LOAN AND SECURITY AGREEMENT


     This  LOAN  AND  SECURITY  AGREEMENT  (this  "Agreement"),  is  dated as of
                                                   ---------
September         ,  2000  (the  "Closing  Date"),  by and between the following
           -------
parties:

LENDER/SECURED  PARTY:         NTFC  CAPITAL CORPORATION, a Delaware corporation
                               with  offices  at  501  Corporate  Centre  Drive,
                               Franklin,  Tennessee  37067  (the "Lender");  and
                                                                  ------

BORROWER/DEBTOR:               POINTE  COMMUNICATIONS  CORPORATION,  a  Nevada
                               corporation  with its principal place of business
                               at  1325 Northmeadow Parkway, Suite 110, Roswell,
                               Georgia  30076  (the  "Borrower").
                                                      --------

     This  Agreement  includes the general terms and conditions contained herein
and  all  the  exhibits  and  schedules  attached  hereto,  all  of  which  are
incorporated  herein.  In  the event of a conflict between the general terms and
conditions  and  any schedule, the additional terms and conditions stated in the
schedule  shall  control.

     By  executing  this  Agreement,  the  Lender  agrees  to  make loans to the
Borrower,  and  the  Borrower  agrees  to  borrow from the Lender and to provide
collateral  to  secure  such  loans,  all  on the terms and conditions set forth
herein.

     IN  WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized  representatives:

LENDER:                                 BORROWER:
------                                  --------

NTFC  CAPITAL  CORPORATION              POINTE  COMMUNICATIONS  CORPORATION

BY:                                     BY:
   ------------------------------          ------------------------------
TITLE:                                  TITLE:
      ---------------------------             ---------------------------
DATE:                                   DATE:
     ----------------------------            ----------------------------


<PAGE>
<TABLE>
<CAPTION>
                                      TABLE OF CONTENTS

                                                                                         Page
<S>          <C>                                                                           <C>
ARTICLE 1:   DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
     1.01.   Certain Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
     1.02    Accounting Principles; Subsidiaries. . . . . . . . . . . . . . . . . . . . . .10
     1.03    UCC Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
     1.04    General Construction; Captions. . . . . . . . . . . . . . . . . . . . . . . . 11
     1.05    References to Documents and Laws. . . . . . . . . . . . . . . . . . . . . . . 11

ARTICLE 2:   LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
     2.01    Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
     2.02.   Note and Payment Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
     2.03.   Procedures for Borrowing. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
     2.04.   Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
     2.05    Computation of Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
     2.06    Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
     2.07    Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.08    Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.09    Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     2.10    Lender's Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
     2.11    Increased Costs and Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .16

ARTICLE 3:   COLLATERAL AND SECURITY AGREEMENT. . . . . . . . . . . . . . . . . . . . . . .17
     3.01.   Grant of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . . 17
     3.02    Priority of Security Interests. . . . . . . . . . . . . . . . . . . . . . . . 18
     3.03    Further Documentation; Pledge of Instruments. . . . . . . . . . . . . . . . . 18
     3.04    Further Identification of Collateral. . . . . . . . . . . . . . . . . . . . . 18
     3.05    Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
     3.06    Standard of Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.07    Advances to Protect Collateral. . . . . . . . . . . . . . . . . . . . . . . . 19
     3.08    License to Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.09    Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
     3.10    Collateral Assignment of Nortel Purchase Agreement. . . . . . . . . . . . . . 19
     3.11    Release of Security Interest. . . . . . . . . . . . . . . . . . . . . . . . . 20

ARTICLE 4:   REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . . . . 20
     4.01.   Organization and Qualification. . . . . . . . . . . . . . . . . . . . . . . . 20
     4.02.   Authority and Authorization. . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.03.   Execution and Binding Effect. . . . . . . . . . . . . . . . . . . . . . . . . 20
     4.04    Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.05    Regulatory Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . .20
     4.06    Material Agreement; Absence of Conflicts. . . . . . . . . . . . . . . . . . . 21


                                     i
<PAGE>
     4.07    No Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21
     4.08    Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
     4.09    Financial Accounting Practices. . . . . . . . . . . . . . . . . . . . . . . . 21
     4.10    Accurate and Complete Disclosure. . . . . . . . . . . . . . . . . . . . . . . 21
     4.11    No Event of Default; Compliance with Material Agreements. . . . . . . . . . . 22
     4.12    Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
     4.13    Rights to Property; Intellectual Property. . . . . . . . . . . . . . . . . . .22
     4.14    Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.15    Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.16    No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . 22
     4.17    No Regulatory Event. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.18.   Trade Relations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
     4.19.   No Brokerage Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     4.20.   Margin Stock; Regulation U. . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.21.   Investment Company; Public Utility Holding Company. . . . . . . . . . . . . . 23
     4.22.   Personal Holding Company; Subchapter S. . . . . . . . . . . . . . . . . . . . 23
     4.23.   ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     4.24.   Environmental Warranties. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.25.   Security Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
     4.26.   Place of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.27.   Location of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
     4.28.   Clear Title To Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.29.   Assumed Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     4.30.   Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 24
     4.31.   Nortel Purchase Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .24

ARTICLE 5:   CONDITIONS OF CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
     5.01.   Borrower's, Telscape's and the other Guarantors' Certificate. . . . . . . . . 24
     5.02.   Opinions of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
     5.03.   Closing Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25

ARTICLE 6:   CONDITIONS OF LENDING. . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
     6.01.   Conditions for Initial Advance. . . . . . . . . . . . . . . . . . . . . . . . 26
     6.02.   Conditions for All Advances. . . . . . . . . . . . . . . . . . . . . . . . . .26
     6.03.   Affirmation of Representations and Warranties. . . . . . . . . . . . . . . . .27
     6.04.   Deadline for Funding Conditions. . . . . . . . . . . . . . . . . . . . . . . .27

ARTICLE 7:   AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
     7.02.   Other Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
     7.03    Notice of Pension Related Events. . . . . . . . . . . . . . . . . . . . . . . 30
     7.04    Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
     7.05.   Preservation of Corporate Existence and Qualification. . . . . . . . . . . . .30
     7.06.   Continuation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
     7.07.   Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30


                                     ii
<PAGE>
     7.08.   Payment of Taxes, Charges, Claims and Current Liabilities. . . . . . . . . . .31
     7.09.   Financial Accounting Practices. . . . . . . . . . . . . . . . . . . . . . . . 32
     7.10.   Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
     7.11.   Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
     7.12    Government Authorizations; Regulatory Authorizations, Etc.. . . . . . . . . . 32
     7.13.   Contracts and Franchises. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.14.   Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.15.   Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
     7.16.   Construction and Storage. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.17    Upgrade of Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     7.18    Further Assurances - Guarantors. . . . . . . . . . . . . . . . . . . . . . . .33

ARTICLE 8:   NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
     8.01.   Restrictions on Indebtedness, Liens and Sale of Collateral. . . . . . . . . . 34
     8.02    Limitation on Contingent Obligations. . . . . . . . . . . . . . . . . . . . . 34
     8.03.   Prohibition of Mergers, Acquisitions, Name, Office or Business Changes, Etc. .34
     8.04    Termination of Nortel Purchase Agreement. . . . . . . . . . . . . . . . . . . 35
     8.05.   Removal of Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . .35
     8.06.   Assumed Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
     8.07.   Limitation on Investments, Advances and Loans. . . . . . . . . . . . . . . . .36
     8.08.   Limitation on Equity Payments. . . . . . . . . . . . . . . . . . . . . . . . .36
     8.09.   Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
     8.10.   Limitation on Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.11.   Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.12.   Infrastructure Build Out. . . . . . . . . . . . . . . . . . . . . . . . . . . 37
     8.13.   Restrictions on Dividends and Related Transactions. . . . . . . . . . . . . . 37

ARTICLE 9:   EVENTS OF DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 38
     9.01.   Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
     9.02    Consequences of an Event of Default. . . . . . . . . . . . . . . . . . . . . .40
     9.03    Exercise of Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     9.04.   Rights of Secured Party; Possession or Sale of Collateral. . . . . . . . . . .41
     9.05.   Notices, Etc. Waived. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
     9.06.   Additional Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
     9.07    Application of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . .42
     9.08    Discontinuance of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . .42
     9.09.   Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
     9.10.   Regulatory Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

ARTICLE 10:  GENERAL CONDITIONS/MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 43
     10.01   Modifications and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . .43
     10.02.  Advances Not Implied Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 43
     10.03.  Deviation from Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 44


                                     iii
<PAGE>
     10.04   Holidays. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
     10.05   Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
     10.06.  Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
     10.07   FCC and PUC Approval. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
     10.08.  Lender Sole Beneficiary. . . . . . . . . . . . . . . . . . . . . . . . . . . .45
     10.09.  Lender's Review of Information. . . . . . . . . . . . . . . . . . . . . . . . 45
     10.10.  No Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.11.  Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.12.  Rights Cumulative. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
     10.13.  Duration; Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.14.  Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
     10.15.  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.16.  Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
     10.17.  Participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
     10.18.  Time of Essence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47
     10.19.  Disclosures and Confidentiality. . . . . . . . . . . . . . . . . . . . . . . .47
     10.20.  Jurisdiction and Venue. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
     10.21.  Jury Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49
     10.22.  Limitation on Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . .49
     10.23.  Borrower Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
     10.24.  Schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
     10.25.  Agreement to Govern. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50
     10.26.  Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>


                                     iv
<PAGE>
                    SCHEDULES TO LOAN AND SECURITY AGREEMENT
                    ----------------------------------------

Schedule  1.01          Borrower  Information  and  Defined  Terms
Schedule  1.02          Business  Plan
Schedule  2.01          Maximum  Loan  Amount
Schedule  2.02          Payment  Terms  and  Governing  Law
Schedule  2.09          Fees
Schedule  4.04          Required  Consents
Schedule  4.05          Regulatory  Authorizations
Schedule  4.06          Permitted  Conflicts  and  Restrictions
Schedule  4.07          Restrictions  on  Loans
Schedule  4.08          Financial  Statements
Schedule  4.12          Pending  Litigation
Schedule  4.25          UCC  Filing  Offices
Schedule  4.26          Principal  Offices  and  Location  of  Collateral
Schedule  4.29          Assumed  Names
Schedule  4.30          Transactions  with  Affiliates
Schedule  4.31          Nortel  Purchase  Agreement
Schedule  6.02          Post-Closing  Items
Schedule  7.07          Insurance
Schedule  7.15          Financial  Covenants
Schedule  8.01          Permitted  Specific  Encumbrances


                     EXHIBITS TO LOAN AND SECURITY AGREEMENT
                     ---------------------------------------

Exhibit  A     Form  of  Note
Exhibit  B     Form  of  Borrowing  Certificate
Exhibit  C     Form  of  Opinion  of  Counsel  for  Borrower
Exhibit  D     Form  of  Opinion  of  Regulatory  Counsel  for  Borrower
Exhibit  E     Form  of  Landlord's  Consent
Exhibit  F     Form  of  Certificate  of  Financial  Condition
Exhibit  G     Form  of  Telscape  Guaranty  Agreement
Exhibit  H     Form  of  Significant  Subsidiary  Guaranty  Agreement
Exhibit  I     Form  of  Collateral  Assignment  of  Purchase  Agreement


<PAGE>
                           LOAN AND SECURITY AGREEMENT
                           ---------------------------


     THIS  LOAN  AND SECURITY AGREEMENT ("Agreement") is dated as of the Closing
                                          ---------                      -------
Date  set  forth  on Schedule 1.01 hereto, by and between the entity or entities
----                 -------------
described  on  Schedule  1.01 hereto (collectively, "Borrower") and NTFC CAPITAL
               --------------                        --------
CORPORATION,  a  Delaware  corporation ("Lender"), with offices at 501 Corporate
                                         ------
Centre  Drive,  Franklin,  Tennessee  37067.

                              B A C K G R O U N D:
                              -------------------

     A.     Borrower  has  entered into a certain purchase agreement with Nortel
Networks,  Inc.,  as described on Schedule 4.31 hereto, providing for Borrower's
                                  -------------
purchase  of  certain telecommunications equipment and the license of associated
software, all as described therein, and has requested Lender to extend credit to
Borrower  to  finance such purchase and license and to make credit available for
the  purchase  of  additional  telecommunications  equipment,  in  each  case as
described  herein.

     B.     Lender  is  willing to extend such credit to Borrower upon the terms
and  conditions  set  forth  in  this  Agreement.

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


                             ARTICLE 1: DEFINITIONS
                             ----------------------

     1.01.     Certain  Definitions.  Certain terms are defined on Schedule 1.01
               --------------------                                -------------
hereto  or  elsewhere in this Agreement or the Schedules hereto . In addition to
other  words  and  terms  defined  in  the  preamble hereof or elsewhere in this
Agreement,  or on the Schedules hereto, the following words and terms shall have
the  following  meanings  unless  the  context  otherwise  clearly  requires:

     "Additional Approved Cities":  Chicago (Illinois), Dallas (Texas), New York
      --------------------------
City  (New  York),  San  Francisco  (California)  and  San  Juan  (Puerto Rico).

     "Advance(s)": any advance or loan of funds (including Capitalized Interest)
      ----------
made  by  Lender  to  Borrower  pursuant  to  this  Agreement.

     "Affiliate":  as  applied  to  any  Person,  any  other  Person directly or
      ----------
indirectly controlling, controlled by, or under common control with such Person.
For  purposes  of  this  definition  and  the  definition  of  "Control"  and of
"Subsidiary,"  a  Person shall be deemed to control another Person if such first
Person  possesses,  directly or indirectly, the power to direct, or to cause the
direction  of, the management and policies of such other Person, whether through
ownership of voting securities, by contract or otherwise.  The "Affiliates" of a
Person  shall  also  include  any  Person that owns of record or beneficially at
least 10% of such Person's outstanding capital stock having the right to vote on
the  election  of  the  Person's  directors.

     "Approved  Build-Out  Plan":  the  original  business  plan  titled
      -------------------------
"Pointecom-Telscape  5 Year  --  Combined v4.xls" provided to the Lender in May,
2000,  with  such  changes  as may be required thereto to reflect, in connection
with  infrastructure build-out in all the Additional Approved Cities, a need for
obtaining  aggregate  additional  financing (exclusively for application to such
infrastructure  build-out)  after  the  Closing  Date  in the form of (i) equity
contributions  in an aggregate amount of at least $9,000,000 and (ii) additional
financing  (in  the  form  of  equity  contributions  or  Indebtedness expressly
permitted  under  this  Agreement)  in  an  aggregate  amount, including without
duplication of any equity financing required pursuant to clause (i) above, of at
least  $21,000,000,  in each case as such business plan may from time to time be
modified  or  superseded  subject  to  the  Lender's  written  consent.


<PAGE>
     "Basic Agreements": a collective reference to this Agreement, the Note, the
      ----------------
Security  Documents,  and  the  Guaranty  Agreements.

     "Borrowing Certificate": a certificate substantially in the form of Exhibit
      ---------------------                                              -------
B  hereto.
-

     "Borrowing  Date": any Business Day on which an Advance is made to Borrower
      ---------------
hereunder.

     "Business  Day":  a day other than a Saturday, Sunday or other day on which
      -------------
commercial  banks  in Nashville, Tennessee, are authorized or required by law to
close.

     "Business Plan": the business plan of Telscape attached as Schedule 1.02 to
      -------------                                             -------------
this  Agreement.

     "Calendar  Quarter":  each  three-month  period starting on each January 1,
      -----------------
April  1,  July  1,  and  October  1.

     "Capital  Stock":  any  and  all  shares, interests, participations, social
      --------------
parts  or  other  equivalents  (however  designated)  of  capital  stock  of  a
corporation,  any and all equivalent ownership interests in a Person (other than
a  corporation)  and  any  and  all  warrants  or options to purchase any of the
foregoing.

     "Capitalized Interest": the accrued but unpaid interest on any Advance that
      --------------------
accrues  during  the  Capitalized  Interest  Period, if any Capitalized Interest
Period  is  defined  on  Schedule  2.02 hereto, and is added to and deemed to be
                         --------------
principal  due  under  any  Note,  in  accordance  with  Section 2.02(b) hereof.
                                                         ---------------

     "Capitalized  Interest  Period":  as  defined  on  Schedule  2.02  hereto.
      -----------------------------                     --------------

     "Carrier":  any  inter-exchange  carrier  or  other  provider  of
      -------
telecommunications  long distance service or any local exchange company or other
provider  of  local  telecommunications  service.

     "Cash Equivalents":  (a) securities issued or directly and fully guaranteed
      ----------------
or  insured  by  the  United States Government, or any agency or instrumentality
thereof,  having  maturities  of  not  more  than  one  year  from  the  date of
acquisition;  (b)  marketable  general  obligations  issued  by any state of the
United  States  of America or any political subdivision of any such state or any
public  instrumentality or agency thereof maturing within one year from the date
of  acquisition  thereof and, at the time of acquisition thereof having a credit
rating  of  "A" or better from either Standard & Poor's Ratings Group or Moody's
Investors  Service, Inc.; (c) certificates of deposit, time deposits, eurodollar
time deposits, overnight bank deposits or bankers' acceptances having maturities
of not more than one year from the date of acquisition thereof of the Lender, or
of any U.S. domestic commercial bank the long-term debt of which is rated at the
time  of  acquisition thereof at least A or the equivalent thereof by Standard &
Poor's  Ratings  Group  or  A  or  the  equivalent  thereof by Moody's Investors
Service,  Inc.,  and  having  capital and surplus in excess of $500,000,000; (d)
repurchase  obligations  with  a term of not more than seven days for underlying
securities of the types described in clauses (a), (b) and (c) above entered into
with  any  bank  meeting  the  qualifications specified in clause (c) above; (e)
commercial  paper  rated  at the time of acquisition thereof at least A-2 or the
equivalent  thereof  by Standard & Poor's Ratings Group or P-2 or the equivalent
thereof  by Moody's Investors Service, Inc., or carrying an equivalent rating by
a  nationally recognized rating agency, if both of the two named rating agencies
cease  publishing ratings of investments, and in either case maturing within 270
days  after  the  date  of  acquisition thereof; (f) interests in any investment
company which invests solely in instruments of the type specified in clauses (a)
through  (e) above; and (g) other investment installments approved in writing by
the Lender and offered by any financial institution which has a combined capital
and  surplus  of  not  less  than  $500,000,000.


                                        2
<PAGE>
     "Certificate  of Financial Condition": a certificate in the form of Exhibit
      -----------------------------------                                -------
F  hereto,  executed  by  Borrower  and  Telscape.
-

     "Change in Control":  (a) with respect to Borrower and any Subsidiary other
      -----------------
than Interlink Communications, Inc. ("Interlink"), the acquisition by any Person
or Persons other than Telscape or its Subsidiaries in the aggregate of more than
five  (5%) percent of the Capital Stock of Borrower or such Subsidiary or of the
Capital Stock of Borrower or such Subsidiary having the ordinary voting power to
elect  the  Board  of  Directors  or  the  governing  body  of  Borrower or such
Subsidiary,  (b) with respect to Interlink, the acquisition by another Person of
Capital Stock owned beneficially or of record by Telscape, and, (c) with respect
to  Telscape,  the  acquisition by another Person or Persons in the aggregate of
either  (i)  twenty-five (25%) percent of such Capital Stock or (ii) such lesser
amount  of  such Capital Stock which would result in a change of Control or upon
the  occurrence  of specified events would result in a change in Control and, in
any  case,  the  entering  into of contractual or other arrangements which would
have  the effect of a change of Control in Borrower or any Subsidiary, except as
permitted  pursuant  to  Section  8.03.

     "Closing  Date":  as  defined  on  Schedule  1.01  hereto.
      -------------                     --------------

     "Code":  the  Internal  Revenue Code of 1986, as amended from time to time.
      ----

     "Collateral":  as  defined  in  Section  3.01  hereof.
      ----------                     -------------

     "Commitment":  as  defined  in  Section  2.01  hereof.
      ----------                     -------------

     "Communications Law": any and all of (i) the Communications Act of 1934, as
      ------------------
amended  and  any  similar  or  successor  federal  statute,  and  the rules and
regulations  of  the  FCC  thereunder;  and  (ii)  any  state  law governing the
provision  of  telecommunications services, and the rules and regulations of the
PUC,  all  as  the  same  may  be  in  effect  from  time  to  time.

     "Concession":  the  concession  to  install,  operate  and exploit a public
      ----------
telecommunications network in the Federal District and the States of Guanajuato,
Jalisco,  Mexico,  Nuevo  Leon,  Puebla,  Tamaulipas  and Veracruz, granted to
Telereunion  by the Government of Mexico through Secretaria de Comunicaciones y
Transportes  (Secretary of Communications and Transportation), a Mexican federal
government  agency  (the "SCT"), as evidenced by the Concession Title (Titulo de
Concesion),  dated  June  3,  1998  issued  by  the  SCT.

     "Consent":  a  consent  to  a  collateral assignment of the Nortel Purchase
      -------
Agreement,  a  consent  to  a  collateral  assignment  of  any  Vendor  Purchase
Agreement,  a Landlord Consent, and an agreement from each incumbent provider of
collocation  space  under  any  collocation  and interconnection agreements with
Borrower  or  any Subsidiary where Collateral will be located, including without
limitation,  from  incumbent  local  exchange  carriers  where Collateral may be
located  under  collocation  or  other  arrangements.


                                        3
<PAGE>
     "Contingent  Obligation":  as  to any Person, any obligation of such Person
      ----------------------
guaranteeing,  directly  or  indirectly,  any Indebtedness, leases, dividends or
other  obligations  ("primary  obligations")  of  any other Person (the "primary
obligor")  in  any  manner,  whether  directly or indirectly, including, without
limitation,  any  obligation  of  such Person, whether or not contingent, (a) to
purchase  any  such  primary  obligation  or any property constituting direct or
indirect  security therefor; (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity  capital of the primary obligor or otherwise to maintain the net worth or
solvency  of  the  primary  obligor;  (c)  to  purchase  property, securities or
services  primarily  for  the  purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation;  or  (d)  otherwise  to  assure  or  hold harmless the owner of such
primary  obligation  against  loss  in  respect  thereof.

     "Contractual  Obligation":  as to any Person, any provision of any security
      -----------------------
issued  by  such  Person  or  of  any  agreement,  instrument, or other material
undertaking  to  which  such  Person  is  a  party  or by which it or any of its
property  is  bound.

     "Control":  the  possession, directly or indirectly, of power to direct (or
      -------
cause  the  direction  of)  management  or  policies  of another Person (whether
through  ownership of securities or partnership or other ownership interests, by
contract  or  otherwise).  "Controlled  by" and "under common Control with" have
meanings  correlative  thereto.

     "Conversion  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------                     --------------

     "Default":  any of the conditions or occurrences specified in Section 9.01,
      -------                                                      ------------
whether  or  not any requirement for the giving of notice, the lapse of time, or
both,  or  any  other  condition  has  been  satisfied.

     "Default  Rate":  a  rate  of  interest  equal  to  the lesser of (i) three
      -------------
percentage  points  over  the Interest Rate or (ii) the maximum permissible rate
under  applicable  law  in  effect  at  any  time.

     "Domestic  Subsidiary": any direct or indirect Subsidiary of Telscape which
      --------------------
is  incorporated  under  the laws of the United States, one of the states of the
United  States,  or  under  any  territory or protectorate of the United States.

     "EBITDA":  for any fiscal period, Telscape's actual operating earnings from
      ------
ongoing operations on a consolidated basis, before interest, taxes, depreciation
and  amortization  for  the  fiscal  period.

     "Environmental  Law":  any  current  or future federal, state and local law
      ------------------
(including common law), statute, regulation, ordinance, rulings, codes, judicial
order,  administrative  order  or  terms  of  licenses  or permits applicable to
environmental  conditions (including, without limitation, conditions relating to
ambient  air,  surface  water,  groundwater, land surface or subsurface strata),
including,  without  limitation,  all  such  laws  governing  the  employment,
generation,  use,  storage,  disposal  or  transportation  of toxic or hazardous
substances  or  wastes  (including,  without  limitation, asbestos and petroleum
products),  the Comprehensive Environmental Response, Compensation and Liability
Act,  the  Resource  Conservation  and Recovery Act, the Superfund Amendment and
Reauthorization  Act  of  1986,  the Toxic Substances Control Act, the Clean Air
Act,  the  Water  Pollution Control Act, the Hazardous Waste Management Act, the
Mineral  Lands  and Leasing Act, the Surface Mining Control and Reclamation Act,
U.S.  Department  of Transportation Regulations, and all similar state and local
laws  and  regulations,  all  as  now  or  hereafter  amended.


                                        4
<PAGE>
     "ERISA":  the  Employee  Retirement Income Security Act of 1974, as amended
      -----
from  time  to  time,  and  any  successor  statute.

     "Equipment":  the  equipment  defined  in  Section  3.01  hereof.
      ---------                                 -------------

     "Equity  Payment":  any  distribution  of  earnings  or  capital  to  any
      ---------------
stockholder of Telscape, Borrower or any Subsidiary, any management fee or other
fee  paid  to  any  stockholder  of  Telscape,  Borrower  or  any Subsidiary not
reasonably  related  to services actually performed, or any redemption of equity
ownership  interests in Telscape, Borrower or any Subsidiary, either directly or
indirectly,  whether in cash or property or in obligations of Telscape, Borrower
or  any  Subsidiary.

     "Event  of  Default":  any  of the events specified in Section 9.01 hereof,
      ------------------                                    ------------
provided  that  any  requirement for the giving of notice, the lapse of time, or
both,  or  any  other  condition,  under  Section  9.01  or  otherwise, has been
                                          -------------
satisfied.

     "FCC":  the  Federal  Communications  Commission  of  the  United States of
      ---
America,  and  any  successor,  in  whole  or  in  part,  to  its  jurisdiction.

     "Financing  Termination  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------------------                     --------------

     "First  Borrowing  Date":  the  date  of  the  first  borrowing by Borrower
      ----------------------
hereunder.

     "GAAP":  subject  to  Section  1.02  hereof,  generally accepted accounting
      ----                 -------------
principles  in  the United States of America (as such principles may change from
time  to  time) applied on a consistent basis (except for changes in application
in  which  Telscape's  independent certified public accountants concur), applied
both  to  classification  of  items  and  amounts.

     "General  Intangibles":  as  defined  in  Section  3.01  hereof.
      --------------------                     -------------

     "Governmental  Actions":  actions  by  any  Governmental  Authority.
      ---------------------

     "Governmental  Authority":  the  federal government, any state or political
      -----------------------
subdivision  thereof,  any  city  or municipal entity, and any entity exercising
executive,  legislative,  judicial, regulatory or administrative functions of or
pertaining  to  government.

     "Guarantor":  Telscape and certain of Borrower's and Telscape's Significant
      ---------
Subsidiaries  guaranteeing the Obligations of Borrower hereunder pursuant to the
provisions  of  Section 3.09 of this Agreement and any other Person guaranteeing
                ------------
the  Obligations,  in  whole  or  in  part,  of  Borrower  hereunder.

     "Guaranty" or "Guaranties": one or more of the Guaranty Agreements required
      -------------------------
of  Telscape,  and certain of Borrower's and Telscape's Significant Subsidiaries
pursuant  to  the  provisions  of  Section  3.09  of  this  Agreement.
                                   -------------

     "Indebtedness":  as  to  any Person, at a particular time, (a) indebtedness
      ------------
for borrowed money or for the deferred purchase price of property or services in
respect  of  which such Person is liable, contingently or otherwise, as obligor,
guarantor  or  otherwise, or in respect of which such Person otherwise assures a
creditor  against  loss;  (b)  obligations under leases which shall have been or
should  be,  in  accordance  with GAAP, recorded as capital leases in respect of
which  obligations such Person is liable, contingently or otherwise, as obligor,
guarantor or otherwise, or in respect of which obligations such Person assures a
creditor  against loss; (c) obligations of such Person to purchase or repurchase
accounts  receivable,  chattel paper or other payment rights sold or assigned by
such  Person;  and  (d) indebtedness or obligations of such Person under or with
respect  to  letters  of  credit,  notes,  bonds  or  other  debt  instruments.


                                        5
<PAGE>
     "Initial  Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      ----------------------                     --------------

     "Interest  Only  Period":  as  defined  on  Schedule  2.02  hereto.
      ----------------------                     --------------

     "Interest  Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      -----------------------                     --------------

     "Interest  Rate":  as  defined  on  Schedule  2.02  hereto.
      --------------                     --------------

     "Landlord Consent": a consent substantially in the form of Exhibit E hereto
      ----------------                                          ---------
or  in  other  form  acceptable to Lender, to be executed by the owner/landlord,
sublessor and/or licensor (including carriers) of any real property where any of
the  Collateral  is  to  be  located.

     "Law":  any  law (including common law), constitution, statute, regulation,
      ---
rule,  ordinance,  order,  injunction, writ, decree or award of any governmental
body  or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational  safety or health law, Communications Law, Environmental Law and/or
securities  laws).

     "Lender's  Expenses":  as  defined  in  Section  2.10  hereof.
      ------------------                     -------------

     "Lien":  any  mortgage,  pledge,  hypothecation, lien (statutory or other),
      ----
judgment  lien,  security  interest,  security  agreement,  charge  or  other
encumbrance,  or other security arrangement of any nature whatsoever, including,
without  limitation,  any  installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment,  deposit  arrangement or lease intended as, or having the effect of,
security  and  the filing of any financing statement under the UCC or comparable
law  of  any  jurisdiction.

     "Loans":  the  loans  and  loan facilities described in Section 2.01 hereof
      -----                                                  ------------
and  all  Advances  pursuant  hereto.

     "Loan  Documents":  a collective reference to this Agreement, the Note, the
      ---------------
Security  Documents,  the  Guaranty  Agreements,  and  all  other  documents,
instruments,  agreements  and  certificates  evidencing  or securing any advance
hereunder  or  any  obligation  for  the  payment  or performance thereof and/or
executed  and  delivered  in  connection  with  any  of  the  foregoing.

     "Lucent Credit Agreement":  Credit Agreement dated as of September 29, 2000
      -----------------------
among  Telereunion  S.A.  de  C.V.,  Telereunion  International,  S.A.  de C.V.,
Telscape  International,  Inc.,  the  other  borrowers to be listed therein, any
additional borrowers from time to time, General Electric Capital Corporation, as
Administrative  Agent,  and  the lenders from time to time party thereto, in the
form  executed  as  of  the  Closing  Date.


                                        6
<PAGE>
     "Material Adverse Effect": or "Material Adverse Change": a material adverse
      -----------------------       -----------------------
effect  on,  or  material  adverse  change  in  (i)  the business, operations or
financial  condition  of  the  Borrower  or  Telscape;  (ii)  the ability of the
Borrower  or  Telscape to perform its obligations under this Loan Agreement, the
Note,  or the other Loan Documents; or (iii) the Lender's ability to enforce the
rights and remedies granted under this Agreement or the other Loan Documents, in
all  cases  whether  attributable  to  a  single  circumstance  or  event  or an
aggregation  of  circumstances  or  events.

     "Maturity  Date":  the  date  defined on Schedule 2.02 hereto, on which all
      --------------                          -------------
principal,  interest,  premium,  expenses, fees, penalties and other amounts due
under  the  Note  shall  be  finally  due  and  payable.

     "Network":  the  telecommunications  network  to  be  built and operated by
      -------
Telscape  and  its  Subsidiaries in order to provide telecommunications services
pursuant  to  the  Concession.

     "New  Equity":  The  amount  of proceeds in excess of $37,000,000 (less the
      -----------
liquidation  amount of outstanding Class F Convertible Senior Preferred Stock of
Telscape)  raised  from  the  sale  by Telscape subsequent to the date hereof of
Capital  Stock  of  Telscape or debt subordinated to the Obligations in form and
substance  satisfactory  to  Lender.

     "Note":  collectively,  one  or more promissory notes issued by Borrower to
      ----
Lender  pursuant to this Agreement, and all extensions, renewals, modifications,
replacements,  amendments,  restatements  and  refinancings  thereof.

     "Nortel":  Nortel  Networks,  Inc.,  a  Delaware  corporation.
      ------

     "Nortel  Equipment":  the  equipment  and licensed or sub-licensed software
      -----------------
manufactured  or  supplied  by Nortel to Borrower with respect to which Advances
hereunder  are  used  directly  or  indirectly  to  finance the acquisition cost
thereof  at  any  time pursuant to the Nortel Purchase Agreement or any purchase
order  issued  by  Borrower  to  Nortel or otherwise, including installation and
construction  services  provided  by  Nortel  pursuant  thereto.

     "Nortel  Purchase  Agreement":  the Nortel Purchase Agreement identified on
      ---------------------------
Schedule  4.31  hereto, together with any amendments or supplements thereto, and
--------------
any other purchase agreement between Nortel and Borrower and all purchase orders
and  invoices  issued  pursuant  thereto, all subject to the approval of Lender.

     "Obligations": all indebtedness, liabilities and obligations of Borrower to
      -----------
Lender  of any class or nature, whether arising under or in connection with this
Agreement  and/or the other Loan Documents or otherwise, whether now existing or
hereafter  incurred,  direct  or  indirect,  absolute  or contingent, secured or
unsecured,  matured  or  unmatured,  joint  or  several,  whether for principal,
interest,  fees,  expenses,  lease  obligations,  indemnities  or  otherwise,
including,  without limitation, future advances of any sort, all future advances
made  by Lender for taxes, levies, insurance and/or repairs to or maintenance of
the  Collateral,  the  unpaid  principal amount of, and accrued interest on, the
Note, and any expenses of collection or protection of Lender's rights, including
reasonable  attorneys'  fees.

     "Organizational  Documents": with respect to a corporation, the articles of
      -------------------------
incorporation  and  by-laws  of such corporation; with respect to a partnership,
the  certificate  of  partnership  (or  limited  partnership, as applicable) and
partnership  agreement,  together with the analogous documents for any corporate
or partnership general partner; with respect to a limited liability company, the
articles  of  organization  and  operating  agreement  of such limited liability
company; and in any case, any other document governing the formation and conduct
of  business  by  such  entity.


                                        7
<PAGE>
     "Payment  Date":  as  defined  on  Schedule  2.02  hereto.
      -------------                     --------------

     "Payment  Schedule":  as  defined  on  Schedule  2.02  hereto.
      -----------------                     --------------

     "PBGC": the Pension Benefit Guaranty Corporation established under Title IV
      ----
of  ERISA  or  any  other  governmental  agency,  department  or instrumentality
succeeding  to  its  functions.

     "Permits":  all  consents,  licenses,  notices,  approvals, authorizations,
      -------
filings,  orders,  registrations,  and  permits  required  by  any  Governmental
Authority  for  the  construction  and  operation  of  the  Equipment (excluding
Regulatory  Authorizations),  issued  or  obtained  as  and  when  required  in
accordance  with  all  Requirements  of  Law.

     "Permitted  Encumbrances":  the  Liens permitted under Section 8.01 hereof.
      -----------------------                               ------------

     "Permitted  Preferred  Cash  Dividends":  cash  dividends  with  respect to
      -------------------------------------
classes  D,  E or F of Telscape International, Inc. Convertible Senior Preferred
Stock, payable solely out of proceeds of New Equity, at any time after the first
anniversary  of the Closing Date (as defined in the Lucent Credit Agreement), so
long as (i) Borrower shall fully comply with the prepayment obligations found in
Section  2.04(b)  hereof,  and  (ii) at the time thereof and after giving effect
----------------
thereto, no Default or Event of Default has occurred and is continuing, and with
respect  to  each  of  the  financial  covenants  set  forth in Article VII, (A)
Telscape  is  in  full  compliance therewith as of the most recent date on which
such financial covenant was (or is being) measured, without requiring any waiver
thereof  or  amendment  thereto to enable such compliance, and (B) no Default or
Event  of  Default  could reasonably be expected to exist as of the next date on
which  each  financial  covenant  is  to  be  measured.

     "Person":  an  individual,  corporation,  limited  liability  company,
      ------
partnership, business or other trust, unincorporated association, joint venture,
joint-stock  company,  Governmental  Authority  or  any  other  entity.

     "Plan":  any  employee  pension benefit plan to which Section 4021 of ERISA
      ----
applies  and (i) which is maintained for employees of Telscape, the Borrower, or
any  Significant  Subsidiary  or  (ii)  to  which Telscape, the Borrower, or any
Significant  Subsidiary made, or was required to make, contributions at any time
within  the  preceding  five  years.

     "Proceeds":  as  defined  in  Section  3.01  hereof.
      --------                     -------------

     "PUC":  the  public  utilities  commission  for  the  state  or  any  other
      ---
jurisdiction  in  which Borrower operates its telecommunications business or any
portion of the Equipment is located, or any successor agency, and any successor,
in  whole  or  in part, to its functions or jurisdictions, and any other Persons
specified  as  such  on  Schedule  1.01  hereto.
                         --------------

     "Purchase  Agreement":  individually  and collectively, the Nortel Purchase
      -------------------
Agreement  and  any  Vendor  Purchase  Agreement.

     "Regulatory  Authorizations":  all  approvals,  authorizations,  licenses,
      --------------------------
filings,  notices,  registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications governmental or
other  regulatory  authority, including, without limitation, any certificates of
public  convenience  and  all  grants,  approvals,  licenses,  filings  and
registrations  from  or  to  the  FCC  or  PUC  or  under any Communications Law
necessary  in  order  to enable Borrower to own, construct, maintain and operate
the  Equipment,  and  any  authorizations  specified  on  Schedule  1.01 hereto.
                                                          --------------


                                        8
<PAGE>
     "Regulatory Event": any of the following events: (i) Lender becomes subject
      ----------------
to  regulation  as  a  "carrier,"  a  "telephone company," a "common carrier," a
"public  utility"  or  otherwise  under  any  applicable  law  or  governmental
regulation,  federal,  state  or  local,  solely as a result of the transactions
contemplated  by  this  Agreement  and  the other Loan Documents; (ii) Borrower,
Telscape  or  any  Significant  Subsidiary  becomes subject to regulation by any
Governmental  Authority  in  any  way  that  is  materially  different  from the
regulation  existing  at  the  Closing  Date and that could materially adversely
affect  the  Borrower's,  Telscape's  or any Significant Subsidiary's ability to
perform  its  material  obligations  under the Loan Documents or Lender's rights
thereunder;  or  (iii)  the  FCC  or  PUC  issues  an order revoking, denying or
refusing to renew, or recommending the revocation, denial or non-renewal of, any
Regulatory  Authorization.

     "Reportable  Event":  (i)  a  reportable event described in Section 4043 of
      -----------------
ERISA  and  regulations  thereunder; (ii) a withdrawal by a substantial employer
from  a  Plan  to  which  more  than one employer contributes, as referred to in
Section  4063(b)  of  ERISA;  or  (iii)  a cessation of operations at a facility
causing  more  than 20% of Plan participants to be separated from employment, as
referred  to  in  Section  4062(f)  of  ERISA.

     "Required  Consents":  the  Governmental Authority approvals or consents of
      ------------------
other  Persons  required with respect to the execution, delivery and performance
of  this  Agreement  and the other Loan Documents by the Borrower, Telscape, and
the  Significant  Subsidiaries,  as  described  in  Section  4.04  hereto.
                                                    -------------

     "Requirement  of  Law":  as  to any Person, the Organizational Documents of
      --------------------
such  Person,  and  any  law, treaty, rule or regulation, or determination of an
arbitrator  or  a court or other Governmental Authority, in each case applicable
to  or  binding  upon such Person or any of its properties or transactions or to
which  such  Person or any of its property or transactions is subject, including
without  limitation,  all  applicable  common  law and equitable principles, all
provisions  of  all applicable state and federal constitutions, statutes, rules,
regulations  and  orders  of  governmental  bodies,  all  Permits  or Regulatory
Authorizations  issued  to  Borrower,  all  Communications  Laws,  and  all
Environmental  Laws.

     "Responsible  Officer": with respect to a corporation, its President or any
      --------------------
Vice  President or Treasurer; with respect to a partnership, its general partner
(or  the  President,  any  Vice  President or Treasurer of any corporate general
partner,  as  applicable); with respect to a limited liability company, a member
or  manager  (or the President, any Vice President or Treasurer of any corporate
member  or manager), or the President or any Vice President of any other Person.

     "Restricted  Payment":  means  (a)  any  dividend  or  other  distribution
      -------------------
(whether in cash, securities or other property other than dividends of preferred
stock  of  Telscape paid to holders of such preferred stock) with respect to any
shares of any class of Capital Stock of Telscape or its Subsidiaries, or (b) any
payment  (whether  in cash, securities or other property), including any sinking
fund  or  similar  deposit,  on account of the purchase, redemption, retirement,
acquisition,  cancellation  or  termination  of  any  any shares of any class of
Capital  Stock  of  Telscape  or  any Subsidiary or any option, warrant or other
right to acquire any such shares of Capital Stock of Telscape or any Subsidiary.

     "Security  Documents":  this  Agreement,  the  Consents,  all  financing
      -------------------
statements,  and  any  other  documents  granting, evidencing, or perfecting any
security  interest  or  Lien with respect to or securing any of the Obligations.


                                        9
<PAGE>
     "Significant  Subsidiaries":  with  regard  to  Telscape  or  Borrower,  as
      -------------------------
applicable  (i)  a  direct  or indirect Subsidiary having assets or revenues (as
applicable)  of  at  least  5%  of  Telscape's  consolidated  assets or revenues
(whichever  applies  first)  as  of  the  Closing Date, as of the end of each of
Telscape's  fiscal  years  thereafter,  or  as  of  the end of Telscape's fiscal
quarter  immediately preceding any Borrowing Date, (ii) any Guarantor which is a
direct  or  indirect  Subsidiary  of  Telscape  or Borrower, and (iii) Borrower.

     "Site(s)":  any  of  the  sites  where  Equipment  is  or is to be located.
      -------

     "Software" and "Software Licenses": any software now or hereafter owned by,
      --------------------------------
or  licensed  to,  Borrower  or  with  respect to which Borrower has or may have
license  or  use  rights.

     "Subsidiary":  as to any Person, any corporation or other entity that is an
      ----------
Affiliate of such Person and of which shares of stock or equity interests having
ordinary  voting  power with respect to the election of one or more directors or
other  managers of such corporation are at the time directly or indirectly owned
or  controlled  by  such Person (regardless of any contingency which does or may
suspend  or  dilute  the  voting  rights  of such class of stock). References to
"Subsidiary" shall refer to a Subsidiary of Telscape, unless otherwise provided.

     "System":  Telscape's  complete  telecommunications  network  or  system
      ------
constructed  and/or  operated  by  Telscape  (either directly or indirectly by a
Subsidiary  or  Affiliate  of  Telscape),  of  which the Equipment forms a part.

     "Telecommunications":  voice,  video,  data  and  internet  services.
      ------------------

     "Telscape":  Telscape  International,  Inc.,  a  Texas corporation, and its
      --------
successors.

     "UCC":  the Uniform Commercial Code as the same may from time to time be in
      ---
effect  in  the  State  of  New  York, or the Uniform Commercial Code of another
jurisdiction,  to the extent it may be required to apply to any item or items of
Collateral.

     "Vendor": any manufacturer  or  supplier of Vendor Equipment or licensor or
      ------
supplier  of  Software,  in  each  case  other  than  Nortel.

     "Vendor  Equipment":  any  equipment,  upgrades,  switches  and licensed or
      -----------------
sub-licensed  Software  manufactured,  or  supplied  to  Borrower,  by a Vendor.

     "Vendor  Purchase  Agreement":  any  purchase  agreement, together with any
      ---------------------------
amendments  or supplements thereto, between a Vendor and Borrower or an assignor
of Borrower and all purchase orders and invoices issued pursuant thereto for the
sale  of  Vendor  Equipment,  all  subject  to the approval of Lender, not to be
unreasonably  withheld  or  delayed.

     1.02.     Accounting  Principles;  Subsidiaries.  Except  as  otherwise
               -------------------------------------
provided in this Agreement, all computations and determinations as to accounting
or  financial  matters  and all financial statements to be delivered pursuant to
this  Agreement  shall  be  made and prepared in accordance with GAAP (including
principles  of  consolidation  where appropriate), consistently applied, and all
accounting  or financial terms shall have the meanings ascribed to such terms by
GAAP  unless  otherwise  provided  herein.  All  accounting  and financial terms
herein  shall  be deemed to include references to consolidated and consolidating
principles,  and  covenants,  representations  and  agreements  with  respect to
Telscape  and its properties and activities shall be deemed to refer to Telscape
and  its  consolidated  Subsidiaries  collectively  unless  otherwise  expressly
provided.


                                       10
<PAGE>
     1.03.     UCC  Terms.  Except  as  otherwise provided or amplified (but not
               ----------
limited)  herein, terms used in this Agreement that are defined in the UCC shall
have  the  same  meanings  herein.

     1.04.     General  Construction;  Captions. All definitions and other terms
               --------------------------------
used  in  this  Agreement shall be equally applicable to the singular and plural
forms thereof, and all references to any gender shall include all other genders.
The  words  "hereof,"  "herein" and "hereunder" and words of similar import when
used  in  this Agreement shall refer to this Agreement as a whole and not to any
particular  provision  of  this Agreement, and section, subsection, schedule and
exhibit  references  are  to  this  Agreement  unless  otherwise  specified. The
captions  and  table  of contents in this Agreement and the other Loan Documents
are  for convenience only, and in no way limit or amplify the provisions hereof.

     1.05.     References  to  Documents  and  Laws.  All  defined  terms  and
               ------------------------------------
references  in  this  Agreement  or the other Loan Documents with respect to any
agreements,  notes, instruments, certificates or other documents shall be deemed
to  refer  to  such  documents  and  to any amendments, modifications, renewals,
extensions,  replacements, restatements, substitutions and supplements of and to
such documents. All references to statutes and related regulations shall include
any  amendments  thereof  and  any  successor  statutes  and  regulations.


                                ARTICLE 2: LOANS
                                ----------------

     2.01.     Commitment.  Subject to the terms and conditions herein provided,
               ----------
and  so  long  as  no  Default  has occurred and is continuing hereunder, Lender
agrees  to  lend  to Borrower from time to time before the Financing Termination
Date,  an  aggregate principal amount, plus Capitalized Interest, if any, in the
maximum amount set forth on Schedule 2.01 hereto as the maximum principal amount
                            -------------
(the  "Commitment").  If Borrower or Nortel should terminate the Nortel Purchase
       ----------
Agreement  at  any  time  prior  to  the  Financing  Termination  Date, then the
Commitment  shall  automatically  terminate,  subject  to Lender's right to make
further  Advances  hereunder,  including,  but  not  limited  to, Advances under
Section  2.03.  All  amounts  advanced  hereunder  shall  be used solely for the
--------------
purchase  of  Nortel  Equipment to be installed in the United States and related
services from Nortel, and amounts not exceeding the amount (if any) specified on
Schedule  2.01  may  be used for legal fees, charges, expenses and closing costs
--------------
and  other  expenses  incurred  by Borrower or incurred by Lender and payable by
Borrower  under  Section  2.10;  provided,  however,  that,  notwithstanding the
foregoing,  the  Borrower  may  use  up  to 33% of the Commitment to finance the
origination  fee  set forth on Schedule 2.09 and, subject to approval of Lender,
to finance or refinance any Vendor Equipment installed or to be installed in the
United  States  and  related  services.

     2.02.     Note  and  Payment  Terms.
               -------------------------

          (a)     Promissory  Note.  The  Loans  shall  be evidenced by the Note
                  ----------------
substantially  in the form of Exhibit A hereto, with appropriate insertions. The
                              ---------
Note  shall  be  executed by Borrower, payable to the order of Lender, and shall
evidence  the  obligation  of  Borrower  to repay all principal amounts advanced
under  or  pursuant  to  this  Agreement,  together  with interest and all other
amounts  due thereunder. The Note shall be dated the Closing Date, have a stated
maturity  that is the Maturity Date, and bear interest at the Interest Rate from
the First Borrowing Date until the Note or any amount thereunder is paid in full
(whether  on  the  Maturity  Date,  by acceleration or otherwise). All schedules
attached  to  the  Note shall be deemed a part thereof. Any such schedule may be
amended by Lender from time to time to reflect changes in the amounts includable
thereon,  but the failure to attach or amend any schedule shall not diminish the
obligation  of  Borrower  to  repay  all  amounts  due hereunder or on the Note.


                                       11
<PAGE>
          (b)     Capitalized  Interest  Period. During the Capitalized Interest
                  -----------------------------
Period,  interest  shall  accrue  on all principal amounts outstanding under the
Note  at  the  Interest  Rate,  and  up to an aggregate of the maximum amount of
Capitalized Interest set forth on Schedule 2.02 hereto of such interest shall be
                                  -------------
capitalized,  in  arrears,  and  added  to  the  principal amount of the Note by
Lender,  on behalf of Borrower, on the first day of each calendar month, thereby
increasing  the  principal amount of the Note. The Lender may also evidence such
increase  by  noting  the date and amount of each such addition on a schedule to
the Note.  Interest accruing during the Capitalized Interest Period in excess of
the  maximum aggregate amount of Capitalized Interest set forth on Schedule 2.02
                                                                   -------------
hereto  shall be paid by Borrower quarterly in arrears, on the last Business Day
of  the  Calendar  Quarter  in  which  such  limit  is  exceeded.

          (c)     Interest  Payments. Following the Capitalized Interest Period,
                  ------------------
interest  shall  continue  to  accrue on the principal amount outstanding on the
Note (including Capitalized Interest) at the Interest Rate and shall be payable,
in arrears, on each Interest Payment Date. Interest only shall be payable during
the  Interest  Only Period, and thereafter all accrued interest shall be payable
with  the  principal  payments  described  below.

          (d)     Principal  Payments.  On  the  Conversion Date, the Note shall
                  -------------------
automatically convert to a term note, and all principal amounts due with respect
to the Note (including Capitalized Interest) shall be payable in installments in
accordance  with  the  Payment  Schedule  set  forth  on  Schedule  2.02 hereto,
                                                          --------------
commencing on the Initial Payment Date and on each Payment Date thereafter until
the  Maturity Date.  The amount of each such principal installment payment shall
be  calculated, at the outset, by taking the applicable percentage (as described
on  Schedule  2.02 hereto) of the amount of all principal amounts outstanding on
    --------------
the  Conversion  Date  (including Capitalized Interest); provided, however, that
the  principal  payment  amounts shall be recalculated by Lender if any Advances
are  made  hereunder after the Conversion Date, based on the aggregate amount of
all  Advances  (including  Capitalized  Interest) made at any time. Borrower and
Lender  understand  that this payment schedule is intended to amortize fully the
principal  amount  of  the  Note  and  any  other principal and interest amounts
outstanding  will  be  added  to  the final payment on the Maturity Date. In any
event,  the  entire outstanding principal amount of the Note and all accrued but
unpaid  interest  and all other outstanding amounts due thereunder shall be paid
on  the  Maturity  Date.

          (e)     Late Payments and Default Rate. Notwithstanding the foregoing,
                  ------------------------------
if  Borrower  shall  fail to pay within 10 days after the due date any principal
amount  or  interest  or  other amount payable under this Agreement or under the
Note,  Borrower  shall  pay  to  Lender,  to  defray the administrative costs of
handling  such  late payments, an amount equal to interest on the amount unpaid,
to  the  extent  permitted under applicable law, at the Default Rate (instead of
the  Interest  Rate),  from  the  due  date until such overdue principal amount,
interest or other unpaid amount is paid in full (both before and after judgment)
whether  or  not any notice of default in the payment thereof has been delivered
under  Section  9.01  hereof.  In  addition,  but  without duplication, upon the
occurrence  and  during  the continuance of an Event of Default, all outstanding
amounts  hereunder  shall  bear  interest  at  the  Default Rate (instead of the
Interest  Rate)  until  such  amounts are paid in full, such Event of Default is
cured  by  Borrower,  or  such  Event of Default is waived in writing by Lender.


                                       12
<PAGE>
          (f)     Excess  Interest.  Notwithstanding  any provision of the Note,
                  ----------------
this  Agreement  or any other Loan Document to the contrary, it is the intent of
Lender and Borrower that Lender or any subsequent holder of the Note shall never
be  entitled  to  receive, collect, reserve or apply, as interest, any amount in
excess  of  the  maximum  rate of interest permitted to be charged by applicable
Law,  as  amended  or  enacted  from  time  to time. In the event Lender, or any
subsequent  holder of the Note, ever receives, collects, reserves or applies, as
interest,  any  such excess, such amount which would be excessive interest shall
be  deemed  a  partial  prepayment  of principal and treated as such, or, if the
principal indebtedness and all other amounts due are paid in full, any remaining
excess  funds shall immediately be applied to any other outstanding indebtedness
of  Borrower  due  to  Lender,  and  if  none  is  outstanding, shall be paid to
Borrower.  In determining whether or not the interest paid or payable, under any
specific  contingency,  exceeds  the  highest  lawful  rate, Borrower and Lender
shall,  to  the  maximum  extent  permitted  under  applicable  law, (a) exclude
voluntary  prepayments  and  the  effects  thereof  as it may relate to any fees
charged  by  Lender,  and  (b) amortize, prorate, allocate, and spread, in equal
parts,  the  total  amount  of  interest  throughout  the  entire  term  of  the
indebtedness;  provided  that  if the indebtedness is paid and performed in full
prior  to  the  end  of  the  full contemplated term hereof, and if the interest
received  for  the  actual period of existence hereof exceeds the maximum lawful
rate,  Lender  or any subsequent holder of any Note shall refund to Borrower the
amount  of such excess or credit the amount of such excess against the principal
portion of the indebtedness, as of the date it was received, and, in such event,
Lender  shall  not  be  subject  to  any  penalties  provided  by  any  laws for
contracting  for,  charging,  reserving  or  receiving interest in excess of the
maximum  lawful  rate.

     2.03.     Procedures  for  Borrowing.
               --------------------------

     (a)      Timing of Advances.  Advances shall not be made more than once per
              ------------------
calendar month, and all Advances in any calendar month shall be made on the same
Borrowing  Date.  Each  Advance  (other  than the last  Advance)  shall be in an
aggregate principal amount of not less than $250,000. No amounts may be borrowed
hereunder  on  or  after  the  Financing  Termination  Date.  Lender  is  hereby
authorized to retain from each Advance all amounts of Lender's  Expenses accrued
and unpaid by Borrower,  for which  invoices have been sent to Borrower prior to
such Advance. In any event, all outstanding legal fees, charges and expenses not
paid by Borrower prior to any Borrowing Date shall be paid before any Advance is
made or concurrently with such Advance.

     (b)      Borrowing Certificates.  To request an Advance hereunder, Borrower
              ----------------------
shall  send to  Lender,  at least  five  Business  Days  prior to the  requested
Borrowing Date, a completed Borrowing Certificate,  along with invoices and such
other  supporting  documentation  as Lender may  reasonably  request.  Lender is
hereby  authorized to add to any Borrowing  Certificate  all amounts  payable by
Borrower to Lender in respect of legal fees,  charges  and  expenses  arising or
incurred by Lender, to the extent such fees, charges and expenses have then been
incurred or charged and may be paid from proceeds of the Loans.

     (c)      Transmission of Advances.  Advances shall be made by wire transfer
              ------------------------
to the account(s) specified in the applicable Borrowing Certificate, except that
(i) proceeds of the Loans may be transmitted,  at Lender's  option,  directly to
any  Nortel  or  Vendor  account  for  payment  of any  unpaid  Nortel or Vendor
invoices,  and (ii)  Advances  shall be made to Borrower only to the extent that
Borrower  provides  Lender with  satisfactory  evidence  that the amount of such
Advance will be paid to Nortel or the Vendor. No further  authorization shall be
necessary for any such direct disbursements, and each such Advance shall satisfy
pro tanto the obligations of Lender under this Agreement.

     (d)      Borrowing Dates. Advances shall be made by Lender on the Borrowing
              ---------------
Date  specified in the  applicable  Borrowing  Certificate if all conditions for
such  Advance  have  been  satisfied,  or on  such  later  Business  Date as all
conditions for such Advance shall have been satisfied, as determined by Lender.


                                       13
<PAGE>
     (e)      Advances  After Default.  At its option,  after the occurrence and
              -----------------------
continuance of a Default, Lender may but shall not be obligated to make advances
of portions of the Loans to any Person (including  without limitation Nortel and
any Vendor,  supplier,  subcontractor  and  materialman)  to whom Lender in good
faith determines payment is due with respect to the Equipment,  and any proceeds
so  disbursed  by Lender  shall be deemed  disbursed as of the date on which the
Person to whom payment is made receives the same. No further  authorization from
Borrower shall be necessary to warrant such direct  advances,  and the execution
of this Agreement by Borrower shall, and hereby does,  constitute an irrevocable
authorization and power of attorney so to advance proceeds  hereunder.  All such
Advances shall satisfy pro tanto the  obligations of Lender  hereunder and shall
be secured by the Security Documents as fully as if made directly to Borrower.

     2.04.     Prepayments.
               -----------

          (a)     Voluntary  Prepayments.  The  Borrower  may, at its option, at
                  ----------------------
any  time  and  from time to time, prepay the Loans in whole or in part, upon at
least  five Business Days prior written notice to Lender specifying the date and
amount of prepayment, in a minimum amount of $50,000, plus the premium described
below,  and  all  accrued  but  unpaid  interest  thereon.  Such notice shall be
irrevocable  and  the principal amount specified in such notice shall be due and
payable  on  the  date  specified  together  with accrued interest on the amount
prepaid. Any such prepayment shall be subject to a prepayment premium equal to a
percentage  of the amount prepaid as follows: 3% if the prepayment is made on or
before  the  first anniversary of the Closing Date; 2% if the prepayment is made
after  the  first  anniversary  but  on  or before the second anniversary of the
Closing  Date;  1% if the prepayment is made after the second anniversary but on
or  before  the  third anniversary of the Closing Date, and without a premium if
the prepayment is made after the third anniversary of the Closing Date.  Amounts
prepaid  may  not  be borrowed again and shall be applied as provided in Section
2.04(c).  Excess  interest payments under Section 2.02(g), prepayments made from
insurance  proceeds  pursuant  to  Section  6.03,  or  prepayments made with any
condemnation  proceeds  shall  not  be  subject  to  a  prepayment premium.  The
prepayment  premium  shall  not  be  required  for  amounts  paid pursuant to an
acceleration  of  the  obligations  after the occurrence of an Event of Default.

          (b)     Mandatory Prepayment. If and on each occasion that Telscape or
                  --------------------
any  Subsidiary  shall  make  any Permitted Preferred Cash Dividends, the record
date  for  which  shall  occur  during  the  period  from  and  after  the first
anniversary of the Closing Date and before the second anniversary of the Closing
Date,  then,  on  or  before  the  record date for such Permitted Preferred Cash
Dividends,  the  Borrower  shall  make  a  prepayment  on  the Loans, out of the
proceeds  of  the  New Equity raised in connection with such Permitted Preferred
Cash  Dividends,  in  an  amount equal to the amount of such Permitted Preferred
Cash  Dividends.

          (c)     Application  of  Prepayments. Any prepayments shall be applied
                  ----------------------------
first  to  interest,  then  to  premium,  then  to  expenses,  and  then  to the
installments  of  principal  in  reverse  chronological  order.

     2.05.     Computation  of  Interest.  Interest shall be calculated daily on
               -------------------------
the  basis  of  a  360-day year for the actual days elapsed in the period during
which  it  accrues.

     2.06.     Payments.  All  payments and prepayments to be made in respect of
               --------
principal,  interest,  prepayment  premiums,  or other amounts due from Borrower
hereunder  or  under the Note shall be payable on or before 1:00 p.m., Nashville
time, on the day when due, without presentment, demand, protest or notice of any
kind,  all  of  which  are hereby expressly waived, and an action therefor shall
immediately  accrue. Such payments shall be made to Lender at Lender's office at
501  Corporate  Centre  Drive, Franklin, Tennessee 37067, or such other location
specified  in writing by Lender, in immediately available funds, without setoff,
recoupment,  counterclaims  or  any  other  deduction  of  any  nature.


                                       14
<PAGE>
     2.07.     Indemnity. Borrower hereby indemnifies Lender against any losses,
               ---------
claims,  penalties, expenses, actions, suits, obligations, liabilities and Liens
(and  all  costs  and expenses, including reasonable attorneys' fees incurred in
connection  therewith),  that Lender has sustained or incurred or may sustain or
incur  in connection with any of the Collateral, or the enforcement, performance
or  administration  of the Loan Documents, or as a consequence of any default by
Borrower in the performance or observance of any covenant or condition contained
in  this  Agreement  or  the  Loan  Documents, including without limitation, the
breach  of  any  representation or warranty, any failure of Borrower to pay when
due  (by  acceleration  or  otherwise) any principal, interest, fee or any other
amount  due  hereunder  or under the Note, and any failure of Borrower to comply
with  all applicable Requirements of Law (collectively, "Claims"), except to the
extent  of any Claims proximately caused by Lender's gross negligence or willful
misconduct.  Borrower's obligations under this Section 2.07 shall be part of the
Obligations  and  shall  be secured by the Collateral. Borrower agrees that upon
written  notice  by  Lender  of  the assertion of any Claims, Borrower shall, at
Lender's  option, either assume full responsibility for, or reimburse Lender for
the  reasonable  costs  and expenses of, the defense thereof. Neither Lender nor
Borrower shall have any liability for consequential or incidental damages of any
nature.  The  provisions  of  this Section 2.07 shall survive the termination of
this  Agreement and payment of the Obligations; however, upon the payment of the
other  Obligations,  Lender  shall  release  its  Lien  on  the  Collateral.

     2.08.     Use  of Proceeds. The proceeds of the Advances hereunder shall be
               ----------------
used  by  Borrower only for the purposes and in the amounts described in Section
2.01  hereof,  and  no  amounts  repaid  may  be  reborrowed.

     2.09.     Fees.  Borrower  shall  pay Lender the fees described on Schedule
               ----                                                     --------
2.09  hereto  in  connection  with  this  Agreement.

     2.10.     Lender's Expenses. Borrower agrees (a) to pay or reimburse Lender
               -----------------
for  all its reasonable costs, fees, charges and expenses incurred or arising in
connection  with  the  negotiation,  review,  preparation  and execution of this
Agreement,  the  Loan  Documents,  any  commitment  or  proposal  letter, or any
amendment,  supplement,  waiver,  modification  to,  or  restructuring  of  this
Agreement,  the  Obligations  or  the  other  Loan Documents, including, without
limitation, reasonable legal fees and disbursements, expenses, document charges,
and other charges and expenses of Lender; (b) to pay or reimburse Lender for all
its reasonable costs, fees, charges and expenses incurred in connection with the
administration  of  the  Loans or the enforcement, protection or preservation of
any  rights  under  or  in  connection  with  this  Agreement  or any other Loan
Documents,  including,  without  limitation,  reasonable  legal  fees  and
disbursements,  audit  fees  and charges, and all out-of-pocket expenses; (c) to
pay,  indemnify, and hold Lender harmless from, any and all recording and filing
fees  and  taxes  and any and all liabilities with respect to, or resulting from
any  delay  in  paying,  any stamp, excise and other taxes (excluding income and
franchise  taxes  and  taxes of similar nature), if any, which may be payable or
determined  to  be  payable  in  connection  with  the execution and delivery or
recordation  or  filing  of,  or  consummation  of  any  of  the  transactions
contemplated  by, or any amendment, supplement or modification of, or any waiver
or  consent under or in respect of, this Agreement and the other Loan Documents.
All of the amounts described in this section are referred to collectively as the
"Lender's  Expenses,"  shall  be  payable upon Lender's demand, and shall accrue
interest  at  the  Interest Rate in effect when such demand is made from 20 days
after the date of demand until paid in full. All Lender's Expenses, and interest
thereon,  shall  be  part  of  the  Obligations  and  shall  be  secured  by the
Collateral.  The  agreements in this Section 2.10 shall survive repayment of all
other  Obligations  not  constituting  Lender's Expenses.  All Lender's Expenses
that  are  outstanding  on  any Borrowing Date shall be paid before or with such
Advance.  If Borrower has not paid to Lender the amount of all Lender's Expenses
billed  to  Borrower  at  least  five  Business Days before such Borrowing Date,
Lender shall be authorized to retain from any Advance on such Borrowing Date the
amount  of  such  Lender's Expenses that remain unpaid. Borrower's obligation to
pay  Lender's  Expenses  shall not be limited by any limitation on the amount of
the  Commitment  that  may be designated as available for such purposes, and any
amounts so designated shall be used to pay Lender's Expenses accrued at the time
of  any  Advance  before  any  of  Borrower's  legal  fees  or similar expenses.


                                       15
<PAGE>
     2.11.     Increased  Costs  and  Taxes.  (a)     If,  due to either (i) the
               ----------------------------
introduction  of  or  any  change (other than any change by way of imposition or
increase  of  reserve requirements, in the case of Variable Rate Advances) in or
in  the  interpretation of any law or regulation or (ii) the compliance with any
guideline  or  request  from  any  central  bank or other governmental authority
(whether  or  not  having  the force of law), there shall be any increase in the
cost  to  Lender  of agreeing to make or making, funding or maintaining Variable
Rate  Advances,  then  the  Borrower shall from time to time, upon demand by the
Lender,  pay  to  the  Lender  additional  amounts sufficient to compensate such
Lender  for  such  increased  cost.  A  certificate  as  to  the  amount of such
increased cost, submitted to the Borrower by the Lender, shall be conclusive and
binding  for  all  purposes,  absent  manifest  error.

     (b)       If  the  Lender  determines  that  compliance  with  any  law  or
regulation  or  any  guideline  or  request  from  any  central  bank  or  other
governmental authority (whether or not having the force of law) affects or would
affect the  amount of capital  (or the rate of return on  capital)  required  or
expected  to be  maintained  by the Lender or any  corporation  controlling  the
Lender  and that the  amount  of  commitment,  or  offer or  agreement,  to lend
hereunder and other  commitments,  or offers or agreements,  of this type, then,
upon notice by the Lender,  the Borrower  shall  immediately  pay to the Lender,
from time to time as specified by the Lender,  additional  amounts sufficient to
compensate the Lender,  or such corporation in the light of such  circumstances,
to the extent that the Lender reasonably determines such increase in capital (or
reduction  in rate of return)  to be  allocable  to the  existence  of  Lender's
commitment,  or offer or agreement,  to lend  hereunder.  Such notice as to such
amounts submitted and delivered to the Borrower by the Lender shall set forth in
summary fashion the basis of such allocation and shall be conclusive and binding
for all purposes, absent manifest error.

     (c)       Any  and all  payments  by  Borrower  hereunder  or  under a Note
executed by Borrower  shall be made, in accordance  with Section 2.11,  free and
                                                         ------------
clear of and without deduction for any and all present or future taxes,  levies,
imposts, deductions,  charges or withholdings,  and all liabilities with respect
thereto (all such taxes, levies, imposts, deductions,  charges, withholdings and
liabilities in respect of payments hereunder or under the Note being hereinafter
referred  to as  "Taxes").  If  Borrower  shall be required by law to deduct any
                  -----
Taxes from or in respect of any sum payable hereunder or under any Note executed
by Borrower to Lender, (i) the sum payable by Borrower shall be increased as may
be  necessary  so that,  after  Borrower  and  Lender  have  made  all  required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section  2.11),  Lender  receives an amount equal to the sum it would have
received had no such  deductions  been made,  (ii) Borrower  shall make all such
deductions,  and  (iii)  Borrower  shall  pay the full  amount  deducted  to the
relevant  taxation  authority or other  authority in accordance  with applicable
law.

     (d)      In  addition,  Borrower  shall pay any  present  or future  stamp,
documentary,  excise,  property or similar  taxes,  charges or levies that arise
from  any  payment  made  hereunder  or under  the  Note or from the  execution,
delivery or registration  of,  performance  under, or otherwise with respect to,
this Agreement or the Note (hereinafter referred to as "Other Taxes").
                                                        -----------


                                       16
<PAGE>
     (e)      Borrower shall indemnify  Lender for and hold it harmless  against
the full  amount of Taxes and Other  Taxes,  and for the full amount of taxes of
any kind  imposed by any  jurisdiction  on amounts  payable  under this  section
imposed on or paid by Lender and any liability (including  penalties,  additions
to tax, interest and expenses)  arising therefrom or with respect thereto.  This
indemnification  shall be made within 30 days from the date Lender makes written
demand therefor.

     (f)       Within  30 days  after  the date of any  payment  of  Taxes,  the
Borrower shall furnish to Lender, at its address referred to above, the original
or a certified copy of a receipt evidencing such payment.

     (g)      In the event that Lender determines in its reasonable  discretion,
that it has  actually  and  finally  realized  a refund of or  credit  for taxes
withheld  or  paid  pursuant  to  this  section,   which  credit  or  refund  is
identifiable  by Lender as being a result of taxes  withheld in connection  with
sums payable  hereunder or under any other Loan Document,  Lender shall promptly
notify Borrower and shall remit to Borrower, the amount of such refund or credit
allocable  to  payments  made  hereunder  or under  the  other  Loan  Documents;
provided,  however, that in the event of any subsequent disallowance of any such
           -------
refund or credit on account of which Lender has made a payment  pursuant to this
paragraph, the amount so disallowed shall be deemed to be a Tax for which Lender
shall be  entitled to  indemnification  under of this  section,  but only to the
extent of any payment by such Lender pursuant to this paragraph.


                  ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
                  --------------------------------------------

     3.01.     Grant  of  Security  Interest.  The  Borrower  (as debtor) hereby
               -----------------------------
assigns  to  Lender  as  collateral,  and  grants to Lender (as secured party) a
continuing  security  interest  in  and  to,  all of Borrower's right, title and
interest  in and to the following kinds and types of property, whether now owned
or  hereafter  acquired  or  arising,  wherever  located,  together  with  all
substitutions  therefor  and  all accessions, replacements and renewals thereof,
and  in  all  proceeds  and  products  thereof (collectively, the "Collateral"):

          (a)     All  Nortel  Equipment financed or refinanced with proceeds of
an  Advance  and all Vendor Equipment financed or refinanced with proceeds of an
Advance, and in each case any and all additions, substitutions, and replacements
to or of any of the foregoing, together with all attachments thereto (other than
attachments  (i) not financed or refinanced with proceeds of an Advance or which
are not required to be attached thereto by the terms of this Agreement, and (ii)
which  are  not  an  integral part of the Collateral, and are severable from the
Collateral  without  damaging  the  functionality  or  value  of  the  remaining
Collateral),  and  all components, parts, improvements, upgrades, and accessions
installed  thereon  or affixed thereto, including installation services provided
by  Nortel  or  any  other  Vendor  in  connection  therewith  (collectively,
"Equipment")  and the Borrower's rights under each Nortel Purchase Agreement and
each  Vendor  Purchase  Agreement  relating  to  such  Equipment;

          (b)     All general intangibles and intangible property (including all
contracts  and  contract rights) constituting part of, or provided by or through
Nortel  or  any  Vendor  in  connection  with,  the Equipment, including without
limitation  insurance  proceeds  and  amounts  due  under  insurance  policies,
licenses,  license  rights,  rights in intellectual property, Software, Software
Licenses,  computer  programming  (including source codes, object codes, and all
other  embodiments  of computer programming or information), refunds, warranties
and  indemnification  rights,  and  all  amounts owed at any time to Borrower by
Lender  or  Nortel or by a Vendor in connection with a Vendor Purchase Agreement
relating  to  Equipment  (collectively,  "General  Intangibles");


                                       17
<PAGE>
          (c)     All  proceeds  and products of any of the foregoing, including
without  limitation  (i)  any  and  all  proceeds  of  any insurance, indemnity,
warranty  or  guaranty payable to Borrower from time to time with respect to any
of  the  Collateral;  (ii) any and all payments (in any form whatsoever) made or
due  and  payable  to  Borrower  from  time  to  time  in  connection  with  any
requisition,  confiscation,  condemnation,  seizure  or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color  of  governmental  authority);  and  (iii)  any  and all cash proceeds and
non-cash  proceeds  in  the  form  of equipment, inventory, contracts, accounts,
general intangibles, chattel paper, documents, instruments, securities, or other
proceeds,  but  excluding any revenues or accounts receivable paid to or due the
Borrower as a result of the operation of the Collateral in the Borrower's normal
course  of  business  (collectively,  "Proceeds").

     3.02.     Priority of Security Interests. The security interests granted by
               ------------------------------
Borrower  to  Lender are and shall be continuing and indefeasible first-priority
security  interests  in the Collateral, subject to no Liens except for Permitted
Encumbrances  to  the  extent  provided  in  Section  8.01.
                                             -------------

     3.03.     Further  Documentation;  Pledge  of  Instruments. At any time and
               ------------------------------------------------
from  time  to time, upon the written request of Lender, and at the sole expense
of  Borrower, Borrower shall promptly execute, deliver and record any documents,
instruments,  agreements  and  amendments,  and take all such further action, as
Lender  may  reasonably  deem  desirable  in obtaining the full benefits of this
Agreement  and  of  the  rights  and  powers  herein granted, including, without
limitation,  the filing of any financing statements or amendments under the UCC.
Borrower  also  hereby authorizes Lender to file any such financing statement or
amendment thereto, without the signature of Borrower, or with a copy or telecopy
of  Borrower's  signature,  to  the  extent  permitted  by applicable law, or to
execute  any  financing  statement or amendment thereof on behalf of Borrower as
Borrower's  attorney-in-fact.  If any amount payable under or in connection with
any  of  the  Collateral  shall be or become evidenced by any promissory note or
other  instrument  or  any  certificated  securities,  such  note, instrument or
certificate shall be immediately pledged and delivered to Lender hereunder, duly
endorsed in a manner satisfactory to Lender.  Lender acknowledges and recognizes
that  Borrower's assignment of or grant of a security interest in its Regulatory
Authorizations  may  be  subject  to  restrictions  imposed by the FCC or PUC on
Borrower's  ability  to  assign  its  interest  in  or  transfer  control of any
Regulatory  Authorizations.  Likewise,  Lender  acknowledges and recognizes that
Borrower's  assignment  of or grant of a security interest in any state or local
franchises  or  licenses  may  be  subject  to  similar government restrictions.
Borrower  acknowledges, however, that the value of the Regulatory Authorizations
is  a  critical  part of Lender's collateral package, and agrees to use its best
efforts  to  effect  the transfer of such Regulatory Authorizations to Lender or
its  designee  upon  the  occurrence  of  an  Event  of  Default.

     3.04.     Further  Identification  of Collateral. Borrower shall furnish to
               --------------------------------------
Lender  from  time  to  time  statements  and  schedules further identifying and
describing  the  Collateral  and  such  other  reports  in  connection  with the
Collateral  as  Lender  may  reasonably  request,  all  in  reasonable  detail.

     3.05.     Remedies.  Lender  shall  have  all  the rights and remedies of a
               --------
secured  party  under  the  UCC,  and  shall be entitled to exercise any and all
remedies  available  under  Article 9 hereof or otherwise available at law or in
equity  upon  the  occurrence  of  an  Event  of  Default.


                                       18
<PAGE>
     3.06.     Standard  of  Care.  Lender  shall  be  deemed  to have exercised
               ------------------
reasonable  care in the custody and preservation of any of the Collateral in its
possession  if  it  takes  such  action for that purpose as Borrower requests in
writing,  but  Lender's  failure  to  comply  with any such request shall not of
itself be deemed a failure to exercise reasonable care, and no failure of Lender
to  preserve or protect any rights with respect to such Collateral against prior
parties,  or  to  do any act with respect to the preservation of such Collateral
not  so  requested by Borrower, shall be deemed a failure to exercise reasonable
care  in  the  custody  or  preservation  of  such  Collateral.

     3.07.     Advances  to  Protect  Collateral.  All insurance expense and all
               ---------------------------------
expenses  of  protecting,  storing, warehousing, insuring, handling, maintaining
and  shipping the Collateral (including, without limitation, all rent payable by
Borrower  to  any  landlord  of  any premises where any of the Collateral may be
located)  and  any and all taxes shall be borne and paid by Borrower. Lender may
(but shall not be obligated to) make advances to preserve, protect or obtain any
of  the  Collateral,  including  advances  to  cure  defaults  under  any  lease
agreements  for  Sites or advances to pay taxes, insurance and the like, and all
such advances shall become part of the Obligations owing to Lender hereunder and
shall  be  payable  to  Lender on demand, with interest thereon from the date of
such  advance  until  paid  at  the  Default  Rate in effect on the date of such
advance.

     3.08.     License to Use. Lender is hereby granted a license or other right
               --------------
to  use after and during the continuance of an Event of Default, without charge,
Borrower's  labels, patents, copyrights, rights of use of any name, trade names,
trademarks  and  advertising  matter,  or any tangible or intangible property or
rights  of a similar nature as it pertains to the Collateral, in advertising for
sale  and  selling  any Collateral, and Borrower's rights under all licenses and
franchise  agreements  with  respect  to  the Collateral shall inure to Lender's
benefit.

     3.09.     Guarantees.  Payment  of the Borrower's Obligations shall also be
               ----------
unconditionally  guaranteed  by  Telscape,  pursuant  to  the  form  of Guaranty
Agreement attached as Exhibit G to this Agreement, and by each existing and each
                      ---------
future  Significant Subsidiary which is a Domestic Subsidiary. In the event that
the  Guarantors  (excluding Telscape) have assets or revenues (as applicable) in
the  aggregate  on  a  non-consolidated  basis  of  less  than 90% of Telscape's
domestic  consolidated  assets  or  revenues (whichever applies first) as of the
Closing Date, as of the end of each of Telscape's fiscal years thereafter, or as
of  the  end  of  Telscape's  fiscal quarter immediately preceding any Borrowing
Date,  then  Borrower  shall  cause  additional  direct  or  indirect  Domestic
Subsidiaries of Telscape designated by the Borrower and acceptable to the Lender
to  execute and deliver Guaranty Agreements in the form attached as Exhibit H to
                                                                    ---------
this  Agreement  so that the domestic assets and revenues (as applicable) in the
aggregate  on  a  non-consolidated  basis  of  all  of the Guarantors (excluding
Telscape)  that  are also Domestic Subsidiaries (including each newly-designated
Significant  Subsidiary)  exceeds 90% of Telscape's domestic consolidated assets
and  90%  of  Telscape's  domestic  consolidated  revenues,  as  applicable.

     3.10.     Collateral  Assignment  of  Nortel  Purchase  Agreement.  On  the
               -------------------------------------------------------
Closing  Date, the Borrower shall assign to the Lender, as additional collateral
security,  all  of the Borrower's right, title and interest in and to the Nortel
Purchase  Agreement  pursuant  to  the form of Collateral Assignment of Purchase
Agreement  attached  as Exhibit I to this Agreement and shall obtain the consent
of  Nortel to that assignment. Borrower shall make future collateral assignments
to  the  Lender  of any additional purchase agreements subsequently entered into
with  Nortel  and  shall  use  its reasonable efforts to deliver consents to the
Lender  from  Nortel  for  those  subsequent assignments within 10 business days
after  the  effective  date  of  each  subsequent  purchase  agreement  using
substantially  the  same  forms  as  attached  as  exhibits  to  this Agreement.


                                       19
<PAGE>
     3.11.     Release  of  Security  Interest.  Upon the payment of all amounts
               -------------------------------
due  under  the  Notes  and  all  of Lender's Expenses, Lender shall release its
security interest in the Collateral and any indemnity obligations of Borrower to
Lender  which  survive  the  payment  thereafter  shall  become  unsecured
notwithstanding  any  other  provision  in  this  Loan  Agreement.


                    ARTICLE 4: REPRESENTATIONS AND WARRANTIES
                    -----------------------------------------

     Borrower  hereby  represents  and  warrants  to  Lender  as  follows:

     4.01.     Organization  and Qualification.  Each of Telscape, the Borrower,
               -------------------------------
and  each Subsidiary is duly organized, validly existing and in good standing as
a  corporation  under  the  laws  of  its  state  of organization. Telscape, the
Borrower,  and  each  Subsidiary  is  duly  qualified to do business and in good
standing  in  each  jurisdiction  in which the failure to receive or retain such
qualification  would  have  a  Material  Adverse  Effect.

     4.02.     Authority and Authorization.  Each of Telscape, the Borrower, and
               ---------------------------
each  Significant Subsidiary has all requisite corporate right, power, authority
and  legal  right  to  execute and deliver and perform its obligations under the
Loan  Documents  to which it is a party, to make and secure (as the case may be)
the  borrowings  provided  for herein, and to execute and deliver and to perform
its  obligations  under  the  Loan  Documents  to  which it is a party.  Each of
Telscape's, the Borrower's and each Significant Subsidiary's execution, delivery
and  performance  of  the Loan Documents to which it is a party Basic Agreements
have  been duly and validly authorized by all necessary corporate proceedings on
the  part  of  Telscape,  the  Borrower,  and  each  Significant  Subsidiary.

     4.03.     Execution  and  Binding Effect. This Agreement, the Note, and all
               ------------------------------
other  Basic  Agreements  have  been  or  will  be duly and validly executed and
delivered  by  Telscape,  the  Borrower,  and  each  Significant  Subsidiary, as
applicable,  and constitute or, when executed and delivered, will constitute the
legal,  valid  and  binding  obligations  of  Telscape,  the  Borrower, and each
Significant  Subsidiary,  as  applicable,  enforceable  in accordance with their
respective  terms,  except  as such enforceability may be limited by bankruptcy,
insolvency,  reorganization,  receivership,  moratorium  or other laws affecting
creditors'  rights  generally.

     4.04.     Governmental  Authorizations.  Except for the consents identified
               ----------------------------
on  Schedule  4.04  hereto (the "Required Consents"), no authorization, consent,
    --------------               -----------------
approval,  license,  exemption  or  other  action  by,  and  no  registration,
qualification,  designation,  declaration  or  filing  with,  any  Governmental
Authority  (other  than  the  filing  of  financing  statements and continuation
statements)  is  or  will  be  necessary  in  connection  with the execution and
delivery  of  this Agreement, the Note, or any other Loan Documents by Telscape,
the  Borrower,  or  any  Significant  Subsidiary;  the  consummation  of  the
transactions herein or therein contemplated; the performance of or compliance by
Telscape,  the  Borrower,  and  each  Significant  Subsidiary with the terms and
conditions  hereof  or  thereof;  or  the  legality, validity and enforceability
hereof  or  thereof.

     4.05.     Regulatory  Authorizations.  Telscape,  the  Borrower,  and  the
               --------------------------
Significant  Subsidiaries  collectively  hold  all  authorizations,  permits and
licenses  required  by  the  FCC,  the  PUC,  or  any Communications Law for the
construction and operation of the System, and all such Regulatory Authorizations
are  in  full force and effect, are subject to no further administrative (except
as set forth in Schedule 4.05) or judicial review, and are therefore final.  The
                -------------
Lender will not by reason of the execution, delivery and performance (other than
the  enforcement  of  remedies)  of  any of the Loan Documents be subject to the
regulation  or  control  of  either  the  FCC  or  the  PUC.  The  Regulatory
Authorizations  are  described  on  Schedule  4.05.
                                    --------------


                                       20
<PAGE>
     4.06.     Material  Agreement; Absence of Conflicts. Except as set forth on
               -----------------------------------------
Schedule  4.06  hereof,  the execution and delivery of this Agreement, the Note,
--------------
and  the  other  Loan  Documents; the consummation of the transactions herein or
therein  contemplated;  and  the performance of or compliance with the terms and
conditions  hereof  or  thereof  by Telscape, the Borrower, and each Significant
Subsidiary will not (a) materially violate any applicable Law; (b) conflict with
or  result  in  a  breach  of or a default under the Organizational Documents of
Telscape,  the  Borrower,  or  any  Subsidiary,  or conflict with or result in a
material  breach  of  or  default  under  any  agreement  or instrument to which
Telscape,  the  Borrower, or any Subsidiary is a party or by which Telscape, the
Borrower,  or  any  Subsidiary or its properties are bound; or (c) result in the
creation  or  imposition  of  any Lien upon any property (now owned or hereafter
acquired)  of  Telscape,  the  Borrower,  or any Subsidiary, except as otherwise
contemplated  by  this  Agreement.

     4.07.     No  Restrictions.  None  of  Telscape,  the  Borrower,  or  any
               ----------------
Significant  Subsidiary  is not a party or subject to any contract, agreement or
restriction  in  its  Organizational  Documents  that  materially  and adversely
affects  its  business  or  the  use  or  ownership  of any of its properties or
operation  of its business. Except as set forth on Schedule 4.07 hereof, none of
                                                   -------------
Telscape,  the  Borrower,  or  any  Subsidiary  is not a party or subject to any
contract  or  agreement  which  restricts  its  right  or  ability  to  incur
Indebtedness.  None  of Telscape, the Borrower, or any Subsidiary has not agreed
or  consented  to  cause  or  permit  in  the  future  (upon  the happening of a
contingency  or otherwise) any of the Collateral, whether now owned or hereafter
acquired,  to  be  subject  to  a  Lien  that  is  not  a Permitted Encumbrance.

     4.08.     Financial  Statements.  The  Borrower has furnished to Lender the
               ---------------------
most recent annual or quarterly financial statements of Telscape, certified by a
Responsible Officer of Telscape, including balance sheets and related statements
of  income  and  retained earnings and statements of cash flows, as described on
Schedule  4.08  hereof.  Such financial statements (including the notes thereto)
--------------
present fairly the financial condition of Telscape on a consolidated basis as of
the  end of such fiscal period and the results of its operations and the changes
in  its  financial position for the fiscal period then ended, all in  conformity
with  GAAP  applied  on  a  basis  consistent  with that of the preceding fiscal
period. Any projections and pro forma financial statements delivered by Borrower
to  Lender  were  prepared  in  good  faith,  based  on  reasonable assumptions,
including  (without  limitation)  the  cost  of  capital,  but Borrower makes no
representation  as  to  the  accuracy  of  any  such  projections.

     4.09.     Financial  Accounting Practices.  Each of Telscape, the Borrower,
               -------------------------------
and  each  Subsidiary  has  made  and kept books, records and accounts which, in
reasonable detail, accurately and fairly reflect its respective transactions and
dispositions  of  its  assets,  and  each  of  Telscape,  the Borrower, and each
Subsidiary shall maintain a system of internal accounting controls sufficient to
provide  reasonable  assurances that (a) transactions are executed in accordance
with  management's  general  or  specific  authorization;  (b)  transactions are
recorded  as  necessary  (i)  to  permit  preparation of financial statements in
conformity  with GAAP and (ii) to maintain accountability for assets; (c) access
to  assets is permitted only in accordance with management's general or specific
authorization;  and  (d) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect  to  any  differences.

     4.10.     Accurate  and  Complete Disclosure. No representation or warranty
               ----------------------------------
made  by  Borrower  under  this Agreement and no statement made by Telscape, the
Borrower,  or  any  Subsidiary  in any financial statement, certificate, report,
exhibit  or  document  furnished  by  Telscape, the Borrower, or a Subsidiary to
Lender  pursuant  to  or  in  connection with this Agreement (including, without
limitation, any filings with the Securities Exchange Commission, the FCC, or the
PUC)  is  or was false or misleading as of the date made in any material respect
(including  the  omission  of  any  material  information necessary to make such
representation,  warranty  or  statement  not  misleading); it being understood,
however,  that  Telscape,  the  Borrower,  and  the  Subsidiaries  make  no
representations  as  to any projections furnished to Lender.  There are no facts
that  evidence  or  create a Material Adverse Effect, or, so far as Borrower can
now  foresee,  will  evidence or create a Material Adverse Effect, which has not
been set forth in the financial statements referred to in Section 4.08 hereof or
                                                          ------------
otherwise  disclosed  in  writing  to  Lender prior to the First Borrowing Date.


                                       21
<PAGE>
     4.11.     No  Event  of  Default;  Compliance with Material Agreements.  No
               ------------------------------------------------------------
event has occurred and is continuing and no condition exists which constitutes a
Default  or an Event of Default after giving effect to the Advance to be made on
the First Borrowing Date. As of the date hereof, none of Telscape, the Borrower,
or  any  Subsidiary  is  in  violation of any term of its material agreements or
instruments  to  which  it is a party or by which it or its properties is bound.

     4.12.     Litigation.  Except  as  set  forth in Schedule 4.12, there is no
               ----------                             -------------
action,  suit  or  proceeding  pending  or,  to  the  knowledge of Telscape, the
Borrower,  or  a  Subsidiary  threatened by or before any Governmental Authority
against  or  affecting  Telscape,  the Borrower, any Subsidiary, or any of their
properties,  rights or licenses which if adversely decided would have a Material
Adverse  Effect.

     4.13.     Rights to Property; Intellectual Property.  The Borrower has good
               -----------------------------------------
and  marketable title to the Collateral, subject only to Permitted Encumbrances.
Each  of  Telscape,  the Borrower and their respective Subsidiaries has good and
marketable title to all personal and real property purported to be owned by them
as reflected in the most recent balance sheet referred to in Section 4.08 hereof
                                                             ------------
(except  as  sold  or otherwise disposed of in the ordinary course of business).
Each  of  Telscape,  the  Borrower  and  their  respective  Subsidiaries owns or
possesses  the right to use all patents, trademarks, service marks, trade names,
copyrights,  know-how,  franchises, software and software licenses necessary for
the  operation  of  their business, free from burdensome restrictions other than
such  defects  in  title or limitations in rights to use that individually or in
the  conjunction  with  each  other  do not or will not cause a Material Adverse
Effect.

     4.14.     Financial  Condition.  Telscape's  financial  condition  is
               --------------------
accurately  described  in  the  Certificate  of  Financial Condition executed by
Telscape  and  the  Borrower  pursuant  to  this  Agreement.

     4.15.     Taxes.  Telscape's,  the  Borrower's,  and  each  Significant
               -----
Subsidiary's  federal  tax  identification  number is set forth on Schedule 1.01
                                                                   -------------
hereto.  Except  as  disclosed on Schedule 4.15 hereto, all tax returns required
                                  -------------
to  be  filed  by  Telscape,  the Borrower, or any Subsidiary have been properly
prepared,  executed  and  filed,  and  all  taxes,  assessments,  fees and other
governmental  charges  upon  Telscape, the Borrower, and each Subsidiary or upon
any  of  its  properties, incomes, sales or franchises which are shown to be due
and payable thereon have been paid, other than taxes or assessments the validity
or  amount  of which Telscape, the Borrower, or the Subsidiary is determining or
contesting  in good faith or for which Telscape, the Borrower, or the Subsidiary
has  filed  appropriate extensions. The reserves and provisions for taxes on the
books  of  Telscape, the Borrower, and each Subsidiary are adequate for all open
years  and  for  its  current  fiscal  period.

     4.16.     No  Material  Adverse  Change.  Since  the  date of the financial
               -----------------------------
statements referenced in Section 4.08, there has been no Material Adverse Change
                         ------------
except  as  disclosed  on  Schedule  4.16.

     4.17.     No  Regulatory  Event.  No  Regulatory  Event has occurred and is
               ---------------------
continuing.

     4.18.     Trade  Relations.  There  exists no actual or, to Telscape's, the
               ----------------
Borrower's  or  any Subsidiary's knowledge, threatened termination, cancellation
or  limitation  of,  or any modification or change in, the business relationship
between  Telscape,  the  Borrower,  or any Subsidiary and any Carrier, any labor
organizations,  any  customer,  or  any  group  thereof  whose  agreements  with
Telscape,  the  Borrower, or any Subsidiary or use of the System individually or
in  the aggregate are material to the business of Telscape, the Borrower, or any
Subsidiary, or with any material Supplier, and there exists no present condition
or state of facts or circumstances which would have a Material Adverse Effect or
prevent  Telscape,  the Borrower, or any Subsidiary from conducting its business
after  the  consummation  of  the  transactions  contemplated by this Agreement.


                                       22
<PAGE>
     4.19.     No  Brokerage  Fees.  No  brokerage  or  other fee, commission or
               -------------------
compensation  is  to be paid by Telscape, the Borrower, or any Subsidiary to any
Person  in  connection  with  the  Loans  to be made hereunder other than to the
Lender.  The  Borrower  hereby  indemnifies  Lender  against  any claims brought
against  Lender  for  brokerage  fees  or  commissions of any Person based on an
agreement  with  Telscape, the Borrower, or any Subsidiary and agrees to pay all
expenses  incurred  by  Lender  in  connection with the defense of any action or
proceeding  brought  to  collect  any  such  brokerage  fees  or  commissions.

     4.20.     Margin  Stock;  Regulation  U.  The  Borrower  is  not  engaged
               -----------------------------
principally, or as one of its important activities, in the business of extending
credit  for  the  purpose of purchasing or carrying margin stock.  The making of
the Advances and the use of the proceeds thereof will not violate Regulations G,
U  or  X  of  the  Board  of  Governors  of  the  Federal  Reserve  System.

     4.21.     Investment Company; Public Utility Holding Company.  The Borrower
               --------------------------------------------------
is  not  an  "investment  company"  or  a  "company  controlled by an investment
company"  within  the meaning of the Investment Company Act of 1940, as amended,
or  a "holding company," or a "subsidiary company" of a "holding company," or an
"affiliate"  of  a  "holding company" or of a "subsidiary company" of a "holding
company,"  within the meaning of the Public Utility Holding Company Act of 1935,
as  amended.

     4.22.     Personal  Holding  Company;  Subchapter S.  The Borrower is not a
               -----------------------------------------
"personal  holding company" as defined in Section 542 of the Code.  The Borrower
is  not  a  "Subchapter  S"  corporation  within  the  meaning  of  the  Code.

     4.23.     ERISA.  (i)  With  respect  to any Plan, to Borrower's knowledge,
               -----
there is no Reportable Event currently under consideration by the PBGC which may
reasonably  result  in  any  material  liability to the PBGC with respect to any
Plan,  (ii)  no Plan has been terminated, (iii) no trustee has been appointed by
any  United  States District Court to administer any Plan, (iv) the PBGC has not
instituted  proceedings  to  terminate  any  Plan  or  to  appoint  a trustee to
administer  any  such  Plan,  (v)  neither  Telscape,  the  Borrower,  nor  any
Significant  Subsidiary  has  withdrawn, completely or partially, from any Plan,
and  (vi)  neither  Telscape,  the  Borrower, nor any Significant Subsidiary has
incurred  secondary  liability for withdrawal liability payments under any Plan.

     4.24.     Environmental  Warranties.  Telscape,  the  Borrower,  and  each
               -------------------------
Subsidiary  is in compliance with all Environmental Laws applicable to Telscape,
the  Borrower,  or  any  Subsidiary,  or its business or to the real or personal
property owned, leased or operated by Telscape, the Borrower, or any Subsidiary.
None of Telscape, the Borrower, or any Subsidiary has received notice of, nor is
aware  of,  any  violations  or alleged violations, or any liability or asserted
liability,  under  any  such  Environmental  Laws, with respect to Telscape, the
Borrower,  any  Subsidiary,  or  their  business  or  properties.


                                       23
<PAGE>
     4.25.     Security  Interests.  The  provisions  of  Article  3  hereof are
               -------------------                        ----------
effective to create in favor of Lender a legal, valid and enforceable Lien on or
security interest in all of the Collateral, and, when the recordings and filings
described  on Schedule 4.25 hereto have been properly made in the public offices
              -------------
listed  on  said  Schedule  4.25,  this  Agreement  will  create  a  perfected
                  --------------
first-priority  security  interest  in  all right, title, estate and interest of
Borrower  in the Collateral, and subject to no other Liens, except for Permitted
Encumbrances.  All  action  necessary  or  desirable to protect and perfect such
security interest in each item of the Collateral will have been duly taken prior
to  the  First Borrowing Date. The recordings and filings shown on said Schedule
                                                                        --------
4.25  are  all the actions necessary or advisable in order to establish, protect
---
and  perfect  the  interest  of  Lender  in  the  Collateral.

     4.26.     Place  of  Business.  The  chief  executive office of Borrower is
               -------------------
identified  on Schedule 4.26 hereto.  The Borrower's principal place of business
               -------------
in  the  state(s)  where the Equipment is located is identified on Schedule 4.26
                                                                   -------------
hereto.  The Borrower's records concerning the Collateral are kept at one or all
of  these  addresses.

     4.27.     Location of Collateral. The Collateral is and will be kept at the
               ----------------------
locations  identified  on Schedule 4.26 hereto or such other locations as may be
                          -------------
permitted  under  Section  8.04.
                  -------------

     4.28.     Clear  Title  To  Collateral.  The  Borrower is the sole owner of
               ----------------------------
each  item of the Collateral, having good and marketable title thereto, free and
clear  of any and all Liens, claims or rights of others, except for the security
interest  granted  herein  to  Lender  and  the  other  Permitted  Encumbrances.

     4.29.     Assumed  Names.  Except as set forth on Schedule 4.29 hereto, the
               --------------                          -------------
Borrower  does  not  conduct business under any assumed names or trade names and
has  not  conducted business under any other names or any assumed names or trade
names  at  any  time  prior  to  the  date  hereof.

     4.30.     Transactions  with  Affiliates.  No  Affiliate  and no officer or
               ------------------------------
director  of Telscape, the Borrower, or any Subsidiary or any individual related
by  blood,  marriage,  adoption or otherwise to any such officer or director, or
any  Person  in  which  any such officer, director or individual related thereto
owns  any beneficial interest, is a party to any agreement, contract, commitment
or  transaction  with  Telscape,  the  Borrower,  or  any  Subsidiary or has any
material  interest  in  any material property used by Telscape, the Borrower, or
any  Subsidiary,  except  as  set  forth  on  Schedule  4.30  hereto.
                                              --------------

     4.31.     Nortel  Purchase  Agreement.  The  Nortel  Purchase Agreement for
               ---------------------------
Nortel  Equipment  already  acquired has been duly executed and delivered by the
Borrower  and  Nortel;  is  in  full  force  and effect; and a true, correct and
complete  copy  thereof  (including  all  annexes,  attachments  and  amendments
thereto)  has  been  delivered  to  Lender, and there are no other side letters,
waivers  or  other  agreements  affecting  the  terms  thereof.


                        ARTICLE 5: CONDITIONS OF CLOSING
                        --------------------------------

     On  or  before  the  Closing Date, the following conditions shall have been
satisfied:

     5.01.     Borrower's,  Telscape's  and the Other Guarantors' Certificate. A
               --------------------------------------------------------------
certificate of Telscape, the Borrower, and each Significant Subsidiary signed by
a  duly  authorized  Responsible  Officer,  certifying  as to (i) true copies of
Organizational  Documents of Telscape, the Borrower, and each other Guarantor in
effect on such date; (ii) true copies of all corporate action taken by Telscape,
the Borrower, and each other Guarantor relative to this Agreement, the Note, and
the other Loan Documents; (iii) the names, true signatures and incumbency of the
Responsible  Officers  of  Telscape,  the  Borrower,  and  each  other Guarantor
authorized  to  execute and deliver this Agreement, the Note, and the other Loan
Documents;  as  applicable  (iv)  a  Certificate of Good Standing (or equivalent
certificate) for Telscape, the Borrower, and each other Guarantor duly issued by
the  Secretary  of State of each state in which Telscape, the Borrower, and each
other  Guarantor  is organized and with respect to the Borrower in each state in
which  Collateral  is  located.


                                       24
<PAGE>
     5.02.     Opinions  of  Counsel.  Lender  shall have received the following
               ---------------------
opinions,  all  dated  as  of  the  Closing  Date  and  in  form  and  substance
satisfactory  to  Lender:

          (a)     A  written  opinion  of counsel to Telscape, the Borrower, and
each  other  Guarantor,  substantially  in  the  form  of  Exhibit  C  hereto;
                                                           ----------

          (b)     A  written  opinion of regulatory counsel for Borrower and the
Guarantors,  substantially  in  the  form  of  Exhibit  D  hereto;  and
                                               ----------

     5.03.     Closing  Documents.  Lender  shall  have  received  the following
               ------------------
documents,  all  in  form  and  substance  satisfactory  to  Lender:

          (a)     Agreement.  This  Agreement,  duly  executed  by  Borrower;
                  ---------

          (b)     Note.  The  Note,  duly  executed  by  Borrower;
                  ----

          (c)     Financing Statements. All UCC-1 financing statements necessary
                  --------------------
to  perfect  the  Liens granted hereby, each duly executed by Borrower, and duly
recorded  in  all  the  offices  identified  on  Schedule  4.25  hereto;
                                                 --------------

          (d)     Collateral  Assignment  of Purchase Agreement.  The Collateral
                  ---------------------------------------------
Assignment of Purchase Agreement, duly executed by the Borrower, and the consent
to  Collateral  Assignment  of  Purchase  Agreement,  duly  executed  by Nortel;

          (e)     Insurance.  Policies and certificates of insurance required by
                  ---------
Section  7.07,  accompanied by evidence of the payment of the premiums therefor;
-------------

          (f)     Financial  Statements.  The  financial statements described in
                  ---------------------
Section  4.08  hereof;
-------------

          (g)     [INTENTIONALLY  OMITTED].
                  ------------------------

          (h)     Certificate of Financial Condition. A Certificate of Financial
                  ----------------------------------
Condition,  duly executed by a Responsible Officer of Telscape and the Borrower.

          (i)     Pre-Closing  Lien  Searches.  Lien  searches  from  all
                  ---------------------------
jurisdictions reasonably determined by Lender to be appropriate, effective as of
a  date  reasonably  close to the Closing Date, reflecting no other Liens (other
than  Permitted  Encumbrances)  on  any  of  the  Collateral.

          (j)     Guaranty  Agreements.  A  Guaranty Agreement, duly executed by
                  --------------------
Telscape  and  each  Significant  Subsidiary  which  is  a  Domestic Subsidiary.


                                       25
<PAGE>
                        ARTICLE 6: CONDITIONS OF LENDING
                        --------------------------------

     6.01.     Conditions  for Initial Advance. On or before the First Borrowing
               -------------------------------
Date,  the  following  conditions  shall have been met to Lender's satisfaction:

          (a)     Post-Closing  Lien  Searches.  Lender  shall  have  received
                  ----------------------------
satisfactory results of Lien searches in all jurisdictions reasonably determined
by  Lender  to  be appropriate, reflecting the filing of financing statements in
favor  of  Lender  pursuant  hereto  and  no  other  Liens  other than Permitted
Encumbrances.

          (b)     Required  Consents.  Lender  shall  have received satisfactory
                  ------------------
evidence  of  Borrower's  obtaining  the  Required  Consents.

     6.02.     Conditions for All Advances. The obligation of Lender to make any
               ---------------------------
Advance  hereunder  is  subject  to  Borrower's  performance  of its obligations
hereunder  on  or before the date of such Advance and to the satisfaction of the
following  further  conditions  on or before the Borrowing Date for any Advance,
including  the  first  Advance:

          (a)     Filings,  Registrations  and  Recordings.  Any  financing
                  ----------------------------------------
statements  or  other  recordings  required  hereunder  shall have been properly
filed,  registered  or  recorded in each office in each jurisdiction required in
order  to  create  in  favor  of  Lender  a perfected first-priority Lien on the
Collateral, subject to no other Lien (other than Permitted Encumbrances); Lender
shall have received acknowledgment copies of all such filings, registrations and
recordings  stamped  by  the  appropriate  filing officer; and Lender shall have
received  results  of  searches of such filing offices and satisfactory evidence
that  any other Liens (other than Permitted Encumbrances) on the Collateral have
been duly released and that all necessary filing fees, recording fees, taxes and
other  expenses  related to such filings, registrations and recordings have been
paid  in  full.

          (b)     Borrowing  Certificate.  Lender  shall  have  received  a duly
                  ----------------------
executed  Borrowing  Certificate  in the form of Exhibit B, including a detailed
                                                 ---------
itemization  of  all costs of goods and services to be paid with the proceeds of
the  Advance and accompanied by supporting documentation satisfactory to Lender.

          (c)     Reporting  Requirements.  Borrower  shall have provided Lender
                  -----------------------
with  all  relevant  reports  and  information  required under Article 7 hereof.
                                                               ---------

          (d)     No Regulatory Event. No Regulatory Event (in either Borrower's
                  -------------------
or  Lender's  reasonable determination) shall have occurred and be continuing or
would  exist  upon  the  consummation of transactions to occur on such Borrowing
Date.

          (e)     No Default or Event of Default. No Default or Event of Default
                  ------------------------------
shall  have  occurred  and be continuing or would exist upon the consummation of
transactions  to  occur  on  such  Borrowing  Date.

          (f)     No  Material  Adverse Change. No Material Adverse Change shall
                  ----------------------------
have  occurred or would occur after giving effect to such Advance since the date
of the last financial statements delivered to Lender pursuant to Section 4.08 or
                                                                 ------------
7.01  hereof.
----

          (g)     Representations  and  Warranties.  The  representations  and
                  --------------------------------
warranties  contained in Article 4 hereof shall be true in all material respects
                         ---------
on  and  as  of  the  date  of  each  such  Advance  hereunder.


                                       26
<PAGE>
          (h)     Lender's  Expenses.  All  closing  costs  and  other  Lender's
                  ------------------
Expenses  shall have been paid in full (or shall be paid first from such Advance
as  provided  in  Section  2.03  hereof).
                  -------------

          (i)     Opinions.  Lender  shall  have  received  from  Borrower  such
                  --------
opinions  of  counsel  for Borrower as may be reasonably acceptable to Lender in
form  and  substance  with respect to the perfection of the Liens created by the
Security  Documents  in  each  jurisdiction where Collateral is located or to be
located.

          (j)     Details,  Proceedings  and  Documents.  All  legal details and
                  -------------------------------------
proceedings  in  connection with the transactions contemplated by this Agreement
shall  be  reasonably satisfactory to Lender, and Lender shall have received all
such  counterpart  originals  or certified or other copies of such documents and
proceedings  in  connection  with  such  transactions,  in  form  and  substance
reasonably  satisfactory  to  Lender,  as  Lender may from time to time request.

          (k)     Consents. Lender shall have received Consents duly executed by
                  --------
all  parties  and  in  form  satisfactory  to  Lender.

          (l)     Fees.  Lender  shall  have  received  the  fee(s) described in
                  ----
Section  2.09  hereof.
-------------

          (m)     Purchase Agreements. Lender shall have received a copy of each
                  -------------------
executed Nortel Purchase Agreement and/or Vendor Purchase Agreement with respect
to  which  proceeds  of  an Advance shall be used to acquire Nortel Equipment or
other Equipment, and Lender shall have reviewed and approved the Equipment to be
acquired  with  proceeds  of an Advance, together with the collateral assignment
and  consent  specified  in  Section  3.10  of  this  Agreement.
                             -------------

          (n)     Post-Closing  Items.  The  post-closing  items  described  on
                  -------------------
Schedule  6.02  hereto, if any, shall have been completed in the time permitted,
--------------
and  Borrower  shall  have  provided  Lender with satisfactory evidence thereof.

     6.03.     Affirmation  of  Representations  and  Warranties.  Any Borrowing
               -------------------------------------------------
Certificate  or  other  request  for  any  Advance  hereunder shall constitute a
representation  and  warranty  that  (a)  the  representations  and  warranties
contained  in  Article 4 hereof are true and correct in all material respects on
               ---------
and as of the date of such request with the same effect as though made on and as
of  the  date of such request and (b) on the date of such request, no Default or
Event of Default has occurred and is continuing,  exists, or will occur or exist
after  giving effect to such Advance (for this purpose such Advance being deemed
to  have  been  made  on the date of such request). Failure of Lender to receive
notice  from  Borrower  to  the  contrary  before  such  Advance  is  made shall
constitute  a  further  representation  and  warranty  by  Borrower that (x) the
representations  and  warranties  of Borrower contained in the first sentence of
this  Section  6.03  are  true and correct on and as of the date of such Advance
      -------------
with  the  same  effect as though made on and as of the date of such Advance and
(y)  on the date of the Advance, no Default or Event of Default has occurred and
is  continuing,  exists  or  will  occur  or  exist  after giving effect to such
Advance.

     6.04.     Deadline  for Funding Conditions. Lender shall have no obligation
               --------------------------------
to  make  any Advances hereunder if all of the conditions set forth in Article 5
                                                                       ---------
and  in  Sections  6.01  and  6.02 hereof have not been fully satisfied, and the
         -------------------------
first  Advance made hereunder, within the period of 12 calendar months following
the  Closing  Date.


                                       27
<PAGE>
                        ARTICLE 7: AFFIRMATIVE COVENANTS
                        --------------------------------

     Borrower hereby agrees that, as long as the commitment hereunder remains in
effect,  the Note remains outstanding or unpaid, or any other amount is owing to
Lender  hereunder  or  under  any of the Loan Documents, Borrower shall keep and
perform  fully  each  and  all  of  the  following  covenants:

     7.01.     Reporting  and  Information  Requirements.
               -----------------------------------------

          (a)     Annual Audit Reports. As soon as practicable, and in any event
                  --------------------
within  105 days after the close of each fiscal year of Telscape, Borrower shall
furnish  or  cause  to be furnished to Lender audited consolidated statements of
income,  cash  flow, and retained earnings for Telscape for the preceding fiscal
year  and  Telscape's  consolidated  balance sheet as of the close of the fiscal
year,  and  notes  to  each,  all  in  reasonable  detail  and  setting forth in
comparative  form  the corresponding figures for the preceding fiscal year, with
such  statements  and  balance  sheet  to  be certified without qualification by
independent  certified  public  accountants  of  recognized regional or national
standing  selected  by  Telscape  and  reasonably  satisfactory  to  Lender.

          (b)     Quarterly Reports. Within 50 days after the end of each fiscal
                  -----------------
quarter,  the  Borrower  shall  furnish  to  Lender  (i)  unaudited consolidated
statements  of  income,  cash  flow,  and retained earnings for Telscape for the
preceding  fiscal  quarter  and  for the period from the beginning of Telscape's
then  current  fiscal  year  to  the end of the fiscal quarter, and an unaudited
consolidated  balance sheet of Telscape as of the end of the fiscal quarter, all
in  reasonable  detail  and  certified  by  a Responsible Officer of Telscape as
presenting fairly the financial position of Telscape as of the end of the fiscal
quarter  and  the  results  of  its  operations and the changes in its financial
position  for  fiscal  quarter, in conformity with GAAP (except for accompanying
notes  thereto),  subject  to year-end audit adjustments, and (ii) upon Lender's
request,  an  aging  of  accounts  payable  and  accounts  receivable.

          (c)     Consolidating  Financial  Statements.  As soon as practicable,
                  ------------------------------------
and  in  any  event  within  105  days  after  the  close of each fiscal year of
Telscape,  Borrower  shall  furnish or cause to be furnished to Lender unaudited
statements  of income for the preceding fiscal year and unaudited balance sheets
as  of  the  close  of the fiscal year for each Significant Subsidiary, together
with  a  consolidating  statement  of  income  and balance relating to Telscape.

          (d)     Compliance  Certificates. Within 50 days after the end of each
                  ------------------------
Calendar Quarter, Borrower shall deliver to Lender a certificate dated as of the
end  of  such  Calendar  Quarter, signed on behalf of Borrower and Telscape by a
Responsible  Officer  of  Borrower  and Telscape (i) stating that as of the date
thereof  no  Event of Default has occurred and is continuing or exists or, if an
Event  of Default has occurred and is continuing or exists, specifying in detail
the  nature  and period of existence thereof and any action with respect thereto
taken  or contemplated to be taken by Borrower; (ii) stating that the signer has
personally  reviewed  this  Agreement  and the Guaranty Agreements and that such
certificate  is  based on an examination made by or under the supervision of the
signer  sufficient  to  assure  that  such  certificate  is  accurate; and (iii)
calculating  and  certifying  Telscape's compliance with the financial covenants
set  forth  in  Section  7.15  hereof.
                -------------

          (e)     Accountants'  Certificate.  Each set of audited statements and
                  -------------------------
balance sheets delivered pursuant to Section 7.01(a) hereof shall be accompanied
                                     ---------------
by a certificate or report dated the date of such statement and balance sheet by
the  accountants  who  certified  such  statements and balance sheet, stating in
substance  that  they  have  reviewed  this  Agreement  and  that, in making the
examination  necessary  for  their  certification  of the statements and balance
sheets,  they  did  not  become  aware  of any Default or, if they did become so
aware,  the certificate or report shall state the nature and period of existence
thereof.


                                       28
<PAGE>
          (f)     Projections. If requested by Lender, Borrower shall deliver to
                  -----------
Lender  within 30 days prior to the beginning of each fiscal year projections of
the anticipated income, expenses, cash flow, assets and liabilities for Telscape
for  each  month of that year, prepared in good faith and in a manner and format
consistent  with other financial statements provided by Borrower and Telscape to
Lender.  The  Borrower  shall  cause  the  projections  to  present  fairly  the
anticipated  financial  condition  of  Telscape  and  shall  be  certified  by a
Responsible  Officer  of  Telscape.  Upon  Lender's  request,  or  following any
material  change  in  Telscape's  financial  condition or business, such reports
shall  be provided to Lender quarterly, within 30 days prior to the beginning of
each  Calendar  Quarter.

          (g)     Other  Reports  and Information.  Promptly upon their becoming
                  -------------------------------
available  to  Telscape  or  the  Borrower, the Borrower shall deliver to Lender
copies  of  (i)  all  regular  or  special  reports  or  effective  registration
statements  which  Telscape  or  the  Borrower  shall  file  with  Governmental
Authorities,  the  FCC  or  the PUC (or any successor thereto) or any securities
exchange;  (ii)  financial  statements,  material reports, and other information
distributed  by  Telscape  or  the  Borrower  to  its creditors or the financial
community  in  general;  and  (iii)  all  press releases issued by or concerning
Telscape,  the  Borrower,  or  the  System.

          (h)     Further  Information.  The  Borrower  will promptly furnish to
                  --------------------
Lender  such other information (including any report by independent auditors) in
such  form  as  Lender  may  reasonably  request.

     7.02.     Other  Notices.  Promptly  upon a Responsible Officer of Borrower
               --------------
becoming  aware  of  any  of  the  following,  Borrower shall give Lender notice
thereof,  together with a written statement of a Responsible Officer of Borrower
setting  forth  the details thereof and any action with respect thereto taken or
contemplated  to  be  taken  by  Borrower:

          (a)     a  Default  or  Event  of  Default;

          (b)     any  Material  Adverse  Change;

          (c)     a  default  or  breach  by  Telscape,  the  Borrower,  or  any
Subsidiary  under  any other contractual obligation to which it is a party or by
which  it  or  its  properties  is  bound, if the consequences of such breach or
default  are  material  to  the  business,  operations or financial condition of
Telscape,  the  Borrower,  or  a  Significant  Subsidiary;

          (d)     any event that Borrower reasonably determines would constitute
a  Regulatory  Event;

          (e)     the commencement,  existence or threat of any proceeding by or
before  any  Governmental  Authority  against  Telscape,  the  Borrower,  or any
Subsidiary  which,  if  adversely decided, would have a Material Adverse Effect;

          (f)     Borrower's receipt of any notice of violation of, or liability
under,  any Environmental Laws affecting Telscape, the Borrower, any Significant
Subsidiary,  or  any  of  its  properties;  or

          (g)     any Change in Control or any material change in the management
of  Telscape,  the  Borrower,  or  any  Significant  Subsidiary.


                                       29
<PAGE>
     7.03.     Notice  of  Pension-Related  Events.  The Borrower shall promptly
               -----------------------------------
furnish  Lender  with  written  notice  upon  the  receipt  by  Borrower  or the
administrator  of  any Plan of any notice, correspondence or other communication
from  the  PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or
any other Person, as the case may be, relating to (i) any Reportable Event, (ii)
any  funding  deficiency  with  respect to any Plan, (iii) any liability, either
primary  or  secondary,  with respect to complete or partial withdrawal from any
Plan,  (iv)  proceedings  to  terminate  any  Plan,  or (v) the appointment of a
trustee  for  any  Plan.  Such  notice  shall  be  accompanied  by any pertinent
documents, including, but not limited to, the relevant notice, correspondence or
other  communication  and  a  statement  of  a  Responsible  Officer of Borrower
describing  the  event  or  the  action  taken  and  the  reasons  therefor.

     7.04.     Inspection  Rights.  The  Borrower  shall  upon  reasonable prior
               ------------------
written  notice  (but  no less than 72 hours) permit Lender's employees to visit
and  inspect  the  Collateral; to examine the books and records of Telscape, the
Borrower,  and  each  Subsidiary  and take copies and extracts therefrom; and to
discuss  their respective affairs with their officers, employees and independent
engineers  at  such  times  and  as often as Lender may reasonably request.  The
Borrower hereby authorizes such officers, employees and independent engineers to
discuss  with  Lender  the  affairs  of  the  Borrower.

     7.05.     Preservation  of  Corporate  Existence  and  Qualification.  The
               ----------------------------------------------------------
Borrower  shall  maintain  its  and  each  of  its  Subsidiary's existence, good
standing,  and  rights  in  full  force  and  effect  in  its  jurisdiction  of
organization.  The  Borrower  shall  and  shall  have  each  of its Subsidiaries
qualify  to do business and remain qualified and in good standing and obtain all
necessary authorizations to do business in each jurisdiction in which failure to
receive  or  retain  such  would  have  a  Material  Adverse  Effect.

     7.06.     Continuation of Business.  The Borrower shall continue to operate
               ------------------------
and  maintain the System and shall acquire and maintain in full force and effect
all  rights, privileges, franchises and licenses necessary for the operation and
maintenance  of  the  System,  including  (without  limitation)  any  license or
authorization  required  by  the  FCC  or  any  PUC.

     7.07.     Insurance.
               ---------

          (a)     The  Borrower  shall  provide  and  maintain  or  cause  to be
maintained  at  all  times  insurance  in such forms and covering such risks and
hazards  relating  to  the  Collateral and in such amounts and with an insurance
corporation  with  a Best rating of "A" or above, licensed to do business in the
states  where  the  System  and  Borrower are located, as may be satisfactory to
Lender,  as  shown  on Schedule 7.07 hereto, and otherwise as may be required by
                       -------------
the  Security  Documents.

          (b)     Borrower  shall  cause  (i)  all  liability insurance policies
relating  to  the  Collateral  to name Lender as an additional insured; (ii) all
physical  damage  insurance  policies  to contain a lender's or mortgagee's loss
payable provision acceptable to Lender with respect to the Collateral; (iii) all
insurance  policies  relating  to  the Collateral to provide that no assignment,
cancellation,  modification,  reduction in amount, or adverse change in coverage
thereof  shall  be  effective  until at least 30 days after receipt by Lender of
written  notice  thereof; (iv) all insurance policies to insure the interests of
Lender  with  respect to the Collateral regardless of any breach of or violation
by Borrower of any warranties, declarations or conditions contained therein; and
(v)  all  insurance  policies  relating to the Collateral to provide that Lender
shall  have no obligation or liability for premiums, commissions, assessments or
calls  in connection with such insurance. Lender shall be under no obligation to
verify  the  adequacy  or  existence  of  any insurance coverage. Borrower shall
furnish  Lender  copies of, or acceptable certificates with respect to, all such
policies prior to the Closing Date and shall provide to Lender, at least 30 days
prior to each policy expiration date, evidence of the insurance being maintained
by  Borrower in compliance with this Section 7.07(b). Certificates for insurance
                                     ---------------
required  under  subsection (i) above shall be in ACORD Form 27 (attached hereto
at  Schedule  7.07),  and  all  certificates  shall  be satisfactory in form and
    --------------
substance  to  Lender.


                                       30
<PAGE>
          (c)     If  the  Collateral  is  partially  or  totally  damaged  or
destroyed,  Borrower  shall  give  prompt  notice  to  Lender, and all insurance
proceeds relating to the Collateral, less the costs of collection thereof, shall
be paid to or retained by Lender. Settlements, adjustments or compromises of any
claims  for  loss,  damage  or  destruction  to  the Collateral shall be made by
Borrower  and  Lender  as  long  as  no  Event  of  Default  has occurred and is
continuing,  and  otherwise  shall  be  made  solely  by Lender. Borrower hereby
authorizes  and  directs  any  affected  insurance  company to pay such proceeds
directly  to  Lender and to rely on Lender's statement as to whether an Event of
Default  has  occurred.  Borrower shall pay all costs of collection of insurance
proceeds  payable  on  account  of  such damage or destruction. If no Default or
Event  of  Default  has occurred and is continuing on the date the Collateral is
partially  or  totally  damaged  or  destroyed,  Lender  shall make available to
Borrower  the  proceeds of any physical damage insurance actually paid to Lender
in  respect  of  such  damage  or destruction of the Collateral (after deducting
therefrom  any sums retained by Lender in reimbursement for costs of collection)
to  pay  the  cost  of restoration, and Borrower shall proceed promptly with the
work  of  restoration of the Collateral and shall pursue the work of restoration
diligently to completion. If any Default or Event of Default has occurred and is
continuing  either on the date of such damage or destruction or on the date such
insurance  proceeds  are paid, or if any Default or Event of Default shall occur
prior to completion of such work of restoration, then Lender, at its option, may
apply  such  insurance  proceeds  in  payment of any of the Obligations, in such
order  as  Lender  may  elect  in  its  sole  discretion. Any insurance proceeds
remaining  after  completion of work or restoration shall, at Lender's election,
be  applied  in  accordance  with Section 2.04(c) hereof (but without prepayment
                                  ---------------
premium)  or paid over to Borrower. Upon completion of any restoration, Borrower
shall deliver to Lender a certificate stating that the restoration has been duly
completed  and  accounting  for  the  use  of  any  insurance  proceeds  in such
restoration.

     7.08.     Payment  of  Taxes,  Charges,  Claims  and  Current  Liabilities.
               ----------------------------------------------------------------
Borrower  shall  and  shall  cause each of its Subsidiaries to pay or discharge:

          (a)     on or prior to the date on which penalties thereto accrue, all
taxes, assessments and other government charges or levies imposed upon it or any
of  its  properties  or  income (including such as may arise under Section 4062,
Section  4063 or Section 4064 of ERISA, or any similar provision of law), except
for  filed  extensions;

          (b)     on  or  prior  to  the  date  when  due,  all lawful claims of
materialmen,  mechanics,  carriers,  warehousemen,  and other like persons which
could  result  in  creation  of  a  Lien  on  the  Collateral;  and

          (c)     on  or  prior  to  the  date when due, all other lawful claims
which,  if  unpaid,  might  result  in  the creation of a Lien on the Collateral
(other  than  Permitted  Encumbrances) or which, if unpaid, might give rise to a
claim  entitled  to  priority  over  general creditors of Borrower or any of its
Significant  Subsidiaries  in  a  case under Title 11 (Bankruptcy) of the United
States  Code,  as  amended,  or  in  any insolvency proceeding or dissolution or
winding-up  involving  Borrower  or  its  Significant  Subsidiary.


                                       31
<PAGE>
     Notwithstanding  the  foregoing,  the Borrower and each Subsidiary shall be
entitled  (a)  to  contest or appeal the requirements of any Law or Governmental
Authority  or  the payment of any tax, assessment, charge, levy or claim, or any
judgment entered against the Borrower or any Subsidiary and (b) to be delinquent
in  the  filing of the tax returns and payment of taxes as disclosed in Schedule
4.15  (collectively, in this Section 7.08, all such matters described in clauses
                             ------------
(a)  and (b) of this sentence are referred to as the "requirements"), as long as
                                                      ------------
(i)  such  requirements  are  being  contested  (or for the matters disclosed in
Schedule  4.15,  pursued)  in  good  faith by appropriate proceedings diligently
conducted;  (ii)  the  Borrower  and/or  the Subsidiary has given Lender written
notice  of  such  requirements  and  the intent to contest them, with supporting
reasons  for  such  contest,  before  the  addition of any interest or penalties
(except  for  the  matters  disclosed  on Schedule 4.15) that may accrue on such
requirements;  (iii)  the Borrower and/or the Subsidiary maintains adequate cash
reserves  and  makes  other appropriate provisions as may be required by GAAP to
provide  for  any  liability arising from such requirements; (iv) the contesting
of,  or failure to comply with, such requirements does not in any way jeopardize
the Borrower's and each of its Subsidiaries' ability or authority to operate all
or  any  part  of the Collateral or the continuing priority of Lender's security
interests  in the Collateral; (vi) the contesting of, or failure to comply with,
such  requirements  does  not  have  a  Material  Adverse  Effect; and (vii) any
foreclosure,  attachment,  execution,  sale  or  similar  proceeding against the
Borrower, the Subsidiary, or any of their properties in connection with any such
requirements is duly stayed by posting of a bond or security deposit or by other
action  sufficient  under  applicable  law to stay such foreclosure, attachment,
execution,  sale  or  other  proceedings.

     7.09.     Financial  Accounting  Practices.  The  Borrower  shall and shall
               --------------------------------
cause  its  Subsidiaries  to make and keep books, records and accounts which, in
reasonable  detail,  accurately  and  fairly  reflect  its  transactions  and
dispositions of its assets and maintain a system of internal accounting controls
sufficient  to  provide reasonable assurances that (a) transactions are executed
in  accordance  with  management's  general  or  specific  authorization;  (b)
transactions  are  recorded  as necessary (i) to permit preparation of financial
statements  in  conformity  with  GAAP  and  (ii) to maintain accountability for
assets;  (c)  access to assets is permitted only in accordance with management's
general  or  specific  authorization;  and  (d)  the recorded accountability for
assets  is  compared  with  the  existing  assets  at  reasonable  intervals and
appropriate  action  is  taken  with  respect  to  any  differences.

     7.10.     Compliance  with  Laws. Borrower shall comply and shall have each
               ----------------------
of  its  Subsidiaries  comply  in  all  respects with all Laws applicable to the
Borrower and such Subsidiary provided that Borrower shall not be deemed to be in
violation  of this Section 7.10 as a result of any failure to comply which would
                   ------------
not  result  in  any  liability  or  exposure to Lender or any fines, penalties,
injunctive  relief  or  other  civil  or  criminal  liabilities  which,  in  the
aggregate,  would  materially  affect  the  business,  operations  or  financial
condition  of  the  Borrower or the Subsidiary or the ability of the Borrower or
any  Significant Subsidiary to perform its obligations under this Agreement, the
Note,  or  a  Guaranty  Agreement.

     7.11.     Use of Proceeds.  The Borrower shall use the proceeds of Advances
               ---------------
hereunder  only  as  set  forth  in  Section  2.01  hereof.
                                     -------------

     7.12.     Government  Authorizations;  Regulatory Authorizations, Etc.  The
               -----------------------------------------------------------
Borrower  shall  and shall have each of its Subsidiaries at all times obtain and
maintain  in  force  all Regulatory Authorizations and all other authorizations,
permits, consents, approvals, licenses, exemptions and other actions by, and all
registrations,  qualifications,  designations,  declarations  and  other filings
with,  any  Governmental  Authority  necessary  in connection with execution and
delivery  of this Agreement, the Note, the Guaranty Agreements, the consummation
of  the  transactions  herein  or  therein  contemplated,  the performance of or
compliance  with  the  terms  and conditions hereof or thereof, or to ensure the
legality,  validity  and  enforceability  hereof  or  thereof.


                                       32
<PAGE>
     7.13.     Contracts and Franchises.  The Borrower shall and shall have each
               ------------------------
of  its  Subsidiaries comply with all agreements or instruments to which it is a
party  or by which it or any of its properties (now owned or hereafter acquired)
may be subject or bound and shall maintain any and all franchises it may have or
hereafter  acquire,  provided  that  the  Borrower  shall not be deemed to be in
violation  of  this  Section  7.13 as a result of any failure to comply with any
                     -------------
agreement  if  such  failure  would  not  have  Material  Adverse  Effect.

     7.14.     Consents.  The  Borrower  shall  obtain such Landlord's Consents,
               --------
and other third party consents as Lender shall reasonably request to protect its
Liens  and  its  access  to  the  Collateral.

     7.15.     Financial  Covenants.  The  Borrower shall cause Telscape and the
               --------------------
Subsidiaries  to  comply with the financial covenants set forth on Schedule 7.15
                                                                   -------------
hereto.

     7.16.     Construction  and  Storage. The Collateral shall be installed and
               --------------------------
equipped  in  full  compliance  with  the  Requirements  of  Law  affecting  the
Collateral,  except  to  the  extent  a  failure  to  so comply would not have a
Material  Adverse Effect on the construction or operation of the Collateral. All
Equipment  financed  with  the  proceeds  of  the Loans shall be safeguarded and
stored  until installed in appropriate storage facilities owned or leased by the
Borrower.  In  the  event  of  any  cessation  of  construction for more than 15
successive calendar days, the Borrower shall make adequate provision, reasonably
acceptable to Lender, for the protection of all materials stored on site against
deterioration,  loss  or  damage.

     7.17.     Upgrade  of  Equipment.  The  Borrower  shall update the Software
               ----------------------
used  in  the  Equipment  within  two  releases of the most current batch change
supplement  release.  The  Borrower shall maintain the Equipment in good working
order  in  accordance  with  established  maintenance  procedures  such that the
Equipment  performs  to  published  specifications  and  shall  upgrade  its
functionality  to  include batch change supplements releases generally available
to  customers  of Nortel or the applicable Vendor, as the case may be, and batch
change  supplements  upgrades  included  in  the  original purchase price of the
Purchase  Agreement  in  the  form  in  effect  on the date of the Closing Date.

     7.18.     Further  Assurances  -  Guarantors.  (a)     If and to the extent
               ----------------------------------
requested  by  the  Lender from time to time, execute and deliver such documents
and  take  such  other action, and cause each of its Subsidiaries to execute and
deliver  such  documents  and  take  such  other  action, as may be necessary or
reasonably  requested  by  the  Lender,  in order to assure and confirm that all
obligations  under  this  Agreement, the Note or any of the other Loan Documents
are  at  all  times  guaranteed on terms satisfactory to Lender by Guaranties as
required  by  Section  3.09.

          (b)     Promptly  upon  the  designation by the Borrower or one of its
Domestic  Subsidiaries  as a Subsidiary, within 10 days thereafter, the Borrower
will  cause  such  Subsidiary  to  enter into a Guaranty and will deliver to the
Lender,  upon the request of the Lender in its sole discretion, a signed copy of
a  favorable  opinion  of  counsel  for  the  Subsidiary as to such Guaranty and
related  documents  inform  and  substance  satisfactory  to  Lender.


                          ARTICLE 8: NEGATIVE COVENANTS
                          -----------------------------

     Borrower hereby agrees that, as long as the Commitment hereunder remains in
effect, the Note remains outstanding and unpaid, or any other amount is owing to
Lender  hereunder or under any of the Loan Documents, the Borrower shall not and
shall  allow  not any of its Subsidiaries directly or indirectly to do or permit
to  exist  any  of  the  following  without  prior  written  consent  of Lender:


                                       33
<PAGE>
     8.01.     Restrictions  on Indebtedness, Liens and Sale of Collateral.  (a)
               -----------------------------------------------------------
Create,  incur,  assume  or  suffer to exist at any one time any Indebtedness in
excess  of  $50,000  in  the  aggregate, except for (i) Indebtedness incurred by
Borrower  or  any of its Subsidiaries in the ordinary course of business so long
as  immediately  before,  and  after  giving  effect  to, the incurrence of such
Indebtedness,  (1)  Telscape  is  in compliance with the financial covenants set
forth  on Schedule 7.15 hereto, and (2) no Default or Event of Default hereunder
          -------------
shall  have  occurred and be continuing at the time of, or as a result from, the
incurrence  of  such  Indebtedness, (ii) trade payables incurred in the ordinary
course of business, (iii) any Indebtedness set forth on Schedule 8.01 hereto, so
                                                        -------------
long  as  the  amount  of such scheduled indebtedness does not exceed the amount
outstanding  on  the  Closing  Date, as set forth on Schedule 8.01, and (iv) any
                                                     -------------
Loans  under  the  Lucent Credit Agreement; or (b) create or suffer to exist any
Lien  on the Collateral, or any part thereof, whether superior or subordinate to
the  Lien  of the Security Documents, or assign, or any other assets or property
of  Borrower  or  any  Subsidiary,  or  convey,  sell or otherwise dispose of or
encumber its interest in the Collateral, or any part thereof (including, without
limitation,  execution  of  any  lease), nor permit any such action to be taken,
except for the following permitted dispositions and encumbrances (the "Permitted
                                                                       ---------
Encumbrances"):  (i)  the Lien created hereby; (ii) Liens for taxes not yet due,
------------
or  which  are  being  contested in good faith and by appropriate proceedings in
accordance  with  Section  7.08  hereof;  (iii)  carriers',  warehousemen's,
                  -------------
mechanics',  materialmen's,  repairmen's  or  other  like  Liens  arising in the
ordinary  course  of  business which are overdue for a period not longer than 30
days  or  which are being contested in good faith and by appropriate proceedings
in  accordance  with  Section  7.08  hereof;  (iv)  pledges  or liens not on the
                      -------------
Collateral  in connection with workers' compensation, unemployment insurance and
other  social  security  legislation;  (v) deposits to secure the performance of
bids,  trade  contracts  (other  than  for  borrowed  money),  leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations of
a  like  nature  incurred  in  the  ordinary course of business; (vi) easements,
rights-of-way,  restrictions  and  other  similar  encumbrances  that  are  not
substantial  in amount, and which do not in any case materially detract from the
value  of the property subject thereto or interfere with the ordinary conduct of
the  business of the Borrower or the applicable Subsidiary; (vii) judgment liens
which  may  not  be on any of the Collateral with respect to which execution has
been  stayed  within 10 days by appropriate judicial proceedings and the posting
of adequate security which may not be any of the Collateral; and (viii) specific
liens,  if  any,  identified on Schedule 8.01 hereto. Any of the foregoing Liens
                                -------------
shall  remain  "Permitted  Encumbrances" as long as they are being contested, if
applicable,  by  the  Borrower or its Subsidiary in compliance with Section 7.08
                                                                    ------------
hereof.

     8.02.     Limitation  on  Contingent  Obligations.  Agree  to,  or  assume,
               ---------------------------------------
guarantee,  endorse  or  otherwise in any way be or become responsible or liable
for,  directly or indirectly, any Contingent Obligation except for those created
or  contemplated  by  the  Loan  Documents.

     8.03.     Prohibition  of  Mergers,  Acquisitions, Name, Office or Business
               -----------------------------------------------------------------
Changes,  Etc.
-------------

          (a)     Enter  into  any  merger,  consolidation  or  amalgamation, or
liquidate,  wind  up  or  dissolve  itself  (or  suffer  any  liquidation  or
dissolution),  or convey, sell, lease, assign, transfer or otherwise dispose of,
all  or  substantially  all  of its property, business or assets, except for the
following (a "Permitted Transaction") if immediately after giving effect thereto
no  Default or Event of Default would exist and be continuing hereunder: (i) any
Subsidiary  of  Telscape  may  be  merged  or consolidated with or into Telscape
(provided  that  Telscape  shall  be the continuing or surviving corporation) or
with  or  into  any one or more Subsidiaries of Telscape or with or into another
Person  (provided  that  the  Subsidiary  of Telscape shall be the continuing or
surviving  corporation,  and  shall  remain  a Subsidiary of Telscape), (ii) any
Subsidiary of the Borrower may sell, lease, transfer or otherwise dispose of any
or  all  of its assets (upon voluntary liquidation or otherwise) to the Borrower
or  any  other  Subsidiary  of  the Borrower so long as the effect of such sale,
lease,  transfer or other disposition will not dilute such assets without proper
consideration;  and  (iii) the Borrower or any Subsidiary of the Borrower may be
merged  or  consolidated  with  or into another Person provided that Borrower or
such  Subsidiary  shall be the continuing or surviving corporation and in either
case  a Subsidiary of Telscape, provided, however, in each Permitted Transaction
                                -----------------
involving  a  Subsidiary  which  is  a Guarantor the surviving (if not already a
Guarantor)  or  transferee entity (if not already a Guarantor) must execute as a
condition  to  the  consummation  of the Permitted Transaction such documents as
requested  by Lender to evidence its assumptions of the Subsidiary's obligations
under  its  Guaranty  and deliver such other certificates and opinions as Lender
may  reasonably  require.


                                       34
<PAGE>
          (b)     Without  the  consent of the Lender, sell, assign, transfer or
otherwise  dispose  of  any  Capital  Stock  of  any Subsidiary; or, without the
consent of the Lender, which shall not be unreasonably withheld, otherwise issue
and  sell  any  Capital Stock or beneficial interest therein (including, without
limitation,  preferred  stock)  of  any  Subsidiary where such issuance and sale
would  result in any Persons (other than Telscape or any Significant Subsidiary)
holding  in  the  aggregate  in  excess  of  five  percent  of  such Subsidiary.

          (c)     Change  its  name or corporate structure without giving Lender
at  least 30 days advance written notice of such change, and previously ensuring
that  any  steps  that  Lender may deem necessary to continue the perfection and
priority of Lender's security interests in the Collateral shall have been taken.

          (d)     Change  its  fiscal year end from December 31, except with the
prior  written  consent  of  Lender,  which  consent  shall  not be unreasonably
withheld.

          (e)     Amend,  restate  or otherwise modify, or violate any terms of,
its  Organizational  Documents  in  a manner adverse to Lender without the prior
written  consent  of  Lender.

          (f)     Become  or agree to become a general or limited partner in any
general  or limited partnership, or a member in a limited liability company or a
joint  venturer in any joint venture, except that the Borrower or Subsidiary may
become so involved in the aforementioned types of entities if such entity is, or
thereupon  becomes,  a  Subsidiary  of  the  Borrower.

          (g)     Without the consent of the Lender, amend, modify or supplement
a  material  term  of  (a)  a  Contractual  Obligation  in  connection  with the
construction,  operation,  ownership  and  maintenance  of  the  Network  or the
business  derived from the Network, or (b) any other Contractual Obligation, the
amendment  or  modification  of  which  could  reasonably  be expected to have a
Material  Adverse  Effect..

          (h)     Engage  in  any  business  other  than  the  business  of
Telecommunications  and  businesses  which  are  related  thereto.

     8.04.     Termination  of  Nortel  Purchase  Agreement. Fail to satisfy its
               --------------------------------------------
purchase  obligations  under a Purchase Agreement prior to the completion of the
installation  of the subject Equipment or terminate any Purchase Agreement prior
to  the  completion  of  the  installation  of  the  subject  Equipment.

     8.05.     Removal  of  Collateral.  Remove  or  permit  the  removal of any
               -----------------------
material  part of the Collateral from the locations identified on Schedule 4.25,
                                                                  -------------
without  giving  Lender  30  days prior written notice of such move and ensuring
that any steps Lender may deem necessary to continue the perfection and priority
of  Lender's  security  interest  in  the  Collateral  shall  have  been  taken.


                                       35
<PAGE>
     8.06.     Assumed  Names.  Transact or engage in business under any assumed
               --------------
name,  fictitious  name,  tradestyle  or  "d/b/a"  except  those  identified  on
Schedule  4.29,  without  giving  Lender at least 30 days' prior written notice.
--------------

     8.07     Limitation  on  Investments,  Advances  and  Loans.     Make  any
              --------------------------------------------------
advance,  loan,  extension of credit or capital contribution to, or purchase any
stock,  bonds,  notes,  debentures  or  other  securities  of  or  any  assets
constituting  a business unit of, or make any other investment in any Person (an
"Investment"),  except:
 ----------

          (a)  extensions  of  trade  credit  and  endorsements  of  negotiable
instruments  and  other  documents  in  the  ordinary  course  of  business;

          (b)  Investments  in  Cash  Equivalents;

          (c)  Investments  by  Borrower  or  any  Subsidiary in Telscape or any
Subsidiary  of  Telscape;

          (d)  loans  to  officers,  directors  and  employees  of the Borrower,
Telscape and their Subsidiaries where cash paid out to such officers, directors,
and  employees shall not exceed in the aggregate $500,000 outstanding at any one
time;

          (e)  Investment  in  Telecommunications  companies in an amount not to
exceed  $10,000,000  per  annum;  and

          (f)  acquisitions  of  Telecommunications  equipment.

     8.08     Limitation on Equity Payments. Declare or make, or agree to pay or
              -----------------------------
make, directly or indirectly, any Restricted Payment (or incur any obligation to
do  so),  except  (a)  each of the Subsidiary may declare and pay dividends with
respect  to  its Capital Stock payable solely in additional shares of its common
stock, (b) Subsidiaries may declare and pay dividends to their shareholders with
respect  to  their  Capital Stock ratably to Telscape, each Subsidiary and other
Person  then  holding  Capital  Stock of such Subsidiary (based on the ownership
interest  of  each  such  shareholder at such time without regard to class), (c)
Subsidiaries  may  make  payments  to  their  shareholders  on  account  of  the
redemption of their Capital Stock ratably to Telscape, each Subsidiary and other
Person  then  holding  Capital  Stock of such Subsidiary (based on the ownership
interest  of  each  such  shareholder at such time without regard to class), (d)
Subsidiaries  may  declare  and pay dividends to each other and to Telscape with
respect  to  their  Capital Stock, or (e) Telscape may declare and pay Permitted
Preferred  Cash  Dividends;  provided  that  any  Restricted  Payment  otherwise
                             --------
permitted  pursuant  to  this Section shall not be permitted unless the Borrower
shall  have  delivered  or  caused  to  be  delivered  the Lender, prior to such
Restricted  Payment, a certificate signed by a Responsible Officer setting forth
the amount of such Restricted Payment and certifying that all conditions to such
Restricted  Payment  are  satisfied.

     8.09     Capital  Expenditures.  Directly  or  indirectly make or commit to
              ---------------------
make  any expenditure in respect of the purchase or other acquisition (including
installment purchases or capital leases) of fixed or capital assets in excess of
an  aggregate  of $1 million during each 12-month period during the term of this
Agreement,  other than (for so long as such expenditures do not violate Schedule
                                                                        --------
7.15) (i) replacements and maintenance properly charged to current operations or
----
(ii)  expenditures  in  accordance  with  the  Business  Plan.


                                       36
<PAGE>
     8.10     Limitation on Leases. Except as otherwise permitted under Sections
              --------------------                                      --------
8.01  or  8.08,  enter  into  any  agreement,  or  be or become liable under any
----      ----
agreement,  not  in  existence as of the date hereof and reflected on Telscape's
consolidated  financial  statements,  for  the lease, hire or use of any real or
personal  property  in  excess  of $500,000 in the aggregate, including, without
limitation,  capital  or  operating  leases,  except  that  the  Borrower or its
Subsidiaries may, in the ordinary course of business and on term standard in the
industry,  enter  into leases or agreements (i) for the use of real property for
the  System  or sales offices; (ii) for office space, office equipment, vehicles
or  tools;  and  (iii)  for  the  location  and  storage  of  the  Collateral.

     8.11     Transactions  with Affiliates. Except as permitted by Section 8.07
              -----------------------------                         ------------
or as described in Schedule 4.30 hereto, enter into any transactions, including,
                   -------------
without  limitation,  any loans or advances, any repayment of loans or advances,
or  the purchase, sale or exchange of property or the rendering of any services,
with  any  Affiliate;  or otherwise pay any fees or expenses to, or reimburse or
assume  any  obligation  for  the reimbursement of any expenses incurred by, any
Affiliate.

     8.12     Infrastructure  Build  Out.  Commit  to  build  or  construct
              --------------------------
telecommunications  infrastructure in any city other than Atlanta (Georgia), Los
Angeles  (California),  Houston  (Texas),  Miami  (Florida),  or  San  Diego
(California);  provided however, that Borrower or any Subsidiary of Borrower may
commit to build out or construct telecommunications infrastructure in any of the
Additional  Approved  Cities, in each case (a) as contemplated in and consistent
with,  the  Approved  Build-Out Plan and for each such Additional Approved City,
subject  to  delivery to the Lender, at least three (3) months prior to entering
into  any  such  commitment  or commencing any such build-out, of a fully funded
plan  (including  evidence showing that Borrower or such Subsidiary has obtained
all  financing required or contemplated by the Approved Build-Out Plan) for such
city  in  connection  with  such Additional Approved City, all to the reasonable
satisfaction  of the Lender, and (b) only for so long as and to the extent that,
at  the  time of any such commitment and after giving effect thereto, no Default
or Event of Default has occurred and is continuing, and, with respect to each of
the  financial  covenants  set  forth  in  Article  VII (i) Telscape was in full
compliance  therewith as of the most recent date such financial covenant was (or
is being) measured, without requiring any waiver thereof or amendment thereto to
enable such compliance, and (ii) no Default or Event of Default could reasonably
be  expected to exist as of the next date on which such financial covenant is to
be  measured

     8.13     Restrictions  on  Dividends  and  Related Transactions.  Create or
              ------------------------------------------------------
otherwise  cause  or  permit  to  exist  or  become effective any encumbrance or
restriction on the ability of any Subsidiary of Telscape (i) to pay dividends or
make any other distributions on or in respect of its capital stock; (ii) to make
loans  or  advances,  or  to  pay  any Indebtedness or other obligation owed, to
Telscape,  Borrower  or  any Subsidiary of Telscape; or (iii) to transfer any of
its  property  or  assets  to  Telscape, Borrower or any Subsidiary of Telscape,
except  for  encumbrances  or  restrictions existing under or by reason of:  (1)
this Agreement; (2) applicable law, (3) customary non-assignment provisions with
respect  to  any  contract  or  any  lease  governing  a leasehold interest of a
Subsidiary,  or  (4)  under  agreements  listed  on  Schedule  8.13.
                                                     --------------


                                       37
<PAGE>
     8.14     Limitation  on  Sale  of  Collateral.  Without  the consent of the
              ------------------------------------
Lender,  sell,  assign  (by  operation  of law or otherwise), lease, transfer or
otherwise  dispose  of,  or grant any option with respect to, any of its assets,
except  that Telscape and its Subsidiaries may (a) sell inventory or obsolete or
unnecessary  equipment not constituting Collateral, in each case in the ordinary
course  of  business;  and (b) make other sales or dispositions of assets (other
than  Collateral or the Capital Stock of any Subsidiary) if all of the following
conditions  are  met:  (i) the market value of assets sold or otherwise disposed
of  in  any single transaction or series of related transactions does not exceed
$250,000  and the aggregate market value of assets sold or otherwise disposed of
in  any  fiscal year does not exceed $1,500,000; (ii) the consideration received
is  at  least  equal  to  the  fair  market  value of such assets; (iii) the Net
Proceeds  of such asset sale or other disposition are applied to the obligations
under  the  Lucent Credit Agreement or are used to acquire replacement property,
in each case as set forth in Section 2.8(b)(iii) of the Lucent Credit Agreement;
and  (iv)  no  Default  shall  then  exist  or  result  from  such sale or other
disposition.


                    ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
                    -----------------------------------------

     9.01.     Events  of Default. An Event of Default shall mean the occurrence
               ------------------
or  existence of one or more of the following events or conditions (whatever the
reason  for such Event of Default and whether voluntary, involuntary or effected
by  operation  of  Law):

          (a)     Payment  Default. If Borrower fails to pay any sum, whether of
                  ----------------
principal  or  interest  on  the  Note  or any prepayment premiums, or any other
amount  due hereunder or under the Note within three business days after written
notice  from  Lender  that  such  amount  became  due;

          (b)     False  Statement. If any statement, representation or warranty
                  ----------------
made by Telscape, the Borrower, or any Guarantor in any Loan Document or made in
any  financial  statement, certificate, report, exhibit or document furnished to
Lender  pursuant  to  any Loan Document, proves to have been untrue, incomplete,
false  or misleading in any material respect as of the time when made (including
any  omission  of  material  information  necessary to make such representation,
warranty  or  statement  not  misleading), (i) such untruth, falsity, misleading
statement,  or  omission  shall  not  have  been  corrected  or  remedied to the
satisfaction  of Lender within 10 calendar days after the earlier of Telscape's,
the  Borrower's,  or  the  Guarantor's  knowledge  thereof or receipt of written
notice  thereof from Lender and (ii) the Lender relied on such untruth, falsity,
misleading  statement,  or  omission  to  its  detriment;

          (c)     Covenant Defaults. If the Borrower defaults in the performance
                  -----------------
or  observance  of any covenant or agreement in this Agreement, and such default
continues  for  a  period  of  30  calendar days after the earlier of Borrower's
knowledge  thereof  or receipt of written notice from Lender thereof, except for
specific  Defaults  listed elsewhere in this Section 9.01, as to which no notice
                                             ------------
or  cure  period  shall  apply  unless  specified;

          (d)     Failure  of  Conditions.  If  the  Borrower  fails to meet any
                  -----------------------
condition  of lending under Article 6 hereof and such condition is not waived by
                            ---------
Lender;

          (e)     Undischarged  Judgments.  If  one  or  more  judgments for the
                  -----------------------
payment  of  money  has  been  entered  against  Telscape,  the Borrower, or any
Subsidiary  in  an  amount in excess of $500,000, and such judgment or judgments
have remained undischarged and unstayed for a period of 30 calendar days, unless
the  validity  thereof  is  contested  in  compliance  with Section 7.08 hereof;
                                                            ------------

          (f)     Attachments,  etc.  If  a  writ  or  warrant  of  attachment,
                  -----------------
garnishment,  execution,  distraint  or  similar process has been issued against
Telscape,  the  Borrower,  any  Subsidiary, or any of their properties which has
remained  undischarged  and  unstayed for a period of 30 consecutive days and is
not  being  contested  in  compliance  with  Section  7.08  hereof;
                                             -------------


                                       38
<PAGE>
          (g)     Default  Under  Third Party Agreements. If a default, or event
                  --------------------------------------
or  condition which with notice or lapse of time or both would become a default,
occurs  that  gives the creditor the right to accelerate in respect of any other
obligation  of  Telscape,  the  Borrower  or  any  Subsidiary for borrowed money
(including  lease  obligations)  in  the amount of $500,000 in the aggregate, or
under  any  two  or  more  such  other  obligations  of  any  amount;

          (h)     Dissolution; Discontinuance of Business, Etc. If Telscape, the
                  --------------------------------------------
Borrower,  or  any Guarantor discontinues its usual business, dissolves, has its
Organizational  Document revoked, winds up or liquidates itself or its business;

          (i)     Involuntary  Bankruptcy  or  Receivership  Proceedings.  If  a
                  ------------------------------------------------------
receiver,  custodian,  liquidator,  or  trustee  of  Telscape, the Borrower, any
Subsidiaries, or of any of their property is appointed by the order or decree of
any court or agency or supervisory authority having jurisdiction; or an order is
entered  adjudicating  Telscape,  the Borrower, or any Subsidiary as bankrupt or
insolvent; or any of the property of Telscape, the Borrower or any Subsidiary is
sequestered  by  court  order;  or  a  petition  is  filed against Telscape, the
Borrower,  or  any  Subsidiary  under  any  state  or  federal  bankruptcy,
reorganization,  arrangement,  insolvency,  readjustment  of  debt, dissolution,
liquidation,  or  receivership law of any jurisdiction, whether now or hereafter
in  effect;

          (j)     Voluntary  Bankruptcy.  If  Telscape,  the  Borrower,  or  any
                  ---------------------
Subsidiary  takes  affirmative steps to prepare to file, or files, a petition in
voluntary  bankruptcy  or  to seek relief under any provision of any bankruptcy,
reorganization,  arrangement,  insolvency, readjustment of debt, dissolution, or
liquidation  law  of  any  jurisdiction,  whether now or hereafter in effect, or
consents  to  the  filing  of  any  petition  against  it  under  any  such law;

          (k)     Assignments  for  Benefit of Creditors, Etc.  If Telscape, the
                  -------------------------------------------
Borrower, or any Subsidiary makes an assignment for the benefit of creditors, or
admits  in  writing its inability to pay its debts generally as they become due,
or  consents  to the appointment of a receiver, trustee, or liquidator of itself
or  of  all  or  any  part  of  its  properties;

          (l)     Non-compliance  with  Governmental Requirements.  If Telscape,
                  -----------------------------------------------
the Borrower, or any Significant Subsidiary fails to comply with any requirement
of any Governmental Authority within 10 calendar days after notice in writing of
such  requirement  shall  have  been  given  to  Telscape,  the Borrower, or the
Significant  Subsidiary by such Governmental Authority, or such longer period of
time  permitted  Telscape,  the  Borrower, or the Significant Subsidiary by such
Governmental  Authority;

          (m)     Regulatory Authorizations.  If any Regulatory Authorization in
                  -------------------------
connection with this Agreement or any other Loan Document or any such Regulatory
Authorization  now or hereafter necessary or advisable to make this Agreement or
the other Loan Documents legal, valid, enforceable and admissible in evidence or
to  permit  Telscape, the Borrower, or any Significant Subsidiary to conduct its
business  is  not  obtained  or has ceased to be in full force and effect or has
been modified or amended or has been held to be illegal or invalid or is revoked
or  terminated,  and  is  not  being contested by Telscape, the Borrower, or the
Significant  Subsidiary  in  compliance  with Section 7.08 hereof and Lender has
                                              ------------
reasonably  determined  in  good faith (which determination shall be conclusive)
that  such  event or occurrence may have a Material Adverse Effect or a material
adverse  effect  on  Lender's  rights  under  this  Agreement  or any other Loan
Documents;


                                       39
<PAGE>
          (n)     Damage  or Destruction. If the proceeds of any physical damage
                  ----------------------
insurance actually paid in respect of the partial or total damage or destruction
of  the Collateral are insufficient to cover the cost of the restoration thereof
or  if  Lender  determines  that such damage or destruction is so extensive that
repair  or  restoration  cannot be expected within a time period short enough to
prevent  a  Material  Adverse  Effect;

          (o)     Consents.  If  Borrower  fails to provide any Consent required
                  --------
hereunder  and Lender determines in its sole and reasonable discretion that such
failure  results  in  a  material impairment of Lender's security for the Loans;

          (p)     Change  in  Control.  If  any  Change  in Control should occur
                  -------------------
without  Lender's  prior written consent, which may be withheld in Lender's sole
and  absolute  discretion;

          (q)     ERISA  Defaults.  If,  with respect to any Plan, (i) there has
                  ---------------
occurred  a  Reportable  Event being considered by the PBGC which may reasonably
result  in  any  material liability to the PBGC with respect to any Plan; (ii) a
Plan  has been terminated; (iii) a trustee has been appointed by a United States
District  Court  to  administer  a  Plan;  (iv)  a  PBGC or any other person has
instituted proceedings to terminate a Plan or to appoint a trustee to administer
any such Plan; (v) either Telscape, the Borrower, any Significant Subsidiary, or
any Affiliate has withdrawn, completely or partially, from any Plan; (vi) either
Telscape,  the  Borrower,  any  Significant  Subsidiary,  or  any  Affiliate has
incurred  secondary  liability for withdrawal liability payments under any Plan;
or  (vii)  a  Plan  has failed to meet the minimum funding standards established
under  the  Code  or  ERISA;

          (r)     Defaults  Under  Other  Loan  Documents.  If  any  default,
                  ---------------------------------------
misrepresentation  or  breach  should occur under any Security Document or other
Loan  Document  and is not cured or waived within the time permitted therein, or
any  such  Loan  Documents  should  cease to be in full force and effect, or any
party  thereto  should  assert any unenforceability of, or deny liability on, or
admit  inability  to  perform  under,  any  such  Loan  Document;  or

          (s)     Repudiation  of  Guaranty.  Any  guaranty or any subordination
                  -------------------------
agreement required or delivered in connection with this Agreement is breached or
becomes  ineffective,  or any guarantor, or subordinating creditor, disavows its
obligations  under  the guaranty or subordination agreement, as the case may be.

          (t)     Sale of Guarantor.  Any Guarantor (other than Telscape) ceases
                  ------------------
to  be  a  Subsidiary  of  Telscape.

     9.02.     Consequences  of  an  Event  of  Default. If any Event of Default
               ----------------------------------------
shall  occur  and be continuing or shall exist, Lender shall be under no further
obligation  to make Advances hereunder, any remaining commitment hereunder shall
immediately  terminate,  with  no  further  notice, and Lender may, by notice to
Borrower,  declare  the  unpaid  principal  amount of the Note, interest accrued
thereon  and  all other amounts owing by Borrower hereunder or under the Note to
be  immediately  due and payable without presentment, demand, protest or further
notice  of  any  kind,  all  of which are hereby expressly waived, and an action
therefor  shall  immediately accrue. Such consequences shall occur automatically
upon  the  occurrence of an Event of Default under Section 9.01 (h), (i), (j) or
                                                   -----------------------------
(k),  without  any notice or demand. Upon the occurrence of an Event of Default,
---
Lender  may,  in its sole discretion, exercise any and all remedies available to
it  under  this Article 9 or under any of the Loan Documents or under applicable
                ---------
law  without  further  notice  or  period  of  grace  or  opportunity  to  cure.


                                       40
<PAGE>
     9.03.     Exercise  of Rights. Subject to any requirements for FCC or other
               -------------------
governmental  approval  upon the occurrence of any Event of Default, the rights,
powers  and privileges provided in this section and all other remedies available
to  Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time, whether or not the Obligations shall be
due  and payable and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or the Note. No failure to
exercise  nor  any delay in exercising on the part of Lender, any right, remedy,
power  or  privilege  hereunder  or  under any of the other Loan Documents shall
operate  as  a  waiver  thereof, nor shall any single or partial exercise of any
right,  power  or privilege hereunder or thereunder preclude any other or future
exercise thereof or the exercise of any other right, remedy, power or privilege.

     9.04.     Rights  of  Secured  Party;  Possession  or  Sale  of Collateral.
               ----------------------------------------------------------------
Without  limiting  the  generality  of  the foregoing, Lender shall have all the
rights  and  remedies  of a secured party under the UCC, and Lender may, without
demand and without advertisement or notice, all of which Borrower waives, at any
time  or  times,  sell  and  deliver  any or all Collateral held by or for it at
public  or  private sale, for cash, upon credit or otherwise, at such prices and
upon  such  terms  as  Lender  deems  advisable,  in its sole discretion, and/or
collect,  or  enforce  the  collection  of,  the  Collateral.  Lender may be the
purchaser  at any such sale. Upon the occurrence of an Event of Default and upon
Lender's  request,  Borrower  shall  assemble,  at  its  own expense, any or all
Equipment  and  other  Collateral at a convenient place acceptable to Lender and
shall  pay to Lender or reimburse Lender for, on demand, all costs of collection
of  all  amounts  due,  and  enforcement  of  all  rights  hereunder,  including
reasonable  attorneys'  fees  and legal expenses, and expenses of any repairs to
any  realty  or  other  property to which any of such Collateral may be affixed.
Upon an Event of Default, Lender may, to the full extent permitted by applicable
law, without notice, advertisement, hearing or process of law of any kind, enter
upon any premises where any of the Collateral may be located and take possession
of  and  remove  such  Collateral.

     9.05.     Notices,  Etc.  Waived.  Except  as  expressly  provided  in this
               ----------------------
Article  9,  Borrower  hereby  expressly waives, to the full extent permitted by
----------
applicable  law,  presentment, demand, protest, any and all notices of any kind,
advertisements,  hearing  or  process  of law in connection with the exercise by
Lender  of  any  of  its  rights and remedies upon the occurrence of an Event of
Default. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed reasonably and properly given
if  given  in  accordance with Section 10.06 hereto at least 10 days before such
                               -------------
disposition.

     9.06.     Additional  Remedies.  Lender's  remedies upon the occurrence and
               --------------------
during the continuance of an Event of Default shall include, in addition to, and
not  in  lieu of, such remedies as are available at law or in equity or provided
for  in  any  of  the  Loan  Documents,  the  following:

          (a)     Foreclosure;  Receivership.  Lender  shall be entitled to file
                  --------------------------
one  or  more  suits  at  law  or in equity to collect the Obligations and/or to
foreclose  on Lender's Liens on and security interests created by this Agreement
or the Security Documents. Lender may apply or require Borrower to apply for any
necessary  transfers,  assignments,  orders,  consents or licenses in connection
with  the  operation  or  abandonment of the Collateral or any part thereof, and
Lender  shall  also  be  entitled  as  a  matter of right and without notice and
without  requiring bond (notice and bond being hereby waived), without regard to
the  solvency  or  insolvency of Borrower at the time of application and without
regard to the value of the Collateral at that time, to have a receiver appointed
by  a  court  of competent jurisdiction in order to manage, protect and preserve
the  Collateral and to continue the operation of the business of Borrower and to
collect  all  revenues  and profits thereof and apply the same to the payment of
all  expenses  and  other  charges  of such receivership until the sale or other
final disposition of the Collateral. Borrower hereby consents to the appointment
of  such  receiver.


                                       41
<PAGE>
          (b)     Right  to  Cure.  If Borrower fails in any material respect to
                  ---------------
perform  or  comply with any of its agreements contained herein or in any of the
other  Loan  Documents, Lender may take whatever actions it may deem appropriate
to  perform  or  comply  or  otherwise cause performance or compliance with such
agreement,  all  at  the  risk,  cost  and  expense  of  Borrower.

          (c)     Setoff.  If  the unpaid principal amount of the Note, interest
                  ------
accrued  thereon,  or  any other amount owing by Borrower hereunder or under the
Note  shall  have  become due and payable (by acceleration or otherwise), Lender
shall  have the right, in addition to all other rights and remedies available to
it,  without  notice to Borrower, to setoff against and to appropriate and apply
to  such  due  and payable amounts any debt owing to and any other funds held in
any manner for the account of Borrower by Lender. Such right shall exist whether
or  not Lender shall have given notice or made any demand hereunder or under the
Note,  whether  or  not  such  debt  owing  to  or funds held for the account of
Borrower  is  or  are  matured  or unmatured, and regardless of the existence or
adequacy  of  any  collateral,  guaranty  or any other security, right or remedy
available  to  Lender.  Borrower  hereby  consents to and confirms the foregoing
arrangements  and  confirms  Lender's  rights  of  setoff.

     9.07.     Application  of  Proceeds.  Any proceeds of any of the Collateral
               -------------------------
received  by  Lender  through sale or disposition of the Collateral or otherwise
may  be  applied  by  Lender  toward  the  payment of the Obligations, including
expenses  in connection with the Collateral (including reasonable fees and legal
expenses)  in  such  order of application as Lender may from time to time elect.

     9.08.     Discontinuance  of  Proceedings.  If  Lender  should  proceed  to
               -------------------------------
enforce any right or remedy under this Agreement or any other Loan Document and,
then,  discontinue or abandon such proceeding for any reason, all rights, powers
and  remedies  of  Lender  hereunder shall continue as if no such proceeding had
been  taken.

     9.09.     Power of Attorney. For the purpose of carrying out the provisions
               -----------------
and  exercising the rights, powers and privileges granted by the Loan Documents,
including,  without  limitation,  this  Article  9,  Borrower hereby irrevocably
                                        ----------
constitutes and appoints Lender its true and lawful attorney-in-fact to execute,
acknowledge  and deliver any instruments and do and perform any acts such as are
referred  to  in the Loan Documents, including, without limitation, this Article
                                                                         -------
9,  in  the  name  and  on  behalf  of  Borrower,  from time to time in Lender's
-
reasonable  discretion  after  the  occurrence  and during the continuance of an
Event  of Default, in accordance with the Loan Documents and any statute or rule
of law. This power of attorney is a power coupled with an interest and cannot be
revoked.  Borrower hereby ratifies all that said attorney-in-fact shall lawfully
do  or  cause  to  be  done  by  virtue and in accordance with the terms hereof.
Without  limiting  the  generality  of  the  foregoing,  Lender  may,  after the
occurrence  and  during the continuance of an Event of Default, do the following
without  notice  to  or  assent  by  Borrower to accomplish the purposes of this
Agreement:

          (a)     upon  failure  of  Telscape,  the  Borrower,  or  any of their
Subsidiaries  to  timely  pay or discharge taxes or Liens levied or placed on or
threatened  against  the  Collateral, effect any repairs or any insurance called
for by the terms of this Agreement or any other Loan Document and pay all or any
part  of  the  premiums  therefor  and  the  costs  thereof;


                                       42
<PAGE>
          (b)     (i)  direct any party liable for any payment on any Collateral
to  make payment of any and all monies due and to become due thereunder directly
to Lender or as Lender shall direct; (ii) in the name of Borrower, its own name,
or otherwise, take possession of, endorse and collect any checks, drafts, notes,
acceptances  or  other  instruments  for  the  payment  of  monies  due under or
otherwise  receive  payment  of  and  receipt for any and all monies, claims and
other  amounts due and to become due at any time in respect of or arising out of
any  Collateral;  (iii) sign and endorse any invoices, freight or express bills,
bills  of  lading,  storage  or  warehouse  receipts,  drafts  against  debtors,
assignments,  verifications  and notices in connection with the Collateral; (iv)
commence  and prosecute any suits, actions or proceedings at law or in equity in
any  court of competent jurisdiction to collect all or any of the Collateral and
to  enforce  any  other right in respect of any Collateral; (v) defend any suit,
action  or  proceeding  brought  against Telscape, the Borrower, or any of their
Subsidiaries  with  respect to any Collateral; (vi) settle, compromise or adjust
any  suit,  action  or  proceeding  described above upon commercially reasonable
terms under the circumstances and, in connection therewith, give such discharges
or releases as Lender may reasonably deem appropriate; and (vii) generally sell,
use, operate, transfer, pledge, make any agreement with respect to, or otherwise
deal  with  any  of the Collateral as fully and completely as though Lender were
the  absolute  owner  thereof  for  all  purposes,  and,  at Lender's option and
Borrower's  expense,  at  any time or from time to time after the occurrence and
during  the  continuance  of an Event of Default, all other acts and things that
Lender  reasonably  deems  necessary  to  protect,  preserve or realize upon the
Collateral and Lender's security interest therein, in order to effect the intent
of  this  Agreement and the other Loan Documents all as fully and effectively as
Borrower  might  do.

     9.10.     Regulatory  Matters.  Notwithstanding  any  provision  to  the
               -------------------
contrary  contained  herein,  Lender will not exercise any right or remedy under
this  Agreement  that requires prior FCC or PUC approval without first obtaining
such  approval.  If  counsel to Lender reasonably determines that the consent of
the  FCC  or  PUC  is required in connection with any of the actions that may be
taken  by  Lender  in  the  exercise of its rights hereunder or under any of the
other Loan Documents, then Borrower, at its sole cost and expense, agrees to use
its  best  efforts  to  secure  such consent and to cooperate with Lender in any
action  commenced  by  Lender  to  secure  such consent. Upon the occurrence and
during  the continuation of an Event of Default, Borrower shall promptly execute
and/or  cause  the  execution of all applications, certificates, instruments and
other documents and papers that may be required in order to obtain any necessary
governmental  consent,  approval  or  authorization  and,  if  Borrower fails or
refuses  to execute such documents, the clerk of the court with jurisdiction may
execute  such  documents  on  behalf  of  Borrower.


                  ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
                  --------------------------------------------

The  following  conditions  shall  be  applicable  throughout  the  term of this
Agreement:

     10.01.     Modifications  and  Waivers.  This  Agreement,  the  other  Loan
                ---------------------------
Documents,  or  any  provision  thereof may not be changed, waived or terminated
orally,  but  only  by an instrument in writing signed by the party against whom
enforcement  of the change, waiver or termination is sought. No action or course
of  dealing  on  the  part  of Lender or its officers, employees, consultants or
agents, nor any failure or delay by Lender with respect to exercising any right,
power  or  privilege of Lender under the Note, this Agreement, or any other Loan
Document,  shall  operate  as  a waiver thereof, except as otherwise provided in
this  Agreement.  Any  waiver  shall be effective only to the extent and for the
instance  specifically  identified  in  such  writing and shall not be deemed to
imply  any  future  waivers  or other waivers. No amendment to any Loan Document
shall  be effective without written agreement signed by the parties to such Loan
Document.

     10.02.     Advances  Not  Implied  Waivers.  No  waiver of the requirements
                -------------------------------
contained  in any Loan Document shall be effective unless in writing duly signed
by  Lender.  No  Advance  hereunder  shall  constitute  a  waiver  of any of the
conditions  of  Lender's  obligation  to make further Advances nor, in the event
Borrower  is  unable  to  satisfy  any  such condition, shall any waiver of such
condition  have  the  effect of precluding Lender from thereafter declaring such
inability  to  be  an  Event  of Default as herein provided. Any Advance made by
Lender  and  any sums expended by Lender pursuant to the Loan Documents shall be
deemed  to  have  been  made  pursuant  to  this  Agreement, notwithstanding the
existence  of  an uncured Default or Event of Default. No Advance at a time when
an  Event  of Default exists shall constitute a waiver of any right or remedy of
Lender  existing  by  reason  of  such  Event  of  Default,  including,  without
limitation,  the  right to accelerate the maturity of the Indebtedness evidenced
by  the  Note  or  to  foreclose the Lien on the Collateral or to refuse to make
further  advances  hereunder.


                                       43
<PAGE>
     10.03.     Deviation  from  Covenants.  The  procedure  to  be  followed by
                --------------------------
Borrower  to  obtain  the  consent of Lender to any deviation from the covenants
contained  in  this  Agreement  or  any other Loan Document shall be as follows:

          (a)     Borrower  shall  send a written notice to Lender setting forth
(i)  the  covenant(s)  relevant to the matter, (ii) the requested deviation from
the  covenant(s) involved, and (iii) the reason for the requested deviation from
the  covenant(s);  and

          (b)     Lender,  within  a reasonable time, will send a written notice
to  Borrower,  permitting  or  refusing  the  request,  but in no event will any
deviation  from  the  covenants  of this Agreement or any other Loan Document be
effective  without the express prior written consent of Lender. Lender's failure
to  provide  such  written  notice  shall  be  deemed a refusal of such request.

     10.04.     Holidays.  Except  as  otherwise  provided  herein, whenever any
                --------
payment  or  action  to  be  made  or taken hereunder or under the Note shall be
stated  to  be  due on a day which is not a Business Day, such payment or action
shall  be made or taken on the next following Business Day and such extension of
time shall be included in computing interest or fees, if any, in connection with
such  payment  or  action.

     10.05.     Records.  From time to time, Lender may send Borrower statements
                -------
of the unpaid principal amount of the Note, the unpaid interest accrued thereon,
the  Interest  Rate  or  rates  applicable  to such unpaid principal amount, the
duration of such applicability, and the amount remaining available on any Loans,
and  each statement shall be deemed correct and conclusively binding on Borrower
(absent  manifest  error)  unless  Borrower  notifies  Lender of an error in the
statement  in  writing  within  30  days  after  the  date any such statement is
provided  to  Borrower.

     10.06.     Notices.  All  notices,  requests, demands, directions and other
                -------
communications  (collectively,  "notices") required under the provisions of this
Agreement  or  any  other  Loan  Document  shall  be  in  writing  (including
communication  by  facsimile  transmission) unless otherwise expressly permitted
hereunder  and  shall  be  sent  by hand, by registered or certified mail return
receipt  requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all  cases  with  charges  prepaid,  and any such properly given notice shall be
effective  upon  the  earlier of receipt or (i) when delivered by hand, (ii) the
third  Business Day after being mailed, (iii) the following Business Day if sent
by  overnight  courier  service,  or  (iv)  when  sent by facsimile, answer back
received.  All  notices  shall  be  addressed  as  follows:

     If  to  Borrower:   Pointe  Communications  Corporation
                         1325  Northmeadow  Parkway,  Suite  110
                         Roswell,  Georgia  30076
                         Attention:  Chief  Financial  Officer
                         Telecopy:  (770)  319-2834


                                       44
<PAGE>
     If  to  Lender:     NTFC  Capital  Corporation
                         501  Corporate  Centre  Drive
                         Franklin,  Tennessee  37067
                         Attention:  Manager,  Credit
                         Telecopy:  (615)  771-6626

     With  a  copy  to:  NTFC  Capital  Corporation
                         501  Corporate  Centre  Drive
                         Franklin,  Tennessee  37067
                         Attention:  Legal  Department
                         Telecopy:  (615)  771-6187

                               and

                         TFS  Portfolio  Management
                         10  Riverview  Drive
                         Danbury,  Connecticut  06810

     All  notices  shall  be  sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to  the  other  party  hereto,  given  in  accordance  with  the  terms  hereof.

     10.07.     FCC  and  PUC  Approval.  The exercise of any rights or remedies
                -----------------------
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval. Pending the receipt of any
PUC  or FCC approval, Borrower shall not do anything to delay, hinder, interfere
with,  or  obstruct the exercise of Lender's rights or remedies hereunder or the
obtaining  of  such  approvals.

     10.08.     Lender  Sole  Beneficiary.  All  conditions of the obligation of
                -------------------------
Lender to make any Advances hereunder are imposed solely and exclusively for the
benefit  of  Lender  and  its assigns and no other Person shall have standing to
require  satisfaction  of  such  conditions in accordance with their terms or be
entitled  to  assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions.  No Person shall under any
circumstances  be  deemed  to be a beneficiary of such conditions, any or all of
which  may be freely waived in whole or in part by Lender at any time if, in its
sole  discretion,  it  deems it advisable to do so. Inspections and approvals of
the  System,  and  the  workmanship  and  materials  used  therein,  impose  no
responsibility or liability of any nature whatsoever on Lender. No Person shall,
under any circumstances, be entitled to rely upon such inspections and approvals
by  Lender  for  any  reason.  Lender's sole obligation hereunder is to make the
Advances  if  and  to  the  extent  required  by  this  Agreement  or the Notes.

     10.09.     Lender's Review of Information. Borrower acknowledges and agrees
                ------------------------------
that  any  review  or  analysis  by  Lender  of financial information, operating
information,  marketing  data,  or other information provided to Lender by or on
behalf  of  Borrower  at  any time is and shall be conducted solely for Lender's
benefit  and internal use and that Lender is under no duty or obligation to make
the  results  of  such review or analysis available to Borrower. Borrower is not
relying,  and  will  not  rely,  on  Lender  for  financial  or business advice.


                                       45
<PAGE>
     10.10.     No  Joint  Venture.  Nothing  in any of the Loan Documents or in
                ------------------
this  Agreement  shall  be  deemed  to constitute any kind of partnership, joint
venture,  or  fiduciary  relationship  between  Lender  and  Borrower.

     10.11.     Severability.  The  provisions of this Agreement are intended to
                ------------
be  severable.  If  any  provision of this Agreement or the other Loan Documents
shall  be held invalid or unenforceable in whole or in part in any jurisdiction,
such  provision  shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or  enforceability thereof in any other jurisdiction or the remaining provisions
hereof  or  thereof  in  any  jurisdiction.

     10.12.     Rights  Cumulative. All rights, powers and remedies herein given
                ------------------
to  Lender  are  cumulative  and  not  alternative,  and  are in addition to all
statutes  or  rules  of  law.

     10.13.     Duration;  Survival.  All  representations  and  warranties  of
                -------------------
Borrower  contained  herein  or  made  in  connection herewith shall survive the
making  of  and  shall  not  be  waived  by  the  execution and delivery of this
Agreement  and  the  other  Loan  Documents, any investigation by Lender, or the
making  of  any  Advances  hereunder.  All  covenants and agreements of Borrower
contained herein shall continue in full force and effect from and after the date
hereof  so  long  as  it  may  borrow hereunder and until payment in full of the
Notes, interest thereon, all fees and all other Obligations of Borrower. Without
limitation,  it  is understood that all obligations of Borrower to make payments
to or indemnify Lender shall survive the payment in full of the Notes and of all
other  Obligations.

     10.14.     Governing  Law. This Agreement, the Notes, and each of the other
                --------------
Loan  Documents  shall be governed by, construed and enforced in accordance with
the  internal  laws  of the state of New York, except to the extent, if any, set
forth  on  Schedule  2.02  hereto  and  except  to  the  extent that the laws of
           --------------
jurisdictions  where  the  Collateral is located may be required to apply to the
Collateral.

     10.15.     Counterparts.  This  Agreement  may be executed in any number of
                ------------
counterparts  (by  facsimile  transmission  or  otherwise)  and by the different
parties  hereto on separate counterparts, each of which, when so executed, shall
be  deemed  an  original, but all such counterparts shall constitute but one and
the  same  instrument.

     10.16.     Successors and Assigns. This Agreement shall be binding upon and
                ----------------------
inure  to the benefit of Lender and Borrower and their respective successors and
assigns;  provided, however, that Borrower may not assign or transfer any of its
          -----------------
rights  or  obligations hereunder or under the other Loan Documents (in whole or
in  part)  without  the  prior  written  consent  of  Lender. Lender may assign,
transfer  or  pledge  any  of  its respective rights or obligations hereunder or
under the other Loan Documents without notice to or the prior written consent of
Borrower.  Upon  receipt  of  written  notice  from  Lender  of such assignment,
Borrower  shall  promptly acknowledge receipt thereof in writing. If Borrower is
given  written  notice  of any assignment, it shall perform its obligations with
respect to this Agreement for the ratable benefit of the applicable assignee(s),
and,  if  so  directed,  shall  pay  all  amounts due or to become due hereunder
directly  to the applicable assignee(s) or to any other party designated by such
assignee(s).  Borrower  shall  not assert against any such assignee any set-off,
defense  or  counterclaim  that  Borrower  may have against Lender or any person
other than such assignee. Borrower shall also execute and deliver to Lender such
documentation  as  any  such assignee may reasonably require, including (without
limitation)  amended  promissory  notes,  acknowledgments of, or consents to the
assignment  which  may  require  Borrower  to  make  certain  representations or
affirmations  as  to  some  of  the  basic terms and covenants contained herein.
Lender  shall  not  be  relieved of its obligations hereunder as a result of any
such  sale,  assignment,  transfer,  grant  or  pledge,  unless  such  assignee
specifically  assumes  all or part of Lender's future obligations hereunder in a
writing,  a  copy of which shall be delivered to Borrower; in which event, after
the  date  of such assignment, Borrower's obligations to any such assignee shall
be  proportionately  as  set forth herein with respect to Lender. Borrower shall
not look to Lender to perform any of such assignee's obligations hereunder which
arise  after  the  date  thereof.  Any  assignee  shall  be  entitled to rely on
Borrower's agreements as stated herein, as applicable, and shall be considered a
third  party beneficiary thereof. Except to the extent otherwise required by the
context of this Agreement, the word "Lender," when used in this Agreement, shall
mean  and  include any holder of any Note originally issued to Lender hereunder.
Any  such  holder  of  any  Note shall be bound by and have the benefits of this
Agreement  the  same  as  if  such  holder  had  been  a  signatory  hereto.


                                       46
<PAGE>
     10.17.     Participation.  Lender shall have the right to enter into one or
                -------------
more  participation  agreements,  syndication  agreements, or similar agreements
with  one  or  more participating lenders or other parties approved by Lender on
such terms and conditions as Lender shall deem advisable. Borrower shall furnish
a  sufficient  number  of  copies  of reports and certificates to Lender so that
Lender and each participating lender shall receive a copy of each such document.

     10.18.     Time  of  Essence. Time is of the essence of this Agreement, the
                -----------------
Note  and  the  other  Loan  Documents.

     10.19.     Disclosures  and  Confidentiality.
                ---------------------------------

          (a)     Borrower  agrees  that it will obtain Lender's written consent
before  using  or  generating  any  press  release,  advertisement,  publicity
materials,  or  other  publication in which the name or logo of Lender or any of
its  Affiliates  is  used  or  may  be  reasonably  inferred.  Borrower will not
distribute  any  such  materials  in the absence of such prior written approval.

          (b)     Borrower  agrees  that  it  will  not, directly or indirectly,
disclose  to  any  third  party  the  terms  of  this  Agreement, the other Loan
Documents,  prior  or  future  correspondence relating thereto, the transactions
contemplated hereby, or any other information regarding Lender or its Affiliates
learned  by  Borrower  during the course of negotiation thereof. The term "third
party"  shall  exclude  only  Borrower,  its  employees, its senior lenders, its
Affiliates, and their respective attorney(s) and certified public accountant(s).
This  Section  10.19(b) shall not restrict the disclosure of information if such
      -----------------
disclosure  is  required by law, by order of any court, or by the order, rule or
regulation  of  any  administrative  agency,  including (without limitation) any
requirements of the FCC, any PUC, or any state or federal securities commissions
(the "Commissions"); provided, however, that, except for disclosures required by
      -----------    --------  -------
the  FCC,  PUC or Commissions, Borrower shall provide Lender with advance notice
of  any  such  required  disclosure  of  information  so that Lender may seek an
appropriate protective order and/or waive compliance with this section. Borrower
shall  not oppose any action taken by Lender to obtain an appropriate protective
order  or  other  reliable  assurance  that  the  information  will  be accorded
confidential treatment. The obligations set forth in this Section 10.19(b) shall
                                                          ----------------
survive  the  termination  of  this  Agreement.

          (c)     The  disclosure  of  information  by either Lender or Borrower
will  not be restricted under this Agreement if such information (i) has been or
becomes  published or is now, or in the future, in the public domain through (A)
no  fault  of  the parties, (B) disclosure other than unauthorized disclosure by
the  party  to  whom  the  information  is disclosed, or (C) disclosure to third
parties  by  the  disclosing party without similar restriction; (ii) is property
(other  than  proposal  letters,  commitment  letters,  or  other correspondence
between  Lender  and Borrower) within the legitimate possession of the receiving
party  prior  to disclosure hereunder; (iii) subsequent to disclosure hereunder,
is  lawfully  received  from  a  third  party  having  rights  therein  without
restriction  of the third party's or receiving party's rights to disseminate the
information  and  without  notice  of  any  restriction  against  its  further
disclosure;  (iv)  is disclosed with the written approval of the other party; or
(v)  is  or  becomes  publicly  available  free  of  any  obligation  to keep it
confidential.


                                       47
<PAGE>
          (d)     Borrower  authorizes Lender to discuss with and furnish to any
Affiliate  of  Lender,  to  any  government  or  self-regulatory  agency  with
jurisdiction  over  Lender,  to  any  other  Governmental  Authority,  or to any
assignee,  successor, participant, successor, or prospective assignee, successor
or  participant,  all financial statements, audit reports, and other information
pertaining  to  Telscape,  the  Borrower, and/or their Subsidiaries whether such
information  was provided by Borrower or prepared or obtained by Lender or third
parties.  Neither Lender nor any of its employees, officers, directors or agents
makes  any  representation  or warranty to any existing or prospective assignee,
successor  or  participant  regarding  any  audit reports or other analyses that
Lender  may  distribute,  whether  such  information was provided by Borrower or
prepared  or obtained by Lender or third parties, nor shall Lender or any of its
employees,  officers,  directors  or  agents be liable to any Person receiving a
copy  of  such  reports  or analyses for any inaccuracy or omission contained in
such  reports  or  analyses  or  relating  thereto.

          (e)     Every  reference  in this Agreement to disclosures of Borrower
to  Lender (except the financial statements), to the extent that such references
refer  or  are  intended to refer to disclosures at or prior to the execution of
this  Agreement,  shall  be deemed strictly to refer only to written disclosures
delivered  to  Lender  concurrently  with  the  execution  of this Agreement and
referred  to  specifically  in  the Loan Documents. The parties intend that such
disclosures  are  to  be  limited to those presented in an orderly manner at the
time  of  executing this Agreement and are not to be deemed to include expressly
or  impliedly  any disclosures that previously may have been delivered from time
to time to Lender, except to the extent that such previous disclosures are again
presented  to  Lender  in  writing  concurrently  with  the  execution  of  this
Agreement.

     10.20.     Jurisdiction  and  Venue.  (a)  The  Borrower hereby irrevocably
                ------------------------
and  unconditionally:

               (i)  submits for itself and its  property in any legal  action or
          proceeding  relating to this Agreement and the other Loan Documents to
          which  it is a  party,  or  for  recognition  and  enforcement  of any
          judgment in respect thereof to the non-exclusive  general jurisdiction
          of the  courts  of the  State of New York,  the  courts of the  United
          States of America for the Southern District of New York, and appellate
          courts from any thereof; and

               (ii) consents  that any such action or proceeding  may be brought
          in such courts and waives any  objection  that it may now or hereafter
          have to the venue of any such action or  proceeding  in any such court
          or that such  action or  proceeding  was  brought in any  inconvenient
          court and agrees not to plead or claim the same.

     (b) The Borrower hereby irrevocably and unconditionally:


                                       48
<PAGE>
          (i)  consents  to  the  appointment  of CT  Corporation  System,  1633
     Broadway, New York, New York 10019, as its process agent (together with any
     successor process agent, the "Process Agent") upon which service of process
                                   -------------
     in New York,  New  York,  may be  served  in any  legal  action  proceeding
     instituted in such courts.  To the extent  permitted by applicable law, the
     Borrower  agrees  that  service of  process  may be made  personally  or by
     mailing or  delivering  a copy of the summons and  complaint or other legal
     process in any legal  action or  proceeding  to the Borrower in care of the
     Process  Agent  and  such  agent  is  hereby   authorized  to  receive  and
     acknowledge the same for and on behalf of the Borrower and to admit service
     with respect  thereto.  Service  upon the Process  Agent shall be deemed in
     every respect  effective  service of process upon the Borrower and shall be
     legal and binding upon the Borrower  for all purposes  notwithstanding  any
     failure  to mail  copies of such  legal  process  to the  Borrower,  or any
     failure on the part of the  Borrower  to  receive  the same.  The  Borrower
     further agrees that it will not revoke the appointment of the Process Agent
     so long as any of the Note remains  outstanding  or until the  appointment,
     which  appointment  the  Borrower  similarly  agrees  not to  revoke,  of a
     successor  Process  Agent  acceptable  to the Lender  and such  successor's
     acceptance  of such  appointment.  The Borrower  agrees that it will at all
     times continuously maintain the Process Agent to receive service of process
     in the State of New York on behalf of  itself,  and,  in the event that for
     any reason such  Process  Agent shall  cease to be the Process  Agent,  the
     Borrower shall promptly appoint a successor Process Agent acceptable to the
     Lender for  service of process in the State of New York and shall  promptly
     deliver to the Lender a copy of such successor  Process Agent's  acceptance
     or acknowledgement of that appointment.  The Borrower will take any and all
     reasonable  action,  including,  the  filing of any and all  documents  and
     instruments  that may be  necessary  to  continue  the  appointment  of the
     Process Agent in full force and effect;

          (ii)  agrees  that  nothing  herein  shall  affect the right to effect
     service of process in any other manner  permitted by law or shall limit the
     right to sue in any other jurisdiction; and

          (iii) waives,  to the maximum  extent not prohibited by law any rights
     it may have to claim or recover in any legal action or proceeding  referred
     to in this  subsection any special,  exemplary,  punitive or  consequential
     damages.

     10.21.     Jury  Waiver. BORROWER AND LENDER HEREBY KNOWINGLY AND WILLINGLY
                ------------
WAIVE  THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING
THIS  AGREEMENT,  ANY  OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP
BETWEEN  LENDER  AND  BORROWER.  BORROWER  WARRANTS  AND  REPRESENTS THAT IT HAS
REVIEWED  THE  FOREGOING  WAIVERS  WITH  ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY  WAIVED  ITS  JURY  TRIAL  RIGHTS  FOLLOWING CONSULTATION WITH LEGAL
COUNSEL.  IN  THE  EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT  TO  A  TRIAL  BY  THE  COURT.

     10.22.     Limitation  on  Liability. LENDER, BORROWER AND GUARANTORS SHALL
                -------------------------
HAVE NO LIABILITY UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER
LOAN  DOCUMENTS  FOR  SPECIAL,  EXEMPLARY,  PUNITIVE,  INCIDENTAL,  INDIRECT  OR
CONSEQUENTIAL  DAMAGES  OF  ANY  SORT IN ANY SUIT BROUGHT OR ACTION COMMENCED IN
CONNECTION  WITH  THIS  AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS.
EACH  PARTY  WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH ACTION
ANY  SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES
OF  ANY  SORT  OTHER  THAN  ACTUAL  DAMAGES.


                                       49
<PAGE>
     10.23.     Borrower Waivers. To the full extent permitted by law and except
                ----------------
as  set  forth  herein, Borrower hereby waives (i) presentment, demand, protest,
notice  of  presentment,  protest,  default,  non-payment,  maturity,  release,
compromise,  settlement,  extension  or  renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper, and guaranties
at any time held by Lender on which Borrower may in any way be liable and hereby
ratifies  and  confirms whatever Lender may do in this regard; (ii) notice prior
to  taking possession or control of the Collateral or any bond or security which
might  be  required  by  any  court  prior to allowing Lender to exercise any of
Lender's  remedies,  including  the issuance of an immediate writ of possession,
except as expressly required in any of the Loan Documents; (iii) any marshalling
of  assets  or  any  right to compel Lender to resort first to any Collateral or
other  Persons  before  pursuing Borrower for payment of the Obligations and any
defenses  based  on  suretyship or impairment of Collateral; (iv) the benefit of
all  valuation, appraisement and exemption laws; (v) any right to require Lender
to terminate its security interest in the Collateral or in any other property of
Borrower  until  termination of this Agreement and the execution by Borrower and
by  any  person  whose Loans to Borrower are used in whole or in part to satisfy
the  Obligations,  of  an  agreement indemnifying Lender from any loss or damage
Lender may incur as the result of dishonored or unsatisfied items of any account
debtor  applied  to  the  Obligations;  and  (vi)  notice  of acceptance hereof.
Borrower  acknowledges  that  the foregoing waivers are a material inducement to
Lender's  entering  into  this  Agreement  and  that  Lender is relying upon the
foregoing  waivers  in  its  future  dealings  with  Borrower.

     10.24.     Schedules. The Schedules and Exhibits attached to this Agreement
                ---------
are  an  integral  part  hereof  and  are  hereby made a part of this Agreement.

     10.25.     Agreement  to  Govern. In case of any conflict between the terms
                ---------------------
of  this  Agreement  and  any  of  the  other  Loan Documents, the terms of this
Agreement  shall  govern.

     10.26.     Entire  Agreement. This Agreement, the other Loan Documents, and
                -----------------
other  documents,  agreements  and  certificates  executed  by  the  parties
contemporaneously  herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof. Borrower
is not entering into this Agreement in reliance on statements or representations
made  by  any  Person  other  than  as  set  forth  herein.

    END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.01 [SIGNATURES
                                                      -------------
                           APPEAR ON THE COVER PAGE.]


                                       50
<PAGE>
                                  SCHEDULE 1.01
                         TO LOAN AND SECURITY AGREEMENT

                     BORROWER INFORMATION AND DEFINED TERMS
                     --------------------------------------

CLOSING DATE:       September  29,  2000

BORROWER:           Pointe  Communications  Corporation, a  Nevada corporation

TAX IDENTIFICATION
NUMBER:             84-1097751

CHIEF
EXECUTIVE OFFICES:  1325  Northmeadow  Parkway,  Suite  110
                    Roswell,  Georgia  30076

REGULATORY
AUTHORIZATIONS:     The term  "Regulatory  Authorizations"  shall  include:  the
                    various  telecommunications  services permits,  licenses and
                    authorizations   issued  to  the  borrower  and  Significant
                    Subsidiaries  by  regulatory   authorities,   set  forth  on
                    Schedule 4.05 to the Loan and Security Agreement.

NORTEL
NETWORKS,  INC.:    Master Purchase  Agreement  dated November 2, 1999,  between
                    Pointe Communications Corporation and Nortel Networks, Inc.


TAX IDENTIFICATION NUMBERS OF:

(Guarantor)
Telscape  International,  Inc.--     75-2433637

(Significant  Subsidiary  Guarantors)
Telscape  U.S.A.,  Inc.     76-0499077
MSN  Communications,  Inc.     33-0707658
Interlink  Communications,  Inc.   77-0483223
TSCP  International,  Inc.     76-0577773
Pointecom,  Incorporated:  58-2440272
Galatel,  Inc.  58-2559588
Pointe  Local  Exchange  Company:  58-2539217
Overlook  Communications  International  Corporation     58-2028264
Rent-A-Line  Telephone  Company,  LLC     58-2297158
Tops  Corporation     76-0460301


<PAGE>
                                                                SCHEDULE 1.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                  BUSINESS PLAN
                                  -------------





<PAGE>
                                                                SCHEDULE 2.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               MAXIMUM LOAN AMOUNT
                               -------------------

Maximum  Principal Amount (including Capitalized Interest):          $16,000,000

Maximum  Amount  for  Lender's  Expenses:                            $    50,000




<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2


                         PAYMENT TERMS AND GOVERNING LAW
                         -------------------------------


INITIAL
BORROWING  DATE:    The first Borrowing Date on which the Lender disburses funds
                    at the request of the Borrower,  as evidenced by a borrowing
                    certificate  executed by the Borrower under the terms of the
                    Loan.

FINANCING
TERMINATION DATE:   September 30, 2001 (One year after Closing Date).

CAPITALIZED
INTEREST PERIOD:    September 29, 2000, through September 30, 2001.

INTEREST
ONLY PERIOD:        October 1, 2001, through September 30, 2002.

CONVERSION  DATE:   September  30,  2002.

PAYMENT  SCHEDULE:  After  the  Conversion  Date,  the  Borrower  shall  pay all
                    outstanding principal amounts, together with all accrued but
                    unpaid interest, in arrears in 20 quarterly  installments of
                    principal  and interest.  If the Borrower  elects to convert
                    all or a portion of the Advances to a fixed interest rate on
                    the Conversion  Date as set forth below,  the Borrower shall
                    pay  the  outstanding  principal  amount  of  the  Loans  so
                    converted  in equal  quarterly  payments  of  principal  and
                    interest on the last Business Day of each  Calendar  Quarter
                    in an amount  sufficient to fully  amortize the Loans by the
                    Maturity Date. If the Borrower does not make the election to
                    convert all Advances to a fixed interest rate on or prior to
                    the Conversion  Date as set forth below,  the Borrower shall
                    pay the  outstanding  principal  amount  of the Loans not so
                    converted in quarterly  payments on the last Business Day of
                    each Calendar Quarter as follows:

                          Quarter  Ending          Amount
                          ---------------          ------

                          December  31,  2002       3.75%
                          March  31,  2003          3.75%
                          June  30,  2003           3.75%
                          September  30,  2003      3.75%
                          December  31,  2003       4.25%
                          March  31,  2004          4.25%
                          June  30,  2004           4.25%
                          September  30,  2004      4.25%
                          December  31,  2004       5.00%
                          March  31,  2005          5.00%
                          June  30,  2005           5.00%


<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 3


                          Quarter  Ending          Amount
                          ---------------          ------

                          September  30,  2005      5.00%
                          December  31,  2005       5.75%
                          March  31,  2006          5.75%
                          June  30,  2006           5.75%
                          September  30,  2006      5.75%
                          December  31,  2006       6.25%
                          March  31,  2007          6.25%
                          June  30,  2007           6.25%
                          September  30,  2007      6.25%

INITIAL
PAYMENT  DATE:      The last  Business Day of the first  Calendar  Quarter after
                    the Conversion Date.

INTEREST
PAYMENT  DATE:      The last  Business Day of the first  Calendar  Quarter after
                    the Capitalized Interest Period and the last Business Day of
                    each Calendar Quarter thereafter until the Maturity Date.

PAYMENT  DATE:      The Initial  Payment Date and the last  Business Day of each
                    Calendar Quarter thereafter until the Maturity Date.


<PAGE>
                                                                SCHEDULE 2.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 4


MATURITY  DATE:     September  30,  2007  (Last  Business  Day of 20th  Calendar
                    Quarter after the Conversion Date).

GOVERNING  LAW:     New  York.


<PAGE>
                                                                SCHEDULE 2.09 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                      FEES
                                      ----

The  Borrower  shall pay a  non-refundable  origination  fee of  $320,000 on the
Closing Date,  provided that Borrower  shall receive a credit for any portion of
the Origination Fee paid prior to the Closing Date. The Borrower may finance (or
refinance) with Advances hereunder up to $320,000 of the Origination Fee.

Upon invoicing, the Borrower shall pay all reasonable fees, charges and expenses
of the Lender (including,  without limitation, the fees, charges and expenses of
the  Lender's  counsel)  arising  in  connection  with  the  structuring  of the
transactions  contemplated  in this Loan  Agreement and in  connection  with the
negotiation,  drafting, preparation,  execution and/or delivery of the documents
evidencing  the terms and  conditions  of the credit  facility  and all  related
documents  regardless of a successful  closing.  The Borrower also shall pay all
closing costs,  including legal fees and charges,  as well as all stamp or other
recording costs,  charges,  filing fees, costs and expenses of the Lender in the
enforcement or protection of its rights.  The Borrower may finance up to $50,000
of the foregoing fees,  charges and expenses under the Loan,  which the Borrower
first shall use to reimburse the Lender for its legal fees, charges and expenses
and, then, to reimburse the Borrower for its legal expenses.


<PAGE>
                                  SCHEDULE 4.04
                         TO LOAN AND SECURITY AGREEMENT

                                REQUIRED CONSENTS
                                -----------------


Certain  state  filings  requesting consent to incur indebtedness over a certain
threshold  are  required  in connection with the undertaking of the Subsidiaries
named  below  to  guarantee the obligations of the Borrower, as set forth below.
Regulatory  counsel  is  currently  preparing  the  filings and such filings are
expected  to  be  made by the Closing Date, and if not made by the Closing Date,
will  be made as soon as reasonably possible thereafter.  Each entity requesting
the aforementioned consents must receive approval from the relevant state office
within  60  days  of  the  Closing  Date.

Georgia:
-------
Overlook  Communications  International  Corporation
PointeCom,  Incorporated
Telscape  USA,  Inc.

Pennsylvania:
------------
MSN  Communications,  Inc.
Telscape  USA,  Inc.
Overlook  Communications  International  Corporation

New  York:
---------
Overlook  Communications  International  Corporation
Telscape  USA,  Inc.
PointeCom,  Incorporated


<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2


                            REGULATORY AUTHORIZATIONS
                            -------------------------


                                  FEDERAL (FCC)

POINTE  COMMUNICATIONS  CORPORATION

     214 License               ITC-95-160                  5/1/95
     Earth Station E960410     SES-LIC-19960624-00939     9/20/96
     Earth Station E960094     SES-LIC-19951121-00140     4/26/96

TELSCAPE  INTERNATIONAL,  INC.

     Signaling Point Code      SPC-NEW-19990916-00073     9/22/99

TELSCAPE  USA,  INC.

     214 License (Global F/B)     ITC-214-19971222-0809   2/13/98
     214 License (Global Resale)  ITC-214-19960925-00465  11/8/96

MSN  COMMUNICATIONS,  INC.

     214 License              ITC-214-19960522-00207      7/19/96

OVERLOOK  COMMUNICATIONS  INTERNATIONAL  CORPORATION

     214 License              ITC-95-334                  7/10/95

WORLDLINK  COMMUNICATIONS,  INC.

     214 License              ITC-95-460                  9/22/95
     214 License              ITC-214-1999-0505-00284     6/18/99

POINTECOM,  INCORPORATED

     214 License              ITC-214-19990716-000468     8/18/99

INTERLINK  COMMUNICATIONS,  INC.

     214 License              ITC-214-19981014-00699     11/27/98
     Earth Station E960024    SES-MOD-19991018-01758     12/29/99
     Earth Station E921000    Various                     Various
     Earth Station E890130    SES-LIC-19990920-01853      2/18/00


<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 3


TSCP  INTERNATIONAL,  INC.

     214 License    ITC-98-588-AL  8/6/98

STATE

TELSCAPE  USA,  INC.

     Arizona           Application T-03268A-960520          10/3/96
     Arkansas          Docket No. 96-294-U                  10/7/96
     California        Decision No. 97-04-040                4/9/97
     Florida           Cert. No. 4768                       1/27/97
     Georgia           Cert. No. R-395                      10/7/97
     Idaho             Tariff Accepted                     10/12/96
     Illinois          Docket No. 96-0450                   12/4/96
     Iowa              Registered                            8/9/99
     Kansas            Docket No. 97-TUSC-147-COC           11/7/96
     Kentucky          Tariff Accepted                     10/11/96
     Louisiana         TSP00038                             11/1/96
     Maine             Docket No. 96-528                   11/15/96
     Massachusetts     Registered
     Michigan          Registered                            9/6/96
     Minnesota         Docket No. P-5399/NA-96-1057         12/6/96
     Mississippi       Docket No. 96-UA-0430               10/25/96
     Missouri          Case No. TA-97126                   11/12/96
     Montana           Authorized
     Nebraska          Case No. C-1413                     11/12/96
     Nevada            CPC 2616                            11/15/96
     New Mexico        96-345-TC / Utility Case No. 2954    4/20/99
     New York          Case No. 96-C-0823                  12/11/96
     North Carolina    Docket No. P-589                    11/14/96
     North Dakota      Certificate No. 365                 10/10/96
     Ohio              Case No. 96-978-CT-RRJ              10/13/96
     Oregon            Order No. 96-267                     10/9/96
     Pennsylvania      Docket No. A-310444                 12/16/96
     South Dakota      Docket TC 96-162                    10/17/96
     Tennessee         Case No. 96-01396                    10/2/96
     Texas             Registration Letter Amended          7/14/97
     Utah              Letter of Registration submitted      8/4/99
     Washington        Case No. UT-961137 (IXC Resell)      10/9/96
                       Case No. UT-971780 (Comp. Class.)    3/24/98
     Wisconsin         Utility No. 7093-TI-100             12/23/96
     Wyoming           Docket No. 74209-TX-96-1             9/10/96


<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 4


MSN  COMMUNICATIONS,  INC.

     California        Decision No. 97-03-010  App. No. 96-12-004    3/7/97
     Illinois          Docket No. 96-0601                           3/12/97
     Nevada            CPC 2207,  Docket No. 96-12009               3/20/97
     New York          Case No. 96-C-1172                            4/7/97
     Texas             Registered (IXC)                             7/20/96
                       SPCOA No. 60073

OVERLOOK  COMMUNICATIONS  INTERNATIONAL  CORPORATION

     Alabama           Docket No. 25636                           12/2/96
     Arizona           Docket No. U-3129-96-165                   9/24/97
     Connecticut       Docket No. 96-0813                        12/18/96
     Florida           Cert. No. 4088, Docket No. 95-0871-TI     12/29/95
                       Order No. PSC-95-1020-FOF-TI
     Georgia           Cert. No.R-286, Docket No. 5841-U         11/22/96
     Idaho             Tariff Accepted                            8/10/95
     Indiana           Cause No. 40344                           11/30/95
     Kansas            Docket No. 194,710 U, 96-OLCC-617-COC      8/12/96
     Kentucky          Case No. 95-366                            10/4/95
     Louisiana         Registration Accepted                      10/6/95
     Massachusetts     Registered                                 7/21/95
     Minnesota         Docket No. P-5258/NA-95-976                1/12/95
     Missouri          Case No. TA-96-101                        11/28/95
     Nevada            Docket No. 96-5030  Cert. No. 2119         7/31/96
     New Hamp.         Docket DE-96-009, Order No. 22,269          8/6/96

     New Jersey        Registered                                  7/6/95
     New York          Case No. 95-C-0902                         12/8/95
     North Dakota      Case PU-151996-197  Registration No. 325   6/11/96
     Ohio              Case No. 96-17-CT RRJ                       2/9/96
     Oklahoma          Cause PUD 95-0000199,  Order No. 408533    1/15/97
     Pennsylvania      Docket No. A-310359                        4/11/96
     Tennessee         Registered                                  8/4/95
     Texas             Registered                                 7/13/95
     Vermont           CPG No. 238                                6/26/97
     Washington        Docket No. UT-961222                      11/13/96
                       Docket No. UT-991073                       9/22/99
     West Virginia     Case No. 96-0981-T-CN                     11/26/96


<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 5


WORLDLINK  COMMUNICATIONS,  INC.

     Connecticut    Docket No. 96-09-01                         4/30/97
     Georgia        Docket No. 5073-U Cert.  No. R-194           6/8/95
     Idaho          Tariff Accepted                            10/16/95
     Indiana        Cause No. 40660                              1/8/97
     Louisiana      Tariff Accepted                             4/11/96
     Massachusetts  Tariff Approved                              9/4/96
     Missouri       Case No. TA-97-107                         11/22/96
     Nevada         Docket No. 96-9010  Cert. No. 2164         11/15/96
     North Dakota   Registration No. 370, Case PU-1583-96-480  11/29/96
     Texas          Registered                                  8/31/95
     West Virginia  Case No 96-1158-T-CN                       12/16/96

POINTE  LOCAL  EXCHANGE  COMPANY  (FORMERLY  HTC  COMMUNICATIONS,  LLC)

     California     U-6185-C, Decision 99-06-083 (LEC license)  6/24/99
                    U-6185-C, Decision 99-06-083 (IXC license)  6/24/99

PointeCom,  Incorporated

    Florida         Docket No. 990215-TX                         6/2/99
                    Order No. PSC-99-1056-CO-TX (LEC license)
                    Docket No. 991008-TI                       11/12/99
                    Order No. PSC-99-2050-PAA-TI (IXC license)
     Georgia        IXC application filed                       8/24/99
     New York       Case No. 99-C-0902                         11/19/99
     Texas          COA-50027, Docket No. 22049 (SPCOA)         4/12/00

Rent-A-Line  Telephone  Company,  LLC

     Georgia        Amended Cert. No. L-035                     5/20/99
                    Docket Nos. 7130-U and 6170-U

Galatel,  Inc.

     Georgia  Pre-paid Reseller


<PAGE>
                                                                SCHEDULE 4.05 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 6


                 REGULATORY AUTHORIZATIONS NOT IN GOOD STANDING
                 ----------------------------------------------


                               TELSCAPE USA, INC.
                           CERTIFICATION STATUS REPORT
                           ---------------------------

                                   IN GOOD STANDING
             STATE      WITH PUBLIC SERVICE/PUBLIC UTILITY COMMISSION
             ---------  --------------------------------------------

             KENTUCKY     NO
             ---------  --------------------------------------------

             LOUISIANA     NO
             ---------  --------------------------------------------



                            MSN COMMUNICATIONS, INC.
                           CERTIFICATION STATUS REPORT
                           ---------------------------

                                   IN GOOD STANDING
             STATE      WITH PUBLIC SERVICE/PUBLIC UTILITY COMMISSION
             ---------  --------------------------------------------

             FLORIDA     NO
             ---------  --------------------------------------------

Certificates  of  the  above  entities  are  in effect but not in good standing;
efforts  are  being  undertaken  presently  to  bring these certificates to good
standing  status.


<PAGE>
                                  SCHEDULE 4.06
                         TO LOAN AND SECURITY AGREEMENT

                      PERMITTED CONFLICTS AND RESTRICTIONS
                      ------------------------------------

                                      NONE




<PAGE>
                                                                SCHEDULE 4.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              RESTRICTIONS ON LOANS
                              ---------------------

                                      NONE




<PAGE>
                                                                SCHEDULE 4.08 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                              FINANCIAL STATEMENTS
                              --------------------

Quarterly  Report  of  Telscape on Form 10-Q for the period ended June 30, 2000.
Annual  Report  of Telscape on Form 10-K for the period ended December 31, 1999.
Annual  Report  of Pointe Communications Corporation on Form 10-K for the period
ended  December  31,  1999.




<PAGE>
                                  SCHEDULE 4.11

                         TO LOAN AND SECURITY AGREEMENT
                       DEFAULTS UNDER MATERIAL AGREEMENTS
                       ----------------------------------


                                      NONE




<PAGE>
                                                                SCHEDULE 4.12 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------
                                                                          PAGE 2


                                  SCHEDULE 4.12
                         TO LOAN AND SECURITY AGREEMENT

                               PENDING LITIGATION
                               ------------------

Telscape  International,  Inc.,  Telereunion,  S.A.  de  C.V.,  Telereunion
-----------------------------------------------------------------------------
International,  S.A.  de C.V., vs. Mastec, et. al. and Acietel Mexicana, S.A. de
--------------------------------------------------------------------------------
C.V. in the  United  States  District Court, Southern District of Texas, Houston
---
Division,  Case  No.  H-99-1468,  regarding  breach of contract, fraud, tortious
interference  with  contract  and  negligent  misrepresentations  resulting  in
construction  delays  and  alternate  financing  incurring  additional costs and
expenses,  as  well  as  reputation and credibility damages.  This suit has been
filed  in  the  above  district  court  and  is  currently set to go to trial on
September  29,  2000.  The  defendants  have  filed  a  counterclaim  seeking an
unspecified  amount  of  damages  against  the  Company  which  the Company will
vigorously  contest  and  refute.   All  activity has been temporarily stayed in
this  case, as the parties are negotiating and will likely conclude a settlement
agreement.  Even  though we have been advised that we have a strong case against
MasTec,  there  can  be  no  assurance  as  to the successful conclusion to this
matter.


<PAGE>
                                                                SCHEDULE 4.15 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

<TABLE>
<CAPTION>
                                              TAXES
                                              -----

<S>   <C>                                                                            <C>
ITEM  DESCRIPTION                                                                    Amount
----  -----------------------------------------------------------------------------  -----------

1     Federal Excise Taxes:  The Company has reached a settlement with the
      IRS regarding  unpaid Federal Excise Taxes.  The liability is as follows:
      Federal Excise Taxes (November 1998 through June 2000 - accrued on             $1,587 ,000
      books)
      Interest at 10% (not accrued on books)                                         $   238,000
      The Company has negotiated a 24 month payment plan, which will begin
      in October 2000.

2     Section 280G payments:
      None

3     Overlook Communications International Corporation has not filed federal
      excise and various state sales and use, gross receipts, universal service
      fund and franchise tax returns related to its conduct of the prepaid calling
      card business during 1997 through August 2000.  The Company has
      received an assessment for Universal Service Fund Fees for
      approximately $2.0 million, which it believes is incorrect and has retained
      Telecom Compliance Services, Inc. ("TCS") to assist in determining the
      correct obligation and negotiating a settlement with the USAC.
      Additionally, the Company has engaged Arthur Andersen to assist the
      Company in determining its liability for the various state and federal taxes
      and facilitating the filing of any required returns.  Arthur Andersen began
      the voluntary disclosure process with the Company's three largest states
      California, Illinois and Florida as well as the IRS for Federal Excise tax.
      Thus far they have been successful in arguing no NEXUS related to the
      prepaid calling card business in California and Illinois and the Company
      has received notification of no liability past or prospective (assuming fact
      patterns remain constant) for the prepaid card business in these states.  A
      voluntary disclosure was filed with the IRS in May 2000 but a response
      has not been received to date.  The Federal Excise tax has been repealed
      and will phase out over a three year period.  As of August 31, 2000, the
      Company had accrued approximately $3.3 million in its Financial
      Statements for these various obligations.

4     As a result of a Georgia State Use tax audit during 1998, Pointe
      Communications Corporation was assessed approximately $85,000 in use
      tax, which has been accrued in the Company's Financial Statement but
      has not yet been paid.


<PAGE>
5     Pointe Communications Corporation has not filed the Texas Franchise
      Tax Return for 1998 for its subsidiary TOPS.  The return will be filed
      pending resolution of a valuation of Telcommute Solutions G.P., Inc.,
      which TOPS dividended to its parent Pointe Communications Corporation.
</TABLE>


<PAGE>
                                                                SCHEDULE 4.16 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------


The  financial  projections and the financial condition of the Company have been
negatively  affected  by  the  following  events  since  June  30,  2000:

     (i) The Mexican network was expected to be complete and operational  during
     the second  quarter of 2000.  However,  due to delays in  construction  and
     interconnection with Telmex, the network became only partially  operational
     during the third  quarter  and is not  expected  to be  complete  until the
     fourth  quarter  of 2000.  This delay has had a  significant  impact on the
     gross  margins  earned  in the  prepaid  calling  card  and  the  wholesale
     businesses.

     (ii) The completion of the Competitive  Local Exchange  Carrier network and
     marketing of such services was delayed by approximately  one quarter due to
     delay in the completion of the build out and delay in the implementation of
     the Operating Support System necessary to provision customers.

     (iii) The non-CLEC one plus  business in the United  States was closed as a
     result of negative operating results.

     (iv) The Coast Partners litigation was settled for $875,000.

Borrower  acknowledges  that  nothing  in  the disclosures in this Schedule 4.16
shall  be  deemed  to  alter  its  obligations under the Agreement, or limit the
Lender's  rights  and  remedies  under  the  Agreement.


<PAGE>
                                  SCHEDULE 4.25
                         TO LOAN AND SECURITY AGREEMENT

                               UCC FILING OFFICES
                               ------------------

CALIFORNIA

     Secretary  of  State
     Uniform  Commercial  Code  Division
     P.  O.  Box  942835
     Sacramento,  California  94235-0001

FLORIDA

     Bureau  of  Uniform  Commercial  Code
     Department  of  State
     P.  O.  Box  5588
     Tallahassee,  Florida  32314

GEORGIA

     Clerk  of  the  Superior  Court  of  Cobb  County
     P.  O.  Box  3370
     Marietta,  Cobb  County,  Georgia  30061

TEXAS

     Texas  Secretary  of  State
     UCC  Filing/Recording  Office
     P.O.  Box  13697
     Austin,  Texas  78711

NEVADA

     Nevada  Secretary  of  State
     UCC  Filing/Recording  Office
     200  North  Carson  Street
     Carson  City,  Nevada  89701-4201


<PAGE>
                                SCHEDULE  4.26
                         TO LOAN AND SECURITY AGREEMENT

                  PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
                  --------------------------------------------

BORROWER'S  CHIEF  EXECUTIVE  OFFICE:

     Pointe  Communications  Corporation  c/o
     Telscape  International,  Inc.
     1325  Northmeadow  Parkway,  Suite  110
     Roswell,  Georgia  30076

LOCATIONS  OF  COLLATERAL:

     3949  Ruffin  Road,  Suite  E-2
     San  Diego,  California  92123

     11021  Valley  Blvd.
     El  Monte,  California  91731

     444  Brickell  Avenue,  Suite  100
     Miami,  Florida  33131

     1301  Fanning  Street,  Suite  1275
     Houston,  Texas  77002


<PAGE>
                                  SCHEDULE 4.29
                         TO LOAN AND SECURITY AGREEMENT

                                  ASSUMED NAMES
                                  -------------


Pointecom
Telscape  Communications
Telscape  Communications  International



<PAGE>
                                                               SECTION  4.30  TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                          TRANSACTIONS WITH AFFILIATES
                          ----------------------------


     On  May  7,  1999,  the  Company  issued  $1,000,000  in senior notes to E.
Scott  Crist,  bearing  interest  at 8% until November 6, 1999.  Thereafter, the
interest  rate  increased  by  1%  for  each  month after November 6, 1999.  The
Company  repaid  $150,000  to  Mr.  Crist  on  August  27,  1999  and 200,000 on
August  2000.  The outstanding balance of the Note due to Mr. Crist at September
29,  2000  is  $650,000.

     On  August 16, 1999, E. Scott Crist issued a Promissory Note to the Company
in  the amount of $95,000, bearing simple interest at an annual rate of 8%.  The
outstanding  balance  of  the  Note  due to the Company at December 31, 1999 was
$97,873,  including  principal  and  accrued  interest.

     On  December  10,  1998,  Manual  Landa  issued  a  Promissory  Note to the
Company  in the amount of $270,000, bearing simple interest at an annual rate of
9%.  The outstanding balance of the Note due to the Company at December 31, 1999
was  $220,336,  including  principal  and  accrued  interest.

     During  1997, the Company entered into a five year operating lease of earth
station  equipment located in Panama, Costa Rica and Nicaragua. Steve Raville is
affiliated  with  one  of the lessors. The lease obligations total approximately
$70,000  per  annum.


<PAGE>
                                                                SCHEDULE 4.31 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                            NORTEL PURCHASE AGREEMENT
                            -------------------------

     Master  Purchase  Agreement  dated  as  of November 2, 1999, between Pointe
Communications  Corporation  and  Nortel  Networks,  Inc.




<PAGE>
                                                                SCHEDULE 6.02 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                               POST-CLOSING ITEMS
                               ------------------

1.   Filing of UCC-1  Financing  Statements  in offices  listed on Schedule 4.25
     within 10 days of the Closing Date.

2.   Filing of UCC-1  Financing  Statements as fixture filings for the locations
     of Collateral listed on Schedule 4.26 within 10 days of the Closing Date.

3.   Delivery to Lender of Certificate of Insurance  satisfying the requirements
     of Section 7.01 within 15 days of Closing.

4.   Delivery to Lender of all post-filing lien searches  reflecting no liens as
     to  Collateral  (other than a  subordinate  lien securing the Lucent Credit
     Agreement) within 45 days of the Closing Date.

5.   Delivery to Lender of all Consents within 60 days of the Closing Date.

6.   Delivery  to  Lender  of an  opinion  of  Regulatory  Counsel  in form  and
     substance satisfactory to Lender within 15 days of the Closing Date.

7.   Receipt of all Required Consents within 60 days of the Closing Date.

The  failure  of  the  Borrower  to  satisfy, or cause the satisfaction of, each
post-closing item listed above within the specified time period shall constitute
an  Event  of  Default.


<PAGE>
                                                                SCHEDULE 7.07 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                    INSURANCE
                                    ---------

                          [SEE ATTACHED CERTIFICATE(S)]




<PAGE>
                                                                SCHEDULE 8.01 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                         PERMITTED SPECIFIC ENCUMBRANCES
                         -------------------------------


1.   Liens securing  Indebtedness  under the Lucent Credit  Agreement,  provided
     that  any lien on the  Collateral  must be  subordinate  to the Lien on the
     Collateral in favor of Lender.

2.   Liens securing  Indebtedness under the Loan and Security Agreement dated as
     of January 11, 1999 between and among Telscape International, Inc., a Texas
     corporation ("Telscape"),  Domestic and/or Foreign Subsidiaries of Telscape
     which are  signatories to the Schedule of Borrowing  Subsidiaries  attached
     thereto  and  such  additional  Domestic  and/or  Foreign  Subsidiaries  of
     Telscape  which may thereafter  become a party thereto  pursuant to Section
     1(b)  thereof,  and NTFC  Capital  Corporation,  provided  that no lien may
     encumber the Collateral.

3.   Liens securing  Indebtedness under the Loan and Security Agreement dated as
     of December 7, 1998 between and among Telscape International, Inc., a Texas
     corporation ("Telscape"),  Domestic and/or Foreign Subsidiaries of Telscape
     which are  signatories to the Schedule of Borrowing  Subsidiaries  attached
     thereto  and  such  additional  Domestic  and/or  Foreign  Subsidiaries  of
     Telscape  which may thereafter  become a party thereto  pursuant to Section
     1(b)  thereof,  and  Newbridge  Financial  Services,  a unit of GE  Capital
     Corporation, provided that no lien may encumber the Collateral.

4.   Liens securing Indebtedness permitted under Section 8.01(a),  provided that
     no lien may encumber the Collateral.


<PAGE>
                                                                SCHEDULE 8.13 TO
                                                                ----------------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------


               RESTRICTIONS ON DIVIDENDS AND RELATED TRANSACTIONS
               --------------------------------------------------

1.   Lucent Credit Agreement.

2.   Loan and Security  Agreement dated as of January 11, 1999 between and among
     Telscape International,  Inc., a Texas corporation  ("Telscape"),  Domestic
     and/or  Foreign  Subsidiaries  of  Telscape  which are  signatories  to the
     Schedule of Borrowing  Subsidiaries  attached  thereto and such  additional
     Domestic  and/or  Foreign  Subsidiaries  of Telscape  which may  thereafter
     become a party thereto  pursuant to Section 1(b) thereof,  and NTFC Capital
     Corporation.

3.   Loan and Security  Agreement dated as of December 7, 1998 between and among
     Telscape International,  Inc., a Texas corporation  ("Telscape"),  Domestic
     and/or  Foreign  Subsidiaries  of  Telscape  which are  signatories  to the
     Schedule of Borrowing  Subsidiaries  attached  thereto and such  additional
     Domestic  and/or  Foreign  Subsidiaries  of Telscape  which may  thereafter
     become a party  thereto  pursuant to Section 1(b)  thereof,  and  Newbridge
     Financial Services, a unit of GE Capital Corporation.


<PAGE>
                                                                       EXHIBIT A
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                                  FORM OF NOTE
                                  ------------




<PAGE>
                                                                       EXHIBIT B
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                          FORM OF BORROWING CERTIFICATE
                          -----------------------------




<PAGE>
                                                                       EXHIBIT C
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                     FORM OF OPINION OF COUNSEL FOR BORROWER
                     ---------------------------------------




<PAGE>
                                                                       EXHIBIT D
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

               FORM OF OPINION OF REGULATORY COUNSEL FOR BORROWER
               --------------------------------------------------




<PAGE>
                                                                       EXHIBIT E
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                           FORM OF LANDLORD'S CONSENT
                           --------------------------




<PAGE>
                                                                       EXHIBIT F
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                   FORM OF CERTIFICATE OF FINANCIAL CONDITION
                   ------------------------------------------



<PAGE>
                                                                       EXHIBIT G
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                       FORM OF TELSCAPE GUARANTY AGREEMENT
                       -----------------------------------




<PAGE>
                                                                       EXHIBIT H
                                                                       ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

                FORM OF SIGNIFICANT SUBSIDIARY GUARANTY AGREEMENT
                -------------------------------------------------




<PAGE>
                                    EXHIBIT I
                                    ---------
                                                     LOAN AND SECURITY AGREEMENT
                                                     ---------------------------

               FORM OF COLLATERAL ASSIGNMENT OF PURCHASE AGREEMENT
               ---------------------------------------------------




<PAGE>