EXHIBIT 10.6

                        FIRST AMENDMENT TO LOAN AGREEMENT
                             AND SECURITY AGREEMENT

         THIS  AMENDMENT  to  Loan  Agreement  and  Security   Agreement   (this
"Amendment") is executed as of the 29th of March,  1999, by and between ELCOTEL,
INC.,  ELCOTEL DIRECT,  INC., and TECHNOLOGY  SERVICE GROUP, INC.  (successor by
merger with ELCOTEL  HOSPITALITY  SERVICES,  INC.),  all  Delaware  corporations
(collectively "Borrower"),and NATIONSBANK,  N.A., a National Banking Association
("Lender" or "Bank").

                                   WITNESSETH:

         WHEREAS,  Borrower and Lender  entered into that certain  Restated Loan
Agreement dated as of November 25, 1997 (the "Loan  Agreement") and that certain
Restated Security  Agreement dated November 25, 1997 (the "Security  Agreement";
the Loan Agreement and the Security Agreement are together referred to herein as
the "Agreements") in connection with a $15,000,000.00 loan; and

         NOW  THEREFORE,   in  consideration  of  this  Amendment  to  the  Loan
Agreements,  and  other  good  and  valuable  consideration,   the  receipt  and
sufficiency  of which is hereby  acknowledged,  the  parties  mutually  agree as
follows:

         1. This Amendment is a modification only and not a novation. All terms,
covenants and conditions of said Agreements remain unchanged except as specified
below.  This Amendment shall not waive any right or remedy afforded Lender under
said Agreements.

         2.  The  term  "note"  or  "promissory  note",  as  referred  to in the
Agreements,  includes  that  certain  First  Replacement  Note in the  amount of
$10,000,000.00,   that  certain  Second   Replacement  Note  in  the  amount  of
$4,000,000.00,  and that  certain  Promissory  Note in the  principal  amount of
$1,500,000.00,  each of  even  date  herewith,  all  executed  by  Borrower  and
delivered  to Lender.  The term "Line of Credit  Note"  shall refer to the First
Replacement  Note.  The  term  "Loan  ", as used  in this  Amendment  and in the
Agreements  shall  include the  indebtedness  evidenced by the  aforesaid  First
Replacement Note, Second Replacement Note, and Promissory Note.

         3. Borrower hereby warrants and covenants that it is in compliance with
all terms,  covenants and conditions of the Note, Agreements as modified hereby,
and all other  loan  documents  executed  in  connection  therewith  (the  "Loan
Documents").  Borrower hereby ratifies and confirms all warranties and covenants
contained  in the Note,  Agreements  and other Loan  Documents as of the date of
this Amendment.

         4. Disbursements  under the $1,500,000.00  Promissory Note described in
paragraph  2 above  shall be made by  Lender  to  finance  the  purchase  of new
equipment,  approved by Lender in writing and used in connection with, and to be
located on, the real property  described in the Agreements.  Such  disbursements
shall be limited to 75% of the purchase price of such equipment, excluding taxes
and fees, and shall be  conditioned  upon the delivery by Borrower to Lender of:
(a) a copy of the purchase order invoice(s) for the acquisition of the equipment
for which  disbursement is being sought and (b) evidence  satisfactory to Lender
that (1) such


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equipment is encumbered by a first perfected  security  interest for the benefit
of Lender,  as evidenced by security  agreements and UCC-1 Financing  Statements
filed at Borrower's expense in the applicable office(s),  and (2) all reasonable
requirements of Lender for similar transactions have been satisfied.

         5.  Subparagraph  1.F. of the Loan Agreement is deleted in its entirety
and replaced with the following:

         "F. Debt Service  Coverage  Ratio.  Debt Service  Coverage  Ratio means
Borrower's Net income ("NI") + Depreciation ("D") + Amortization  ("AMORT") less
Dividends ("DIV"), all divided by Current Maturities of Long Term Debt ("CMLTD")
plus Current  Maturities of Capital Leases ("CMCL") plus Interest Expense ("IE")
(i.e. NI + D + AMORT - DIV
      --------------------
       CMLTD + CMCL + IE)

         6. Paragraph 4.A.iv is hereby deleted.

         7.  Paragraph  5A is hereby  amended to increase  the  limitation  from
$500,000.00 to $1,500,000.00.

         8. For purposes of interpreting  subparagraph 2G of the Loan Agreement,
the figure "$15,00,000.00" shall be changed to "$10,000,000.00".

         9.  Subparagraph  2D of the Loan  Agreement is deleted in its entirety,
effective  as of the  date of this  Amendment,  and  replaced  by the  following
provision:

         "D.  Borrowing Base.  Borrowings  under the Line of Credit Note will be
         based on a Borrowing  Base formula and at no time will the  outstanding
         principal  balance of the Loan exceed the lesser of (1)  $10,000,000.00
         or (2) the sum of 80% of Eligible Domestic Accounts Receivable plus 40%
         of  Eligible  Inventory  (which  inventory  portion of the Loan will be
         capped  at  $4,000,000.00)  minus  the  aggregate  face  amount  of all
         outstanding Letters of Credit as hereinafter defined.  Borrower, at its
         expense  shall  deliver or cause to be delivered to Bank within 30 days
         of written request by Bank throughout the term of the Loan, an Eligible
         Inventory  Report,  in form  satisfactory  to Bank from  Borrower or at
         Bank's  option,  some other  inspector  chosen by Bank  listing  all of
         Borrower's  Eligible  Inventory on hand.  On the day of a draw request,
         the Borrower shall submit to Bank a certification, in form satisfactory
         to Bank, that Borrower is not in default under the Loan Agreement,  the
         Line  of  Credit  Note,  or  other  Loan   Documents.   Borrower  on  a
         consolidated  basis,  will  provide  Borrowing  Base  Certificates  and
         accounts  receivables  aging  lists  monthly,  or at any  such  time as
         required by Bank, which Borrowing Base Certificate  shall calculate the
         availability  under the full  commitment  of the Line, in form attached
         hereto as Exhibit  "A",  or such other  form as Bank  determines  to be
         acceptable in its sole discretion. Included in the calculation shall be
         any Letters of Credit which are being secured by the Loan.  The monthly
         Borrowing Base Certificate and accounts  receivable aging list shall be
         provided  within 20 days of month end.  If at any time the  outstanding
         balance of the Note exceeds the Borrowing Base, the Borrower shall have
         30 days to cure such default."


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<PAGE>

         10.  AS A  MATERIAL  INDUCEMENT  FOR BANK TO  EXECUTE  THIS  AMENDMENT,
BORROWER DOES HEREBY RELEASE,  WAIVE,  DISCHARGE,  COVENANT NOT TO SUE,  ACQUIT,
SATISFY AND FOREVER  DISCHARGE  BANK, ITS OFFICERS,  DIRECTORS,  EMPLOYEES,  AND
AGENTS  AND ITS  AFFILIATES  AND  ASSIGNS  FROM ANY AND ALL  LIABILITY,  CLAIMS,
COUNTERCLAIMS,  DEFENSES,  ACTIONS,  CAUSES  OF  ACTION,  SUITS,  CONTROVERSIES,
AGREEMENTS,  PROMISES AND DEMANDS  WHATSOEVER IN LAW OR IN EQUITY WHICH BORROWER
EVER HAD, NOW HAVE,  OR WHICH ANY PERSONAL  REPRESENTATIVE,  SUCCESSOR,  HEIR OR
ASSIGN OF BORROWER  HEREAFTER CAN, SHALL OR MAY HAVE AGAINST BANK, ITS OFFICERS,
DIRECTORS,  EMPLOYEES,  AND AGENTS, AND ITS AFFILIATES AND ASSIGNS, FOR, UPON OR
BY REASON OF ANY MATTER,  CAUSE OR THING  WHATSOEVER  THROUGH THE DATE  THEREOF.
BORROWER  FURTHER  EXPRESSLY  AGREES  THAT  THE  FOREGOING  RELEASE  AND  WAIVER
AGREEMENT  IS INTENDED TO BE AS BROAD AND  INCLUSIVE AS PERMITTED BY THE LAWS OF
THE STATE OF FLORIDA. IN ADDITION TO, AND WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, AND IN CONSIDERATION OF BANK'S EXECUTION OF THIS AMENDMENT,  BORROWER
COVENANTS WITH AND WARRANT UNTO BANK, AND ITS AFFILIATES AND ASSIGNS, THAT THERE
EXIST NO  CLAIMS,  COUNTERCLAIMS,  DEFENSES,  OBJECTIONS,  OFFSETS  OR CLAIMS OF
OFFSETS  AGAINST BANK OR THE OBLIGATION OF BORROWER TO PAY THE LOAN TO BANK WHEN
AND AS THE SAME BECOMES DUE AND PAYABLE.

         11.  Notwithstanding  any  provision to the  contrary  contained in the
Agreements, the parties agree to add the following thereto:

          "ARBITRATION.  ANY  CONTROVERSY  OR CLAIM BETWEEN OR AMONG THE PARTIES
HERETO  INCLUDING  BUT NOT  LIMITED TO THOSE  ARISING  OUT OF OR RELATING TO THE
AGREEMENTS OR THIS AMENDMENT OR ANY RELATED AGREEMENTS OR INSTRUMENTS, INCLUDING
ANY CLAIM  BASED ON OR ARISING  FROM AN ALLEGED  TORT,  SHALL BE  DETERMINED  BY
BINDING  ARBITRATION IN ACCORDANCE  WITH THE FEDERAL  ARBITRATION ACT (OR IF NOT
APPLICABLE,  THE APPLICABLE  STATE LAW). THE RULES OF PRACTICE AND PROCEDURE FOR
THE  ARBITRATION OF COMMERCIAL  DISPUTES OF JUDICIAL  ARBITRATION  AND MEDIATION
SERVICES, INC. (J.A.M.S.), AND THE "SPECIAL RULES" SET FORTH BELOW. IN THE EVENT
OF ANY  INCONSISTENCY,  THE  SPECIAL  RULES  SHALL  CONTROL.  JUDGMENT  UPON ANY
ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION.  ANY PARTY TO
THIS AMENDMENT MAY BRING AN ACTION, INCLUDING A SUMMARY OR EXPEDITED PROCEEDING,
TO COMPEL  ARBITRATION  OF ANY  CONTROVERSY  OR CLAIM TO WHICH THE AGREEMENTS OR
THIS AMENDMENT APPLIES IN ANY COURT HAVING JURISDICTION OVER SUCH ACTION.

         A. SPECIAL  RULES.  THE  ARBITRATION  SHALL BE CONDUCTED IN  BRADENTON,
FLORIDA, AND ADMINISTERED BY ENDISPUTE,  INC., D/B/A J.A.M.S./ENDISPUTE WHO WILL
APPOINT AN ARBITRATOR; IF J.A.M.S./ENDISPUTE IS UNABLE OR LEGALLY PRECLUDED FROM
ADMINISTERING THE ARBITRATION,  THEN THE AMERICAN  ARBITRATION  ASSOCIATION WILL
SERVE.  ALL ARBITRATION  HEARINGS WILL BE COMMENCED WITHIN 90 DAYS OF THE DEMAND
FOR ARBITRATION; FURTHER, THE ARBITRATOR SHALL ONLY, UPON A SHOWING OF CAUSE, BE
PERMITTED TO EXTEND THE  COMMENCEMENT OF SUCH HEARING FOR UP TO AN ADDITIONAL 60
DAYS.


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<PAGE>

         B. RESERVATION OF RIGHTS.  NOTHING IN THIS AMENDMENT SHALL BE DEEMED TO
(I) LIMIT THE APPLICABILITY OF ANY OTHERWISE  APPLICABLE  STATUTES OF LIMITATION
OR REPOSE AND ANY WAIVERS CONTAINED IN THE AGREEMENTS OR THIS AMENDMENT; OR (II)
BE A WAIVER BY THE LENDER OF THE PROTECTION  AFFORDED TO IT BY 12 U.S.C. SEC. 91
OR ANY  SUBSTANTIALLY  EQUIVALENT  STATE  LAW;  OR (III)  LIMIT THE RIGHT OF THE
LENDER  HERETO (A) TO EXERCISE  SELF HELP  REMEDIES SUCH AS (BUT NOT LIMITED TO)
SETOFF, OR (B) TO FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY COLLATERAL, OR
(C) TO OBTAIN FROM A COURT  PROVISIONAL  OR ANCILLARY  REMEDIES SUCH AS (BUT NOT
LIMITED TO)  INJUNCTIVE  RELIEF,  WRIT OF  POSSESSION  OR THE  APPOINTMENT  OF A
RECEIVER.  THE LENDER MAY EXERCISE  SUCH SELF HELP RIGHTS,  FORECLOSE  UPON SUCH
PROPERTY,  OR OBTAIN SUCH PROVISIONAL OR ANCILLARY  REMEDIES  BEFORE,  DURING OR
AFTER THE  PENDENCY  OF ANY  ARBITRATION  PROCEEDING  BROUGHT  PURSUANT  TO THIS
AMENDMENT.  NEITHER THIS EXERCISE OF SELF HELP REMEDIES NOR THE  INSTITUTION  OR
MAINTENANCE OF AN ACTION FOR  FORECLOSURE  OR PROVISIONAL OR ANCILLARY  REMEDIES
SHALL  CONSTITUTE A WAIVER OF THE RIGHT OF ANY PARTY,  INCLUDING THE CLAIMANT IN
ANY SUCH ACTION, TO ARBITRATE THE MERITS OF THE CONTROVERSY OR CLAIM OCCASIONING
RESORT TO SUCH REMEDIES."

         12.  Year 2000  Compliance.  Borrower  has (i)  initiated  a review and
assessment  of all areas within its and each of its  subsidiaries'  business and
operations  (including  those  affected by supplier and  vendors)  that could be
adversely  affected by the "Year 2000 Problem"  (that is, the risk that computer
applications  used by Borrower or any of its  subsidiaries (or its suppliers and
vendors)  may  be  unable  to  recognize  and  perform  properly  date-sensitive
functions  involving  certain  dates  prior to and any date after  December  31,
1999),  (ii)  developed a plan and timeline for addressing the Year 2000 Problem
on a timely basis,  and (iii) to date,  implemented that plan in accordance with
that  timetable.  Borrower  reasonably  believes that all computer  applications
(including  those of its  suppliers and vendors) that are material to its or any
of its  subsidiaries'  business and operations will on a timely basis be able to
perform properly date-sensitive functions for all dates before and after January
1, 2000 (that is, be "Year 2000 compliant"), except to the extent that a failure
to do so could not  reasonably be expected to have a material  adverse effect on
Borrower or its subsidiaries.  Borrower will promptly notify Lender in the event
Borrower discovers or determines that any computer application  (including those
of its supplier and vendors) that is material to its or any of its subsidiaries'
business  and  operations  will not be Year 2000  compliant  on a timely  basis,
except to the extent that such failure could not  reasonably be expected to have
a material adverse effect on Borrower or its subsidiaries.

         13. Nothing herein invalidates or shall impair or release any covenant,
condition,  agreement, or stipulation in the Note, Loan Agreements and any other
Loan Documents,  and the same, except as herein modified, shall continue in full
force and effect and the Borrower  further  covenants  and agrees to perform and
comply  with  and  abide  by  each  and  every  of  the  covenants,  agreements,
conditions, and stipulations of thereof which are not inconsistent herewith.

         14. This Amendment shall be binding upon and shall inure to the benefit
of the heirs,  executors,  administrators and assigns, or successors and assigns
of the respective parties hereto.


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<PAGE>

         15. All pronouns and all variations thereof shall be construed so as to
refer to the masculine,  feminine,  neuter, singular, and plural form thereof as
required by the identity of the person or persons or the situation.

         16.  This  instrument  may be  executed  in one  or  more  counterparts
(including telecopied counterpart(s)), each of which shall be deemed an original
and all of which taken together shall constitute one and the same instrument.

         17. As amended  hereby,  the Agreements  shall remain in full force and
effect.

         IN WITNESS  WHEREOF,  the parties have executed this First Amendment as
of the date and year first above written.

Signed, Sealed and Delivered                   NATIONSBANK, N.A.,
in the presence of:                            a National Banking Association

                                               By: /s/ Nathan Coon
---------------------------                        -----------------
*--------------------------                    Nathan Coon
*(Print Name of Witness)                       Vice President

                                               Address:  1605 Main Street
                                               Sarasota, FL  34236
---------------------------
*--------------------------
*(Print Name of Witness)                       (CORPORATE SEAL)

                                               LENDER

                                               ELCOTEL, INC., a
                                               Delaware corporation

                                               By: /s/ William H. Thompson
---------------------------                        -----------------------
*--------------------------                    William Thompson, Senior Vice
*(Print Name of Witness)                       President

                                               Address: 6428 Parkland Drive
                                               Sarasota, FL  34243

                                               (CORPORATE SEAL)
---------------------------
*--------------------------
*(Print Name of Witness)


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<PAGE>

                                            ELCOTEL DIRECT, INC., a
                                            Delaware corporation

                                            By: /s/ William H. Thompson
---------------------------                 ---------------------------
*--------------------------                 William Thompson,
*(Print Name of Witness)                    Vice President

                                            Address: 6428 Parkland Drive
                                            Sarasota, FL  34243

                                            (CORPORATE SEAL)
---------------------------
*--------------------------
*(Print Name of Witness)

                                            TECHNOLOGY SERVICE GROUP, INC.
                                            (successor by merger with ELCOTEL
                                            HOSPITALITY  SERVICES, INC.), a
                                            Delaware corporation

                                            By: /s/ William H. Thompson
---------------------------                     -----------------------
*--------------------------                 William Thompson,
*(Print Name of Witness)                    Vice President

                                            Address: 6428 Parkland Drive
                                            Sarasota, FL  34243

---------------------------                 (CORPORATE SEAL)
*--------------------------
*(Print Name of Witness)

                                             BORROWER


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