4.9.     Loan Purpose.  Borrowers will use the proceeds of each Advance
hereunder exclusively as set forth in Sections 1.1.3 and 1.2.3.

         4.10.    Taxes.  Each  Borrower  will  pay  and  discharge  all  taxes,
assessments or other governmental  charges or levies imposed on it or any of its
property or assets prior to the date upon which any penalty for  non-payment  or
late payment is incurred,  unless (a) the same are then being  contested in good
faith  by  appropriate  proceedings  diligently  prosecuted,  and  (b)  adequate
reserves therefor acceptable to Administrative Agent have been established,  and
(c)  Administrative  Agent has been  notified  thereof in  writing,  and (d) the
consequences  of such  non-payment  could not  reasonably  be expected to have a
Material Adverse Effect.  Notwithstanding the foregoing,  this Section 4.10 does
not apply with respect to franchise taxes and other fees and charges  associated
with qualification by a Borrower in a state where such Borrower is not operating
so long as such  failure  to pay such fees or  charges  (individually  or in the
aggregate) could not reasonably be expected to have a Material Adverse Effect.

         4.11.    Reserved.

         4.12.    Litigation and Administrative Proceedings.  Each Borrower will
notify  Administrative  Agent in writing  within 30 calendar days after becoming
aware  of  the  institution  or   commencement  of  any  litigation,   legal  or
administrative  proceeding,  or labor controversy (a) with a purported amount in
controversy in excess of $2.5 million, or (b) that could otherwise reasonably be
expected to have or cause a Material Adverse Effect.

         4.13.    Monitoring  Compliance;  Occurrence  of Certain  Events.  Each
Borrower at all times will  maintain (and comply with)  commercially  reasonable
procedures and systems designed to monitor compliance and to detect instances of
non-compliance with the Loan Documents. Each Borrower will notify Administrative
Agent in  writing  within  10  Business  Days  after  becoming  aware of (a) the
occurrence of any Default or Event of Default  hereunder,  or (b) the occurrence
of any  Default or Event of Default  under any other Loan  Document,  or (c) the
happening  of any event or the  assertion  or threat  of any  claim  that  could
reasonably be expected to have or cause a Material Adverse Effect.

         4.14.    Compliance  with  Laws.  Each  Borrower  will  comply  in  all
material  respects (a) with all material  laws,  rules,  regulations  and orders
(federal,  state, local and otherwise) applicable to its business,  and (b) with
the  provisions  and  requirements  of all  Authorizations.  Each  Borrower will
promptly notify  Administrative  Agent of such Borrower's  receipt of any notice
from any governmental  authority or other Person asserting any actual or alleged
failure by such  Borrower to so


                                       30
<PAGE>

comply  with any such laws,  rules,  regulations,  orders or  Authorizations  or
setting forth circumstances that, if adversely  determined,  would be reasonably
likely  to  have  a  Material  Adverse  Effect.  Such  "material"  laws,  rules,
regulations   and  orders  shall  include,   as  applicable,   (i)  the  Federal
Communications Act and each State Communications Act and the rules, regulations,
policies, procedures and orders of the FCC and each such State PUC, and (ii) the
Environmental Control Statutes, and (iii) ERISA.

         4.15.    Further Actions.

                  4.15.1.  Additional  Collateral.  Each  Borrower will execute,
deliver  and record (or,  as  appropriate,  cause the  execution,  delivery  and
recordation) at any time upon  Administrative  Agent's reasonable request and in
form and substance reasonably  satisfactory to Administrative  Agent, any of the
following  instruments in favor of Administrative Agent as additional Collateral
hereunder: (a) mortgages, deeds of trust and/or assignments on or of any real or
personal property owned, leased or licensed by it, and (b) certificates of title
encumbrances  against  any of its  titled  vehicles,  and  (c)  any  other  like
assignments or agreements  specifically covering any of its properties or assets
(including assignments of any patents, trademarks,  copyrights, databases, trade
secrets and other forms of  intellectual  property and deposit  account  control
agreements),  and (d) any  financing  or  continuation  statements  requested by
Administrative  Agent.  In  addition,  without  limiting the  generality  of the
foregoing,  BUT ONLY to the extent that any such grant of additional  collateral
(in Borrowers' reasonable judgment) would not require the consent or approval of
AoL, then Borrowers (at any time upon the request of Administrative  Agent) will
use commercially reasonable efforts to cause TALK.COM INC. to grant an all-asset
lien in favor of Administrative Agent (for the benefit of Lenders) as collateral
support for the Guaranty by TALK.COM INC.

                  4.15.2.  Further Assurances.  From time to time, each Borrower
will  execute  and deliver (or will cause to be  executed  and  delivered)  such
supplements,  amendments,  modifications  to  and/or  replacements  of the  Loan
Documents  and  such  further  instruments  as may  be  reasonably  required  to
effectuate  the  intention  of the parties to (or to  otherwise  facilitate  the
performance of) the Loan Documents.

                  4.15.3.  Estoppel  Certificates.  Upon Administrative  Agent's
request,   each  Borrower  will  execute,   acknowledge   and  deliver  (or,  as
appropriate,  cause the execution,  acknowledgment and delivery) to such Persons
as Administrative Agent may reasonably request a statement in writing certifying
as follows (to the best of its knowledge,  after diligent inquiry): (a) that the
Loan Documents (as amended,  if applicable) are unmodified and in full force and
effect,  and (b) that the payments under the Loan Documents  required to be paid
by  Borrowers  have been  paid,  and (c) the then  unpaid  principal  balance of
Facilities hereunder, and (d) whether or not any Default is then occurring under
any of the Loan Documents and, if so,  specifying each such Default of which the
signer may have knowledge,  and (e) whether or not any Borrower is then entitled
to assert  any  claims,  defenses  or causes of action  that  would  impose  any
liability  upon  Administrative  Agent or any  Lender  or that  would  otherwise
challenge  the  enforceability  any  Loan  Document  or  any  provision  thereof
(including,  the  existence  of  any  so-called  "Lender  Liability"  claims  or
defenses).  Unless such Borrower  otherwise  consents (which consent will not be
unreasonably withheld,  delayed or conditioned),  Administrative Agent must give
such  Borrower at least ten (10)  Business Days to complete and deliver any such
certificate. Each Borrower understands and agrees that any such


                                       31
<PAGE>

certificate   delivered   pursuant  to  this  Section  may  be  relied  upon  by
Administrative Agent, each Lender, and, if different, by the recipient thereof.

                  4.15.4.  Waivers and Consents. At any time upon Administrative
Agent's request,  each Borrower will use its commercially  reasonable efforts to
obtain  and  deliver  (in  form  and  substance   reasonably   satisfactory   to
Administrative  Agent) a waiver or consent to the  assignment to  Administrative
Agent of any contract, lease,  Authorization or other agreement to which it is a
party.

                  4.15.5.  Access  and  Audits.  Administrative  Agent  and each
Lender  (from  time  to  time  at its  discretion)  may  conduct  audits  of the
Collateral and of the performance and operations of any Borrower.  Each Borrower
(upon   Administrative   Agent's  request  from  time  to  time)  will  use  its
commercially  reasonable efforts to provide Administrative Agent and each Lender
(and their  representatives  and agents) with reasonable  access,  during normal
business  hours,  to such Borrower's  management  personnel,  books and records,
property  and  operations  (including  its  financial  records),   whether  such
property, books and records are in the possession of such Borrower or are in the
possession  of a third  party  (including  the  possession  of  such  Borrower's
Affiliates,  accountants and legal counsel),  provided however that such efforts
to provide access under this Section shall not require any Borrower to waive any
legal privilege available to such Borrower with respect to such information.  In
connection  with any such audit,  Administrative  Agent and each Lender may also
make notes and copies of (and extracts from) relevant records.

                  4.15.6. Updating of Loan Document Schedules. From time to time
upon the written  request of  Administrative  Agent (which  request shall not be
made more  frequently  than  once  every 12  months  unless an Event of  Default
exists),  Borrowers  will prepare and deliver to  Administrative  Agent (with 15
Business  Days of any such  request) an updated  version of the Schedules to the
Loan Documents.

         4.16.    Costs  and   Expenses.   Borrowers   will  pay  or   reimburse
Administrative  Agent  and  each  Lender  for  all  reasonable  fees  and  costs
(including all reasonable  attorneys' fees and  disbursements and the reasonable
fees and  disbursements  of in-house counsel and  documentation  personnel) that
Administrative  Agent  or any  Lender  from  time to time  may pay or  incur  in
connection  with  (a)  the  preparation,  negotiation  and  review  of the  Loan
Documents,  any  waivers,  consents and  amendments  in  connection  herewith or
therewith and all other  documentation  related  hereto or thereto,  and (b) the
funding of the  indebtedness or any Advance  hereunder,  and (c) the initial and
continuing  perfection or protection of  Administrative  Agent's or any Lender's
interest in any of the Collateral,  and (d) the collection or enforcement of any
of the Loan  Documents,  and (e) the  periodic  examination  and auditing of the
Collateral  and the books,  records and  operations  of  Borrowers  (but only in
connection  with one such audit  during any  calendar  year  unless a Default or
Event of Default has occurred and is continuing), and (f) Administrative Agent's
release of its interests in the  Collateral in accordance  with the terms of the
Loan Documents.  Borrowers will pay any and all recordation  taxes or other fees
due upon the filing of the financing  statements or documents of similar  effect
required to be filed under the Loan Documents,  and will provide  Administrative
Agent with a copy of any receipt or other evidence reflecting such payments. All
obligations  provided for in this Section shall survive the  termination of this
Agreement and/or the repayment of indebtedness hereunder.


                                       32
<PAGE>

         4.17.    Other Information.  Each Borrower will provide  Administrative
Agent  with  any  other  documents  and  information  (financial  or  otherwise)
reasonably requested by Administrative Agent or its counsel from time to time.

         4.18.    Reserved.

         4.19.    Post-Closing Items.

                  a.  Estoppels and Consents.  Within 60 calendar days after the
Closing Date,  Borrowers will use commercially  reasonable efforts to obtain and
deliver to Administrative Agent such estoppel and consent agreements in favor of
Administrative  Agent  (for the  benefit  of  Lenders),  in form  and  substance
acceptable to Administrative Agent (in its commercially  reasonable  discretion)
relating to the real  property  leases  listed on Schedule  3.5B (other than the
lease of parking spaces located in Pinellas  County,  Florida).  Notwithstanding
the  foregoing,  so long as  Borrowers  satisfy  the  "commercially  reasonable"
standard  set forth  above,  then  failure  of any  Borrower  to obtain any such
estoppel and consent shall not constitute a Default hereunder.

                  b. Mortgages and Title Insurance Policies.  Within 30 calendar
days after the Closing Date,  Borrowers will provide  Administrative  Agent with
legal  descriptions  for and will  execute,  file and deliver to  Administrative
Agent (in such form as  Administrative  Agent may  request  in its  commercially
reasonable  discretion)  one or more deeds of trust,  mortgages  and/or  fixture
filings  encumbering  in favor of  Administrative  Agent  (for  the  benefit  of
Lenders), together with an acceptable lender's title policy, with respect to the
real estate owned by any Borrower.

                  c. Merrill  Lynch Control  Agreement.  Within 30 calendar days
after the Closing Date,  Borrowers will deliver to  Administrative  Agent one or
more executed  control  agreements with respect to each investment  account that
Borrowers have at Merrill Lynch.

                  d.  Dissolution  of  Inactive   Subsidiaries   Access  One  of
Virginia,  Talk.com  Texas and Talk.com New  Hampshire.  Within 90 calendar days
after the Closing  Date,  Borrowers  either will  dissolve or merge into another
Borrower (and provide  Administrative Agent with evidence thereof) the following
three  entities:  (a)  Access  One  Communications  of  Virginia,  Inc.  and (b)
Talk.com,  Inc., a Texas  corporation  and (c)  Talk.com  Holding  Corp.,  a New
Hampshire corporation.

                         ARTICLE 5: NEGATIVE COVENANTS

         Each Borrower (jointly and severally) hereby covenants and agrees that,
so long as any indebtedness  remains outstanding  hereunder,  each Borrower will
comply with the following  negative  covenants  (unless Required Lenders through
Administrative  Agent  otherwise  consent in writing,  which consent will not be
unreasonably withheld, delayed or conditioned while no Default is occurring):

         5.1.     Capital  Expenditures.  As  of  and  after  January  1,  2001,
Borrowers (on a consolidated  basis) will not incur Capital  Expenditures in any
fiscal year in excess of $30 million. Notwithstanding the foregoing, no Borrower
may make any such Capital  Expenditure to acquire all or


                                       33
<PAGE>

any substantial  portion of the assets or equity of another business  enterprise
(unless explicitly permitted by Section 5.7).

         5.2.     Additional Indebtedness. No Borrower will borrow any monies or
create,   incur,  assume  or  permit  to  exist  any  additional   indebtedness,
obligations  or  liabilities  (including  monetary  obligations  evidenced  by a
promissory  note and  monetary  obligations  under  non-compete  and  consulting
arrangements) except as follows (collectively, the "Permitted Indebtedness"):

                  a. Indebtedness  under the Loan Documents in favor of Lenders;
and

                  b.  Trade  indebtedness,   if  and  to  the  extent  (i)  such
indebtedness is incurred in the normal and ordinary course of business for value
received and (ii) such  indebtedness (to the extent it exceeds $5 million to any
single vendor or $15 million in the aggregate among all such vendors) is paid on
a current  basis or is less  than 60  calendar  days past the due date  therefor
(other than with respect to any such  indebtedness that is then being diligently
disputed by Borrowers in good faith or with respect to any such  indebtedness in
favor of a vendor  with  whom  Borrowers  have a good  faith  dispute,  claim or
counterclaim regarding service or performance under a contract); and

                  c. Indebtedness and obligations  incurred TO PURCHASE FIXED OR
CAPITAL ASSETS, consistent with the restrictions in Section 5.1 and Section 5.5,
provided,  however,  that (1) the  aggregate  amount of such  asset  acquisition
indebtedness  outstanding  at any time  (together  with the aggregate  amount of
Capital Lease  indebtedness  outstanding  under Subsection 5.2.d) may not exceed
*** , and (2) such indebtedness must be immediately  included in the calculation
of Funded Debt,  and (3) such fixed or capital  assets being  purchased  may not
constitute (a) customized  application software or systems integration software,
or (b)  equity  interests  in or  substantially  all of the  assets  of  another
enterprise other than Permitted Investments,  or (c) any other asset the loss of
which could  reasonably be expected to have or cause a Material  Adverse Effect;
and

                  d. Indebtedness and obligations incurred UNDER CAPITAL LEASES,
consistent  with the  restrictions  in Section  5.1 and Section  5.5,  provided,
however,  that (1) the  aggregate  amount  of such  Capital  Lease  indebtedness
outstanding at any time (together with the aggregate amount of asset acquisition
indebtedness  outstanding  under Subsection  5.2.c) may not exceed *** , and (2)
such  indebtedness  must be  immediately  included in the  calculation of Funded
Debt,  and (3) such fixed or capital  assets being leased may not constitute (a)
customized  application  software or systems  integration  software,  or (b) any
asset the loss of which could reasonably be expected to have or cause a Material
Adverse Effect; and

                  e.  Indebtedness  in favor of another  Borrower  if and to the
extent permitted under Section 5.7; and

                  f.  Subordinated  Indebtedness if and to the extent  permitted
under Section 5.11; and

                  g. Loans and advances by any Borrower to any other Borrower so
long as each such loan or advance (1) is unsecured,  and (2) is  subordinated in
right  and  time  of  payment  to the  Obligations,  and (3) is  evidenced  by a
promissory note (in form and substance reasonably satisfactory to Administrative
Agent)  that is  endorsed  in blank and  delivered  to  Administrative  Agent as
additional Collateral under the Loan Documents; and

                  h. Other unsecured  Indebtedness incurred with unrelated third
parties in the aggregate outstanding at any time not to exceed $2.5 million; and


                                       34
<PAGE>

                  i. Unsecured severance obligations (that were approved by such
Borrower's board of directors) to former officers and employees; and

                  j. Any renewals, extensions, modifications and replacements of
the Indebtedness permitted under this Section that do not increase the principal
amount thereof and that otherwise comply with any stated  conditions  applicable
thereto under this Section; and

                  k. Such  indebtedness  listed on  Schedule  5.2 with the prior
written consent of Lenders through  Administrative Agent (which consent will not
be unreasonably withheld while no Default is occurring).  Unless Lenders through
Administrative Agent otherwise expressly consent in writing (or unless otherwise
specified  on Schedule  5.2),  all  indebtedness  listed on Schedule 5.2 must be
included in the calculation of Funded Debt.

         5.3.     Guaranties. No Borrower will guarantee, assume or otherwise be
or agree to become liable in any way,  either  directly or  indirectly,  for any
additional  indebtedness  or  liability of any other  Person,  except as follows
(collectively,   the  "Permitted  Guaranties"):  (a)  in  favor  of  Lenders  or
Administrative   Agent,  or  (b)  to  endorse  checks,   drafts  and  negotiable
instruments for collection in the ordinary  course of business,  or (c) in favor
of another  Borrower (so long as such  obligation or liability is subordinate to
the Obligations in favor of Lenders under the Loan Documents and is reflected on
the books and records of such Borrowers),  or (d) as listed on Schedule 5.3 with
the consent of Lenders, or (e) to the extent that Lenders through Administrative
Agent otherwise consent in writing.

         5.4.     Reserved.  [COMMENT:  PRIOR TEXT OF SECTION  5.4  INCORPORATED
INTO SECTION 5.7.]

         5.5.     Liens and  Encumbrances;  Negative  Pledge.  No Borrower  will
create,  permit or suffer the  creation or  existence of any Liens on any of its
property or assets (real or personal, tangible or intangible), except as follows
(collectively, the "Permitted Liens"):

                  a. Liens in favor of Administrative  Agent as security for the
Obligations under the Loan Documents; and

                  b.  Liens   arising  in  favor  of  sellers  or  lessors   for
indebtedness  and  obligations  incurred  to  purchase or lease fixed or capital
assets as permitted  under Section 5.2.c or Section  5.2.d,  provided,  that (1)
such Liens secure only the indebtedness and obligations  created thereunder (but
not  any  related  monetary   obligations   under   non-compete  and  consulting
arrangements)  and are  limited  to the  assets  purchased  or  leased  pursuant
thereto,  and (2) such fixed or capital  assets do not constitute (a) customized
application software or systems integration software, or (b) equity interests in
or substantially all of the assets of another enterprise, or (c) any other asset
the loss of which  could  reasonably  be  expected  to have or cause a  Material
Adverse Effect; and

                  c. Liens for taxes,  assessments or other governmental charges
(federal,  state or local)  that are not yet  delinquent  or that are then being
currently  contested  in  good  faith  by  appropriate   proceedings  diligently
prosecuted,  provided,  however,  that  (1)  the  existence  of such  Liens  and
challenge  of such  charges  must have been fully  disclosed  to  Administrative
Agent, and (2) adequate reserves therefor in accordance with GAAP must have been
established,  and (3) such Liens (in Administrative  Agent's reasonable opinion)
could not reasonably be expected to have or cause a Material Adverse Effect; and


                                       35
<PAGE>

                  d. Liens or  deposits  in the  ordinary  course of business to
secure  obligations  under  workmen's  compensation,  unemployment  insurance or
social security laws or similar legislation; and

                  e.  Deposits to secure  performance  or payment  bonds,  bids,
tenders, franchises or public and statutory obligations required in the ordinary
course of business; and

                  f. Deposits to secure surety,  appeal or custom bonds required
in the ordinary course of business; and

                  g.  Possessory  liens of  carriers,  warehousemen,  mechanics,
materialmen  and landlords  incurred in the ordinary course of business for sums
not more than 30 calendar days past due or for sums being currently contested in
good faith by appropriate proceedings diligently prosecuted,  provided, however,
that (1) the  existence of such Liens and  challenge of such sums  allegedly due
must have  been  fully  disclosed  to  Administrative  Agent,  and (2)  adequate
reserves  therefor in accordance with GAAP must have been  established,  and (3)
such Liens (in Administrative  Agent's reasonable  opinion) could not reasonably
be expected to have or cause a Material Adverse Effect; and

                  h. Easements,  rights-of-way,  restrictions  and other similar
encumbrances  on real  property  of a Borrower  that,  independently  and in the
aggregate, do not materially interfere with the occupation,  use or enjoyment by
such Borrower of the property or assets encumbered  thereby in the normal course
of business; and

                  i.  Attachment  and/or  judgment  Liens  (i)  that  are  being
contested in good faith by appropriate  proceedings diligently  prosecuted,  and
(ii) for which  adequate  reserves (if any) have been  established in accordance
with GAAP, and (iii) that (in Administrative  Agent's reasonable  opinion) could
not reasonably be expected to have a Material Adverse Effect; and

                  j. Liens arising from the filing (for notice purposes only) of
financing  statements  in respect of true  leases to the extent  such leases are
permitted under Section 5.2; and

                  k. Liens  securing  renewals,  extensions,  modifications  and
replacements of any Indebtedness  secured by a Lien permitted under this Section
so long as (i) such Indebtedness is not increased, (ii) such renewal, extension,
modification or replacement is not secured by any additional  assets,  and (iii)
such Lien otherwise complies with any stated conditions applicable thereto under
this Section; and

                  l. Liens  listed on Schedule  5.5 with the consent of Required
Lenders  through  Administrative  Agent (which consent will not be  unreasonably
withheld, delayed or conditioned while no Default is occurring).

No Borrower will  similarly  covenant to or in favor of any other Person that it
will not create,  permit or suffer the creation or existence of any Liens on any
of its property or assets.  In addition,  no Borrower will purchase or otherwise
acquire any additional assets (including any leasehold interest therefor) unless
Administrative  Agent's  interest in such property either (a) is already covered
and perfected  pursuant to an existing and effective UCC-1 financing  statement,
fixture filing,  mortgage and/or leasehold mortgage (as appropriate) in favor of
Administrative Agent or (b) except as provided in Clause "(c)" below,  otherwise
becomes properly  perfected within 5 calendar days after any such


                                       36
<PAGE>

acquisition  by such  Borrower's  filing (at its  expense) all  necessary  UCC-1
financing statements,  fixture filings, mortgages and/or leasehold mortgages (as
appropriate,  and in form and substance reasonably  acceptable to Administrative
Agent) or (c) with such additional assets or group of related  additional assets
that do not have a cost or a fair market value in excess of $250,000,  otherwise
becomes properly  perfected within 15 calendar days after any executive  officer
(including  the  general   counsel)  of  a  Borrower  becomes  aware  that  such
acquisition  necessitates  additional  filings  in  order  for the  interest  of
Administrative Agent in such assets to be perfected.  Moreover, no Borrower will
establish   or  maintain  any   "securities   account"   with  any   "securities
intermediary"  (as such terms are  defined  in  Article 8 of the UCC)  except as
permitted under Section 5.7.

         5.6.     Transfer of Assets. No Borrower will sell,  lease,  license on
an exclusive basis, transfer or otherwise dispose of all or substantially all of
its assets. In addition,  no Borrower will sell, lease,  license on an exclusive
basis (without  retaining such Borrower's and its assigns' absolute right to use
on a  royalty-free  basis),  transfer or otherwise  dispose of ANY of its assets
other than as follows (collectively, the "Permitted Transfers"): (a) Assets with
a fair market  value of $10 million or less  pursuant to a  transaction  with an
unrelated  third party in the normal and  ordinary  course of business for value
received and otherwise in accordance with the terms hereof  (including  Sections
1.1.6.5.c  and  1.2.6.5.c),  and (b)  assets  sold  or  transferred  to  another
Borrower,  and (c) to the  extent  that  Lenders  through  Administrative  Agent
otherwise  consent in writing (which consent may be conditioned  upon compliance
with Sections 1.1.6.5.c and 1.2.6.5.c).

         5.7.     Acquisitions  and  Investments.  No Borrower  will purchase or
otherwise acquire (including by way of share exchange) any part or amount of the
equity  ownership,  assets,  evidences  of  indebtedness  or other  obligations,
securities  or interests of any other  Person.  Notwithstanding  the  foregoing,
Borrowers may acquire or invest in the following  (collectively,  the "Permitted
Investments"):

                  a. "Cash Equivalents", which term shall be defined to mean (i)
any direct obligation of or obligation  unconditionally guaranteed by the United
States of America or any State thereof (or any agency,  political subdivision or
instrumentality  thereof,  to the extent  backed by the full faith and credit of
the United States of America or any State thereof) maturing not more than 1 year
from the date of  acquisition;  AND/OR (ii)  commercial  paper maturing not more
than 270 days from the date of  issuance,  which is  issued  by  either  (a) any
Person  organized under the laws of any State of the United States of America or
the  District of Columbia  and rated at least A-1 or higher by Standard & Poor's
Rating Services or P-1 or higher by Moody's  Investors  Service,  Inc. as of the
date of issuance, or (b) any Lender (or its holding company);  AND/OR (iii) time
deposits,  bankers  acceptances and  certificates of deposit,  maturing not more
than 1 year from the date of  issuance,  which is issued by either (a) a bank or
trust  company  organized  under the laws of the United States of America or any
State thereof that has combined capital and surplus of at least $500,000,000 and
that has (or is a  subsidiary  of a bank  holding  company that has) a long-term
unsecured  debt  rating of A or  higher,  a credit  rating  of A or higher  from
Standard & Poor's Rating Services or a credit rating of A-2 or higher by Moody's
Investors Service,  Inc., or (b) any Lender; AND/OR (iv) repurchase  obligations
or  agreements  having a term not  exceeding  thirty  (30) days with  respect to
underlying  securities  of the types  described in clause (i) above entered into
with  any  Lender  or any  bank or  trust  company  meeting  the  qualifications
specified in clause (iii)(a)  above;  AND/OR (v) money market funds at least 90%
of the  assets of which


                                       37
<PAGE>

are  continuously  invested in securities of the type  described in clauses (i),
(ii), (iii) and (iv) above; and

                  b.  Investments  received in connection with the bankruptcy or
reorganization  of, or  settlement  of  delinquent  accounts and disputes  with,
customers and suppliers,  in each case in the ordinary  course of business;  and

                  c. Investments by way of contributions to capital or purchases
of capital  stock by any Borrower in any other  wholly-owned  Subsidiary of such
Borrower that is (or immediately after giving effect to such investment will be)
a Borrower; provided that such Borrower complies with the provisions of Sections
4.15 and 5.8; and

                  d. Investments  consisting of (i) accounts  receivable arising
in the ordinary course of a Borrower's business or (ii) deposits and prepayments
made by a Borrower to its vendors and other  suppliers in the ordinary course of
such Borrower's business in connection with the purchase price or acquisition of
goods,  inventory,  supplies,  materials,   equipment,  licenses  or  leases  of
intellectual property, and other assets or services; and

                  e. Investments consisting of (i) loans and advances of cash to
employees of a Borrower for reasonable travel,  relocation and business expenses
in the ordinary course of such  Borrower's  business not exceeding $2 million in
the  aggregate  outstanding  at any time,  and (ii)  advances to  employees of a
Borrower  secured  by shares of capital  stock of  TALK.COM  INC.  or options to
purchase  capital  stock of  TALK.COM  INC.  not  exceeding  $1  million  in the
aggregate  outstanding  at any time,  and (iii)  extensions of trade credit by a
Borrower in the ordinary  course of such Borrower's  business,  and (iv) prepaid
expenses  by a  Borrower  incurred  in the  ordinary  course of such  Borrower's
business; and

                  f. Investments  consisting of intercompany  indebtedness among
Borrowers as and to the extent permitted under Section 5.2.g; and

                  g. Investments  consisting of loans and advances by a Borrower
to its Partitions in the ordinary course of such Borrower's  business secured by
the  assets of such  Partitions,  evidenced  by one or more  written  assignable
instruments  with  such  Partitions,  and  not  exceeding  *** in the  aggregate
outstanding at any time ***; and ; and

                  h. Investments consisting of noncash consideration received by
a Borrower in connection with any disposition permitted under Section 5.6; and

                  i.  "Permitted  Acquisitions",  which term shall be defined to
mean  acquisitions of other Persons or entities  provided that (a) no Default or
Event of  Default  exists  at the time of such  acquisition  or would be  caused
thereby on a pro forma  basis,  and (b)  Administrative  Agent is provided  with
prior written notice of such acquisitions at least 15 calendar days prior to the
occurrence  thereof (and is  concurrently  therewith or  immediately  thereafter
provided with a list of assets to be acquired,  a copy of the draft  acquisition
documents,  a copy of current  financial  statements on the target and any other
information and materials that Administrative Agent may reasonably request), and
(c) all assets and equity  acquired in  connection  with such  acquisitions  are
pledged  and/or  encumbered in favor of  Administrative  Agent with a first lien
priority,  and (d) the total  consideration  for such  acquisition to be paid by
Borrowers (inclusive of assumed liabilities,  but


                                       38
<PAGE>

exclusive of stock of TALK.COM  INC.  issued in connection  therewith)  does not
exceed $25 million in any 12 consecutive month period; and

                  j.  Investments  listed on  Schedule  5.7 with the  consent of
Required  Lenders  through  Administrative  Agent  (which  consent  will  not be
unreasonably withheld, delayed or conditioned while no Default is occurring).

No  Borrower  will  establish  or maintain  any  "securities  account"  with any
"securities  intermediary"  (as such terms are defined in Article 8 of the UCC),
unless a control  agreement  acceptable in form and substance to  Administrative
Agent  is   first   executed   by  such   "securities   intermediary"   securing
Administrative  Agent's  first  priority  interest  and  rights  in  and  to all
"financial assets" and "security entitlements"  associated with such "securities
account."

         5.8.     New Ventures; Mergers. No Borrower will (a) enter into any new
business  activities or ventures not related either to the current businesses of
a  Borrower  or to  the  provision  or  marketing  of  other  telecommunications
services,  or (b)  merge  or  consolidate  with or into any  other  corporation,
partnership,  limited  liability  company  or other  organization  (unless  such
Borrower or another Borrower is the survivor,  Administrative  Agent is provided
notice  thereof at least 10 Business Days prior  thereto,  and such  transaction
will not cause a Default or Event of  Default),  or (c)  create or  acquire  (or
cause or permit the  creation or  acquisition  of) any  Subsidiary  or Affiliate
(except the hiring of officers and  directors).  Notwithstanding  the foregoing,
any  Borrower  may  create  or  acquire  (or  cause or permit  the  creation  or
acquisition  of) one or more  wholly-owned  Subsidiaries  provided that (1) each
such Subsidiary (at Required  Lenders' sole discretion)  becomes a "Borrower," a
"Guarantor"  and/or  an  "Obligor"  under  the Loan  Documents,  and (2) a first
priority  security  interest  in and  pledge of 100% of the assets and equity of
each such Subsidiary is perfected in favor of Administrative Agent as additional
Collateral under the Loan Documents.

         5.9.     Transactions with Affiliates.  No Borrower will enter into any
transaction  or  agreement  with any  Subsidiary,  Affiliate  or  other  related
enterprise  except  as  follows:  (a)  reasonable  and  customary   compensation
arrangements in the ordinary course of business with its officers and directors,
and (b) indebtedness among Borrowers (if any) to the extent permitted by Section
5.2, and (c) guaranties (if any) to the extent permitted by Section 5.3, and (d)
employee  loans (if any) to the extent  permitted  under  Section  5.7,  and (e)
reasonable and customary  asset transfers among Borrowers (if any) to the extent
permitted under Section 5.6, and (f) dividends and distributions (if any) to the
extent permitted by Section 5.10, and (g) transactions in the ordinary course of
business between Borrowers.

         5.10.    Distributions  or Dividends.  No Borrower will declare or make
(directly or indirectly) any payment or  distribution  with respect to, or incur
any liability for the purchase, acquisition, redemption or retirement of, any of
its equity interests  (including warrants therefor) or as a dividend,  return of
capital or other payment or  distribution  of any kind to any holder of any such
equity interest.  Notwithstanding  the foregoing,  (a) a Borrower may pay lawful
dividends  to a holder of its equity who is also a Borrower,  and (b) a Borrower
may pay lawful  dividends to TALK.COM  INC. so long as (i) TALK.COM  INC. is the
legal and  beneficial  owner of shares of capital  stock of such  Borrower,  and
(ii) no Default  then exists  under the Loan  Documents  or would  otherwise  be
caused by the payment of


                                       39
<PAGE>

such dividend (including, any Default under the Guaranty by TALK.COM INC. and/or
any Default under Section 4.1 on a pro forma basis after deducting such proposed
dividend from OCF).

         5.11.    Payment of Subordinated  Indebtedness.  No Borrower will incur
or make any  payments on  Subordinated  Indebtedness  except as  permitted  by a
separate  intercreditor or subordination  agreement  executed between such other
creditor  and  Administrative  Agent.  Notwithstanding  the  foregoing,  if  any
Subordinated  Indebtedness  is  subsequently  authorized  by Lenders  and if any
Default occurs under the Loan Documents,  then no Borrower will make any further
payments in connection with its Subordinated  Indebtedness unless and until such
Default has been waived or cured to the satisfaction of Administrative Agent and
Lenders.

         5.12.    Reserved.

         5.13.    Issuance of  Additional  Equity.  No Borrower  will permit the
issuance,  reissuance,  conversion or exercise of any equity  interests  (common
stock, preferred stock, partnership interests, member interests or otherwise) or
any options,  warrants,  convertible securities or other rights to purchase such
beneficial or equity  interest.  Notwithstanding  the foregoing,  a Borrower may
issue additional equity interests  provided that: (a) such Borrower has provided
written notice thereof to  Administrative  Agent at least 15 Business Days prior
to such  issuance  (which  notice must at least  describe the type and amount of
equity  interests  being  purchased,  the  consideration  to be received by such
Borrower in exchange for such issuance, and the identity of the purchaser),  and
(b) such equity  interests  (other than equity  interests owned by TALK.COM that
are pledged to AOL or are  restricted by the AoL Investment  Agreements  between
TALK.COM  and  AOL) are  pledged  to  Administrative  Agent  (with a first  lien
priority) as  additional  Collateral  hereunder at the time of issuance  thereof
using  documentation  that is in form and  substance  reasonably  acceptable  to
Administrative  Agent,  and (c) no Default or Event of Default then exists under
the Loan  Documents or would  otherwise  result from the issuance of such equity
interest (including a Default under the change in control restrictions set forth
in Section 7.1.8).

         5.14.    Removal  of  Assets.  No  Borrower  will  remove or permit the
removal of any asset or group of assets  (with a  collective  fair market  value
exceeding  $250,000)  to a  jurisdiction  or a  county  in  which  no  financing
statement on Form UCC-1 has been filed naming  Administrative  Agent as "secured
party" with respect to such assets.  Notwithstanding  the foregoing,  a Borrower
may remove the  following  types of assets under the following  conditions:  (a)
temporary  removal of equipment for repair or replacement  provided that (to the
extent that the fair market value of such equipment in the aggregate  exceeds $1
million)   Administrative  Agent  has  received  prior  written  notice  thereof
indicating  the type of  equipment,  its  approximate  fair  market  value,  the
destination  location and an estimate of the length of time that such  equipment
will be  removed  from the  relevant  jurisdiction,  and (b)  booths,  displays,
marketing materials and related accompanying  equipment of a Borrower being used
temporarily in connection with marketing such Borrower's business at trade shows
or otherwise  (provided  that the  aggregate  fair market value thereof does not
exceed $500,00),  and (c) portable computers and related accompanying  equipment
being used by the  officers,  employees  and  independent  representatives  of a
Borrower in connection with accomplishing such Borrower's business activities at
home offices or otherwise (provided that the aggregate fair market value thereof
does not exceed $500,000).  Moreover,  no Borrower will move the location of its
chief  executive


                                       40
<PAGE>

office (or change its official mailing address) without providing Administrative
Agent with written notice thereof at least 15 Business Days prior thereto.

         5.15.    Modifications to Organic Documents. No Borrower will (a) amend
or  otherwise  modify any of its  Organic  Documents  unless such  amendment  or
modification  could  not  reasonably  be  expected  to have or cause a  Material
Adverse  Effect and such  Borrower  provides  Administrative  Agent with written
notice  thereof  at least 15  Business  Days  prior  thereto,  or (b) change its
official  name,  its  operating  names or the  names  under  which  it  executes
contracts and conducts  business  unless such Borrower  provides  Administrative
Agent with written notice thereof at least 15 Business Days prior thereto.

         5.16.    Terms of and  Modifications  to Material  Relationships.  Each
Borrower  will use  commercially  reasonable  efforts to ensure that no Material
Contract  entered into by any Borrower  after the Closing  Date  (including  the
renewal or extension of any Material  Contract  existing as of the Closing Date,
other than the AoL Investment  Agreements) will restrict any Borrower's  ability
to  collaterally  assign or encumber  such  contract in favor of  Administrative
Agent.

         5.17.    Margin Stock Restrictions; Other Federal Statutes. No Borrower
will use any of the proceeds hereunder,  directly or indirectly,  to purchase or
carry, or to reduce or retire any indebtedness  that was originally  incurred to
purchase  or  carry,  any  Margin  Stock or for any  other  purpose  that  might
constitute the transactions contemplated hereby as a "Purpose Credit" within the
meaning of the FRB's Margin Regulations. In addition, no Borrower will engage as
its  principal  business in the  extension of credit for  purchasing or carrying
Margin Stock.  No Borrower will cause or permit any Loan Document to violate any
other regulation of the FRB or the SEC or any provision of the Securities Act of
1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940 or
the Small  Business  Investment  Act of 1958,  each as amended,  or any rules or
regulations promulgated under any of such statutes.

             ARTICLE 6: ADDITIONAL COLLATERAL AND RIGHT OF SET OFF

         6.1.     Additional  Collateral.   As  additional  collateral  for  the
payment of any and all Obligations of each Borrower to  Administrative  Agent or
any Lender (whether matured or unmatured,  and whether now existing or hereafter
incurred  or created  hereunder  or  otherwise),  each  Borrower  hereby  grants
Administrative  Agent and each Lender a security interest in and a lien upon all
funds,  balances and other  property of any kind of such  Borrower,  or in which
such  Borrower  has any  interest  (limited  to the  interest  of such  Borrower
therein),   now  or  hereafter  in  the   possession,   custody  or  control  of
Administrative  Agent or such Lender or any Affiliate of Administrative Agent or
such Lender.

         6.2.     Right of  Set-Off.  Administrative  Agent and each  Lender are
hereby  authorized  at any time and from time to time during the existence of an
Event of Default hereunder  (unless  expressly  prohibited by applicable law) to
set-off and apply any and all  deposits  (general  or  special,  time or demand,
provisional  or  final)  and  other  indebtedness  at any time  held or owing by
Administrative  Agent or any Lender (or any of their  Affiliates)  to or for the
credit or the account of any  Borrower


                                       41
<PAGE>

against any and all of the indebtedness and monetary obligations of any Borrower
now or hereafter  existing  under the Loan  Documents  or any other  evidence of
indebtedness  originated,  acquired or otherwise held by Administrative Agent or
any Lender,  irrespective of whether  Administrative  Agent or such Lender shall
have made any demand under the Loan Documents or other indebtedness and although
such obligations may be unmatured. Administrative Agent or such Lender agrees to
notify  Borrowers  within a commercially  reasonable time after any such set-off
and application made by Administrative Agent or such Lender; provided,  however,
that the failure to give such notice shall not in any way affect the validity of
such set-off and application.

         6.3.     Additional Rights. The rights of Administrative Agent and each
Lender  under this  Article 6 are in addition to the other  rights and  remedies
(including  other rights of set-off) that  Administrative  Agent and Lenders may
have by contract, at law, or otherwise.

                        ARTICLE 7: DEFAULT AND REMEDIES

         7.1.     Events of Default.  Each of the  following  events  separately
constitutes an independent Event of Default hereunder:

                  7.1.1.  Payment  Obligations.  If any  payment  of  principal,
interest,  fees,  expenses,  indemnities or other sums payable to Administrative
Agent or any Lender under any Loan  Document  (including  under any Note) is not
received by Administrative Agent in immediately available funds on the date such
payment is due and payable and such  failure to receive  payment in  immediately
available  funds  continues for a period of five (5) Business Days after the due
date therefor.

                  7.1.2.  Representations and Warranties. If any representation,
warranty or other statement made in any Loan Document, or in any written report,
schedule,  exhibit,  certificate,  agreement,  or other  document given by or on
behalf  of  any  Borrower  or any  other  Obligor  (or  otherwise  furnished  in
connection  herewith)  when made was  misleading  or  incorrect  in any material
respect.

                  7.1.3. Financial Covenants. If Borrowers default in or fail to
observe at any time any of the covenants set forth in Section 4.1.

                  7.1.4.  Other Covenants in Loan Documents.  If any Borrower or
any other Obligor  defaults in the full and timely  performance  when due of any
other  covenant or  agreement  contained  in any Loan  Document (or in any other
document or  agreement  now or hereafter  executed or  delivered  in  connection
herewith),  and (other than with respect to Section  4.19) such default  remains
uncured  for a period of ten (10)  Business  Days after the  earlier of the date
that  Administrative  Agent or any Lender  notifies any Borrower  thereof or the
date that any Borrower otherwise acquires knowledge thereof. Notwithstanding the
foregoing,  if such covenant  Default is not  reasonably  subject to cure within
such 10 Business Day period,  then such Default will not  constitute an Event of
Default under this Section 7.1.4 if and so long as (a) Administrative  Agent was
notified of the  occurrence  of such Default in writing  within such 10 Business
Day period, and (b) Borrowers (or such other Obligor) commenced cure within such
10 Business Day period,  and (c) Borrowers (or such other  Obligor)


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<PAGE>

continue  to  diligently  pursue  cure  thereafter,  and  (d)  such  Default  is
ultimately  cured  to   Administrative   Agent's   satisfaction  (or  waived  by
Administrative  Agent in writing  in  accordance  with  Section  10.3)  within a
reasonable  period of time after such 10  Business  Day period (but in any event
within 60 calendar days after the occurrence of such Default).

                  7.1.5.  Default  Under Other  Agreements  with  Administrative
Agent or Lenders.  If any event of default  (as  described  or defined  therein,
which term shall include any notice and cure periods provided therein) occurs or
exists under the provisions of any other credit agreement,  security  agreement,
mortgage,  deed of trust,  indenture,  debenture, or other agreement relating to
indebtedness  in excess of $50,000 by any  Borrower  in favor of  Administrative
Agent or any Lender,  unless such default is waived by  Administrative  Agent or
such Lender or cured to Administrative Agent's or such Lender's satisfaction.

                  7.1.6.  Default Under Material  Agreements with Other Parties.
(a) If any Borrower or Guarantor  fails or refuses to make any required  payment
(whether  principal,  interest or otherwise) with respect to any Funded Debt (or
with  respect  to  any  guaranty  or   reimbursement   obligation  of  any  such
indebtedness)  with an aggregate exposure in excess of $2.5 million prior to the
expiration of any applicable  grace period with respect to such payment,  OR (b)
if any such indebtedness for borrowed money with an aggregate exposure in excess
of $2.5 million is accelerated  prior to its express maturity as a result of any
default  thereunder,  OR (c) if any event of default  (as  described  or defined
therein,  which term shall include any notice and cure periods provided therein)
occurs or exists under the  provisions of any other  contract the loss or breach
of which  could  reasonably  be  expected  to have or cause a  Material  Adverse
Effect.  Notwithstanding  the  foregoing,  the  occurrence  of such an  event of
default  thereunder  will not  constitute an Event of Default under this Section
7.1.6 if and so long as either:

                           (1) (i)  Administrative  Agent  was  notified  of the
                  occurrence  of such  event of  default  in  writing  within 10
                  Business Days after the occurrence thereof, and (ii) the other
                  Person to such agreement has not formally declared an event of
                  default   thereunder,   has  not   accelerated   any   related
                  indebtedness  in  connection   therewith,   and  is  not  then
                  otherwise   pursuing  any  remedies   thereunder,   and  (iii)
                  Borrowers continue to diligently pursue resolving such dispute
                  with such Person, and (iv) such event of default is ultimately
                  cured (without any Borrower incurring any material  liability)
                  to  Administrative  Agent's  satisfaction  within a reasonable
                  period of time after such 10  Business  Day period (but in any
                  event  within 60 calendar  days after the  occurrence  of such
                  Default), or

                           (2) Within 30 calendar  days after the  occurrence of
                  such event of default, the services or products provided under
                  such  Material  Contract  are replaced by such  Borrower  with
                  substantially  comparable  services  or  products  under a new
                  contract with another Person  (without any Borrower  incurring
                  any  material   liability)  that  is  in  form  and  substance
                  acceptable to Administrative Agent.

                  7.1.7.  Security Interest. If the security interest or lien in
any  of  the  Collateral  (with  a  fair  market  value  exceeding  collectively
$250,000),  other than  Collateral  consisting of equity  ownership  interest in
Borrowers (other than equity of Talk Holding or Access One that is encumbered


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<PAGE>

in favor of AoL pursuant to the AoL Investment Agreements) or in subsidiaries or
other  securities of Borrowers (for which there is no permissible  threshold for
non-compliance),  at any time does not constitute a legal, valid and enforceable
security interest or lien in favor of Administrative Agent.  Notwithstanding the
foregoing,  the  occurrence of such an event  involving  Collateral  (other than
Collateral  consisting of equity ownership interests or other securities) with a
fair market value of less than $500,000 will not  constitute an Event of Default
under this Section 7.1.7 if and so long as (a) Administrative Agent was notified
of such Default in writing within 10 Business Days after the occurrence thereof,
and (b) such Lien is  subsequently  created and/or  perfected to  Administrative
Agent's satisfaction (and without in any way adversely affecting  Administrative
Agent's or any Lender's rights in or to such Collateral) within 30 calendar days
after such event occurs.

                  7.1.8. Change of Control.

                           a. If  Talk.com  Inc.  at any time  ceases to own and
control 100% of each class of securities  of both Talk  Holding,  Access One and
Tel-Save Holdings of Virginia, Inc.

                           b. If each Borrower (other than Talk Holding,  Access
One and Tel-Save  Holdings of Virginia,  Inc.) ceases to be owned and controlled
100% by another  Borrower or by TALK.COM  INC.,  except that up to 0.238% of the
shares of common stock of The Other Phone Company may be owned by a Person other
than a Borrower.

                           c. If any "Change of Control"  occurs with respect to
TALK.COM  INC.,  which term shall be  defined to mean that (i) any  "person"  or
"group" (as such terms are used in Section  13(d) and 14(d) of the Exchange Act)
is or becomes the "beneficial  owner" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act) of shares  representing  more than 50% of the combined  voting
power of the then-outstanding securities entitled to vote generally in elections
of  directors of TALK.COM  INC.  ("Voting  Stock"),  AND/OR (ii)  TALK.COM  INC.
consolidates  with or merges  into any other  corporation,  or any other  person
merges into TALK.COM INC., unless the stockholders of TALK.COM INC.  immediately
before such transaction own (directly or indirectly)  immediately following such
transaction at least a majority of the combined  voting power of the outstanding
voting  securities  of  the  corporation  resulting  from  such  transaction  in
substantially  the  same  proportion  as their  ownership  of the  Voting  Stock
immediately  before  such  transaction,  AND/OR  (iii)  TALK.COM  INC.  conveys,
transfers or leases all or substantially  all of its assets to any person (other
than to one or more  wholly-owned  subsidiaries of TALK.COM INC. that are either
Borrowers  or other  Guarantors),  AND/OR (iv) the  "Continuing  Directors"  (as
defined in the next  sentence)  at any time do not  constitute a majority of the
board of directors of TALK.COM INC. (or, if applicable,  a successor corporation
to TALK.COM INC.).  For purposes of Clause "(iv)" of the preceding  sentence,  a
"Continuing Director" as of any date of determination is any member of the board
of directors of TALK.COM INC. who (a) was a member of such board of directors on
the date hereof or (b) was  nominated  for  election or elected to such board of
directors with the approval of a majority of the  Continuing  Directors who were
members of such board of directors at the time of such nomination or election.

                  7.1.9.  Government  Action.  If  any  governmental  regulatory
authority or judicial  body makes any final  non-appealable  determination  that
could reasonably be expected to have or cause a Material Adverse Effect.


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<PAGE>

                  7.1.10.  Insolvency.  If any Borrower  (a) becomes  insolvent,
bankrupt or generally fails to pay its debts as such debts become due; or (b) is
adjudicated insolvent or bankrupt in any proceeding; or (c) admits in writing an
inability  to pay its debts;  or (d) comes under the  authority  of a custodian,
receiver or trustee (or one is appointed  for  substantially  all of its, his or
her property);  or (e) makes an assignment for the benefit of creditors;  or (f)
has commenced  against it any  proceedings  under any law related to bankruptcy,
insolvency,  liquidation,  dissolution or the  reorganization,  readjustment  or
release of debtors that is either not contested or if contested is not dismissed
or stayed  within  60  calendar  days  after the  commencement  thereof;  or (g)
commences or institutes  any  proceedings  under any law related to  bankruptcy,
insolvency,  liquidation,  dissolution or the  reorganization,  readjustment  or
release of debtors; or (h) calls a meeting of creditors with a view to arranging
a  composition  or  adjustment of debt; or (i) by any act or failure to act that
indicates consent to, approval of or acquiescence in any of the foregoing.

                  7.1.11.   Additional  Liabilities.   If  any  judgment,  writ,
warrant,  attachment  or execution or similar  process that calls for payment or
presents  liability  in excess of $2.5  million  is  rendered,  issued or levied
against any Borrower or any of its  properties  or assets and such  liability is
not paid,  waived,  stayed,  vacated,  discharged,  settled,  satisfied or fully
bonded within 30 calendar days after it is rendered, issued or levied.

                  7.1.12. Reserved.

                  7.1.13.  FCC  and  Other  Regulatory-Action  Defaults.  If any
Official Body terminates,  revokes, suspends, modifies, limits or fails to renew
any  Authorization  of any Borrower and such action could reasonably be expected
to have or cause a Material Adverse Effect.

                  7.1.14.  Loss or Revocation  of Guaranty.  If TALK.COM INC. or
any other  Guarantor at any time revokes (or attempts to revoke) its Guaranty or
its  continuing  obligations  thereunder,  or if  TALK.COM  INC.  or  any  other
Guarantor  at any time -- becomes  insolvent or bankrupt as described in Section
7.1.10,  or if any  Guaranty at any time does not  constitute a ------ -- legal,
valid, binding and enforceable obligation of such Guarantor.

         7.2.     Remedies.

                  7.2.1.   Acceleration,  Termination and Pursuit of Collateral.
At any time during the  existence  of any Event of Default,  at the  election of
Required  Lenders  but with  notice  thereof to a  Borrower  (unless an Event of
Default  described in Section  7.1.10 has occurred,  in which case  acceleration
will occur automatically with respect to the entire indebtedness and without any
notice),   then  Lenders  (a)  may  terminate  any  or  all  Commitments  and/or
Facilities,  and/or (b) may accelerate any Maturity Date, and/or (c) may declare
all or any  portion  of the  indebtedness  of any or all  Borrowers  to  Lenders
(hereunder or otherwise,  and including all principal,  interest, fees, expenses
and indemnities hereunder) to be immediately due and payable. At any time during
the  existence of any Event of Default,  Lenders and  Administrative  Agent will
also  have the  immediate  right to  enforce  and  realize  upon any  collateral
security  granted  under any Loan  Document in any manner or order that Required
Lenders or  Administrative  Agent (at the direction of Required  Lenders)  deems
expedient without regard to any equitable principles of marshaling or otherwise.


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<PAGE>

         7.2.2.   Mandatory Partial Prepayments.  Without in any way limiting or
otherwise  restricting the  availability of any other remedy available under the
Loan  Documents or under  applicable  law, and  regardless of whether or not the
indebtedness under the Loan Documents has been accelerated,  upon the occurrence
and during the  continuance of any Event of Default  (unless  Lenders  otherwise
consent),  Borrowers  from  time to time as and  when  required  under  Sections
1.1.6.5 and 1.2.6.5 shall make all prepayments required under such Sections.

         7.2.3.   Other  Remedies.  In  addition  to  the  rights  and  remedies
expressly granted in the Loan Documents,  each Lender and  Administrative  Agent
also will have all other legal and equitable  rights and remedies  granted by or
available  under all  applicable law (including the "self help" and other rights
of a  secured  party  under  the  UCC),  and all  rights  and  remedies  will be
cumulative in nature.

         7.2.4.   Special Regulatory-Related Remedies.

                  a. Each Borrower and  Administrative  Agent hereby acknowledge
their intent that,  during the existence of an Event of Default,  to the fullest
extent permitted by applicable law and governmental policy (including the rules,
regulations  and policies of the FCC and each State PUC),  Administrative  Agent
will have all rights  necessary  or  desirable  to obtain,  use and/or  sell the
assets and operations of each Borrower and the other Collateral, and to exercise
all remedies  available to  Administrative  Agent and each Lender under the Loan
Documents,  the UCC or other  applicable  law. Each Borrower and  Administrative
Agent  agree  that,  if  any  applicable  law  or  governmental  policy  changes
subsequent to the date hereof that affects in any manner Administrative  Agent's
rights  of  access  to,  or use or sale  of,  any  Borrower's  assets  or  other
Collateral  (including  Authorizations)  or the  procedures  necessary to enable
Administrative  Agent to obtain  such  rights of access,  use or sale  during an
Event of Default,  then  Administrative  Agent and each  Borrower will amend the
Loan Documents (in such manner as Administrative  Agent reasonably  requests) in
order to  provide  Administrative  Agent  with all such  rights to the  greatest
extent possible consistent with then-applicable law and governmental policy.

                  b. Each  Borrower  hereby  agrees  (during the  existence of a
Default) to take any actions that Administrative Agent may reasonably request in
order to enable  Administrative  Agent to receive the full  rights and  benefits
granted to Administrative  Agent and each Lender by the Loan Documents.  Without
limiting the generality of the foregoing, at any time during the existence of an
Event of Default,  at the cost and expense of Borrowers (jointly and severally),
each Borrower will use its best efforts to assist and cooperate in obtaining all
approvals (including all FCC and State PUC approvals) which are then required by
applicable  law or contract for or in connection  with any action or transaction
contemplated  by the Loan  Documents or the UCC. Each Borrower  further  agrees,
upon Administrative Agent's request and at the expense of Borrowers (jointly and
severally), at any time during the existence of an Event of Default, to prepare,
sign,  file and  diligently  prosecute (and to use its best efforts to cause the
preparation,  execution, filing and diligent prosecution by others) with the FCC
the assignor's or transferor's  portion of any  applications  for consent to the
assignment  of  Authorizations  or  transfer  of control  thereof  necessary  or
appropriate  under the rules of each  Official  Body for approval of any sale or
transfer of any  Collateral  or any  Authorization  pursuant to the  exercise of
Administrative  Agent's and Lenders'  remedies  under the Loan  Documents.  Each
Borrower further agrees that,  during the existence of a Default,  each Borrower
will assist and


                                       46
<PAGE>

cooperate  with  Administrative  Agent  and each  Lender  (and will use its best
efforts to cause others to assist and cooperate  with  Administrative  Agent and
each Lender) to ensure that each Borrower continues (a) to operate in the normal
course  of  business,  and  (b) to  fulfill  all of its  legal,  regulatory  and
contractual  obligations,  and (c) to otherwise  be properly and  professionally
managed. At Administrative Agent's request and the expense of Borrowers (jointly
and  severally),  at any time during the existence of an Event of Default,  such
assistance  and  cooperation  may include the employment of (and, to the maximum
extent  not  prohibited  by the  rules,  regulations  and  orders  of  the  FCC,
delegation of  appropriate  management  authority to) one or more  qualified and
independent  consultants and professional  managers acceptable to Administrative
Agent to  assist in the  interim  operations  of  Borrowers;  all of which  each
Borrower hereby agrees not to challenge.  Each Borrower further consents to (and
agrees that it will not challenge), at any time during the existence of an Event
of Default,  the transfer of control or assignment of  Authorizations  and other
assets  to a  receiver,  trustee,  transferee,  or  similar  official  or to any
purchaser of the  Collateral  pursuant to any public or private  sale,  judicial
sale,  foreclosure  or exercise of other  remedies  available to  Administrative
Agent or any Lender as permitted by applicable law.

                  c.  NOTWITHSTANDING  ANYTHING TO THE CONTRARY CONTAINED IN ANY
LOAN DOCUMENT, neither Administrative Agent nor any Lender nor any Borrower will
take any action  pursuant to the Loan Documents that would  constitute or result
in any assignment of an Authorization or any transfer of control of any Borrower
if such assignment of  Authorization  or transfer of control would require under
then existing law  (including the written rules and  regulations  promulgated by
the FCC) the prior  approval of the FCC or any State PUC,  unless such  approval
has been obtained (as applicable)  from such State PUC (to the extent failure to
obtain such  approval by  Administrative  Agent could  reasonably be expected to
have or cause a Material  Adverse Effect) or from the FCC.  Without limiting the
generality  of  the  foregoing,   Administrative  Agent  and  each  Lender  each
specifically  agrees that (a) voting  rights with respect to the pledged  equity
interests of each  Borrower  will remain with the holders of such voting  rights
during the existence of an Event of Default  unless and until any required prior
approvals  to the  transfer  of  such  voting  rights  have  been  obtained  (as
applicable)  from such State PUC (to the extent  failure to obtain such approval
by Administrative Agent could reasonably be expected to have or cause a Material
Adverse  Effect) or from the FCC,  and (b) during the  existence of any Event of
Default and foreclosure upon the Collateral by Administrative  Agent, there will
be  either a  private  or public  sale of the  Collateral,  and (c) prior to the
exercise of voting rights by the purchaser at any such sale,  any consent of any
State PUC or the FCC required pursuant to any State  Communications  Act (to the
extent  failure to obtain such consent  could  reasonably be expected to have or
cause  a  Material   Adverse   Effect)  or  the   Federal   Communications   Act
(respectively) will be obtained.

         ARTICLE 8: ADMINISTRATIVE AGENT AND RELATIONSHIP AMONG LENDERS

         8.1.     Appointment, Authorization and Grant of Authority. Each Lender
hereby irrevocably  designates and appoints MCG as the  Administrative  Agent of
such Lender to act as specified in this Agreement and the other Loan  Documents,
and each such  Lender  hereby  irrevocably  authorizes  MCG (in its  capacity as
Administrative Agent) to take actions on behalf of such Lender, to exercise such
powers  and to perform  such  other  duties as are  expressly  delegated  to the
Administrative  Agent  by the  terms  of  this  Agreement  and  the  other  Loan
Documents,  together with all such other powers and


                                       47
<PAGE>

authority as are reasonably incidental thereto.  Without limiting the generality
of the  foregoing,  the  Administrative  Agent  (on  behalf of each  Lender)  is
authorized  (a) to execute each Loan Document  (other than this  Agreement,  but
including, without limitation, all financing statements, continuation statements
and other collateral agreements and documents) for and on behalf of each Lender,
and (b) to  accept  each Loan  Document  and all  other  agreements,  documents,
instruments,  certificates  and opinions  reasonably  required to implement  the
intent  of the  parties  to  this  Agreement,  and (c) to file  and  record  all
financing  statements,  continuation  statements and other collateral agreements
and documents,  and (d) to receive and deliver  communications and notifications
to Lenders and to  Borrowers,  and (e) to receive and  distribute  payments  and
Advances between Lenders and Borrowers.  The duties and  responsibilities of the
Administrative   Agent  shall  be  ministerial  and  administrative  in  nature.
Notwithstanding  any  provision  to the  contrary  in  any  Loan  Document,  the
Administrative  Agent (a) shall not have any  duties or  responsibilities  other
than  those  expressly  set  forth  in the  Loan  Documents  (which  duties  and
responsibilities  shall be subject to the  limitations  and  qualifications  set
forth in this Article),  and (b) shall not have any fiduciary  relationship with
any  Lender;  and no implied  covenants,  functions,  responsibilities,  duties,
obligations  or  liabilities  shall be read into the Loan Documents or otherwise
exist against the Administrative Agent.

         8.2.     Acceptance of Appointment. MCG hereby accepts such appointment
and  agrees  to act as such  Administrative  Agent  upon the  express  terms and
conditions (but subject to the limitations and qualifications) set forth in this
Article.

         8.3.     Administrative   Agent's  Relationship  with  Borrowers.   The
provisions  of this  Article  are solely for the  benefit of the  Administrative
Agent and  Lenders,  and no  Borrower  shall  have any  rights as a third  party
beneficiary (or otherwise)  under this Article.  In performing its functions and
duties under the Loan Documents, the Administrative Agent shall act solely as an
agent of the Lenders,  and the  Administrative  Agent does not assume (and shall
not be deemed to have assumed) any obligation or relationship of agency or trust
with or for any Borrower.

         8.4.     Non-Reliance on Administrative  Agent and Other Lenders.  Each
Lender expressly  acknowledges and agrees (a) that the Administrative Agent (and
its directors,  officers,  employees, agents,  attorneys-in-fact and Affiliates)
have not made any  representations  or warranties to such Lender and (b) that no
act  by  the   Administrative   Agent  hereinafter  taken  (including,   without
limitation, any review of the affairs of any Borrower or other Obligor) shall be
deemed to constitute any representation or warranty by the Administrative  Agent
to any  Lender.  Each  Lender  represents  to the  Administrative  Agent that it
(independently  and without any reliance  upon the  Administrative  Agent or any
other Lender,  and based upon such  documents and  information  as it has deemed
necessary or appropriate) has made its own appraisal,  investigation  and credit
analysis of the business,  assets, operations,  properties,  financial and other
condition,  prospects  and  creditworthiness  of each  Borrower  and each  other
Obligor and has made its own decision to make its Loans  hereunder  and to enter
into  this  Agreement.  Each  Lender  also  covenants  and  represents  that  it
(independently  and without any reliance  upon the  Administrative  Agent or any
other Lender,  and based upon such  documents and  information  as it shall deem
necessary  or  appropriate)  will  continue  to make  its own  credit  analysis,
appraisals  and decisions in taking or not taking  action under this  Agreement,
and  will  continue  to  make  such  investigations  as it  deems  necessary  or
appropriate to inform itself as to the business, assets, operations, properties,
financial and other condition,  prospects and  creditworthiness of each Borrower
and each other  Obligor.  Except as  otherwise  expressly  provided  in the Loan


                                       48
<PAGE>

Documents,  the  Administrative  Agent shall not have any duty or responsibility
(a) to keep any Lender  informed  as to the  performance  or  observance  by any
Borrower or any other Obligor of its obligations  under the Loan  Documents,  or
(b) to inspect the books or properties of any Borrower or any other Obligor,  or
(c) to provide any Lender with any credit or other  information  concerning  the
business,  operations,  assets,  properties,   financial  and  other  condition,
prospects or  creditworthiness  of any Borrower or any other  Obligor  which may
come into the  possession of the  Administrative  Agent (or any of its officers,
directors,   employees,   agents,    attorneys-in-fact   or   Affiliates).   The
Administrative  Agent will make  reasonable  efforts  to furnish to the  Lenders
material information  concerning Borrowers of which the Administrative Agent has
actual  knowledge;  however,  in  the  absence  of  gross  negligence,   willful
misconduct or fraud, the Administrative  Agent shall not be liable to any Lender
for any failure to relay or furnish to such Lender any such information.

         8.5.     Reliance by  Administrative  Agent. The  Administrative  Agent
shall be entitled to rely and act (and shall be fully  protected  in relying and
acting) upon any note, writing, resolution, instrument, report, notice, consent,
certificate,  affidavit,  letter, request,  electronic transmission or any other
message, statement, instruction, notice, order or other writing, conversation or
communication  believed by Administrative  Agent in good faith to be genuine and
correct  and to  have  been  signed,  sent or made  by the  proper  Person.  The
Administrative  Agent  shall  not be bound to  ascertain  or  inquire  as to the
satisfaction,  performance  or  observance  of  any of  the  terms,  provisions,
covenants or conditions of or the accuracy of any statements or  representations
in any Loan Document by any Borrower or any other  Obligor.  The  Administrative
Agent may deem and treat the stated payee of any Note as the holder  thereof for
all purposes under the Loan Documents unless and until  Administrative Agent has
received and accepted an assignment and assumption agreement relating thereto in
form and substance acceptable to the Administrative Agent.

         8.6.     Delegation of Duties;  Additional  Reliance by  Administrative
Agent. The Administrative  Agent may consult with, employ and perform any of its
duties under the Loan Documents by or through agents,  attorneys-in-fact,  legal
counsel,  independent public  accountants and other experts.  The Administrative
Agent shall not be  responsible  for the  negligence  or  misconduct of any such
Persons  selected  by  Administrative   Agent  with  reasonable  care,  and  the
Administrative Agent shall be fully protected in any action or inaction taken by
it in good faith in reliance upon or in accordance with the advice or statements
of  legal  counsel  (including,   without  limitation,  counsel  to  Borrowers),
independent accountants and other experts selected by Administrative Agent.

         8.7.     Acting on Instructions of Lenders.  The  Administrative  Agent
shall be entitled to act or refrain from acting (and shall be fully protected in
acting or refraining  from acting) under the Loan Documents in accordance with a
written  request of or  written  instructions  from the  Required  Lenders.  The
Administrative Agent shall also be entitled to refrain from acting (and shall be
fully  protected in  refraining  from acting)  under the Loan  Documents  unless
Administrative  Agent  first (a)  receives  such  advice or  concurrence  of the
Required Lenders as Administrative Agent deems appropriate or (b) is indemnified
to its  satisfaction  by the Lenders  against any and all  liability and expense
which it may incur by reason of taking or  continuing  to take any such  action.
Except as  otherwise  expressly  stated in the Loan  Documents,  any requests or
instructions   by  the   Required   Lenders  (and  any  action  or  inaction  by
Administrative Agent pursuant thereto) shall be binding upon all the Lenders.


                                       49
<PAGE>

         8.8.     Actions Upon  Occurrence of Default or Event of Default.  Each
Lender will use its best efforts to notify the Administrative  Agent immediately
in writing  upon  becoming  aware of the  occurrence  of any Default or Event of
Default.  The  Administrative  Agent  shall not be deemed to have  knowledge  or
notice of the occurrence of any Default or Event of Default hereunder unless the
Administrative  Agent has received notice from a Lender or a Borrower  referring
to this Agreement, describing such Default or Event of Default, and stating that
such notice is a "notice of default".  If the Administrative  Agent receives any
such notice of default, then the Administrative Agent shall use its best efforts
to give notice thereof to each Lender as soon as reasonably practical.  Upon the
occurrence  of any  Default or Event of  Default,  the  Lenders  shall  promptly
consult  with one  another in an  attempt  to agree  upon a mutually  acceptable
course of conduct. In the absence of unanimous agreement among the Lenders as to
the  appropriate  course of conduct,  the  Administrative  Agent shall  exercise
rights and take such other  action on behalf of all Lenders with respect to such
Default or Event of Default as  directed  by the  Required  Lenders.  Unless and
until the  Administrative  Agent shall have  received such  directions  from the
Lenders (or, as applicable,  the Required Lenders), the Administrative Agent may
take (but shall not be  obligated  to take) such  action  (or may  refrain  from
taking  such  action)  with  respect  to such  Default  or Event of  Default  as
Administrative Agent shall deem advisable in the best interest of the Lenders.

         8.9.     Administrative   Agent's   Rights  as  Lender  in   Individual
Capacity.  The Administrative  Agent (and its Affiliates) may make loans to, may
have cash  management  agreements  with,  may accept  deposits  from,  may issue
letters of credit on behalf of, and may otherwise generally engage (and continue
to engage) in any kind of business  with any Borrower or other Obligor as though
the  Administrative  Agent  were not the  Administrative  Agent  under  the Loan
Documents.  With respect to any Loans made by  Administrative  Agent as a Lender
hereunder and all obligations  owing to it as a Lender under the Loan Documents,
the  Administrative  Agent  shall  have  the  same  rights,  powers  duties  and
obligations  under the Loan  Documents as any other Lender and may exercise such
rights,  powers, duties and obligations as though it were not the Administrative
Agent  hereunder.  To the  extent  that  the  Administrative  Agent  is a Lender
hereunder,  the terms "Lender",  "Lenders" and "Required  Lenders" shall include
the Administrative Agent in its individual capacity.

         8.10.    Advances By Administrative  Agent.  Unless the  Administrative
Agent has been notified in writing by a Lender prior to the Settlement  Date for
any Advance or Loan that such Lender will not make the amount  constituting  its
Pro Rata share of such Advance or Loan available to the Administrative  Agent on
or prior to such applicable  Settlement Date, then the Administrative  Agent may
assume  (but shall not be  required  to assume)  that such Lender will make such
amount available to the Administrative  Agent in immediately  available funds on
or before such  Settlement  Date,  and in  reliance  upon such  assumption,  the
Administrative  Agent may make available to Borrowers a corresponding  amount on
behalf  of such  Lender.  If the  amount  of such  Pro  Rata  share  is not made
available to the Administrative Agent in immediately available funds by a Lender
until after the applicable  Settlement  Date,  then such Lender shall pay to the
Administrative  Agent on demand  and in  immediately  available  funds an amount
equal to the result of the following equation (which shall be in addition to the
amount of such Lender's Pro Rata share of such Advance or Loan):  the product of
(a) the average  (computed for the period  determined under clause (c) below) of
the  weighted  average  interest  rate for Federal  Funds as  determined  by the
Administrative  Agent  during each day included in such  period,  multiplied  by
(b) the  amount  of such  Lender's  Pro  Rata  share  of such  Advance  or Loan,
multiplied  by (c) a fraction  (i) the  numerator of which is the number of days
that elapsed from and


                                       50
<PAGE>

including such  Settlement Date to and including the date on which such Lender's
Pro  Rata  share  of  such   Advance  or  Loan  is  actually   received  by  the
Administrative Agent in immediately  available funds and (ii) the denominator of
which is 360. A statement from the Administrative  Agent submitted to any Lender
with respect to any amounts owing under this Section shall be conclusive (absent
manifest  error)  as to the  amount  owed to the  Administrative  Agent  by such
Lender.  If such  Lender's  Pro  Rata  share  is not  actually  received  by the
Administrative  Agent in immediately  available  funds within three (3) Business
Days after the  applicable  Settlement  Date for such Advance or Loan,  then the
Administrative  Agent shall be entitled to recover from such Lender,  on demand,
the amount of such Pro Rata  share with  interest  thereon  for the entire  such
period since such  Settlement  Date at the highest  interest rate per annum then
applicable under the Facilities.

         8.11.    Payments to Lenders.  Promptly  after  receipt in  immediately
available funds from Borrowers of any payment of principal, interest or any fees
or other amounts due to any Lender under the Loan Documents,  the Administrative
Agent shall distribute to each Lender that Lender's Pro Rata share of such funds
so received.

         8.12.    Pro-Rata Sharing of Setoff Proceeds.  Any sums obtained by the
Administrative  Agent or any Lender from any Borrower or other Obligor by reason
of any  exercise of a right of setoff or banker's  lien shall be shared Pro Rata
among Lenders.  Notwithstanding the foregoing,  neither the Administrative Agent
nor any Lender shall be required to so share with any other  Lender  collections
from any Borrower or other Obligor specifically  relating to (or the proceeds of
any item of  collateral  that is not  subject to the Loan  Documents)  any other
indebtedness  (i.e.  other than  indebtedness  under the Loan Documents) of such
Borrower or other Obligor to the Administrative Agent or such Lender.

         8.13.    Limitation   on  Liability  of   Administrative   Agent.   The
Administrative   Agent  (and  its  directors,   officers,   employees,   agents,
attorneys-in-fact  and  Affiliates)  shall not be liable to any  Lender  for any
action  taken or inaction  by  Administrative  Agent or such Person  under or in
connection  with any Loan Document,  except to the extent of foreseeable  actual
loses resulting directly and exclusively from  Administrative  Agent's own gross
negligence,  willful misconduct or fraud. Without limiting the generality of the
foregoing,  the Administrative  Agent (and its directors,  officers,  employees,
agents,  attorneys-in-fact  and Affiliates) shall not be liable,  responsible or
have  any  duty  with  respect  to any of the  following:  (a) the  genuineness,
execution,    authorization,     validity,    effectiveness,     enforceability,
collectibility,   value  or  sufficiency  of  any  Loan  Document,  or  (b)  the
collectibility  of any  amount  owed by any  Obligor to any  Lender,  or (c) the
accuracy, completeness or truthfulness of any recital, statement, representation
or warranty made to the Administrative Agent or to any Lender in connection with
any Loan Document or other certificate,  affidavit,  report, opinion,  financial
statement,  document  or  instrument  executed  or  furnished  pursuant to or in
connection  with any Loan Document,  or (d) any failure of any Person to receive
any  notice  or  communication  due  such  Person  under  any Loan  Document  or
applicable law, or (e) the assets, liabilities,  financial condition, results of
operations, business, prospects or creditworthiness of any Borrower or any other
Obligor,  or (f) ascertaining or inquiring into the satisfaction,  observance or
performance  of any  condition,  covenant  or  agreement  in any  Loan  Document
(including, without limitation, the use of proceeds by any Borrower), or (g) the
inspection  of any  books,  records or  properties  of any  Obligor,  or (h) the
existence or possible existence of any Default or Event of Default.


                                       51
<PAGE>

         8.14.    Indemnification.  To the extent that Borrowers do not actually
reimburse,  indemnify or hold harmless  Administrative Agent (in accordance with
Section  10.1  hereof),  then each Lender  hereby  agrees on a Pro Rata basis to
indemnify  and hold  harmless  the  Administrative  Agent  (and  its  directors,
officers, employees, agents,  attorneys-in-fact and Affiliates) from and against
any and all  liabilities,  obligations,  losses,  damages,  penalties,  actions,
judgments,  suits,  costs,  reasonable  expenses  or  disbursements  of any kind
whatsoever  that  at any  time  (including,  without  limitation,  at  any  time
following the payment of the Obligations of Borrowers  hereunder) may be imposed
upon,  incurred  by  or  asserted  against  the  Administrative  Agent  (or  its
directors, officers, employees, agents,  attorneys-in-fact or Affiliates) in its
capacity as such in any way relating to or arising out of any Loan Document,  or
the  transactions  contemplated  hereby or any action or  inaction  taken by the
Administrative Agent under or in connection with any of the foregoing;  provided
that no Lender shall be liable to the  Administrative  Agent (or its  directors,
officers, employees, agents, attorneys-in-fact or Affiliates) for the payment of
any  portion  of such  liabilities,  obligations,  losses,  damages,  penalties,
actions,  judgments,  suits, costs, expenses or disbursements resulting directly
and exclusively from the gross  negligence,  willful  misconduct or fraud of the
Administrative Agent. If any indemnity furnished to the Administrative Agent (or
its directors, officers, employees, agents, attorneys-in-fact or Affiliates) for
any purpose (in the opinion of the  Administrative  Agent) shall be insufficient
or  become  impaired,  then the  Administrative  Agent  may  require  additional
indemnity and cease (or not commence) to do the acts  indemnified  against until
such additional indemnity is furnished to the satisfaction of the Administrative
Agent.  The agreement in this Section shall survive the payment of all Advances,
Loans, fees and other Obligations of each Borrower arising hereunder.

         8.15.    Resignation;     Successor     Administrative    Agent.    The
Administrative  Agent at any time may resign as the  Administrative  Agent under
the Loan Documents by giving the Lenders and Borrowers written notice thereof at
least 10 Business Days prior to the effective date of such  resignation.  During
such notice period,  the Required Lenders shall appoint (from among the Lenders)
a successor Administrative Agent for the Lenders, subject to the consent of each
Lender  (such  approval or consent,  as the case may be, not to be  unreasonably
withheld,  delayed or conditioned) and concurrent notice to the Borrowers.  Upon
acceptance of such appointment by such successor agent, (a) such successor agent
shall succeed to the rights,  powers and duties of the Administrative Agent, and
(b) the term "Administrative Agent" shall include such successor agent effective
upon its  appointment,  and (c) the  resigning  Administrative  Agent's  rights,
powers and duties as the Administrative  Agent shall be terminated,  all without
any other or further act or deed on the part of such former Administrative Agent
or any of the  parties to the Loan  Documents.  Notwithstanding  the  foregoing,
after the  effectiveness  of the resigning  Administrative  Agent's  resignation
hereunder as the  Administrative  Agent,  the  provisions  of this Article shall
continue to inure to its benefit as to any actions  taken or omitted to be taken
by it while it was Administrative Agent under the Loan Documents.


                ARTICLE 9: DEFINITIONS AND RULES OF CONSTRUCTION

         9.1.     Definitions.  When used in this Agreement, the following terms
shall have the respective meanings set forth below:


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<PAGE>

                  9.1.1.  "Access One Merger" means the acquisition  transaction
evidenced by that  certain  Agreement  and Plan of Merger dated  effective as of
March 24, 2000, as amended,  among Talk.com Inc., Aladdin  Acquisition Corp. and
Access One.

                  9.1.2.  "Account"  means, at any relevant time, the designated
or principal deposit account of Borrowers at  Administrative  Agent for purposes
of effecting transactions hereunder.

                  9.1.3.  "Adjusted LIBO Rate" means the rate per annum (rounded
upwards,  if necessary,  to the next 1/100th of 1%) determined by Administrative
Agent pursuant to the following formula:

              Adjusted LIBO Rate =                           LIBO Rate
                                                     ----------------------
                                                     1 - Reserve Percentage

For purposes of this calculation, "LIBO Rate" means the London Interbank Offered
Rate per annum (determined by Administrative  Agent) two (2) Business Days prior
to the first day of any  Interest  Period  for which the  Adjusted  LIBO Rate is
applicable  as published by Reuters  Monitor Money Rate Service and displayed on
the LIBO page as the "Libo  Rate"  (or,  if Reuters  is not  available,  then as
published by Bloomberg or Dow  Jones-Telerate  and displayed on page 3750 as the
BBA LIBOR) (or, in any such  instance,  as  published  by such other  service or
displayed on such other page as may replace such service or page for the purpose
of  displaying  rates or  prices  comparable  to the  designated  rate)  for the
offering of dollar deposits by leading banks in the London  interbank market for
a period of approximately 3 months and in an amount  approximately  equal to the
amount outstanding hereunder to which such LIBO Rate will be applicable. If more
than one such rate is displayed on such page or its  replacement,  then the LIBO
Rate will be the arithmetic  mean of such displayed  rates.  If the first day of
the applicable  Interest  Period is not a Business Day, then the applicable LIBO
Rate will be the rate in effect on the immediately  preceding  Business Day. For
purposes  of  this  calculation,  "Reserve  Percentage"  means  that  percentage
(expressed  as a decimal)  prescribed by the FRB (or any other  governmental  or
administrative  agency  or  funding  source  to  which  Administrative  Agent is
subject)  for  determining  the  reserve  requirements   (including  any  basic,
supplemental,  marginal or emergency reserves) for deposits of U.S. Dollars with
maturities  of comparable  duration in a non-U.S.  or an  international  banking
office.

                  9.1.4. "Administrative Agent" means MCG Finance Corporation or
any successor, assignee, pledgee or other transferee of Administrative Agent.

                  9.1.5.   "Advance"  means  any  advance  of  funds  under  any
Facility.

                  9.1.6.  "Advance Request" has the meaning set forth in Section
1.4.1.

                  9.1.7.  "Affiliate"  of any  Person  or  entity  means (a) any
Person directly or indirectly  owning,  controlling or holding 5% or more of the
outstanding  beneficial  interest in such person or entity, or (b) any Person as
to which such other Person or entity  directly or indirectly  owns,  controls or
holds  5% or more of the  outstanding  beneficial  interest,  or (c) any  Person
directly or indirectly controlling,  controlled by, or under common control with
such other person or entity, or (d) any officer,  director, partner or member of
such Person, but such term does not include Administrative Agent or any Lender.


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<PAGE>

                  9.1.8.  "Agreement"  means this Credit Facility  Agreement and
all the  exhibits  and  schedules  hereto,  all as may be amended and  otherwise
modified from time to time hereafter.

                  9.1.9.  "AoL" means America  Online,  Inc., and its successors
and assigns under the AoL Investment Agreements.

                  9.1.10.   "AoL  Investment   Agreements"  means  that  certain
Investment Agreement by and between Tel-Save.com, Inc. (n/k/a Talk.com Inc.) and
AoL dated as of December 31, 1998, together will all security agreements, pledge
agreements,  and other agreements and documents related thereto,  each as may be
amended and modified from time to time.

                  9.1.11.  "Authorized  Officer" means any officer,  employee or
representative  of such  organization who is expressly  designated as such or is
otherwise authorized to borrow funds hereunder or, as appropriate,  to sign loan
documents and/or deliver certificates on behalf of such organization pursuant to
the  provisions  of such  organization's  most  recent  resolution  on file with
Administrative Agent.

                  9.1.12.   "Authorization"   means   any   License   or   other
governmental permit, certificate and/or approval issued by any Official Body.

                  9.1.13.  "Available  Credit Portion" means that portion of the
Line of Credit Commitment that is generally available in the ordinary course for
borrowing  at any time  under the Line of  Credit  Facility,  as such  amount is
determined in accordance with Section 1.3.

                  9.1.14.  "Average  Monthly  Revenue"  means,  at the  time  of
measurement and for the relevant period,  the sum of the following:  (a) Bundled
Services  Revenue during the relevant  fiscal quarter  divided by 3, plus (b) LD
Only Services Revenue during the relevant fiscal quarter divided by 3.

                  9.1.15. "Borrower" means,  individually and collectively,  the
following:

                           a.       Talk.com   Holding   Corp.,  a  Pennsylvania
                                    corporation,  having its principal and chief
                                    executive office at the address specified in
                                    the Notice Section hereof,  or any successor
                                    or authorized assignee thereof, and

                           b.       Access  One  Communications   Corp.,  a  New
                                    Jersey corporation, having its principal and
                                    chief   executive   office  at  the  address
                                    specified in the Notice Section  hereof,  or
                                    any   successor   or   authorized   assignee
                                    thereof, and

                           c.       The Other  Phone  Company,  Inc.,  a Florida
                                    corporation,  having its principal and chief
                                    executive office at the address specified in
                                    the Notice Section hereof,  or any successor
                                    or authorized assignee thereof, and


                                       54
<PAGE>

                           d.       OmniCall,    Inc.,    a    South    Carolina
                                    corporation,  having its principal and chief
                                    executive office at the address specified in
                                    the Notice Section hereof,  or any successor
                                    or authorized assignee thereof, and

                           e.       Tel-Save  Holdings  of  Virginia,   Inc.,  a
                                    Virginia  corporation,  having its principal
                                    and chief  executive  office at the  address
                                    specified in the Notice Section  hereof,  or
                                    any   successor   or   authorized   assignee
                                    thereof, and

                           f.       Any other entity  subsequently  added hereto
                                    as a Borrower hereunder, or any successor or
                                    authorized assignee thereof.

                   9.1.16.  "Bundled  Services  Revenue"  means,  at the time of
measurement  and for the  relevant  period,  Revenue  derived  exclusively  from
Bundled Subscribers.

                   9.1.17.  "Bundled Subscriber" means (a) a Subscriber who is a
Subscriber only of Borrowers'  local telephone  services or (b) a Subscriber who
is a Subscriber of both Borrowers' local telephone  services and Borrowers' long
distance telephone services.

                   9.1.18.  "Business Day" means any day that is not a Saturday,
a Sunday or a day on which banks under the laws of the  Commonwealth of Virginia
(or,  with respect to certain LIBO Rate matters,  banks in London,  England) are
authorized or required to be closed.

                   9.1.19. "Capital Expenditures" means expenditures (a) for any
fixed assets or improvements,  replacements,  substitutions or additions thereto
that have a useful life of more than one (1) year,  including direct or indirect
acquisition of such assets or (b) for any Capital Leases.

                   9.1.20.  "Capital  Leases" means capital leases and subleases
as defined in the Financial  Accounting  Standards  Board Statement of Financial
Accounting  Standards  No. 13 dated  November  1976 (as amended and updated from
time to time).

                   9.1.21.  "Cash  Equivalents"  has the  meaning  set  forth in
Section 5.7.

                   9.1.22.  "Change of  Control"  has the  meaning  set forth in
Section 7.1.8.

                   9.1.23. "Closing Date" means the date on which all conditions
precedent to the  effectiveness  of this  Agreement  under Section 2.1 have been
satisfied or waived by Lenders.

                   9.1.24.  "Code" means the Internal  Revenue Code of 1986,  as
amended.

                   9.1.25.  "Collateral" means the collateral security committed
to Administrative  Agent under the Collateral Security Documents executed by any
Borrower or any other Obligor in favor of Administrative  Agent pursuant to this
Agreement from time to time and/or pursuant to all similar or related  documents
and agreements from time to time, all as amended from time to time.

                   9.1.26.  "Collateral Security Documents" means,  individually
and collectively, (a) the Security Agreements and the financing statements filed
pursuant  thereto,  and (b) the  Pledge  and


                                       55
<PAGE>

Security Agreements, and (c) any additional documents guaranteeing indebtedness,
assuring  performance of obligations,  subordinating  indebtedness,  or granting
security or Collateral to  Administrative  Agent hereunder,  all as amended from
time to time.

                   9.1.27. "Commitment" means any commitment for credit pursuant
to a Facility established hereunder.

                   9.1.28.  "Commitment  Percentage" means, with respect to each
Lender,  that  portion  of the  total  Commitments  as to which  such  Lender is
obligated.

                   9.1.29.  "Cumulative  OCF" means OCF (as  defined  herein) as
measured  from  January 1 of any given  calendar  year to the  relevant  date of
measurement during such calendar year.

                   9.1.30.  "Default" means any event or circumstance  that with
the  giving  of notice  or the  passage  of time  would  constitute  an Event of
Default. The term Default shall include any Event of Default arising therefrom.

                   9.1.31. "Dollar" or "$" means U.S. dollars.

                   9.1.32. "EBITDA" means, at the time of any determination, the
sum of the following  items for Borrowers (on a  consolidated  basis) during the
relevant four consecutive fiscal quarter period:

                           a.       Net  income  of  Borrowers  from  continuing
                                    operations (on a consolidated  basis) during
                                    such   period   --  i.e.,   -  -   excluding
                                    extraordinary gains and income items and the
                                    cumulative  effect of accounting  changes --
                                    determined in accordance with GAAP, and ---

                           b.       Plus  Interest  Expense of Borrowers  during
                                    such period,  but subtract  interest  income
                                    accrued during such period, and

                           c.       Plus  federal and state income taxes paid or
                                    required to be paid by Borrowers during such
                                    period, and

                           d.       Plus  depreciation  permitted under GAAP for
                                    Borrowers during such period, and

                           e.       Plus  amortization  expense  permitted under
                                    GAAP for Borrowers during such period.

                  9.1.33.  "Environmental  Control  Statutes" means all federal,
state and local laws,  rules,  ordinances and regulations (as implemented and as
interpreted) governing the control,  removal,  storage,  transportation,  spill,
release or  discharge of hazardous or toxic  wastes,  substances  and  petroleum
products,  including  as provided  in the  provisions  of (a) the  Comprehensive
Environmental  Response,  Compensation  and Liability Act of 1980, as amended by
the Superfund Amendment and Reauthorization Act of 1986, and (b) the Solid Waste
Disposal  Act,  and (c) the Clean Water Act,  and (d) the Clean Air Act, and (e)
the Hazardous Materials  Transportation  Act, and (f) the Resource


                                       56
<PAGE>

Conservation  and  Recovery  Act of 1976,  and (g) the Federal  Water  Pollution
Control Act Amendments of 1972, and (h) the rules, regulations and ordinances of
the EPA, and any departments of health services,  regional water quality control
boards, state water resources control boards, and/or cities in which any of such
Borrower's assets are located.

                  9.1.34. "EPA" means the United States Environmental Protection
Agency or any other entity that succeeds to its responsibilities and powers.

                  9.1.35.  "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and as implemented and interpreted.

                  9.1.36.  "ERISA  Affiliate" means any company,  whether or not
incorporated,  which is considered a single  employer with Borrower under Titles
I, II and IV of ERISA.

                  9.1.37.  "Event of Default" means each of the events described
in Section 7.1.

                  9.1.38. "Facility" means any credit facility established under
Article 1.

                  9.1.39. "FCC" means the Federal  Communications  Commission or
any other entity or agency that succeeds to its responsibilities and powers.

                  9.1.40.  "Federal Communications Act" means the Communications
Act of 1934, as amended,  and as implemented  by the FCC and  interpreted by the
FCC or any court of competent jurisdiction.

                  9.1.1.   "Fixed   Charges"   means,   at  the   time   of  any
determination, the sum of the following items (without duplication) for TALK.COM
INC. and its subsidiaries (on a consolidated basis,  including Borrowers) during
the relevant four consecutive fiscal quarter period:

                           a.       The   amount   of   principal    and   other
                                    non-Interest  Expense contract payments paid
                                    or  required   to  be  paid  and   mandatory
                                    commitment  reductions on Funded Debt (i.e.,
                                    including  the  indebtedness  - - under  the
                                    Loan Documents) during such period, and ---

                           b.       Plus  Interest  Expense  during such period,
                                    and

                           c.       Plus  the  amount  of  non-financed  Capital
                                    Expenditures during such period.

                  9.1.41.  "FRB"  means the Board of  Governors  of the  Federal
Reserve   System  or  any  other   entity  or  agency   that   succeeds  to  its
responsibilities and powers.

                  9.1.42. "Funded Debt" means, at the time of any determination,
the  aggregate  principal  amount  of  indebtedness  of  TALK.COM  INC.  and its
subsidiaries (on a consolidated  basis,  including  Borrowers) for the following
(without duplication):


                                       57
<PAGE>

                           a.       Borrowed money  (including the  indebtedness
                                    under the Loan Documents,  but not including
                                    trade  indebtedness  permitted under Section
                                    5.2.b), and

                           b.       Installment  purchases  of real or  personal
                                    property, and

                           c.       Subordinated Indebtedness, and

                           d.       Capital Leases, and

                           e.       Deferred  purchase price in connection  with
                                    acquisitions, and

                           f.       Reimbursement  obligations  under letters of
                                    credit, and

                           g.       Any  indebtedness  or  contractual   payment
                                    obligation   that  is  not  paid  within  60
                                    calendar days of the due date therefor, and

                           h.       Any  indebtedness  evidenced by a promissory
                                    note, a debenture and/or an indenture, and

                           i.       Guaranties of  indebtedness  and obligations
                                    that would constitute  Funded Debt hereunder
                                    if  the  primary   obligor  thereof  were  a
                                    Borrower, and

                           j.       Indebtedness   otherwise   required   to  be
                                    included  as part  of  "Funded  Debt"  under
                                    Section 5.2.

                  9.1.43.  "GAAP" means generally accepted accounting principles
as set forth in the statements,  opinions and  pronouncements  of the Accounting
Principles Board of the American Institute of Certified Public  Accountants,  of
the  Financial   Accounting   Standards   Board  and/or  such  other  entity  as
Administrative  Agent may  reasonably  approve,  all as applied on a  consistent
basis as in effect from time to time.

                  9.1.44.  "Gross Profit Margin" means gross profit margin under
and defined in accordance with GAAP.

                  9.1.45.  "Guarantor"  means TALK.COM INC. and any other Person
subsequently  added as a guarantor under the Loan ocuments,  or any successor or
authorized assignee thereof.

                  9.1.46.  "Guaranty" means the guaranty agreement executed by a
Guarantor, as such agreement may be amended and modified from time to time.

                  9.1.47.  "Hazardous  Materials"  includes  (a) any  "hazardous
waste" as defined by the  Resource  Conservation  and  Recovery  Act of 1976 (42
U.S.C.  ss. 6901  et  seq.),  as  amended  from  time to time,  and  regulations
promulgated  thereunder;  or (b) any  "hazardous  substance"  as  defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42
U.S.C.  ss. 9601  et  seq.),  as  amended  from  time to time,  and  regulations
promulgated thereunder;  or (c) any other substance the use or presence of which
on, in,  under or above any real  property  ever  owned,


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<PAGE>

controlled  or used by Borrower is  similarly  regulated  or  prohibited  by any
federal, state or local law, rule, ordinance,  regulation or decree of any court
or governmental authority as a hazardous material.

                  9.1.48.   "Interest   Expense"  means,  at  the  time  of  any
determination, the amount of interest and other finance charges of TALK.COM INC.
and its subsidiaries (on a consolidated basis,  including Borrowers) required to
be charged as an expense under GAAP during the relevant four consecutive  fiscal
quarter period  (including the fees under Section 1.7 and any other such charges
with respect to any Funded  Debt).  For purposes of this  calculation,  interest
includes interest accrued under Capital Leases.

                  9.1.49.  "Interest Period" means (a) with respect to the Prime
Rate,  a period of one (1)  Business  Day,  and (b) with respect to the Adjusted
LIBO Rate, a period of 3 months duration commencing initially on the date of the
relevant Advance and ending 3 months thereafter and (after such initial Interest
Period)  commencing  on  the  day  immediately  following  the  last  day of the
preceding  Interest  Period  and  ending  on  the  corresponding  day  3  months
thereafter.

                  9.1.50.  "LD  Only  Services  Revenue"  means,  at the time of
measurement and for the relevant  period,  Revenue derived  exclusively  from LD
Only Subscribers  (including partition Revenue, but not including any other form
of wholesale Revenue).

                  9.1.51.  "LD  Only  Subscriber"  means a  Subscriber  who is a
Subscriber  of  Borrowers'  long  distance  telephone  services only but are not
Subscribers of Borrowers' local telephone services.

                  9.1.52.  "Lender" means,  individually and  collectively,  the
following:

                           a.       MCG Finance  Corporation  or any  successor,
                                    assignee,  participant,   pledgee  or  other
                                    transferee of such Lender hereunder, and

                           b.       MCG  Credit  Corporation  or any  successor,
                                    assignee,  participant,   pledgee  or  other
                                    transferee of such Lender hereunder, and

                           c.       Any other entity  subsequently  added hereto
                                    as a  Lender  hereunder  (either  as a  Term
                                    Lender  or  as  a  Line   Lender),   or  any
                                    successor,  assignee,  participant  or other
                                    transferee thereof.

                  9.1.53.  "Leverage  Ratio"  means a ratio of Funded Debt as of
the end of the relevant period to TTM-OCF for the relevant period.

                  9.1.54.   "LIBO  Rate"  has  the  meaning  set  forth  in  the
definition of "Adjusted LIBO Rate".

                  9.1.55.  "License"  means any  authorization,  construction or
other permit, consent, franchise, ordinance, registration, certificate, license,
call sign, frequency  designation,  agreement or other right filed with, granted
by, issued by or entered into with any Official Body.


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<PAGE>

                  9.1.56. "Lien" means any security interest,  mortgage, pledge,
hypothecation,  assignment, deposit arrangement, encumbrance, lien (statutory or
otherwise),  reversionary or reclamation interest, charge against or interest in
property to secure  payment of a debt or  performance  of an obligation or other
priority or preferential arrangement of any kind or nature whatsoever.

                  9.1.57.  "Line  Effective  Date"  means  the date on which the
conditions precedent for the effectiveness of the Line of Credit Facility as set
forth in Sections  2.1 and 2.2 have been  satisfied  by  Borrowers  or waived in
writing by Administrative Agent (at the direction of Line Lenders) in accordance
with the terms hereof.

                  9.1.58. "Line Effectiveness  Notification Date" means the date
on  which  Administrative  Agent  provides  written  notification  to  Borrowers
confirming  that the Line of Credit Facility has been syndicated and will become
available as set forth in Section 1.2 upon  satisfaction by Borrowers or written
waiver  by  Administrative  Agent  (at the  direction  of Line  Lenders)  of the
conditions precedent under Sections 2.1 and 2.2.

9.1.59.  "Line  Lender"  means a Lender who has issued a  Commitment  to Advance
funds under the Line of Credit  Facility or has otherwise  agreed to be a Lender
for purposes of the Line of Credit Facility.

                  9.1.60.  "Line of  Credit  Commitment"  means  the  Commitment
established pursuant to Sections 1.2 and 1.3.

                  9.1.61.  "Line of Credit  Commitment  Percentage"  means, with
respect to each Line Lender, that portion of the total Line of Credit Commitment
as to which such Lender is obligated.

                  9.1.62.  "Line of  Credit  Facility"  means the line of credit
Facility as described in Article 1.

                  9.1.63.  "Line of Credit  Maturity  Date" has the  meaning set
forth in Section 1.2.2.

                  9.1.64.  "Line of Credit  Note" means any Note  payable to the
order of a Lender  prepared in accordance with Section 1.2.4, as may be amended,
modified,  restated,  replaced,  supplemented,  extended or renewed from time to
time hereafter.

                  9.1.65. "LLC" means a limited liability company.

                  9.1.66.  "Loan"  means any loan or Advance of funds  under any
Facility as well as any other  credit  extended by  Administrative  Agent or any
Lender to any Borrower under this Agreement.

                  9.1.67. "Loan Documents" means this Agreement,  any Notes, the
Collateral   Security   Documents  and  any  other  documents,   agreements  and
certificates  entered into or delivered in  connection  herewith or therewith or
pursuant  hereto or thereto,  all as may be amended,  modified and  supplemented
from time to time.


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<PAGE>

                  9.1.68.   "Local   Authorities"   means,    individually   and
collectively,  the state and local  governmental  authorities  that  govern  the
activities of any Borrower.

                  9.1.69.  "Margin  Regulation"  has the  meaning  set  forth in
Section 3.17.

                  9.1.70.  "Margin  Stock" has the  meaning set forth in Section
3.17.

                  9.1.71. "Material Adverse Change" means any change that has or
causes or could  reasonably  be  expected  to have or cause a  Material  Adverse
Effect.

                  9.1.72.  "Material  Adverse  Effect"  means,  relative  to any
occurrence  of  whatever  nature  (including  any adverse  determination  in any
litigation,   arbitration,  or  governmental  investigation  or  proceeding),  a
material adverse change to, or, as the case may be, a materially  adverse effect
on:

                           a.       The business,  assets,  revenues,  financial
                                    condition,    operations,    Collateral   or
                                    prospects of  Borrowers  taken as a whole or
                                    of TALK.COM INC. AND ITS SUBSIDIARIES  taken
                                    as a whole; or

                           b.       The ability of Borrowers taken as a whole or
                                    of TALK.COM INC. AND ITS SUBSIDIARIES  taken
                                    as a whole  to  perform  any of its  payment
                                    obligations when due or to perform any other
                                    material    obligations   under   any   Loan
                                    Document; or

                           c.       The   rights,   remedies   or   benefits  of
                                    Administrative Agent or any Lender under any
                                    Loan Document.

                   9.1.73.  "Material  Contract"  has the  meaning  set forth in
Section 3.8.

                   9.1.74.  "MCG"  means MCG  Finance  Corporation,  a  Delaware
corporation,  or any  successor  or  assignee  thereof,  having an office at the
address  specified in the Notice  Section  hereof,  and which is  Administrative
Agent and a Lender hereunder at the time of execution hereof.

                   9.1.75.  "Notes" means,  individually and collectively,  each
promissory  note  delivered  to each Lender  pursuant to any Loan  Document  and
evidencing any indebtedness to such Lender under the Loan Documents (each as may
be amended, modified, supplemented, restated, extended, renewed or replaced from
time to time).

                   9.1.76.  "Obligations"  means  all  of the  indebtedness  and
obligations  (monetary  or  otherwise)  of any  Borrower  and any other  Obligor
arising  under  or  in  connection  with  any  Loan  Document  as  well  as  all
indebtedness  of any  Borrower  arising  under or in  connection  with any other
agreement between such Borrower and Administrative Agent or any Lender.

                   9.1.77.  "Obligor"  means each  Borrower or any other  Person
(other than Administrative Agent and Lenders) obligated under any Loan Document.


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<PAGE>

                   9.1.78.  "OCF" (or  "Operating  Cash Flow")  means EBITDA (as
defined in the definition thereof above).

                   9.1.79.  "Official Body" means any federal,  state, local, or
other  government  (or any political  subdivision,  agency,  authority,  bureau,
commission,  department  or  instrumentality  thereof) and any court,  tribunal,
grand jury or arbitrator, in each instance whether foreign or domestic.

                   9.1.80. "Organic Document" means, relative to any entity, its
certificate  and  articles  of  incorporation  or  organization,  its by-laws or
operating  agreements,  and all equityholder  agreements,  voting agreements and
similar  arrangements  applicable  to any of its  authorized  shares of  capital
stock,  its  partnership  interests  or its  member  interests,  and  any  other
arrangements  relating to the control or management of any such entity  (whether
existing as a corporation, a partnership, an LLC or otherwise).

                   9.1.81.  "Partition"  means an independent  long distance and
marketing  company or other direct  marketing agent of any Borrower that resells
and markets telecommunications products of any Borrower.

                   9.1.82.   "PBGC"   means  the   Pension   Benefits   Guaranty
Corporation or any other entity that succeeds to its responsibilities and powers
under ERISA.

                   9.1.83. "Permitted Acquisitions" has the meaning set forth in
Section 5.7.

                   9.1.84.  "Permitted  Guaranties" has the meaning set forth in
Section 5.3.

                   9.1.85. "Permitted Indebtedness" has the meaning set forth in
Section 5.2.

                   9.1.86.  "Permitted Investments" has the meaning set forth in
Section 5.7.

                   9.1.87.  "Permitted  Liens"  has the  meaning  set  forth  in
Section 5.5.

                   9.1.88.  "Permitted  Transfers"  has the meaning set forth in
Section 5.6.

                   9.1.89. "Person" means any natural person, corporation,  LLC,
partnership,  firm, association,  trust, government,  governmental agency or any
other entity, whether acting in an individual, fiduciary or other capacity.

                   9.1.90.  "Plan" means any pension  benefit or welfare benefit
plan as defined in Sections 3(1), (2) or (3) of ERISA covering  employees of any
Borrower or any ERISA Affiliate of any Borrower.

                   9.1.91. "Pledge and Security Agreements" means,  individually
and collectively,  each pledge and security agreement relating to a pledge of an
equity  interest  in  an  enterprise  (all  as  may  be  amended,  modified  and
supplemented  from time to time)  required to be executed and delivered in favor
of Administrative Agent pursuant to the Loan Documents.


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<PAGE>

                   9.1.92.   "Portion"   means  a  designated   portion  of  the
indebtedness  hereunder as to which a specified Rate Index (and a  corresponding
Rate Margin) has been selected or deemed to be applicable.

                   9.1.93.  "Prime  Rate" means a variable  rate of interest per
annum equal to the rate of interest from time to time  published by the Board of
Governors of the Federal Reserve System in Federal Reserve  statistical  release
H.15 (519) entitled  "Selected  Interest Rates" as the Bank prime loan rate. The
Prime Rate also includes rates  published in any successor  publications  of the
Federal Reserve System reporting the Bank prime loan rate or its equivalent.  In
the event that the Board of Governors of the Federal  Reserve  System  ceases to
publish a Bank prime loan rate or equivalent, the term "Prime Rate" shall mean a
variable  rate of interest  per annum equal to the highest of the "prime  rate,"
"reference   rate,"  "base  rate"  or  other   similar  rate  as  determined  by
Administrative  Agent announced from time to time by any of First Union National
Bank,  Bank of America,  The Chase  Manhattan Bank or Citibank,  N.A. Such term,
however,  does not necessarily mean  Administrative  Agent's best or lowest rate
available.

                   9.1.94. "Pro Rata" means from or to each Lender in proportion
to its Commitment Percentage.

                   9.1.95.  "Rate  Index" has the  meaning set forth in Sections
1.1.5 and 1.2.5.

                   9.1.96.  "Rate  Margin" has the meaning set forth in Sections
1.1.5 and 1.2.5.

                   9.1.97. "Required Lenders" means Lenders holding at least 75%
of the aggregate  outstanding  principal amount of the Loans (or, if no Loans at
the time of such  determination  are  outstanding,  then Lenders  obligated with
respect to at least 75% of the Commitments).

                   9.1.98. "Reserve Percentage" has the meaning set forth in the
definition of "Adjusted LIBO Rate".

                   9.1.99.   "Revenue"   means   revenue  of  Borrowers   (on  a
consolidated basis) as determined in accordance with GAAP.

                   9.1.100.  "SEC" means the Securities and Exchange  Commission
or any other entity that succeeds to its responsibilities and powers.

                   9.1.101.   "Securities   Acts"   means,   collectively,   the
Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended,
and as  implemented  by the  SEC and  interpreted  by the  SEC or any  court  of
competent jurisdiction.

                   9.1.102.  "Security  Agreements"  means,  collectively,  each
security  agreement (as may be amended,  modified and supplemented  from time to
time)  required to be executed and  delivered in favor of  Administrative  Agent
pursuant to Article 2, and any other security agreement required or delivered in
connection  with  the  Loan  Documents,   including  any  intellectual  property
assignments or security  agreements required to be delivered pursuant to Article
2.


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<PAGE>

                   9.1.103. "Settlement Date" means, with respect to any Advance
hereunder, the date on which funds are advanced by Administrative Agent.

                   9.1.104.  "State  Communications  Acts" means the laws of any
state in  which  any  Borrower  does  business  that  govern  the  provision  of
communications  services  offered or performed by any Borrower within such state
and are  applicable  to such  Borrower,  as  amended  from time to time,  and as
implemented by the rules, regulations, and orders of the applicable State PUC or
any court of competent jurisdiction.

                   9.1.105.  "State PUC" means the public utility  commission or
other regulatory agency of any state in which any Borrower does business that is
vested with jurisdiction over such Borrower and over State  Communications  Acts
or the provision of communication services within such state.

                   9.1.106.  "Subordinated  Indebtedness" means all indebtedness
and  monetary   obligations  of  any  Borrower  or  any  Guarantor  (other  than
indebtedness in favor of Administrative  Agent or any Lender or indebtedness and
obligations  expressly excluded  therefrom by Required  Lenders),  including all
indebtedness  treated  or  defined  as  "Subordinated  Indebtedness"  under  any
separate  Subordination  Agreement  by and  among  a  Borrower  or a  Guarantor,
Administrative Agent and another Person. Notwithstanding the foregoing, the term
"Subordinated Indebtedness" (unless Required Lenders otherwise require) does not
include  indebtedness  permitted  under Section 5.2.a or 5.2.b or (to the extent
consistent with Section 5.5.b) under Section 5.2.c or 5.2.d.

                   9.1.107.  "Subscriber"  means  any  Person  who  is a  paying
customer or subscriber of a Borrower's  telecommunications  services, whether as
an LD Only Subscriber or a Bundled Subscriber.

                   9.1.108. "Subscriber Acquisition Costs" means, at the time of
measurement, the aggregate marketing,  telemarketing and other acquisition costs
associated with acquiring new Subscribers  (including,  any commissions  paid to
third parties) during the relevant fiscal quarter divided by the total number of
net new Subscribers (i.e., net of attrition) added during such fiscal quarter.

                   9.1.109.  "Subsidiary"  of any  Person  or  entity  means any
Person as to which such other Person or entity (a) directly or indirectly  owns,
controls or holds 25% or more of the outstanding  beneficial  interest or (b) is
otherwise  required  in  accordance  with  GAAP  to be  considered  as part of a
consolidated organization.

                   9.1.110.  "Talk.com  Inc." means  Talk.com  Inc.,  a Delaware
corporation.

                   9.1.111.  "Tariff" means any tariff, rate schedule or similar
document that is either (a) required by law or applicable regulation to be filed
with the FCC or a State PUC or (b) permitted by law or applicable  regulation so
to be filed and actually filed by any Borrower.

                   9.1.112.  "Term  Lender"  means a  Lender  who has  issued  a
Commitment to Advance funds or has otherwise  agreed to be a Lender for purposes
of the Term Loan Facility.

                   9.1.113.   "Term  Loan   Commitment"   means  the  Commitment
established pursuant to Section 1.1 and Section 1.3.


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<PAGE>

                   9.1.114.   "Term  Loan  Commitment  Percentage"  means,  with
respect to each  Lender,  that portion of the total Term Loan  Commitment  as to
which such Lender is obligated.

                   9.1.115. "Term Loan Facility" means the term loan Facility as
described in Article 1.

                   9.1.116.  "Term Loan Maturity Date" has the meaning set forth
in Section 1.1.2.

                   9.1.117. "Term Loan Note" means any Note payable to the order
of a Lender  prepared  in  accordance  with  Section  1.1.4,  as may be amended,
modified,  restated,  replaced,  supplemented,  extended or renewed from time to
time hereafter.

                   9.1.2.   "Total   Charges"   means,   at  the   time  of  any
determination, the sum of the following items (without duplication) for TALK.COM
INC. and its subsidiaries (on a consolidated basis,  including Borrowers) during
the immediately preceding four consecutive fiscal quarter period:

                           a. The amount of Fixed  Charges  during such  period,
and

                           b. Plus the  amount of all  federal,  state and local
taxes paid during such period.

Notwithstanding  the  foregoing,  payments  by  TALK.COM  INC.  of up to $66.857
million of principal  and accrued  interest  during 2002  relating to its 4 1/2%
Convertible  Subordinated  Notes  maturing  September 15, 2002 (as  Subordinated
Notes exists as of the Closing Date) shall not be included in the calculation of
Total Charges.  Further notwithstanding the foregoing,  with respect to payments
by TALK.COM INC. to AoL under promissory notes issued by TALK.COM INC.  pursuant
to the AoL Investment  Agreements as consideration for "make whole"  obligations
or mandatory  redemptions  of stock or warrants of TALK.COM  INC.  owned by AoL,
such payments of principal and interest thereunder also shall not be included in
the  calculation of Total Charges IF, at the time of issuance of such promissory
notes,  the amount payable in respect of such obligation does not exceed the sum
of (i) the unused  portion of the  Available  Credit  Portion (to the extent the
Line of Credit  Facility is effective)  and (ii) cash and Cash  Equivalents  (as
defined in Section 5.7(a)) held by TALK.COM INC. and Borrowers.

                  9.1.118.  "TTM-OCF"  means  EBITDA  for  Borrowers  during the
immediately preceding 4 consecutive fiscal quarter periods.  Notwithstanding the
foregoing,  for purposes of any  calculation of such amount made between January
1, 2001 and December 31, 2001 with respect to  performance  by Borrowers  during
such period, then TTM-OCF shall mean year-to-date EBITDA annualized.

                  9.1.119.  "UCC" means the Uniform Commercial Code as in effect
in the applicable jurisdiction.

                  9.1.120. "Warrants" has the meaning set forth in Section 1.7.

         9.2.     Rules of Interpretation and Construction.

                  9.2.1.  Plural;  Gender.  Unless otherwise expressly stated or
the context clearly indicates a different intention, then (as may be appropriate
in the  particular  context)  (a) a  singular  number  or noun  used in any Loan
Document includes the plural, and a plural number or noun


                                       65
<PAGE>

includes  the  singular,  and (b) the use of the  masculine,  feminine or neuter
gender pronouns in any Loan Document includes each and all genders.

                  9.2.2.  Section  and  Schedule  References.  Unless  otherwise
expressly stated or the context clearly  indicates a different  intention,  then
all references to sections,  paragraphs,  clauses, schedules and exhibits in any
Loan  Document are to be  interpreted  as  references  to sections,  paragraphs,
clauses, schedules and exhibits of such Loan Document (rather than of some other
Loan Document). In addition, the words "herein", "hereof", "hereunder", "hereto"
and  other  words of  similar  import  in any Loan  Document  refer to such Loan
Document as a whole, and not to any particular  section,  paragraph or clause in
such Loan Document.

                  9.2.3. Titles and Headings.  Unless otherwise expressly stated
or the context clearly indicates a different intention,  then the various titles
and headings in the Loan Documents are inserted for convenience  only and do not
affect the meaning or  interpretation  of such Loan  Document  or any  provision
thereof.

                  9.2.4.  "Including"  and  "Among  Other"  References.   Unless
otherwise  expressly  stated  or  the  context  clearly  indicates  a  different
intention,  then all references in the Loan  Documents to phrases  containing or
list preceded by the words "include",  "includes",  "including",  "among other",
"among  other  things" or other  words or  phrases  of similar  import are to be
interpreted to mean such "without  limitation"  (whether or not such  additional
phrase is actually  added).  In other words,  such words and phrases  connote an
illustrative example or list rather than an exclusive example or list.

                  9.2.5.  "Shall",  "Will",  "Must", "Can" and "May" References.
Unless otherwise  expressly stated or the context clearly  indicates a different
intention,  then all  references  in the Loan  Documents  to the words  "shall",
"will" and "must"  (including,  when modified by "not") are to be interpreted to
indicate  mandatory actions or restrictions (as applicable),  and all references
in the Loan  Documents to the words "may" and "can"  (unless  modified by "not")
are to be interpreted to indicate permissive actions.

                  9.2.6.  Time of Day  References.  Unless  otherwise  expressly
stated or the context clearly indicates a different intention,  then all time of
day  references in and  restrictions  imposed under the Loan Documents are to be
calculated using Eastern Time.

                  9.2.7.  "Knowledge" of a Person.  Unless  otherwise  expressly
stated or the context  clearly  indicates a  different  intention,  then (a) all
references to the "knowledge," "awareness" or "belief" of any Person that is not
a natural  person are to be  interpreted  to mean the  knowledge,  awareness  or
belief of senior and  executive  management  of such Person (and  including  the
knowledge or awareness of managers of limited  liability  companies  and general
partners  of  partnerships),  and  (b)  all  representations  qualified  by  the
"knowledge,"  "awareness"  or "belief" of a Person are to be interpreted to mean
(unless a different  standard  is  specified)  that such Person has  conducted a
commercially   reasonable  inquiry  and  investigation   prior  to  making  such
representation.

                  9.2.8.  Successors  and Assigns.  Unless  otherwise  expressly
stated  or the  context  clearly  indicates  a  different  intention,  then  all
references to any Person  (including any Official Body)


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<PAGE>

in any Loan Document are to be  interpreted  as including (as  applicable)  such
Person's  successors,  assigns,  estate,  heirs,  executors,  administrators and
personal  representatives.  Notwithstanding the foregoing,  no Borrower or other
Obligor may assign or delegate  any Loan  Document  (or any right or  obligation
thereunder)  except to the extent  expressly  permitted  hereunder or under such
other Loan Document.

                  9.2.9. Modifications to Documents.  Unless otherwise expressly
stated  or the  context  clearly  indicates  a  different  intention,  then  all
references  to any Loan  Document or other  agreement or  instrument in any Loan
Document  are  to  be  interpreted  as  including  all   extensions,   renewals,
amendments,  supplements,  substitutions,  replacements  and waivers thereto and
thereof from time to time.

                  9.2.10.  References to Laws and Regulations.  Unless otherwise
expressly stated or the context clearly  indicates a different  intention,  then
all  references  to any  law,  regulation,  rule,  order or  policy  in any Loan
Document  are to be  interpreted  references  to such law,  regulation,  rule or
policy (a) as implemented and  interpreted  from time to time by Official Bodies
with  appropriate   jurisdiction  therefor,   and  (b)  as  amended,   modified,
supplemented, replaced and repealed from time to time.

                  9.2.11.  Financial  and  Accounting  Terms.  Unless  otherwise
expressly  stated  or the  context  clearly  indicates  a  different  intention,
financial and accounting terms used in the foregoing definitions or elsewhere in
the Loan Documents shall be defined and determined in accordance with GAAP.

                  9.2.12.  Conflicts  Among  Loan  Documents.  Unless  otherwise
expressly stated or the context clearly  indicates a different  intention,  then
any  irreconcilable  conflict between the terms and conditions of this Agreement
and the terms and  conditions of any other Loan  Document  (other than a Note or
any  warrant  issued to any  Lender)  are to be resolved by having the terms and
conditions of this Agreement govern.

                  9.2.13.  Independence of Covenants and Defaults. All covenants
and defaults contained in the Loan Documents shall be given independent  effect.
If a particular action or condition is not permitted by any covenant in the Loan
Documents,  then the fact that such action or condition would be permitted by an
exception to (or would otherwise be within the limitations of) another  covenant
in the Loan  Documents  shall not avoid the occurrence or existence of a Default
if such action is taken or if such condition exists.

                  9.2.14. Administrative Agent. References in this Agreement and
the  other  Loan  Documents  to  Administrative   Agent  shall  mean  either  to
Administrative  Agent in such capacity or (where  appropriate) to Administrative
Agent for the benefit of Lenders.  Unless otherwise  indicated in this Agreement
or another Loan  Document,  all  Collateral  held and all  payments  received by
Administrative Agent are deemed to be held and received,  respectively,  for the
benefit of Lenders.

                           ARTICLE 10: MISCELLANEOUS

         10.1.    Indemnification,  Reliance  and  Assumption  of Risk.  Without
limiting any other indemnification in any Loan Document,  each Borrower (jointly
and severally) hereby agrees to defend


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<PAGE>

Administrative Agent and each Lender (and their directors,  officers, employees,
agents,  counsels and Affiliates)  from, and hold each of them harmless against,
any and all losses, liabilities, claims, damages, interests, judgments, or costs
(including reasonable fees and disbursements of counsel) incurred by any of them
arising out of or in any way connected with any Loan Document, except for losses
resulting  directly and  exclusively  from such  Person's own gross  negligence,
willful  misconduct  or fraud (or the gross  negligence,  willful  misconduct or
fraud of any director,  officer or employee of such Person).  In addition,  each
Borrower will  reimburse and (jointly and  severally)  indemnify  Administrative
Agent and each Lender for all costs and losses resulting from the following: (1)
any failure or refusal by any  Borrower or by any  Affiliate  of any Borrower to
provide any requested  assistance or cooperation in connection  with any attempt
by  Administrative  Agent or any Lender to liquidate any Collateral in the event
of any Event of Default and/or any attempt by Administrative Agent or any Lender
to otherwise exercise its rights hereunder, and (2) any misrepresentation, gross
negligence, fraud or willful misconduct by any Borrower (or any of its employees
or  officers),  or any other  person or entity  pledging  Collateral  hereunder.
Moreover, with respect to any Advance Request or other communication between any
Borrower and Administrative Agent and/or Lenders hereunder and all other matters
and  transactions  in connection  therewith,  each Borrower  hereby  irrevocably
authorizes  Administrative  Agent and each Lender to accept, rely upon, act upon
and comply with any verbal or written instructions,  requests, confirmations and
orders of any  Authorized  Officer of any Borrower.  Each Borrower  acknowledges
that the transmissions of any such instruction,  request, confirmation, order or
other communication involves the possibility of errors, omissions,  mistakes and
discrepancies,  and each  Borrower  agrees to adopt such  internal  measures and
operational procedures to protect its interest. By reason thereof, each Borrower
hereby assumes all risk of loss and  responsibility  for -- and hereby  releases
and  discharges  Administrative  Agent and each  Lender from any and all risk of
loss and  responsibility  for, and agrees to indemnify,  reimburse on demand and
hold  Administrative  Agent and each Lender harmless from -- any and all claims,
actions, damages, losses, liability and costs by reason of or in any way related
to (a)  Administrative  Agent's or any  Lender's  accepting,  relying and acting
upon, complying with or observing any such instructions, requests, confirmations
or orders  from or on behalf of any such  Authorized  Officer,  and (b) any such
errors, omissions, mistakes and discrepancies by (or otherwise resulting from or
attributable  to the  actions or  inactions  of) any  Authorized  Officer or any
Borrower;  provided,  however,  no  Borrower  assumes  hereby  the  risk  of any
foreseeable actual loss resulting  directly and exclusively from  Administrative
Agent's or any Lender's own gross negligence,  fraud or willful misconduct. Each
Borrower's obligations provided for in this Section will survive any termination
of this Agreement, and the repayment of the outstanding balances hereunder.

         10.2.    Assignments  and  Participations.  No  Loan  Document  may  be
assigned (in whole or in part) by any Borrower without the prior written consent
of each  Lender.  Notwithstanding  any  other  provision  of any Loan  Document,
without receiving any consent of any Borrower,  each Lender at any time and from
time to time may syndicate,  participate or otherwise transfer, pledge or assign
all (or any  proportionate  part of) its rights and obligations under any of the
Loan Documents (or any indebtedness evidenced thereby) to any Person;  PROVIDED,
HOWEVER  that so long as no  Default  or Event of Default  has  occurred  and is
continuing under the Loan Documents,  then no Lender may syndicate,  participate
or assign  its  rights  under the Loan  Documents  to a Person  that is  engaged
primarily in the business of  providing  or marketing of  telecommunications  or
Internet  services without the prior written consent of Borrowers (which consent
shall not be unreasonably  withheld,


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<PAGE>

delayed  or  conditioned).  Lenders  (through  Administrative  Agent)  will make
reasonable  efforts  to  notify  Borrowers  of any  such  absolute  transfer  or
assignment within twenty (20) Business Days thereafter; however, a failure to so
notify  will in no way impair any rights of  Administrative  Agent or Lenders or
any  participant,  transferee  or  assignee.  Upon  execution  and  delivery  to
Administrative Agent of an appropriate instrument between any such transferee or
assignee  and an  assigning  Lender  and  payment  by the  assigning  Lender  to
Administrative  Agent a $1,500  assignment fee, then such transferee or assignee
will become a Lender  party to this  Agreement  and will have all the rights and
obligations  of a Lender  as set  forth in such  instrument.  At  Administrative
Agent's  request,  each  Borrower will execute (or  re-execute)  and deliver (or
otherwise  obtain) any  documents  necessary  to reflect or  implement  any such
participation,  transfer or assignment (including  replacement  promissory notes
and any requested  letters  authorizing  such  transferee or assignee to rely on
existing  certificates  and opinions) and will otherwise  fully cooperate in any
such syndication  process.  Attached as Exhibit 10.2 is a form of Assignment and
Assumption Agreement,  a substantially similar version of which is to be used in
connection with assignment of Lenders hereunder.

         10.3.    No Waiver; Delay. To be effective,  any waiver by Lenders must
be expressed in a writing executed by Administrative Agent (with the approval of
Required  Lenders).  Once a Default occurs under the Loan  Documents,  then such
Default  will  continue  to  exist  until it  either  is  cured  (to the  extent
specifically  permitted) in accordance  with the Loan  Documents or is otherwise
expressly waived by Lenders (in their sole and absolute  discretion) in writing;
and once an Event of Default occurs under the Loan Documents, then such Event of
Default will continue to exist until it is expressly waived by Lenders (in their
sole and absolute  discretion) in writing. If Administrative Agent or any Lender
waives any power, right or remedy arising hereunder or under any applicable law,
then such waiver will not be deemed to be a waiver (a) upon the later occurrence
or recurrence  of any events giving rise to the earlier  waiver or (b) as to any
other  Obligor.  No  failure or delay by  Administrative  Agent or any Lender to
insist upon the strict performance of any term, condition, covenant or agreement
of any of the  Loan  Documents,  or to  exercise  any  right,  power  or  remedy
hereunder, will constitute a waiver of compliance with any such term, condition,
covenant  or  agreement,  or  preclude  Administrative  Agent or any Lender from
exercising  any such  right,  power,  or remedy at any later  time or times.  By
accepting  payment after the due date of any amount payable under this Agreement
or any other Loan Document,  neither Administrative Agent nor any Lender will be
deemed to waive the right either to require prompt payment when due of all other
amounts payable under this Agreement or any other Loan Document or to declare an
Event of Default for  failure to effect  such  prompt  payment of any such other
amount.  The remedies  provided  herein are cumulative and not exclusive of each
other, the remedies provided by law, and the remedies provided by the other Loan
Documents.

         10.4.    Modifications  and Amendments.  Except as otherwise  expressly
provided in this  Agreement,  no  modification or amendment to any Loan Document
will be effective  unless made in a writing  signed by  appropriate  officers of
Administrative  Agent  (with  the  consent  of the  Required  Lenders)  and each
Borrower.   Notwithstanding   the  foregoing,   to  the  extent  that  any  such
modification or amendment attempts to implement any of the following,  then such
amendment or modification must be approved by all Lenders:

         a.       Increase the Commitment Percentage of any Lender, or


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<PAGE>

         b.       Alter any provision that effectively reduces the interest rate
                  applicable to the Loans, or

         c.       Reduce the  amount of any fees due to  Lenders  under any Loan
                  Document (other than fees payable to the Administrative  Agent
                  for its own account), or

         d.       Reduce  the  amount of any  payment  (whether  for  principal,
                  interest  or  any  fee,  other  than  a  fee  payable  to  the
                  Administrative Agent for its own account), or

         e.       Postpone or extend the  Maturity  Date for any Facility or any
                  scheduled payment date (whether for principal, interest or any
                  fee, other than a fee payable to the Administrative  Agent for
                  its own account), or

         f.       Change the  definition of "Pro Rata" or "Required  Lenders" or
                  otherwise  change the number or percentage of Lenders that are
                  required  to take or approve  (or  direct  the  Administrative
                  Agent to take) any action under the Loan Documents, or

         g.       Release or discharge  any  Borrower as a "Borrower"  under the
                  Loan  Documents  or permit any  Borrower  to assign to another
                  Person  any  of its  rights  or  obligations  under  the  Loan
                  Documents, or

         h.       Release  all or any  part of any  guaranty  of any part of the
                  Indebtedness under the Loan Documents or any security interest
                  in or pledge of any  Collateral  (except as otherwise  already
                  expressly authorized under the Loan Documents), or

         i.       Amend this Section.

In  addition,  no  provision  of any Loan  Document  relating  to the  rights or
obligations of the  Administrative  Agent may be modified or amended without the
consent of the Administrative Agent.

         10.5.    Disclosure of  Information  to Third  Parties.  Administrative
Agent and each Lender will employ reasonable procedures to treat as confidential
all  non-public  information  delivered to  Administrative  Agent or such Lender
pursuant to the Loan Documents concerning the performance,  operations,  assets,
structure and business  plans of Borrowers  and/or  TALK.COM INC. While other or
different confidentiality  procedures may be employed by Administrative Agent or
any Lender,  the actual  procedures  employed by  Administrative  Agent and each
Lender for this purpose will be conclusively deemed to be reasonable if they are
at least as protective of such information as the procedures  generally employed
by  Administrative  Agent and such Lender to safeguard  the  confidentiality  of
Administrative    Agent's   and   Lenders'   own    confidential    information.
Notwithstanding the foregoing, Administrative Agent and each Lender may disclose
any  information  concerning  any  Borrower  in  Administrative  Agent's or such
Lender's   possession   from  time  to  time  (a)  to  permitted   participants,
transferees,   assignees,   pledgees  and   investors   (including   prospective
participants,  transferees, assignees, pledgees and investors), but subject to a
reasonable  confidentiality  agreement  regarding  any  non-public  confidential
information  thereby  disclosed,   and  (b)  in  response  to  credit  inquiries
consistent  with  general  banking  practices,  and (c) to any  federal or state
regulator  of


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<PAGE>

Administrative  Agent or such Lender, and (d) to Administrative  Agent's or such
Lender's Affiliates,  employees, legal counsel, appraisers,  accountants, agents
and investors who have an  obligation  to maintain the  confidentiality  of such
information,  and (e) to any Person pursuant to compulsory judicial process, and
(f) to any judicial or arbitration  forum in connection  with enforcing the Loan
Documents  or  defending  any  action  based  upon  the  Loan  Documents  or the
relationship between  Administrative Agent,  Lenders, and Borrowers,  and (g) to
any other Person with respect to the public or non-confidential  portions of any
such  information.  If  Administrative  Agent  or any  Lender  believes  (in its
reasonable determination) that it is required in the course of an administrative
or judicial  proceeding to disclose any such non-public  information,  then such
Person (if practical and not prohibited by such  administrative or judicial body
or by applicable  law) shall give such Borrower or Talk.com Inc. (as applicable)
notice  thereof  so  that  it may  seek a  protective  order  and/or  may  waive
compliance with these confidentiality provisions. Moreover, Administrative Agent
and each Lender (without any compensation,  remuneration or notice to Borrowers)
may also include operational and performance and structural information and data
relating to  Borrowers  in  compilations,  reports and data bases  assembled  by
Administrative  Agent or such Lender (or their  Affiliates) and used to conduct,
support,  assist in and validate  portfolio,  industry  and credit  research and
analysis  for  itself  and  other  Persons;  provided,   however,  that  neither
Administrative  Agent nor any Lender may thereby  disclose to other  Persons any
information  relating to Borrowers in a manner that is attributable to Borrowers
unless (1) such  disclosure is permitted  under the standards  outlined above in
this  Section or (2)  Borrowers  otherwise  separately  consent  thereto  (which
consent may not be unreasonably withheld).

         10.6.    Binding Effect and Governing Law. This Agreement and the other
Loan  Documents have been delivered by Borrowers and the other Obligors and have
been received by  Administrative  Agent in the  Commonwealth  of Virginia.  This
Agreement and all documents executed hereunder are binding upon and inure to the
benefit of the parties hereto and their respective  successors and assigns. This
Agreement  and  all  documents  executed  hereunder  are  governed  as to  their
validity,   interpretation,   construction   and  effect  by  the  laws  of  the
Commonwealth of Virginia (without giving effect to the conflicts of law rules of
Virginia).

         10.7.    Notices.  Any  notice,  request,   consent,  waiver  or  other
communication  required  or  permitted  under  or in  connection  with  the Loan
Documents  will  be  deemed  satisfactorily  given  if it is in  writing  and is
delivered either personally to the addressee  thereof,  or by prepaid registered
or certified U.S. mail (return receipt requested), or by a nationally recognized
commercial  courier  service  with  next-day  delivery  charges  prepaid,  or by
telegraph,  or by facsimile (voice confirmed),  or by any other reasonable means
of personal delivery to the party entitled thereto at its respective address set
forth below:

         If to any Borrower         [Party Entitled to Notice]
         or its Affiliates:         c/o Talk.com Holding Corp.
         -----------------          6805 Route 202
                                    New Hope, PA  18938
                                    Attention:     Aloysius T. Lawn, IV, Esquire
                                    Facsimile:     (215) 862-1960


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<PAGE>

         If to Administrative:      MCG Finance Corporation
         Agent or Lenders:          1100 Wilson Boulevard, Suite 800
                                    Arlington, VA  22209
                                    Attention:       Loan Administration
                                    Facsimile:       (703) 247-7505

Any party to a Loan  Document  may change its  address or  facsimile  number for
notice  purposes  by giving  notice  thereof  to the other  parties to such Loan
Document in accordance with this Section, provided that such change shall not be
effective  until 2 calendar  days after notice of such change.  All such notices
and other communications will be deemed given and effective (a) if by mail, then
upon  actual  receipt  or 5  calendar  days  after  mailing  as  provided  above
(whichever is earlier), or (b) if by facsimile, then upon successful transmittal
to such party's  designated  number,  or (c) if by  telegraph,  then upon actual
receipt or 2 Business Days after delivery to the telegraph company (whichever is
earlier),  or (d) if by nationally  recognized  commercial courier service, then
upon actual  receipt or 2 Business  Days after  delivery to the courier  service
(whichever is earlier), or (e) if otherwise delivered, then upon actual receipt.
For  any  and  all  purposes  related  to  giving  and  receiving   notices  and
communications  between any Borrower and Administrative  Agent and Lenders under
any Loan Document,  each Borrower hereby irrevocably  appoints Talk Holding (and
its  Authorized  Officers)  as its agent to whom  Administrative  Agent and each
Lender may give and from whom  Administrative  Agent and each Lender may receive
all such notices and communications, and Administrative Agent and each Lender is
entitled to rely upon (and treat as being properly  authorized by Borrowers) any
verbal or written notices or communications  purportedly  received from (or that
Administrative  Agent or such Lender believes in good faith to be received from)
such Authorized Officer.

         10.8.    Relationship with Prior Agreements.  This Agreement completely
and fully  supersedes  all oral  agreements  and all  other  and  prior  written
agreements  by and among  Borrowers  and  Administrative  Agent  and any  Lender
concerning the terms and conditions of this credit arrangement.

         10.9.    Severability.  If  fulfillment  of  any  provision  of or  any
transaction related to any Loan Document at the time performance is due involves
transcending  the limit of validity  prescribed  by  applicable  law,  then ipso
facto,  the  obligation  to be  fulfilled  shall be reduced to the limit of such
validity.  If any  clause  or  provision  of this  Agreement  operates  or would
prospectively operate to invalidate this Agreement or any other Loan Document in
whole or in part,  then such clause or  provision  only shall be void (as though
not contained  herein or therein),  and the remainder of this  Agreement or such
other  Loan  Document  shall  remain  operative  and in full  force and  effect;
provided,  however, if any such clause or provision pertains to the repayment of
any  indebtedness  hereunder,  then the occurrence of any such invalidity  shall
entitle Lenders (in their sole and absolute  discretion) to demand the immediate
payment  of  the  entire  outstanding  indebtedness  under  the  Loan  Documents
(inclusive of all interest, fees and expenses).

         10.10.   Termination  and Survival.  All  representations,  warranties,
covenants and other agreements of any Obligor  contained in any Loan Document or
any other  documentation  required  thereunder  will survive the  execution  and
delivery of the Loan  Documents  and the funding of the Advances  hereunder  and
will continue in full force and effect until  terminated in accordance with this


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<PAGE>

Agreement.  Upon (a) indefeasible  receipt by Administrative Agent of the entire
indebtedness and all other amounts then due or owing to Administrative  Agent or
any Lender under the Loan Documents (without any condition,  deduction,  offset,
netting,   counterclaim   or  reservation   of  rights),   and  (b)  receipt  by
Administrative  Agent of an  instruction  from Borrowers to terminate and cancel
the Loan Documents, all Commitments and all Facilities thereunder (together with
an acknowledgment that neither Administrative Agent nor any Lender will have any
further  obligations  or  liabilities  under  or in  connection  with  any  Loan
Document),  then  Administrative  Agent (at the  written  request and expense of
Borrowers) will terminate and cancel all Loan Documents (other than the waivers,
reinstatement rights, and reimbursement and indemnification protections in favor
of  Administrative  Agent  and  each  Lender  under  the Loan  Documents,  which
provisions shall survive any such termination of the Loan Documents).

         10.11.   Reinstatement.   To  the  maximum  extent  not  prohibited  by
applicable   law,  this   Agreement  and  the  other  Loan  Documents  (and  the
indebtedness  hereunder and  Collateral  therefor)  will be  reinstated  and the
indebtedness  correspondingly  increased (as though such payment(s) had not been
made) if at any time any amount received by  Administrative  Agent or any Lender
in respect of any Loan  Document is  rescinded  or must  otherwise  be restored,
refunded or returned by  Administrative  Agent or such Lender to Borrower or any
other Person (a) upon or as a result of the insolvency, bankruptcy, dissolution,
liquidation or  reorganization  of any Borrower or any other Person, or (b) upon
or as a result of the  appointment  of any  receiver,  intervenor,  conservator,
trustee or similar  official  for any  Borrower  or any other  Person or for any
substantial  part of the assets of any Borrower or any other Person,  or (c) for
any other reason.

         10.12.   Counterparts.  This Agreement may be executed in any number of
counterparts  with the same effect as if all the signatures on such counterparts
appeared on one document. Each such counterpart will be deemed to be an original
but all counterparts together will constitute one and the same instrument.

         10.13.   Waiver of Suretyship Defenses. Each Borrower hereby waives any
and all defenses and rights of discharge  based upon suretyship or impairment of
collateral  (including  lack of attachment or perfection  with respect  thereto)
that it may now have or may  hereafter  acquire with  respect to  Administrative
Agent or any Lender or any of its obligations hereunder, under any Loan Document
or under any other  agreement that it may have or may hereafter  enter into with
Administrative Agent or any Lender.

         10.14.   WAIVER OF  LIABILITY.  Each  Borrower  (a) agrees that neither
Administrative  Agent  nor any  Lender  (nor any of their  directors,  officers,
employees or agents) shall have any liability to any Borrower  (whether sounding
in tort,  contract or otherwise) for losses or costs suffered or incurred by any
borrower  in  connection  with  or  in  any  way  related  to  the  transactions
contemplated or the relationship  established by any Loan Document,  or any act,
omission or event  occurring in  connection  herewith or  therewith,  except for
foreseeable actual losses resulting directly from Administrative Agent's or such
lender's own gross negligence,  willful misconduct or fraud (including the gross
negligence,   willful  misconduct  or  fraud  of  its  directors,  officers  and
employees) and (b) waives, releases and agrees not to sue upon any claim against
administrative agent or any lender (or their directors,  officers,  employees or
agents) whether sounding in tort,  contract or otherwise,  except for claims for
foreseeable actual losses resulting directly from Administrative Agent's or such
lender's own gross negligence,  willful misconduct or fraud (including the gross
negligence, willful


                                       73
<PAGE>

misconduct or fraud of its directors, officers and employees). Moreover, whether
or not such  damages  are  related  to a claim  that is  subject  to the  waiver
effected   above  and  whether  or  not  such  waiver  is   effective,   neither
Administrative Agent nor any Lender (nor their directors, officers, employees or
agents)  shall have any  liability  with  respect to (and each  Borrower  hereby
waives,  releases  and  agrees  not to sue upon  any  claim  for)  any  special,
indirect,  consequential,  punitive or  non-foreseeable  damages suffered by any
Borrower  in  connection  with  or  in  any  way  related  to  the  transactions
contemplated or the relationship  established by any Loan Document,  or any act,
omission or event occurring in connection herewith or therewith.

         10.15.   FORUM SELECTION;  CONSENT TO  JURISDICTION.  Any litigation in
connection  with or in any way  related to any LOan  DOcument,  or any course of
conduct, course of dealing,  statements (whether verbal or written),  actions or
inactions of  Administrative  Agent,  any LEnder or any BOrrower will be brought
and maintained  exclusively in the courts of the  COmmonwealth of VIrginia or in
the United States District Court for the Eastern District of Virginia; provided,
however, that any suit seeking enforcement against any Borrower,  any Collateral
or any  other  property  may also be  brought  (at  Administrative  Agent's  and
Lenders' option) in the courts of any other  jurisdiction  where such Collateral
or other property may be found or where  Administrative  Agent or any Lender may
otherwise obtain personal jurisdiction over such Borrower.  Each Borrower hereby
expressly  and  irrevocably  submits  to the  jurisdiction  of the courts of the
Commonwealth of Virginia and of the United States District Court for the Eastern
District of Virginia for the purpose of any such  litigation  as set forth above
and  irrevocably  agrees to be bound by any final  and  non-appealable  judgment
rendered  thereby in connection  with such  litigation.  Each  Borrower  further
irrevocably  consents to the service of process by registered or certified mail,
postage  prepaid,  or by personal  service within or outside the Commonwealth of
Virginia.  Each Borrower hereby expressly and irrevocably waives, to the fullest
extent  permitted by law, any objection  which it may have or hereafter may have
to the laying of venue of any such litigation brought in any such court referred
to above  and any  claim  that  any  such  litigation  has  been  brought  in an
inconvenient forum. To the extent that any Borrower has or hereafter may acquire
any immunity from  jurisdiction of any court or from any legal process  (whether
through service or notice,  attachment  prior to judgment,  attachment in aid of
execution  or  otherwise)  with  respect  to itself or its  property,  then such
Borrower hereby  irrevocably  waives such immunity in respect of its obligations
under this Agreement.

         10.16.   WAIVER OF JURY TRIAL.  Administrative  Agent,  each Lender and
each Borrower each hereby knowingly,  voluntarily and  intentionally  waives (to
the maximum extent not prohibited by applicable law) any rights it may have to a
trial by jury in respect of any  litigation  (whether  as claim,  counter-claim,
affirmative  defense or otherwise)  in connection  with or in any way related to
any of the  Loan  Documents,  or any  course  of  conduct,  course  of  dealing,
statements  (whether verbal or written),  actions or inactions of administrative
agent,  any Lender or any Borrower.  Each Borrower  acknowledges  and agrees (a)
that it has received full and sufficient  consideration  for this provision (and
each other  provision of each other Loan  Document to which it is a party),  and
(b) that it has been advised by legal  counsel in connection  herewith,  and (c)
that this provision is a material  inducement for Administrative  Agent and each
lender entering into the Loan Documents and funding Advances thereunder.


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                                       75
<PAGE>


         IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have  executed  this CREDIT  FACILITY  AGREEMENT,  as an  instrument  under seal
(whether or not any such seals are physically  attached  hereto),  as of the day
and year first above written.

ATTEST:                                  TALK.COM  HOLDING  CORP.


By:      _________________________       By:      ______________________________
Name:    _________________________       Name:    ______________________________
Title:   _________________________       Title:   ______________________________

[SEAL]


ATTEST:                                  ACCESS  ONE  COMMUNICATIONS  CORP.


By:      _________________________       By:      ______________________________
Name:    _________________________       Name:    ______________________________
Title:   _________________________       Title:   ______________________________

[SEAL]


ATTEST:                                  OMNICALL,  INC.


By:      _________________________       By:      ______________________________
Name:    _________________________       Name:    ______________________________
Title:   _________________________       Title:   ______________________________

[SEAL]


ATTEST:                                  THE  OTHER  PHONE  COMPANY,  INC.


By:      _________________________       By:      ______________________________
Name:    _________________________       Name:    ______________________________
Title:   _________________________       Title:   ______________________________

[SEAL]


                                       76
<PAGE>


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                                       77
<PAGE>

         IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have  executed  this CREDIT  FACILITY  AGREEMENT,  as an  instrument  under seal
(whether or not any such seals are physically  attached  hereto),  as of the day
and year first above written.

ATTEST:                                  TEL-SAVE  HOLDINGS  OF  VIRGINIA,  INC.

By:      _________________________       By:      ______________________________
Name:    _________________________       Name:    ______________________________
Title:   _________________________       Title:   ______________________________

[SEAL]



                       [SIGNATURES CONTINUE ON NEXT PAGE]





                                       78
<PAGE>


         IN WITNESS WHEREOF, the undersigned, by their duly authorized officers,
have  executed  this CREDIT  FACILITY  AGREEMENT,  as an  instrument  under seal
(whether or not any such seals are physically  attached  hereto),  as of the day
and year first above written.

WITNESS:                                 MCG FINANCE CORPORATION (AS
                                         ADMINISTRATIVE AGENT)


By:      __________________________     By:      _______________________________
                                        Name:    _______________________________
                                        Title:   _______________________________




WITNESS:                                MCG FINANCE CORPORATION (AS
                                        TERM LENDER)


By:      __________________________     By:      _______________________________
                                        Name:    _______________________________
                                        Title:   _______________________________


WITNESS:                                MCG CREDIT CORPORATION (AS TERM
                                        LENDER)


By:      __________________________     By:      _______________________________
                                        Name:    _______________________________
                                        Title:   _______________________________





                                       79