EXHIBIT 10.3

                               SECURITY AGREEMENT

                  SECURITY AGREEMENT (this "AGREEMENT"), dated as of February
11, 1997, by and between EqualNet Holding Corp., a Texas corporation (the
"Company"), having an office at EqualNet Plaza, 1250 Wood Branch Park Drive,
Houston, Texas 77079-1212, its subsidiaries, EqualNet Corporation, a Delaware
corporation ("E Sub"), TeleSource, Inc., a Texas corporation ("TeleSource"), and
EqualNet Wholesale Services, Inc., a Delaware corporation ("WHOLESALE," and
together with E Sub and TeleSource, the "SUBSIDIARIES" and the Subsidiaries
together with the Company, the "EQUALNET COMPANIES"), and The Furst Group, Inc.,
a New Jersey corporation (the "Purchaser"), having an office at 459 Oakshade
Road, Shamong, New Jersey 08088.

                              PRELIMINARY STATEMENT

                  The EqualNet Companies have entered into a Note and Warrant
Purchase Agreement, dated as of February 3, 1997 (the "NOTE AGREEMENT";
capitalized terms defined in the Note Agreement and not otherwise defined herein
being used herein as therein defined), with the Purchaser. It is a condition to
the Purchaser's obligation to purchase the Notes, Refinancing Notes and Warrants
under the Note Agreement that this Security Agreement be executed and delivered.

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

                  1. GRANT OF SECURITY INTEREST. Each EqualNet Company hereby
pledges, hypothecates, transfers, grants and assigns to the Purchaser, and
agrees that the Purchaser shall have, a security interest in and lien on the
following:

                  (a) all of the accounts and general intangibles, whether now
         owned or hereafter created arising or acquired, of such EqualNet
         Company or in which EqualNet Company now or hereafter has any interest,
         and all guarantees thereof and all security now or hereafter held by
         such EqualNet Company for the payment or satisfaction thereof; and

                  (b) all proceeds of the foregoing and proceeds of other
         proceeds; and

                  (c) without limiting the generality of (a) or (b) above, all
         customer lists, letters of authorization, letters of agency,
         verification tapes and other supporting documentation and books and
         records relative to (a) or (b) above.

All of the foregoing being referred to herein as the "Collateral." The terms
"accounts," "general intangible" and "proceeds" as used herein shall have the
meanings specified from time to time in the Uniform Commercial Code as in effect
in the State of New York (the "UCC").

                  2. OBLIGATIONS SECURED. The Collateral secures the payment in
full, when due, of any and all indebtedness (including but not limited to
network usage and non-usage charges and other trade indebtedness) and other
obligations of such EqualNet Company to the Purchaser, whether now existing or
hereafter incurred or arising, of every kind and description, direct or
indirect, primary or secondary, including, without limitation, indebtedness and
other obligations arising out of the Note Agreement, the Notes, the Refinancing
Notes, the Warrants, this Agreement, or any supplement thereto or hereto, in
each case as the same may be increased or reduced from time to time, and whether
or not evidenced by any note or other instrument, including without limitation
any and all sums from time to time advanced by the Purchaser in payment of
taxes, assessments and other public charges and expenses, or to satisfy prior
encumbrances, or for the payment of which such EqualNet Company otherwise is
obligated and which, if not paid, might encumber any property of such EqualNet
Company, it being understood and agreed, nevertheless, that the Purchaser shall
not have any obligation to make any such advance (all of the indebtedness and
other obligations described in this Section 2 being herein sometimes referred to
collectively as the "OBLIGATIONS SECURED"). Payments of all amounts owed
hereunder by any of the EqualNet Companies to Purchaser shall be made and
delivered to Secured Party, or its agent, in the State of New York, by wire
transfer of immediately available funds. Secured Party shall deliver to the
EqualNet Companies written wire transfer instructions with respect to the
foregoing.

                  3.    REPRESENTATIONS AND WARRANTIES. The EqualNet Companies
jointly and severally represent and to the Purchaser that:

                  (a)   None of the EqualNet Companies have changed their name
         in the last year;

                  (b)   The location of the chief executive office of each of
         the EqualNet Companies is the office whose address is set forth above;
         and

                  (c) Except as set forth in a notice delivered to the
         Purchaser, none of the presently existing Collateral arises out of a
         contract with the United States or any department, agency or
         instrumentality thereof.

So long as any Obligations Secured remain unpaid or the EqualNet Companies shall
be entitled to borrow under the Note Agreement, the EqualNet Companies shall be
deemed to represent and warrant continuously to the Purchaser all of the
<PAGE>
representations and warranties set forth in this Section 3.

                  4. MAINTENANCE OF COLLATERAL AND TITLE THERETO. The EqualNet
Companies jointly and severally represent, warrant and covenant to and with the
Purchaser that they have or will acquire and maintain absolute and exclusive
title to each and every item of the Collateral, free and clear of all liens,
claims, security interests and other encumbrances (except oniy security
interests in favor of the Purchaser and except for those liens and security
interests granted pursuant to the Credit Agreement dated as of November 30, 1995
(as amended through the date hereof (the "CREDIT AGREEMENT") among the Company
and each of the lenders who is or may become from time to time a party thereto
and Comerica Bank-Texas, as agent). The EqualNet Companies will jointly and
severally warrant and defend unto the Purchaser and its successors and assigns
title to all of the Collateral purported to be owned by them against the claims
and demands of all persons whomsoever except the liens granted pursuant to the
Credit Agreement. The EqualNet Companies shall pay any and all taxes,
assessments and other public accounts and charges of every kind and nature which
may be levied upon or assessed against any part of the Collateral. The EqualNet
Companies shall not permit any liens, claims, security interests or other
encumbrances (except only security interests in favor of the Purchaser and
except for those liens and security interests granted pursuant to the Credit
Agreement) to attach to any part of the Collateral, nor permit any part of the
Collateral to be levied upon under any legal process. Without the prior written
consent of the Purchaser, the EqualNet Companies shall not amend or terminate
any contract or other document or instrument constituting part of the
Collateral, except for routine transactions in the ordinary course of business.
Except in the ordinary course of business consistent with past practice, the
EqualNet Companies shall not do or permit to be done anything which might impair
the value of any item of the Collateral owned by them or the security intended
to be afforded hereby.

                  5.    COLLECTION OF ACCOUNTS.

                  (a) The EqualNet Companies will cause all moneys, checks,
         notes, drafts and other payments relating to or constituting proceeds
         of accounts of the EqualNet Companies upon which the Purchaser has a
         first priority security interest to be forwarded to a U.S. Postal
         Service box ("Lockbox") specified by Purchaser for deposit in an
         account ("COLLATERAL ACCOUNT") of the EqualNet Companies under the
         control of Purchaser as may be specified in an agreement among the
         Company, the Purchaser and the institution where such Collateral
         Account is located. The EqualNet Companies will advise each account
         debtor to address all remittances with respect to amounts payable on
         account of any accounts to the specified Lockbox and all invoices
         relating to any such accounts to indicate that payment is to be made
         via the specified Lockbox.

                  (b)    The EqualNet Companies and the Purchaser shall cause
         all collected balances in the Collateral Account to be:

                           (i)    paid to the Purchaser or other holders of the
                  Refinancing Notes to the extent of any amount due and payable
                  pursuant to Section 2.3(a) of the Note Agreement, and

                           (ii) with respect to the balance, so long as no Event
                  of Default under the Notes or the Refinancing Notes has
                  occurred and is continuing, transferred to a deposit account
                  of the EqualNet Companies as instructed by the EqualNet
                  Companies from time to time.

                  (c) Any monies, checks, notes, drafts or other payments
         referred to in paragraph (a) of this Section 5 which, notwithstanding
         the terms of such paragraph, are received by or on behalf of the
         EqualNet Companies, will be held in trust and transferred as promptly
         as possible, in the exact form received, together with any necessary
         endorsements for deposit in the Collateral Account.

                  6.    VERIFICATION AND NOTIFICATION. The Purchaser shall have
the right at any time and from to time,

                  (a) in the name of any of the EqualNet Companies or in the
         name of the Purchaser to verify the validity, amount or any other
         matter relating to any accounts by mail, telephone, telegraph or
         otherwise, and

                  (b) to notify the account debtors under any accounts of the
         assignment of such accounts to the Purchaser and to direct such account
         debtor to make payment of all amounts due or to become due thereunder
         directly to the Purchaser upon such notification and after the
         occurrence of an Event of Default, to enforce collection of any such
         accounts, and to adjust, settle or compromise the amount or payment
         thereof, in the same manner and to the same extent as the EqualNet
         Companies might have done.

                  7 DELIVERY OF INSTRUMENTS. In the event any Account becomes
evidenced by a promissory note, trade acceptance or any other instrument for the
payment of money, the EqualNet Companies will immediately thereafter deliver
such instrument to the Purchaser, appropriately endorsed to the Purchaser.

                  8. INSPECTION. The Purchaser (by any of its officers,
employees or agents) shall have the right at any time or times to inspect all
files relating to the Collateral to discuss the EqualNet Companies' affairs and
finances, insofar as the same are reasonably related to the rights of the
Purchaser hereunder or under any of the Documents, with any Person to verify the
amount, quantity, value and condition of, or any other matter relating to, any
of the Collateral and, in this connectidn, to review, audit and make extracts
from all records and files related to any of the Collateral.

                  9.    SCHEDULE OF ACCOUNTS. At the request of the Purchaser,
the EqualNet Companies shall deliver the Purchaser on or before the 15th day of
each month a schedule of their accounts receivable which

                  (a)   shall be as of the end of the immediately preceding
month,

                  (b)   shall be reconciled to the Borrowing Base Certificate,
if any, as of the end of such month,

                  (c) shall set forth a detailed aged trial balance of all its
         then existing Accounts, specifying the names, addresses and balance due
         for each account debtor obligated on an Account so listed, and

                  (d) shall set forth a detailed report of balances due from
         each account debtor, specifying the names and addresses of each
         account debtor.

                  10.   POWER OF ATTORNEY. Each EqualNet Company hereby appoints
the Purchaser as its attorney, power

                  (a) as long as an Event of Default has occurred and is
         continuing, to endorse the name of such EqualNet Company on any checks,
         notes, acceptances, money orders, drafts or other forms of payment or
         security that may come into the Purchaser's possession, and

                  (b) to sign the name of such EqualNet Company on any notices
         of assignment, financing statements and other public records relating
         to the perfection or priority of the security interest or verification
         of accounts and on notices to or from customers.

                  11. GOVERNMENT ACCOUNTS. If any account arises out of a
contract with the United States or any department, agency or instrumentality
thereof, the EqualNet Companies shall immediately notify the Purchaser thereof
in writing and execute any instruments and take any steps required by the
Purchaser in order that the security interest hereunder in the applicable
EqualNet Company's contract right under such contract and in all accounts
arising thereunder and in the proceeds thereof shall be perfected under the
provisions of the Federal Assignment of Claims Act.

                  12. CHANGE IN NAME OR CHIEF EXECUTIVE OFFICE. The EqualNet
Companies shall notily the Purchaser in writing 30 days prior to any change in
the name of an EqualNet Company or any change in the location of its chief
executive office.

                  13. RIGHTS AND REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuation of any Event of Default under the Notes or the
Refinancing Notes, the Lender shall have, in addition to all other rights and
remedies provided by law, all of the rights and remedies of a secured creditor
under the UCC.

                  14. WAIVERS AND OTHER AGREEMENTS. Each EqualNet Company to the
extent of its interest in the Collateral hereby waives and releases any and all
right to require the Purchaser to collect any of the Obligations Secured from
any specific item or items of the Collateral or from any other collateral
security under any theory of marshaling of assets or otherwise, and each
EqualNet Company specifically authorizes the Purchaser to apply any item or
items of the Collateral in which any EqualNet Company may have any interest
against any portion of the Obligations Secured in such manner as the Purchaser
may determine in the Purchaser's exclusive discretion. Purchaser is hereby
authorized by the EqualNet Companies without any liability to the Purchaser, in
its exclusive discretion and without notice to or demand upon any of the
EqualNet Companies and without otherwise affecting any of the EqualNet
Companies' obligations hereunder, from time to time to take and hold other
collateral (in addition to or other than the Collateral itself) for the payment
of the Obligations Secured or any part thereof, and to accept and hold any
endorsement or guaranty of payment of the Obligations Secured or any part
thereof and to release or substitute any endorser or guarantor or any other
person granting security for or in any other way obligated upon the Obligations
Secured or any part thereof

                  15. FURTHER ASSURANCES, ETC. With respect to the Collateral,
each EqualNet Company agrees to do, file, record, make, execute and deliver all
such acts, deeds, things, notices and instruments as may be necessary or
desirable in the opinion of the Purchaser in order to vest more fully in and
assure to the Purchaser the liens on and security interests in the Collateral
created hereby or intended so to be and the enforcement and realization of the
benefits of, all of the rights, remedies and powers of the Purchaser hereunder
relating to the Collateral. The Purchaser shall not have any obligation to take
any steps, and each EqualNet Company shall in each case duly take all steps,
necessary to perfect and otherwise preserve against all other parties the rights
of such EqualNet Company and those of the Purchaser in the Collateral and each
and every item thereof.

                  16. TRANSFER OF INTEREST. Any or all of the rights, benefits
and advantages of the Purchaser under this Agreement or any of the other
Documents, and the right to receive payment of the principal of and premium, if
any, and interest on the Notes and Refinancing Notes as and when due and payable
by the EqualNet Companies may be assigned by the Purchaser and reassigned by any
assignee at any time and from time to time.

                  17. EXPENSES. The EqualNet Companies shall pay all costs of
filing of any financing, continuation or termination statements or security
agreements with respect to the Collateral deemed by the Purchaser to be
necessary or advisable in order to perfect and protect the liens and security
interests hereby created in favor of the Purchaser or intended so to be. Each
EqualNet Company agrees that the Collateral secures, and further agrees to pay
on demand, all reasonable expenses (including but not limited to reasonable
attorneys' fees and other costs for legal services, costs of insurance and
payments of taxes or other charges) of or incidental to the custody, care, sale
or collection of or realization on any of the Collateral or in any way relating
to the enforcement or protection of the rights of the Purchaser hereunder or
under the other Documents.

                  18. SEVERABILITY. The invalidity or unenforceability of any
provision hereof shall in no way the validity or enforceability of any other
provision.

                  19. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS CHOICE OF LAW RULES.

                  20. HEADINGS. Article and Section headings in this Agreement
are included herein for of reference only and shall not constitute a part of 
this Agreement for any other purpose.

                  21. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, all of which together shall constitute one and the same
instrument, and either of the parties hereto may execute this by signing any
such counterpart.

                  22. INTERCREDITOR AGREEMENT. This Agreement and the security
interest granted hereby are to the terms of the Intercreditor Agreement.

                  23. BINDING EFFECT. This Agreement shall be binding upon and
enure to the benefit of the and their respective successors and assigns.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their proper corporate officers thereunto duly
authorized as of the day and year first above written.

                           EQUALNET COMPANIES:

                                     EQUALNET HOLDING CORP.
                                     By:[SIG ILLEGIBLE]
                                        President
                             
                                     EQUALNET CORPORATION
                                     By:[SIG ILLEGIBLE]
                                        President

                                     TELESOURCE, INC.
                                     By:[SIG ILLEGIBLE]
                                        President

                                     EQUALNET WHOLESALE SERVICES, INC.

                                     By:[SIG ILLEGIBLE]
                                        President

                                   PURCHASER:

                                     THE FURST GROUP, INC.

                                     By:[SIG ILLEGIBLE]
                                        Executive Vice President
 
                                      8