**EXHIBIT
        10.2**
 
 **AGREEMENT
        OF COMPROMISE,**
 **SETTLEMENT
        AND RELEASE**
 
 
 **PARTIES** **:**
 
 The
        parties to this AGREEMENT OF COMPROMISE, SETTLEMENT AND RELEASE (“Agreement”)
        are:
  ·
              ATSI
                  Communications, Inc., a Delaware corporation, now known as ATSI
                  Communications, Inc., a Nevada corporation, via merger (hereinafter
                  “Defendant” or “ATSI”), and
 
 ·
              Richard
                  C. Benkendorf (hereinafter “Plaintiff” or “Benkendorf” herein)
 
 **RECITALS** :
 
 WHEREAS,
        Benkendorf formerly sat on the Board of Directors for ATSI and was paid fees
        and
        expenses relating to various activities on behalf of ATSI; and
  WHEREAS,
        Benkendorf has alleged that fees and expenses remain unpaid and is due and
        owing
        and ATSI has disputed prior billings and submissions by Plaintiff;
        and
  WHEREAS,
        Benkendorf and ATSI have asserted various other claims against each other;
        and
  WHEREAS,
        Plaintiff instituted a lawsuit against ATSI in the County Court at Law No.
        2,
        Travis County, Texas bearing Cause No. C-1-CV-05-001154 (hereinafter the
        “Lawsuit”), after which ATSI appeared therein; and
  WHEREAS,
        the papers in said Lawsuit are incorporated herein regarding the publicly
        asserted claims and counterclaims by ATSI and Benkendorf as more particularly
        set forth in said Lawsuit; and
  1
 WHEREAS,
        bona fide disputes and controversies exist between the parties as to the
        amount
        owed Benkendorf, whether he previously agreed to abate charging for fees
        along
        with other directors, whether his claims were previously modified by agreement,
        whether Benkendorf was properly terminated, and other claims or offsets between
        the parties, whether or not publicly asserted in the Lawsuit; and
  WHEREAS,
        by reason of such disputes and controversies the parties hereto desire to
        compromise and settle all claims and causes of action of any kind whatsoever
        between the parties relating to the claims and defenses or potential
        counterclaims asserted or which could have been asserted in the Lawsuit and
        any
        and all other claims, known or unknown, if any, either party hereto may have
        against the other.
  NOW,
        THEREFORE, to buy peace and for the mutual agreements and understandings
        herein
        expressed, the receipt of which is hereby acknowledged, Benkendorf and ATSI
        do
        hereby contract and agree as follows:
  1.  ATSI
        promises to do the following:
  ·
              pay**$1,500**substantially contemporaneous with the execution of this
                  Agreement;
  2
  ·
              in
                  April 2006, ATSI will cause sufficient ATSI common stock to issue
                  to
                  Benkendorf on the 15thof
                  such month so that, the market value of such stock on the date
                  of issuance
                  is equivalent to no less than $7,614 based on theprice
                  of the last transaction price reported for transactions in the
                  ATSI common
                  stock on the Over-the-Counter Bulletin Board on the trading day
                  immediately precedingthe date of issuance, and will continue thereafter on a monthly
                  basis to
                  issue such stock so that stock valued at the time of issuance is
                  worth no
                  less than $7,614 based on theprice
                  of the last transaction price reported for transactions in the
                  ATSI common
                  stock on the Over-the-Counter Bulletin Board on the trading day
                  immediately precedingthe 15thof
                  each month until a total of stock valued at**$45,684**(valued at the time of the issuance of such stock when such stock
                  issuance
                  is due per this Agreement) in ATSI common stock is issued to Benkendorf;
                  and
  ·
              upon
                  written request by Benkendorf, ATSI will pay for a legal opinion
                  in
                  support of Benkendorf being able to lift the restrictions.
 
 2.  ATSI
        does
        not hereafter guarantee the minimum stock price for which Benkendorf may
        hereafter sell such stock issued to him in consideration of this Agreement;
        ATSI
        will, however, issue enough stock each month which, based on the market sale
        price at the time of issuance, equals to no less than $7,614 per month. Market
        price at the time of issuance of the stock will be based on the price
        of
        the last transaction price reported for transactions in the ATSI common stock
        on
        the Over-the-Counter Bulletin Board on the trading day immediately
        preceding the
        15 th of each
        month.
  3
 3.  Effective
        immediately, Benkendorf and his successors, affiliates, attorneys, agents,
        and
        assigns, and those in privity with him, does hereby release, acquit and
        discharge ATSI and its successors, affiliates, attorneys (including but not
        limited to Langley & Banack, Inc. and Peter Kilpatrick), agents, and assigns
        (including all current and former officers and directors of ATSI Communications,
        Inc. formerly a Delaware corporation, which includes but is not limited to
        Art
        Smith), and those in privity with them, of and from any and all claims, known
        or
        unknown, contingent or uncontingent, liquidated or unliquidated, demands
        and/or
        causes of action growing out of their prior relationship with each other,
        including but not limited to all matters set forth in the Lawsuit, it being
        understood that the only obligations remaining by and between the parties
        hereto
        are that as narrowly set forth herein.
  4.  Effective
        immediately, ATSI and its successors, affiliates, attorneys, agents, and
        assigns, and those in privity with them, do hereby release, acquit and discharge
        Benkendorf and his successors, affiliates, attorneys (including Jeremy Levine),
        agents, and assigns and those in privity with him, of and from any and all
        claims, known or unknown, contingent or uncontingent, liquidated or
        unliquidated, demands and/or causes of action growing out of their prior
        relationship with each other, including but not limited to all matters set
        forth
        in the Lawsuit.
  5.  No
        party
        herein admits or acknowledges any wrongdoing.
  6.  All
        parties agree that no cause of action or claims asserted to be owned by one
        party against the other has been assigned to any other person or company.
  7.  Upon
        the
        consummation of this Agreement, the parties will direct their attorneys to
        promptly seek dismissal of all claims and counterclaims by the parties in
        the
        Lawsuit by preparing the appropriate joint motion and order of dismissal
        of all
        claims and counterclaims in the Lawsuit.
  4
 8.  This
        Agreement represents the entire agreement between the parties. The parties
        further contract and agree that no oral agreement exists between the parties
        and
        that this settlement agreement can only be modified in writing if signed
        by all
        parties hereto.
  9.  All
        obligations under this Agreement are due to be performed in Travis County,
        Texas.
  10.  ATSI
        agrees and covenants not to hereafter disparage Benkendorf and Benkendorf
        agrees
        and covenants not to hereafter disparage ATSI or its officers and members
        of its
        Board of Directors.
  11.  Benkendorf
        asserts he was not removed as a Director by ATSI. If any third party should
        inquire to ATSI regarding Benkendorf, ATSI agrees it will not hereafter assert
        to third parties that Benkendorf was removed as a Director.
  12.  In
        the
        event ATSI should fail to comply with any of the payment (stock issuance)
        terms
        of this Agreement, ATSI will be given written notice by Benkendorf of such
        default and if ATSI fails to cure same within 20 days of receipt of such
        written
        notice, Benkendorf shall be entitled to twice the unpaid amount in any
        arbitration claim hereafter initiated by Benkendorf. Further, should ATSI
        breach
        the payment terms of this Agreement and fail to timely cure, Benkendorf may
        seek
        his reasonable and necessary attorney’s fees in connection with any arbitration
        claim hereafter initiated by Benkendorf.
  5
 13.  If
        any
        party breaches the terms hereof for which either side fails to cure within
        20
        days after notice an opportunity to cure, any dispute relating to this Agreement
        shall be submitted to binding arbitration in Travis County, Texas (using
        the
        Rules of the American Arbitration Association as a guide) per a single
        arbitrator mutually selected by the parties’ attorneys or, if the parties are
        unable to select one, a Court may appoint one. Such arbitration shall not
        be by
        the American Arbitration Association.
  14.  The
        scope
        of the release above is such that Benkendorf foregoes any rights, if any,
        which
        he otherwise would have to buy or receive stock in ATSI per any stock option
        or
        stock compensation plan. The only contractual rights Benkendorf hereafter
        has as
        to ATSI, including but not limited to issuance of stock, is set forth in
        this
        Agreement. Benkendorf asserts that 20% of the consideration he receives under
        this Agreement should be allocable to reimbursement of his attorneys fees;
        ATSI
        does not make any representations to Benkendorf regarding the taxability
        of the
        proceeds and consideration hereunder and leaves it to and among Benkendorf
        and
        his counsel as to Benkendorf’s payment of attorneys fees and/or allocation of
        consideration received to attorneys fees.
  15.  T his
        Agreement may be executed in counterparts and via fax, and a fax copy will
        be
        equivalent to an original. All signatories hereto represent and warrant that
        they have the authority to execute the binding promises and releases in this
        Agreement. This Agreement is not binding on any one party unless signed by
        or on
        behalf of both signatories below on or before March 17, 2006.
  6
  16.  This
        is
        an 8-page document with signature pages. Because of the number of drafts
        of this
        Agreement, this Agreement will also have initials for AS (Art Smith for ATSI)
        and RB (for Richard Benkendorf) to be applied to each non-signatory page.
        If
        this Agreement is not executed by all parties on or before March 27, 2006,
        this
        Agreement is not consummated.
  **AGREED:****ATSI
                  COMMUNICATIONS, INC.**
                a
                  Nevada Corporation, formerly a
                Delaware
                  Corporation
              **RICHARD
                  BENKENDORF**By:/s/ Art Smith
              /s/
                  Richard C. BenkendorfArt
                  Smith, Its President and
                Chief
                  Executive Officer
                Signed:
                  March 27, 2006
              Richard
                  C. Benkendorf, individually
                Signed:
                  March 27, 2006
 
 7
  APPROVED
        AS TO FORM BY COUNSEL TO PARTIES:
 
 **Langley
        & Banack, Inc** **.**
 745
        E.
        Mulberry, 9th Floor
 San
        Antonio, Texas 78212
 (210)
        736-6600 - Telephone
 (210)
        735-6889 - Telecopier
 
 By: /s/ PETER
        L. KILPATRICK
 PETER
        L.
        KILPATRICK
 State
        Bar
        No. 11416545
 **Attorneys
        for ATSI Communications, Inc.,** **a
        Nevada Corporation, formerly a Delaware Corporation, “Defendant” in the Lawsuit
        described above**
 
 
 **Walker,
        Bright & Lewis** **,
        P.C.**
 7000
        N.
        Mopac Expressway, Suite 490
 Austin,
        TX 78731
 (512)
        708-1600 - Telephone
 (512)
        708-1500 - Facsimile
 
 By: /s/
        JEREMY P. LEVINE
 JEREMY
        P.
        LEVINE
 State
        Bar
        No. 00791101
 **Attorneys
        for Richard C. Benkendorf, “Plaintiff” in Lawsuit described
        above**
 
 8