Document:

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                                                                   Exhibit 10.12

                         EXECUTIVE EMPLOYMENT AGREEMENT

Agreement made as of September 24, 1998, between AMERICAN TELESOURCE
INTERNATIONAL, Inc., a Delaware corporation (the "Company"), and Arthur L. Smith
("Executive").

     The Company and the Executive desire to enter into certain agreements
providing for Executive's employment with the Company.

The parties hereto agree as follows:

     1.   Employment.  The Company agrees to employ Executive and Executive
          ----------
accepts such employment for the period beginning August 1, 1998 (the "Start
Date") and ending upon termination pursuant to paragraph 1 (D) hereof (the
                                               ---------------
"Employment Period").

(A)  Services.  During the Employment Period, Executive will be the Chief
     --------
Executive Officer of the Company, and in connection therewith will render such
services of an executive and administrative character to the Company and its
affiliates as are customarily rendered by persons holding such position with
similarly situated companies, as the Board of Directors of American TeleSource
International Inc., a Delaware, U.S.A. corporation (the "Board") may from time
to time direct.  Executive will devote his best efforts and substantially all of
his business time and attention (except as otherwise specifically permitted
herein and except for vacation periods and reasonable periods of illness or
other incapacity) to the business of the Company and its affiliates and will
faithfully and diligently carry out such duties and have such responsibilities
as are customary among persons employed in substantially similar capacities for
similar companies. Executive will report to the Board and shall faithfully and
diligently comply with all of its reasonable and lawful directives.  For
purposes of this Agreement, the term "affiliates" means any corporation, limited
partnership, limited liability company or other entity engaged in the same
business as the Company or a related business, which controls, is controlled by
or is under common control with the Company.

(B)  Salary.  During the Employment Period and thereafter as provided in
     ------
paragraph (D) below, the Company will pay Executive a base salary at the rate of
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not less than $130,000 per annum (or such higher amount as the Board may
establish from time to time), and will be payable in accordance with the
Company's regular payroll practices.

(C)  Benefits.  In addition to the compensation described above in this
     --------
paragraph 1, Executive will be entitled during the Employment Period to the
------------
following benefits:

     (1)  such bonus as the Board in its sole discretion may from time to time
authorize, but in no event shall bonuses paid during a year exceed 50% of
Executive's base salary for such year;

     (2)  such health insurance and other benefits as are available from time to
time to the Company's salaried employees generally;

     (3)  in accordance with the Company's vacation and absence paid as in
effect from time to time, sick leave, personal time provided that Executive
shall have no less than three weeks vacation each year, with salary;

     (4)  reimbursement, upon submission of documentation in accordance with the
Company's regular expense policies, for reasonable business expenses incurred on
the Company's behalf by Executive;

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     (5)  participation in any savings plan, 401(k) plan, profit sharing plan or
pension plan as is available from time to time to the Company's salaried
employees generally; and

     (6)  opportunity to participate in any and all employee benefit plans from
time to time in effect for executives or salaried employees of the Company
generally (subject to any contribution therefore generally required by such
employees and except to the extent such plans are in a category of benefit
otherwise provided to Executive).

(D)  Termination.  Unless earlier terminated by termination of Executive's
     -----------
employment pursuant to any of the provisions immediately below, Executive's
employment with the Company will continue until the third anniversary of the
Start Date, and Executive's employment shall be renewed automatically for one-
year periods thereafter unless either party hereto gives written notice to the
other party, at least 120 days prior to the next anniversary date, that such
employment shall not be renewed:

     (1)  Death.  In the event of Executive's death during the term hereof,
          -----
Executive's employment hereunder shall immediately and automatically terminate.
Notwithstanding such event, the Company shall pay to Executive's designated
beneficiary or, if no beneficiary has been designated by Executive, to his
estate, the base salary at the rate in effect on the date of death for a period
of 6 months.  The Company shall also pay to Executive's designated beneficiary
or, if no beneficiary has been designated by Executive, to his estate, any
incentive compensation that is earned but unpaid, based on the operations of the
Company for the whole year, prorated through the date of death.

     (2)  Disability.
          ----------

               (a)  The Company may terminate Executive's employment hereunder,
upon notice to Executive, in the event that Executive becomes disabled during
his employment hereunder through any illness, injury, accident or condition of
either a physical or psychological nature and, as a result, is unable to perform
substantially all of his duties and responsibilities hereunder for 90 days
during any period of 365 consecutive calendar days. In the event of such
termination, until the earliest of (i) the conclusion of the then-current term
of this Agreement and (ii) the conclusion of a period of 6 months following the
date of termination, the Company shall continue to pay Executive the base salary
at the Rate in effect on the date of termination and shall continue to
contribute to the cost of Executive's participation in the Company's group
medical and dental insurance plan, if any, provided that Executive is entitled
to continue such participation under applicable law and plan terms. The Company
will also pay Executive, in the case of such termination, any incentive
compensation that is earned but unpaid, based on the operations of the Company
for the whole year, prorated through the date of such termination;

               (b)  While receiving disability income payments under the
Company's disability income plan, if any, Executive shall be entitled to receive
the excess, if any, of base salary under paragraph I (B) hereof over such
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disability income payments, and shall be entitled to receive such bonus and
other benefits as are described in paragraph 1(C), until the termination of his
                                   -------------
employment and except to the extent a longer period is specified in paragraph
                                                                    ---------
1(D)(2)(a).
---------

     (3)  Termination by the Company without Cause.  The Company may at any time
          ----------------------------------------
terminate Executive's employment without Cause (as defined below) by giving
Executive written notice of the effective date of termination.  In the event of
such termination, the Company shall have the continuing obligation to make
payments of base salary in accordance with paragraph (B) above at the rate in
                                           -------------
effect on the effective date of such termination until the third anniversary of
the Start Date or until 24 months after the effective date of such termination,
whichever period is longer.  Additionally, during such period following
termination as the Company shall have the continuing obligation to make payments
of base salary, the Company shall continue to contribute to the cost of
Executive's participation in the Company's group medical and insurance plans, if
any, provided that Executive is entitled to continue such participation under
applicable law and plan.  The Company will also pay Executive, in the event of

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such termination, any incentive compensation that is earned but unpaid, based on
operations of the Company for the whole year, prorated through the date of his
termination.

     (4)  Termination by the Company for Cause. The Company shall have the right
          ------------------------------------
to terminate the Executive's employment at any time for any of the following
reasons (each of which is referred to herein as "Cause") by giving Executive
written notice of the effective date of termination (which effective date may be
the date of such notice):

               (a)  the willful breach of any provision of paragraphs 1(A), 2,
                                                           ------------------
3, 4 or 5 (including, but not limited to, a refusal to follow reasonable and
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lawful directives of the Board; provided, however, that to the extent that such
breach is curable, the Board will give Executive written notice of such breach
and Executive will have 30 days from the receipt of such notice to cure such
breach;

               (b)  any act of fraud, embezzlement or other material dishonesty
with respect to any aspect of the Company's business;

               (c)  continued use of illegal drugs;

               (d)  substantial failure of performance, repeated or continued
after written notice of such failure and explanation of such failure of
performance, which is reasonably determined by the Board of Directors to be
materially injurious to the business or interests of the Company; or

               (e)  conviction of a felony or of a crime involving moral
                    turpitude.

               If the Company terminates Executive's employment for any of the
reasons set forth above in this paragraph 1(D)4, the Company shall have no
                                ---------------
other obligations hereunder (including the obligation to continue to make
base salary as provided in paragraph 1(D)3 from and after the effective date of
                           ---------------
payments of termination and shall have all other rights and remedies available
under this or any other agreement and at law or in equity.

     (5)  By the Executive for Good Reason.  Executive may terminate his
          --------------------------------
employment hereunder for Good Reason, upon written notice to the Company setting
forth the nature of such Good Reason in reasonable detail.  "Good Reason" shall
mean:

               (a)  the material failure of the Company to provide Executive the
base salary and incentive compensation and benefits in accordance with the terms
of paragraph 1 and paragraph 6 hereof;
   ---------------------------

               (b)  the material diminution in the nature or scope of
Executive's responsibilities, duties or authority; or

               (c)  the occurrence of a Change in Control (as defined herein).

     In the event of termination in accordance with this paragraph 1(D)(5), the
                                                         -----------------
Company shall continue to pay Executive the base salary at the rate in effect on
the effective date of such termination until the third anniversary of the Start
Date or until 24 months after the effective date of such termination, whichever
period is longer.  Additionally, during such period following termination as the
Company shall have the continuing obligation to make payments of base salary,
the Company shall continue to contribute to the cost of Executive's
participation in the Company's group medical and insurance plans, if any,
provided that Executive is entitled to continue such participation under
applicable law and plan.  The Company will also pay Executive, in the event of
such termination, any incentive compensation that is earned but unpaid, based on
operations of the Company for the whole year, prorated through the date of his
termination.

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     A "Change in Control" shall be deemed to have occurred if (i) any "person"
(as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act
of 1934, as amended), becomes the "beneficial owner" (as such term is defined in
Rule 13d-3 under the Act), directly or indirectly, of outstanding securities of
the Company representing 40% or more of the combined voting power of the
outstanding securities of the Company, or (ii) during any period of two
consecutive years, individuals who at the beginning of such period constitute
the Board of Directors of the Company and any new director whose election by the
Board of Directors or nomination for election by the shareholders of the Company
was approved by a vote of at least two-thirds (2/3) of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved, cease for any
reason to constitute a majority thereof, or (iii) the shareholders of the
Company approve (A) a merger or consolidation of the Company with any other
entity (other than a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 60% of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation), (B) a plan of complete
liquidation of the Company or (C) an agreement or agreements for the sale or
disposition, in a single transaction or series of related transactions, by the
Company of all or substantially all of the property and assets of the Company.
Notwithstanding the foregoing, events otherwise constituting a Change in Control
in accordance with the foregoing shall not constitute a Change in Control if
such events are solicited by the Company and are, if Executive is then a member
of the Board, approved, recommended or supported by Executive in his capacity as
a member of the Board of the Company in actions taken prior to, and with respect
to, such events.

     (6)  Voluntary Termination by Executive.  Except as provided in paragraph
          ----------------------------------                         ---------
1(D)(5), in the event that Executive's employment with the Company is terminated
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by Executive, such termination shall be a breach of this Agreement and the
Company shall have no further obligations hereunder from and after the date of
such termination.

     2.   Nondisclosure.  Executive acknowledges that during the course of his
          -------------
performance of services for the Company he has acquired and will acquire
technical knowledge with respect to the Company's business operations,
including, by way of illustration, the Company's existing and contemplated
services, trade secrets, patents and selling techniques and information,
customer lists, supplier lists, and confidential information relating to the
Company's policy and/or business strategy (all of such information herein
referenced to as the "Confidential Information"); provided, however, that the
term "Confidential Information" shall not include (a) any information which is
or becomes publicly available otherwise than through breach of this Agreement,
or (b) any information which is or becomes known or available to Executive on a
non-confidential basis and not in contravention of applicable law from a source
which is entitled to disclose such information to Executive.  Executive agrees
that he will not, while he is employed by the Company, divulge to any person,
directly or indirectly, except to the Company or its officers and agents or as
reasonably required in connection with his duties on behalf of the Company, or
use, except on behalf of the Company, any Confidential Information acquired by
Executive during the term of his employment.  Executive agrees that he will not,
at any time after his employment with the Company has ended, divulge to any
person directly or indirectly any Confidential Information.  Executive further
agrees that if his relationship with the Company is terminated (for whatever
reason) he shall not take with him but will leave with the Company all records,
papers and computer data and any copies thereof relating to the Confidential
Information (or if such papers, records, computer data or copies are not on the
premises of the Company, Executive agrees to return such papers, records and
computer data immediately upon his termination).  Executive acknowledges that
all such papers, records, computer data or copies thereof are and remain the
property of the Company.

     3.   Inventions and Patents.  Executive agrees that all inventions,
          ----------------------
innovations or improvements relating to the Company's business or method of
conducting business (including new contributions, improvements, ideas and
discoveries, whether patentable or not) conceived or made by him during his
employment with the Company belong

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to the Company. Executive will promptly disclose such inventions, innovations or
improvements to the Board and perform all actions reasonably requested by the
Board to establish and confirm such ownership.

     4.   Other Businesses.  During the Employment Period, Executive agrees
          ----------------
that he will not, directly or indirectly except with the express written consent
of the Board, become engaged in, render material services for, or permit his
name to be used in connection with, or directly or indirectly counsel or consult
with, any business other than the business of the Company and its affiliates;
provided, however, that Executive may be a passive investor in any such business
(subject to the limitations set forth in paragraph 5  below).
                                         -----------

     5.   Noncompetition.  Executive agrees that:
          --------------

               (A)  During the term he performs services for the Company and
during the Post-Employment Period (as defined below), Executive will not
interfere with the relationship between the Company or any affiliate and any
employee, agent or representative of the Company or any such affiliate.

               (B)  During the term he performs services for the Company and
during the Post-Employment Period, Executive will not directly or indirectly
divert or attempt to divert from the Company or any affiliate any business which
provides telecommunications services in the United States or Latin America,
including, without limitation, domestic and international call services or
domestic and international telecommunications networks for voice, data, fax
and/or video transmission between the United States and Latin America or within
Latin America, or any related business in which the Company has been actively
engaged during the term Executive performed services for the Company, nor
interfere with the relationships of the Company with customers, dealers,
distributors, franchisees or sources of supply.

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          (C)  During the term he performs services for the Company and during
the Post-Employment Period, Executive will not directly or indirectly own,
manage, operate control, be employed by, participate in, or be connected in any
manner with the ownership, management, operation or control of, any business or
enterprise which provides telecommunications services in the United States or
Latin America, including, without limitation, domestic and international call
services or domestic and international telecommunication networks for voice,
data, fax and/or video transmission between the United States and Latin America
or within Latin America, or any related business in which the Company has been
actively engaged during the then Executive performed services for the Company.

          (D)  For purposes hereof, the "Post-Employment Period" shall mean: (i)
in the event Executive's employment with the Company is terminated for Cause
pursuant to paragraph 1(D)(4), the 12-month period following Executive's
            -----------------
termination of employment with the Company, or (ii) in the event Executive's
employment with the Company is terminated for any reason other reason, the
period during which the Company continues to make payments of base salary.

     6.   Stock Option.  Effective as of the date hereof (the "Effective
          ------------
Date"), under the terms of the American TeleSource International, Inc. (ATSI)
1998 Stock Option Plan (the "Plan"), ATSI, a Delaware corporation ("ATSI"),
hereby grants to Executive the option (the "Option") to purchase shares (the
"Option Shares") of Common Stock, no par value per share, of ATSI, subject to
the requisite approval of the Plan by ATSI's Board of Directors and ATSI's
shareholders.  The number of Option Shares, the purchase price per Option Share
and the installments and dates in which the Executive shall have the right to
exercise the Option are attached to this Agreement as Exhibit "B".  The Plan is
attached to this Agreement as Exhibit "A".  Beginning on the Effective Date,
such installments shall be cumulative (i.e. once the right to purchase the
number of shares of an installment has accrued, such shares may be purchased at
any time thereafter, or in part from time to time, until the business day
immediately preceding the tenth anniversary of the Effective Date (the
"Expiration Date") or until such earlier date as set forth in the following
paragraph.  Notwithstanding the preceding sentence, upon the occurrence of a
Change in Control, Executive's right to exercise the Option shall become fully
vested (i.e., all unissued Option Shares may be purchased at any time
thereafter, or in part from time to time, until the Expiration Date or until
such earlier date as set forth in the following paragraph).

     Upon termination of Executive's employment pursuant to Paragraph 1(D)(4)
                                                            -----------------
(Termination by the Company for Cause) or paragraph 1(D)(6) (Voluntary
                                          -----------------
Termination by Executive), the Option shall remain exercisable for the four
month period following such termination, but only to the extent such option was
exercisable at termination.  Upon termination of Executive's employment pursuant
to paragraph 1(D)(1) (Death) or paragraph 1(D)(2) (Disability), the Option, to
   -----------------            -----------------
the extent then exercisable, shall remain exercisable for the one-year period
following such termination.   Upon termination of Executive's employment
pursuant to paragraph  (D)(3) (Termination by the Company without Cause) or
            -----------------
paragraph 1(D)(5) (By the Executive for Good Reason), Executive's right to
-----------------
exercise the Option shall become fully vested and the Option shall remain
exercisable for the four-month period following such termination.

     7.   General Provisions.
          ------------------

          (A)  Notices.  Any notice provided for in this Agreement must be in
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writing and must be either personally delivered, or mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service, to the recipient at the address below indicated:

          To the Company: Attn.: Board of Directors
                          12500 Network Boulevard, Suite 407
                          San Antonio, Texas 78249

          To Executive:   At Executive's last known address as listed

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                         with the Company

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any
notice under this Agreement will be deemed to have been given when so delivered
or sent or if mailed, five days after so mailed.

          (B)  Severability.   Whenever possible, each provision of this
               ------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to he invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision in such jurisdiction or any other jurisdiction, or the
legality or enforceability of such provision in any other jurisdiction, but this
Agreement will be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained herein
except that any court having jurisdiction shall have the power to reduce the
duration, area or scope of such invalid, illegal or unenforceable provision and,
in its reduced form it shall be enforceable.

          (C)  Complete Agreement.  This Agreement embodies the complete
               ------------------
agreement and understanding between the parties and supersedes and preempts any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have been related to the subject matter hereof in any
way.

          (D)  Successors and Assigns.  This Agreement is a personal service
               ----------------------
contract and is not assignable by the Executive.  Subject to the Executive's
rights under paragraph 1(D)(5)(d), this Agreement may be assigned from time to
             --------------------
time by the Company.  This Agreement shall be binding on and inure to the
benefit of the parties hereto and such parties' respective successors, personal
representatives and permitted assigns.

          (E)  Choice of Law.  All questions concerning the construction,
               -------------
validity and interpretation of this Agreement will be governed by the internal
law, and not the law of conflicts, of the State of Texas.

          (F)  Remedies.  Each of the parties to this Agreement will be
               --------
entitled to enforce his or its rights under this Agreement specifically, to
recover damages (including, without limitation, reasonable fees and expenses of
counsel) by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in his or its favor.  The parties hereto
agree and acknowledge that money damages may not be an adequate remedy for any
breach or threatened breach of the provisions of this Agreement and that any
party may in his or its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
Such injunction or decree shall be available without the posting of any bond or
other security.

          (G)  Amendments and Waivers.  Any provision of this Agreement may be
               ----------------------
amended or waived only with the prior written consent of Executive and a
majority of the Board.

          (H)  Absence of Conflicting Agreements.  Executive hereby warrants
               ---------------------------------
and covenants that his employment by the Company does not result in a breach of
the terms, conditions or provisions of any agreement to which Executive is
subject.

          (I)  Survival.  No termination of Executive's employment by either or
               --------
both parties shall reduce or terminate Executive's covenants and agreements in
paragraphs 2, 3 and 5.
---------------------

    IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered on the day and year first above written.

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"Company"           AMERICAN TELESOURCE INTERNATIONAL, INC.
                    By:  _______________________________________________
                    Name:  _____________________________________________
                    Title:  ____________________________________________

"Executive"
                    _____________________________________________________
                                    Arthur L. Smith

                                      54<PAGE>

                                                                   EXHIBIT 10.14
                              EMPLOYMENT AGREEMENT

     This Employment Agreement ("Agreement"), executed this _______ day of
September, 1999 to be effective as of January 1, 2000, is between AMERICAN
TELESOURCE INTERNATIONAL, INC., a Delaware corporation (the "Employer"), and
Craig K. Clement ("Employee").

                                R E C I T A L S:

     A.   The Employer and Employee entered into an Executive Employment
          Agreement dated effective January 1, 1997 for a period of three years.

     B.   The Employer decided not to renew the Executive Employment Agreement,
          and has given notice to Employee that the Executive Employment
          Agreement will not renew and will therefore terminate effective
          December 31, 1999.

     C.   The Employer and Employee agreed to enter into new employment
          agreement for a one year term on the terms and conditions herein
          provided.

     D.   The Employer considers the maintenance of a sound management team,
          including Employee, essential to protecting and enhancing its best
          interests and those of its stockholders.

     E.   Employee will be an officer of the Employer and Employee will be a
          member of Employer's management team.

     NOW, THEREFORE, in consideration of Employee's future employment with
Employer and other good and valuable consideration, the parties agree as
follows:

     Section 1.  Employment.  The Employer hereby employs Employee, and Employee
hereby accepts employment, upon the terms and subject to the conditions stated
in this Agreement.

     Section 2.  Duties.  Employee shall be employed as Senior Vice President,
Corporate Development of the Employer,  or such other positions with Employer to
which he may be appointed by the Board of Directors of the Employer (the
"Board").  It is understood that Employee may be requested from time to time to
provide assistance or services to, or act as an officer or director of the
Employer or any of its subsidiaries or other affiliates.   Employee shall
perform such services and, if elected as a director or officer of any such
company, shall hold such office (and discharge its duties) without additional
compensation other than the compensation set forth in this Agreement; provided,
                                                                      ---------
however, that this Agreement does not prohibit (or require) the affiliates of
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Employer from offering additional compensation. Employee agrees to devote his
full work time and best efforts to the performance of the duties as an Employee
of Employer and to the performance of such other duties as assigned him from
time to time by the Board or the Chairman.

     Section 3.  Term.  The initial term of employment of Employee hereunder
shall continue for one year, from January 1, 2000 ("Employment Date") until
December 31, 2000, unless earlier terminated pursuant to Section 6 herein.

     Section 4.  Compensation and Benefits.  In consideration for the services
of Employee hereunder, the Employer shall compensate Employee as follows:

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     (a) Base Salary.  Until the termination of Employee's employment hereunder,
Employer shall pay Employee a base salary at the rate of at least $1950.46 per
week ("Base Salary"), payable in accordance with the regular payroll practices
of the Employer for executives, less such deductions or amounts as are required
to be deducted or withheld by applicable laws or regulations and less such other
deductions or amounts, if any, as are authorized by Employee.  The Base Salary
may not be decreased at any time during the term of Employee's employment
hereunder Any increase in Base Salary shall be in the sole discretion of the
Compensation Committee of the Board.

     (b) Executive Bonus Plan.  Employee shall be eligible to receive from the
Employer such  management incentive bonuses as may be provided in management
incentive bonus plans adopted from time to time by Employer.

     (b) Vacation.  Employee shall be entitled time off in accordance with the
Employee's vacation and absence policy, as it may be modified from time to time
during Employee's employment hereunder, provided that Employee will have no less
than three (3) weeks of paid vacation during the initial term of this Agreement,
and each subsequent year if the initial term is extended.

     (c) Life Insurance Benefits.  Employer shall pay the premiums allocable to
a term life insurance policy in the face amount of $50,000 covering Employee as
the named insured, subject to Employee's passing a standard physical examination
in order to permit issuance of the policy at standard (non-rated) premiums and
satisfaction of any other standard underwriting requirements.  Employee shall be
the owner of such policy and shall have the right to designate the beneficiary
of the policy proceeds.  Employee shall be liable for income taxes with respect
to premium amounts includable in Employee's taxable income.

     (d) Group Insurance Benefits.  Employee shall be entitled to participate in
the Employer's group health and disability programs as are made available to the
Employer's other executives and officers and the Employee's participation in
such programs shall be at the same rates which are available to the Employer's
other executives and officers.

     (e) Savings Plans.  Employee shall be entitled to participate in Employer's
401(k) plan, or other retirement or savings plans as are made available to the
Employer's other executives and officers on the same terms which are available
to the Employer's other executives and officers.

     (f) Health Club Membership.  Employer shall pay for or reimburse Employee
for a family membership at a health and fitness club of Employee's choosing,
provided that the total cost of the membership does not exceed $75 per month.

     Section 5.  Expenses.  The parties anticipate that in connection with the
services to be performed by Employee pursuant to the terms of this Agreement,
Employee will be required to make payments for travel, entertainment of business
associates and similar expenses.  Employer shall reimburse Employee for all
appropriate and reasonable expenses authorized by Employer and incurred by
Employee in the performance of his duties hereunder.  Employee shall comply with
such budget limitations and approval and reporting requirements with respect to
expenses as Employer may establish from time to time.

     Section 6.  Termination.

     (a) General.  Employee's employment hereunder shall commence on the
Employment Date and continue until the end of the term specified in Section 3,
except that the employment of Employee hereunder shall terminate prior to such
time in accordance with the following:

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          (i) Death or Disability.  Upon the death of Employee during the term
     of his employment hereunder or, at the option of Employer, in the event of
     Employee's Disability, upon 30 days' notice to Employee.  "Disability" with
     respect to an Employee shall be deemed to exist if the Employee meets the
     definition of either "disabled" or "disability" under the terms of the
     Employer's long-term disability benefit program (including the definitions
     for total or partial disability). Any refusal by Employee to submit to a
     reasonable medical examination to determine whether Employee is so disabled
     shall be deemed  to constitute conclusive evidence of Employee's
     disability.

         (ii)  For Cause.  For "Cause" immediately upon written notice by
     Employer to Employee.  A termination shall be for "Cause" if:

         (1)        Employee commits fraud, bribery, embezzlement or other
               material dishonesty with the respect to the business of Employer,
               or Employer discovers that Employee has committed any such act in
               the past with respect to a previous employer; or

         (2)        Employee commits a felony or any criminal act involving
               moral turpitude or Employer discovers that Employee has committed
               any such act in the past; or

         (3)        Employee commits a material breach of any of the covenants,
               representations, terms or provisions hereof; or

         (4)        Employee violates any instructions or policies of Employer
               with respect to the operation of its business or affairs or
               Employee fails to obey written directions delivered to Employee
               by the Employer's Board or Chairman of the Board; or

         (5)        Employee commits or omits to perform any act the performance
               of which or the omission of which constitutes substantial failure
               of Employee to diligently and effectively perform his duties to
               Employer or adversely affects or could adversely affect the
               Employer's business reputation; or

         (6)        Employee uses illegal drugs.

         (iii) Without Cause.  Without Cause immediately upon notice by
     Employer to Employee.

     (b) Severance Pay.

         (i)   Termination Upon Death or Disability or For Cause. Employee shall
     not be entitled to any severance pay or other compensation upon termination
     of his employment pursuant to Section 6(a)(i) or (ii) except for his Base
     Salary accrued but unpaid as of the date of termination, unpaid expense
     reimbursements under Section 5 for expenses incurred in accordance with the
     terms hereof prior to termination, compensation for accrued, unused
     vacation as of the date of termination ("Accrued Amounts"), and in the
     event of termination pursuant to Section 6(a)(i) for Disability, an amount
     equal to twenty-six (26) times the difference between the Base Salary in
     effect at the time of termination and twenty-six weeks worth of the benefit
     to be paid under the Employer's long term disability plan. This amount
     shall be paid in a lump sum no later than ten (10) business days following
     the date of Employee's termination.

         (ii)  Termination Without Cause.  In the event Employee's employment
     hereunder is terminated pursuant to Section 6(a)(iii) prior to the
     expiration of the initial term of this Agreement (as such initial term may
     have been extended), Employer shall pay Employee, as consideration for the
     execution of
                                      57
<PAGE>

     a separation and release agreement and in lieu of any further compensation
     payable hereunder other than Accrued Amounts, a cash amount equal to
     twenty-six (26) times Employee's then current Base Salary. Such separation
     payment shall be Employee's sole remedy in connection with such
     termination. The separation payment shall be made as specified above
     without regard to the number of months remaining in the term of this
     Agreement, and shall be paid in a lump sum within ten (10) business days of
     the Employee's execution of a separation and release agreement.

     (c) Change in Control.  If a "Change in Control" occurs during Employee's
employment under this Agreement, and if Employee's employment is terminated
"Without Cause" pursuant to Section 6(a)(iii) above prior to the end of a period
of twenty-four (24) months beyond the month in which a "Change in Control"
occurs, or if Employee voluntarily terminates his employment prior to the end of
a period three (3) months beyond the month in which a Change in Control of the
Employer occurs, Employee shall receive  the amount determined pursuant to
Section 6(b)(ii) above.  A "Change in Control" of Employer shall be deemed to
have occurred if (i) any "person" or "group" (as such terms are used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Act")),
becomes the "beneficial owner" (as such term is defined in Rule 13d-3 under the
Act), directly or indirectly, of outstanding securities of Employer representing
40% of more of the combined voting power of the outstanding securities of the
Employer, or (ii) during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board cease for any reason to
constitute a majority of the Board (except that any new director who is elected
by the Board to fill a vacancy created by the death, resignation or
disqualification of a member of the Board shall not be considered a new member
of the Board for purposes of this definition), or (iii) the shareholders of
Employer approve (A) a merger or consolidation of Employer with any other
entity, other than a merger or consolidation which would result in the voting
securities of Employer outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) at least 60% of the combined voting power of
the voting securities of Employer, or (B) a plan of complete liquidation of
Employer, or (C) an agreement or agreements for the sale or disposition, in a
single transaction or series of related transactions, by the Employer of all or
substantially all of the property and assets of Employer.

Section 7.  Inventions; Assignment.

     (a) Inventions Defined.  All rights to discoveries, inventions,
improvements, designs and innovations (including all data and records pertaining
thereto) that relate to the business of Employer, including its affiliates,
whether or not able to be patented, copyrighted or reduced to writing, that
Employee may discover, invent or originate during the term of his employment
hereunder, and for a period of six months thereafter, either alone or with
others and whether or not during working hours or by the use of the facilities
of Employer ("Inventions"), shall be the exclusive property of Employer.
Employee shall promptly disclose all Inventions to Employer, shall execute at
the request of Employer any assignments or other documents Employer may deem
necessary to protect or perfect its rights therein, and shall assist Employer,
at Employer's expense, in obtaining, defending and enforcing Employer's rights
therein.  Employee hereby appoints Employer as his attorney-in-fact to execute
on his behalf any assignments or other documents deemed necessary by Employer to
protect or perfect its rights to any Inventions.

     (b) Covenant to Assign and Cooperate.  Without limiting the generality of
the foregoing, Employee shall assign and transfer to Employer the world-wide
right, title and interest of Employee in the Inventions.  Employee agrees that
Employer may apply for and receive patent rights (including Letters Patent in
the United States) for the Inventions in Employer's name in such countries as
may be determined solely by Employer.  Employee shall communicate to Employer
all facts known to Employee relating to the Inventions and shall cooperate with
Employer's reasonable requests in connection with vesting title to the
Inventions and related patents exclusively in Employer and in connection with
obtaining, maintaining and protecting Employer's exclusive patent rights in the
Inventions.
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<PAGE>

     (c)  Successors and Assigns. Employee's obligations under this Section 7
          shall inure to the benefit of Employer, its affiliates and their
          respective successors and assigns and shall survive the expiration of
          the term of this Agreement for such time as may be necessary to
          protect the proprietary rights of Employer and its affiliates in the
          Inventions.

     Section 8.  Confidential Information.

     (a) Acknowledgment of Proprietary Interest.  Employee acknowledges the
proprietary interest of Employer and its affiliates in all Confidential
Information (as defined below).  Employee agrees that all Confidential
Information learned by Employee during his employment with Employer or
otherwise, whether developed by Employee alone or in conjunction with others or
otherwise, is and shall remain the exclusive property of Employer.  Employee
further acknowledges and agrees that his disclosure of any Confidential
Information will result in irreparable injury and damage to Employer.

     (b) Confidential Information Defined.  "Confidential Information" means all
trade secrets, copyrightable works,  confidential or proprietary information of
Employer or its affiliates, including without limitation, (i) information
derived from reports, investigations, experiments, research and work in
progress, (ii) methods of operation, (iii) market data, (iv) proprietary
computer programs and codes, (v) drawings, designs, plans and proposals, (vi)
marketing and sales programs, (vii) the identities of clients or customers ,
(viii) historical financial information and financial projections, (ix) pricing
formulae and policies, (x) all other concepts, ideas, materials and information
prepared or performed for or by Employer and (xi) all information related to the
business, services, products, purchases or sales of Employer or any of its
suppliers and customers, other than information that is publicly available.

     (c) Covenant Not To Divulge Confidential Information.  Employer is entitled
to prevent the disclosure of Confidential Information.  As a portion of the
consideration for the employment of Employee and for the compensation being paid
to Employee by Employer, Employee agrees at all times during the term of his
employment hereunder and thereafter to hold in strict confidence and not to
disclose or allow to be disclosed to any person, firm or corporation, other than
to persons engaged by Employer to further the business of Employer, and not to
use except in the pursuit of the business of Employer, the Confidential
Information, without the prior written consent of Employer.

     (d) Return of Materials at Termination.  In the event of any termination or
cessation of his employment with Employer for any reason, Employee shall
promptly deliver to Employer all documents, data and other information derived
from or otherwise pertaining to Confidential Information.  Employee shall not
take or retain any documents or other information, or any reproduction or
excerpt thereof, containing or pertaining to any Confidential Information.

     Section 9.  Non-Solicitation.

     (a) Solicitation of Employees.  During Employee's employment with Employer
and for a period of twelve (12) months after termination of such employment at
any time and for any reason, and regardless of whether any payments are made to
Employee under this Agreement as a result of such termination, Employee shall
not solicit, participate in or promote the solicitation of any person who was
employed by Employer or any of its affiliates at the time of Employee's
termination of employment with Employer to leave the employ of Employer or any
of its affiliates, or, on behalf of himself or any other person, hire, employ or
engage any such person.  Employee further agrees that, during such time, if an
employee of Employer or any of its affiliates contacts Employee about
prospective employment, Employee will inform such employee that he or she cannot
discuss the matter further without the consent of Employer (and the applicable
affiliate).

                                      59
<PAGE>

     (b) Solicitation of Clients, Customers, Etc.  During Employee's employment
with Employer and for a period of twelve (12) months after termination of
Employee's employment at any time and for any reason, and regardless of whether
any payments are made to Employee under this Agreement as a result of such
termination, Employee shall not, directly or indirectly, solicit any person who,
at the time of termination of Employee's employment with Employer, was a client,
customer, policyholder, vendor, consultant or agent of Employer or its
affiliates to discontinue business, in whole or in part, with Employer or its
affiliates.  Employee further agrees that, during such time, if such a client,
customer, policyholder, vendor, or consultant or agent contacts Employee about
discontinuing business with Employer or moving that business elsewhere, Employee
will inform such client, customer, policyholder, vendor, consultant or agent
that he or she cannot discuss the matter further without the consent of Employer
(and the applicable affiliate).

     Section 10.  No-Compete.

     (a) Competition During Employment.  Employee agrees that during the term of
his employment with Employer, neither he nor any of his affiliates, will
directly or indirectly compete with Employer or its affiliates in any way, and
that he will not act as an officer, director, employee, consultant, shareholder,
lender, or agent of any entity which is engaged in any business of the same
nature as, or in competition with, the businesses in which Employer and its
affiliates are now engaged or in which Employer or its affiliates become engaged
during the term of employment; provided, however, that this Section 10(a) shall
not prohibit Employee or any of his affiliates from: (i) purchasing or holding
an aggregate equity interest of up to 1%, so long as Employee and his affiliates
combined do not purchase or hold an aggregate equity interest of more than 5%,
in any business in competition with Employer and its affiliates.    Furthermore,
Employee agrees that during the term of employment, he will undertake no
planning for the organization of any business activity competitive with the work
he performs as an employee of Employer and Employee will not combine or conspire
with any other employees of Employer and its affiliates for the purpose of the
organization of any such competitive business activity.

     (b) Competition Following Employment.  In order to protect Employer against
the unauthorized use or the disclosure of any Confidential Information of
Employer and its affiliates presently known or hereinafter obtained by Employee
during his employment under this Agreement, Employee agrees that for a period of
twelve (12) months after the termination or cessation of his employment with
Employer at any time and for any reason, and regardless of whether any payments
are made to Employee under this Agreement as a result of such termination,
neither Employee nor any of his affiliates, shall, directly or indirectly, for
itself or himself or on behalf of any other corporation, person, firm,
partnership, association, or any other entity (whether as an individual, agent,
servant, employee, employer, officer, director, shareholder, investor,
principal, consultant or in any other capacity):

               (i) engage or participate in any business which engages in
          competition with such businesses being conducted by Employer or any of
          its affiliates during the term of employment anywhere in any state in
          the United States or in any foreign country where the Employer or any
          of its affiliates provides telecommunications services, including,
          without limitation, domestic and international call services or
          domestic and international telecommunications networks of voice, data,
          fax or video transmission to or from the United States and Latin
          America or within Latin America, or any other business in which the
          Employer or any of its affiliates has been actively engaged during the
          term Employee performed services for the Employer; provided, however,
          that this provision shall not prohibit Employee or any of his
          affiliates from purchasing or holding an aggregate equity interest of
          up to 1%, so long as Employee and his affiliates combined do not
          purchase or hold an aggregate equity interest of more than 5%, in any
          business in competition with Employer;

               (ii) assist or finance any person or entity in any manner or in
          any way inconsistent with the intents and purposes of this Agreement.

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<PAGE>

       Section 11.  General.

       (a) Notices.  All notices and other communications hereunder shall be in
writing or by written telecommunication, and shall be deemed to have been duly
given if delivered personally or if mailed by certified mail, return receipt
requested or by written telecommunication, to the relevant address set forth
below, or to such other address as the recipient of such notice or communication
shall have specified to the other party in accordance with this Section 11(a):

       If to Employer, to:

       American TeleSource International, Inc.
       12500 Network Boulevard, Suite 407
       San Antonio, Texas, 78249
       Attention:  Chairman of the Board
        (or the subsequent headquarters of Employer as known to Employee)

       If to Employee, to the Employee's last known address appearing on
Employer's records

       (b) Withholding.  All payments required to be made to Employee by
Employer under this Agreement shall be subject to the withholding of such
amounts, if any, relating to federal, state and local taxes as may be required
by law.

       (c) Equitable Remedies.  Each of the parties hereto acknowledges and
agrees that upon any breach by Employee of his obligations under any of Sections
7, 8, 9, and 10 Employer shall suffer immediate, great and irreparable injury
and shall have no adequate remedy at law.  Accordingly, in event of such
breach,  Employer shall be entitled, in addition other remedies and without
showing actual damages, to specific performance and other appropriate injunctive
and equitable relief.

       (d) Severability.  If any provision of this Agreement is held to be
illegal, invalid or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision never comprised a part hereof, and the remaining
provisions hereof shall remain in full force and effect and shall not be
affected by the illegal, invalid or unenforceable provision or by its severance.
Furthermore, in lieu of such illegal, invalid or unenforceable provision, there
shall be added automatically as part of this Agreement a provision as similar in
its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.

       (e) Waivers.  No delay or omission by either party in exercising any
right, power or privilege hereunder shall impair such right, power or privilege,
nor shall any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other right, power
or privilege.

       (f) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

       (g) Captions.  The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.

       (h) Interpretation of Agreement.  This Agreement shall be construed
according to its fair meaning and not for or against either party.  Use of the
words "herein," "hereof," "hereto," "hereunder" and the like in this Agreement
refer to this Agreement only as a whole and not to any particular section or
subsection of this

                                      61
<PAGE>

Agreement, unless otherwise noted. The masculine gender shall be deemed to
denote the feminine or neuter genders, the singular to denote the plural, and
the plural to denote the singular, where the context so permits.

       (i) Binding Agreement; Assignment.  This Agreement shall be binding upon
and inure to the benefit of the parties and shall be enforceable by the personal
representatives and heirs of Employee and the successors and assigns of
Employer.  The affiliates of Employer shall be considered third party
beneficiaries of this Agreement with respect to any services provided by
Employee to them and in connection with Employee's covenants in Sections 7,8,9
and 10 hereof.  This Agreement may be assigned by the Employer; provided that in
the event of any such assignment, the Employer shall remain liable for all of
its obligations hereunder and shall be liable for all obligations of all such
assignees hereunder.  If Employee dies while any amounts would still be payable
to him hereunder, such amounts shall be paid to Employee's estate.  This
Agreement is not otherwise assignable by Employee.

       (j) Entire Agreement. This Agreement contains the entire understanding of
the parties, supersedes all prior agreements and understandings relating to the
subject matter hereof and may not be amended except by a written instrument
hereafter signed by each of the parties hereto.

       (k) Governing Law.  This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the State of Texas,
without regard to its choice of law principles.

       (l) Arbitration.  Without limiting Employer's right to seek equitable
remedies under Section 11(c) above,  Employer and Employee agree that any
dispute or controversy arising under or in connection with this Agreement shall
be settled by arbitration.  Arbitration under this Agreement shall be governed
by the Federal Arbitration Act and proceed in San Antonio, Texas in accordance
with the rules of the American Arbitration Association ("AAA").  Arbitration
will be conducted before a panel of three neutral arbitrators selected from a
AAA list of proposed arbitrators with business law experience.  Either party may
take any legal action needed to protect any right pending completion of the
arbitration.  The arbitrator will determine whether an issue is arbitrable and
will give effect to applicable statutes of limitation.  The arbitrator has the
discretion to decide, upon documents only or with a hearing, any motion to
dismiss for failure to state a claim or any motion for summary judgment.
Discovery shall be governed by the Federal Rules of Civil Procedure and the
Federal Rules of Evidence.  All information developed by the arbitration or
litigation shall be held in confidence subject to such protective orders as the
arbitrator deems useful to ensure complete confidentiality. The decision of the
arbitrator shall be final and binding on all parties to this Agreement, and
judgment thereon may be entered in any court having jurisdiction over the
parties.  All costs of the arbitration proceeding or litigation to enforce the
arbitration award shall be paid by the party against whom the arbitrator
decides.

       (m) Employee Representations.   Employee represents and certifies to
Employer that he:  (i) has received a copy of this Agreement for review and
study and has had ample time to review it before signing; (ii) has read this
Agreement carefully; (iii) has been given a fair opportunity to discuss and
negotiate the terms of this Agreement; (iv) understands its provisions; (v) has
had the opportunity to consult his attorney; (vi) has determined that it is in
his best interest to enter into his Agreement; (vii) has not been influenced to
sign this Agreement by any statement or representation by Employer or its
counsel not contained in this Agreement; and (viii) enters into this Agreement
knowingly and voluntarily.

                                      62
<PAGE>

     EXECUTED as of the date and year first above written.

                          AMERICAN TELESOURCE INTERNATIONAL, INC.

                                   By /s/ Arthur L. Smith
                                      -------------------
                                      Chairman of Board of Directors

                                     /s/ Craig K. Clement
                                     --------------------
                                     Craig K. Clement

                                      63

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