SECOND
                                MASTER AMENDMENT
                                       TO
                      LOAN AND SECURITY AGREEMENTS, WAIVER
                               AND EQUIPMENT NOTES
                             MODIFICATION AGREEMENT

         THIS SECOND MASTER AMENDMENT TO LOAN AND SECURITY AGREEMENTS, WAIVER
AND EQUIPMENT NOTES MODIFICATION AGREEMENT ("Master Amendment") is entered into
as of September 6, 1996 among  American  Communication  Services of Louisville,
Inc., a Delaware corporation ("Louisville"),  American Communication Services of
Fort Worth, Inc., a Delaware  corporation  ("Fort Worth"),  American
Communication Services of Columbia,  Inc., a Delaware corporation  ("Columbia"),
American  Communication  Services of  Greenville,  Inc., a Delaware  corporation
("Greenville"), and American Communication Services of El Paso, Inc. ("El Paso",
and collectively with Louisville, Fort Worth, Columbia and Greenville, the "ACSI
Borrower Subsidiaries") and AT&T Credit Corporation ("Lender").

                                   WITNESSETH:

         WHEREAS,  each of the ACSI Borrower Subsidiaries is party to a Loan and
Security Agreement with the Lender; specifically described as follows:

                  (i) Louisville and the Lender are parties to that certain Loan
                  and  Security  Agreement  dated as of  October  17,  1994,  as
                  amended by that certain  Amendment  No. 1 dated as of June 26,
                  1995 and that  certain  Master  Amendment  (the "First  Master
                  Amendment")  to  Loan  and  Security  Agreements  dated  as of
                  November  30,  1995  between  Lender  and  the  ACSI  Borrower
                  Subsidiaries  (as the same may  from  time to time be  further
                  amended,  modified,  supplemented or restated, the "Louisville
                  Loan Agreement");

                  (ii) Fort  Worth and the Lender  are  parties to that  certain
                  Loan and Security  Agreement dated as of February 28, 1995, as
                  amended by the First Master  Amendment and that certain Letter
                  Amendment  (the "Letter  Amendment")  dated as of December 19,
                  1995 between Lender and the ACSI Borrower  Subsidiaries  other
                  than  Louisville (as the same may from time to time be further
                  amended, modified, supplemented or restated.
                  the "Fort Worth Loan Agreement");

                  (iii) Columbia,  Greenville and the Lender are parties to that
                  certain Loan and Security Agreement dated as of June 30, 1995,
                  as  amended  by the  First  Master  Amendment  and the  Letter
                  Amendment  (as the  same  may  from  time  to time be  further
                  amended, modified, supplemented or restated, the "Columbia and
                  Greenville Loan Agreement"), and


                                       -1-

<PAGE>



                  (iv) El Paso and the Lender are parties to that  certain  Loan
                  and  Security  Agreement  dated as of  September  8, 1995,  as
                  amended by the First Master Amendment and the Letter Amendment
                  (as the  same  may  from  time to  time  be  further  amended,
                  modified,   supplemented  or  restated,   the  "El  Paso  Loan
                  Agreement",   and   collectively   with  the  Louisville  Loan
                  Agreement,  the Fort Worth Loan Agreement and the Columbia and
                  Greenville Loan Agreement, the "Loan Agreements");

         WHEREAS,  the ACSI Borrower  Subsidiaries  have requested the Lender to
modify the Loan  Agreements to increase the Capital Loan  Commitment  Amount and
decrease the Equipment Loan  Commitment  Amount in each of the  respective  Loan
Agreements  and to substitute as Exhibit A a modified  Business Plan for each of
the respective Loan Agreements,

         WHEREAS,  the Lender and the ACSI Borrower  Subsidiaries have agreed to
amend the  "Equipment  Notes" to make a technical  correction and to reflect the
reduced  "Commitment  Amount" for the "Equipment  Loans" (as each quoted term is
defined in the respective Loan Agreements for each ACSI Subsidiary); and

         WHEREAS,  the Lender and the ACSI Borrower  Subsidiaries have agreed to
amend the Loan  Agreements  on the terms and  conditions  set forth  herein  and
restate paragraph 2 of the Letter Amendment;

         NOW,  THEREFORE,  in consideration of the premises set forth above, the
terms  and   conditions   contained   herein,   and  other  good  and   valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
ACSI  Borrower  Subsidiaries  and the  Lender  have  agreed  to  amend  the Loan
Agreements and the Equipment Notes as set forth below. Capitalized terms used in
this Master  Amendment which are not otherwise  defined  herein,  shall have the
meanings  given  such  terms in the  respective  Loan  Agreement  for each  ACSI
Borrower Subsidiary as applicable.

         1. Amendments to Loan Agreements. Effective as of the date hereof and
subject to the satisfaction of the conditions precedent set forth in Section 4
below, on and after the date hereof, the parties hereto agree as follows:

         1.1 The definition of "Capital Loan Commitment  Amount" in Section 1.01
of each of the Loan Agreements is hereby deleted and replaced as follows:

         (a)    In the Louisville Loan Agreement with the following definition:

                "Capital Loan Commitment  Amount" shall mean the lesser of (i)
                $5,216,242.00  inclusive of capitalized  interest,  if any, on
                the  Capital  Loans  and  (ii)  ninety  percent  (90%)  of the
                outstanding  principal balance of all then outstanding  Loans,
                inclusive of capitalized interest.

         (b)    In the Fort Worth Loan Agreement, with the following definition:


                                       -2-

<PAGE>



                "Capital Loan Commitment  Amount" shall mean the lesser of (i)
                $6,665,024.00  inclusive of capitalized  interest,  if any, on
                the  Capital  Loans  and  (ii)  ninety  percent  (90%)  of the
                outstanding  principal balance of all then outstanding  Loans,
                inclusive of capitalized interest."

         (c)    In the Columbia and Greenville Loan Agreement, with the
following definitions:

                  "ACS Columbia  Capital Loan Commitment  Amount" shall mean the
                  lesser of (i) $6,101,357.00 inclusive of capitalized interest,
                  if any,  on the ACS  Columbia  Capital  Loans and (ii)  ninety
                  percent  (90%) of the  outstanding  principal  balance  of all
                  Loans made by Lender to ACS Columbia, inclusive of capitalized
                  interest."

                  "ACS Greenville Capital Loan Commitment Amount" shall mean the
                  lesser of (i) $4,680,000, and (ii) ninety percent (90%) of the
                  outstanding  principal  balance of all loans made by Lender to
                  ACS Greenville, inclusive of capitalized interest. "

         (d)      In the El Paso Loan Agreement, with the following definition:

                  "Capital Loan Commitment  Amount" shall mean the lesser of (i)
                  $5,529,387.00  inclusive of capitalized  interest,  if any, on
                  the  Capital  Loans  and  (ii)  ninety  percent  (90%)  of the
                  outstanding  principal balance of all then outstanding  Loans,
                  inclusive of capitalized interest."

         1.2 The  definition  of "Capital  Note" in Section  1.01 of each of the
Loan Agreements is hereby deleted and replaced with the following:

         (a)    In the Louisville Loan Agreement, the Fort Worth Loan Agreement,
and the El Paso Loan Agreement with the following definition:

               "Capital  Note" shall mean the  promissory  note of the Borrower,
               substantially  in the form of Exhibit C  attached  hereto and any
               replacement or substitute therefor. "

         (b)    In the Columbia and Greenville Loan Agreement, with the
following definition:

                  "Capital  Note"  shall  mean  the  promissory  note of  either
                  Borrower,  substantially  in the form of  Exhibit  C  attached
                  hereto and any replacement or substitute therefor."

         1.3 The  definition of "Equipment  Loan  Commitment  Amount" in Section
1.01 of each of the Loan Agreements is hereby deleted and replaced as follows:

         (a)     In the Louisville Loan Agreement with the following definition:

                  "Equipment Loan Commitment  Amount" shall mean  $579,582.00,
                  inclusive of capitalized  interest, if any, on the Equipment
                  Loans."

                                       -3-

<PAGE>




         (b)     In the Fort Worth Loan Agreement with the following definition:

                  "Equipment Loan Commitment  Amount" shall mean  $740,558.00,
                  inclusive of capitalized  interest, if any, on the Equipment
                  Loans."

         (c)      In the Columbia and Greenville Loan Agreement, with the
following definitions:

                  "ACS Columbia  Equipment  Loan  Commitment  Amount" shall mean
                  $677,928.00, inclusive of capitalized interest, if any, on the
                  ACS Columbia Equipment Loans."

                  "ACS Greenville  Equipment Loan Commitment  Amount" shall mean
                  $520,000.00, inclusive of capitalized interest, if any, on the
                  ACS Greenville Equipment Loans."

         (d)      In the El Paso Loan Agreement, with the following definition:

                  "Equipment Loan Commitment  Amount" shall mean  $614,376.00,
                  inclusive of capitalized interests,  if any on the Equipment
                  Loans. "

         1.4  Section 2.08(f) of the Louisville Loan Agreement is hereby amended
in its entirety to read as follows:

                  "If the aggregate  principal balance (inclusive of capitalized
                  interest) of (i) the  Equipment  Loans  exceeds the  Equipment
                  Loan  Commitment  Amount or (ii) the Capital Loans exceeds the
                  Capital Loan  Commitment  Amount,  but in either case does not
                  cause the aggregate of the then outstanding  Capital Loans and
                  Equipment Loans to exceed the amount which is the aggregate of
                  the  Equipment  Loan   Commitment   Amount  and  Capital  Loan
                  Commitment  Amount,  such excess shall be treated as a Capital
                  Loan.  Otherwise,  then  in each  such  case,  Borrower  shall
                  immediately  repay to Lender,  upon  notice from  Lender,  the
                  amount  by which  the  outstanding  principal  balance  of the
                  respective  Loan  Balance  exceeds its  respective  Commitment
                  Amount,  together with all accrued and unpaid interest on such
                  excess principal up to the date of repayment. "

         1.5  Section 6.03 of each of the Loan Agreements is hereby amended to
add the following clause at the end thereof:

                  "and if no Default or Event of Default has then  occurred  and
                  is continuing, transfers occurring on or after June 1, 1996 of
                  Equipment and other equipment to Additional  System  Borrowers
                  and  other   subsidiaries   of  Parent  owning  and  operating
                  alternate access communication systems, with book value not to
                  exceed (i) $250,000 in the  aggregate,  and (ii) when combined
                  with similar  transfers made by Additional  System  Borrowers,
                  not to exceed  $500,000 in the  aggregate,  provided  that the
                  Person which receives such Equipment or other  equipment shall
                  pay the Borrower which  transferred such Equipment to it, cash
                  in the amount of the book value for such transferred Equipment
                  or  equipment,  within five  Business  Days of such  transfer,
                  subject to accounting adjustments in

                                       -4-

<PAGE>



                  connection  with  the  monthly  closing  of the  books  of the
                  Borrower,  the  Additional  System  Borrowers  and such  other
                  subsidiaries,  which accounting  adjustments shall be made not
                  later than forty-five (45) days after such fifth Business Day,
                  and provided further that the book value of all such transfers
                  by  the  Borrower  and  a  description  of  the  Equipment  or
                  equipment  transferred  shall be noted on the  monthly  report
                  required  to be  delivered  to the Lender  pursuant to Section
                  5.06(i) for the month in which such transfer occurred."

         1.6  Exhibits  A and C to each of the  respective  Loan  Agreements  is
hereby deleted in their  entirety and Exhibits A and C to this Master  Amendment
respectively are hereby substituted therefor, specifically as follows:

         (a) to the  Louisville  Loan  Agreement,  Exhibits A-1, and C-1 to this
Master  Amendment  shall  replace  Exhibits  A  and  C to  the  Louisville  Loan
Agreement, respectively.

         (b) to the Fort  Worth  Loan  Agreement,  Exhibits  A-2 and C-2 to this
Master  Amendment  shall  replace  Exhibits  A  and C to  the  Fort  Worth  Loan
Agreement, respectively.

         (c) to the Columbia and Greenville Loan Agreement, Exhibits A-3 and C-3
to this Master  Amendment  shall  replace  Exhibits A and C to the  Columbia and
Greenville Loan Agreement, respectively.

         (d) to the El Paso Loan Agreement,  Exhibits A-4 and C-4 to this Master
Amendment  shall  replace  Exhibits  A and C to  the  El  Paso  Loan  Agreement,
respectively.

         1.7 Section 6.01 of the El Paso Loan Agreement is amended to delete the
word "and" at the end of clause (iv), to add the word "and" at the end of clause
(v) thereof and to add the following clause (vi) thereto:

                  "(vi)  the  rights  of  El  Paso  Electric  Company,  a  Texas
                  corporation  ("El Paso  Electric  Company"),  pursuant to that
                  certain License Agreement dated as of December 6, 1995 between
                  El Paso Electric Company and Borrower. "

         2. Equipment  Notes  Modification.  Each Equipment Note executed by the
respective  ACSI Borrower  Subsidiary is hereby amended (i) to delete the phrase
"as set forth on Schedule A attached hereto" at the end of the first sentence in
the second  paragraph of the  respective  Equipment  Note and to substitute  the
following therefor: "as set forth in Section 2.06(b) of the Loan Agreement", and
(ii) to reduce the  principal  amount  thereof to the  amounts  set forth as the
respective Equipment Loan Commitment Amounts in Section 1.3 above.

         3.  Waiver.  Parent and each of ACSI Borrower Subsidiaries have advised
Lender  that as of May 31,  1996,  the  ACSI  Borrower  Subsidiaries  and  other
operating  subsidiaries  of Parent had engaged in  transfers  and  exchanges  of
Equipment and other  equipment,  which  transfers and exchanges of Equipment and
other equipment which were the property of the ACSI Borrower Subsidiaries had an
aggregate  book value not in excess of $380,000.  The Lender  hereby  waives any
Event of Default that

                                       -5-

<PAGE>



occurred  under  any  of  the  Loan  Agreements  as  a  result  of  any  of  the
above-described  transfers.  Nothing  contained  in  this  Section  3  shall  be
construed as waiving any other Event of Default or allowing any future transfers
of Equipment or other  equipment  not  permitted by the terms of the  respective
Loan Agreements.

         4. Conditions of Effectiveness of this Master Amendment. This Master
Amendment shall become effective and be deemed effective on the date first above
written subject to the Lender's receipt of each of the following:

         (i)      five (5) originals of this Master Amendment, duly executed by
                  the ACSI Borrower Subsidiaries and the Lender; and

         (ii)     Substituted and Amended Capital Notes by each of the ACSI
                  Borrower Subsidiaries;

         (iii)    five (5)  originals  of the  Master  Reaffirmation  of  Parent
                  Pledge and Support Agreements attached as Annex A hereto; and

         (iv)     perfection of security interest in all new filing
                  jurisdictions where respective Systems are being expanded.

         5. Further Assurances. The ACSI Borrower Subsidiaries hereby agree from
time to time,  as and when  requested  by the Lender,  to execute and deliver or
cause  to be  executed  and  delivered,  all  such  documents,  instruments  and
agreements  and to take or cause to be taken such further or other action as the
Lender  may deem  necessary  or  desirable  in order to carry out the intent and
purposes  of this  Master  Amendment,  the Loan  Agreements  or the  other  Loan
Documents.

         6.  Representations  and Warranties of the ACSI Borrower  Subsidiaries.
The ACSI  Borrower  Subsidiaries  hereby  represent and warrant that this Master
Amendment and their  respective  Loan  Agreement as  previously  executed and as
amended  hereby,   constitute  legal,  valid  and  binding  obligations  of  the
respective ACSI Borrower  Subsidiary and are enforceable  against the respective
ACSI Borrower Subsidiary in accordance with their terms.

         7. Reference to the Effect on the Agreement.

         (a) Upon the  effectiveness of Section 1 hereof,  on and after the date
hereof,  each reference in the Loan Agreement to "this Agreement,"  "hereunder,"
"hereof,"  "herein" or words of like import shall mean and be a reference to the
respective Loan Agreement as amended hereby.

         (b) Except as specifically set forth above, each of the Loan Agreements
and the Equipment  Notes,  and all other  documents,  instruments and agreements
executed and/or  delivered in connection  therewith,  shall remain in full force
and effect, and are hereby ratified and confirmed.

         (c) The execution,  delivery and effectiveness of this Master Amendment
shall  not,  except as  expressly  provided  herein,  operate as a waiver of any
right, power or remedy of the Lender, nor

                                       -6-

<PAGE>



constitute a waiver of any  provision of the Loan  Agreements  or the  Equipment
Notes,  or any other  documents,  instruments  and  agreements  executed  and/or
delivered in connection therewith.

         8. Headings. Section headings in this Master Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Master Amendment for any other purpose.

         9. Counterparts: Facsimile Signatures. This Master Amendment may be
executed by one or more of the parties to the Master Amendment on any number of
separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Each of the parties hereto
agrees that a signature transmitted by facsimile transmission shall be effective
to bind the party so transmitting its signature.

         10. Entire Agreement.  This Master  Amendment,  taken together with the
respective  Loan  Agreements  and all of the other  respective  Loan  Documents,
embodies  the entire  agreement  and  understanding  of the  parties  hereto and
supersedes all prior agreements and  understandings,  written and oral, relating
to the subject matter hereof.

         11.  Applicable  Law,  Severability.  This  Master  Amendment  shall be
governed by, and construed in accordance  with, the internal laws (as opposed to
the  conflict  of laws  provisions)  and  decisions  of the State of New Jersey.
Whenever possible,  each provision of this Master Amendment shall be interpreted
in such manner as to be effective  and valid under  applicable  law, but, if any
provision of this Master  Amendment  shall be held to be  prohibited  or invalid
under  applicable law, such provision shall be ineffective only to the extent of
such  prohibition  or  invalidity,  without  invalidating  the remainder of such
provision or the remaining provisions of this Master Amendment.

[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]


                                       -7-

<PAGE>



         IN WITNESS WHEREOF,  this Master Amendment has been duly executed as of
the date set forth above.

                                      AMERICAN COMMUNICATION
                                      SERVICES OF LOUISVILLE, INC.

                                      /s/ RICHARD A. KOZAK
                                      Name: Richard A. Kozak
                                      Title: President & Chief Executive Officer

                                      AMERICAN COMMUNICATION
                                      SERVICES OF FORT WORTH. INC.

                                      /s/ RICHARD A. KOZAK
                                      Name: Richard A. Kozak
                                      Title: President & Chief Executive Officer

                                      AMERICAN COMMUNICATION
                                      SERVICES OF COLUMBIA, INC.

                                      /s/ RICHARD A. KOZAK
                                      Name: Richard A. Kozak
                                      Title: President & Chief Executive Officer

                                      AMERICAN COMMUNICATION
                                      SERVICES OF GREENVILLE, INC.

                                      /s/ RICHARD A. KOZAK
                                      Name: Richard A. Kozak
                                      Title: President & Chief Executive Officer

                                      AMERICAN COMMUNICATION
                                      SERVICES OF EL PASO, INC.

                                      /s/ RICHARD A. KOZAK
                                      Name: Richard A. Kozak
                                      Title: President & Chief Executive Officer

                                      AT&T CREDIT CORPORATION

                                      /s/ EDWARD W. ANDREWS, JR.
                                      Name: Edward W. Andrews, Jr.
                                      Title: President


                                       -8-

<PAGE>



                                    EXHIBIT A
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

         A-1      Exhibit A to Louisville Loan Agreement
         A-2      Exhibit A to Fort Worth Loan Agreement
         A-3      Exhibit A to Columbia and Greenville Loan Agreement
         A-4      Exhibit A to El Paso Loan Agreement


                                       -1-

<PAGE>



                                   EXHIBIT A-1
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

                                    EXHIBIT A



                                  BUSINESS PLAN
                                    Attached.





                                       -2-

<PAGE>



                                   EXHIBIT A-2
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

                                   EXHIBIT A

                                  BUSINESS PLAN
                                    Attached.


                                       -3-

<PAGE>



                                   EXHIBIT A-3
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

                                    EXHIBIT A

                                  BUSINESS PLAN
                                    Attached.


                                       -4-

<PAGE>



                                   EXHIBIT A-4
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

                                  BUSINESS PLAN
                                    Attached.

                                    EXHIBIT A


                                       -5-

<PAGE>



                                    EXHIBIT C
                                       to
                           SECOND MASTER AMENDMENT TO
                                 LOAN AGREEMENTS

         C-1      Exhibit C to Louisville Loan Agreement
         C-2      Exhibit C to Fort Worth Loan Agreement
         C-3      Exhibit C to Columbia and Greenville Loan Agreement
         C-4      Exhibit C to El Paso Loan Agreement

                                       -6-
<PAGE>



                                                                         ANNEX A

                                     SECOND
                             MASTER REAFFIRMATION OF
                      PARENT PLEDGE AND SUPPORT AGREEMENTS

         This SECOND MASTER REAFFIRMATION OF PARENT PLEDGE AND SUPPORT
AGREEMENTS (this  "Reaffirmation")  is executed as of this 6th day of September,
1996 by American  Communications  Services,  Inc., a Delaware  corporation  (the
"Parent"),  in  favor  of  AT&T  Credit  Corporation,   a  Delaware  corporation
("Lender").

                                   WITNESSETH

         WHEREAS,  American  Communications  Services of Louisville,  Inc.,
American Communication  Services of Fort Worth, Inc., American  Communication
Services of Columbia,  Inc. and American  Communication  Services of Greenville,
Inc., and American  Communication Services of El Paso, Inc. (each a Delaware
corporation), entered into those certain Loan and Security  Agreements each
dated respectively as of October 16, 1994,  February 28, 1995, June 30, 1995 and
September 9, 1995, as amended  (collectively,  as so amended  and as further
 amended,  restated or modified. the "Loan Agreements") with Lender;

         WHEREAS,  to induce  Lender to enter  into the Loan  Agreement,  Parent
executed and delivered  those certain Parent Pledge and Support  Agreements each
dated as of October 16, 1994,  February 28, 1995, June 30, 1995 and September 9,
1995, as amended (collectively,  as so amended and as further amended,  restated
or modified, the "Pledge Agreements") in favor of the Lender;

         WHEREAS,  the parties to the Loan  Agreements  are  entering  into that
certain  Second  Master  Amendment to Loan and Security  Agreements,  Waiver and
Equipment Notes Modification  Agreement (the "Amendment") of even date herewith;
and

         WHEREAS, it is a condition precedent to the effectiveness of the
Amendment that Parent execute and deliver this Reaffirmation;

         NOW, THEREFORE, for and in consideration of the foregoing and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parent hereby agrees as follows:

         1. Reaffirmation of Pledge Agreements.  The Parent acknowledges that it
has received and reviewed the Amendment and reaffirms that (a) the pledge of the
"Pledged Stock" as defined in the respective Pledge Agreements and the liens and
security  interest  granted therein and (b) the Pledge  Agreements and the liens
and security interest granted therein shall continue in full force and effect in
accordance  with  their  respective  terms  notwithstanding  the  execution  and
delivery of the Amendment.

         2. Governing Law and Jurisdiction. This Reaffirmation shall be
construed in accordance with and governed by the internal laws of the State of
New Jersey, without giving effect to any conflicts of laws principles.


<PAGE>




         3. Execution in Counterparts. This Reaffirmation may be executed in any
number of counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.

                [THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]



<PAGE>



         IN WITNESS WHEREOF,  the parties hereto have caused this  Reaffirmation
to be duly executed by their duly authorized  representatives  as of the day and
year first written above.

                                          AMERICAN COMMUNICATIONS SERVICES, INC.

                                          By:
                                          Name:
                                          Title:

         Acknowledged and agreed to as of the day and year first written above.

                                          AT&T CREDIT CORPORATION

                                          By:
                                          Name:
                                          Title:




<PAGE>



                                                                       EXHIBIT C

                                     FORM OF
                      SUBSTITUTED AND AMENDED CAPITAL NOTE

$                                                         Morristown, New Jersey
                                                                          [DATE]

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
LOUISVILLE,   INC.,   a   Delaware   corporation   (the   "Borrower"),    hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown,  New Jersey 07962-1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds,  the lesser of (i) the principal sum of AND NO/100 DOLLARS ($ ), and (ii)
the unpaid  amount of all "Capital  Loans"  (referred to below),  together  with
interest on the principal balance remaining from time to time unpaid at the rate
provided  below from the date such  principal is advanced  until payment in full
thereof.  This  Substituted  and Amended  Capital Note is referred to in and was
executed  and  delivered  pursuant  to  Section  2.04 of that  certain  Loan and
Security  Agreement  dated as of October 17, 1994, as amended (as so amended and
restated,  and further amended,  restated and supplemented or modified from time
to time,  the "Loan  Agreement") by and between the Borrower and the Lender (the
"Loan  Agreement"),  to which  reference  is hereby made for a statement  of the
terms and conditions  under which the Capital Loans  evidenced  hereby are being
made and are to be  repaid.  All terms  which are  capitalized  and used  herein
(which are not otherwise  specifically  defined herein) and which are defined in
the Loan Agreement shall be used in this Substituted and Amended Capital Note as
defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable thereon during such extension at the rate specified above.


<PAGE>



Checks,  drafts or similar  items of payment  received  by the Lender  shall not
constitute  payment,  but  credit  therefor  shall,  solely  for the  purpose of
computing  interest  earned  by the  Lender,  be  given  on the date the same is
honored  by the  Lender's  depository  bank  and  final  settlement  thereof  is
reflected  by  irrevocable  credit to the Lender's  account in such bank.  In no
contingency or event whatsoever shall interest charged  hereunder,  however such
interest may be characterized  or computed,  exceed the highest rate permissible
under  any  law  which a  court  of  competent  jurisdiction  shall,  in a final
determination, deem applicable hereto. In the event that such a court determines
that the Lender has  received  interest  hereunder in excess of the highest rate
applicable  hereto,  the Lender shall  promptly  refund such excess  interest to
Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain Capital Note dated October 17, 1994 in the original  principal amount of
$2,214,000  (the "Former Note") made by the Borrower and delivered to the Lender
remains  outstanding  as of the date  hereof  and shall  continue  to be secured
pursuant  to the terms of the Loan  Documents.  The  principal  balance  of this
Substituted  and  Amended  Capital  Note  includes  the  indebtedness   hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                           OF LOUISVILLE, INC.

                                                 By:
                                                 Its:



<PAGE>



                                                                       EXHIBIT C
                      SUBSTITUTED AND AMENDED CAPITAL NOTE

                                                          Morristown, New Jersey
$                                                                         [DATE]

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
FORT   WORTH,   INC.,   a  Delaware   corporation   (the   "Borrower"),   hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown,  New Jersey 07962-1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds,  the lesser of (i) the principal sum of AND NO/100 DOLLARS ($ ), and (ii)
the unpaid  amount of all "Capital  Loans"  (referred to below),  together  with
interest on the principal balance remaining from time to time unpaid at the rate
provided  below from the date such  principal is advanced  until payment in full
thereof.  This  Substituted  and Amended  Capital Note is referred to in and was
executed  and  delivered  pursuant  to  Section  2.04 of that  certain  Loan and
Security  Agreement dated as of February 28, 1995, as amended (as so amended and
restated,  and further amended,  restated and supplemented or modified from time
to time,  the "Loan  Agreement") by and between the Borrower and the Lender (the
"Loan  Agreement"),  to which  reference  is hereby made for a statement  of the
terms and conditions  under which the Capital Loans  evidenced  hereby are being
made and are to be  repaid.  All terms  which are  capitalized  and used  herein
(which are not otherwise  specifically  defined herein) and which are defined in
the Loan Agreement shall be used in this Substituted and Amended Capital Note as
defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but credit therefor shall, solely for the purpose of computing interest
earned by the Lender, be given on the


<PAGE>



date the same is honored by the Lender's  depository  bank and final  settlement
thereof is reflected by irrevocable credit to the Lender's account in such bank.
In no contingency or event whatsoever shall interest charged hereunder,  however
such  interest  may be  characterized  or  computed,  exceed  the  highest  rate
permissible  under any law which a court of competent  jurisdiction  shall, in a
final  determination,  deem  applicable  hereto.  In the event that such a court
determines  that the Lender has  received  interest  hereunder  in excess of the
highest rate  applicable  hereto,  the Lender shall promptly  refund such excess
interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain  Capital  Note  dated May 1, 1995 in the  original  principal  amount of
$2,970,000  (the "Former Note") made by the Borrower and delivered to the Lender
remains  outstanding  as of the date  hereof  and shall  continue  to be secured
pursuant  to the terms of the Loan  Documents.  The  principal  balance  of this
Substituted  and  Amended  Capital  Note  includes  the  indebtedness   hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                           OF FORT WORTH, INC.

                                                 By:
                                                 Its:



<PAGE>



                                                                       EXHIBIT C

                      SUBSTITUTED AND AMENDED CAPITAL NOTE

                                                          Morristown, New Jersey
$                                                                         [DATE]

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
COLUMBIA, INC., a Delaware corporation (the "Borrower"),  hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION,  a Delaware corporation
(the  "Lender"),  at its  office at 44  Whippany  Road,  Morristown,  New Jersey
07962-1983, or at such other place as the holder of this Substituted and Amended
Capital Note may from time to time designate in writing,  in lawful money of the
United States of America and in immediately  available  funds, the lesser of (i)
the principal sum of

         AND NO/100  DOLLARS ($ ), and (ii) the  unpaid  amount of all  "Capital
Loans"  (referred to below),  together with  interest on the  principal  balance
remaining from time to time unpaid at the rate provided below from the date such
principal  is advanced  until  payment in full  thereof.  This  Substituted  and
Amended  Capital Note is referred to in and was executed and delivered  pursuant
to Section 2.04 of that certain Loan and Security Agreement dated as of June 30,
1995, as amended (as so amended and restated, and further amended,  restated and
supplemented  or modified from time to time, the "Loan  Agreement") by and among
the Borrower,  American  Communication  Services of  Greenville,  Inc.,  and the
Lender (the "Loan Agreement"), to which reference is hereby made for a statement
of the terms and conditions  under which the Capital Loans evidenced  hereby are
being made and are to be repaid. All terms which are capitalized and used herein
(which are not otherwise  specifically  defined herein) and which are defined in
the Loan Agreement shall be used in this Substituted and Amended Capital Note as
defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire unpaid.

         Whenever in this Substituted and Amended Capital Note reference is made
to the Lender or Borrower,  such reference is made to include, as applicable,  a
reference to their respective successors


<PAGE>



and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                AMERICAN COMMUNICATION SERVICES
                                                            OF COLUMBIA, INC.

                                                By:
                                                Its:


<PAGE>



                                                                       EXHIBIT C

                      SUBSTITUTED AND AMENDED CAPITAL NOTE

$                                                                         [DATE]

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
GREENVILLE,   INC.,   a   Delaware   corporation   (the   "Borrower"),    hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown, New Jersey 07962- 1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds, the lesser of (i) the principal sum of

         AND NO/100  DOLLARS ($ ), and (ii) the  unpaid  amount of all  "Capital
Loans"  (referred to below),  together with  interest on the  principal  balance
remaining from time to time unpaid at the rate provided below from the date such
principal  is advanced  until  payment in full  thereof.  This  Substituted  and
Amended  Capital Note is referred to in and was executed and delivered  pursuant
to Section 2.04 of that certain Loan and Security Agreement dated as of June 30,
1995, as amended (as so amended and restated, and further amended,  restated and
supplemented  or modified from time to time, the "Loan  Agreement") by and among
the Borrower,  American Communication Services of Columbia, Inc., and the Lender
(the "Loan Agreement"), to which reference is hereby made for a statement of the
terms and conditions  under which the Capital Loans  evidenced  hereby are being
made and are to be  repaid.  All terms  which are  capitalized  and used  herein
(which are not otherwise  specifically  defined herein) and which are defined in
the Loan Agreement shall be used in this Substituted and Amended Capital Note as
defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next succeeding


<PAGE>



Business Day, and interest shall be payable thereon during such extension at the
rate specified above. Checks, drafts or similar items of payment received by the
Lender shall not constitute  payment,  but credit therefor shall, solely for the
purpose of  computing  interest  earned by the Lender,  be given on the date the
same is honored by the Lender's  depository bank and final settlement thereof is
reflected  by  irrevocable  credit to the Lender's  account in such bank.  In no
contingency or event whatsoever shall interest charged  hereunder,  however such
interest may be characterized  or computed,  exceed the highest rate permissible
under  any  law  which a  court  of  competent  jurisdiction  shall,  in a final
determination, deem applicable hereto. In the event that such a court determines
that the Lender has  received  interest  hereunder in excess of the highest rate
applicable  hereto,  the Lender shall  promptly  refund such excess  interest to
Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain  Capital Note dated July 21, 1995 in the original  amount of  $2,808,000
(the "Former  Note") made by the Borrower  and  delivered to the Lender  remains
outstanding as of the date hereof and shall  continue to be secured  pursuant to
the terms of the Loan Documents.  The principal  balance of this Substituted and
Amended Capital Note includes the indebtedness  hitherto evidenced by the Former
Note and to the extent such indebtedness is included in the principal balance of
this  Substituted  and Amended Capital Note, the Substituted and Amended Capital
Note (i) merely  reevidences the indebtedness  hitherto  evidenced by the Former
Note, (ii) is given in substitution  for, and not as payment of the Former Note,
and (iii) is in no way intended to constitute a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Substituted and Amended Capital Note.

         Whenever in this Substituted and Amended Capital Note reference is made
to the Lender or Borrower;:such  reference is made to include, as applicable,  a
reference to their  respective  successors  and assigns.  The provisions of this
Substituted  and  Amended  Capital  Note shall be binding  upon and inure to the
benefit of said successors and assigns.  Borrower's successors and assigns shall
include, without limitation,  a receiver,  trustee or debtor in possession of or
for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                           OF GREENVILLE, INC.
         
                                                 By:
                                                 Its:


<PAGE>



                                                                       EXHIBIT C

                      SUBSTITUTED AND AMENDED CAPITAL NOTE

                                                          Morristown, New Jersey
$                                                                         [DATE]

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
EL PASO, INC., a Delaware corporation (the "Borrower"),  hereby  unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION,  a Delaware corporation
(the  "Lender"),  at its  office at 44  Whippany  Road,  Morristown,  New Jersey
07962-1983, or at such other place as the holder of this Substituted and Amended
Capital Note may from time to time designate in writing,  in lawful money of the
United States of America and in immediately  available  funds, the lesser of (i)
the principal sum of AND NO/100  DOLLARS ($ ), and (ii) the unpaid amount of all
"Capital  Loans"  (referred to below),  together  with interest on the principal
balance  remaining  from time to time unpaid at the rate provided below from the
date such principal is advanced until payment in full thereof.  This Substituted
and  Amended  Capital  Note is  referred to in and was  executed  and  delivered
pursuant to Section 2.04 of that certain Loan and Security Agreement dated as of
September 8, 1995, as amended (as so amended and restated,  and further amended,
restated and  supplemented or modified from time to time, the "Loan  Agreement")
by and between the  Borrower and the Lender,  to which  reference is hereby made
for a  statement  of the terms and  conditions  under  which the  Capital  Loans
evidenced  hereby  are being  made and are to be  repaid.  All  terms  which are
capitalized  and used  herein  (which  are not  otherwise  specifically  defined
herein)  and  which  are  defined  in the Loan  Agreement  shall be used in this
Substituted and Amended Capital Note as defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but


<PAGE>



credit  therefor shall,  solely for the purpose of computing  interest earned by
the Lender, be given on the date the same is honored by the Lender's  depository
bank and final  settlement  thereof is  reflected by  irrevocable  credit to the
Lender's  account in such bank.  In no  contingency  or event  whatsoever  shall
interest  charged  hereunder,  however  such  interest may be  characterized  or
computed,  exceed the highest  rate  permissible  under any law which a court of
competent jurisdiction shall, in a final determination,  deem applicable hereto.
In the event that such a court determines that the Lender has received  interest
hereunder  in excess of the highest  rate  applicable  hereto,  the Lender shall
promptly refund such excess interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain Capital Note dated September 29, 1995 in the original  principal  amount
of  $4,125,000  (the "Former  Note") made by the  Borrower and  delivered to the
Lender  remains  outstanding  as of the date  hereof  and shall  continue  to be
secured  pursuant to the terms of the Loan Documents.  The principal  balance of
this  Substituted  and Amended Capital Note includes the  indebtedness  hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                              OF EL PASO, INC.

                                                 By:
                                                 Its:




<PAGE>



                      SUBSTITUTED AND AMENDED CAPITAL NOTE

$5,216,242.00                                             Morristown, New Jersey
                                                               September 6, 1996

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
LOUISVILLE,   INC.,   a   Delaware   corporation   (the   "Borrower"),    hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown,  New Jersey 07962-1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds,  the lesser of (i) the principal sum of FIVE MILLION TWO HUNDRED  SIXTEEN
THOUSAND TWO HUNDRED FORTY-TWO AND NO/100 DOLLARS ($5,216,242.00),  and (ii) the
unpaid amount of all "Capital Loans" (referred to below), together with interest
on the principal balance remaining from time to time unpaid at the rate provided
below from the date such  principal is advanced  until  payment in full thereof.
This Substituted and Amended Capital Note is referred to in and was executed and
delivered  pursuant to Section 2.04 of that certain Loan and Security  Agreement
dated as of October  17,  1994,  as amended  (as so amended  and  restated,  and
further  amended,  restated and  supplemented or modified from time to time, the
"Loan  Agreement")  by and  between  the  Borrower  and the  Lender  (the  "Loan
Agreement"),  to which reference is hereby made for a statement of the terms and
conditions under which the Capital Loans evidenced hereby are being made and are
to be repaid.  All terms which are  capitalized  and used herein  (which are not
otherwise  specifically  defined  herein)  and  which  are  defined  in the Loan
Agreement shall be used in this  Substituted and Amended Capital Note as defined
in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but credit therefor shall, solely for the purpose of computing interest
earned by the Lender, be given on the


<PAGE>



date the same is honored by the Lender's  depository  bank and final  settlement
thereof is reflected by irrevocable credit to the Lender's account in such bank.
In no contingency or event whatsoever shall interest charged hereunder,  however
such  interest  may be  characterized  or  computed,  exceed  the  highest  rate
permissible  under any law which a court of competent  jurisdiction  shall, in a
final  determination,  deem  applicable  hereto.  In the event that such a court
determines  that the Lender has  received  interest  hereunder  in excess of the
highest rate  applicable  hereto,  the Lender shall promptly  refund such excess
interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain Capital Note dated October 17, 1994 in the original  principal amount of
$2,214,000  (the "Former Note") made by the Borrower and delivered to the Lender
remains  outstanding  as of the date  hereof  and shall  continue  to be secured
pursuant  to the terms of the Loan  Documents.  The  principal  balance  of this
Substituted  and  Amended  Capital  Note  includes  the  indebtedness   hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                            OF LOUISVILLE, INC.

                                                 /s/ RICHARD A. KOZAK
                                                 Its: President & CEO




<PAGE>



                      SUBSTITUTED AND AMENDED CAPITAL NOTE


$6,665,024.00                                                  September 6, 1996

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
FORT   WORTH,   INC.,   a  Delaware   corporation   (the   "Borrower"),   hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown,  New Jersey 07962-1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds, the lesser of (i) the principal sum of SIX MILLION SIX HUNDRED SIXTY-FIVE
THOUSAND  TWENTY-FOUR  AND NO/100 DOLLARS  ($6,665,024.00),  and (ii) the unpaid
amount of all "Capital Loans" (referred to below), together with interest on the
principal  balance remaining from time to time unpaid at the rate provided below
from the date such  principal is advanced  until payment in full  thereof.  This
Substituted  and Amended  Capital  Note is referred to in and was  executed  and
delivered  pursuant to Section 2.04 of that certain Loan and Security  Agreement
dated as of February  28,  1995,  as amended (as so amended  and  restated,  and
further  amended,  restated and  supplemented or modified from time to time, the
"Loan  Agreement")  by and  between  the  Borrower  and the  Lender  (the  "Loan
Agreement"),  to which reference is hereby made for a statement of the terms and
conditions under which the Capital Loans evidenced hereby are being made and are
to be repaid.  All terms which are  capitalized  and used herein  (which are not
otherwise  specifically  defined  herein)  and  which  are  defined  in the Loan
Agreement shall be used in this  Substituted and Amended Capital Note as defined
in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but credit therefor shall, solely for the purpose of computing interest
earned by the Lender, be given on the


<PAGE>



date the same is honored by the Lender's  depository  bank and final  settlement
thereof is reflected by irrevocable credit to the Lender's account in such bank.
In no contingency or event whatsoever shall interest charged hereunder,  however
such  interest  may be  characterized  or  computed,  exceed  the  highest  rate
permissible  under any law which a court of competent  jurisdiction  shall, in a
final  determination,  deem  applicable  hereto.  In the event that such a court
determines  that the Lender has  received  interest  hereunder  in excess of the
highest rate  applicable  hereto,  the Lender shall promptly  refund such excess
interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain  Capital  Note  dated May 1, 1995 in the  original  principal  amount of
$2,970,000  (the "Former Note") made by the Borrower and delivered to the Lender
remains  outstanding  as of the date  hereof  and shall  continue  to be secured
pursuant  to the terms of the Loan  Documents.  The  principal  balance  of this
Substituted  and  Amended  Capital  Note  includes  the  indebtedness   hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment, protest and notice of nonpayment are hereby--waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                             OF FORT WORTH, INC.

                                                 /s/ RICHARD A. KOZAK
                                                 Its: President & CEO





<PAGE>



                      SUBSTITUTED AND AMENDED CAPITAL NOTE

$6,101,357.00                                                  September 6, 1996

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
COLUMBIA, INC., a Delaware corporation (the "Borrower"),  hereby unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION,  a Delaware corporation
(the "Lender"), at its office at 44 Whippany Road, Morristown, New Jersey 07962-
1983,  or at such other  place as the  holder of this  Substituted  and  Amended
Capital Note may from time to time designate in writing,  in lawful money of the
United States of America and in immediately  available  funds, the lesser of (i)
the  principal  sum of SIX  MILLION  ONE  HUNDRED  ONE  THOUSAND  THREE  HUNDRED
FIFTY-SEVEN  AND NO/100 DOLLARS  ($6,101,357.00),  and (ii) the unpaid amount of
all "Capital Loans" (referred to below), together with interest on the principal
balance  remaining  from time to time unpaid at the rate provided below from the
date such principal is advanced until payment in full thereof.  This Substituted
and  Amended  Capital  Note is  referred to in and was  executed  and  delivered
pursuant to Section 2.04 of that certain Loan and Security Agreement dated as of
June 30,  1995,  as amended (as so amended and  restated,  and further  amended,
restated and  supplemented or modified from time to time, the "Loan  Agreement")
by and among the Borrower, American Communication Services of Greenville,  Inc.,
and the Lender (the "Loan  Agreement"),  to which reference is hereby made for a
statement of the terms and  conditions  under which the Capital Loans  evidenced
hereby are being made and are to be repaid.  All terms which are capitalized and
used herein (which are not otherwise  specifically defined herein) and which are
defined in the Loan  Agreement  shall be used in this  Substituted  and  Amended
Capital Note as defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but credit therefor shall, solely for the purpose of computing interest
earned by the Lender, be given on the


<PAGE>



date the same is honored by the Lender's  depository  bank and final  settlement
thereof is reflected by irrevocable credit to the Lender's account in such bank.
In no contingency or event whatsoever shall interest charged hereunder,  however
such  interest  may be  characterized  or  computed,  exceed  the  highest  rate
permissible  under any law which a court of competent  jurisdiction  shall, in a
final  determination,  deem  applicable  hereto.  In the event that such a court
determines  that the Lender has  received  interest  hereunder  in excess of the
highest rate  applicable  hereto,  the Lender shall promptly  refund such excess
interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain  Capital Note dated July 21, 1995 in the original  amount of  $2,700,000
(the "Former  Note") made by the Borrower  and  delivered to the Lender  remains
outstanding as of the date hereof and shall  continue to be secured  pursuant to
the terms of the Loan Documents.  The principal  balance of this Substituted and
Amended Capital Note includes the indebtedness  hitherto evidenced by the Former
Note and to the extent such indebtedness is included in the principal balance of
this  Substituted  and Amended Capital Note, the Substituted and Amended Capital
Note (i) merely  reevidences the indebtedness  hitherto  evidenced by the Former
Note, (ii) is given in substitution  for, and not as payment of the Former Note,
and (iii) is in no way intended to constitute a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Substituted and Amended Capital Note.

         Whenever in this Substituted and Amended Capital Note reference is made
to the Lender or Borrower,  such reference is made to include, as applicable,  a
reference to their  respective  successors  and assigns.  The provisions of this
Substituted  and  Amended  Capital  Note shall be binding  upon and inure to the
benefit of said successors and assigns.  Borrower's successors and assigns shall
include, without limitation,  a receiver,  trustee or debtor in possession of or
for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                               OF COLUMBIA, INC.


                                                 /s/ RICHARD A. KOZAK
                                                 Its: President & CEO



<PAGE>



                      SUBSTITUTED AND AMENDED CAPITAL NOTE


$4,680,000.00                                                  September 6, 1996
         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
GREENVILLE,   INC.,   a   Delaware   corporation   (the   "Borrower"),    hereby
unconditionally  promises  to pay to the  order of AT&T  CREDIT  CORPORATION,  a
Delaware  corporation  (the  "Lender"),  at  its  office  at 44  Whippany  Road,
Morristown,  New Jersey 07962-1983, or at such other place as the holder of this
Substituted and Amended Capital Note may from time to time designate in writing,
in lawful  money of the United  States of America and in  immediately  available
funds,  the lesser of (i) the principal  sum of FOUR MILLION SIX HUNDRED  EIGHTY
THOUSAND AND NO/100 DOLLARS  ($4,680,000.00),  and (ii) the unpaid amount of all
"Capital  Loans"  (referred to below),  together  with interest on the principal
balance  remaining  from time to time unpaid at the rate provided below from the
date such principal is advanced until payment in full thereof.  This Substituted
and  Amended  Capital  Note is  referred to in and was  executed  and  delivered
pursuant to Section 2.04 of that certain Loan and Security Agreement dated as of
June 30,  1995,  as amended (as so amended and  restated,  and further  amended,
restated and  supplemented or modified from time to time, the "Loan  Agreement")
by and among the Borrower,  American Communication  Services of Columbia,  Inc.,
and the Lender (the "Loan  Agreement"),  to which reference is hereby made for a
statement of the terms and  conditions  under which the Capital Loans  evidenced
hereby are being made and are to be repaid.  All terms which are capitalized and
used herein (which are not otherwise  specifically defined herein) and which are
defined in the Loan  Agreement  shall be used in this  Substituted  and  Amended
Capital Note as defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but


<PAGE>



credit  therefor shall,  solely for the purpose of computing  interest earned by
the Lender, be given on the date the same is honored by the Lender's  depository
bank and final  settlement  thereof is  reflected by  irrevocable  credit to the
Lender's  account in such bank.  In no  contingency  or event  whatsoever  shall
interest  charged  hereunder,  however  such  interest may be  characterized  or
computed,  exceed the highest  rate  permissible  under any law which a court of
competent jurisdiction shall, in a final determination,  deem applicable hereto.
In the event that such a court determines that the Lender has received  interest
hereunder  in excess of the highest  rate  applicable  hereto,  the Lender shall
promptly refund such excess interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain  Capital Note dated July 21, 1995 in the original  amount of  $2,808,000
(the "Former  Note") made by the Borrower  and  delivered to the Lender  remains
outstanding as of the date hereof and shall  continue to be secured  pursuant to
the terms of the Loan Documents.  The principal  balance of this Substituted and
Amended Capital Note includes the indebtedness  hitherto evidenced by the Former
Note and to the extent such indebtedness is included in the principal balance of
this  Substituted  and Amended Capital Note, the Substituted and Amended Capital
Note (i) merely  reevidences the indebtedness  hitherto  evidenced by the Former
Note, (ii) is given in substitution  for, and not as payment of the Former Note,
and (iii) is in no way intended to constitute a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                             OF GREENVILLE, INC.

                                                 /s/ RICHARD A. KOZAK
                                                 Its: President & CEO




<PAGE>



                      SUBSTITUTED AND AMENDED CAPITAL NOTE


$5,529,387.00                                                  September 6, 1996

         FOR VALUE RECEIVED, the undersigned, AMERICAN COMMUNICATION SERVICES OF
EL PASO, INC., a Delaware corporation (the "Borrower"),  hereby  unconditionally
promises to pay to the order of AT&T CREDIT CORPORATION,  a Delaware corporation
(the  "Lender"),  at its  office at 44  Whippany  Road,  Morristown,  New Jersey
07962-1983, or at such other place as the holder of this Substituted and Amended
Capital Note may from time to time designate in writing,  in lawful money of the
United States of America and in immediately  available  funds, the lesser of (i)
the  principal  sum of FIVE  MILLION  FIVE HUNDRED  TWENTY-NINE  THOUSAND  THREE
HUNDRED  EIGHTY-SEVEN  AND NO/100 DOLLARS  ($5,529,387.00),  and (ii) the unpaid
amount of all "Capital Loans" (referred to below), together with interest on the
principal  balance remaining from time to time unpaid at the rate provided below
from the date such  principal is advanced  until payment in full  thereof.  This
Substituted  and Amended  Capital  Note is referred to in and was  executed  and
delivered  pursuant to Section 2.04 of that certain Loan and Security  Agreement
dated as of  September  8, 1995,  as amended  (as so amended and  restated,  and
further  amended,  restated and  supplemented or modified from time to time, the
"Loan Agreement") by and between the Borrower and the Lender, to which reference
is hereby  made for a  statement  of the terms and  conditions  under  which the
Capital Loans  evidenced  hereby are being made and are to be repaid.  All terms
which are  capitalized  and used herein  (which are not  otherwise  specifically
defined  herein)  and which are defined in the Loan  Agreement  shall be used in
this Substituted and Amended Capital Note as defined in the Loan Agreement.

         The  principal  indebtedness  evidenced  hereby  shall  be  payable  in
twenty-eight (28) consecutive  quarterly  installments,  as set forth in Section
2.06(b) of the Loan Agreement.  The principal  amount hereof may be prepaid only
in accordance with the terms of the Loan Agreement.

         Borrower  further  promises to pay interest on the  outstanding  unpaid
principal  amount hereof which remains unpaid from the date hereof until payment
in full hereof at the rates described in the Loan Agreement,  payable  quarterly
in arrears on the Payment  Dates and subject to  capitalization  of the interest
payable  prior  to the  Commitment  Termination  Date  in  accordance  with  the
provisions of Section 2.06 of the Loan Agreement, and calculated on the basis of
a 360-day year comprised of twelve 30 day months, compounded monthly;  provided,
however,  that if the Borrower  shall default in the payment of the principal or
interest hereof, the Borrower promises to, on demand, pay interest on the entire
unpaid  principal  amount  hereof at a rate equal to four percent (4%) per annum
above the rate of interest  that would  otherwise be  applicable,  from the date
such  payment is due to the date of actual  payment,  and if any other  Event of
Default  occurs and is  continuing,  the Borrower  promises  to, on demand,  pay
interest on the entire  unpaid  principal  amount  hereof at a rate equal to two
percent  (2%) per annum  above the rate of  interest  that  would  otherwise  be
applicable, until such Event of Default is cured.

         If payment hereunder becomes due and payable on a Saturday,  Sunday, or
legal holiday,  under the laws of the State of New Jersey,  the due date thereof
shall be extended to the next  succeeding  Business  Day, and interest  shall be
payable  thereon  during such  extension at the rate  specified  above.  Checks,
drafts or similar items of payment  received by the Lender shall not  constitute
payment, but credit therefor shall, solely for the purpose of computing interest
earned by the Lender, be given on the


<PAGE>



date the same is honored by the Lender's  depository  bank and final  settlement
thereof is reflected by irrevocable credit to the Lender's account in such bank.
In no contingency or event whatsoever shall interest charged hereunder,  however
such  interest  may be  characterized  or  computed,  exceed  the  highest  rate
permissible  under any law which a court of competent  jurisdiction  shall, in a
final  determination,  deem  applicable  hereto.  In the event that such a court
determines  that the Lender has  received  interest  hereunder  in excess of the
highest rate  applicable  hereto,  the Lender shall promptly  refund such excess
interest to Borrower.

         The  unpaid  balance of the  indebtedness  hitherto  evidenced  by that
certain Capital Note dated September 29, 1995 in the original  principal  amount
of  $4,125,000  (the "Former  Note") made by the  Borrower and  delivered to the
Lender  remains  outstanding  as of the date  hereof  and shall  continue  to be
secured  pursuant to the terms of the Loan Documents.  The principal  balance of
this  Substituted  and Amended Capital Note includes the  indebtedness  hitherto
evidenced by the Former Note and to the extent such  indebtedness is included in
the  principal  balance  of this  Substituted  and  Amended  Capital  Note,  the
Substituted  and Amended Capital Note (i) merely  reevidences  the  indebtedness
hitherto  evidenced by the Former Note, (ii) is given in  substitution  for, and
not as payment of the Former Note, and (iii) is in no way intended to constitute
a novation of the Former Note.

         Except as otherwise agreed in the Loan Agreement,  payments received by
the Lender from the Borrower on this  Substituted and Amended Capital Note shall
be applied  first to the payment of  interest  which is due and payable and only
thereafter to the outstanding principal balance.

         Presentment,  protest and notice of nonpayment are hereby waived by the
Borrower.

         This  Substituted and Amended Capital Note shall be interpreted and the
rights and  liabilities of the parties hereto  determined in accordance with the
internal laws (as opposed to conflicts of law  provisions)  and decisions of the
State of New Jersey.  Whenever  possible each provision of this  Substituted and
Amended  Capital Note shall be interpreted in such manner as to be effective and
valid under applicable law, but if any provision of this Substituted and Amended
Capital  Note shall be  prohibited  by or invalid  under  applicable  law,  such
provision shall be ineffective to the extent of such  prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this  Substituted and Amended Capital Note.  Whenever in this Substituted and
Amended Capital Note reference is made to the Lender or Borrower, such reference
is made to include,  as applicable,  a reference to their respective  successors
and assigns.  The provisions of this  Substituted and Amended Capital Note shall
be  binding  upon and  inure to the  benefit  of said  successors  and  assigns.
Borrower's successors and assigns shall include, without limitation, a receiver,
trustee or debtor in possession of or for the Borrower.

                                                 AMERICAN COMMUNICATION SERVICES
                                                               OF EL PASO, INC.

                                                           /s/ RICHARD A. KOZAK
                                                           Its: President & CEO