REVOLVING CREDIT

                                       AND

                               SECURITY AGREEMENT


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                         PNC BANK, NATIONAL ASSOCIATION
                            (AS LENDER AND AS AGENT)


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                                      WITH


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                           TRESCOM INTERNATIONAL, INC.
                              TRESCOM U.S.A., INC.
                         INTEX TELECOMMUNICATIONS, INC.
               THE ST. THOMAS AND SAN JUAN TELEPHONE COMPANY, INC.
                                       AND
                      STSJ OVERSEAS TELEPHONE COMPANY, INC.
                                   (BORROWERS)


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                                  July 31, 1997


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<PAGE>

                              REVOLVING CREDIT AND
                               SECURITY AGREEMENT
                            ------------------------


      Revolving  Credit  and  Security   Agreement  dated  July  31,  1997  (the
"Agreement") among TRESCOM  INTERNATIONAL,  INC., a corporation  organized under
the  laws  of  the  State  of  Florida  ("TresCom"),  TRESCOM  U.S.A.,  INC.,  a
corporation organized under the laws of the State of Florida ("TresCom U.S.A."),
INTEX  TELECOMMUNICATIONS,  INC., a corporation  organized under the laws of the
State of South Carolina ("Intex"), THE ST. THOMAS AND SAN JUAN TELEPHONE,  INC.,
a corporation  organized under the laws of the U.S. Virgin Islands  ("STSJ") and
STSJ OVERSEAS  TELEPHONE  COMPANY,  INC.  (d/b/a  TresCom  P.R.),  a corporation
organized under the laws of Puerto Rico  ("Telecom")  (TresCom,  TresCom U.S.A.,
Intex,  STSJ  and  Telecom,   each  a  "Borrower"  and  jointly  and  severally,
"Borrowers"), the financial institutions which are now or which hereafter become
a party hereto  (individually,  a "Lender" and collectively,  the "Lenders") and
PNC BANK,  NATIONAL  ASSOCIATION  ("PNC"),  as agent for Lenders  (PNC,  in such
capacity, the "Agent").

      IN  CONSIDERATION   of  the  mutual  covenants  and  undertakings   herein
contained, Borrowers, Lenders and Agent hereby agree as follows:

I.       DEFINITIONS.

         1.1.  ACCOUNTING  TERMS.  As used in this  Agreement,  the  Note or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement,  accounting  terms not  defined in Section 1.2 or  elsewhere  in this
Agreement and  accounting  terms partly defined in Section 1.2 to the extent not
defined,  shall have the respective meanings given to them under GAAP; PROVIDED,
HOWEVER, whenever such accounting terms are used for the purposes of determining
compliance  with financial  covenants in this Agreement,  such accounting  terms
shall be  defined in  accordance  with GAAP as  applied  in  preparation  of the
audited financial statements of Borrowers for the fiscal year ended December 31,
1996 and each fiscal year thereafter.

         1.2.    GENERAL TERMS.  For  purposes  of  this Agreement the following
terms shall have the following meanings:

                 "ACCOUNTANTS" shall have  the  meaning set forth in Section 9.7
hereof.

                 "ADVANCES" shall mean and include  the  Revolving  Advances and
Letters of Credit.

                 "ADVANCE RATES" shall  have the  meaning  set  forth in Section
2.1(a) hereof.

                 "AFFILIATE"  of any Person shall mean any Person  (other than a
Subsidiary) which,  directly or indirectly,  is in 

                                       -2-

<PAGE>

control of, is controlled by, or is under common  control with such Person.  
For purposes of this  definition, control of a Person shall mean the power, 
direct or indirect, (x) to vote 5% or more of the  securities  having  ordinary
voting  power for the  election of directors  of such  Person, or (y) to  direct
or cause  the  direction  of the management  and  policies  of such  Person  
whether by contract or otherwise excluding officers and directors acting solely
in their capacity as officers and directors.

                 "AGENT"  shall have the  meaning  set forth in the  preamble to
this Agreement and shall include its successors and permitted assigns.

                 "ALTERNATE BASE RATE" shall mean, for any day, a rate per annum
equal to the  higher  of (i) the Base  Rate in  effect  on such day and (ii) the
Federal Funds Rate in effect on such day plus 1/2 of 1%.

                 "AUTHORITY"  shall  have  the  meaning  set  forth  in  Section
4.19(c).

                 "ASSIGNMENT"  shall  mean,  collectively,   the  Assignment  of
Accounts  Receivable  dated as of the Closing Date between Telecom and Agent and
the Statement of Assignment of Accounts  Receivable dated as of the Closing Date
between Telecom and Agent.

                 "BASE RATE" shall mean the base commercial  lending rate of PNC
as  publicly  announced  to be in  effect  from  time to time,  such  rate to be
adjusted  automatically,  without notice, on the effective date of any change in
such rate.  This rate of  interest is  determined  from time to time by PNC as a
means of pricing some loans to its customers and is neither tied to any external
rate of  interest  or index nor does it  necessarily  reflect the lowest rate of
interest  actually  charged  by PNC to  any  particular  class  or  category  of
customers of PNC.

                 "BLOCKED ACCOUNTS" shall have the meaning set forth in  Section
4.15(h).

                 "BORROWER" or  "BORROWERS"  shall have the meaning set forth in
the preamble to this Agreement and shall extend to all permitted  successors and
assigns of such Persons.

                 "BORROWERS' ACCOUNT"  shall  have  the  meaning  set  forth  in
Section 2.8.

                 "BORROWING AGENT" shall mean TresCom.

                 "BUSINESS  DAY" shall  mean with  respect  to  Eurodollar  Rate
Loans, any day on which commercial banks are open for domestic and international
business, including dealings in Dollar deposits in London, England and New York,
New York and with  respect  to all other  matters,  any day other  than a day on

                                       -3-
<PAGE>

which commercial banks in New York, Pennsylvania or New Jersey are authorized or
required by law to close.

                 "CERCLA" shall mean the  Comprehensive Environmental  Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 ET
SEQ.

                 "CHANGE  OF  CONTROL"  shall  mean  (a)  with  respect  to  all
Borrowers  other than TresCom,  the  occurrence of any event  (whether in one or
more  transactions)  which results in a transfer of control of any Borrower to a
Person who is not an Original  Owner,  (b) with respect to TresCom,  a Person or
group of  Persons  acting in  concert  as a  partnership,  limited  partnership,
syndicate or other group  ("Group of  Persons"),  together  with any  Affiliates
thereof  (other than one or more  Original  Owners),  shall  succeed in having a
sufficient  number of its nominees  elected to the Board of Directors of TresCom
such that such nominees,  when added to any existing directors  remaining on the
Board of Directors of TresCom  after such  election who are  Affiliates  of such
Person or Group of Persons, will constitute a majority of the Board of Directors
of TresCom or (c) with respect to all Borrowers,  any merger or consolidation of
or with any  Borrower  or sale of all or  substantially  all of the  property or
assets of any Borrower to a Person who is not an Original Owner. For purposes of
this definition,  "control of Borrower" shall mean the power, direct or indirect
(x) to vote 50% of the securities  having ordinary voting power for the election
of  directors  of any  Borrower or (y) to direct or cause the  direction  of the
management  and  policies of any  Borrower by  contract or  otherwise  excluding
officers  and  directors  acting  solely  in  their  capacity  as  officers  and
directors.

                 "CHANGE OF  OWNERSHIP"  shall mean (a) with respect to TresCom,
the Original Owner ceases to own the largest percentage of the securities having
ordinary  voting power for the  election of  directors  of TresCom,  or (b) with
respect to all other Borrowers,  100% of the common stock of such Borrower is no
longer owned or controlled  by a Person who is an Original  Owner or a Borrower,
in each  case  including  for the  purposes  of the  calculation  of  percentage
ownership,  any  shares of common  stock into  which any  capital  stock of such
Borrower held by any Original  Owner is convertible or for which any such shares
of the capital  stock of such  Borrower or of any other  Person may be exchanged
and any shares of common stock  issuable to such Original Owner upon exercise of
any warrants,  options or similar rights which may at the time of calculation be
held by such Original Owner.

                 "CHARGES" shall mean all taxes, charges, fees, imposts,  levies
or other  assessments,  including,  without  limitation,  all net income,  gross
income,  gross  receipts,   sales,  use,  ad  valorem,  value  added,  transfer,
franchise,  profits, inventory,  capital stock, license,  withholding,  payroll,
employment, social security, unemployment,  excise, severance, stamp, occupation
and property taxes, custom duties, fees, assessments,  liens, claims and charges
of any kind whatsoever,  together with any interest and any penalties, additions
to tax or additional amounts, imposed by any taxing or other authority,


                                       -4-

<PAGE>

domestic or foreign (including, without limitation, the Pension Benefit Guaranty
Corporation or any environmental agency or superfund),  upon the Collateral, any
Borrower or any of its Affiliates (other than Warburg or a Warburg Affiliate).

                 "CLOSING  DATE"  shall mean July 31,  1997 or such other  later
date as may be agreed to by the parties hereto.

                 "CODE" shall mean the Internal Revenue Code of 1986, as amended
from time to time and the regulations promulgated thereunder.

                 "COLLATERAL" shall mean and include:

                       (a)    all Receivables;

                       (b)    all General Intangibles;

                       (c)    all  Licenses (but only to the extent permitted by
FCC  Rules  and  any  law,  statute,   rule,  regulation  or  ordinance  of  any
Governmental Body);

                       (d)   (i) all of  each  Borrower's  rights  as an  unpaid
vendor,  mechanic,  artisan,  or  other  lienor,  including stoppage in transit,
setoff,  detinue,  replevin,  reclamation  and  repurchase;  (ii) all additional
amounts due to any Borrower from any Customer relating to the Receivables; (iii)
all of each Borrower's contract rights, rights of payment which have been earned
under  a  contract  right,  instruments,  documents,  chattel  paper,  warehouse
receipts,  deposit accounts,  money, securities and investment property; (iv) if
and when  obtained  by any  Borrower,  all real and  personal  property of third
parties in which such  Borrower has been granted a lien or security  interest as
security for the payment or enforcement of Receivables; and (v) any other goods,
personal property or real property now owned or hereafter  acquired in which any
Borrower may in the future grant a security  interest to Agent hereunder,  or in
any  amendment or  supplement  hereto or thereto,  or under any other  agreement
between Agent and any Borrower;

                       (e)    all  of  each  Borrower's  ledger  sheets,  ledger
cards,  files,  correspondence,  records, books  of  account,  business  papers,
computers,  computer  software  (owned  by any  Borrower  or in  which it has an
interest  (but  only to the  extent  such  interest  is  assignable)),  computer
programs,  tapes,  disks and documents  relating to (a), (b), (c) or (d) of this
Paragraph; and

                       (f)   all proceeds and products of (a),  (b), (c), (d) or
(e) in  whatever  form,  including,  but  not limited to: cash, deposit accounts
(whether  or  not  comprised  solely  of  proceeds),  certificates  of  deposit,
insurance proceeds  (including hazard,  flood and credit insurance),  negotiable
instruments and other instruments for the payment of money, chattel paper,

                                       -5-

<PAGE>

security agreements,  documents, eminent domain proceeds,  condemnation proceeds
and tort claim proceeds.

                 "COMMITMENT PERCENTAGE" of any Lender shall mean the percentage
set forth below such Lender's  name on the signature  page hereof as same may be
adjusted upon any assignment by a Lender pursuant to Section 16.3(b) hereof.

                 "COMMITMENT  TRANSFER  SUPPLEMENT" shall mean a document in the
form of EXHIBIT  16.3  hereto,  properly  completed  and  otherwise  in form and
substance  satisfactory  to Agent by which the Purchasing  Lender  purchases and
assumes a portion  of the  obligation  of Lenders  to make  Advances  under this
Agreement.

                 "COMMUNICATIONS ACT" shall mean the Communications Act of 1934,
as amended.

                 "CONSENTS"  shall mean all filings and all  licenses,  permits,
consents, approvals,  authorizations,  qualifications and orders of governmental
authorities and other third parties, domestic or foreign,  necessary to carry on
any Borrower's business,  including,  without limitation,  any Consents required
under all applicable federal, state or other applicable law.

                 "CONTROLLED GROUP" shall mean all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common  control  which,  together  with any  Borrower,  are  treated as a single
employer under Section 414 of the Code.

                 "CUSTOMER"  shall mean and  include  the  account  debtor  with
respect to any Receivable and/or the prospective purchaser of goods, services or
both with respect to any contract or contract right, and/or any party who enters
into or  proposes  to enter  into any  contract  or other  arrangement  with any
Borrower, pursuant to which such Borrower is to deliver any personal property or
perform any services.

                 "DEFAULT" shall mean an event which,  with the giving of notice
or passage of time or both, would constitute an Event of Default.

                 "DEFAULT RATE" shall  have the meaning set forth in Section 3.1
hereof.

                 "DEFAULTING LENDER" shall have the meaning set forth in Section
2.16(a) hereof.

                 "DEPOSITORY  ACCOUNTS" shall  have  the  meaning  set forth  in
Section 4.15(h) hereof.

                 "DOCUMENTS" shall  have the meaning set forth in Section 8.1(c)
hereof.

                                       -6-

<PAGE>

                 "DOLLAR" and the sign "$" shall mean lawful money of the United
States of America.

                 "DOMESTIC RATE LOAN" shall mean any Advance that bears interest
based upon the Alternate Base Rate.

                 "EARLY  TERMINATION  DATE"  shall have the meaning set forth in
Section 13.1 hereof.

                 "EARNINGS  BEFORE INTEREST AND TAXES" shall mean for any period
the sum of (i) net income (or loss) of TresCom on a consolidated  basis for such
period  (excluding  extraordinary  gains and  losses)  PLUS (ii) Total  Interest
Expense for such period,  PLUS (iii) all charges  against income of TresCom on a
consolidated  basis for such period for federal,  state and local taxes actually
paid.

                 "EBITDA"  shall  mean for any  period  the sum of (i)  Earnings
Before  Interest and Taxes for such period PLUS (ii)  depreciation  expenses for
such period, PLUS (iii) amortization expenses for such period PLUS (iv) Non-Cash
Items.

                 "ELIGIBLE  IX  -  PLUS  UNBILLED   RECEIVABLES"  shall  mean  a
Receivable which would otherwise  constitute an Eligible  Receivable  except for
the fact that it has not been invoiced,  provided that such Receivable  shall be
invoiced  within  four  (4) days  from the end of the  month  during  which  the
services giving rise to such Receivables were performed.

                 "ELIGIBLE OAN RECEIVABLES"  shall mean a Receivable which, when
paid, is to be remitted by OAN to a Borrower in connection  with the  submission
by OAN of call  records of such  Borrower to an LEC for  billing and  collection
from end-users of such Borrower's  services so long as (a) such Receivable would
otherwise constitute an Eligible Receivable hereunder and (b) the LEC is subject
to the federal regulations with respect to the telecommunications industry as in
effect on the Closing Date.

                 "ELIGIBLE  RECEIVABLES"  shall mean and include with respect to
each Borrower,  each Receivable of such Borrower  arising in the ordinary course
of such Borrower's business and which Agent, in its sole credit judgment,  shall
deem to be an Eligible  Receivable,  based on such  considerations  as Agent may
from time to time deem  appropriate.  A Receivable  shall not be deemed eligible
unless such Receivable is subject to Agent's first priority  perfected  security
interest and no other Lien (other than Permitted Encumbrances), and is evidenced
by an invoice or other documentary evidence  satisfactory to Agent. In addition,
no Receivable shall be an Eligible Receivable if:

                 (a) it  arises  out  of a  sale  made  by  any  Borrower  to an
Affiliate  (other than Warburg or a Warburg  Affiliate)  of any Borrower or to a
Person controlled by an Affiliate (other than Warburg or a Warburg Affiliate) of
any Borrower;

                                       -7-

<PAGE>

                 (b)   it is due or unpaid more than  ninety (90) days after the
original invoice date;

                 (c) fifty  percent (50%) or more of the  Receivables  from such
Customer are not deemed Eligible Receivables hereunder.  Such percentage may, in
Agent's sole discretion, be increased or decreased from time to time;

                 (d)   any  covenant, representation  or  warranty  contained in
this Agreement with respect to such Receivable has been breached;

                 (e) the Customer shall (i) apply for, suffer, or consent to the
appointment of, or the taking of possession by, a receiver,  custodian,  trustee
or liquidator of itself or of all or a substantial  part of its property or call
a meeting of its creditors, (ii) admit in writing its inability, or be generally
unable,  to pay its debts as they become due or cease  operations of its present
business,  (iii) make a general  assignment  for the benefit of creditors,  (iv)
commence a voluntary case under any state or federal  bankruptcy laws (as now or
hereafter in effect),  (v) be  adjudicated a bankrupt or insolvent,  (vi) file a
petition  seeking to take advantage of any other law providing for the relief of
debtors,  (vii) acquiesce to, or fail to have  dismissed,  any petition which is
filed against it in any involuntary  case under such bankruptcy  laws, or (viii)
take any action for the purpose of effecting any of the foregoing;

                 (f) the sale is to a  Customer  outside  the  United  States of
America, Puerto Rico or the U.S. Virgin Islands, unless the sale is on letter of
credit,  guaranty or acceptance  terms,  in each case acceptable to Agent in its
sole discretion;

                 (g) Agent  believes,  in its sole judgment,  that collection of
such Receivable is insecure or that such Receivable may not be paid by reason of
the Customer's financial inability to pay;

                 (h)  the  Customer  is  the  United  States  of  America,   the
Commonwealth   of  Puerto  Rico,  any  state  or  any   department,   agency  or
instrumentality of any of them, unless the applicable Borrower assigns its right
to payment of such  Receivable to Agent pursuant to the Assignment of Claims Act
of  1940,  as  amended  (31  U.S.C.  Sub-Section  3727  ET  SEQ.  and 41  U.S.C.
Sub-Section 15 ET SEQ.), Articles 200 and 201 of the Puerto Rico Political Code,
3 PR Laws Ann  Section  901, or has  otherwise  complied  with other  applicable
statutes or ordinances;

                 (i) the services  giving rise to such  Receivable have not been
performed by the  applicable  Borrower or the  Receivable  does not  represent a
final sale;

                 (j)  the  Receivable  is  subject  to  any  offset,  deduction,
defense,  dispute,  or  counterclaim  (but only to the  extent  of such  offset,
deduction, defense, dispute or

                                       -8-

<PAGE>

counterclaim) or the Receivable is contingent in any respect or for any reason;

                 (k) the  applicable  Borrower has made any  agreement  with any
Customer for any deduction therefrom, except for discounts or allowances made in
the ordinary  course of business for prompt  payment,  all of which discounts or
allowances are reflected in the calculation of the face value of each respective
invoice related thereto;

                 (l)   the rendition of services has not been completed;

                 (m)   such  Receivable  is not payable to a Borrower or, solely
with respect to STSJ, to a representative acting on behalf of STSJ;

                 (n) the  Customer  is also a creditor or supplier of a Borrower
other than the portion of such  Receivable  which exceeds the payables that such
Borrower owes such creditor or supplier; or

                 (o) such  Receivable is not otherwise  satisfactory to Agent as
determined  in good  faith by  Agent  in the  exercise  of its  discretion  in a
reasonable manner.

                 "ELIGIBLE UNBILLED  RECEIVABLES" shall mean a Receivable (other
than an Eligible IX Unbilled  Receivable)  which would  otherwise  constitute an
Eligible Receivable except for the fact that it has not been invoiced,  provided
that such  Receivable  shall be evidenced by an invoice  within thirty (30) days
from the end of the month during which the services  and/or goods giving rise to
such Receivable were performed.

                 "ENVIRONMENTAL COMPLAINT" shall  have  the meaning set forth in
Section 4.19(c) hereof.

                 "ENVIRONMENTAL  LAWS"  shall mean all  federal,  state,  local,
territorial and commonwealth  environmental,  land use, zoning, health, chemical
use, safety and sanitation laws, statutes,  ordinances and codes relating to the
protection of the  environment  and/or  governing the use,  storage,  treatment,
generation,  transportation,  processing,  handling,  production  or disposal of
Hazardous  Substances  and  the  rules,   regulations,   policies,   guidelines,
interpretations,  decisions,  orders and  directives of federal,  state,  local,
territorial and commonwealth  governmental agencies and authorities with respect
thereto to the extent in writing and generally available to the public.

                 "EQUIPMENT"  shall mean and include as to each  Borrower all of
such  Borrower's  goods  (other than  inventory)  whether now owned or hereafter
acquired and wherever  located  including,  without  limitation,  all equipment,
machinery, apparatus, motor vehicles, fittings, furniture, furnishings,

                                       -9-

<PAGE>

fixtures,  parts, accessories and all replacements and substitutions therefor or
accessions thereto.

                 "ERISA" shall mean the Employee  Retirement Income Security Act
of 1974, as amended from time to time and the rules and regulations  promulgated
thereunder.

                 "EURODOLLAR  RATE LOAN"  shall mean an Advance at any time that
bears interest based on the Eurodollar Rate.

                 "EURODOLLAR  RATE" shall mean for any Eurodollar  Rate Loan for
the then current  Interest Period  relating  thereto the interest rate per annum
determined  by PNC by  dividing  (the  resulting  quotient  rounded  upward,  if
necessary, to the nearest 1/100 of one percent (1.0%) per annum) (i) the rate of
interest  determined  by PNC in  accordance  with its  usual  procedures  (which
determination  shall be conclusive  absent  manifest error) to be the eurodollar
rate two (2) Business Days prior to the first day of such Interest Period for an
amount comparable to such Eurodollar Rate Loan and having a borrowing date and a
maturity comparable to such Interest Period by (ii) a number equal to 1.00 minus
the Reserve Percentage.

                 "EVENT OF  DEFAULT"  shall  mean the  occurrence  of any of the
events set forth in Article X hereof.

                 "FCC" shall mean the Federal  Communications  Commission or any
successor  governmental  entity that has jurisdiction over the matters which are
within the jurisdiction of the FCC.

                 "FCC  RULES"  shall mean the rules and  regulations  of the FCC
published in Title 47 of the Code of Federal Regulations, as well as those rules
and regulations not yet incorporated  into Title 47 but published in the Federal
Register or in a FCC report and order,  including rules and regulations  adopted
but not yet effective.

                 "FEDERAL  FUNDS  RATE" shall mean,  for any day,  the  weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers,  as published for such
day (or if such day is not a Business Day, for the next preceding  Business Day)
by the Federal Reserve Bank of New York, or if such rate is not so published for
any day which is a Business Day, the average of quotations  for such day on such
transactions  received by PNC from three  Federal  funds  brokers of  recognized
standing selected by PNC.

                 "FORMULA AMOUNT" shall  have  the  meaning set forth in Section
2.1(a).

                 "GAAP" shall mean generally accepted  accounting  principles in
the United States of America in effect from time to time.


                                      -10-

<PAGE>

                 "GENERAL  INTANGIBLES"  shall  mean  and  include  as  to  each
Borrower  all of such  Borrower's  general  intangibles,  whether  now  owned or
hereafter acquired including,  without limitation,  all choses in action, causes
of action, corporate or other business records,  inventions,  designs,  patents,
patent applications,  equipment formulations,  manufacturing procedures, quality
control  procedures,   trademarks,   service  marks,  trade  secrets,  goodwill,
copyrights, design rights, registrations,  licenses, franchises, customer lists,
tax refunds, tax refund claims,  computer programs, all claims under guaranties,
security  interests  or other  security  held by or granted to such  Borrower to
secure  payment  of  any  of  the  Receivables  by a  Customer,  all  rights  of
indemnification  and all other  intangible  property  of every  kind and  nature
(other than Receivables).

                 "GOVERNMENTAL  BODY" shall mean any nation or  government,  any
state or other  political  subdivision  thereof  or any  entity  exercising  the
legislative,  judicial,  regulatory or administrative functions of or pertaining
to a government.

                 "GUARANTOR" shall mean TresCom Network Services, Inc. and any
other Person who may hereafter  guarantee  payment or  performance  of the whole
or any part of  the Obligations and  "GUARANTORS"  means  collectively  all such
Persons.

                 "GUARANTY"  shall  mean  any  guaranty  of the  obligations  of
Borrowers  executed by a Guarantor in favor of Agent for the ratable  benefit of
Lenders.

                 "HAZARDOUS DISCHARGE" shall  have  the  meaning  set  forth  in
Section 4.19(c) hereof.

                 "HAZARDOUS  SUBSTANCE"  shall  mean,  without  limitation,  any
flammable explosives, radon, radioactive materials,  asbestos, urea formaldehyde
foam insulation,  polychlorinated  biphenyls,  petroleum and petroleum products,
methane, hazardous materials, Hazardous Wastes, hazardous or Toxic Substances or
related materials as defined in CERCLA, the Hazardous  Materials  Transportation
Act, as amended (49 U.S.C.  Sections 1801, ET SEQ.), RCRA, Articles 15 and 27 of
the New  York  State  Environmental  Conservation  Law or any  other  applicable
Environmental Law and in the regulations adopted pursuant thereto.

                 "HAZARDOUS  WASTES" shall mean all waste  materials  subject to
regulation  under  CERCLA,  RCRA  or  applicable  state,  local,   territory  or
commonwealth law, and any other applicable Federal,  state, local, territory and
commonwealth  laws now in force or hereafter enacted relating to hazardous waste
disposal.

                 "INDEBTEDNESS"  of a Person at a particular date shall mean all
obligations  of such Person which in  accordance  with GAAP would be  classified
upon a balance sheet as liabilities  (except capital stock and surplus earned or
otherwise) and in any event, without limitation by reason of enumeration,  shall
include

                                      -11-

<PAGE>

all  indebtedness,  debt and other similar  monetary  obligations of such Person
whether  direct or  guaranteed,  and all  premiums,  if any, due at the required
prepayment dates of such indebtedness, and all indebtedness secured by a Lien on
assets owned by such Person,  whether or not such  indebtedness  actually  shall
have been created,  assumed or incurred by such Person. Any indebtedness of such
Person  resulting  from the  acquisition by such Person of any assets subject to
any Lien shall be deemed,  for the purposes hereof,  to be the equivalent of the
creation,  assumption and incurring of the indebtedness secured thereby, whether
or not actually so created, assumed or incurred.

                 "INTEREST COVERAGE RATIO" shall mean, for any period, the ratio
of (x) EBITDA for such period LESS any cash actually expended by any Borrower in
connection  with the closing of certain  sales  offices by such  Borrower at any
time after the Closing Date and prior to December 31, 1997 to (y) Total Interest
Expense net of Total Interest Income for such period.

                 "INTEREST  PERIOD"  shall  mean  the  period  provided  for any
Eurodollar Rate Loan pursuant to Section 2.2(b).

                 "INTEX" shall  have  the  meaning  set  forth  in  the Preamble
hereto.

                 "ISSUER"  shall  mean any  Person who issues a Letter of Credit
and/or accepts a draft pursuant to the terms hereof.

                 "LEC"  shall mean the local  exchange  carriers  which  provide
billing   services  to  Borrowers  with  respect  to  Borrowers'   business  and
residential Customers.

                 "LENDER" and "LENDERS" shall have the meaning  ascribed to such
term in the  preamble to this  Agreement  and shall  include  each Person  which
becomes a transferee, successor or assign of any Lender.

                 "LETTER OF CREDIT FEES" shall  have  the  meaning  set forth in
Section 3.2.

                 "LETTERS OF CREDIT" shall have the meaning set forth in Section
2.9.

                 "LICENSES"   shall  mean  the  licenses,   permits,   or  other
authorizations  together with all pending applications  therefor,  issued by the
FCC or PRTRB to any Borrower, whether now existing or hereafter issued.

                 "LIEN"  shall  mean  any  mortgage,   deed  of  trust,  pledge,
hypothecation,   assignment,  security  interest,  lien  (whether  statutory  or
otherwise),  Charge,  claim or  encumbrance,  or  preference,  priority or other
security  agreement or preferential  arrangement  held or asserted in respect of
any asset of any kind or nature whatsoever  including,  without limitation,  any
conditional sale or other title retention agreement, any


                                      -12-

<PAGE>

lease having substantially the same economic effect as any of the foregoing, and
the filing of, or agreement to give, any financing  statement  under the Uniform
Commercial Code or comparable law of any jurisdiction.

                 "MATERIAL  ADVERSE EFFECT" shall mean a material adverse effect
on (a) the condition,  operations, assets, business or prospects of TresCom on a
consolidated  basis, (b) Borrowers' ability to pay the Obligations in accordance
with the terms thereof, (c) the value of the Collateral, or Agent's Liens on the
Collateral or the priority of any such Lien or (d) the practical  realization of
the  benefits  of  Agent's  and each  Lender's  rights and  remedies  under this
Agreement and the Other Documents.

                 "MAXIMUM REVOLVING ADVANCE AMOUNT" shall mean $25,000,000.

                 "MULTIEMPLOYER  PLAN"  shall  mean a  "multiemployer  plan"  as
defined in Sections 3(37) and 4001(a)(3) of ERISA.

                 "NET COST AMOUNTS"  shall mean the  difference  between (i) the
consideration  paid by any Borrower for any assets acquired by such Borrower and
(ii) the fair market value of such assets.

                 "NON-CASH ITEMS" shall mean for any period,  the sum of (i) any
non-cash  compensation  given by any Borrower to its  employees  with respect to
stock options issued by such Borrower to such employees,  (ii) the  amortization
of telemarketing  expenses  incurred by Borrowers during such period,  and (iii)
the  amortization  of upfront  fees  credited by Borrowers to Global Link during
such period,  so long as the amounts  described  in clauses (i),  (ii) and (iii)
have been previously capitalized in accordance with GAAP.

                 "NOTE" shall mean the Revolving Credit Note.

                 "OAN" shall mean OAN Services,  Inc., a Texas  corporation  and
any successor or assign thereof.

                 "OAN RECEIVABLES ADVANCE RATE" shall have the meaning set forth
in Section 2.1(a)(y)(iii) hereof.

                 "OAN  SERVICES  AGREEMENT"  shall mean the  Billing and Related
Services Agreement dated as of April 15, 1994 between OAN and TresCom U.S.A. (as
successor in interest to Total Telecommunications, Inc.).

                 "OBLIGATIONS"  shall  mean  and  include  any  and  all of each
Borrower's   Indebtedness   and/or  liabilities  to  Agent  or  Lenders  or  any
corporation that directly or indirectly controls or is controlled by or is under
common control with Agent or any Lender of every kind,  nature and  description,
direct or indirect,  secured or unsecured,  joint,  several,  joint and several,
absolute or contingent, due or to become due, now existing or hereafter

                                      -13-

<PAGE>

arising, contractual or tortious, liquidated or unliquidated,  regardless of how
such  indebtedness or liabilities  arise or by what agreement or instrument they
may be evidenced or whether evidenced by any agreement or instrument, including,
but  not  limited  to,  any  and  all  of  any  Borrower's  Indebtedness  and/or
liabilities  under this Agreement or the Other  Documents and all obligations of
any  Borrower  to Agent or Lenders to perform  acts or refrain  from  taking any
action.

                 "ORIGINAL  OWNERS"  shall  mean (i) with  respect  to  TresCom,
Warburg,  (ii) with respect to Telecom,  TresCom or STSJ, and (iii) with respect
to all Borrowers other than TresCom and Telecom, TresCom.

                 "OSHA" shall mean the  Occupational  Safety and Health Act, and
all rules and regulations from time to time promulgated thereunder.

                 "OTHER DOCUMENTS" shall mean the Note, the  Questionnaire,  any
Guaranty,  the  Assignment  and any and all other  agreements,  instruments  and
documents,  including,  without  limitation,   guaranties,  pledges,  powers  of
attorney, consents, and all other writings heretofore, now or hereafter executed
by any  Borrower or any  Guarantor  and/or  delivered  to Agent or any Lender in
respect of the transactions contemplated by this Agreement.

                 "PARENT" of any Person shall mean a corporation or other entity
owning,  directly  or  indirectly  at least 50% of the  shares of stock or other
ownership  interests  having  ordinary  voting  power to elect a majority of the
directors of the Person, or other Persons  performing  similar functions for any
such Person.

                 "PARTICIPANT"  shall mean each  Person who shall be granted the
right by any Lender to  participate  in any of the  Advances  and who shall have
entered into a  participation  agreement in form and substance  satisfactory  to
such Lender.

                 "PAYMENT   OFFICE"  shall  mean   initially  Two  Tower  Center
Boulevard,  East Brunswick, New Jersey 08816;  thereafter,  such other office of
Agent,  if any, which it may designate by notice to Borrowing  Agent and to each
Lender to be the Payment Office.

                 "PBGC" shall mean the Pension Benefit Guaranty Corporation.

                 "PERMITTED  ACQUISITIONS"  shall  mean  an  acquisition  by any
Borrower of all or substantially  all of the assets or all or substantially  all
of the shares of capital stock of a Person  engaged in a business  substantially
similar to the business of Borrowers described in Section 5.22 hereof, PROVIDED,
HOWEVER, that no such acquisition shall be permitted hereunder unless (i) at the
time and after giving effect to such acquisition, no Event

                                      -14-

<PAGE>

of Default or Default has occurred and is  continuing,  (ii) after giving effect
to such  acquisition,  Undrawn  Availability  shall be no less than  $4,000,000,
(iii) the acquired  assets shall be subject to Agent's first  priority  security
interest  created  hereunder to the extent that such acquired assets  constitute
the type of  Collateral  in which  Agent has been  granted a  security  interest
herein,  (iv) to the extent that any portion of the purchase price paid for such
acquisition  consists of  Indebtedness of such Borrower to the seller or sellers
of such assets or stock,  such  Indebtedness  shall be  subordinated in right of
payment to the prior payment in full of the  Obligations on terms and conditions
satisfactory to Agent in all respects and (v) such Borrower  provides Agent with
fifteen  (15) days  prior  written  notice  and  PROVIDED,  FURTHER,  that Agent
reserves  the right to perform  all  necessary  due  diligence  that Agent deems
necessary on such acquired  assets before  including the acquired  assets in the
calculation of the Formula Amount.

                 "PERMITTED ENCUMBRANCES" shall mean (a) Liens in favor of Agent
for the benefit of Agent and Lenders; (b) Liens for taxes,  assessments or other
governmental  charges not  delinquent  or being  contested  in good faith and by
appropriate  proceedings  and with  respect to which proper  reserves  have been
taken by  Borrowers;  PROVIDED,  THAT,  the Lien  shall  have no  effect  on the
priority  of the  Liens in favor of Agent or the  value of the  assets  in which
Agent has such a Lien and a stay of  enforcement  of any such  Lien  shall be in
effect; (c) Liens disclosed in the financial  statements  referred to in Section
5.5; (d) deposits or pledges to secure obligations under worker's  compensation,
social security or similar laws, or under unemployment  insurance;  (e) deposits
or pledges to secure bids,  tenders,  contracts  (other than  contracts  for the
payment of money), leases,  statutory  obligations,  surety and appeal bonds and
other  obligations  of  like  nature  arising  in  the  ordinary  course  of any
Borrower's  business;  (f)  judgment  Liens that have been  stayed or bonded and
mechanics',  workers', materialmen's or other like Liens arising in the ordinary
course of any Borrower's  business with respect to obligations which are not due
or which are being contested in good faith by the applicable Borrower; (g) Liens
placed upon fixed assets hereafter  acquired to secure a portion of the purchase
price  thereof,  provided  that (x) any such lien shall not  encumber  any other
property of the Borrowers and (y) the aggregate  amount of Indebtedness  secured
by such Liens  incurred  as a result of such  purchases  during any fiscal  year
shall not exceed the amount provided for in Section 7.6; and (h) Liens disclosed
on SCHEDULE 1.2.

                 "PERMITTED   INVESTMENT"   shall  mean  an  investment  in  any
Subsidiary formed or acquired by any Borrower solely for the purpose of entering
into a  partnership,  joint  venture or similar  arrangement  which will provide
certain  telecommunication  services so long as at the time of and after  giving
effect to such investment,  (i) Undrawn Availability shall exceed $2,000,000 and
(ii) no Default or Event of Default shall have  occurred and be continuing  and,
PROVIDED, further that (a) the aggregate amount


                                      -15-

<PAGE>

of all such  investments in any fiscal year shall not exceed  $2,000,000 and (b)
such Borrower  pledges to Agent for the ratable  benefit of Lenders the stock of
such Subsidiary  pursuant to a Pledge Agreement to be executed between Agent and
such  Borrower,  which  agreement  shall  be in form  and  substance  reasonably
satisfactory to Agent in all respects.

                 "PERSON"  shall  mean  any  individual,   sole  proprietorship,
partnership,   corporation,   business  trust,   joint  stock  company,   trust,
unincorporated   organization,    association,    limited   liability   company,
institution,  public benefit  corporation,  joint venture,  entity or government
(whether Federal,  state, county,  city,  municipal or otherwise,  including any
instrumentality, division, agency, body or department thereof).

                 "PLAN" shall mean any employee  benefit plan within the meaning
of Section 3(3) of ERISA, maintained for employees of Borrowers or any member of
the Controlled Group or any such Plan to which any Borrower or any member of the
Controlled Group is required to contribute on behalf of any of its employees.

                 "PROJECTIONS" shall  have  the  meaning  set  forth  in Section
5.5(a) hereof.

                 "PRTRB"   shall   mean  the  Puerto   Rico   Telecommunications
Regulatory Board or any successor governmental entity that has jurisdiction over
the matters which are within the jurisdiction of the PRTRB.

                 "PURCHASING LENDER" shall have the meaning set forth in Section
16.3 hereof.

                 "QUESTIONNAIRE"   shall  mean  the  Documentation   Information
Questionnaire  and the responses  thereto provided by Borrowers and delivered to
Agent.

                 "RCRA" shall  mean  the Resource Conservation and Recovery Act,
42 U.S.C. Sections 6901 ET SEQ., as same may be amended from time to time.

                 "REAL PROPERTY" shall mean all of each Borrower's right,  title
and interest in and to the owned and leased premises identified on SCHEDULE 4.19
hereto.

                 "RECEIVABLES" shall mean and include, as to each Borrower,  all
of such Borrower's  accounts,  contract  rights,  instruments  (including  those
evidencing  indebtedness  owed to  Borrowers  by their  Affiliates),  documents,
chattel paper, general intangibles relating to accounts, drafts and acceptances,
and all other forms of obligations  owing to such Borrower  arising out of or in
connection  with the rendition of services,  all  guarantees  and other security
therefor,  whether secured or unsecured,  now existing or hereafter created, and
whether or not specifically sold or assigned to Agent hereunder.


                                      -16-

<PAGE>


                 "RECEIVABLES  ADVANCE RATE" shall have the meaning set forth in
Section 2.1(a)(y)(i) hereof.

                 "RECEIVABLES IX - PLUS ADVANCE RATE" shall have the meaning set
forth in Section 2.1(a)(y)(ii) hereof.

                 "RELEASE" shall have the meaning set forth in Section 5.7(c)(i)
hereof.

                 "REPORTABLE  EVENT" shall mean a reportable  event described in
Section 4043(b) of ERISA or the regulations promulgated thereunder.

                 "REQUIRED   LENDERS"  shall  mean  Lenders   holding  at  least
fifty-one  percent  (51%) of the Advances  and, if no Advances are  outstanding,
shall  mean  Lenders   holding   fifty-one   percent  (51%)  of  the  Commitment
Percentages.

                 "RESERVE   PERCENTAGE"   shall  mean  the   maximum   effective
percentage  in effect on any day as  presented  by the Board of Governors of the
Federal   Reserve  System  (or  any  successor  for   determining   the  reserve
requirements,   including,  without  limitation,   supplemental,   marginal  and
emergency reserve requirements) with respect to eurocurrency funding.

                 "REVOLVING  ADVANCES"  shall  mean  Advances  made  other  than
Letters of Credit.

                 "REVOLVING CREDIT NOTE" shall mean the promissory note referred
to in Section 2.1(a) hereof.

                 "REVOLVING INTEREST RATE" shall mean an interest rate per annum
equal to (a) the sum of the Alternate  Base Rate plus one quarter of one percent
(.25%) with respect to Domestic Rate Loans,  (b) the sum of the Eurodollar  Rate
plus two and one half percent (2.50%) with respect to Eurodollar Rate Loans.

                 "SALES  EXPENSES"  shall  mean  all  expenses  incurred  and/or
accrued by Borrowers  during the period from the Closing  Date to and  including
December 31, 1997 in connection with the closing of certain sales offices not to
exceed the aggregate amount of up to $6,000,000.

                 "SBA" shall  mean  the Small Business Administration Agency and
any successor thereto.

                 "SBA LOAN" shall mean the  indebtedness and obligations of STSJ
to the SBA in the aggregate original principal amount of $500,000,  and which as
of the Closing Date has an outstanding balance of $393,000.

                 "SETTLEMENT  DATE" shall mean the Closing  Date and  thereafter
Wednesday  of each week unless  such day is not a Business  Day in which case it
shall be the next succeeding Business Day.


                                      -17-

<PAGE>

                 "STSJ" shall have the meaning set forth in the Preamble hereto.

                 "SUBSIDIARY"  shall mean a corporation or other entity of whose
shares of stock or other ownership interests having ordinary voting power (other
than stock or other ownership  interests having such power only by reason of the
happening  of a  contingency)  to  elect a  majority  of the  directors  of such
corporation,  or other Persons performing similar functions for such entity, are
owned, directly or indirectly, by such Person.

                 "TANGIBLE  NET WORTH"  shall mean,  at a  particular  date,  an
amount  equal  to (a)  the  aggregate  amount  of all  assets  of  TresCom  on a
consolidated basis as may be properly classified as such in accordance with GAAP
consistently  applied (excluding such other assets as are properly classified as
intangible  assets  under  GAAP  other  than ten  percent  (10%) of all Net Cost
Amounts),  LESS (b) the  aggregate  amount of all  liabilities  of  TresCom on a
consolidated basis, PLUS (c) the amount of all Sales Expenses.

                 "TELECOM" shall  have  the  meaning  set  forth in the Preamble
hereto.

                 "TELECOMMUNICATIONS  ACT" shall mean  Telecommunications Act of
1996, as amended from time to time.

                 "TERM" shall have the meaning set forth in Section 13.1 hereof.

                 "TERMINATION  EVENT"  shall  mean (i) a  Reportable  Event with
respect to any Plan or  Multiemployer  Plan; (ii) the withdrawal of any Borrower
or any member of the Controlled Group from a Plan or Multiemployer Plan during a
plan year in which  such  entity  was a  "substantial  employer"  as  defined in
Section  4001(a)(2)  of  ERISA;  (iii)  the  providing  of  notice  of intent to
terminate  a Plan in a distress  termination  described  in  Section  4041(c) of
ERISA;  (iv) the  institution  by the PBGC of proceedings to terminate a Plan or
Multiemployer  Plan;  (v) any  event or  condition  (a) which  might  constitute
grounds under Section 4042 of ERISA for the  termination  of, or the appointment
of a trustee to  administer,  any Plan or  Multiemployer  Plan,  or (b) that may
result in  termination  of a  Multiemployer  Plan  pursuant to Section  4041A of
ERISA; or (vi) the partial or complete withdrawal within the meaning of Sections
4203 and 4205 of ERISA,  of any Borrower or any member of the  Controlled  Group
from a Multiemployer Plan.

                 "TOTAL  INTEREST  EXPENSE"  shall  mean,  for any  period,  the
aggregate  interest  expense of  TresCom on a  consolidated  basis  during  such
period, as determined in accordance with GAAP consistently applied.

                 "TOTAL  INTEREST  INCOME"  shall  mean,  for  any  period,  the
aggregate interest income of TresCom on a consolidated basis during such period,
as determined in accordance with GAAP consistently applied.


                                      -18-

<PAGE>

                 "TOXIC  SUBSTANCE"  shall mean and include any material present
on the Real  Property or the  Leasehold  Interests  which has been shown to have
significant  adverse  effect on human  health or which is subject to  regulation
under the Toxic Substances Control Act (TSCA),  15 U.S.C. Sections 2601 ET SEQ.,
applicable state, local,  territory or commonwealth law, or any other applicable
Federal  or  state  laws now in force or  hereafter  enacted  relating  to toxic
substances.   "Toxic  Substance"  includes  but  is  not  limited  to  asbestos,
polychlorinated biphenyls (PCBs) and lead-based paints.

                 "TRANSACTIONS" shall  have the meaning set forth in Section 5.5
hereof.

                 "TRANSFEREE" shall  have  the  meaning  set  forth  in  Section
16.3(b) hereof.

                 "TRESCOM" shall  have  the  meaning  set  forth in the Preamble
hereto.

                 "TRESCOM ON A CONSOLIDATED  BASIS" shall mean the consolidation
in  accordance  with GAAP of the  accounts  or other  items of  TresCom  and its
Subsidiaries.

                 "TRESCOM U.S.A." shall  have  the  meaning  set  forth  in  the
Preamble hereto.

                 "UNBILLED  RECEIVABLES ADVANCE RATE" shall have the meaning set
forth in Section 2.1(a)(iv) hereof.

                 "UNDRAWN  AVAILABILITY"  at a  particular  date  shall  mean an
amount  equal to (a) the lesser of (i) the  Formula  Amount or (ii) the  Maximum
Revolving  Advance Amount,  MINUS (b) the sum of (i) the  outstanding  amount of
Advances PLUS (ii) all amounts due and owing to Borrowers' trade creditors which
are sixty (60) days or more past due,  PLUS (iii)  fees and  expenses  for which
Borrowers  are liable  but which  have not been paid or  charged  to  Borrowers'
Account.

                 "WARBURG"  shall  mean  E.M.  Warburg,  Pincus  and  Co.,  LLC,
Warburg,  Pincus Investors,  LP, or any other venture capital or investment fund
in which  E.M.  Warburg,  Pincus & Co.,  LLC is,  directly  or  indirectly,  the
managing partner or managing member thereof.

                 "WARBURG  AFFILIATE"  shall  mean any  Person  (other  than any
Borrower) in which Warburg has the power, direct or indirect, to vote 5% or more
of the securities  having ordinary voting power for the election of directors of
such Person.

                 "WEEK" shall mean the time period  commencing  with the opening
of  business  on a Wednesday  and ending on the end of  business  the  following
Tuesday.

                                      -19-
<PAGE>

         1.3. UNIFORM  COMMERCIAL CODE TERMS. All terms used herein  and defined
in the  Uniform  Commercial  Code as adopted in the State of New York shall have
the meaning given therein unless otherwise defined herein.

         1.4. CERTAIN MATTERS OF CONSTRUCTION.  The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as a whole
and not to any particular  section,  paragraph or subdivision.  Any pronoun used
shall be deemed to cover all genders. Wherever appropriate in the context, terms
used  herein in the  singular  also  include  the  plural  and VICE  VERSA.  All
references to statutes and related  regulations  shall include any amendments of
same and any successor statutes and regulations.  Unless otherwise provided, all
references  to  any  instruments  or  agreements  to  which  Agent  is a  party,
including,  without limitation,  references to any of the Other Documents, shall
include  any  and  all  modifications  or  amendments  thereto  and  any and all
extensions or renewals thereof.



II.      ADVANCES, PAYMENTS.

         2.1. (a) REVOLVING  ADVANCES.  Subject to the terms and  conditions set
forth in this  Agreement,  each Lender,  severally  and not  jointly,  will make
Revolving  Advances to Borrowers in aggregate  amounts  outstanding  at any time
equal to such  Lender's  Commitment  Percentage of the lesser of (x) the Maximum
Revolving  Advance Amount less the aggregate  amount of  outstanding  Letters of
Credit or (y) an amount equal to the sum of:

                 (i)   up  to  85%, subject  to the provisions of Section 2.1(c)
                 hereof ("Receivables Advance Rate"), of  Eligible  Receivables,
                 PLUS

                 (ii) up to 85%,  subject to the  provisions  of Section  2.1(c)
                 hereof ("Receivables IX - Plus Advance Rate"), of Eligible IX -
                 Plus Unbilled Receivables; PLUS

                 (iii) up to 70%,  subject to the  provisions of Section  2.1(c)
                 hereof  ("OAN  Receivables   Advance  Rate")  of  Eligible  OAN
                 Receivables; PLUS

                 (iv) up to 50%,  subject to the  provisions  of Section  2.1(c)
                 hereof  ("Unbilled   Receivables  Advance  Rate")  of  Eligible
                 Unbilled Receivables (the Receivables Advance Rate, Receivables
                 IX Plus Advance Rate, the OAN Receivables  Advance Rate and the
                 Unbilled   Receivables   Advance  Rate  shall  be  referred  to
                 collectively, as the "Advance Rates"); MINUS



                                      -20-

<PAGE>

                 (v) the  aggregate  amount  of  outstanding  Letters of Credit,
                 MINUS

                 (vi) such  reserves  as Agent may  reasonably  deem  proper and
                 necessary from time to time.

         The amount  derived  from the sum of (x) Sections  2.1(a)(y)(i),  (ii),
(iii) and (iv) MINUS (y)  Section  2.1  (a)(y)(vi)  at any time and from time to
time shall be referred to as the "Formula Amount".  The Revolving Advances shall
be  evidenced  by the secured  promissory  note (the  "Revolving  Credit  Note")
substantially in the form attached hereto as EXHIBIT 2.1(A).

                 (b) PERMITTED ACQUISITIONS AND INVESTMENTS.  The maximum amount
of  Revolving  Advances  which  may be  used  by  Borrowers  to  make  Permitted
Acquisitions  and  Permitted  Investments  shall not  exceed  $6,000,000  in the
aggregate  at any  time  or  from  time  to  time.  Revolving  Advances  made in
connection  with a Permitted  Acquisition  and a Permitted  Investment  shall be
deemed to be the last Revolving Advances that are repaid by Borrowers  hereunder
at any time and from time to time.

                 (c) DISCRETIONARY RIGHTS. The Advance Rates may be increased or
decreased  by Agent at any time  and from  time to time in the  exercise  of its
reasonable business  judgement.  Each Borrower consents to any such increases or
decreases and  acknowledges  that decreasing the Advance Rates or increasing the
reserves may limit or restrict Advances requested by Borrowing Agent.


         2.2.    PROCEDURE FOR BORROWING REVOLVING ADVANCES.

                 (a) Borrowing  Agent on behalf of any Borrower may notify Agent
prior to 12:00 p.m. on a Business Day of a Borrower's  request to incur, on that
day, a Revolving  Advance  hereunder by telephonic or facsimile request from any
of the individuals  listed on EXHIBIT 2.2 attached hereto and made a part hereof
followed  by  written  confirmation  within  forty-eight  (48) hours of any such
request. Should any amount required to be paid as interest hereunder, or as fees
or other  charges  under this  Agreement  or any other  agreement  with Agent or
Lenders,  or with  respect to any other  Obligation,  become due,  same shall be
deemed a request for a Revolving  Advance as of the date such payment is due, in
the amount  required to pay in full such  interest,  fee,  charge or  Obligation
under this  Agreement  or any other  agreement  with Agent or Lenders,  and such
request shall be irrevocable.

                 (b)  Notwithstanding  the provisions of (a) above, in the event
any Borrower  desires to obtain a Eurodollar  Rate Loan,  Borrowing  Agent shall
give Agent at least three (3) Business  Days' prior written  notice,  specifying
(i) the date of the proposed borrowing (which shall be a Business Day), (ii) the
type of borrowing and the amount on the date of such Advance to


                                      -21-

<PAGE>

be borrowed,  which amount shall be an integral multiple of $500,000,  and (iii)
the  duration  of the first  Interest  Period  therefor.  Interest  Periods  for
Eurodollar Rate Loans shall be for one, two or three months.  No Eurodollar Rate
Loan shall be made available to Borrower  during the continuance of a Default or
an Event of Default.

                 (c) Each  Interest  Period  of a  Eurodollar  Rate  Loan  shall
commence  on the date  such  Eurodollar  Rate Loan is made and shall end on such
date as Borrowing  Agent may elect as set forth in (b)(iii)  above provided that
the exact length of each Interest  Period shall be determined in accordance with
the  practice  of the  interbank  market for  offshore  Dollar  deposits  and no
Interest Period shall end after the last day of the Term.

         Borrowing Agent shall elect the initial Interest Period applicable to a
Eurodollar  Rate Loan by its  notice of  borrowing  given to Agent  pursuant  to
Section 2.2(b) or by its notice of conversion given to Agent pursuant to Section
2.2(d),  as the case may be.  Borrowing  Agent shall elect the  duration of each
succeeding Interest Period by giving irrevocable written notice to Agent of such
duration not less than three (3) Business Days prior to the last day of the then
current  Interest Period  applicable to such Eurodollar Rate Loan. If Agent does
not receive  timely notice of the Interest  Period  elected by Borrowing  Agent,
Borrowers  shall be deemed to have  elected to  convert to a Domestic  Rate Loan
subject to Section 2.2(d) hereinbelow.

                 (d) Provided  that no Event of Default  shall have occurred and
be  continuing,  any Borrower  may, on the last Business Day of the then current
Interest Period  applicable to any  outstanding  Eurodollar Rate Loan, or on any
Business Day with respect to Domestic  Rate Loans,  convert any such loan into a
loan of another type in the same aggregate  principal  amount  provided that any
conversion of a Eurodollar Rate Loan shall be made only on the last Business Day
of the then current Interest Period  applicable to such Eurodollar Rate Loan. If
a Borrower desires to convert a loan,  Borrowing Agent shall give Agent not less
than three (3) Business  Days' prior  written  notice to convert from a Domestic
Rate Loan to a  Eurodollar  Rate Loan or one (1)  Business  Day's prior  written
notice  to  convert  from a  Eurodollar  Rate  Loan  to a  Domestic  Rate  Loan,
specifying  the date of such  conversion,  the loans to be converted  and if the
conversion is from a Domestic Rate Loan to any other type of loan,  the duration
of the  first  Interest  Period  therefor.  After  giving  effect  to each  such
conversion,  there shall not be outstanding  more than seven (7) Eurodollar Rate
Loans, in the aggregate.

                 (e) At its  option  and upon  three (3)  Business  Days'  prior
written  notice,  any Borrower may prepay the Eurodollar  Rate Loans in whole at
any time or in part from time to time,  without  premium  or  penalty,  but with
accrued  interest on the principal  being prepaid to the date of such repayment.
Such  Borrower  shall  specify  the date of  prepayment  of  Advances  which are
Eurodollar Rate Loans and the amount of such prepayment. In


                                      -22-

<PAGE>

the event that any prepayment of a Eurodollar Rate Loan is required or permitted
on a date other than the last Business Day of the then current  Interest  Period
with respect  thereto,  such Borrower shall indemnify Agent and Lenders therefor
in accordance with Section 2.2(f) hereof.

                 (f) Each Borrower  shall  indemnify  Agent and Lenders and hold
Agent and Lenders  harmless from and against any and all losses or expenses that
Agent and  Lenders  may  sustain or incur as a  consequence  of any  prepayment,
conversion  of or any default by any Borrower in the payment of the principal of
or interest on any Eurodollar Rate Loan or failure by any Borrower to complete a
borrowing  of, a prepayment  of or  conversion  of or to a Eurodollar  Rate Loan
after notice thereof has been given, including, but not limited to, any interest
payable by Agent or Lenders to lenders of funds  obtained by it in order to make
or  maintain  its  Eurodollar  Rate Loans  hereunder.  A  certificate  as to any
additional amounts payable pursuant to the foregoing sentence submitted by Agent
or any Lender to Borrowing Agent shall be conclusive absent manifest error.

                 (g)   Notwithstanding   any  other  provision  hereof,  if  any
applicable law, treaty, regulation or directive, or any change therein or in the
interpretation  or  application  thereof,  shall make it unlawful for any Lender
(for purposes of this subsection (g), the term "Lender" shall include any Lender
and the office or branch where any Lender or any corporation or bank controlling
such Lender makes or maintains  any  Eurodollar  Rate Loans) to make or maintain
its Eurodollar  Rate Loans,  the obligation of Lenders to make  Eurodollar  Rate
Loans  hereunder  shall  forthwith  be cancelled  and  Borrowers  shall,  if any
affected Eurodollar Rate Loans are then outstanding,  promptly upon request from
Agent,  either pay all such  affected  Eurodollar  Rate  Loans or  convert  such
affected  Eurodollar  Rate Loans into loans of another type. If any such payment
or conversion of any Eurodollar  Rate Loan is made on a day that is not the last
day of the Interest Period  applicable to such Eurodollar Rate Loans,  Borrowers
shall  pay  Agent,  upon  Agent's  request,  such  amount or  amounts  as may be
necessary to compensate Lenders for any loss or expense sustained or incurred by
Lenders in respect of such  Eurodollar  Rate Loan as a result of such payment or
conversion, including (but not limited to) any interest or other amounts payable
by Lenders to lenders of funds  obtained by Lenders in order to make or maintain
such  Eurodollar  Rate Loan. A certificate as to any additional  amounts payable
pursuant to the foregoing sentence submitted by Lenders to Borrowing Agent shall
be conclusive absent manifest error.

         2.3. DISBURSEMENT OF ADVANCE PROCEEDS.  All Advances shall be disbursed
from whichever  office or other place Agent may designate from time to time and,
together  with any and all other  Obligations  of Borrowers to Agent or Lenders,
shall be  charged to  Borrowers'  Account  on  Agent's  books.  During the Term,
Borrowers   may  use  the  Revolving   Advances  by  borrowing,   prepaying  and
reborrowing, all in accordance with the terms and conditions


                                      -23-

<PAGE>

hereof.  The proceeds of each Revolving Advance requested by Borrowers or deemed
to have been  requested by Borrowers  under Section  2.2(a)  hereof shall,  with
respect  to  requested  Revolving  Advances  to the  extent  Lenders  make  such
Revolving  Advances,  be made available to the applicable Borrower on the day so
requested by way of credit to such Borrower's  operating account at PNC, or such
other bank as Borrowing Agent may designate following  notification to Agent, in
immediately  available  federal funds or other  immediately  available funds or,
with  respect  to  Revolving  Advances  deemed  to have  been  requested  by any
Borrower,  be  disbursed to Agent to be applied to the  outstanding  Obligations
giving rise to such deemed request.

         2.4.    INTENTIONALLY OMITTED.

         2.5.    MAXIMUM ADVANCES.  The  aggregate balance of Revolving Advances
outstanding at any time shall not exceed the lesser of (a) the Maximum Revolving
Advance Amount less outstanding Letters of Credit or (b) the Formula Amount less
outstanding Letters of Credit.

         2.6.    REPAYMENT OF ADVANCES.

                 (a) The  Advances  shall be due and payable in full on the last
day of the Term subject to earlier prepayment as herein provided.

                 (b) Each  Borrower  recognizes  that the amounts  evidenced  by
checks,  notes, drafts or any other items of payment relating to and/or proceeds
of  Collateral  may  not be  collectible  by  Agent  on the  date  received.  In
consideration of Agent's agreement to conditionally credit Borrowers' Account as
of the  Business  Day on which  Agent  receives  those  items of  payment,  each
Borrower agrees that, in computing the charges under this  Agreement,  all items
of payment shall be deemed  applied by Agent on account of the  Obligations  one
(1) Business Day after the Business Day Agent  receives  such  payments via wire
transfer or electronic  depository  check.  Agent is not,  however,  required to
credit  Borrowers'  Account  for the  amount  of any  item of  payment  which is
unsatisfactory to Agent and Agent may charge  Borrowers'  Account for the amount
of any item of payment which is returned to Agent unpaid.

                 (c) All  payments  of  principal,  interest  and other  amounts
payable  hereunder,  or under any Other  Document  shall be made to Agent at the
Payment Office not later than 1:00 P.M. (New York Time) on the due date therefor
in lawful money of the United  States of America in federal funds or other funds
immediately available to Agent. Agent shall have the right to effectuate payment
on any and all  Obligations  due and  owing  hereunder  by  charging  Borrowers'
Account or by making Advances as provided in Section 2.2 hereof.

                 (d)   Borrowers  shall  pay  principal, interest, and all other
amounts payable hereunder, or under any Other Document,


                                      -24-

<PAGE>

without any deduction whatsoever,  including,  but not limited to, any deduction
for any setoff or counterclaim.

         2.7.  REPAYMENT OF EXCESS ADVANCES.  The aggregate  balance of Advances
outstanding  at any time in excess of the maximum  amount of Advances  permitted
hereunder  shall be  immediately  due and payable  without the  necessity of any
demand, at the Payment Office,  whether or not a Default or Event of Default has
occurred.

         2.8. STATEMENT OF ACCOUNT. Agent shall maintain, in accordance with its
customary  procedures,  a loan  account  ("Borrowers'  Account")  in the name of
Borrowers in which shall be recorded the date and amount of each Advance made by
Agent and the date and  amount of each  payment in  respect  thereof;  PROVIDED,
HOWEVER, the failure by Agent to record the date and amount of any Advance shall
not  adversely  affect  Agent or any  Lender.  Each  month,  Agent shall send to
Borrowing  Agent a  statement  showing the  accounting  for the  Advances  made,
payments made or credited in respect  thereof,  and other  transactions  between
Agent and Borrowers,  during such month. The monthly  statements shall be deemed
correct and binding upon  Borrowers  in the absence of manifest  error and shall
constitute an account stated between Lenders and Borrowers unless Agent receives
a written statement of Borrowers'  specific exceptions thereto within sixty (60)
days after such statement is received by Borrowing  Agent.  The records of Agent
with respect to the loan account shall be conclusive  evidence  absent  manifest
error of the  amounts of  Advances  and other  charges  thereto  and of payments
applicable thereto.

         2.9.  LETTERS OF CREDIT.  Subject to the terms and  conditions  hereof,
Agent shall issue or cause the issuance of standby  Letters of Credit to support
guarantees of Borrowers  obligations  under  contracts  ("Letters of Credit") on
behalf of any Borrower;  PROVIDED,  HOWEVER,  that Agent will not be required to
issue or cause to be issued any  Letters  of Credit to the extent  that the face
amount of such Letters of Credit would then cause the sum of (i) the outstanding
Revolving Advances PLUS (ii) outstanding  Letters of Credit to exceed the lesser
of (x) the  Maximum  Revolving  Advance  Amount or (y) the Formula  Amount.  The
maximum amount of outstanding  Letters of Credit shall not exceed  $5,000,000 in
the aggregate at any time. All  disbursements  or payments related to Letters of
Credit  shall be  deemed to be  Domestic  Rate  Loans  consisting  of  Revolving
Advances and shall bear interest at the applicable  Revolving  Interest Rate for
Domestic  Rate Loans;  Letters of Credit that have not been drawn upon shall not
bear interest.

         2.10.   ISSUANCE OF LETTERS OF CREDIT.

                 (a) Borrowing Agent, on behalf of Borrowers,  may request Agent
to issue or cause the issuance of a standby  Letter of Credit by  delivering  to
Agent at the Payment Office,  Agent's form of Letter of Credit  Application (the
"Letter of Credit  Application")  completed to the  satisfaction of Agent;  and,
such

                                      -25-

<PAGE>

other  certificates,  documents  and other papers and  information  as Agent may
reasonably request.  Borrowing Agent, on behalf of Borrowers, also has the right
to give  instructions and make agreements with respect to any  application,  any
applicable  letter of credit and security  agreement,  any applicable  letter of
credit reimbursement agreement and/or any other applicable agreement, any letter
of credit and the disposition of documents, disposition of any unutilized funds,
and to agree with Agent upon any  amendment,  extension or renewal of any Letter
of Credit.

                 (b) Each  Letter of  Credit  shall,  among  other  things,  (i)
provide for the payment of sight drafts when  presented for honor  thereunder in
accordance  with  the  terms  thereof  and  when  accompanied  by the  documents
described  therein  and (ii) have an expiry  date not later  than six (6) months
after such  Letter of Credit's  date of issuance  and in no event later than the
last day of the Term.  Each  Letter of Credit  shall be subject  to the  Uniform
Customs and Practice for  Documentary  Credits  (1993  Revision),  International
Chamber of Commerce  Publication No. 500, and any amendments or revision thereof
adhered to by the Issuer and, to the extent not inconsistent therewith, the laws
of the State of New York.

                 (c) Agent shall use its reasonable efforts to notify Lenders of
the request by Borrowing Agent for a Letter of Credit hereunder.

         2.11.   REQUIREMENTS FOR ISSUANCE OF LETTERS OF CREDIT.

                 (a) In  connection  with the  issuance  of any Letter of Credit
Borrowers  shall  indemnify,  save and hold  Agent,  each Lender and each Issuer
harmless  from  any  loss,  cost,  expense  or  liability,   including,  without
limitation,  payments  made by Agent,  any Lender or any Issuer and expenses and
reasonable  attorneys' fees incurred by Agent,  any Lender or Issuer arising out
of, or in connection  with, any Letter of Credit to be issued or created for any
Borrower.  Borrowers  shall be bound by Agent's or any Issuer's  regulations and
good  faith  interpretations  of any  Letter of Credit  issued  or  created  for
Borrowers' Account,  although this interpretation may be different from its own;
and,  neither  Agent,  nor  any  Lender,   nor  any  Issuer  nor  any  of  their
correspondents shall be liable for any error, negligence,  or mistakes,  whether
of omission or  commission,  in following  Borrowing  Agent's or any  Borrower's
instructions or those contained in any Letter of Credit or of any modifications,
amendments or supplements  thereto or in issuing or paying any Letter of Credit,
except for Agent's,  any Lender's,  any Issuer's or such  correspondents'  gross
(not mere) negligence or willful misconduct.

                 (b)  Borrowing  Agent shall  authorize and direct any Issuer to
name the  applicable  Borrower as the  "Applicant"  or  "Account  Party" of each
Letter of Credit.  If Agent is not the Issuer of any Letter of Credit,  Borrower
shall  authorize  and direct  the  Issuer to  deliver to Agent all  instruments,
documents, and other writings and property received by the Issuer pursuant


                                      -26-

<PAGE>

to the  Letter of Credit and to accept and rely upon  Agent's  instructions  and
agreements  with respect to all matters arising in connection with the Letter of
Credit or the application therefor.

                 (c) In  connection  with all Letters of Credit issued or caused
to be issued by Agent under this Agreement, each Borrower hereby appoints Agent,
or its  designee,  as its  attorney,  with full power and  authority (i) to sign
and/or endorse such Borrower's name upon any letter of credit  applications  and
acceptances;  and (ii) to complete in such Borrower's name or Agent's, or in the
name of Agent's designee,  any order, sale or transaction,  obtain the necessary
documents in connection  therewith,  and collect the proceeds  thereof.  Neither
Agent nor its  attorneys  will be liable for any acts or  omissions  nor for any
error  of  judgment  or  mistakes  of fact or law,  except  for  Agent's  or its
attorney's gross (not mere) negligence or willful misconduct.  This power, being
coupled with an interest, is irrevocable as long as any Letters of Credit remain
outstanding.

                 (d) Each Lender  shall to the extent of the  percentage  amount
equal to the product of such Lender's Commitment  Percentage times the aggregate
amount of all unreimbursed  reimbursement obligations arising from disbursements
made or obligations  incurred with respect to the Letters of Credit be deemed to
have irrevocably purchased an undivided  participation in each such unreimbursed
reimbursement  obligation.  In the event that at the time a disbursement is made
the unpaid  balance of  Revolving  Advances  exceeds or would  exceed,  with the
making of such disbursement,  the lesser of the Maximum Revolving Advance Amount
less  the  outstanding  Letters  of  Credit  or  the  Formula  Amount  less  the
outstanding  Letters of  Credit,  and such  disbursement  is not  reimbursed  by
Borrowers  within two (2) Business Days, Agent shall promptly notify each Lender
and  upon  Agent's   demand  each  Lender  shall  pay  to  Agent  such  Lender's
proportionate  share  of  such  unreimbursed  disbursement  together  with  such
Lender's proportionate share of Agent's unreimbursed costs and expenses relating
to such unreimbursed disbursement. Upon receipt by Agent of a repayment from any
Borrower  of any amount  disbursed  by Agent for which  Agent had  already  been
reimbursed by Lenders, Agent shall deliver to each Lender that Lender's pro rata
share of such repayment.  Each Lender's participation  commitment shall continue
until the last to occur of any of the following  events:  (A) Agent ceases to be
obligated  to issue or cause to be issued  Letters of Credit  hereunder;  (B) no
Letter of Credit issued hereunder remains outstanding and uncancelled or (C) all
Persons (other than the applicable  Borrower) have been fully reimbursed for all
payments made under or relating to Letters of Credit.

         2.12.   ADDITIONAL PAYMENTS.  Any  sums expended by Agent or any Lender
due to any Borrower's  failure to perform or comply with its  obligations  under
this  Agreement  or  any  Other  Document  including,  without  limitation,  any
Borrower's obligations under Sections 4.2, 4.4, 4.12, 4.13, 4.14 and 6.1 hereof,
may be

                                      -27-

<PAGE>

charged  to  Borrowers'  Account  as  a  Revolving  Advance  and  added  to  the
Obligations.

         2.13.   MANNER OF BORROWING AND PAYMENT.

                 (a) Each  borrowing  of  Revolving  Advances  shall be advanced
according to the applicable Commitment Percentages of Lenders.

                 (b) Each payment  (including  each  prepayment) by Borrowers on
account of the  principal of and interest on the  Revolving  Advances,  shall be
applied  to  the  Revolving  Advances  pro  rata  according  to  the  applicable
Commitment  Percentages of Lenders.  Except as expressly  provided  herein,  all
payments  (including  prepayments)  to be made by any  Borrower  on  account  of
principal,  interest and fees shall be made without set off or counterclaim  and
shall be made to Agent on behalf of the Lenders to the Payment  Office,  in each
case on or prior to 1:00 P.M.,  New York time,  in  Dollars  and in  immediately
available funds.

                 (c) (i)  Notwithstanding  anything to the contrary contained in
Sections  2.13(a)  and (b)  hereof,  commencing  with  the  first  Business  Day
following  the Closing  Date,  each  borrowing  of Revolving  Advances  shall be
advanced  by Agent and each  payment by any  Borrower  on  account of  Revolving
Advances shall be applied first to those Revolving  Advances  advanced by Agent.
On or before 1:00 P.M., New York time, on each  Settlement  Date commencing with
the first  Settlement  Date following the Closing Date,  Agent and Lenders shall
make certain  payments as follows:  (I) if the aggregate amount of new Revolving
Advances made by Agent during the preceding  Week (if any) exceeds the aggregate
amount of  repayments  applied to  outstanding  Revolving  Advances  during such
preceding  Week,  then each Lender shall  provide  Agent with funds in an amount
equal to its applicable Commitment Percentage of the difference between (w) such
Revolving  Advances and (x) such repayments and (II) if the aggregate  amount of
repayments  applied to outstanding  Revolving  Advances during such Week exceeds
the aggregate amount of new Revolving Advances made during such Week, then Agent
shall  provide  each  Lender  with  funds in an amount  equal to its  applicable
Commitment Percentage of the difference between (y) such repayments and (z) such
Revolving Advances.

                       (ii)   Each  Lender shall be entitled to earn interest at
the applicable Revolving Interest Rate on outstanding Revolving  Advances  which
it has funded.

                       (iii)  Promptly  following  each  Settlement  Date, Agent
shall submit to each Lender a certificate with respect to payments  received and
Revolving  Advances made during the Week  immediately  preceding such Settlement
Date.  Such  certificate of Agent shall be conclusive in the absence of manifest
error.

                 (d)   If  any  Lender  or  Participant  (a "benefitted Lender")
shall at any time receive any payment of all or part of


                                    -28-

<PAGE>

its Advances,  or interest thereon, or receive any Collateral in respect thereof
(whether  voluntarily or  involuntarily  or by set-off) in a greater  proportion
than any such payment to and Collateral received by any other Lender, if any, in
respect of such other Lender's Advances,  or interest thereon,  and such greater
proportionate  payment or  receipt  of  Collateral  is not  expressly  permitted
hereunder, such benefitted Lender shall purchase for cash from the other Lenders
a participation in such portion of each such other Lender's  Advances,  or shall
provide  such other  Lender  with the  benefits of any such  Collateral,  or the
proceeds thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such Collateral or proceeds  ratably with each
of Lenders; PROVIDED, HOWEVER, that if all or any portion of such excess payment
or benefits is thereafter  recovered from such benefitted Lender,  such purchase
shall be rescinded,  and the purchase price and benefits returned, to the extent
of such recovery,  but without interest.  Each Lender so purchasing a portion of
another Lender's Advances may exercise all rights of payment (including, without
limitation,  rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

                 (e)  Unless  Agent  shall  have  been  notified  by  telephone,
confirmed  in  writing,  by any Lender that such Lender will not make the amount
which would  constitute  its  applicable  Commitment  Percentage of the Advances
available to Agent,  Agent may (but shall not be obligated  to) assume that such
Lender  shall make such amount  available to Agent on the next  Settlement  Date
and,  in  reliance  upon  such   assumption,   make  available  to  Borrowers  a
corresponding amount. Agent will promptly notify Borrowers of its receipt of any
such notice from a Lender.  If such amount is made  available to Agent on a date
after such next  Settlement  Date,  such Lender  shall pay to Agent on demand an
amount  equal  to the  product  of (i) the  daily  average  Federal  Funds  Rate
(computed  on the basis of a year of 360 days)  during  such period as quoted by
Agent, times (ii) such amount, times (iii) the number of days from and including
such  Settlement  Date to the  date on which  such  amount  becomes  immediately
available to Agent. A certificate of Agent  submitted to any Lender with respect
to any  amounts  owing  under this  paragraph  (e) shall be  conclusive,  in the
absence of manifest error. If such amount is not in fact made available to Agent
by such Lender within three (3) Business Days after such Settlement  Date, Agent
shall be entitled to recover such an amount,  with interest  thereon at the rate
per annum then applicable to such Revolving Advances  hereunder,  on demand from
Borrowers;  PROVIDED,  HOWEVER,  that Agent's right to such  recovery  shall not
prejudice or otherwise  adversely affect Borrowers' rights (if any) against such
Lender.

         2.14.   INTENTIONALLY OMITTED.

         2.15.   USE OF PROCEEDS.  Borrowers shall apply the proceeds of 
Advances to (i) repay on the Closing Date existing indebtedness owed to SunTrust
Bank, South Florida, N.A., (ii) pay

                                    -29-

<PAGE>

fees  and  expenses   relating  to  this   transaction,   (iii)  make  Permitted
Acquisitions and Permitted  Investments  subject to the limitations set forth in
Section 2.1(b) hereof and (iv) provide for their working capital needs.

         2.16.   DEFAULTING LENDER.

                 (a) Notwithstanding  anything to the contrary contained herein,
in the event any Lender (x) has refused (which  refusal  constitutes a breach by
such Lender of its  obligations  under this  Agreement)  to make  available  its
portion of any Advance or (y) notifies  either Agent or Borrowing  Agent that it
does not intend to make  available  its  portion of any  Advance  (if the actual
refusal would  constitute a breach by such Lender of its obligations  under this
Agreement) (each, a "Lender Default"),  all rights and obligations  hereunder of
such Lender (a  "Defaulting  Lender") as to which a Lender  Default is in effect
and of the other  parties  hereto shall be modified to the extent of the express
provisions of this Section 2.16 while such Lender Default remains in effect.

                 (b)  Advances  shall be  incurred  pro rata from  Lenders  (the
"Non-Defaulting  Lenders")  which  are not  Defaulting  Lenders  based  on their
respective Commitment Percentages, and no Commitment Percentage of any Lender or
any pro rata share of any  Advances  required to be advanced by any Lender shall
be increased as a result of such Lender Default.  Amounts received in respect of
principal  of any type of  Advances  shall be applied  to reduce the  applicable
Advances  of each  Lender pro rata  based on the  aggregate  of the  outstanding
Advances of that type of all Lenders at the time of such application;  provided,
that, such amount shall not be applied to any Advances of a Defaulting Lender at
any time when, and to the extent that,  the aggregate  amount of Advances of any
Non-Defaulting Lender exceeds such Non-Defaulting Lender's Commitment Percentage
of all Advances then outstanding.

                 (c)  A  Defaulting   Lender  shall  not  be  entitled  to  give
instructions  to  Agent or to  approve,  disapprove,  consent  to or vote on any
matters  relating to this  Agreement and the Other  Documents.  All  amendments,
waivers and other modifications of this Agreement and the Other Documents may be
made without  regard to a Defaulting  Lender and, for purposes of the definition
of "Required  Lenders",  a Defaulting  Lender shall be deemed not to be a Lender
and not to have Advances outstanding.

                 (d) Other than as expressly set forth in this Section 2.16, the
rights and  obligations  of a Defaulting  Lender  (including  the  obligation to
indemnify Agent) and the other parties hereto shall remain unchanged. Nothing in
this  Section  2.16 shall be deemed to release  any  Defaulting  Lender from its
obligations  under this  Agreement  and the Other  Documents,  shall  alter such
obligations,  shall operate as a waiver of any default by such Defaulting Lender
hereunder, or shall prejudice any rights which any Borrower, Agent or any Lender
may have against
                                    -30-

<PAGE>

any  Defaulting  Lender as a result of any  default  by such  Defaulting  Lender
hereunder.

                 (e) In the event a Defaulting Lender retroactively cures to the
satisfaction  of Agent the breach  which  caused a Lender to become a Defaulting
Lender,  such Defaulting Lender shall no longer be a Defaulting Lender and shall
be treated as a Lender under this Agreement.


III.     INTEREST AND FEES.

         3.1.  INTEREST.  Interest  on  Revolving  Advances  shall be payable in
arrears on the first day of each month with respect to Domestic  Rate Loans and,
with  respect to  Eurodollar  Rate Loans,  at the end of each  Interest  Period.
Interest  charges shall be computed at a rate per annum equal to the  applicable
Revolving Interest Rate. Whenever, subsequent to the date of this Agreement, the
Alternate Base Rate is increased or decreased, the applicable Revolving Interest
Rate for Domestic Rate Loans shall be similarly changed without notice or demand
of any kind by an amount  equal to the  amount of such  change in the  Alternate
Base  Rate  during  the time such  change  or  changes  remain  in  effect.  The
Eurodollar  Rate shall be adjusted with respect to Eurodollar Rate Loans without
notice or demand of any kind on the effective  date of any change in the Reserve
Percentage as of such effective  date. Upon and after the occurrence of an Event
of Default, and during the continuation  thereof, (i) the Obligations shall bear
interest at the  applicable  Revolving  Interest  Rate plus two (2%) percent per
annum (the "Default Rate").

         3.2.    LETTER OF CREDIT FEES.

                 Borrowers  shall pay (x) to Agent,  for the benefit of Lenders,
fees for each  Letter of Credit for the period  from and  excluding  the date of
issuance of same to and including the date of expiration or  termination,  equal
to the average daily face amount of each outstanding Letter of Credit multiplied
by one and one-half percent (1.50%) per annum, such fees to be calculated on the
basis of a 360-day year for the actual  number of days elapsed and to be payable
monthly  in  arrears  on the first day of each  month and on the last day of the
Term and (y) to the Issuer,  any and all fees and expenses as agreed upon by the
Issuer  and the  Borrowing  Agent in  connection  with  any  Letter  of  Credit,
including,  without  limitation,  in connection  with the opening,  amendment or
renewal of any such Letter of Credit and shall  reimburse  Agent for any and all
fees and  expenses,  if any,  paid by Agent to the Issuer (all of the  foregoing
fees, the "Letter of Credit  Fees").  All such charges shall be deemed earned in
full on the date when the same are due and  payable  hereunder  and shall not be
subject to rebate or proration  upon the  termination  of this Agreement for any
reason. Any such charge in effect at the time of a particular  transaction shall
be the charge for that transaction, notwithstanding any subsequent change in the
Issuer's prevailing charges for that type of

                                    -31-

<PAGE>

transaction.  All Letter of Credit Fees payable hereunder shall be deemed earned
in full on the date when the same are due and payable hereunder and shall not be
subject to rebate or proration  upon the  termination  of this Agreement for any
reason.

         3.3. (a) CLOSING FEE. Upon the execution of this  Agreement,  Borrowers
shall pay to Agent for the ratable  benefit of Lenders a closing fee of $187,500
less that  portion of the  commitment  fee of  $75,000  and the  deposit  fee of
$30,000  heretofore paid by Borrowers to Agent  remaining  after  application of
such fees to out of pocket expenses.

                 (b) FACILITY FEE. If, for any fiscal  quarter  during the Term,
the average  daily unpaid  balance of Advances for each day of such quarter does
not equal the Maximum  Revolving  Advance  Amount,  then Borrowers  shall pay to
Agent for the ratable  benefit of Lenders a fee at a rate equal to three eighths
of one percent  (.375%)  per annum on the amount by which the Maximum  Revolving
Advance  Amount  exceeds such average  daily unpaid  balance.  Such fee shall be
payable to Agent in arrears on the first day of each fiscal quarter.

         3.4.  (a)  COLLATERAL  EVALUATION  FEE.  Borrowers  shall  pay  Agent a
collateral  evaluation fee equal to $2,500 per month commencing on the first day
of the month  following  the  Closing  Date and on the  first day of each  month
thereafter during the Term. The collateral evaluation fee shall be deemed earned
in full on the date  when  same is due and  payable  hereunder  and shall not be
subject  to rebate or  proration  upon  termination  of this  Agreement  for any
reason.

                 (b) COLLATERAL  MONITORING FEE. Borrowers shall pay to Agent on
the first day of each month  following  any month in which  Agent  performs  any
collateral  monitoring - namely any field  examination,  collateral  analysis or
other  business  analysis,  the need for which is to be  determined by Agent and
which  monitoring  is  undertaken  by Agent or for Agent's  benefit a collateral
monitoring  fee in an amount  equal to $600 per day for each person  employed to
perform  such   monitoring,   plus  all  reasonable   out-of-pocket   costs  and
disbursements  incurred  by  Agent in the  performance  of such  examination  or
analysis,  PROVIDED, HOWEVER, that absent the occurrence of an Event of Default,
Borrowers  shall be obligated  to pay for no more than five (5) such  collateral
monitorings performed by Agent or for Agent's benefit in any fiscal year.

         3.5.  COMPUTATION  OF INTEREST AND FEES.  Interest  and fees  hereunder
shall be computed  on the basis of a year of 360 days and for the actual  number
of days elapsed.  If any payment to be made hereunder becomes due and payable on
a day other than a Business  Day, the due date thereof  shall be extended to the
next  succeeding  Business  Day and  interest  thereon  shall be  payable at the
applicable   Revolving  Interest  Rate  for  Domestic  Rate  Loans  during  such
extension.

                                    -32-
<PAGE>

         3.6. MAXIMUM  CHARGES.  In no event whatsoever shall interest and other
charges charged  hereunder exceed the highest rate permissible under law. In the
event interest and other charges as computed  hereunder would  otherwise  exceed
the highest rate permitted  under law, such excess amount shall be first applied
to any unpaid  principal  balance owed by Borrowers,  and if the then  remaining
excess amount is greater than the previously unpaid principal  balance,  Lenders
shall promptly refund such excess amount to Borrowers and the provisions  hereof
shall be deemed amended to provide for such permissible rate.

         3.7.  INCREASED  COSTS. In the event that any applicable law, treaty or
governmental  regulation,  or any  change  therein or in the  interpretation  or
application  thereof,  or compliance by any Lender (for purposes of this Section
3.7, the term "Lender" shall include Agent or any Lender and any  corporation or
bank  controlling  Agent or any Lender) and the office or branch  where Agent or
any Lender (as so defined) makes or maintains any Eurodollar Rate Loans with any
request or  directive  (whether or not having the force of law) from any central
bank or other financial, monetary or other authority, shall:

                 (a)  subject  Agent  or  any  Lender  to any  tax  of any  kind
whatsoever  with respect to this  Agreement or any Other  Document or change the
basis of  taxation  of  payments  to Agent or any  Lender  of  principal,  fees,
interest or any other  amount  payable  hereunder  or under any Other  Documents
(except for changes in the rate of tax on the overall net income of Agent or any
Lender by the jurisdictions in which it maintains its principal office);

                 (b) impose,  modify or hold  applicable  any  reserve,  special
deposit,  assessment or similar  requirement against assets held by, or deposits
in or for the account of, advances or loans by, or other credit extended by, any
office  of Agent or any  Lender,  including  (without  limitation)  pursuant  to
Regulation D of the Board of Governors of the Federal Reserve System; or

                 (c)  impose  on Agent or any  Lender  or the  London  interbank
Eurodollar  market any other  condition  with  respect to this  Agreement or any
Other Document;

and the result of any of the  foregoing  is to increase the cost to Agent or any
Lender of making,  renewing or maintaining  its Advances  hereunder by an amount
that Agent or such  Lender  deems to be  material or to reduce the amount of any
payment  (whether of principal,  interest or otherwise) in respect of any of the
Advances by an amount that Agent or such Lender deems to be material,  then,  in
any case  Borrowers  shall  promptly pay Agent or such Lender,  upon its demand,
such  additional  amount  as will  compensate  Agent  or such  Lender  for  such
additional  cost or such  reduction,  as the  case  may be,  provided  that the
foregoing  shall  not  apply to  increased  costs  which  are  reflected  in the
Eurodollar  Rate,  as the case may be.  Agent or such Lender  shall  certify the
amount of such additional cost or reduced amount to


                                    -33-

<PAGE>

Borrowers, and such certification shall be conclusive absent manifest error.

         3.8.    BASIS FOR DETERMINING INTEREST RATE INADEQUATE OR
UNFAIR.  In the event that Agent or any Lender shall have determined that:

                 (a)   reasonable  means  do  not  exist  for  ascertaining  the
Eurodollar  Rate  applicable  pursuant  to Section  2.2 hereof for any  Interest
Period; or

                 (b) Dollar deposits in the relevant amount and for the relevant
maturity  are not  available in the London  interbank  Eurodollar  market,  with
respect to an outstanding Eurodollar Rate Loan, a proposed Eurodollar Rate Loan,
or a proposed conversion of a Domestic Rate Loan into a Eurodollar Rate Loan,

then Agent shall give Borrowing Agent prompt written,  telephonic or telegraphic
notice of such  determination.  If such notice is given,  (i) any such requested
Eurodollar  Rate Loan shall be made as a Domestic  Rate Loan,  unless  Borrowing
Agent shall notify  Agent no later than 10:00 a.m.  (New York City time) two (2)
Business Days prior to the date of such proposed borrowing, that its request for
such  borrowing  shall be cancelled or made as an unaffected  type of Eurodollar
Rate Loan, (ii) any Domestic Rate Loan or Eurodollar Rate Loan which was to have
been converted to an affected type of Eurodollar Rate Loan shall be continued as
or converted  into a Domestic  Rate Loan,  or, if  Borrowing  Agent shall notify
Agent, no later than 10:00 a.m. (New York City time) two (2) Business Days prior
to the  proposed  conversion,  shall  be  maintained  as an  unaffected  type of
Eurodollar Rate Loan, and (iii) any outstanding  affected  Eurodollar Rate Loans
shall be  converted  into a Domestic  Rate Loan,  or, if  Borrowing  Agent shall
notify  Agent,  no later than 10:00 a.m.  (New York City time) two (2)  Business
Days  prior  to the  last  Business  Day of the  then  current  Interest  Period
applicable to such affected  Eurodollar  Rate Loan,  shall be converted  into an
unaffected  type of  Eurodollar  Rate Loan, on the last Business Day of the then
current  Interest  Period for such affected  Eurodollar  Rate Loans.  Until such
notice has been withdrawn,  Lenders shall have no obligation to make an affected
type of Eurodollar Rate Loan or maintain  outstanding  affected  Eurodollar Rate
Loans and no Borrower shall have the right to convert a Domestic Rate Loan or an
unaffected type of Eurodollar Rate Loan into an affected type of Eurodollar Rate
Loan.

         3.9.    CAPITAL ADEQUACY.

                 (a) In the event that Agent or any Lender shall have determined
that any  applicable  law,  rule,  regulation  or  guideline  regarding  capital
adequacy,  or any  change  therein,  or any  change  in  the  interpretation  or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration  thereof, or compliance
by Agent or any Lender (for purposes of this Section 3.9, the

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<PAGE>

term  "Lender"  shall include  Agent or any Lender and any  corporation  or bank
controlling  Agent or any  Lender)  and the office or branch  where Agent or any
Lender (as so defined)  makes or maintains  any  Eurodollar  Rate Loans with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority,  central bank or comparable  agency, has or would
have the effect of reducing the rate of return on Agent or any Lender's  capital
as a consequence of its obligations  hereunder to a level below that which Agent
or such Lender could have achieved but for such  adoption,  change or compliance
(taking into  consideration  Agent's and each Lender's  policies with respect to
capital  adequacy)  by an amount  deemed by Agent or any Lender to be  material,
then, from time to time, Borrowers shall pay upon demand to Agent or such Lender
such additional  amount or amounts as will  compensate  Agent or such Lender for
such reduction.  In determining such amount or amounts, Agent or such Lender may
use any  reasonable  averaging or  attribution  methods.  The protection of this
Section  3.9 shall be  available  to Agent  and each  Lender  regardless  of any
possible  contention  of  invalidity  or  inapplicability  with  respect  to the
applicable law, regulation or condition.

                 (b) A  certificate  of Agent or such Lender  setting forth such
amount or amounts as shall be necessary to compensate  Agent or such Lender with
respect to Section 3.9(a) hereof when delivered to Borrowers shall be conclusive
absent manifest error.


IV.      COLLATERAL:  GENERAL TERMS

         4.1. SECURITY INTEREST IN THE COLLATERAL.  To secure the prompt payment
and  performance  to Agent and each  Lender of the  Obligations,  each  Borrower
hereby  assigns,  pledges  and grants to Agent for the  ratable  benefit of each
Lender a continuing  security interest in and to all of its Collateral,  whether
now owned or existing or hereafter acquired or arising and wheresoever  located.
Each  Borrower  shall  mark  its  books  and  records  as  may be  necessary  or
appropriate to evidence, protect and perfect Agent's security interest and shall
cause its financial statements to reflect such security interest.

         4.2.  PERFECTION OF SECURITY  INTEREST.  Each  Borrower  shall take all
action that may be necessary or desirable, or that Agent may reasonably request,
so as at all times to maintain  the  validity,  perfection,  enforceability  and
priority of Agent's  security  interest in the  Collateral or to enable Agent to
protect,  exercise  or  enforce  its  rights  hereunder  and in the  Collateral,
including,  but not limited to, (i) immediately discharging all Liens other than
Permitted  Encumbrances,  (ii) obtaining landlords' or mortgagees' lien waivers,
(iii)  delivering  to Agent,  endorsed or  accompanied  by such  instruments  of
assignment  as Agent may  specify,  and  stamping or marking,  in such manner as
Agent may specify,  any and all chattel paper,  instruments,  letters of credits
and  advices  thereof  and  documents  evidencing  or  forming  a  part  of  the
Collateral, (iv) entering

                                    -35-

<PAGE>

into  warehousing,  lockbox and other  custodial  arrangements  satisfactory  to
Agent, (v) obtaining  approval of the FCC or PRTRB for any action or transaction
contemplated  by this  Agreement  which is  required by law,  and  specifically,
without  limitation,  preparing,  signing and filing  with the FCC or PRTRB,  as
applicable,  the  assignor's  or  transferor's  portion  of any  application  or
applications for consent to the assignment of a License necessary or appropriate
under the FCC Rules or any law,  statute,  rule,  regulation or ordinance of any
Governmental  Body and  (vi)  executing  and  delivering  financing  statements,
instruments of pledge, mortgages,  notices and assignments, in each case in form
and  substance  satisfactory  to  Agent,  relating  to the  creation,  validity,
perfection,  maintenance or continuation of Agent's security  interest under the
Uniform  Commercial Code or other applicable law. Agent is hereby  authorized to
file financing statements signed by Agent instead of Borrower in accordance with
Section 9-402(2) of Uniform Commercial Code as adopted in the State of New York.
All reasonable out-of-pocket charges, expenses and fees Agent may incur in doing
any of the foregoing,  and any local taxes relating thereto, shall be charged to
Borrowers'  Account as a Revolving  Advance of a Domestic Rate Loan and added to
the Obligations,  or, at Agent's option,  shall be paid to Agent for the ratable
benefit of Lenders immediately upon demand.

         4.3.    DISPOSITION OF COLLATERAL.  Each Borrower  will  safeguard  and
protect all  Collateral  for  Agent's  general  account and make no  disposition
thereof whether by sale, lease or otherwise.

         4.4. PRESERVATION OF COLLATERAL.  Following the occurrence of a Default
or Event of Default and after the expiration of any applicable  cure period,  in
addition to the rights and remedies set forth in Section 11.1 hereof, Agent: (a)
may at any time take such steps as Agent  deems  necessary  to  protect  Agent's
interest  in and to  preserve  the  Collateral,  including  the  hiring  of such
security  guards or the placing of other security  protection  measures as Agent
may deem  appropriate;  (b) may employ  and  maintain  at any of any  Borrower's
premises a custodian who shall have full  authority to do all acts  necessary to
protect Agent's  interests in the Collateral;  and (c) shall have, and is hereby
granted,  a right of ingress and egress to the places  where the  Collateral  is
located,  and may proceed  over and through  any of  Borrower's  owned or leased
property.  Each Borrower shall  cooperate  fully with all of Agent's  efforts to
preserve the Collateral and will take such actions to preserve the Collateral as
Agent may direct. All of Agent's reasonable out-of-pocket expenses of preserving
the Collateral,  including any reasonable out-of-pocket expenses relating to the
bonding of a custodian,  shall be charged to  Borrowers'  Account as a Revolving
Advance of a Domestic Rate Loan and added to the Obligations.

         4.5.    OWNERSHIP OF COLLATERAL.  With  respect  to  the Collateral, at
the time the Collateral becomes subject to Agent's


                                    -36-

<PAGE>

security  interest:  (a) each  Borrower  shall be the  sole  owner of and  fully
authorized  and able to sell,  transfer,  pledge  and/or grant a first  priority
security  interest in each and every item of its respective  Collateral to Agent
(other than any Collateral  which secures the SBA Loan in which STSJ shall grant
to Agent for the ratable benefit of Lenders a second priority  security interest
therein);  and, except for Permitted  Encumbrances  the Collateral shall be free
and  clear of all Liens  and  encumbrances  whatsoever;  (b) each  document  and
agreement  executed  by each  Borrower  or  delivered  to Agent or any Lender in
connection  with this Agreement  shall be true and correct in all respects;  and
(c) all  signatures  and  endorsements  of each  Borrower  that  appear  on such
documents  and  agreements  shall be genuine and each  Borrower  shall have full
capacity to execute same.

         4.6. DEFENSE OF AGENT'S AND LENDERS'  INTERESTS.  Until (a) payment and
performance  in  full of all of the  Obligations  and  (b)  termination  of this
Agreement,  Agent's interests in the Collateral shall continue in full force and
effect.  During such period no Borrower  shall,  without  Agent's  prior written
consent, pledge, sell, assign,  transfer,  create or suffer to exist a Lien upon
or encumber or allow or suffer to be  encumbered in any way except for Permitted
Encumbrances,  any part of the  Collateral.  Each Borrower  shall defend Agent's
interests in the Collateral against any and all Persons whatsoever.  At any time
following demand by Agent for payment of all  Obligations,  Agent shall have the
right to take  possession of the indicia of the Collateral and the Collateral in
whatever  physical  form  contained,   including  without  limitation:   labels,
stationery, documents, instruments and advertising materials. If Agent exercises
this right to take possession of the Collateral,  Borrowers shall,  upon demand,
assemble  it in the best manner  possible  and make it  available  to Agent at a
place  reasonably  convenient  to  Agent.  In  addition,  with  respect  to  all
Collateral,  Agent  and  Lenders  shall be  entitled  to all of the  rights  and
remedies set forth herein and further provided by the Uniform Commercial Code or
other  applicable  law.  Each  Borrower  shall,  and Agent may,  at its  option,
instruct all Persons  holding cash,  checks,  documents or  instruments in which
Agent  holds a security  interest  to deliver  same to Agent  and/or  subject to
Agent's order and if they shall come into any Borrower's  possession,  they, and
each of them,  shall be held by such Borrower in trust as Agent's  trustee,  and
such  Borrower  will  immediately  deliver them to Agent in their  original form
together with any necessary endorsement.

         4.7.  BOOKS AND RECORDS.  Each Borrower  shall (a) keep proper books of
record and account in which full,  true and correct  entries will be made of all
dealings or transactions of or in relation to its business and affairs;  (b) set
up on its books accruals with respect to all taxes, assessments, charges, levies
and claims;  and (c) on a reasonably current basis set up on its books, from its
earnings, allowances against doubtful Receivables,  advances and investments and
all  other  proper  accruals   (including   without   limitation  by  reason  of
enumeration, accruals for premiums, if any, due on required payments and


                                    -37-

<PAGE>

accruals for depreciation,  obsolescence, or amortization of properties),  which
should be set aside from such  earnings in  connection  with its  busine  All
determinations  pursuant to this subsection shall be made in accordance with, or
as required  by, GAAP  consistently  applied in the opinion of such  independent
public accountant as shall then be regularly engaged by Borrowers.

         4.8. FINANCIAL DISCLOSURE.  Each Borrower hereby irrevocably authorizes
and directs all accountants  and auditors  employed by such Borrower at any time
during the Term to exhibit and deliver to Agent and each Lender copies of any of
any Borrower's financial statements,  trial balances or other accounting records
of any sort in the  accountant's  or  auditor's  possession,  and to disclose to
Agent and each Lender any information  such accountants may have concerning such
Borrower's  financial  status and  business  operations.  Each  Borrower  hereby
authorizes all federal,  state and municipal authorities to furnish to Agent and
each Lender copies of reports or examinations relating to such Borrower, whether
made by such Borrower or otherwise;  however, Agent and each Lender will attempt
to obtain such  information  or materials  directly from such Borrower  prior to
obtaining  such   information  or  materials  from  such   accountants  or  such
authorities.  Agent  acknowledges  that  Borrowers  have been advised by Ernst &
Young LLP, Borrowers' accountants as of the Closing Date, that Ernst & Young LLP
will not  provide  Agent or any Lender  with the  information  set forth in this
Section 4.8. This  acknowledgement  has no effect  whatsoever on any  Borrower's
obligation to comply with the  requirements set forth in this Section 4.8 during
the Term.

         4.9.  COMPLIANCE  WITH LAWS.  Each Borrower shall comply with all acts,
rules,  regulations and orders of any  legislative,  administrative  or judicial
body or official applicable to its respective  Collateral or any part thereof or
to the operation of such Borrower's business the non-compliance with which could
reasonably  be expected to have a Material  Adverse  Effect.  Each Borrower may,
however, contest or dispute any acts, rules, regulations,  orders and directions
of those bodies or officials in any reasonable manner, provided that any related
Lien is  inchoate  or stayed and  sufficient  reserves  are  established  to the
reasonable satisfaction of Agent to protect Agent's Lien on or security interest
in the  Collateral.  The assets of Borrowers at all times shall be maintained in
accordance  with  the  requirements  of all  insurance  carriers  which  provide
insurance with respect to the assets of Borrowers so that such  insurance  shall
remain in full force and effect.

         4.10.  INSPECTION OF PREMISES.  At all reasonable  times Agent and each
Lender shall have full access to and the right to audit, check, inspect and make
abstracts and copies from each Borrower's books, records, audits, correspondence
and all other  papers  relating  to the  Collateral  and the  operation  of each
Borrower's  business.  Agent,  any Lender and their agents may enter upon any of
Borrower's premises at any time during business


                                    -38-

<PAGE>

hours and at any other  reasonable  time, and from time to time, for the purpose
of inspecting the Collateral and any and all records  pertaining thereto and the
operation of such Borrower's business.

         4.11. INSURANCE.  Each Borrower shall bear the full risk of any loss of
any nature  whatsoever  with respect to the  Collateral.  At each Borrower's own
cost and expense in amounts and with carriers acceptable to Agent, each Borrower
shall  (a)  keep all its  insurable  properties  and  properties  in which  such
Borrower has an interest insured against the hazards of fire,  flood,  sprinkler
leakage,  windstorm,  those hazards covered by extended  coverage  insurance and
such  other  hazards,  and for  such  amounts,  as is  customary  in the case of
companies engaged in businesses  similar to such Borrower's  including,  without
limitation,  business  interruption  insurance;  (b)  maintain  a bond  in such
amounts as is customary in the case of companies  engaged in businesses  similar
to such  Borrower  insuring  against  larceny,  embezzlement  or other  criminal
misappropriation  of insured's  officers and  employees who may either singly or
jointly  with  others  at any time have  access  to the  assets or funds of such
Borrower  either  directly  or through  authority  to draw upon such funds or to
direct generally the disposition of such assets; (c) maintain public and product
liability insurance against claims for personal injury, death or property damage
suffered by others;  (d)  maintain  all such  worker's  compensation  or similar
insurance  as may be  required  under the laws of any state or  jurisdiction  in
which such Borrower is engaged in business; (e) furnish Agent with (i) copies of
all  policies and evidence of the  maintenance  of such  policies by the renewal
thereof  at  least  thirty  (30)  days  before  any  expiration  date,  and (ii)
appropriate  loss payable  endorsements  in form and substance  satisfactory  to
Agent,  naming Agent as a co-insured  and loss payee as its interests may appear
with respect to all insurance coverage referred to in clauses (a) and (c) above,
and providing (A) that all proceeds thereunder shall be payable to Agent, (B) no
such  insurance  shall be affected by any act or neglect of the insured or owner
of the  property  described  in such  policy,  and (C) that such policy and loss
payable  clauses may not be  cancelled,  amended or  terminated  unless at least
thirty (30) days' prior  written  notice is given to Agent.  In the event of any
loss thereunder, the carriers named therein hereby are directed by Agent and the
applicable  Borrower  to make  payment  for such  loss to Agent  and not to such
Borrower and Agent jointly.  If any insurance losses are paid by check, draft or
other  instrument  payable to any Borrower and Agent jointly,  Agent may endorse
such  Borrower's  name  thereon  and do such  other  things  as  Agent  may deem
advisable to reduce the same to cash.  Agent is hereby  authorized to adjust and
compromise  claims under insurance  coverage  referred to in clauses (a) and (c)
above.  All loss  recoveries  received by Agent upon any such  insurance  may be
applied to the Obligations,  in such order as Agent in its sole discretion shall
determine.  Any surplus shall be paid by Agent to Borrowers or applied as may be
otherwise  required by law. Any deficiency thereon shall be paid by Borrowers to
Agent, on demand.


                                    -39-

<PAGE>

         4.12.  FAILURE  TO PAY  INSURANCE.  If any  Borrower  fails  to  obtain
insurance as hereinabove provided, or to keep the same in force, Agent, if Agent
so elects,  may obtain such insurance and pay the premium  therefor on behalf of
Borrower,  and charge  Borrowers'  Account therefor as a Revolving  Advance of a
Domestic Rate Loan and such expenses so paid shall be part of the Obligations.

         4.13.  PAYMENT OF TAXES.  Each  Borrower will pay, when due, all taxes,
assessments and other Charges  lawfully levied or assessed upon such Borrower or
any of the Collateral including,  without limitation, real and personal property
taxes,  assessments and charges and all franchise,  income,  employment,  social
security benefits,  withholding, and sales taxes. If any tax by any governmental
authority is or may be imposed on or as a result of any transaction  between any
Borrower  and Agent or any Lender  which  Agent or any Lender may be required to
withhold or pay or if any taxes,  assessments,  or other  Charges  remain unpaid
after the date fixed for their payment,  or if any claim shall be made which, in
Agent's  or any  Lender's  opinion,  may  possibly  create  a valid  Lien on the
Collateral,  Agent may without notice to Borrowers pay the taxes, assessments or
other  Charges and each  Borrower  hereby  indemnifies  and holds Agent and each
Lender harmless in respect thereof. Agent will not pay any taxes, assessments or
Charges to the extent that any Borrower has  contested or disputed  those taxes,
assessments or Charges in good faith, by expeditious protest,  administrative or
judicial  appeal or similar  proceeding  provided  that any  related tax lien is
stayed and sufficient reserves are established to the reasonable satisfaction of
Agent to protect Agent's  security  interest in or Lien on the  Collateral.  The
amount of any  payment  by Agent  under  this  Section  4.13 shall be charged to
Borrowers'  Account as a Revolving  Advance of a Domestic Rate Loan and added to
the  Obligations  and,  until  Borrowers  shall  furnish Agent with an indemnity
therefor (or supply Agent with evidence satisfactory to Agent that due provision
for the payment  thereof has been made),  Agent may hold  without  interest  any
balance  standing  to  Borrowers'  credit and Agent  shall  retain its  security
interest in any and all Collateral held by Agent.

         4.14.  PAYMENT OF LEASEHOLD  OBLIGATIONS.  Each  Borrower  shall at all
times pay, when and as due following any applicable cure period contained in any
lease, its rental  obligations under all leases under which it is a tenant,  and
shall otherwise comply, in all material  respects,  with all other terms of such
leases and keep them in full  force and effect  and,  at  Agent's  request  will
provide evidence of having done so other than rental obligations which are being
contested  in good  faith by any  Borrower  and such  Borrower  has  established
reserves in an amount satisfactory to Agent.

         4.15.   RECEIVABLES.

                 (a)   NATURE OF RECEIVABLES.  Each of the Receivables shall be
a bona fide and valid account representing a


                                      -40-

<PAGE>

bona fide indebtedness  incurred by the Customer therein named, for a fixed sum,
including  as set forth in the  invoice  relating  thereto  to the  extent  such
Receivable is invoiced  (provided  immaterial or  unintentional  invoice  errors
shall not be deemed to be a breach  hereof) with respect to an absolute  sale or
lease and delivery of goods upon stated terms of a Borrower,  or work,  labor or
services  theretofore  rendered by a Borrower as of the date each  Receivable is
created.  Same  shall  be due  and  owing  in  accordance  with  the  applicable
Borrower's standard terms of sale without dispute, setoff or counterclaim except
as may be stated on the accounts receivable  schedules delivered by Borrowers to
Agent.

                 (b) SOLVENCY OF CUSTOMERS.  Each Customer,  to the best of each
Borrower's knowledge,  as of the date each Receivable is created, is and will be
solvent and able to pay all  Receivables  on which the  Customer is obligated in
full when due or with  respect to such  Customers  of any  Borrower  who are not
solvent such Borrower has set up on its books and in its  financial  records bad
debt reserves adequate to cover such Receivables.

                 (c)  LOCATIONS OF BORROWER.  Each  Borrower's  chief  executive
office is located at the addresses set forth on SCHEDULE  4.15(C) hereto.  Until
written notice is given to Agent by Borrowing Agent of any other office at which
any Borrower keeps its records pertaining to Receivables, all such records shall
be kept at the executive  office or at 707 N.E. Third Avenue,  Fort  Lauderdale,
Florida.

                 (d) COLLECTION OF RECEIVABLES.  Until any Borrower's  authority
to do so is  terminated  by  Agent  (which  notice  Agent  may  give at any time
following  the  occurrence  of an Event of Default or a Default or when Agent in
its  reasonable  discretion  deems it to be in Lenders' best interest to do so),
each Borrower  will, at such  Borrower's  sole cost and expense,  but on Agent's
behalf and for Agent's  account,  collect as Agent's  property  and in trust for
Agent  all  amounts  received  on  Receivables,  and shall  not  commingle  such
collections with any Borrower's funds or use the same except to pay Obligations.
Each Borrower shall,  upon request,  deliver to Agent, or deposit in the Blocked
Account,  in  original  form and on the date of  receipt  thereof,  all  checks,
drafts,  notes,  money  orders,   acceptances,   cash  and  other  evidences  of
Indebtedness.

                 (e)   NOTIFICATION OF ASSIGNMENT OF RECEIVABLES.  At  any  time
following the  occurrence of an Event of Default or a Default,  Agent shall have
the right to send notice of the assignment of, and Agent's security interest in,
the Receivables to any and all Customers or any third party holding or otherwise
concerned  with any of the  Collateral.  Thereafter,  Agent  shall have the sole
right to collect the  Receivables,  take possession of the Collateral,  or both.
Agent's actual collection  expenses,  including,  but not limited to, stationery
and postage, telephone and telegraph,  secretarial and clerical expenses and the
salaries


                                    -41-

<PAGE>

of any collection  personnel used for  collection,  may be charged to Borrowers'
Account and added to the Obligations.

                 (f) POWER OF AGENT TO ACT ON  BORROWERS'  BEHALF.  Agent  shall
have the right to receive,  endorse,  assign and/or deliver in the name of Agent
or any Borrower any and all checks, drafts and other instruments for the payment
of money relating to the Receivables,  and each Borrower hereby waives notice of
presentment,  protest  and  non-payment  of any  instrument  so  endorsed.  Each
Borrower  hereby  constitutes  Agent  or  Agent's  designee  as such  Borrower's
attorney  with  power  (i) to  endorse  such  Borrower's  name  upon any  notes,
acceptances,  checks,  drafts,  money  orders or other  evidences  of payment or
Collateral;  (ii) to sign such  Borrower's name on any invoice or bill of lading
relating to any of the Receivables,  drafts against  Customers,  assignments and
verifications of Receivables;  (iii) to send verifications of Receivables to any
Customer;  (iv) to sign such Borrower's name on all financing  statements or any
other  documents or  instruments  deemed  necessary or  appropriate  by Agent to
preserve,  protect,  or perfect  Agent's  interest in the Collateral and to file
same; (v) to demand payment of the  Receivables;  (vi) to enforce payment of the
Receivables  by  legal  proceedings  or  otherwise;  (vii)  to  exercise  all of
Borrowers' rights and remedies with respect to the collection of the Receivables
and any other Collateral;  (viii) to settle, adjust, compromise, extend or renew
the  Receivables;  (ix) to settle,  adjust or compromise  any legal  proceedings
brought to collect  Receivables;  (x) to prepare,  file and sign such Borrower's
name on a proof of claim in bankruptcy or similar document against any Customer;
(xi) to  prepare,  file and sign  such  Borrower's  name on any  notice of Lien,
assignment or  satisfaction  of Lien or similar  document in connection with the
Receivables;  and (xii) to do all other acts and things  necessary  to carry out
this  Agreement.  All acts of said attorney or designee are hereby  ratified and
approved,  and said  attorney  or  designee  shall not be liable for any acts of
omission  or  commission  nor for any error of judgment or mistake of fact or of
law,  unless done  maliciously or with gross (not mere)  negligence;  this power
being  coupled  with an interest  is  irrevocable  while any of the  Obligations
remain  unpaid.  Agent shall have the right at any time following the occurrence
of an Event of Default or Default,  to change the  address for  delivery of mail
addressed to any Borrower to such address as Agent may designate and to receive,
open and dispose of all mail addressed to any Borrower.

                 (g) NO LIABILITY. Neither Agent nor any Lender shall, under any
circumstances  or in any event  whatsoever,  have any liability for any error or
omission or delay of any kind occurring in the settlement, collection or payment
of any of the Receivables or any instrument  received in payment thereof, or for
any damage  resulting  therefrom,  except to the extent  that any  liability  or
damage arises out of the willful  misconduct  or gross (not mere)  negligence of
Agent or such Lender. Following the occurrence of an Event of Default or Default
Agent may, without notice or consent from any Borrower, sue upon or otherwise


                                    -42-

<PAGE>

collect, extend the time of payment of, compromise or settle for cash, credit or
upon any terms any of the  Receivables or any other  securities,  instruments or
insurance applicable thereto and/or release any obligor thereof.

                 (h) ESTABLISHMENT OF A LOCKBOX ACCOUNT,  DOMINION ACCOUNT.  All
proceeds of  Collateral  shall,  at the  direction  of Agent,  be  deposited  by
Borrowers  into a lockbox  account,  dominion  account  or such  other  "blocked
account"  ("Blocked  Accounts") as Agent may require  pursuant to an arrangement
with such bank as may be  selected  by  Borrowers  and be  acceptable  to Agent.
Borrowers  shall issue to any such bank, an  irrevocable  letter of  instruction
directing said bank to transfer such funds so deposited to Agent,  either to any
account  maintained  by Agent at said bank or by wire  transfer  to  appropriate
account(s)  of Agent.  All  funds  deposited  in such  "blocked  account"  shall
immediately  become  the  property  of Agent  and  Borrowers  shall  obtain  the
agreement  by such  bank to  waive  any  offset  rights  against  the  funds  so
deposited.  Neither  Agent nor any Lender  assumes any  responsibility  for such
"blocked account" arrangement, including without limitation, any claim of accord
and  satisfaction  or release  with  respect to  deposits  accepted  by any bank
thereunder.  Alternatively, Agent may establish depository accounts ("Depository
Accounts") in the name of Agent at a bank or banks for the deposit of such funds
and  Borrowers  shall  deposit all  proceeds of  Collateral  or cause same to be
deposited,  in kind, in such Depository  Accounts of Agent in lieu of depositing
same to the Blocked Accounts.

                 (i)  ADJUSTMENTS.  No Borrower will,  without Agent's  consent,
compromise or adjust any Receivables (or extend the time for payment thereof) or
grant any additional  discounts,  allowances or credits thereon except for those
compromises,  adjustments,  returns,  discounts,  credits and allowances as have
been heretofore customary in the business of such Borrower.

         4.16.   INTENTIONALLY OMITTED.

         4.17. MAINTENANCE OF PROPERTIES.  Each Borrower will cause all material
properties  owned by such Borrower or used or held for use in the conduct of its
business to be maintained and kept in good  condition,  repair and working order
and  supplied  with  all  necessary  Equipment  and  will  cause  to be made all
necessary repairs, renewals, replacements, betterments and improvements thereof,
all as in the  judgment of such  Borrower  may be necessary so that the business
carried on in connection therewith may be properly and advantageously  conducted
at all times.

         4.18.   EXCULPATION OF LIABILITY.  Nothing  herein  contained shall  be
construed  to  constitute  Agent or any Lender as any  Borrower's  agent for any
purpose  whatsoever,  nor shall Agent or any Lender be responsible or liable for
any  shortage,  discrepancy,  damage,  loss or  destruction  of any  part of the
Collateral wherever the same may be located and regardless of the


                                    -43-

<PAGE>

cause thereof, except to the extent that any liability arises out of the willful
misconduct or gross (not mere) negligence of Agent or such Lender. Neither Agent
nor any Lender,  whether by anything  herein or in any  assignment or otherwise,
assume  any of any  Borrower's  obligations  under  any  contract  or  agreement
assigned  to Agent or such  Lender,  and neither  Agent nor any Lender  shall be
responsible  in any way for the  performance by any Borrower of any of the terms
and conditions thereof.

         4.19.   ENVIRONMENTAL  MATTERS.  (a)  Borrowers  shall  ensure that the
Real Property remains in compliance with all  Environmental  Laws and they shall
not place or permit to be placed any  Hazardous  Substances on any Real Property
except  as  not  prohibited  by  applicable  law  or  appropriate   governmental
authorities.

                 (b) Borrowers  shall (i) employ in  connection  with the use of
the Real Property  appropriate  technology necessary to maintain compliance with
any  applicable  Environmental  Laws and (ii)  dispose of any and all  Hazardous
Waste  generated at the Real Property only at facilities  and with carriers that
maintain valid permits under RCRA and any other applicable  Environmental  Laws.
Borrowers shall use their best efforts to obtain certificates of disposal,  such
as hazardous waste manifest receipts, from all treatment,  transport, storage or
disposal  facilities or operators  employed by Borrowers in connection  with the
transport or disposal of any Hazardous Waste generated at the Real Property.

                 (c) In the event any Borrower obtains, gives or receives notice
of any Release or threat of Release of a  reportable  quantity of any  Hazardous
Substances at the Real Property (any such event being hereinafter referred to as
a  "Hazardous  Discharge")  or  receives  any notice of  violation,  request for
information or notification that it is potentially responsible for investigation
or cleanup of  environmental  conditions at the Real Property,  demand letter or
complaint, order, citation, or other written notice with regard to any Hazardous
Discharge or violation of Environmental  Laws affecting the Real Property or any
Borrower's  interest  therein (any of the  foregoing is referred to herein as an
"Environmental   Complaint")  from  any  Person,   including  any  state  agency
responsible in whole or in part for environmental  matters in the state in which
the Real  Property  is  located or the United  States  Environmental  Protection
Agency (any such person or entity  hereinafter the "Authority"),  then Borrowing
Agent shall, within five (5) Business Days, give written notice of same to Agent
detailing facts and  circumstances of which any Borrower is aware giving rise to
the Hazardous  Discharge or Environmental  Complaint.  Such information is to be
provided to allow Agent to protect its  security  interest,  if any, in the Real
Property and is not intended to create nor shall it create any  obligation  upon
Agent or any Lender with respect thereto.

                 (d)   Borrowers  shall  promptly forward to Agent copies of any
request for information, notification of potential


                                    -44-

<PAGE>

liability,  demand letter relating to potential  responsibility  with respect to
the  investigation  or cleanup of Hazardous  Substances at any other site owned,
operated or used by any  Borrower to dispose of Hazardous  Substances  and shall
continue  to forward  copies of  correspondence  between  any  Borrower  and the
Authority  regarding such claims to Agent until the claim is settled.  Borrowers
shall promptly forward to Agent copies of all documents and reports concerning a
Hazardous  Discharge at the Real  Property that any Borrower is required to file
under any Environmental Laws. Such information is to be provided solely to allow
Agent  to  protect  Agent's  security  interest  in the  Real  Property  and the
Collateral.

                 (e) Borrowers shall respond promptly to any Hazardous Discharge
or  Environmental  Complaint and take all necessary action in order to safeguard
the health of any Person and to avoid subjecting the Collateral or Real Property
to any Lien.  If any Borrower  shall fail to respond  promptly to any  Hazardous
Discharge or  Environmental  Complaint or any Borrower shall fail to comply with
any of the  requirements of any  Environmental  Laws, Agent on behalf of Lenders
may, but without the  obligation  to do so, for the sole  purpose of  protecting
Agent's interest in Collateral: (A) give such notices or (B) enter onto the Real
Property (or authorize  third parties to enter onto the Real  Property) and take
such  actions  as Agent (or such  third  parties  as  directed  by  Agent)  deem
reasonably  necessary or advisable,  to clean up, remove,  mitigate or otherwise
deal  with  any  such  Hazardous  Discharge  or  Environmental   Complaint.  All
reasonable  out-of-pocket  costs and expenses  incurred by Agent and Lenders (or
such third parties) in the exercise of any such rights,  including any sums paid
in connection with any judicial or administrative  investigation or proceedings,
fines and  penalties,  together with interest  thereon from the date expended at
the Default Rate for Domestic Rate Loans  constituting  Revolving Advances shall
be paid upon demand by Borrowers,  and until paid shall be added to and become a
part of the  Obligations  secured  by the  Liens  created  by the  terms of this
Agreement or any other agreement between Agent, any Lender and any Borrower.

                 (f)  Promptly  upon the  written  request of Agent from time to
time,  (which request shall only be made by Agent if, in the exercise of Agent's
reasonable  judgment,  Agent believes that a Hazardous  Discharge  exists at the
Real  Property,  a Hazardous  Substance  has been placed at the Real Property or
that any Borrower is not in compliance with Environmental Laws), Borrowers shall
provide Agent, at Borrowers'  expense,  with an environmental site assessment or
environmental  audit  report  prepared  by  an  environmental  engineering  firm
acceptable  in the  reasonable  opinion of Agent,  to assess  with a  reasonable
degree of certainty  the  existence of a Hazardous  Discharge  and the potential
costs in  connection  with  abatement,  cleanup  and  removal  of any  Hazardous
Substances  found on,  under,  at or within  the Real  Property.  Any  report or
investigation  of  such  Hazardous  Discharge  proposed  and  acceptable  to  an
appropriate Authority that is charged to oversee the clean-up of such Hazardous


                                    -45-

<PAGE>

Discharge shall be acceptable to Agent.  If such  estimates,  individually or in
the aggregate,  exceed $100,000, Agent shall have the right to require Borrowers
to post a bond,  letter of credit or other security  reasonably  satisfactory to
Agent to secure payment of these costs and expenses.

                 (g) Borrowers  shall defend and indemnify Agent and Lenders and
hold Agent,  Lenders  and their  respective  employees,  agents,  directors  and
officers  harmless  from and against all loss,  liability,  damage and  expense,
claims,  costs,  fines and penalties,  including  attorney's  fees,  suffered or
incurred  by Agent or Lenders  under or on account  of any  Environmental  Laws,
including,  without  limitation,  the  assertion  of any Lien  thereunder,  with
respect to any Hazardous  Discharge,  the presence of any  Hazardous  Substances
affecting the Real Property,  whether or not the same originates or emerges from
the Real Property or any contiguous real estate,  including any loss of value of
the Real Property as a result of the  foregoing  except to the extent such loss,
liability,  damage  and  expense  is  attributable  to any  Hazardous  Discharge
resulting  from  actions  on  the  part  of  Agent  or  any  Lender.  Borrowers'
obligations  under this  Section  4.19 shall  arise  upon the  discovery  of the
presence of any Hazardous  Substances at the Real  Property,  whether or not any
federal, state, or local environmental agency has taken or threatened any action
in  connection  with  the  presence  of  any  Hazardous  Substances.  Borrowers'
obligation and the  indemnifications  hereunder shall survive the termination of
this Agreement.

                 (h) For  purposes of Section 4.19 and 5.7,  all  references  to
Real  Property  shall be deemed to include all of  Borrowers'  right,  title and
interest in and to its owned and leased premises.

         4.20.   FINANCING  STATEMENTS.  Except  as   respects   the   financing
statements  filed by Agent and the  financing  statements  described on SCHEDULE
1.2, no  financing  statement  covering  any of the  Collateral  or any proceeds
thereof is on file in any public office.


V.       REPRESENTATIONS AND WARRANTIES.

         Each Borrower represents and warrants as follows:

         5.1. AUTHORITY. Each Borrower has full power, authority and legal right
to enter into this  Agreement  and the Other  Documents  and to perform  all its
respective  Obligations  hereunder and thereunder.  The execution,  delivery and
performance  of this  Agreement  and of the Other  Documents (a) are within such
Borrower's corporate powers, have been duly authorized, are not in contravention
of law or the terms of such Borrower's by-laws,  certificate of incorporation or
other  applicable  documents  relating to such  Borrower's  formation  or to the
conduct of such Borrower's  business or of any material agreement or undertaking
to which such Borrower is a party or by which such Borrower is


                                    -46-

<PAGE>

bound,  and (b) will not  conflict  with nor  result in any breach in any of the
provisions  of or  constitute  a default  under or result in the creation of any
Lien except  Permitted  Encumbrances  upon any asset of such Borrower  under the
provisions of any agreement,  charter  document,  instrument,  by-law,  or other
instrument  to which such Borrower or its property is a party or by which it may
be bound.

         5.2.   FORMATION   AND   QUALIFICATION.   (a)  Each  Borrower  is  duly
incorporated  and in good standing  under the laws of the state,  territorial or
commonwealth listed on SCHEDULE 5.2(A) and is qualified to do business and is in
good standing in the states and  commonwealths  listed on SCHEDULE  5.2(A) which
constitute all states,  territories and commonwealths in which qualification and
good  standing are  necessary  for such Borrower to conduct its business and own
its property and where the failure to so qualify could reasonably be expected to
have a Material  Adverse  Effect.  Each Borrower has delivered to Agent true and
complete  copies  of its  certificate  of  incorporation  and  by-laws  and will
promptly notify Agent of any amendment or changes thereto.

                 (b)   The  only  Subsidiaries  of  each  Borrower are listed on
SCHEDULE 5.2(B).

         5.3. SURVIVAL OF REPRESENTATIONS  AND WARRANTIES.  All  representations
and  warranties  of such  Borrower  contained  in this  Agreement  and the Other
Documents  shall  be true  at the  time of  such  Borrower's  execution  of this
Agreement and the Other Documents, and shall survive the execution, delivery and
acceptance  thereof by the parties  thereto and the closing of the  transactions
described therein or related thereto.

         5.4. TAX RETURNS.  Each Borrower's federal tax identification number is
set forth on SCHEDULE 5.4. Each Borrower has filed all federal,  state and local
tax  returns  and other  reports  each is required by law to file other than for
fiscal year ending December 31, 1996 and has paid all taxes,  assessments,  fees
and other  governmental  charges that are due and payable.  Borrowers  have been
granted an extension  to file their tax returns for fiscal year ending  December
31, 1996 and  Borrowers  will not incur any income tax liability for such fiscal
year.  Federal,  state and local income tax returns of each  Borrower  have been
examined  and reported  upon by the  appropriate  taxing  authority or closed by
applicable statute and satisfied for all fiscal years prior to and including the
fiscal year ending  December 31, 1995.  The  provision for taxes on the books of
each Borrower are adequate for all years not closed by applicable statutes,  and
for its current fiscal year, and no Borrower has any knowledge of any deficiency
or additional assessment in connection therewith not provided for on its books.

         5.5.    FINANCIAL STATEMENTS.

                 (a)   The  twelve-month  cash  flow projections of TresCom on a
consolidated basis for the fiscal year ending


                                    -47-

<PAGE>

December 31,  1997,  copies of which are annexed  hereto as EXHIBIT  5.5(A) (the
"Projections")  were prepared by the Chief Financial Officer of Borrowing Agent,
are based on underlying  assumptions  which  provide a reasonable  basis for the
projections  contained therein and reflect Borrowers'  judgment based on present
circumstances  of the most likely set of conditions and course of action for the
projected period.  Since December 31, 1996, there has been no material change in
the  cash  flows  of  TresCom  on a  consolidated  basis  as  set  forth  in the
Projections.

                 (b)  The  consolidated  and  consolidating  balance  sheets  of
Borrowers,   their   Subsidiaries  and  such  other  Persons  described  therein
(including the accounts of all  Subsidiaries  for the respective  periods during
which a  subsidiary  relationship  existed) as of  December  31,  1996,  and the
related  statements of income,  changes in stockholder's  equity, and changes in
cash flow for the period ended on such date, all  accompanied by reports thereon
containing  opinions  without  qualification  by  independent  certified  public
accountants, copies of which have been delivered to Agent, have been prepared in
accordance with GAAP, consistently applied (except for changes in application in
which such accountants  concur) and present fairly the financial position of the
Borrowers  and  their  Subsidiaries  at such  date  and  the  results  of  their
operations  for such period.  Since December 31, 1996 there has been no material
change  in  the  condition,  financial  or  otherwise,  of  Borrowers  or  their
Subsidiaries as shown on the  consolidated  balance sheet as of such date and no
material change in the aggregate value of machinery, equipment and Real Property
owned by Borrowers and their Subsidiaries, except changes in the ordinary course
of business,  none of which individually or in the aggregate has been materially
adverse.

         5.6.  CORPORATE NAME.  Except as set forth on SCHEDULE 5.6, no Borrower
has been known by any other  corporate  name in the past five years and does not
conduct  business  under any other name nor has any Borrower  been the surviving
corporation of a merger or consolidation or acquired all or substantially all of
the assets of any Person during the preceding five (5) years.

         5.7.    O.S.H.A. AND ENVIRONMENTAL COMPLIANCE.

                 (a) Each Borrower has duly complied with,  and its  facilities,
business,  assets,  property,  leaseholds and Equipment are in compliance in all
material  respects with, the provisions of the Federal  Occupational  Safety and
Health Act, the Environmental  Protection Act, RCRA and all other  Environmental
Laws,  unless such failure to comply could not  reasonably be expected to result
in a Material Adverse Effect; there have been no outstanding citations,  notices
or orders of non-compliance  issued to any Borrower or relating to its business,
assets,  property,  leaseholds  or  Equipment  under  any  such  laws,  rules or
regulations.

                                    -48-
<PAGE>

                 (b)  Each  Borrower  has  been  issued  all  required  material
federal,  state and local  licenses,  certificates  or permits  relating  to all
applicable Environmental Laws.

                 (c)  (i)  There  are no  visible  signs  of  releases,  spills,
discharges,  leaks or  disposal  (collectively  referred  to as  "Releases")  of
Hazardous  Substances at, upon,  under or within any Real Property;  (ii) to the
best  of  Borrowers'  knowledge,  there  are no  underground  storage  tanks  or
polychlorinated  biphenyls on the Real Property; (iii) the Real Property has not
been used as a treatment, storage or disposal facility of Hazardous Waste by any
Borrower  since such Borrower has occupied the Real Property nor, to the best of
such Borrower's knowledge,  has the Real Property ever been used as a treatment,
storage  or  disposal  facility  of  Hazardous  Waste;  and  (iv) to the best of
Borrowers' knowledge,  no Hazardous Substances are present on the Real Property,
excepting  such  quantities  as are handled in  accordance  with all  applicable
manufacturer's  instructions and governmental  regulations and in proper storage
containers and as are necessary for the operation of the commercial  business of
any Borrower or of its tenants.

         5.8.    SOLVENCY; NO LITIGATION, VIOLATION, INDEBTEDNESS OR DEFAULT.

                 (a)  Borrowers  are  solvent,  able to pay their  debts as they
mature, have capital sufficient to carry on their business and all businesses in
which they are about to engage, and (i) as of the Closing Date, the fair present
saleable  value of their  assets,  calculated on a going  concern  basis,  is in
excess of the amount of their  liabilities  and (ii)  subsequent  to the Closing
Date,  the fair saleable  value of their assets  (calculated  on a going concern
basis) will be in excess of the amount of their liabilities.

                 (b) Except as disclosed in SCHEDULE 5.8(B), no Borrower has (i)
any  pending  or to the best of  Borrowers'  knowledge,  threatened  litigation,
arbitration,  actions or proceedings  which involve the  possibility of having a
Material Adverse Effect,  and (ii) any liabilities nor indebtedness for borrowed
money other than the Obligations.

                 (c) No  Borrower is in  violation  of any  applicable  statute,
regulation  or ordinance in any respect  which could  reasonably  be expected to
have a Material Adverse Effect, nor is any Borrower in violation of any order of
any court,  governmental  authority or arbitration board or tribunal which could
reasonably be expected to have a Material Adverse Effect.

                 (d)  No  Borrower  nor  any  member  of  the  Controlled  Group
maintains or contributes to any Plan other than those listed on SCHEDULE  5.8(D)
hereto.  Except as set forth in SCHEDULE  5.8(D),  (i) no Plan has  incurred any
"accumulated funding deficiency," in excess of $100,000 at any time or from time
to time as defined in Section 302(a)(2) of ERISA and Section


                                      -49-

<PAGE>


412(a) of the Code,  whether or not waived, and each Borrower and each member of
the Controlled Group has met all applicable  minimum funding  requirements under
Section  302 of ERISA in respect of each Plan,  (ii) each Plan which is intended
to be a qualified  plan under Section  401(a) of the Code as currently in effect
has been  determined  by the  Internal  Revenue  Service to be  qualified  under
Section 401(a) of the Code and the trust related  thereto is exempt from federal
income tax under Section 501(a) of the Code, (iii) no Borrower nor any member of
the  Controlled  Group has incurred any liability to the PBGC other than for the
payment of  premiums,  and there are no premium  payments  which have become due
which are unpaid,  (iv) no Plan has been  terminated  by the plan  administrator
thereof nor by the PBGC,  and there is no occurrence  which would cause the PBGC
to institute  proceedings  under Title IV of ERISA to terminate any Plan, (v) at
this time,  the  current  value of the assets of each Plan  exceeds  the present
value of the accrued benefits and other liabilities of such Plan and no Borrower
nor any member of the Controlled Group knows of any facts or circumstances which
would materially  change the value of such assets and accrued benefits and other
liabilities,  (vi) no  Borrower  nor any  member  of the  Controlled  Group  has
breached any of the  responsibilities,  obligations  or duties  imposed on it by
ERISA with respect to any Plan, (vii) no Borrower nor any member of a Controlled
Group has incurred any  liability  for any excise tax arising under Section 4972
or 4980B of the  Code,  and no fact  exists  which  could  give rise to any such
liability,  (viii) no Borrower  nor any member of the  Controlled  Group nor any
fiduciary  of, nor any  trustee  to,  any Plan,  has  engaged  in a  "prohibited
transaction"  described  in Section 406 of the ERISA or Section 4975 of the Code
nor taken any action which would  constitute  or result in a  Termination  Event
with respect to any such Plan which is subject to ERISA,  (ix) each Borrower and
each member of the Controlled Group has made all  contributions  due and payable
with  respect  to each  Plan,  (x) there  exists no event  described  in Section
4043(b) of ERISA,  for which the thirty (30) day notice  period  contained in 29
CFR Section 2615.3 has not been waived,  xi) no Borrower  nor any  member of the
Controlled Group has any fiduciary  responsibility  for investments with respect
to any plan existing for the benefit of persons  other than  employees or former
employees of any Borrower and any member of the Controlled  Group,  and (xii) no
Borrower nor any member of the  Controlled  Group has  withdrawn,  completely or
partially,  from any  Multiemployer  Plan so as to  incur  liability  under  the
Multiemployer Pension Plan Amendments Act of 1980.

         5.9. PATENTS, TRADEMARKS,  COPYRIGHTS AND LICENSES. All patents, patent
applications,  trademarks,  trademark applications,  service marks, service mark
applications,  copyrights,  copyright applications,  design rights,  tradenames,
assumed names,  trade secrets and licenses owned or utilized by any Borrower are
set forth on SCHEDULE 5.9, are valid and have been duly registered or filed with
all appropriate  governmental authorities and constitute all of the intellectual
property rights which are necessary for the operation of its business;  there is
no objection to or pending challenge to the validity of any such


                                    -50-

<PAGE>

material patent, trademark,  copyright, design right, tradename, trade secret or
license and no Borrower is aware of any grounds for any challenge, except as set
forth in SCHEDULE 5.9 hereto. Each patent,  patent application,  patent license,
trademark, trademark application,  trademark license, service mark, service mark
application,   service  mark  license,  copyright,   copyright  application  and
copyright  license  owned or held by any Borrower and all trade  secrets used by
any Borrower consist of original material or property developed by such Borrower
or was  lawfully  acquired  by such  Borrower  from the proper and lawful  owner
thereof.  Each of such items which Borrowers  believe in their business judgment
have any  meaningful  value to their  businesses  has been  maintained  so as to
preserve the value thereof from the date of creation or acquisition thereof.

         5.10. LICENSES AND PERMITS. Each Borrower (a) is in compliance with and
(b) has procured and is now in possession  of, all material  licenses or permits
required by any applicable federal, state, provincial,  territorial or local law
or regulation for the operation of its business in each jurisdiction  wherein it
is now  conducting  or  proposes  to conduct  business  and where the failure to
procure such licenses or permits could reasonably be expected to have a Material
Adverse Effect.

         5.11. DEFAULT OF INDEBTEDNESS. No Borrower is in default in the payment
of the principal of or interest on any  Indebtedness  or under any instrument or
agreement  under or subject  to which any  Indebtedness  has been  issued and no
event has occurred  under the  provisions  of any such  instrument  or agreement
which  with or  without  the  lapse of time or the  giving of  notice,  or both,
constitutes or would constitute an event of default thereunder.

         5.12.   NO  DEFAULT.   No  Borrower  is in  default  in  the payment or
performance of any of its  contractual  obligations  and no Default has occurred
which could reasonably be expected to have a Material Adverse Effect.

         5.13. NO BURDENSOME RESTRICTIONS.  No Borrower is party to any contract
or agreement the  performance  of which could have a Material  Adverse Effect on
such  Borrower.  No Borrower  has agreed or  consented to cause or permit in the
future (upon the happening of a contingency  or otherwise)  any of its property,
whether now owned or hereafter acquired,  to be subject to a Lien which is not a
Permitted Encumbrance.

         5.14. NO LABOR DISPUTES.  No Borrower is involved in any labor dispute;
there  are no  strikes  or  walkouts  or union  organization  of any  Borrower's
employees in existence or, to the best of Borrowers'  knowledge,  threatened and
no labor contract is scheduled to expire during the Term other than as set forth
on SCHEDULE 5.14 hereto.

         5.15.  MARGIN REGULATIONS.  No Borrower is engaged, nor will it engage,
principally or as one of its important


                                    -51-

<PAGE>

activities,  in the business of extending credit for the purpose of "purchasing"
or "carrying" any "margin  stock" within the respective  meanings of each of the
quoted terms under Regulation U or Regulation G of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect. No part
of the  proceeds  of any Advance  will be used for  "purchasing"  or  "carrying"
"margin stock" as defined in Regulation U of such Board of Governors.

         5.16.   INVESTMENT COMPANY ACT.  No Borrower is an "investment company"
registered  or required to be  registered  under the  Investment  Company Act of
1940, as amended, nor is it controlled by such a company.

         5.17. DISCLOSURE. No representation or warranty made by any Borrower in
this Agreement or in any financial statement,  report,  certificate or any other
document  furnished in connection  herewith  contains any untrue  statement of a
material  fact or  omits  to  state  any  material  fact  necessary  to make the
statements  herein or  therein  not  misleading,  in light of the  circumstances
existing when such  representation  or warranty was made. There is no fact known
to Borrowers or which  reasonably  should be known to Borrowers  which Borrowers
have  not  disclosed  to Agent  in  writing  with  respect  to the  transactions
contemplated  by this  Agreement  which could  reasonably  be expected to have a
Material Adverse Effect.

         5.18.   FCC, PRTRB AND STATE COMPLIANCE.

                 (a) Each Borrower has duly complied with the  provisions of the
Telecommunications  Act, the Communications  Act, the FCC, the FCC Rules and the
PRTRB including,  without limitation,  the reporting requirements thereunder and
there have been no outstanding  citations,  notices or orders of  non-compliance
issued to any  Borrower  relating to its business or assets under any such laws,
rules or regulations except for such noncompliance which in the aggregate cannot
reasonably be expected to have a Material Adverse Effect.

                 (b) Each Borrower has been issued all required federal,  state,
territorial  and  local  licenses,  certificates  or  permits  relating  to  all
applicable  telecommunication  laws  necessary  or  appropriate  to operate  its
business,  other than licenses,  permits and  certificates  as to which the lack
thereof cannot reasonably be expected to have a Material Adverse Effect.

                 (c) Each Borrower is certified, tariffed or otherwise qualified
to provide its services in all states,  territories and commonwealths where such
certification  or  qualification  is necessary  for such Borrower to operate its
business and such Borrower has filed and maintained  all necessary  tariffs with
the appropriate  federal,  state,  local or territorial  authorities  except for
those as to which the lack thereof will not have a Material Adverse Effect.


                                    -52-
<PAGE>

         5.19.  SWAPS. No Borrower is a party to, nor will it be a party to, any
swap  agreement  whereby such Borrower has agreed or will agree to swap interest
rates or currencies unless same provides that damages upon termination following
an event of default  thereunder  are  payable on an  unlimited  "two-way  basis"
without regard to fault on the part of either party.

         5.20. CONFLICTING AGREEMENTS. No provision of any mortgage,  indenture,
contract,  agreement,  judgment,  decree or order  binding  on any  Borrower  or
affecting the Collateral  conflicts  with, or requires any Consent which has not
already been obtained to, or would in any way prevent the execution, delivery or
performance of, the terms of this Agreement or the Other Documents.

         5.21.  APPLICATION OF CERTAIN LAWS AND  REGULATIONS.  Each Borrower and
any Affiliate (other than Warburg or a Warburg Affiliate) of such Borrower is in
compliance with all statutes, rules or regulations which regulate the incurrence
of any  Indebtedness,  including  without  limitation,  statutes or  regulations
relative to common or interstate  carriers or to the sale of  electricity,  gas,
steam, water,  telephone,  telegraph or other public utility services except for
any non-compliance  which in the aggregate cannot reasonably be expected to have
a Material Adverse Effect.

         5.22.  BUSINESS AND  PROPERTY OF  BORROWER.  Upon and after the Closing
Date, Borrowers do not propose to engage in any business other than providing or
utilizing  long  distance or local  telecommunications  services and  activities
necessary to conduct the foregoing.  On the Closing Date, each Borrower will own
all the property and possess all of the rights and  Consents  necessary  for the
conduct of the business of such  Borrower  except for those as to which the lack
thereof will not have a Material Adverse Effect.


VI.      AFFIRMATIVE COVENANTS.

         Each  Borrower  shall,  until  payment in full of the  Obligations  and
termination of this Agreement:

         6.1.  PAYMENT OF FEES.  Pay to Agent on demand all usual and  customary
fees and  out-of-pocket  expenses which Agent incurs in connection  with (a) the
forwarding of Advance proceeds and (b) the  establishment and maintenance of any
Blocked  Accounts or  Depository  Accounts as provided  for in Section  4.15(h).
Agent may, without making demand,  charge  Borrowers'  Account for all such fees
and out-of-pocket expenses.

         6.2.    CONDUCT OF BUSINESS AND MAINTENANCE  OF EXISTENCE  AND  ASSETS.
(a) Conduct  continuously  and operate  actively its business  according to good
business practices and maintain all of its properties useful or necessary in its
business  in good working order and condition (reasonable wear and tear excepted


                                    -53-

<PAGE>

and  except  as  may be  disposed  of in  accordance  with  the  terms  of  this
Agreement),  including,  without limitation, all licenses, patents,  copyrights,
design  rights,  tradenames,  trade secrets and  trademarks and take all actions
necessary to enforce and protect the validity of any intellectual property right
or other right included in the Collateral; (b) keep in full force and effect its
existence  and comply in all  material  respects  with the laws and  regulations
governing  the  conduct  of  its  business  where  the  failure  to do so  could
reasonably be expected to have a Material Adverse Effect;  and (c) make all such
reports and pay all such  franchise  and other taxes and license fees and do all
such other acts and things as may be lawfully  required to maintain  its rights,
licenses,  leases,  powers and franchises under the laws of the United States or
any political subdivision thereof.

         6.3.    VIOLATIONS.  Promptly notify Agent in writing of any  violation
of any law, statute, regulation or ordinance of any Governmental Body, or of any
agency thereof, applicable to any Borrower which could reasonably be expected to
have a Material Adverse Effect.

         6.4.  GOVERNMENT  RECEIVABLES.  Take all  steps  necessary  to  protect
Agent's interest in the Collateral under the Federal Assignment of Claims Act or
other  applicable  state or local  statutes or  ordinances  and deliver to Agent
appropriately  endorsed,  any  instrument  or chattel paper  connected  with any
Receivable  arising out of contracts between any Borrower and the United States,
any  state,  any  territory,  any  commonwealth  or any  department,  agency  or
instrumentality of any of them.

         6.5.    TANGIBLE NET WORTH.  Maintain Tangible Net Worth at the  end of
each  fiscal  quarter  set  forth  below of not less than the  amount  set forth
opposite such quarter:

==================================================================
           FISCAL QUARTER ENDING:                   AMOUNT:
------------------------------------------------------------------
                  09/30/97                        $27,500,000
------------------------------------------------------------------
                  12/31/97                        $25,700,000
------------------------------------------------------------------
                  03/31/98                        $24,500,000
------------------------------------------------------------------
                  06/30/98                        $23,500,000
------------------------------------------------------------------
      09/30/98 and each fiscal quarter            $23,000,000
                 thereafter
==================================================================

         6.6.    INTEREST COVERAGE RATIO.  Maintain  an  Interest Coverage Ratio
as at the end of the fiscal quarter set forth below with respect to the four (4)
fiscal  quarters  then ended of not less than the ratio set forth  opposite such
quarter:

===========================================================================
                FISCAL QUARTER ENDING:                        RATIO:
---------------------------------------------------------------------------
                       09/30/97                            1.00 to 1.00



                                      -54-
<PAGE>

---------------------------------------------------------------------------
                       12/31/97                            1.00 to 1.00
---------------------------------------------------------------------------
                       03/31/98                            1.00 to 1.00
---------------------------------------------------------------------------
                       06/30/98                            1.25 to 1.00
---------------------------------------------------------------------------
                       09/30/98                            1.25 to 1.00
---------------------------------------------------------------------------
      12/31/98 and each fiscal quarter thereafter          1.50 to 1.00
===========================================================================

         6.7.  EXECUTION  OF  SUPPLEMENTAL  INSTRUMENTS.  Execute and deliver to
Agent from time to time, upon demand, such supplemental agreements,  statements,
assignments  and  transfers,  or  instructions  or  documents  relating  to  the
Collateral,  and such other instruments as Agent may request,  in order that the
full intent of this Agreement may be carried into effect.

         6.8. PAYMENT OF INDEBTEDNESS. Pay, discharge or otherwise satisfy at or
before maturity (subject,  where applicable,  to specified grace periods and, in
the case of the trade payables, to normal payment practices) all its obligations
and liabilities of whatever  nature,  except when the failure to do so could not
reasonably be expected to have a Material  Adverse  Effect or when the amount or
validity  thereof is  currently  being  contested  in good faith by  appropriate
proceedings and each Borrower shall have provided for such reserves as Agent may
reasonably  deem proper and  necessary,  subject at all times to any  applicable
subordination arrangement in favor of Lenders.

         6.9. STANDARDS OF FINANCIAL STATEMENTS.  Cause all financial statements
referred to in Sections 9.7, 9.9, 9.10,  9.11,  9.12,  9.13 and 9.14 as to which
GAAP is applicable to be complete and correct in all material respects (subject,
in  the  case  of  interim  financial  statements,   to  normal  year-end  audit
adjustments) and to be prepared in reasonable detail and in accordance with GAAP
applied  consistently  throughout  the  periods  reflected  therein  (except  as
concurred in by such reporting  accountants or officer,  as the case may be, and
disclosed therein).


VII.     NEGATIVE COVENANTS.

         No Borrower  shall,  until  satisfaction in full of the Obligations and
termination of this  Agreement,  without the prior written  consent of Agent and
Required Lenders:

         7.1.    MERGER, CONSOLIDATION, ACQUISITION AND SALE OF ASSETS.

                 (a)   Enter   into   any   merger,   consolidation   or   other
reorganization  with or into any other  Person or acquire  all or a  substantial
portion of the assets or stock of any Person other than  pursuant to a Permitted
Acquisition or a Permitted


                                    -55-

<PAGE>

Investment or permit any other Person to consolidate with or merge with it.

                 (b) Sell,  lease,  transfer  or  otherwise  dispose  of (i) any
Collateral or (ii) any of its  properties or assets (other than  Collateral)  in
excess of $250,000 in any fiscal year.

         7.2.    CREATION  OF  LIENS.  Create  or  suffer  to  exist any Lien or
transfer  upon or against any of its  property or assets now owned or  hereafter
acquired, except Permitted Encumbrances.

         7.3.    GUARANTEES.  Become  liable  upon the obligations of any Person
by  assumption,  endorsement  or guaranty  thereof or  otherwise  (other than to
Lenders) except the endorsement of checks in the ordinary course of business.

         7.4.  INVESTMENTS.  Purchase or acquire obligations or stock of, or any
other interest in, any Person,  except (a)  obligations  issued or guaranteed by
the United States of America or any agency  thereof,  (b)  certificates  of time
deposit and bankers' acceptances having maturities of not more than 180 days and
repurchase  agreements  backed  by  United  States  government  securities  of a
commercial bank if (i) such bank has a combined  capital and surplus of at least
$500,000,000,  or (ii) its debt  obligations,  or those of a holding  company of
which it is a Subsidiary,  are rated not less than A (or the equivalent  rating)
by a nationally recognized investment rating agency, (c) U.S. money market funds
that invest solely in  obligations  issued or guaranteed by the United States of
America or an agency  thereof,  and (d)  Permitted  Acquisitions  and  Permitted
Investments.

         7.5. LOANS. Make advances, loans or extensions of credit to any Person,
including without limitation, any Parent, Subsidiary or Affiliate other than (a)
loans or advances among Borrowers,  (b) trade debt due to any Borrower which has
been  converted into loans  evidenced by promissory  notes so long as such trade
debt does not at any time constitute Eligible Receivables and PROVIDED, further,
that any such  promissory  notes in  excess  of  $50,000  shall be  pledged  and
delivered to Agent as security for the  Obligations or (c) loans and advances to
employees not to exceed $25,000 in the aggregate outstanding at any time or from
time to time.

         7.6.  CAPITAL   EXPENDITURES.   Contract  for,  purchase  or  make  any
expenditure or commitments  for fixed or capital assets  (including  capitalized
leases) in an amount in excess of (a)  $7,000,000  for the period  commencing on
the Closing Date and ending on December 31, 1997, (b)  $12,000,000 in any fiscal
year  thereafter  through and including the fiscal year ending December 31, 2001
and (c) $6,000,000 during the period commencing on January 1, 2002 and ending on
July 30, 2002.

         7.7.    DIVIDENDS.  Declare, pay  or  make any dividend or distribution
on any shares of the common stock or preferred stock of any Borrower (other than
dividends or distributions payable in


                                    -56-

<PAGE>

its stock, or split-ups or  reclassifications  of its stock or dividends payable
by a Borrower to another Borrower) or apply any of its funds, property or assets
to the  purchase,  redemption  or other  retirement  of any common or  preferred
stock,  or of any  options to  purchase  or acquire any such shares of common or
preferred  stock of any Borrower,  other than any  redemption or purchase of any
such stock of TresCom issued to any of its employees,  PROVIDED,  HOWEVER,  that
such purchase and/or  redemption price does not exceed $500,000 in the aggregate
for all employees in any fiscal year and  PROVIDED,  further that at the time of
and  after  giving  effect to each  such  purchase  or  redemption  (a)  Undrawn
Availability is at least $2,000,000 and (b) no Event of Default has occurred and
is continuing.

         7.8.  INDEBTEDNESS.  Create,  incur,  assume  or  suffer  to exist  any
Indebtedness  for borrowed money  (exclusive of trade debt) except in respect of
(i) Indebtedness to Agent and/or Lenders; (ii) Indebtedness incurred for capital
expenditures  permitted under Section 7.6 hereof,  (iii)  Indebtedness due under
the SBA Loan as in existence on the Closing Date,  (iv)  Indebtedness  due under
capitalized  leases as in  existence  on the Closing  Date and (v)  Indebtedness
incurred in connection with Permitted Acquisitions.

         7.9.  NATURE  OF  BUSINESS.  Substantially  change  the  nature  of the
business in which it is presently engaged, nor except as specifically  permitted
hereby  purchase or invest,  directly or  indirectly,  in any assets or property
other than in the ordinary  course of business for assets or property  which are
useful  in,  necessary  for  and are to be used  in its  business  as  presently
conducted.

         7.10. TRANSACTIONS WITH AFFILIATES.  Directly or indirectly,  purchase,
acquire or lease any property from, or sell,  transfer or lease any property to,
or  otherwise  deal with,  any  Affiliate  other than another  Borrower,  except
transactions  disclosed in the ordinary  course of business,  on an arm's-length
basis on terms no less  favorable  than terms which  would have been  obtainable
from a Person other than an Affiliate.

         7.11.   INTENTIONALLY OMITTED.

         7.12.   SUBSIDIARIES.

                 (a) Form or acquire any  Subsidiary  except in connection  with
(a) a  Permitted  Investment  or  (b) a  Permitted  Acquisition  so  long  as in
connection with such Permitted Acquisition,  (i) such Subsidiary expressly joins
in this  Agreement  as a borrower  and  becomes  jointly and  severally  for the
obligations  of  Borrowers  hereunder,  under  the  Notes  and  under  any other
agreement  between any Borrower,  Agent and/or Lenders and (ii) Agent shall have
received all documents,  including legal opinions,  it may reasonably require to
establish  Agent's  first  priority  security  interest  in  the  assets  of the
Subsidiary to the


                                    -57-

<PAGE>

extent such assets constitute "Collateral" hereunder and compliance with each of
the foregoing conditions.

                 (b)   Enter  into  any  partnership,  joint  venture or similar
arrangement.

         7.13. FISCAL YEAR AND ACCOUNTING  CHANGES.  Change its fiscal year from
December  31 or make  any  change  (i) in  accounting  treatment  and  reporting
practices  except as  required  or  permitted  by GAAP or (ii) in tax  reporting
treatment except as required or permitted by law.

         7.14. PLEDGE OF CREDIT. Now or hereafter pledge Agent's or any Lender's
credit on any purchases or for any purpose  whatsoever or use any portion of any
Advance in or for any business other than such Borrower's  business as conducted
on the date of this Agreement,  or as permitted to be conducted in the future by
the terms of this Agreement.

         7.15.  AMENDMENT OF ARTICLES OF INCORPORATION,  BY-LAWS, LEC CONTRACTS.
Amend,  modify or waive  any  material  term or  material  provision  of (x) its
Articles of  Incorporation or ByLaws unless required by law or (y) any Agreement
with any LEC,  except for amendments,  modifications  or waivers which could not
reasonably be expected to have a Material Adverse Effect.

         7.16.  COMPLIANCE WITH ERISA. (i) (x) Maintain, or permit any member of
the Controlled  Group to maintain,  or (y) become  obligated to  contribute,  or
permit any member of the Controlled Group to become obligated to contribute,  to
any Plan, other than those Plans disclosed on SCHEDULE 5.8(D),  (ii) engage,  or
permit  any  member  of the  Controlled  Group  to  engage,  in  any  non-exempt
"prohibited  transaction",  as that term is defined in section  406 of ERISA and
Section 4975 of the Code,  (iii) incur,  or permit any member of the  Controlled
Group to incur,  any "accumulated  funding  deficiency" in excess of $100,000 at
any time or from time to time,  as that term is defined in Section  302 of ERISA
or  Section  412 of the  Code,  (iv)  terminate,  or  permit  any  member of the
Controlled  Group to  terminate,  any Plan where such event could  result in any
liability  of  any  Borrower  or  any  member  of the  Controlled  Group  or the
imposition  of a lien on the  property  of any  Borrower  or any  member  of the
Controlled  Group pursuant to Section 4068 of ERISA,  (v) assume,  or permit any
member of the  Controlled  Group to assume,  any obligation to contribute to any
Multiemployer  Plan not disclosed on SCHEDULE 5.8(D),  (vi) incur, or permit any
member  of the  Controlled  Group to  incur,  any  withdrawal  liability  to any
Multiemployer Plan; (vii) fail promptly to notify Agent of the occurrence of any
Termination  Event,  (viii) fail to comply, or permit a member of the Controlled
Group to fail to  comply,  with the  requirements  of ERISA or the Code or other
applicable  laws in respect of any Plan, (ix) fail to meet, or permit any member
of the Controlled Group to fail to meet, all minimum funding  requirements under
ERISA or the Code or postpone or delay or allow any member of the Controlled


                                    -58-

<PAGE>

Group to postpone or delay any funding requirement with respect of any Plan.

         7.17.   PREPAYMENT  OF  INDEBTEDNESS.   At   any   time,  directly   or
indirectly,  prepay any Indebtedness  (other than to Agent and/or  Lenders),  or
repurchase,  redeem,  retire  or  otherwise  acquire  any  Indebtedness  of  any
Borrower.

         7.18. DEPOSIT ACCOUNT BALANCES.  At any time, maintain a balance in the
respective  operating  accounts of each of STSJ and TeleCom in excess of $15,000
and, to the extent the balance  exceeds such amount,  Borrowers shall cause such
excess to be transferred on a daily basis to the Blocked Account.


VIII.    CONDITIONS PRECEDENT.

         8.1.  CONDITIONS TO INITIAL ADVANCES.  The agreement of Lenders to make
the initial Advances  requested to be made on the Closing Date is subject to the
satisfaction,  or  waiver  by  all  of  the  Lenders,  immediately  prior  to or
concurrently  with the  making of such  Advances,  of the  following  conditions
precedent:

                 (a)   NOTE.  Agent  shall  have received the Note duly executed
and delivered by an authorized officer of each Borrower;

                 (b)  FILINGS,   REGISTRATIONS  AND  RECORDINGS.  Each  document
(including, without limitation, any Uniform Commercial Code financing statement)
required  by this  Agreement,  any Other  Document  or under  law or  reasonably
requested by the Agent to be filed,  registered  or recorded in order to create,
in favor of Agent, a perfected  security interest in or lien upon the Collateral
shall have been properly filed,  registered or recorded in each  jurisdiction in
which  the  filing,  registration  or  recordation  thereof  is so  required  or
requested,  and Agent  shall have  received  an  acknowledgment  copy,  or other
evidence  satisfactory  to it, of each such filing,  registration or recordation
and  satisfactory  evidence of the payment of any necessary  fee, tax or expense
relating thereto;

                 (c)  CORPORATE  PROCEEDINGS  OF  BORROWERS.  Agent  shall  have
received a copy of the resolutions in form and substance reasonably satisfactory
to Agent,  of the Board of Directors of each Borrower and Guarantor  authorizing
(i) with respect to such  Borrower and  Guarantor  the  execution,  delivery and
performance  of this  Agreement and the Other  Documents  which such Person is a
party,  (collectively  the  "Documents") and (ii) with respect to such Borrower,
the granting of the security  interests in and liens upon the Collateral in each
case  certified by the Secretary or an Assistant  Secretary of each Borrower and
Guarantor as of the Closing  Date;  and, such  certificate  shall state that the
resolutions  thereby  certified  have not been  amended,  modified,  revoked  or
rescinded as of the date of such certificate;


                                    -59-
<PAGE>

                 (d) INCUMBENCY  CERTIFICATES OF BORROWERS AND GUARANTOR.  Agent
shall have received a certificate of the Secretary or an Assistant  Secretary of
each Borrower and  Guarantor,  dated the Closing Date, as to the  incumbency and
signature  of the  officers  of such  Borrower  and  Guarantor,  executing  this
Agreement,  any  certificate  or other  documents to be delivered by it pursuant
hereto,  together with evidence of the incumbency of such Secretary or Assistant
Secretary;

                 (e)  CERTIFICATES.  Agent  shall  have  received  a copy of the
Articles or Certificate of  Incorporation of each Borrower and Guarantor and all
amendments  thereto,  certified by the  Secretary of State or other  appropriate
official  of its  jurisdiction  of  incorporation  together  with  copies of the
By-Laws of each  Borrower and Guarantor  and all  agreements of each  Borrower's
shareholders  certified  as  accurate  and  complete  by the  Secretary  of each
Borrower and Guarantor;

                 (f) GOOD STANDING CERTIFICATES.  Agent shall have received good
standing certificates for each Borrower and Guarantor dated not more than thirty
(30) days prior to the Closing  Date,  issued by the Secretary of State or other
appropriate  official of each Borrower's  jurisdiction of incorporation and each
jurisdiction  where the conduct of each  Borrower's  business  activities or the
ownership of its properties necessitates qualification;

                 (g) LEGAL OPINION. Agent shall have received the executed legal
opinion of Kelley Drye & Warren LLP in form and substance  satisfactory to Agent
which shall cover such matters incident to the transactions contemplated by this
Agreement and the Other Documents  (other than the  Assignment),  and such other
local  counsel  opinions as Agent may  reasonably  require and each Borrower and
Guarantor hereby authorizes and directs such counsel to deliver such opinions to
Agent and Lenders;

                 (h)  NO  LITIGATION.   (i)  No  litigation,   investigation  or
proceeding  before or by any arbitrator or Governmental Body shall be continuing
or  threatened  against any Borrower or against the officers or directors of any
Borrower (A) in connection with the Other  Documents or any of the  transactions
contemplated  thereby and which,  in the reasonable  opinion of Agent, is deemed
material or (B) which could, in the reasonable opinion of Agent, have a Material
Adverse Effect; and (ii) no injunction,  writ,  restraining order or other order
of any nature materially  adverse to any Borrower or the conduct of its business
or inconsistent  with the due consummation of the  Transactions  shall have been
issued by any Governmental Body;

                 (i)   FINANCIAL  CONDITION  CERTIFICATES.   Agent  shall   have
received  an executed  Financial  Condition  Certificate  in the form of EXHIBIT
8.1(i).

                 (j)   COLLATERAL  EXAMINATION.   Agent  shall  have   completed
Collateral examinations and received appraisals, the


                                      -60-
<PAGE>

results of which shall be  satisfactory  in form and substance to Agent,  of the
Receivables and General Intangibles,  of each Borrower and all books and records
in connection therewith;

                 (k)   FEES.  Agent  shall  have  received  all  fees payable to
Agent and  Lenders on or prior to the  Closing  Date  pursuant  to  Article  III
hereof;

                 (l)   PROJECTIONS.  Agent  shall  have  received  a copy of the
Projections which shall be satisfactory in all respects to Agent;

                 (m)   OAN  DOCUMENTATION.  Agent  shall  have received executed
copies of all documentation related to the OAN Services Agreement;

                 (n)   GUARANTIES AND OTHER DOCUMENTS. Agent shall have received
a duly  executed  Guaranty and all Other  Documents,  each in form and substance
satisfactory to Agent;

                 (o) INSURANCE.  Agent shall have received in form and substance
satisfactory  to  Agent,  certified  copies  of  Borrowers'  casualty  insurance
policies,  together with loss payable  endorsements on Agent's  standard form of
loss payee  endorsement  naming  Agent as loss payee,  and  certified  copies of
Borrowers' liability insurance policies, together with endorsements naming Agent
as a co-insured;

                 (p)   PAYMENT INSTRUCTIONS.  Agent shall have  received written
instructions from Borrowers directing the application of proceeds of the initial
Advances made pursuant to this Agreement;

                 (q)   BLOCKED ACCOUNTS. Agent shall have received duly executed
agreements  establishing  the  Blocked  Accounts  or  Depository  Accounts  with
SunTrust  Bank/South  Florida,   National  Association  for  the  collection  or
servicing of the Receivables and proceeds of the Collateral;

                 (r)  CONSENTS.  Agent shall have  received any and all Consents
necessary to permit the  effectuation of the  transactions  contemplated by this
Agreement and the Other Documents;  and, Agent shall have received such Consents
and waivers of such third  parties as might  assert  claims with  respect to the
Collateral, as Agent and its counsel shall deem necessary;

                 (s) NO MATERIAL  ADVERSE CHANGE.  (i) since May 31, 1997, there
shall not have  occurred  any event,  condition  or state of facts  which  could
reasonably  be  expected  to  have  a  Material   Adverse  Effect  and  (ii)  no
representations  made or information supplied to Agent shall have been proven to
be inaccurate or misleading in any material respect;

                 (t)   LEASEHOLD   AGREEMENTS.   Agent   shall   have   received
landlord, mortgagee or warehouseman agreements


                                    -61-

<PAGE>

satisfactory  to Agent with  respect to all  premises  leased by any Borrower at
which such Borrower's books and records are located;

                 (u)  CONTRACT  REVIEW.  Agent shall have  reviewed all material
contracts of Borrowers including,  without limitation,  leases, union contracts,
labor contracts, vendor supply contracts, license agreements and distributorship
agreements  and such  contracts  and  agreements  shall be  satisfactory  in all
respects to Agent;

                 (v) CLOSING  CERTIFICATE.  Agent shall have  received a closing
certificate  signed by the  Chief  Financial  Officer  of  TresCom  and the Vice
President of the other Borrowers  dated as of the date hereof,  stating that (i)
all  representations  and  warranties  set forth in this Agreement and the Other
Documents  are true and correct on and as of such date,  (ii)  Borrowers  are on
such date in  compliance  with all the terms  and  provisions  set forth in this
Agreement and the Other  Documents and (iii) on such date no Default or Event of
Default has occurred or is continuing;

                 (w) BORROWING  BASE.  Agent shall have  received  evidence from
Borrowers that the aggregate amount of Eligible Receivables,  Eligible IX - Plus
Unbilled Receivables, Eligible OAN Receivables and Eligible Unbilled Receivables
is sufficient in value and amount to support Advances in the amount requested by
Borrowers  on the  Closing  Date and that  after  giving  effect to the  initial
Advances  hereunder,  Borrowers  shall  have  Undrawn  Availability  of at least
$5,500,000 as evidenced by the Borrowing Base Certificate in  substantially  the
form of EXHIBIT 8.1(w) hereof  prepared and delivered by TresCom to Agent on the
Closing Date, which certificate shall be satisfactory to Agent in all respects;

                 (x) COMPLIANCE WITH LAWS.  Agent shall be reasonably  satisfied
that each Borrower is in compliance with all pertinent federal, state, local and
territorial  regulations including but not limited to those with respect to EPA,
OSHA, ERISA, FCC and PRTRB;

                 (y) SBA  DOCUMENTATION.  Agent  shall  have  received  executed
copies  of all  documentation  related  to the SBA Loan and the SBA  shall  have
consented in writing to the incurrence by STSJ of the  Indebtedness to Agent and
Lenders  contemplated  herein and the creation of the Liens upon the Collateral;
and

                 (z)  OTHER.  All  corporate  and  other  proceedings,  and  all
documents,   instruments   and  other  legal  matters  in  connection  with  the
Transactions  shall be  satisfactory  in form  and  substance  to Agent  and its
counsel.

         8.2.    CONDITIONS TO EACH ADVANCE.  The  agreement  of Lenders to make
any Advance requested to be made on any date (including, without limitation, the
initial Advance), is subject


                                      -62-

<PAGE>

to the  satisfaction of the following  conditions  precedent as of the date such
Advance is made:

                 (a) REPRESENTATIONS AND WARRANTIES. Each of the representations
and  warranties  made by any Borrower in or pursuant to this  Agreement  and any
Other  Document  to  which it is a party,  and each of the  representations  and
warranties  contained  in  any  certificate,  document  or  financial  or  other
statement  furnished at any time under or in connection  with this  Agreement or
any Other Document shall be true and correct in all material  respects on and as
of such date as if made on and as of such date  unless such  representations  or
warranties  expressly relate to a particular date and except with respect to any
events, changes or conditions expressly permitted under this Agreement;

                 (b) NO  DEFAULT.  No Event of  Default  or  Default  shall have
occurred and be  continuing  on such date, or would exist after giving effect to
the Advances requested to be made, on such date; PROVIDED, HOWEVER that Lenders,
in their sole  discretion,  may continue to make  Advances  notwithstanding  the
existence  of an Event of Default or Default and that any Advances so made shall
not be deemed a waiver of any such Event of Default or Default;

                 (c)   MAXIMUM ADVANCES.  In the case of any Advances  requested
to be made, after giving effect thereto, the aggregate Advances shall not exceed
the maximum amount of Advances permitted under Sections 2.1 and 2.11 hereof; and

                 (d)   MATERIAL  PROVISIONS.   No  material  provision  of  this
Agreement shall, for any reason,  cease to be valid and binding on any Borrower,
or any Borrower shall so claim in writing to Agent.

Each  request  for an Advance  by any  Borrower  hereunder  shall  constitute  a
representation and warranty by each Borrower as of the date of such Advance that
the conditions contained in this subsection shall have been satisfied.


IX.      INFORMATION AS TO BORROWERS.

         Each Borrower shall,  until satisfaction in full of the Obligations and
the termination of this Agreement:

         9.1. DISCLOSURE OF MATERIAL MATTERS. Immediately upon learning thereof,
report to Agent all matters  materially  affecting the value,  enforceability or
collectibility of any portion of the Collateral  including,  without limitation,
any Borrower's reclamation or repossession of, or the return to any Borrower of,
a material  amount of goods or claims or disputes  asserted  by any  Customer or
other obligor.

         9.2.    SCHEDULES.  Deliver to Agent (a) on or before Wednesday of each
week as and for the prior week, a detailed


                                    -63-

<PAGE>

listing  of all sales made by any  Borrower  during the prior week and (b) on or
before  the  15th day of each  month as and for the  prior  month  (i)  accounts
receivable   ageings  together  with  a  Certificate  of  the  President  and/or
Vice-President  of Telecom in  substantially  the form of EXHIBIT  9.2  attached
hereto and made a part hereof and (ii) accounts payable schedules.  In addition,
each  Borrower will deliver to Agent at such  intervals as Agent may  reasonably
require:  (i)  confirmatory  assignment  schedules,  (ii)  copies of  Customer's
invoices,  (iii)  evidence  of  shipment  or  delivery,  and (iv)  such  further
schedules,  documents and/or  information  regarding the Collateral as Agent may
reasonably  require  including,  without  limitation,  trial  balances  and test
verifications.  Agent shall have the right to confirm and verify all Receivables
by any manner and through any medium it considers  advisable  and do whatever it
may deem reasonably necessary to protect its interests  hereunder.  The items to
be provided  under this  Section are to be in form  reasonably  satisfactory  to
Agent and  executed by each  Borrower  and  delivered to Agent from time to time
solely for Agent's convenience in maintaining records of the Collateral, and any
Borrower's  failure to  deliver  any of such  items to Agent  shall not  affect,
terminate,   modify  or  otherwise  limit  Agent's  Lien  with  respect  to  the
Collateral.

         9.3.  ENVIRONMENTAL  REPORTS.  Furnish  Agent,  concurrently  with  the
delivery  of the  financial  statements  referred  to in  Sections  9.7,  with a
certificate signed by the President of each Borrower stating, to the best of his
knowledge, that each Borrower is in compliance in all material respects with all
federal,   state,   local,   territorial  and  commonwealth   laws  relating  to
environmental  protection and control and occupational safety and health. To the
extent  any  Borrower  is  not  in  compliance  with  the  foregoing  laws,  the
certificate shall set forth with specificity all areas of non-compliance and the
proposed   action  such  Borrower  will  implement  in  order  to  achieve  full
compliance.

         9.4.  LITIGATION.  Promptly  notify Agent in writing of any litigation,
suit or  administrative  proceeding  affecting any Borrower,  whether or not the
claim is covered by  insurance,  and of any suit or  administrative  proceeding,
which in any such case could  reasonably be expected to have a Material  Adverse
Effect.

         9.5.  MATERIAL  OCCURRENCES.  Promptly notify Agent in writing upon the
occurrence of (a) any Event of Default or Default; (b) any event, development or
circumstance  whereby any financial  statements  or other  reports  furnished to
Agent fail in any material  respect to present  fairly,  in accordance with GAAP
consistently  applied,  the  financial  condition  or  operating  results of any
Borrower as of the date of such statements;  (c) any accumulated retirement plan
funding  deficiency  which, if such deficiency  continued for two plan years and
was not  corrected  as provided in Section 4971 of the Code,  could  subject any
Borrower  to a tax  imposed  by  Section  4971 of the  Code;  (d) each and every
default by any Borrower which might result in the  acceleration  of the maturity
of any Indebtedness in excess of $100,000,  including the names and addresses of
the holders of such Indebtedness with


                                    -64-

<PAGE>

respect  to which  there is a  default  existing  or with  respect  to which the
maturity has been or could be accelerated,  and the amount of such Indebtedness;
and (e) any other  development  in the business or affairs of any Borrower which
could  reasonably be expected to have a Material  Adverse  Effect;  in each case
describing  the nature  thereof  and the action  Borrowers  propose to take with
respect thereto.

         9.6.    GOVERNMENT RECEIVABLES.  Notify Agent immediately if any of its
Receivables  arise out of contracts  between any Borrower and the United  States
and/or Puerto Rico, any state, or any department,  agency or  instrumentality of
any of them.

         9.7. ANNUAL FINANCIAL STATEMENTS. Furnish Agent within ninety (90) days
after the end of each fiscal year of Borrowers,  financial statements of TresCom
on a  consolidating  and  consolidated  basis  including,  but not  limited  to,
statements of income and  stockholders'  equity and cash flow from the beginning
of the current  fiscal year to the end of such fiscal year and the balance sheet
as at the end of such fiscal year, all prepared in accordance  with GAAP applied
on a basis  consistent  with  prior  practices,  and in  reasonable  detail  and
reported  upon  without   qualification  by  an  independent   certified  public
accounting   firm   selected   by  TresCom  and   satisfactory   to  Agent  (the
"Accountants").  The  report  of  the  Accountants  shall  be  accompanied  by a
statement  of the  Accountants  certifying  that (i) they have  caused  the Loan
Agreement to be reviewed,  (ii) in making the examination upon which such report
was based either no information came to their attention which to their knowledge
constituted  an Event of Default or a Default under this  Agreement or any Other
Document or, if such information  came to their  attention,  specifying any such
Default or Event of  Default,  its nature,  when it  occurred  and whether it is
continuing,  and such report shall contain or have appended thereto calculations
which set forth  Borrowers'  compliance  with the  requirements  or restrictions
imposed by Sections 6.5, 6.6 and 7.6 hereof.  In addition,  the reports shall be
accompanied by a certificate of the President and/or Chief Financial  Officer of
TresCom which shall state that, based on an examination sufficient to permit him
to make an informed  statement,  no Default or Event of Default  exists,  or, if
such is not the case,  specifying such Default or Event of Default,  its nature,
when it  occurred,  whether  it is  continuing  and the  steps  being  taken  by
Borrowers with respect to such event, and such  certificate  shall have appended
thereto calculations which set forth Borrowers' compliance with the requirements
or restrictions imposed by Sections 6.5, 6.6 and 7.6 hereof.

         9.8.  MONTHLY  FINANCIAL  STATEMENTS.  Furnish Agent within thirty (30)
days after the end of each  month,  an  unaudited  balance  sheet and  unaudited
statements  of income  and  stockholders'  equity  and cash flow of TresCom on a
consolidated and consolidating  basis reflecting  results of operations from the
beginning  of the  fiscal  year to the end of such  month  and for  such  month,
prepared on a basis consistent with prior practices


                                    -65-

<PAGE>

and complete and correct in all  material  respects,  subject to normal year end
adjustments.  The reports shall be  accompanied  by a  certificate  of the Chief
Financial  Officer and/or  President of TresCom which shall state that, based on
an  examination  sufficient  to permit  him to make an  informed  statement,  no
Default or Event of Default exists, or, if such is not the case, specifying such
Default  or Event of  Default,  its  nature,  when it  occurred,  whether  it is
continuing  and the steps being taken by  Borrowers  with respect to such event,
and such certificate  shall have appended thereto  calculations  which set forth
Borrowers'  compliance with the requirements or restrictions imposed by Sections
6.5, 6.6 and 7.6 hereof.

         9.9. QUARTERLY  FINANCIAL  STATEMENTS.  Furnish Agent within forty five
(45) days  after  the end of each of the first  three  fiscal  quarters  of each
fiscal  year,  an  unaudited  balance  sheet of  TresCom on a  consolidated  and
consolidating basis and unaudited  statements of income and stockholders' equity
and cash flow of TresCom on a consolidated  and  consolidating  basis reflecting
results of  operations  from the beginning of the fiscal year to the end of such
quarter  and for  such  quarter,  prepared  on a  basis  consistent  with  prior
practices and complete and correct in all material  respects,  subject to normal
year end  adjustments.  The reports shall be accompanied by a certificate of the
President  and/or Chief  Financial  Officer of TresCom,  which shall state that,
based on an examination  sufficient to permit him to make an informed statement,
no Default or Event of Default exists,  or, if such is not the case,  specifying
such Default or Event of Default,  its nature,  when it occurred,  whether it is
continuing  and the steps being taken by  Borrowers  with  respect to such event
and, such certificate shall have appended thereto  calculations  which set forth
Borrowers'  compliance with the requirements or restrictions imposed by Sections
6.5, 6.6 and 7.6 hereof.

         9.10.  OTHER  REPORTS.  Furnish Agent as soon as available,  but in any
event within ten (10) days after the issuance  thereof,  (i) with copies of such
financial  statements,  reports and returns as each  Borrower  shall send to its
stockholders and (ii) all notices sent in connection with the SBA Loan.

         9.11.  ADDITIONAL  INFORMATION.  Furnish  Agent  with  such  additional
information  as Agent  shall  reasonably  request  in order to  enable  Agent to
determine  whether  the terms,  covenants,  provisions  and  conditions  of this
Agreement and the Note have been complied with by Borrowers  including,  without
limitation and without the necessity of any request by Agent,  (a) copies of all
environmental  audits and reviews,  (b) at least thirty (30) days prior thereto,
notice of any  Borrower's  opening of any new office or place of business or any
Borrower's closing of any existing office or place of business, and (c) promptly
upon any Borrower's  learning thereof,  notice of any labor dispute to which any
Borrower  may become a party,  any  strikes or  walkouts  relating to any of its
plants or other facilities, and the expiration of any


                                    -66-

<PAGE>


labor  contract  to which any  Borrower  is a party or by which any  Borrower is
bound.

         9.12.  PROJECTED OPERATING BUDGET.  Furnish Agent, no later than thirty
(30) days prior to the beginning of each Borrower's fiscal years commencing with
fiscal year 1998, a month by month projected  operating  budget and cash flow of
Borrowers  on a  consolidated  basis for such fiscal year  (including  an income
statement  for each month and a balance sheet as at the end of the last month in
each fiscal quarter), such projections to be accompanied by a certificate signed
by the  President or Chief  Financial  Officer of  Borrowing  Agent on behalf of
Borrowers to the effect that such projections have been prepared on the basis of
sound  financial  planning  practice  and that  such  officer  has no  reason to
question  the   reasonableness  of  any  material   assumptions  on  which  such
projections were prepared.

         9.13. VARIANCES FROM OPERATING BUDGET. Furnish Agent, concurrently with
the  delivery of the  financial  statements  referred to in Section 9.7 and each
quarterly  report  referred to in Section 9.9, a written report  summarizing all
material  variances from budgets submitted by Borrowers pursuant to Section 9.12
and a discussion and analysis by management with respect to such variances.

         9.14. NOTICE OF SUITS, ADVERSE EVENTS. Furnish Agent with prompt notice
of (i) any lapse or other  termination  of any Consent issued to any Borrower by
any  Governmental  Body or any other Person that is material to the operation of
Borrowers'  business taken as a whole, (ii) any refusal by any Governmental Body
or any other Person to renew or extend any such  Consent  except for any Consent
which could not reasonably be expected to have a Material  Adverse  Effect;  and
(iii) copies of any periodic or special  reports  filed by any Borrower with any
Governmental Body or Person, if such reports indicate any material change in the
business, operations, affairs or condition of any Borrower, or if copies thereof
are  requested  by Lender,  and (iv)  copies of any  material  notices and other
communications  from any  Governmental  Body  which  specifically  relate to any
Borrower.

         9.15. ERISA NOTICES AND REQUESTS.  Furnish Agent with immediate written
notice in the event that (i) any Borrower or any member of the Controlled  Group
knows or has reason to know that a Termination Event has occurred, together with
a written  statement  describing such Termination  Event and the action, if any,
which such Borrower or member of the Controlled  Group has taken, is taking,  or
proposes to take with  respect  thereto  and,  when known,  any action  taken or
threatened  by the Internal  Revenue  Service,  Department of Labor or PBGC with
respect  thereto,  (ii) any Borrower or any member of the Controlled Group knows
or has reason to know that a prohibited  transaction (as defined in Sections 406
of ERISA and 4975 of the Code) has occurred  together  with a written  statement
describing such  transaction and the action which such Borrower or any member of
the Controlled Group has taken, is taking or proposes to take


                                    -67-
<PAGE>

with respect thereto, (iii) a funding waiver request has been filed with respect
to any Plan  together  with all  communications  received by any Borrower or any
member of the Controlled  Group with respect to such request,  (iv) any increase
in the benefits of any existing Plan or the establishment of any new Plan or the
commencement of contributions to any Plan to which any Borrower or any member of
the  Controlled  Group was not  previously  contributing  shall  occur,  (v) any
Borrower or any member of the  Controlled  Group shall  receive  from the PBGC a
notice  of  intention  to  terminate  a Plan or to have a trustee  appointed  to
administer a Plan,  together with copies of each such notice,  (vi) any Borrower
or any member of the Controlled Group shall receive any favorable or unfavorable
determination   letter  from  the  Internal   Revenue   Service   regarding  the
qualification  of a Plan under Section 401(a) of the Code,  together with copies
of each such letter;  (vii) any Borrower or any member of the  Controlled  Group
shall  receive  a notice  regarding  the  imposition  of  withdrawal  liability,
together  with copies of each such notice;  (viii) any Borrower or any member of
the  Controlled  Group  shall fail to make a required  installment  or any other
required  payment  under  Section  412 of the Code on or before the due date for
such  installment or payment;  (ix) any Borrower or any member of the Controlled
Group  knows  that  (a) a  Multiemployer  Plan  has  been  terminated,  (b)  the
administrator  or plan  sponsor of a  Multiemployer  Plan intends to terminate a
Multiemployer Plan, or (c) the PBGC has instituted or will institute proceedings
under Section 4042 of ERISA to terminate a Multiemployer Plan.

         9.16. FCC AND PRTRB NOTICES AND REQUESTS.  Furnish Agent with immediate
written  notice that (a) the FCC has  re-classified  any  Borrower as a dominant
inter-exchange  carrier,  (b) any Borrower  knows or has reason to know that the
FCC intends to exercise  its  statutory  power to closely  regulate the charges,
practices or classifications of "non-dominant"  carriers,  (c) the FCC or PRTRB,
as  applicable,  has  revoked or denied the  renewal of any  Licenses or (d) any
Borrower has failed to comply in any  material  respects  with the  reporting or
other requirements of the FCC or PRTRB.

         9.17.  SECURITIES  REPORTS.  Promptly  furnish  Agent and Lenders  with
copies of all regular, periodic and special reports which TresCom files with the
Securities and Exchange  Commission or any  governmental  authority which may be
substituted therefor, or any national securities exchange.

         9.18. OAN NOTICES.  Furnish Agent with immediate  written notice of (i)
the  occurrence  of a Reserve  Event  under and as defined  in the OAN  Services
Agreement,  (ii) the occurrence of a default thereunder or (iii) the termination
thereof.

         9.19.   ADDITIONAL  DOCUMENTS.   Execute  and  deliver  to  Agent, upon
request,  such  documents  and  agreements  as  Agent  may,  from  time to time,
reasonably  request  to carry  out the  purposes,  terms or  conditions  of this
Agreement.

                                    -68-

<PAGE>


X.       EVENTS OF DEFAULT.

         The  occurrence  of any  one or  more  of the  following  events  shall
constitute an "Event of Default":

         10.1.  failure by any Borrower to pay any  principal or interest on the
Obligations when due, whether at maturity or by reason of acceleration  pursuant
to the terms of this Agreement,  or by required prepayment or failure to pay any
other  liabilities or make any other payment,  fee or charge provided for herein
when due or in any Other Document;

         10.2.  any  representation  or  warranty  made  or  deemed  made by any
Borrower in this Agreement or any Other Document or in any certificate, document
or financial or other statement  furnished at any time in connection herewith or
therewith  shall prove to have been  misleading  in any material  respect on the
date when made or deemed to have been made;

         10.3.   failure  by  any  Borrower to (i) furnish financial information
when due or when  reasonably  requested,  or (ii) permit the  inspection  of its
books or records;

         10.4.  issuance of a notice of Lien,  levy,  assessment,  injunction or
attachment  against a material  portion of one or more  Borrowers'  property  in
excess of $400,000 which is not lifted,  satisfied,  stayed or discharged within
forty (40) days of the issuance of such notice, levy, assessment,  injunction or
attachment  and  which is being  contested  in good  faith  and  Borrowers  have
established reserves in an amount satisfactory to Agent;

         10.5.  except as  otherwise  provided  for in  Sections  10.1 and 10.3,
failure  or neglect  of any  Borrower  to  perform,  keep or  observe  any term,
provision,  condition,  covenant  herein  contained,  or  contained in any other
agreement or arrangement, now or hereafter entered into between any Borrower and
Agent or any Lender,  except for a failure or neglect of  Borrowers  to perform,
keep or  observe  any term,  provision,  condition  or  covenant,  contained  in
Sections  4.6,  4.7,  4.9,  4.11,  4.13  (solely with respect to any such taxes,
assessments or Charges not to exceed $25,000 in the  aggregate),  6.1, 6.3, 6.4,
9.4 or 9.6 hereof which is cured within thirty (30) days from the  occurrence of
such failure or neglect;

         10.6.  any judgment or judgments  are rendered or judgment  liens filed
against  one or more  Borrowers  for an  aggregate  amount in excess of $400,000
which  within  forty  (40)  days of  such  rendering  or  filing  is not  either
satisfied,  stayed or discharged of record and such  judgments or judgment liens
shall be contested in good faith and Borrowers  establish  reserves in an amount
satisfactory to Agent;

         10.7.   any  Borrower  shall  (i) apply  for, consent  to or suffer the
appointment of, or the taking of possession by, a


                                    -69-

<PAGE>

receiver,  custodian,  trustee,  liquidator or similar fiduciary of itself or of
all or a substantial  part of its property,  (ii) make a general  assignment for
the benefit of  creditors,  (iii)  commence a voluntary  case under any state or
federal  bankruptcy laws (as now or hereafter in effect),  (iv) be adjudicated a
bankrupt or  insolvent,  (v) file a petition  seeking to take  advantage  of any
other law  providing  for the relief of debtors,  (vi)  acquiesce to, or fail to
have  dismissed,  within sixty (60) days,  any petition  filed against it in any
involuntary  case under such  bankruptcy  laws, or (vii) take any action for the
purpose of effecting any of the foregoing;

         10.8.   any  Borrower  shall  admit  in  writing  its  inability, or be
generally unable, to pay its debts as they become due or cease operations of its
present business;

         10.9. any Affiliate (other than Warburg or a Warburg  Affiliate) or any
Subsidiary of any Borrower, or any Guarantor, shall (i) apply for, consent to or
suffer  the  appointment  of,  or the  taking  of  possession  by,  a  receiver,
custodian,  trustee,  liquidator  or similar  fiduciary of itself or of all or a
substantial  part of its property,  (ii) admit in writing its  inability,  or be
generally unable, to pay its debts as they become due or cease operations of its
present business,  (iii) make a general assignment for the benefit of creditors,
(iv) commence a voluntary  case under any state or federal  bankruptcy  laws (as
now or hereafter in effect),  (v) be  adjudicated a bankrupt or insolvent,  (vi)
file a petition  seeking to take  advantage of any other law  providing  for the
relief of debtors,  (vii) acquiesce to, or fail to have dismissed,  within sixty
(60) days,  any petition  filed  against it in any  involuntary  case under such
bankruptcy  laws,  or (viii) take any action for the purpose of effecting any of
the foregoing;

         10.10.  any change in any Borrower's condition or affairs (financial or
otherwise) which in Agent's reasonable opinion has a Material Adverse Effect;

         10.11.  any Lien created  hereunder or provided for hereby or under any
Other  Document for any reason ceases to be or is not a valid and perfected Lien
having a first priority interest or, in the case of Collateral  securing the SBA
Loan, a second priority interest therein;

         10.12.  a default of the  obligations  of any Borrower  under any other
agreement  to which it is a party in a  principal  amount in excess of  $100,000
shall occur which  default is not cured within any  applicable  grace period and
which default causes the acceleration of such obligations;

         10.13.  termination  or breach of any  Guaranty  or  similar  agreement
executed  and  delivered  to Agent in  connection  with the  Obligations  of any
Borrower, or if any Guarantor attempts to terminate, challenges the validity of,
or its liability under, any such Guaranty or similar agreement;


                                    -70-

<PAGE>

         10.14.  any Change of Ownership or Change of Control shall occur;

         10.15. (i) any Governmental Body shall (A) revoke,  terminate,  suspend
or adversely  modify any license,  permit,  patent trademark or tradename of any
Borrower,  the  continuation  of  which  is  material  to  the  continuation  of
Borrowers'  business taken as a whole , or (B) commence  proceedings to suspend,
revoke,  terminate  or adversely  modify any such  license,  permit,  trademark,
tradename or patent and such  proceedings  shall not be dismissed or  discharged
within  sixty (60) days,  or (c) schedule or conduct a hearing on the renewal of
any  license,  permit,   trademark,   tradename  or  patent  necessary  for  the
continuation  of  Borrowers'  businesses  taken as a whole and the staff of such
Governmental  Body issues a report  recommending  the  termination,  revocation,
suspension or material, adverse modification of such license, permit, trademark,
tradename or patent;  (ii) any  agreement  which is necessary or material to the
operation  of  Borrowers'  businesses  taken  as a whole  shall  be  revoked  or
terminated  and not replaced by a substitute  acceptable  to Agent within thirty
(30) days after the date of such revocation or termination,  and such revocation
or  termination  and non-  replacement  would  reasonably  be expected to have a
Material Adverse Effect;

         10.16.  any  portion  of the  Collateral  shall be seized or taken by a
Governmental  Body,  or any  Borrower or the title and rights of any Borrower or
any Original Owner which is the owner of any material  portion of the Collateral
shall have become the subject matter of litigation  which might,  in the opinion
of Agent, upon final determination, result in impairment or loss of the security
provided by this Agreement or the Other Documents;

         10.17.  the  operations of Borrowers'  businesses  taken as a whole are
interrupted at any time for any period of four (4) consecutive days, unless such
Borrower  shall (i) be  entitled  to receive  for such  period of  interruption,
proceeds of business  interruption  insurance  sufficient to assure that its per
diem cash needs  during  such  period is at least  equal to its average per diem
cash needs for the  consecutive  three month period  immediately  preceding  the
initial  date of  interruption  and (ii)  receive  such  proceeds  in the amount
described in clause (i) preceding not later than thirty (30) days  following the
initial date of any such interruption;  provided,  however, that notwithstanding
the  provisions  of clauses  (i) and (ii) of this  section,  an Event of Default
shall be  deemed  to have  occurred  if such  Borrower  shall be  receiving  the
proceeds  of  business  interruption  insurance  for  a  period  of  sixty  (60)
consecutive days; or

         10.18. an event or condition  specified in Sections 7.16 or 9.15 hereof
shall occur or exist with  respect to any Plan and, as a result of such event or
condition,  together with all other such events or  conditions,  any Borrower or
any member of the Controlled Group shall incur, or in the opinion of Agent be


                                    -71-

<PAGE>

reasonably  likely to incur,  a liability to a Plan or the PBGC (or both) which,
in the reasonable judgment of Agent, would have a Material Adverse Effect.


XI.      LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT.

         11.1.  RIGHTS AND REMEDIES.  (a) Upon the occurrence of (i) an Event of
Default  pursuant to Section 10.7 all  Obligations  shall be immediately due and
payable and this  Agreement and the obligation of Lenders to make Advances shall
be deemed  terminated;  and,  (ii) any of the other Events of Default and at any
time thereafter (such Event of Default not having previously been cured), at the
option of Required Lenders all Obligations  shall be immediately due and payable
and Lenders  shall have the right to terminate  this  Agreement and to terminate
the  obligation  of  Lenders to make  Advances  and (iii) a filing of a petition
against Borrower in any involuntary  case under any state or federal  bankruptcy
laws, the obligation of Lenders to make Advances  hereunder  shall be terminated
other than as may be required by an appropriate  order of the  bankruptcy  court
having  jurisdiction  over any  Borrower.  Upon the  occurrence  of any Event of
Default,  Agent  shall have the right to exercise  any and all other  rights and
remedies  provided for herein,  under the Uniform  Commercial Code and at law or
equity  generally,  including,  without  limitation,  the right to foreclose the
security  interests  granted  herein and to realize upon any  Collateral  by any
available judicial procedure and/or to take possession of and sell any or all of
the  Collateral  with or  without  judicial  process.  Agent  may  enter  any of
Borrower's premises without legal process and without incurring liability to any
Borrower therefor,  and Agent may thereupon,  or at any time thereafter,  in its
discretion without notice or demand,  take the Collateral and remove the same to
such place as Agent may deem  advisable and Agent may require  Borrowers to make
the Collateral  available to Agent at a convenient place. With or without having
the Collateral at the time or place of sale,  Agent may sell the Collateral,  or
any part thereof,  at public or private  sale,  at any time or place,  in one or
more  sales,  at such price or  prices,  and upon such  terms,  either for cash,
credit or future  delivery,  as Agent may  elect.  Except as to that part of the
Collateral  which is perishable or threatens to decline  speedily in value or is
of a type  customarily sold on a recognized  market,  Agent shall give Borrowers
reasonable  notification  of such sale or  sales,  it being  agreed  that in all
events  written  notice mailed to Borrowers at least five (5) days prior to such
sale or sales is reasonable notification. At any public sale Agent or any Lender
may bid for and  become  the  purchaser,  and  Agent,  any  Lender  or any other
purchaser at any such sale thereafter  shall hold the Collateral sold absolutely
free  from any  claim or right of  whatsoever  kind,  including  any  equity  of
redemption and such right and equity are hereby expressly waived and released by
each Borrower. In connection with the exercise of the foregoing remedies,  Agent
is granted  permission to use all of each Borrower's  trademarks,  trade styles,
trade names, patents, patent

                                    -72-

<PAGE>

applications,  licenses,  franchises and other proprietary rights which are used
in  connection  with the  exercise  by Agent of its rights  with  respect to the
Collateral.  The  proceeds  realized  from the  sale  and/or  collection  of any
Collateral shall be applied as follows: first, to the reasonable costs, expenses
and  attorneys'  fees and  expenses  incurred  by Agent for  collection  and for
acquisition,  completion, protection, removal, storage, sale and delivery of the
Collateral;  second,  to interest due upon any of the  Obligations  and any fees
payable under this Agreement;  and, third, to the principal of the  Obligations.
If any  deficiency  shall  arise,  Borrowers  shall  remain  liable to Agent and
Lenders therefor.

         (b)  Notwithstanding   anything  to  the  contrary  contained  in  this
Agreement and  subsection (a) of this Section 11, Agent will not take any action
pursuant to this Agreement which would constitute or result in any assignment of
a License  owned by any  Borrower  or any Change of Control of such  Borrower if
such  assignment  or Change of Control  would  require  under then  existing law
(including,  without  limitation,  the FCC Rules), the prior approval of the FCC
and PRTRB,  without  first  obtaining  such  approval  of the FCC and PRTRB,  as
applicable.

         11.2.  AGENT'S  DISCRETION.  Agent  shall  have  the  right in its sole
discretion to determine  which  rights,  Liens,  security  interests or remedies
Agent may at any time pursue, relinquish,  subordinate, or modify or to take any
other action with  respect  thereto and such  determination  will not in any way
modify or affect any of Agent's or Lenders' rights hereunder.

         11.3. SETOFF. In addition to any other rights which Agent or any Lender
may have  under  applicable  law,  upon the  occurrence  of an Event of  Default
hereunder,  Agent and such  Lender  shall  have a right to apply any  Borrower's
property held by Agent and such Lender to reduce the Obligations.

         11.4.  RIGHTS  AND  REMEDIES  NOT  EXCLUSIVE.  The  enumeration  of the
foregoing  rights and remedies is not intended to be exhaustive and the exercise
of any right or remedy  shall not  preclude  the  exercise of any other right or
remedies provided for herein or otherwise provided by law, all of which shall be
cumulative and not alternative.


XII.     WAIVERS AND JUDICIAL PROCEEDINGS.

         12.1.   WAIVER  OF  NOTICE.   Each  Borrower   hereby  waives   demand,
presentment, protest and notice thereof with respect to any and all instruments,
notice of acceptance hereof,  notice of loans or advances made, credit extended,
Collateral received or delivered,  or any other action taken in reliance hereon,
and all  other  demands  and  notices  of any  description,  except  such as are
expressly provided for herein.

                                    -73-

<PAGE>


         12.2.   DELAY.  No delay or omission on Agent's or any Lender's part in
exercising any right,  remedy or option shall operate as a waiver of such or any
other right, remedy or option or of any default.

         12.3. JURY WAIVER. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION (A)
ARISING  UNDER THIS  AGREEMENT  OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION  HEREWITH,  OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR  INCIDENTAL  TO THE DEALINGS OF THE PARTIES  HERETO OR ANY OF THEM
WITH RESPECT TO THIS  AGREEMENT OR ANY OTHER  INSTRUMENT,  DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER  ARISING,  AND WHETHER
SOUNDING IN CONTRACT OR TORT OR OTHERWISE  AND EACH PARTY HEREBY  CONSENTS  THAT
ANY SUCH  CLAIM,  DEMAND,  ACTION OR CAUSE OF ACTION  SHALL BE  DECIDED BY COURT
TRIAL WITHOUT A JURY,  AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN  EVIDENCE OF THE
CONSENTS OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.


XIII.    EFFECTIVE DATE AND TERMINATION.

         13.1.  TERM.  This  Agreement,  which shall inure to the benefit of and
shall be binding upon the respective  successors  and permitted  assigns of each
Borrower,  Agent and each Lender,  shall become effective on the date hereof and
shall  continue in full force and effect until July 29, 1998 (the "Term") unless
sooner terminated as herein provided;  PROVIDED,  HOWEVER, that the Term will be
automatically  extended to July 30, 2002 after all required regulatory approvals
are obtained and effective,  which approvals shall be in substance  satisfactory
to Agent.  Borrowers may terminate  this  Agreement at any time upon ninety (90)
days' prior written notice upon payment in full of the Obligations. In the event
that Borrowers elect to terminate this Agreement and the Obligations are prepaid
in full and the  commitment  of Agent and  Lenders to make  Advances to Borrower
shall  be  terminated  prior  to the  last  day of the  Term  (the  date of such
prepayment  hereinafter referred to as the "Early Termination Date"),  Borrowers
shall pay to Agent for the  benefit of Lenders  an early  termination  fee in an
amount equal to (x) one percent (1.0%) of the Maximum  Revolving  Advance Amount
if the  Early  Termination  Date  occurs  on or after  the  Closing  Date to and
including the date immediately  preceding the second  anniversary of the Closing
Date,  and (y) one half of one percent  (.5%) of the Maximum  Revolving  Advance
Amount if the Early  Termination Date occurs on or after the second  anniversary
of the Closing Date to and  including the date  immediately  preceding the third
anniversary of the Closing Date.

         13.2.   TERMINATION.  The termination of the Agreement shall not affect
any Borrower's, Agent's or any Lender's rights,


                                    -74-

<PAGE>

or any of the Obligations  having their inception prior to the effective date of
such termination, and the provisions hereof shall continue to be fully operative
until all transactions  entered into, rights or interests created or Obligations
have been fully disposed of,  concluded or liquidated.  The security  interests,
Liens and  rights  granted  to Agent and  Lenders  hereunder  and the  financing
statements   filed   hereunder   shall   continue  in  full  force  and  effect,
notwithstanding  the  termination of this Agreement or the fact that  Borrowers'
Account may from time to time be temporarily in a zero or credit position, until
all of the  Obligations  of each  Borrower  have been paid or  performed in full
after the termination of this Agreement or each Borrower has furnished Agent and
Lenders with an  indemnification  satisfactory to Agent and Lenders with respect
thereto.  Accordingly,  each Borrower  waives any rights which it may have under
Section  9-404(1)  of the  Uniform  Commercial  Code to  demand  the  filing  of
termination  statements with respect to the  Collateral,  and Agent shall not be
required to send such termination  statements to each Borrower,  or to file them
with any  filing  office,  unless  and  until  this  Agreement  shall  have been
terminated  in  accordance  with its terms and all  Obligations  paid in full in
immediately available funds. All representations, warranties, covenants, waivers
and  agreements  contained  herein shall  survive  termination  hereof until all
Obligations are paid or performed in full.


XIV.     REGARDING AGENT.

         14.1.  APPOINTMENT.  Each Lender hereby  designates PNC to act as Agent
for such Lender under this Agreement and the Other Documents. Each Lender hereby
irrevocably  authorizes  Agent to take  such  action  on its  behalf  under  the
provisions of this Agreement and the Other Documents and to exercise such powers
and to  perform  such  duties  hereunder  and  thereunder  as  are  specifically
delegated to or required of Agent by the terms hereof and thereof and such other
powers as are reasonably incidental thereto and Agent shall hold all Collateral,
payments of principal and interest,  fees (except the fees set forth in Sections
3.3(a)  and  3.4),  charges  and  collections  (without  giving  effect  to  any
collection days) received pursuant to this Agreement, for the ratable benefit of
Lenders.  Agent may perform any of its duties hereunder by or through its agents
or  employees.  As to any matters not expressly  provided for by this  Agreement
(including  without  limitation,  collection  of the  Note)  Agent  shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain  from  acting  (and shall be fully  protected  in so acting or
refraining from acting) upon the instructions of the Required Lenders,  and such
instructions  shall be  binding;  PROVIDED,  HOWEVER,  that  Agent  shall not be
required  to take  any  action  which  exposes  Agent to  liability  or which is
contrary to this Agreement or the Other Documents or applicable law unless Agent
is  furnished  with an  indemnification  reasonably  satisfactory  to Agent with
respect thereto.

                                    -75-
<PAGE>

         14.2. NATURE OF DUTIES.  Agent shall have no duties or responsibilities
except those  expressly  set forth in this  Agreement  and the Other  Documents.
Neither Agent nor any of its officers,  directors,  employees or agents shall be
(i)  liable for any action  taken or  omitted  by them as such  hereunder  or in
connection  herewith,  unless  caused by their  gross (not mere)  negligence  or
willful  misconduct,  or  (ii)  responsible  in any  manner  for  any  recitals,
statements,  representations  or warranties  made by any Borrower or any officer
thereof contained in this Agreement,  or in any of the Other Documents or in any
certificate, report, statement or other document referred to or provided for in,
or received by Agent under or in connection  with,  this Agreement or any of the
Other  Documents  or  for  the  value,  validity,  effectiveness,   genuineness,
enforceability  or sufficiency of this Agreement,  or any of the Other Documents
or for any failure of any Borrower to perform its obligations  hereunder.  Agent
shall not be under any obligation to any Lender to ascertain or to inquire as to
the  observance  or  performance  of any  of the  agreements  contained  in,  or
conditions of, this Agreement or any of the Other  Documents,  or to inspect the
properties,  books or records of any  Borrower.  The duties of Agent as respects
the Advances to Borrowers  shall be  mechanical  and  administrative  in nature;
Agent shall not have by reason of this  Agreement a  fiduciary  relationship  in
respect of any Lender; and nothing in this Agreement,  expressed or implied,  is
intended to or shall be so construed as to impose upon Agent any  obligations in
respect of this Agreement except as expressly set forth herein.

         14.3.  LACK OF RELIANCE  ON AGENT AND  RESIGNATION.  Independently  and
without reliance upon Agent or any other Lender,  each Lender has made and shall
continue  to  make  (i)  its  own  independent  investigation  of the  financial
condition  and affairs of each  Borrower in  connection  with the making and the
continuance of the Advances hereunder and the taking or not taking of any action
in connection  herewith,  and (ii) its own appraisal of the  creditworthiness of
each Borrower.  Agent shall have no duty or responsibility,  either initially or
on a  continuing  basis,  to  provide  any  Lender  with  any  credit  or  other
information  with respect  thereto,  whether coming into its  possession  before
making of the  Advances  or at any time or times  thereafter  except as shall be
provided  by any  Borrower  pursuant  to the terms  hereof.  Agent  shall not be
responsible   to  any  Lender  for  any   recitals,   statements,   information,
representations or warranties herein or in any agreement,  document, certificate
or a statement delivered in connection with or for the execution, effectiveness,
genuineness,  validity,  enforceability,  collectibility  or sufficiency of this
Agreement or any Other Document,  or of the financial condition of any Borrower,
or be  required  to make  any  inquiry  concerning  either  the  performance  or
observance of any of the terms, provisions or conditions of this Agreement,  the
Note,  the Other  Documents or the financial  condition of any Borrower,  or the
existence of any Event of Default or any Default.

                                    -76-
<PAGE>

         Agent may resign on sixty (60) days' written  notice to each of Lenders
and  Borrowing  Agent and upon  such  resignation,  the  Required  Lenders  will
promptly designate a successor Agent reasonably satisfactory to Borrowers.

         Any such successor Agent shall succeed to the rights, powers and duties
of Agent,  and the term "Agent" shall mean such successor  agent  effective upon
its appointment, and the former Agent's rights, powers and duties as Agent shall
be  terminated,  without  any other or  further  act or deed on the part of such
former Agent.  After any Agent's  resignation  as Agent,  the provisions of this
Article XIV shall inure to its benefit as to any actions  taken or omitted to be
taken by it while it was Agent under this Agreement.

         14.4. CERTAIN RIGHTS OF AGENT. If Agent shall request instructions from
Lenders  with  respect  to any  act or  action  (including  failure  to  act) in
connection with this Agreement or any Other Document, Agent shall be entitled to
refrain  from such act or taking such  action  unless and until Agent shall have
received  instructions  from the  Required  Lenders;  and Agent  shall not incur
liability  to any  Person by  reason  of so  refraining.  Without  limiting  the
foregoing,  Lenders shall not have any right of action whatsoever  against Agent
as a result of its acting or refraining from acting hereunder in accordance with
the instructions of the Required Lenders.

         14.5.  RELIANCE.  Agent shall be  entitled to rely,  and shall be fully
protected in relying,  upon any note, writing,  resolution,  notice,  statement,
certificate,  telex, teletype or telecopier message,  cablegram,  order or other
document or  telephone  message  believed by it to be genuine and correct and to
have been signed, sent or made by the proper person or entity, and, with respect
to all legal matters  pertaining to this  Agreement and the Other  Documents and
its duties  hereunder,  upon advice of counsel  selected by it. Agent may employ
agents  and  attorneys-in-fact  and  shall  not be  liable  for the  default  or
misconduct  of any such  agents  or  attorneys-in-fact  selected  by Agent  with
reasonable care.

         14.6. NOTICE OF DEFAULT. Agent shall not be deemed to have knowledge or
notice of the  occurrence of any Default or Event of Default  hereunder or under
the  Other  Documents,  unless  Agent  has  received  notice  from a Lender or a
Borrower  referring to this Agreement or the Other  Documents,  describing  such
Default  or Event of  Default  and  stating  that such  notice  is a "notice  of
default".  In the event  that Agent  receives  such a notice,  Agent  shall give
notice  thereof to Lenders.  Agent  shall take such action with  respect to such
Default or Event of  Default as shall be  reasonably  directed  by the  Required
Lenders;  PROVIDED,  THAT,  unless  and until  Agent  shall have  received  such
directions,  Agent may (but  shall not be  obligated  to) take such  action,  or
refrain  from  taking  such  action,  with  respect to such  Default or Event of
Default as it shall deem advisable in the best interests of Lenders.

                                    -77-
<PAGE>

         14.7.  INDEMNIFICATION.  To the  extent  Agent  is not  reimbursed  and
indemnified  by Borrowers,  each Lender will  reimburse  and indemnify  Agent in
proportion  to its  respective  portion of the Advances  (or, if no Advances are
outstanding,  according to its Commitment Percentage),  from and against any and
all liabilities,  obligations,  losses, damages, penalties,  actions, judgments,
suits,  costs,  expenses or disbursements of any kind or nature whatsoever which
may be imposed on,  incurred  by or asserted  against  Agent in  performing  its
duties hereunder,  or in any way relating to or arising out of this Agreement or
any Other Document;  PROVIDED THAT,  Lenders shall not be liable for any portion
of  such  liabilities,   obligations,   losses,  damages,  penalties,   actions,
judgments,  suits, costs, expenses or disbursements resulting from Agent's gross
(not mere) negligence or willful misconduct.

         14.8. AGENT IN ITS INDIVIDUAL CAPACITY.  With respect to the obligation
of Agent to lend under this  Agreement,  the Advances  made by it shall have the
same  rights  and  powers  hereunder  as any other  Lender and as if it were not
performing the duties as Agent  specified  herein;  and the term "Lender" or any
similar term shall,  unless the context  clearly  otherwise  indicates,  include
Agent in its individual capacity as a Lender.  Agent may engage in business with
any Borrower as if it were not performing the duties specified  herein,  and may
accept fees and other consideration from any Borrower for services in connection
with this  Agreement  or  otherwise  without  having to account  for the same to
Lenders.

         14.9.  DELIVERY OF DOCUMENTS.  To the extent Agent  receives  financial
statements required under Sections 9.7 and 9.9 from any Borrower pursuant to the
terms  of this  Agreement,  Agent  will  promptly  furnish  such  documents  and
information to Lenders.

         14.10.  BORROWERS'  UNDERTAKING  TO AGENT.  Without  prejudice to their
respective  obligations to Lenders under the other provisions of this Agreement,
each Borrower hereby  undertakes with Agent to pay to Agent from time to time on
demand all  amounts  from time to time due and  payable by it for the account of
Agent or Lenders or any of them  pursuant  to this  Agreement  to the extent not
already  paid.  Any payment  made  pursuant  to any such demand  shall PRO TANTO
satisfy the relevant Borrower's  obligations to make payments for the account of
Lenders or the relevant one or more of them pursuant to this Agreement.


XV.      BORROWING AGENCY.

         15.1.   BORROWING AGENCY PROVISIONS.

                 (a) Each Borrower hereby irrevocably designates Borrowing Agent
to be its  attorney and agent and in such  capacity to borrow,  sign and endorse
notes, and execute and deliver all instruments,  documents, writings and further
assurances now or hereafter required hereunder, on behalf of such Borrower or

                                    -78-
<PAGE>

Borrowers,  and hereby  authorizes Agent to pay over or credit all loan proceeds
hereunder in accordance with the request of Borrowing Agent.

                 (b) The  handling  of this credit  facility as a co-  borrowing
facility  with a borrowing  agent in the manner set forth in this  Agreement  is
solely as an accommodation to Borrowers and at their request.  Neither Agent nor
any Lender shall incur  liability to  Borrowers as a result  thereof.  To induce
Agent and Lenders to do so and in  consideration  thereof,  each Borrower hereby
indemnifies  Agent and each Lender and holds Agent and each Lender harmless from
and against any and all  liabilities,  expenses,  losses,  damages and claims of
damage or injury asserted against Agent or any Lender by any Person arising from
or incurred by reason of the handling of the financing arrangements of Borrowers
as  provided  herein,  reliance  by  Agent  or  any  Lender  on any  request  or
instruction  from  Borrowing  Agent or any  other  action  taken by Agent or any
Lender with  respect to this Section  15.1 except due to willful  misconduct  or
gross (not mere) negligence by the indemnified party.

                 (c) All  Obligations  shall  be  joint  and  several,  and each
Borrower shall make payment upon the maturity of the Obligations by acceleration
or  otherwise,  and such  obligation  and liability on the part of each Borrower
shall in no way be affected by any extensions,  renewals and forbearance granted
to Agent or any Lender to any  Borrower,  failure of Agent or any Lender to give
any Borrower  notice of borrowing or any other  notice,  any failure of Agent or
any Lender to pursue or preserve its rights against any Borrower, the release by
Agent or any  Lender  of any  Collateral  now or  thereafter  acquired  from any
Borrower,  and such  agreement  by each  Borrower to pay upon any notice  issued
pursuant thereto is  unconditional  and unaffected by prior recourse by Agent or
any  Lender  to the  other  Borrowers  or any  Collateral  for  such  Borrower's
Obligations or the lack thereof.

         15.2. WAIVER OF SUBROGATION. Each Borrower expressly waives any and all
rights of subrogation,  reimbursement,  indemnity, exoneration,  contribution of
any other claim which such Borrower may now or hereafter  have against the other
Borrowers or other Person  directly or  contingently  liable for the Obligations
hereunder,  or  against  or  with  respect  to  the  other  Borrowers'  property
(including,  without  limitation,  any  property  which  is  Collateral  for the
Obligations), arising from the existence or performance of this Agreement, until
termination of this Agreement and repayment in full of the Obligations.


XVI.     MISCELLANEOUS.

         16.1.   GOVERNING  LAW.   This  Agreement  shall  be  governed  by  and
construed  in  accordance  with the laws of the  State  of New York  applied  to
contracts  to be  performed  wholly  within the State of New York.  Any judicial
proceeding brought by or against any

                                    -79-
<PAGE>

Borrower  with respect to any of the  Obligations,  this  Agreement or any Other
Document may be brought in any court of competent  jurisdiction  in the State of
New York,  United  States of America,  and, by  execution  and  delivery of this
Agreement,  each  Borrower  accepts  for  itself  and  in  connection  with  its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid  courts,  and irrevocably  agrees to be bound by any judgment rendered
thereby in connection with this Agreement.  Each Borrower hereby waives personal
service of any and all process  upon it and  consents  that all such  service of
process may be made by registered  mail (return receipt  requested)  directed to
Borrowing  Agent at its  address  set forth in Section  16.6 and service so made
shall be  deemed  completed  five (5) days  after  the same  shall  have been so
deposited  in the mails of the  United  States of  America,  or, at the  Agent's
and/or any Lender's option,  by service upon Borrowing Agent which each Borrower
irrevocably  appoints  as such  Borrower's  Agent for the  purpose of  accepting
service  within the State of New York.  Nothing herein shall affect the right to
serve  process in any manner  permitted by law or shall limit the right of Agent
or any Lender to bring  proceedings  against  any  Borrower in the courts of any
other jurisdiction. Each Borrower waives any objection to jurisdiction and venue
of any action  instituted  hereunder  and shall not assert any defense  based on
lack of jurisdiction  or venue or based upon FORUM NON CONVENIENS.  Any judicial
proceeding by any Borrower  against Agent or any Lender  involving,  directly or
indirectly,  any  matter  or  claim in any way  arising  out of,  related  to or
connected with this Agreement or any Other Document,  shall be brought only in a
federal or state court located in the County of New York, State of New York.

         16.2.  ENTIRE  UNDERSTANDING.  (a)  This  Agreement  and the  documents
executed  concurrently  herewith contain the entire  understanding  between each
Borrower,  Agent  and each  Lender  and  supersedes  all  prior  agreements  and
understandings,  if any,  relating to the subject matter  hereof.  Any promises,
representations,  warranties or guarantees not herein  contained and hereinafter
made  shall  have  no  force  and  effect  unless  in  writing,  signed  by each
Borrower's,   Agent's  and  each  Lender's  respective  officers.  Neither  this
Agreement  nor any  portion  or  provisions  hereof  may be  changed,  modified,
amended, waived, supplemented,  discharged, cancelled or terminated orally or by
any course of dealing,  or in any manner  other than by an agreement in writing,
signed by the party to be charged.  Each Borrower  acknowledges that it has been
advised by counsel in connection  with the execution of this Agreement and Other
Documents   and  is  not  relying  upon  oral   representations   or  statements
inconsistent with the terms and provisions of this Agreement.

                 (b) The Required Lenders,  Agent with the consent in writing of
the Required  Lenders,  and  Borrowers  may,  subject to the  provisions of this
Section 16.2 (b), from time to time enter into written  supplemental  agreements
to this Agreement or the Other Documents executed by Borrowers,  for the purpose
of adding
                                    -80-

<PAGE>

or deleting  any  provisions  or otherwise  changing,  varying or waiving in any
manner the rights of Lenders,  Agent or Borrowers  thereunder or the conditions,
provisions or terms thereof or waiving any Event of Default thereunder, but only
to the extent specified in such written agreements;  PROVIDED,  HOWEVER, that no
such supplemental agreement shall, without the consent of all Lenders:

                       (i)    increase the Commitment Percentage of any Lender.

                       (ii)   extend the maturity of any  Note  or  the due date
for any amount payable hereunder, or decrease the rate of interest or reduce any
fee payable by Borrowers to Lenders pursuant to this Agreement.

                     (iii)  alter the definition of the term Required Lenders or
alter, amend or modify this Section 16.2(b).

                       (iv)   release any Collateral  during  any  calendar year
(other than in  accordance  with the  provisions  of this  Agreement)  having an
aggregate value in excess of $250,000.

                       (v)    change the rights and duties of Agent.

                       (vi)   permit any Revolving Advance to be made  if  after
giving effect thereto the total of Advances  outstanding  hereunder would exceed
the Formula Amount for more than sixty (60) consecutive  Business Days or exceed
one hundred and ten percent (110%) of the Formula Amount.

                       (vii)  increase the Advance Rates above the Advance Rates
in effect on the Closing Date.

                      (viii) increase the Maximum Revolving Advance Amount.

Any such supplemental  agreement shall apply equally to each Lender and shall be
binding  upon  Borrowers,  Lenders  and  Agent  and all  future  holders  of the
Obligations.  In the case of any waiver,  Borrowers,  Agent and Lenders shall be
restored to their former  positions and rights,  and any Event of Default waived
shall be  deemed  to be cured and not  continuing,  but no waiver of a  specific
Event of Default shall extend to any subsequent Event of Default (whether or not
the  subsequent  Event of Default is the same as the Event of Default  which was
waived), or impair any right consequent thereon.

         In the event that Agent  requests  the consent of a Lender  pursuant to
this Section 16.2 and such Lender shall not respond or reply to Agent in writing
within five (5) days of delivery of such request, such Lender shall be deemed to
have  consented to the matter that was the subject of the request.  In the event
that Agent  requests  the consent of a Lender  pursuant to this Section 16.2 and
such consent is denied, then PNC may, at its

                                    -81-
<PAGE>

option,  require such Lender to assign its interest in the Advances to PNC or to
another Lender or to any other Person  designated by the Agent (the  "Designated
Lender"),  for a price equal to the then  outstanding  principal  amount thereof
plus accrued and unpaid  interest and fees due such Lender,  which  interest and
fees shall be paid when collected  from  Borrower.  In the event Agent elects to
require any Lender to assign its interest to Agent or to the Designated  Lender,
PNC will so notify such Lender in writing  within forty five (45) days following
such Lender's  denial,  and such Lender will assign its interest to Agent or the
Designated  Lender no later than five (5) days following  receipt of such notice
pursuant to a Commitment Transfer  Supplement executed by such Lender,  Agent or
the Designated Lender, as appropriate.

         16.3.   SUCCESSORS AND ASSIGNS; PARTICIPATIONS; NEW LENDERS.

                 (a) This  Agreement  shall  be  binding  upon and  inure to the
benefit of Borrowers,  Agent, each Lender, all future holders of the Obligations
and their respective successors and assigns,  except that no Borrower may assign
or transfer any of its rights or obligations  under this  Agreement  without the
prior written consent of Agent and each Lender.

                 (b) Each Borrower  acknowledges  that in the regular  course of
commercial banking business one or more Lenders may at any time and from time to
time  sell   participating   interests  in  the  Advances  to  other   financial
institutions (each such transferee or purchaser of a participating  interest,  a
"Transferee").  Each  Transferee  may exercise all rights of payment  (including
without  limitation  rights of  set-off)  with  respect  to the  portion of such
Advances held by it or other  Obligations  payable hereunder as fully as if such
Transferee  were the direct holder thereof  provided that Borrowers shall not be
required to pay to any Transferee  more than the amount which it would have been
required to pay to Lender  which  granted an  interest in its  Advances or other
Obligations  payable  hereunder to such Transferee had such Lender retained such
interest in the Advances hereunder or other Obligations payable hereunder and in
no event shall  Borrowers  be required to pay any such amount  arising  from the
same  circumstances  and with respect to the same Advances or other  Obligations
payable hereunder to both such Lender and such Transferee.  Each Borrower hereby
grants to any Transferee a continuing security interest in any deposits,  moneys
or other property actually or constructively held by such Transferee as security
for the Transferee's interest in the Advances.

                 (c) Any Lender may with the consent of Agent which shall not be
unreasonably withheld or delayed sell, assign or transfer all or any part of its
rights under this  Agreement and the Other  Documents to one or more  additional
banks or financial  institutions  and one or more additional  banks or financial
institutions may commit to make Advances hereunder (each a

                                    -82-
<PAGE>

"Purchasing  Lender"),  in  minimum  amounts  of not less  than  $5,000,000  and
increments  of  $1,000,000   thereafter,   pursuant  to  a  Commitment  Transfer
Supplement,  executed by a Purchasing  Lender,  the transferor Lender, and Agent
and delivered to Agent for recording. Upon such execution,  delivery, acceptance
and recording, from and after the transfer effective date determined pursuant to
such Commitment Transfer Supplement, (i) Purchasing Lender thereunder shall be a
party hereto and, to the extent provided in such Commitment Transfer Supplement,
have the  rights  and  obligations  of a  Lender  thereunder  with a  Commitment
Percentage  as set forth  therein,  and (ii) the  transferor  Lender  thereunder
shall,  to the  extent  provided  in such  Commitment  Transfer  Supplement,  be
released from its  obligations  under this  Agreement,  the Commitment  Transfer
Supplement  creating a  novation  for that  purpose.  Such  Commitment  Transfer
Supplement  shall be deemed to amend this  Agreement to the extent,  and only to
the extent,  necessary to reflect the addition of such Purchasing Lender and the
resulting adjustment of the Commitment  Percentages arising from the purchase by
such Purchasing Lender of all or a portion of the rights and obligations of such
transferor Lender under this Agreement and the Other Documents. Borrowers hereby
consent to the addition of such Purchasing  Lender and the resulting  adjustment
of the  Commitment  Percentages  arising  from the  purchase by such  Purchasing
Lender of all or a portion  of the  rights and  obligations  of such  transferor
Lender under this Agreement and the Other Documents. Borrowers shall execute and
deliver such further  documents  and do such further acts and things in order to
effectuate the foregoing.

                 (d)  Agent  shall  maintain  at  its  address  a copy  of  each
Commitment Transfer  Supplement  delivered to it and a register (the "Register")
for the  recordation  of the names and  addresses of the Advances  owing to each
Lender from time to time. The entries in the Register  shall be  conclusive,  in
the absence of manifest error,  and Borrowers,  Agent and Lenders may treat each
Person  whose  name is  recorded  in the  Register  as the owner of the  Advance
recorded  therein for the  purposes of this  Agreement.  The  Register  shall be
available for inspection by Borrowers or any Lender at any  reasonable  time and
from time to time upon reasonable prior notice. Agent shall receive a fee in the
amount of $2,500 payable by the applicable  Purchasing Lender upon the effective
date of each transfer or assignment to such Purchasing Lender.

                 (e)  Borrowers   authorize  each  Lender  to  disclose  to  any
Transferee or  Purchasing  Lender and any  prospective  Transferee or Purchasing
Lender any and all financial  information in such Lender's possession concerning
Borrowers  which has been  delivered to such Lender by or on behalf of Borrowers
pursuant to this Agreement or in connection with such Lender's credit evaluation
of Borrowers.

         16.4.   APPLICATION OF PAYMENTS.  Agent shall  have  the continuing and
exclusive  right to apply or reverse  and  re-apply  any payment and any and all
proceeds of Collateral to any portion

                                    -83-
<PAGE>

of the Obligations.  To the extent that any Borrower makes a payment or Agent or
any Lender receives any payment or proceeds of the Collateral for any Borrower's
benefit,  which are  subsequently  invalidated,  declared  to be  fraudulent  or
preferential,  set  aside or  required  to be  repaid  to a  trustee,  debtor in
possession,  receiver,  custodian or any other party under any  bankruptcy  law,
common law or equitable  cause,  then, to such extent,  the  Obligations or part
thereof  intended  to be  satisfied  shall be revived  and  continue  as if such
payment or proceeds had not been received by Agent or such Lender.

         16.5.  INDEMNITY.  Each Borrower shall indemnify Agent, each Lender and
each of their respective officers, directors,  Affiliates,  employees and agents
from  and  against  any  and  all  liabilities,  obligations,  losses,  damages,
penalties,  actions,  judgments, suits, costs, expenses and disbursements of any
kind or nature whatsoever  (including,  without limitation,  reasonable fees and
disbursements  of  counsel)  which may be imposed on,  incurred  by, or asserted
against  Agent or any  Lender in any  litigation,  proceeding  or  investigation
instituted or conducted by any  governmental  agency or  instrumentality  or any
other Person with respect to any aspect of, or any transaction  contemplated by,
or  referred  to in, or any  matter  related  to,  this  Agreement  or the Other
Documents,  whether or not Agent or any Lender is a party thereto, except to the
extent that any of the foregoing  arises out of the willful  misconduct or gross
(not mere) negligence of the party being indemnified.

         16.6.  NOTICE.  Any  notice or  request  hereunder  may be given to any
Borrower or to Agent or any Lender at their respective addresses set forth below
or at such other address as may hereafter be specified in a notice designated as
a notice of  change  of  address  under  this  Section.  Any  notice or  request
hereunder  shall be  given by (a) hand  delivery,  (b)  overnight  courier,  (c)
registered or certified mail, return receipt  requested,  (d) telex or telegram,
subsequently  confirmed by registered or certified  mail, or (e) telecopy to the
number set out below (or such other  number as may  hereafter  be specified in a
notice designated as a notice of change of address) with electronic confirmation
of its receipt. Any notice or other communication required or permitted pursuant
to this  Agreement  shall be deemed given (a) when  personally  delivered to any
officer  of the  party to whom it is  addressed,  (b) on the  earlier  of actual
receipt  thereof or three (3) days  following  posting  thereof by  certified or
registered mail,  postage prepaid,  or (c) upon actual receipt thereof when sent
by a recognized  overnight  delivery  service or (d) upon actual receipt thereof
when  sent  by  telecopier  to  the  number  set  forth  below  with  electronic
confirmation of its receipt, in each case addressed to each party at its address
set forth below or at such other  address as has been  furnished in writing by a
party to the other by like notice:

         (A)  If to Agent or            PNC Bank, National Association
                 PNC at:                Two Tower Center Boulevard
                                        East Brunswick, New Jersey 08816


                                    -84-
<PAGE>

                                        Attention:  Ryan Peak
                                        Telephone:  (732) 220-4315
                                        Telecopier: (732) 220-4393

                 with a copy to:        Hahn & Hessen LLP
                                        350 Fifth Avenue
                                        New York, New York 10118-0075
                                        Attention:  Steven J. Seif, Esq.
                                        Telephone:  (212) 736-1000
                                        Telecopier: (212) 594-7167

         (B)     If  to  a  Lender  other  than  Agent,  as  specified  on   the
signature pages hereof

         (C)  If to Borrowing Agent
              or any Borrower, at:      TresCom International, Inc.
                                        200 East Broward Blvd.
                                        Ft. Lauderdale, Florida 33301
                                        Attention:  William Paquin
                                        Telephone:  (954) 763-4000
                                        Telecopier: (954) 627-6472

                 with a copy to:        Kelley Drye & Warren LLP
                                        201 S. Biscayne Boulevard
                                        2400 Miami Center
                                        Miami, Florida 33131
                                        Attention:  John Immer, Esq.
                                        Telephone:  (305) 372-2415
                                        Telecopier: (305) 372-2490

         16.7.   SURVIVAL.  The obligations of Borrowers under  Sections 2.2(f),
3.7,  3.8,  3.9,  4.19(g),  14.7  and 16.5  shall  survive  termination  of this
Agreement and the Other Documents and payment in full of the Obligations.

         16.8.  SEVERABILITY.  If any part of this  Agreement  is  contrary  to,
prohibited  by, or deemed invalid under  applicable  laws or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited or invalid, but the remainder hereof shall not be invalidated thereby
and shall be given effect so far as possible.

         16.9.  EXPENSES.   All  reasonable  costs  and  out-of-pocket  expenses
including,  without  limitation,  reasonable  attorneys' fees and  disbursements
incurred  by Agent,  Agent on behalf of Lenders  and  Lenders (a) in all efforts
made  to  enforce  payment  of  any  Obligation  or  effect  collection  of  any
Collateral,   or  (b)  in  connection  with  the  entering  into,  modification,
amendment,  administration  and enforcement of this Agreement or any consents or
waivers hereunder and all Other Documents,  or (c) in instituting,  maintaining,
preserving, enforcing and foreclosing on Agent's security interest in or Lien on
any of the Collateral, whether through judicial proceedings or otherwise, or (d)
in  defending  or  prosecuting  any  actions or  proceedings  arising  out of or
relating to Agent's or any Lender's transactions with any

                                    -85-
<PAGE>

Borrower, or (e) in connection with any advice given to Agent or any Lender with
respect  to its  rights  and  obligations  under  this  Agreement  and all Other
Documents,  may be  charged  to  Borrowers'  Account  and  shall  be part of the
Obligations.

         16.10.  INJUNCTIVE RELIEF.  Each Borrower recognizes that, in the event
any Borrower  fails to perform,  observe or discharge any of its  obligations or
liabilities  under this Agreement,  any remedy at law may prove to be inadequate
relief to Lenders;  therefore, Agent, if Agent so requests, shall be entitled to
temporary and permanent injunctive relief in any such case without the necessity
of proving that actual damages are not an adequate remedy.

         16.11.  CONSEQUENTIAL DAMAGES.  Neither  Agent  nor any Lender, nor any
agent  or  attorney  for any of  them,  shall  be  liable  to any  Borrower  for
consequential  damages arising from any breach of contract,  tort or other wrong
relating to the establishment, administration or collection of the Obligations.

         16.12.  CAPTIONS.  The captions at various places in this
Agreement are intended for convenience only and do not constitute
and shall not be interpreted as part of this Agreement.

         16.13.  COUNTERPARTS;  TELECOPIED  SIGNATURES.  This  Agreement  may be
executed  in  any  number  of  and  by  different  parties  hereto  on  separate
counterparts,  all of which, when so executed,  shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be deemed to be an original
signature hereto.

         16.14.  CONSTRUCTION.  The parties  acknowledge that each party and its
counsel have reviewed this Agreement and that the normal rule of construction to
the effect that any  ambiguities  are to be resolved  against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments,
schedules or exhibits thereto.

         16.15.  CONFIDENTIALITY; SHARING INFORMATION.

         (a) Agent,  each Lender and each  Transferee  shall hold all non-public
information  obtained by Agent,  such Lender or such Transferee  pursuant to the
requirements  of this  Agreement in accordance  with Agent's,  such Lender's and
such Transferee's  customary  procedures for handling non-public  information of
this nature;  PROVIDED,  HOWEVER,  Agent,  each Lender and each  Transferee  may
disclose such non-public  information in accordance with Agent's,  such Lender's
and such Transferee's  customary procedures for handling non-public  information
of this nature, (i) to its examiners,  affiliates, outside auditors, counsel and
other  professional  advisors,  (ii) to Agent,  any Lender or to any prospective
Transferees and Purchasing Lenders who have executed a confidentiality agreement
reasonably  acceptable  to Borrowers  and Agent or who are parties  hereto,  and
(iii) as required or

                                    -86-
<PAGE>

requested  by any  Governmental  Body or  representative  thereof or pursuant to
legal  process;  PROVIDED,  FURTHER that (x) unless  specifically  prohibited by
applicable law or court order,  Agent, each Lender and each Transferee shall use
its best efforts prior to disclosure  thereof,  to notify Borrowing Agent of the
applicable  request  for  disclosure  of such  non-public  information  (A) by a
Governmental  Body or  representative  thereof  (other than any such  request in
connection  with an  examination  of the  financial  condition  of a Lender or a
Transferee by such  Governmental  Body) or (B) pursuant to legal process and (y)
in no event shall Agent, any Lender or any Transferee be obligated to return any
materials  furnished by any Borrower other than those  documents and instruments
in  possession  of Agent or any  Lender  in  order  to  perfect  its Lien on the
Collateral once (A) all Indebtedness  hereunder  including,  without limitation,
all outstanding  Advances,  accrued interest thereon,  fees,  expenses and other
charges  payable to Agent and the Lenders  hereunder has been paid in full,  (B)
each  Borrower has  furnished  Agent and Lenders  with an  indemnity  reasonably
satisfactory to Agent with respect to any outstanding claims for indemnification
hereunder and (C) this Agreement has been terminated.

         (b)  Each  Borrower  acknowledges  that  from  time to  time  financial
advisory,  investment  banking and other  services may be offered or provided to
such  Borrower  or one or  more  of its  Affiliates  (in  connection  with  this
Agreement  or  otherwise)  by  any  Lender  or by one or  more  Subsidiaries  or
Affiliates of such Lender and such  Borrower  hereby  authorizes  each Lender to
share  any  information  delivered  to  such  Lender  by such  Borrower  and its
Subsidiaries  pursuant to this Agreement,  or in connection with the decision of
such Lender to enter into this Agreement, to any such Subsidiary or Affiliate of
such Lender,  it being  understood  that any such Subsidiary or Affiliate of any
Lender  receiving  such  information  shall be bound  by the  provision  of this
Section 16.15 as if it were a Lender hereunder. Such authorization shall survive
the  repayment  of the  other  Obligations  and  the  termination  of  the  Loan
Agreement.

         16.16.  PUBLICITY.  Each  Borrower  hereby  authorizes  Agent  to  make
appropriate  announcements  of the  financial  arrangement  entered  into  among
Borrowers, Agent and Lenders, including, without limitation, announcements which
are commonly  known as  tombstones,  in such  publications  and to such selected
parties as Agent shall in its sole and absolute discretion deem appropriate.

         Each of the parties has signed  this  Agreement  as of the day and year
first above written.

                                      TRESCOM INTERNATIONAL, INC.
WITNESS:

                                            /s/ William Pacquin
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      William Pacquin
                                      Name:_____________________________
                                             Chief Executive Officer
                                      Title:____________________________

                                      200 East Broward Blvd.
                                      Ft. Lauderdale, Florida 33301


                                    -87-

<PAGE>


                                      TRESCOM U.S.A., INC.
WITNESS:

                                            /s/ William Pacquin
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      William Pacquin
                                      Name:_____________________________
                                             Vice President
                                      Title:____________________________

                                      200 East Broward Blvd.
                                      Ft. Lauderdale, Florida 33301


                                      INTEX TELECOMMUNICATIONS, INC.
WITNESS:

                                            /s/ William Pacquin
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      William Pacquin
                                      Name:_____________________________
                                             Vice President
                                      Title:____________________________

                                      200 East Broward Blvd.
                                      Ft. Lauderdale, Florida 33301


                                    -88-
<PAGE>

                                      THE ST. THOMAS AND SAN JUAN
WITNESS:                              TELEPHONE COMPANY, INC.

                                            /s/ William Pacquin
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      William Pacquin
                                      Name:_____________________________
                                             Vice President
                                      Title:____________________________


                                      200 East Broward Blvd.
                                      Ft. Lauderdale, Florida 33301


                                      STSJ OVERSEAS TELEPHONE COMPANY, INC.
WITNESS:

                                            /s/ William Pacquin
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      William Pacquin
                                      Name:_____________________________
                                             Vice President
                                      Title:____________________________


                                      200 East Broward Blvd.
                                      Ft. Lauderdale, Florida 33301



                                      PNC BANK, NATIONAL ASSOCIATION, as
                                      Lender and as Agent

WITNESS:

                                            /s/ Craig Stillwagon
/s/ Fran Skoller, Esq.                By:_______________________________
_______________________                      Craig Stillwagon
                                      Name:_____________________________
                                             Vice President
                                      Title:____________________________

                                      Two Tower Center Boulevard
                                      East Brunswick, New Jersey 08816

                                      Commitment Percentage:  100%


                                    -89-
<PAGE>


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On this  31st day of July,  1997,  before me  personally  came  William
Paquin,  to me known, who, being by me duly sworn, did depose and say that he is
the Chief  Financial  Officer of TresCom  International,  Inc., the  corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation;  that the seal affixed to said instrument is such corporate
seal;  that it was so  affixed  by  order  of the  board  of  directors  of said
corporation, and that he signed his name thereto by like order.

                                        /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On this  31st day of July,  1997,  before me  personally  came  William
Paquin,  to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of TresCom  U.S.A.,  Inc., the  corporation  described in and
which  executed  the  foregoing  instrument;  that  he  knows  the  seal of said
corporation;  that the seal affixed to said  instrument is such corporate  seal;
that it was so affixed by order of the board of directors  of said  corporation,
and that he signed his name thereto by like order.

                                        /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On  this  31st  day  of  July,   1997,   before  me   personally   came
William Paquin,  to me known,  who, being by me duly sworn,  did
depose and say that he is the  Vice President  of Intex  Telecommunications,
Inc., the corporation  described in and which executed the foregoing instrument;
that he knows  the seal of said  corporation;  that  the  seal  affixed  to said
instrument is such corporate  seal; that it was so affixed by order of the board
of  directors of said  corporation,  and that he signed his name thereto by like
order.

                                        /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC

                                    -90-
<PAGE>


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On this  31st day of July,  1997,  before me  personally  came  William
Paquin,  to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of The St. Thomas and San Juan Telephone  Company,  Inc., the
corporation  described in and which executed the foregoing  instrument;  that he
knows the seal of said corporation;  that the seal affixed to said instrument is
such corporate  seal;  that it was so affixed by order of the board of directors
of said corporation, and that he signed his name thereto by like order.

                                         /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On this  31st day of July,  1997,  before me  personally  came  William
Paquin,  to me known, who, being by me duly sworn, did depose and say that he is
the Vice President of STSJ Overseas  Telephone  Company,  Inc., the  corporation
described in and which executed the foregoing instrument; that he knows the seal
of said corporation;  that the seal affixed to said instrument is such corporate
seal;  that it was so  affixed  by  order  of the  board  of  directors  of said
corporation, and that he signed his name thereto by like order.

                                        /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC


STATE OF NEW YORK      )
                       ) ss.
COUNTY OF NEW YORK     )


        On this  31st  day of July,  1997,  before  me  personally  came  Craig
Stillwagon, to me known, who, being by me duly sworn, did depose and say that he
is a Vice President of PNC BANK, NATIONAL ASSOCIATION,  the national association
described in and which executed the foregoing  instrument and that he signed his
name thereto by on behalf of said national association.

                                        /s/ Loukia Harris
                                        ------------------------------
                                                   NOTARY PUBLIC


                                    -91-
<PAGE>

                         LIST OF EXHIBITS AND SCHEDULES


Exhibits


Exhibit 2.1(a)         Revolving Credit Note
Exhibit 2.2            Authorized Persons
Exhibit 5.5(b)         Financial Projections
Exhibit 8.1(i)         Financial Condition Certificate
Exhibit 9.2            Certificate
Exhibit 8.1(v)         Borrowing Base Certificate
Exhibit 16.3           Commitment Transfer Supplement


Schedules

Schedule 1.2           Permitted Encumbrances
Schedule 4.15(c)       Location of Executive Offices
Schedule 4.19          Real Property
Schedule 5.2(a)        States of Qualification and Good Standing
Schedule 5.2(b)        Subsidiaries
Schedule 5.4           Federal Tax Identification Number
Schedule 5.6           Prior Names
Schedule 5.8(b)        Litigation
Schedule 5.8(d)        Plans
Schedule 5.9           Intellectual Property, Source Code Escrow
                       Agreements
Schedule 5.10          Licenses and Permits
Schedule 5.14          Labor Disputes


<PAGE>

                                TABLE OF CONTENTS



I.      DEFINITIONS..........................................................  2
        1.1.     Accounting Terms............................................  2
        1.2.     General Terms...............................................  2
        1.3.     Uniform Commercial Code Terms............................... 20
        1.4.     Certain Matters of Construction............................. 20

II.     ADVANCES, PAYMENTS................................................... 20
        2.1.     (a)    Revolving Advances................................... 20
                 (b)    Permitted Acquisitions............................... 21
                 (c)    Discretionary Rights................................. 21
        2.2.     Procedure for Borrowing Revolving Advances.................. 21
        2.3.     Disbursement of Advance Proceeds............................ 24
        2.4.     INTENTIONALLY OMITTED....................................... 24
        2.5.     Maximum Advances............................................ 24
        2.6.     Repayment of Advances....................................... 24
        2.7.     Repayment of Excess Advances................................ 25
        2.8.     Statement of Account........................................ 25
        2.9.     Letters of Credit........................................... 25
        2.10.    Issuance of Letters of Credit............................... 26
        2.11.    Requirements For Issuance of Letters of Credit.............. 26
        2.12.    Additional Payments......................................... 28
        2.13.    Manner of Borrowing and Payment............................. 28
        2.14.    INTENTIONALLY OMITTED....................................... 30
        2.15.    Use of Proceeds............................................. 30
        2.16.    Defaulting Lender........................................... 30

III.    INTEREST AND FEES.................................................... 31
        3.1.     Interest.................................................... 31
        3.2.     Letter of Credit Fees....................................... 31
        3.3.     (a)    Closing Fee.......................................... 32
                 (b)    Facility Fee......................................... 32
        3.4.     (a)    Collateral Evaluation Fee............................ 32
                 (b)    Collateral Monitoring Fee............................ 32
        3.5.     Computation of Interest and Fees............................ 33
        3.6.     Maximum Charges............................................. 33
        3.7.     Increased Costs............................................. 33
        3.8.     Basis For Determining Interest Rate Inadequate or
                 Unfair...................................................... 34
        3.9.     Capital Adequacy............................................ 35

IV.     COLLATERAL:  GENERAL TERMS........................................... 35
        4.1.     Security Interest in the Collateral......................... 35
        4.2.     Perfection of Security Interest............................. 36
        4.3.     Disposition of Collateral................................... 36
        4.4.     Preservation of Collateral.................................. 36
        4.5.     Ownership of Collateral..................................... 37
        4.6.     Defense of Agent's and Lenders' Interests................... 37
        4.7.     Books and Records........................................... 38
        4.8.     Financial Disclosure........................................ 38
        4.9.     Compliance with Laws........................................ 38
        4.10.    Inspection of Premises...................................... 39
        4.11.    Insurance................................................... 39
        4.12.    Failure to Pay Insurance.................................... 40


                                    -i-

<PAGE>



        4.13.    Payment of Taxes............................................ 40
        4.14.    Payment of Leasehold Obligations............................ 41
        4.15.    Receivables................................................. 41
                 (a)    Nature of Receivables................................ 41
                 (b)    Solvency of Customers................................ 41
                 (c)    Locations of Borrower................................ 41
                 (d)    Collection of Receivables............................ 41
                 (e)    Notification of Assignment of Receivables............ 42
                 (f)    Power of Agent to Act on Borrowers' Behalf........... 42
                 (g)    No Liability......................................... 43
                 (h)    Establishment of a Lockbox Account, Dominion
                        Account.............................................. 43
                 (i)    Adjustments.......................................... 43
        4.16.    I........................................................... 43
        4.17.    Maintenance of Properties................................... 43
        4.18.    Exculpation of Liability.................................... 44
        4.19.    Environmental Matters....................................... 44
        4.20.    Financing Statements........................................ 46

V.      REPRESENTATIONS AND WARRANTIES....................................... 47
        5.1.     Authority................................................... 47
        5.2.     Formation and Qualification................................. 47
        5.3.     Survival of Representations and Warranties.................. 47
        5.4.     Tax Returns................................................. 47
        5.5.     Financial Statements........................................ 48
        5.6.     Corporate Name.............................................. 48
        5.7.     O.S.H.A. and Environmental Compliance....................... 48
        5.8.     Solvency; No Litigation, Violation, Indebtedness
                 or Default.................................................. 49
        5.9.     Patents, Trademarks, Copyrights and Licenses................ 51
        5.10.    Licenses and Permits........................................ 51
        5.11.    Default of Indebtedness..................................... 51
        5.12.    No Default.................................................. 51
        5.13.    No Burdensome Restrictions.................................. 51
        5.14.    No Labor Disputes........................................... 52
        5.15.    Margin Regulations.......................................... 52
        5.16.    Investment Company Act...................................... 52
        5.17.    Disclosure.................................................. 52
        5.18.    FCC, PRTRB and State Compliance............................. 52
        5.19.    Swaps....................................................... 53
        5.20.    Conflicting Agreements...................................... 53
        5.21.    Application of Certain Laws and Regulations................. 53
        5.22.    Business and Property of Borrower........................... 53

VI.     AFFIRMATIVE COVENANTS................................................ 53
        6.1.     Payment of Fees............................................. 54
        6.2.     Conduct of Business and Maintenance of Existence
                 and Assets.................................................. 54
        6.3.     Violations.................................................. 54
        6.4.     Government Receivables...................................... 54
        6.5.     Tangible Net Worth.......................................... 54
        6.6.     Interest Coverage Ratio..................................... 55
        6.7.     Execution of Supplemental Instruments....................... 55
        6.8.     Payment of Indebtedness..................................... 55
        6.9.     Standards of Financial Statements........................... 55

VII.    NEGATIVE COVENANTS................................................... 56


                                    -ii-

<PAGE>



        7.1.     Merger, Consolidation, Acquisition and Sale of
                 Assets...................................................... 56
        7.2.     Creation of Liens........................................... 56
        7.3.     Guarantees.................................................. 56
        7.4.     Investments................................................. 56
        7.5.     Loans....................................................... 56
        7.6.     Capital Expenditures........................................ 57
        7.7.     Dividends................................................... 57
        7.8.     Indebtedness................................................ 57
        7.9.     Nature of Business.......................................... 57
        7.10.    Transactions with Affiliates................................ 57
        7.11.    INTENTIONALLY OMITTED....................................... 57
        7.12.    Subsidiaries................................................ 57
        7.13.    Fiscal Year and Accounting Changes.......................... 58
        7.14.    Pledge of Credit............................................ 58
        7.15.    Amendment of Articles of Incorporation, By-Laws............. 58
        7.16.    Compliance with ERISA....................................... 58
        7.17.    Prepayment of Indebtedness.................................. 59
        7.18.    Deposit Account Balances.................................... 59

VIII.   CONDITIONS PRECEDENT................................................. 59
        8.1.     Conditions to Initial Advances.............................. 59
                 (a)    Note................................................. 59
                 (b)    Filings, Registrations and Recordings................ 59
                 (c)    Corporate Proceedings of Borrowers................... 59
                 (d)    Incumbency Certificates of Borrowers and
                        Guarantor............................................ 60
                 (e)    Certificates......................................... 60
                 (f)    Good Standing Certificates........................... 60
                 (g)    Legal Opinion........................................ 60
                 (h)    No Litigation........................................ 60
                 (i)    Financial Condition Certificates..................... 61
                 (j)    Collateral Examination............................... 61
                 (k)    Fees................................................. 61
                 (l)    Projections.......................................... 61
                 (m)    OAN Documentation.................................... 61
                 (n)    Guaranties and Other Documents....................... 61
                 (o)    Insurance............................................ 61
                 (p)    Payment Instructions................................. 61
                 (q)    Blocked Accounts..................................... 61
                 (r)    Consents............................................. 61
                 (s)    No Material Adverse Change........................... 62
                 (t)    Leasehold Agreements................................. 62
                 (u)    Contract Review...................................... 62
                 (v)    Closing Certificate.................................. 62
                 (w)    Borrowing Base....................................... 62
                        ..................................................... 62
                 (x)    Compliance with Laws................................. 62
                 (y)    SBA Documentation.................................... 62
                 (z)    Other................................................ 63
        8.2.     Conditions to Each Advance.................................. 63
                 (a)    Representations and Warranties....................... 63
                 (b)    No Default........................................... 63
                 (c)    Maximum Advances..................................... 63
                 (d)    Material Provisions.................................. 63

IX.     INFORMATION AS TO BORROWER........................................... 63


                                    -iii-

<PAGE>



        9.1.     Disclosure of Material Matters.............................. 63
        9.2.     Schedules................................................... 64
        9.3.     Environmental Reports....................................... 64
        9.4.     Litigation.................................................. 64
        9.5.     Material Occurrences........................................ 64
        9.6.     Government Receivables...................................... 65
        9.7.     Annual Financial Statements................................. 65
        9.8.     ............................................................ 66
        9.9.     Quarterly Financial Statements.............................. 66
        9.10.    Other Reports............................................... 66
        9.11.    Additional Information...................................... 66
        9.12.    Projected Operating Budget.................................. 67
        9.13.    Variances From Operating Budget............................. 67
        9.14.    Notice of Suits, Adverse Events............................. 67
        9.15.    ERISA Notices and Requests.................................. 67
        9.16.    FCC and PRTRB Notices and Requests.......................... 68
        9.17.    Securities Reports.......................................... 68
        9.18.    OAN Notices................................................. 68
        9.19.    Additional Documents........................................ 69

X.      EVENTS OF DEFAULT.................................................... 69

XI.     LENDERS' RIGHTS AND REMEDIES AFTER DEFAULT........................... 72
        11.1.    Rights and Remedies......................................... 72
        11.2.    Agent's Discretion.......................................... 73
        11.3.    Setoff...................................................... 73
        11.4.    Rights and Remedies not Exclusive........................... 73

XII.    WAIVERS AND JUDICIAL PROCEEDINGS..................................... 73
        12.1.    Waiver of Notice............................................ 73
        12.2.    Delay....................................................... 74
        12.3.    Jury Waiver................................................. 74

XIII.   EFFECTIVE DATE AND TERMINATION....................................... 74
        13.1.    Term........................................................ 74
        13.2.    Termination................................................. 75

XIV.    REGARDING AGENT...................................................... 75
        14.1.    Appointment................................................. 75
        14.2.    Nature of Duties............................................ 76
        14.3.    Lack of Reliance on Agent and Resignation................... 76
        14.4.    Certain Rights of Agent..................................... 77
        14.5.    Reliance.................................................... 77
        14.6.    Notice of Default........................................... 77
        14.7.    Indemnification............................................. 78
        14.8.    Agent in its Individual Capacity............................ 78
        14.9.    Delivery of Documents....................................... 78
        14.10.   Borrowers' Undertaking to Agent............................. 78

XV.     BORROWING AGENCY..................................................... 78
        15.1.    Borrowing Agency Provisions................................. 79
        15.2.    Waiver of Subrogation....................................... 79

XVI.    MISCELLANEOUS........................................................ 80
        16.1.    Governing Law............................................... 80
        16.2.    Entire Understanding........................................ 80


                                    -iv-

<PAGE>


        16.3.    Successors and Assigns; Participations; New
                 Lenders..................................................... 82
        16.4.    Application of Payments..................................... 84
        16.5.    Indemnity................................................... 84
        16.6.    Notice...................................................... 84
        16.7.    Survival.................................................... 85
        16.8.    Severability................................................ 85
        16.9.    Expenses.................................................... 85
        16.10.   Injunctive Relief........................................... 86
        16.11.   Consequential Damages....................................... 86
        16.12.   Captions.................................................... 86
        16.13.   Counterparts; Telecopied Signatures......................... 86
        16.14.   Construction................................................ 86
        16.15.   Confidentiality............................................. 86
        16.16.   Publicity................................................... 87



                                    -v-