Document:

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                                                                    Exhibit 10.9

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Lender:                                           Loan and Security Agreement
      NTFC CAPITAL CORPORATION,  a subsidiary of  GE CAPITAL CORPORATION
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BORROWER INFORMATION

BORROWER: AMERICAN TELESOURCE INTERNATIONAL, INC. ("ATII"), and each Subsidiary
of ATII on a joint and several basis

Person to contact/Title: Doug Saathoff, CFO

Address: 12500 Network Blvd., Suite 407
City:  San Antonio
County:
State:  Texas
Zip Code: 78249
Telephone Number: 210-558-6090
Facsimile Number: 210-558-6095

_X_ Corporation
___ Partnership
___ Cooperative

AGREEMENT TERMS AND CONDITIONS SET FORTH BELOW AND ON FOLLOWING PAGES

Fees:
Borrowers shall pay to Lender an Origination Fee equal to one percent (1%) of
the Commitment Amount (20,000) on the closing date.  Borrower also shall pay at
closing the expenses of Lender's counsel incurred in the preparation,
negotiation and finalization of this Agreement and all attendant documentation
and on the date of each subsequent Advance such expenses incurred since the
closing date.

Interest Rate:
A fixed rate per annum of interest equal to the five year bank swap rate as
reported on the First Borrowing Date on Telerate, plus 495 basis points.  If
Telerate should cease publication or cease publishing such rate, Lender shall
designate a comparable reference rate for use in determining the Interest Rate
hereunder.

Agreement Date: June______, 1999

Financing Termination Date:  ___________, 1999

Commitment Amount      (US) $2,000,000

No. Of Payments: 20 payments after the expiration of the Capitalized Interest
Period

Supplier:  NORTEL and any other vendor approved by Lender

Initial Payment Date: The first day of the first calendar quarter following the
Conversion Date

Interest Payment Date: The Initial Payment Date and the first day of each
subsequent calendar quarter.

Payment Date: The Initial Payment Date and first day of each subsequent calendar
quarter.

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Payment Schedule:

All amounts borrowed and outstanding hereunder shall be amortized and repaid
quarterly, in arrears, in 20 equal payments of principal and interest sufficient
to pay the Note in full, commencing on the Initial Payment Date, and on each
Payment Date thereafter through and including the Maturity Date, provided,
however, in any event the final payment shall be in an amount equal to all
outstanding principal hereunder, plus all accrued and unpaid interest and all
other unpaid charges hereunder.

Capitalized Interest Period:

The period of six full calendar months following the First Borrowing Date.

During the Capitalized Interest Period, interest shall accrue on all principal
amounts outstanding under the Note at the Interest Rate, and up to an aggregate
of the maximum amount of Capitalized Interest shall be capitalized, monthly in
arrears, and added to the principal amount of the Note by Lender, on behalf of
Borrower, on the first day of each calendar month, thereby increasing the
principal amount of the Note.  The Lender may also evidence such increase by
noting the date and amount of each such addition on a schedule to the Note.
Interest accruing during the Capitalized Interest hereto shall be paid by
Borrower monthly in arrears, on the first day of each calendar month, commencing
on the first day of the month after the month in which such limit is exceeded.

Interest Only Period: N/A

Collateral Location Schedule: San Antonio, Texas

First Borrowing Date: The date of the first borrowing hereunder by a Borrower

Maximum Amount of Capitalized Interest: N/A

Conversion Date: The last day of the capitalized Interest Period

Maturity Date: The twentieth Payment Date

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     1.   COMMITMENT TO LEND:  (a)  Subject to the terms and conditions provided
in this Loan and Security Agreement ("Agreement") and so long as no Event of
Default (as defined in Section 14 hereof) or event or condition which with
notice or passage of time or both would constitute an Event of Default has
occurred and is continuing hereunder, Lender agrees to lend to AMERICAN
TELESOURCE INTERNATIONAL, INC., a Delaware corporation ("ATII"), to the Domestic
and/or Foreign Subsidiaries of ATII which are signatories to this Agreement, and
to such additional Domestic and/or Foreign Subsidiaries of ATII which hereafter
may become a party hereto pursuant to Section 1(b) hereof (ATII, Domestic and/or
Foreign Subsidiaries of ATII which are signatories to this Agreement, and such
additional Domestic and/or Foreign Subsidiaries of ATII which may hereafter
become a party hereto pursuant to Section 1(b) of this Agreement are
individually referred to as a "Borrower" and collectively as the "Borrowers"),
                               --------                           ---------
until the Termination Date set forth above, an amount in the aggregate not to
exceed the Commitment Amount set forth above, which sum shall be used solely for
the purchase by a Borrower of telecommunications equipment and associated
software sublicenses from the Supplier pursuant to one or more Purchase
Agreements (individually, a "Purchase Agreement" and collectively,  the
"Purchase Agreements") made by and between the Supplier and such Borrower for
installation, if such Borrower is a Domestic Borrower, in the United States,
Mexico and other Latin American jurisdictions, and if such Borrower is a Foreign
Borrower, in Mexico and other Latin American jurisdictions. "Subsidiary" means,
                                                             ----------
as to any person, a corporation, partnership, limited liability company or other
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or other ownership interests having such power
only by reason of the happening of a contingency) to elect a majority of the
board of directors or other managers of such corporation, partnership, limited
liability company, or other entity, are at the time owned, or the management of
which is otherwise controlled, directly or indirectly, through one or more
intermediaries, or both, by such person.  "Domestic Subsidiary" means a
                                           -------------------
Subsidiary incorporated under the laws of the United States, one of the states
of the United States, the District of Columbia, or any territory, possession or
protectorate of the United States.  "Foreign Subsidiary" means a Subsidiary
                                     ------------------
incorporated under the laws of any jurisdiction other than the laws of the
United States, one of the states of the United States, the District of Columbia,
or any territory, possession or protectorate of the United States. "Domestic
                                                                    --------
Borrower" means ATII or a Borrower which is a Domestic Subsidiary of ATII, and
--------
"Foreign Borrower" means a Borrower which is a Foreign Subsidiary of ATII.
 ----------------
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of
ATII.

     (b)  Lender and each Borrower acknowledge and agree that subject to the
terms and conditions of this Agreement, ATII shall cause Domestic and/or Foreign
Subsidiaries of ATII formed or acquired hereafter to become a Borrower hereunder
(without the consent of any other Borrower) by executing a form of the annex to
this Agreement set forth as Exhibit A and such additional Domestic Subsidiaries
                            ---------
may thereafter borrow amounts hereunder to finance the acquisition of equipment
which is, or is to be placed, in the United States, Mexico and other Latin
American jurisdictions, and such additional Foreign Subsidiaries of ATII may
thereafter borrow amounts hereunder to finance the acquisition of equipment
which is, or is to be placed, in Mexico and other Latin American jurisdictions.
ATII and the other Borrowers agree that, prior to any additional Subsidiary of
ATII becoming a Borrower hereunder, such Subsidiary and ATII shall execute and
deliver to Lender a form of the annex to this Agreement set forth as Exhibit A,
and if required by Lender cause the delivery of an opinion of legal counsel to
ATII and such additional Subsidiary dated the date of the execution of the form
of the annex to this Agreement set forth as Exhibit A in form and substance
satisfactory to Lender and such other documents as the Lender may request,
including but not limited to a certificate of a responsible officer of such
additional Subsidiary as to the authority of such additional Subsidiary to
execute, deliver and perform this Agreement and the Notes and as to the
incumbency and signature of the officer or officers signing Borrowing
Certificates and Notes.

     (c)  The obligations of each Domestic Borrower hereunder and under each
Note evidencing amounts from time to time advanced hereunder to a Borrower shall
be joint and several obligations of ATII and all other Domestic Borrowers. The
obligations of each Foreign Borrower hereunder and under each Note evidencing
amounts from time to time advanced hereunder to a Foreign Borrower shall be
joint and several obligations of ATII and all other Borrowers.

     2.   THE NOTES AND PAYMENT TERMS: All advances of funds to a Foreign
Borrower (a "Foreign Borrower Advance") shall be evidenced by a single
promissory note in the form of Exhibit B-1 executed by the Borrowers (the
"Foreign Borrowing Note"), which shall be in a form and substance satisfactory
to the Lender and

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represent the joint and several obligations of the Borrowers to pay the
aggregate unpaid advances on the Foreign Borrowing Note (the "Foreign Principal
Amount"), plus any accrued interest thereon, and all extensions, renewals or
modifications thereof including, without limitation, any expenses of Lender or
other amounts due to Lender under the Foreign Borrowing Note or this Agreement.
All advances of funds to a Domestic Borrower (a "Domestic Borrower Advance," and
together with a Foreign Borrower Advance, an "Advance") shall be evidenced by a
single promissory note in the form of Exhibit B-2 executed by the Domestic
Borrowers (the "Domestic Borrowing Note," and together with the Foreign
Borrowing Note, the "Note(s)"), which shall be in a form and substance
satisfactory to the Lender and represent the joint and several obligations of
the Domestic Borrowers to pay the aggregate unpaid advances on the Domestic
Borrowing Note (the "Domestic Principal Amount," and together with the Foreign
Principal Amount, the "Principal Amount"), plus any accrued interest thereon,
and all extensions, renewals or modifications thereof including, without
limitation, any expenses of Lender or other amounts due to Lender under the
Domestic Borrowing Note or this Agreement. Each Note shall be dated the Closing
Date and shall mature on the Maturity Date. Except as otherwise provided herein,
each Note shall bear interest from the borrowing date on the outstanding unpaid
Principal Amount thereof at the Interest Rate stated above (compounded monthly
and computed on the basis of a year of 365 days for the actual days elapsed). In
computing interest on the Notes, the borrowing date shall be included and the
date of payment excluded. Each Borrower and Lender understand that the Payment
Schedule is intended to amortize fully the principal amount of the Notes and any
other principal and interest amounts outstanding will be added to the final
payment on the Maturity Date. In any event, the entire outstanding principal
amount of the Notes and all accrued but unpaid interest and all other
outstanding amounts due thereunder shall be paid on the Maturity Date. If a
Payment Date is not a business day, the Payment Date shall be on the first
business day following the nonbusiness day, and interest thereon shall be
payable at the rate in effect during such extension. Each payment shall be
credited first to accrued and unpaid interest and the balance to the Principal
Amount (provided that in any event the entire Principal Amount of the Notes then
outstanding together with any accrued and unpaid interest shall be paid on the
Maturity Date). The Lender is authorized to endorse the date and amount of each
Advance and each payment of the Principal Amount and interest with respect to
the Notes on the schedule annexed to and constituting a part of the Notes, which
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed.

     All payments shall be made in lawful money of the United States of America
in immediately available funds and without set off or counterclaim to the Lender
or any subsequent assignee of a Note.

     Each Borrower agrees to pay all amounts owing by it under this Agreement,
any Note or the other Loan Documents free and clear of and without deduction for
any present or future taxes (excepting any taxes assessed on Lender's income by
the United States of America ) (collectively, the "Taxes") and has paid or shall
pay when due all applicable deductions or withholdings for or on account of any
Taxes, levies, duties, fees, deductions or withholdings, restrictions or
conditions of any nature imposed by or on behalf of any jurisdiction (other than
the United States of America) or any taxing authority (other than the United
States of America) whatsoever on the payments by Borrowers to Lender under this
Agreement, any Note or the other Loan Documents and

          (A)  that if it is prevented by operation of law from paying any
     Taxes, then the interest rate or fees required to be paid under this
     Agreement, any Note or the other Loan Documents shall be increased by the
     amount necessary to yield to Lender interest or fees at the rates specified
     in this Agreement, any Note or the other Loan Documents after provision for
     the payment of all such Taxes and without taking into account any tax
     benefits accruing to Lender from such payment;

          (B)  that it shall at the request of Lender execute and deliver to
     Lender such further instruments as may be necessary or desirable to effect
     the increase in the interest or fees as provided for in clause (a)
     immediately above, including a new Note to be issued in exchange for any
     Note theretofore issued;

          (C)  that it shall hold Lender harmless from and against any
     liabilities with respect to any Taxes (whether or not properly or legally
     asserted); and

          (D)  that it shall provide Lender with the original or a certified
     copy of evidence of the payment of any Taxes by it, as Lender may
     reasonably request, or, if no taxes have been paid to provide to Lender, at

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     Lender's request, with a certificate from the appropriate taxing authority
     or an opinion of counsel acceptable to Lender stating that no Taxes are
     payable.

     If Lender shall receive a refund of any Taxes paid by Borrower pursuant to
this Section by reason of the fact that such Taxes were not correctly or legally
asserted, Lender shall within sixty (60) days  after receipt of such refund pay
to Borrower the amount of such refund, as determined solely by Lender; provided,
                                                                       --------
however, that in no event shall the amount paid by Lender to Borrower pursuant
-------
to this sentence exceed the amount of Taxes originally paid by Borrower; and
further provided that Lender shall not have any obligation under this Agreement
------- --------
to claim or otherwise seek to obtain any such refund.

     Notwithstanding the foregoing, if the Borrowers shall fail to pay within
five (5) days after when due any part of the Principal Amount, interest or any
other amount payable hereunder or under a Note, such amount shall bear interest
at a rate per annum that is three percent (3%) higher than the Interest Rate
from the due date until such overdue Principal Amount, interest, or other
amounts are paid in full (before and after judgment) whether or not any notice
of default in the payment thereof has been delivered.

     Notwithstanding any provision of this Agreement, it is the intent of the
Lender and the Borrowers that the Lender, or any subsequent holder of a Note,
shall never be entitled to receive, collect, reserve or apply, as interest, any
amount in excess of the maximum lawful rate of interest permitted to be charged
by applicable law, as amended or enacted from time to time.  In the event the
Lender, or any subsequent holder of a Note, ever receives, collects, reserves or
applies as interest, interest in excess of the then maximum lawful rate of
interest, such amount which would be excessive interest shall be deemed a
partial prepayment of the Principal Amount and treated hereunder as such, or, if
the Principal Amount and all other amounts due are paid in full, any remaining
excess funds shall immediately be paid to the Borrowers.  In determining whether
or not the interest paid or payable, under any specific contingency, exceeds the
maximum lawful rate of interest, the Borrowers and the Lender shall, to the
maximum extent permitted under applicable law, (a) exclude voluntary prepayments
and the effects thereof as it may relate to any fees charged by the Lender, and
(b) amortize, prorate, allocate and spread, in equal parts, the total amount of
interest throughout the entire term of the Indebtedness; provided that if the
Indebtedness is paid in full prior to the end of the full contemplated term
hereof, and if the interest received over the actual period of existence hereof
exceeds the maximum lawful rate of interest, the Lender or any subsequent holder
of a Note shall refund to the Borrowers the amount of such excess, and in such
event shall not be subject to any penalties provided by any laws for contracting
for, charging, reserving, collecting or receiving interest in excess of the
maximum lawful rate of interest.

     3.   PROCEDURES FOR BORROWING:  ATII (and if a Borrower other than ATII is
acquiring the equipment to be financed thereby, such other Borrower) shall
execute and deliver to Lender, at least five (5) business days prior to the date
of the requested Advance, a Borrowing Certificate in the form of Exhibit C-1 (a
"Domestic Advance Borrowing Certificate") to request Advances to finance the
acquisition by ATII or such other Domestic Borrower of equipment which is, or is
to be placed, in jurisdictions within the United States, and at least thirty
(30) business days prior to the date of the requested Advance, a Borrowing
Certificate in the form of Exhibit C-2 (a "Foreign Advance Borrowing
Certificate" and together with a Domestic Advance Borrowing Certificate, a
"Borrowing Certificate") to request Advances to finance the acquisition by ATII
or such other Borrower of equipment which is, or is to be placed, in Mexico or
another Latin American jurisdiction.  Each Borrowing Certificate shall be in
form and substance satisfactory to Lender, and shall specify the business day on
which the borrowing is to be made and the amount of the borrowing and have
attached thereto the applicable purchase order issued by such Borrower and
related invoice from the Supplier which is to be paid by Lender with the
proceeds of the loan.  On the borrowing date specified in the Borrowing
Certificate, providing that all conditions precedent have been satisfied, Lender
shall transmit the borrowed funds to an account maintained by and in the name of
Supplier.  The aggregate principal amount of each borrowing shall be not less
than $25,000.  Lender shall not be required to make Advances more than twice per
calendar month.

     4.   PLACE OF PAYMENT:  The Principal Amount, interest and fees, if any,
shall be payable at 501 Corporate Centre Drive, Suite 600, Franklin, Tennessee
37067, or such other place as may be designated, from time to time in writing,
by Lender or any subsequent holder.

                                       9
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     5.   PREPAYMENT:  The Borrowers may, at their option but subject to the
satisfaction of the requirements of the next sentence, at any time and from time
to time, prepay any Advance, in whole or in part, upon at least (30) business
days prior written notice to Lender specifying the date and amount of prepayment
in a minimum amount of $50,000. Any such prepayment occurring during the first,
second and third years following the date of such Advance shall be subject to a
prepayment premium equal to a percentage of the amount being prepaid as follows:
three percent (3%) if the prepayment is made during the first year following the
date of such Advance; two percent (2%) if the prepayment is made during the
second year following the date of such Advance; and one percent (1%) if the
prepayment is made during the third year following the date of such Advance.

     6.   SECURITY INTEREST:  OBLIGATIONS SECURED: Each Domestic Borrower (as
debtor) hereby assigns as collateral and grants to Lender (as secured party), as
security for all of the Indebtedness, and each Foreign Borrower (as debtor)
hereby assigns as collateral and grants to Lender (as secured party), as
security for the Foreign Borrower Indebtedness, a continuing security interest
in and to, all of such Borrower's right, title and interest in and to the
property and the property rights described in Section 7 hereof, whether now
owned or hereafter acquired or arising, wherever located, together with all
substitutions therefor and all accessions, replacements and renewals thereof,
and in all proceeds and products thereof (collectively, the "Collateral").
                                                             ----------
"Indebtedness" means all Domestic Borrower Indebtedness and Foreign Borrower
 ------------
Indebtedness.  "Foreign Borrower Indebtedness" means all indebtedness,
                -----------------------------
liabilities and obligations to Lender of all Foreign Borrowers, of any class or
nature, whether arising under or in connection with this Agreement, and/or the
other Loan Documents or otherwise, whether now existing or hereafter incurred,
direct or indirect, absolute or contingent, secured or unsecured, matured or
unmatured, joint or several, whether for principal, interest, fees, expenses,
lease obligations, indemnities or otherwise, including, without limitation,
future advances of any sort, including all future advances made by Lender for
taxes, levies, insurance and/or repairs to or maintenance of the Collateral, the
unpaid principal amount of, and accrued interest owed by the Foreign Borrowers
on the Notes, and any expenses of collection or protection of Lender's rights,
including reasonable attorneys' fees.   "Domestic Borrower Indebtedness" means
                                         ------------------------------
all indebtedness, liabilities and obligations to Lender of ATII or any other
Domestic Borrower, of any class or nature, whether arising under or in
connection with this Agreement and/or all other documents, instruments,
agreements and certificates evidencing or securing any advance hereunder or any
obligation for the payment or performance thereof and/or executed and delivered
in connection with any of the foregoing (the "Loan Documents") or otherwise,
                                              --------------
whether now existing or hereafter incurred, direct or indirect, absolute or
contingent, secured or unsecured, matured or unmatured, joint or several,
whether for principal, interest, fees, expenses, lease obligations, indemnities
or otherwise, including, without limitation, future advances of any sort, all
future advances made by Lender for taxes, levies, insurance and/or repairs to or
maintenance of the Collateral, the unpaid principal amount of, and accrued
interest owed by the Domestic Borrowers on the Notes, and any expenses of
collection or protection of Lender's rights, including reasonable attorneys'
fees.

     7.   DESCRIPTION OF COLLATERAL:  The Collateral includes, and each Borrower
hereby grants Lender a security interest in, all such Borrower's presently
existing or hereafter acquired right, title and interest in, and to (i) the
equipment, fixtures, and other property identified in a Borrowing Certificate
pursuant to which Lender advances funds hereunder (Borrowing Certificates are
collectively referred to as the "Collateral Schedule") or otherwise acquired or
financed directly or indirectly with loan proceeds from Lender, including,
without limitation, hardware and software, components, wiring, cabling and
associated electronics and any and all replacements, additions, substitutions to
or of any of the foregoing, together with all attachments, components, parts,
accessions, improvements, upgrades, all accessories installed thereon or affixed
thereto and all of the foregoing forming an integral part thereof; and (ii) to
the extent not otherwise included, all proceeds of the foregoing, including
without limitation, (A) any and all proceeds of any insurance, indemnity,
warranty or guaranty payable to a Borrower from time to time with respect to any
of the Collateral; (B) any and all payments (in any form whatsoever) made or due
and payable to a Borrower from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority); (C) any and all other amounts
from time to time paid or payable under or in connection with any of the
Collateral; and (D) any and all cash proceeds and non-cash proceeds in the form
of equipment, inventory, accounts, general intangibles, chattel paper or other
proceeds (collectively, "Proceeds"). The Collateral Schedule is incorporated in
and made a part of this Agreement.

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     8.   REPRESENTATIONS AND WARRANTIES:  In order to induce the Lender to
enter into this Agreement and to make the loans contemplated herein, each
Borrower represents and warrants that on the date of each Note's execution and
until payment in full of the indebtedness:

     (a)  Each Borrower (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it was formed; (ii) has the
power and legal authority to own or lease and operate its property and to carry
on its business as now being conducted; (iii) is properly licensed, in good
standing and duly qualified to do business in every jurisdiction where
necessary; (iv) has the power and authority and the legal right to make, deliver
and perform this Agreement and each Note to which it is a party and to borrow
hereunder and has received all necessary authorization from its directors or
partners, as applicable, to execute, deliver and perform this Agreement, the
Notes to which it is a party and any related documents to be delivered pursuant
to this Agreement, and (v) the Borrowers other than ATII are, and will remain,
Subsidiaries of ATII for so long as such Subsidiary remains obligated to Lender
hereunder.

     (b)  The person executing this Agreement and each Note on behalf of each
Borrower has been given the authority to bind each Borrower, and this Agreement
and the Notes to which it is a party constitute legally binding and enforceable
obligations of each Borrower.

     (c)  The execution, delivery and performance of this Agreement and any Note
will not violate any Borrower's charter, bylaws, partnership agreement or other
organizational papers, or any law, agreement or undertaking to which any
Borrower is a party, or by which any Borrower is bound or affected.

     (d)  All required consents relative to the execution, delivery, and
performance of this Agreement and the Notes have been obtained, including any
required of the Federal Communications Commission, the Commerce Commission for
any state or other jurisdiction in which any Borrower is operating ("PUC") or
any other governmental authority.

     (e)  All information, reports and other papers and data with respect to
each Borrower (other than projections) furnished to the Lender by a Borrower at
any time prior to the date hereof, were, to the best knowledge of each Borrower
at the time the same were furnished, true and correct in all material respects,
or have been subsequently supplemented by other information, reports or other
papers or data, to the extent necessary to give the Lender a true and accurate
knowledge of the subject matter thereof in all material respects; and all
projections with respect to each Borrower furnished by a Borrower, as
supplemented, were prepared or presented in good faith by such Borrower and had
a reasonable basis. No fact is known to any Borrower which materially and
adversely affects the business, operations, assets (taken as a whole), or
financial condition of ATII or any Borrower which has not been set forth in the
financial statements provided to Lender in connection with this Agreement or in
such information, reports, papers and data, or otherwise disclosed in writing to
the Lender prior to the first borrowing date relative to the initial loan made
hereunder. All financial statements have been prepared in accordance with GAAP
applied consistently throughout the period involved.

     (f)  There have been no material adverse changes in ATII's consolidated
financial position since the date of the financial statements provided to Lender
in connection with the credit approval of ATII relative to this Agreement.

     (g)  There is no litigation, investigation or proceeding threatened or
pending against any Borrower or against any of its assets or revenues which, if
decided adversely, would have a material adverse effect upon ATII's consolidated
financial condition or its business, operations or assets (taken as a whole).

     (h)  The Borrower requesting the Advance is the sole owner of and has good
and marketable title to each item of Collateral acquired with proceeds of an
Advance (or will have at the time such Borrower acquires rights in the
Collateral hereafter arising), free and clear of all security interests, claims,
liens, and encumbrances except as granted to Lender. Lender has a fully-
perfected first priority lien on, and security interest in, all right, title and
interest of each Borrower in the Perfected Collateral enforceable against such
Borrower and third parties.

                                      11
<PAGE>

     (i)  Neither ATII nor any other Borrower is in default under any agreement,
mortgage, note, security agreement or other documents to which it is a party or
by which it, or any of its property, is bound in any respect which could be
materially adverse to the business, operations, assets or financial condition of
ATII on a consolidated basis, or which could materially adversely affect the
ability of any Borrower to perform its obligations under this Agreement.

     (j)  Each of ATII and each other Borrower has paid all taxes due, except
such taxes as are being contested in good faith and against which ATII or such
other Borrower has set up reserves satisfactory to the Lender.

     (k)  No Borrower is engaged nor will any engage principally, or as one of
its important activities, in the business of extending credit for the purpose of
"purchasing" or "carrying" any "margin stock" within the respective meaning of
each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now, and from time to time, hereafter in effect. No
part of the proceeds of any loan will be used for "purchasing" or "carrying"
"margin stock" as so defined or for any purpose which violates, or which would
be inconsistent with, the provisions of the regulations of such Board of
Governors.

     (l)  No Borrower is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940 as amended.

     (m)  Neither ATII nor any other Borrower is in violation of any federal or
state law, rule or regulation or determination of an arbitrator, court or other
governmental authority, in each case applicable or binding upon ATII or any
other Borrower or any of its properties or to which ATII or any other Borrower
or any of its properties are subject, in each case which individually or in the
aggregate would have a material adverse effect on the rights of the Borrower or
the security interest of Lender in the Collateral or ATII's consolidated
financial condition or operations or assets taken as a whole.

     (n)  There is no event which is, or with notice or lapse of time, or both,
would be an Event of Default as defined in Section 14 of this Agreement.

     (o)  A Purchase Agreement has been duly executed and delivered by the
Borrower and the Supplier with respect to the Collateral for which proceeds of
an Advance are being requested by such Borrower and will be in full force and
effect on the date of such Note.

     (p)  ATII has reviewed its operations and those of its Subsidiaries with a
view to assessing whether its business (together with the businesses of its
Subsidiaries on a consolidated basis), will be vulnerable to a Year 2000 Problem
or will be vulnerable to the effects of a Year 2000 Problem suffered by any
major commercial customers of ATII or of any of its Subsidiaries, and has a
reasonable basis to believe that no Year 2000 Problem will cause a material
adverse effect to ATII on a consolidated basis. For purposes of this Agreement,
"Year 2000 Problem" means any significant risk that computer hardware, software
or equipment containing embedded microchips essential to the business or
operations of ATII or any other Borrower will not, in the case of dates or time
periods occurring after December 31, 1999, function at least as effectively and
reliably as in the case of times or time periods occurring before January 1,
2000, including the making of leap year calculations.

     (q)  Each Subsidiary of ATII is a signatory to this Agreement.

     9.   CONDITIONS PRECEDENT:

     (a)  Initial Loan. The obligation of the Lender to make the initial loan on
the first borrowing date shall be subject to the fulfillment prior to or
contemporaneously with the making of such loan of the following conditions
precedent:

          (i)  The Lender shall have received an opinion of legal counsel to
ATII and each other Borrower as of such date, dated the first borrowing date, in
a form and substance satisfactory to Lender.

                                      12
<PAGE>

          (ii)   Lender shall have received a certificate of a responsible
officer of ATII and each other Borrower as of such date, dated the first
borrowing date, as to the authority of such Borrower(s) to execute, deliver and
perform this Agreement and all Notes.

          (iii)  The Lender shall have received a certificate of a responsible
officer of ATII and each other Borrower as of such date, dated the first
borrowing date, as to the incumbency and signature of the officer or officers
signing the Agreement, the Notes and any other certificate or other documents to
be delivered pursuant thereto, together with evidence of the incumbency of such
responsible officer.

          (iv)   The Lender shall have received copies of all consolidated
financial statements of ATII as required by Lender.

          (v)    The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of contracts in
effect between one or more Borrowers and Qwest and Vartec containing such terms
as are customary for such business (including but not limited to pricing) in
form and substance satisfactory to Lender.

          (vi)   The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of a copy of a vendor
financing facility in effect between one or more Borrowers and Network Equipment
Technologies, Inc. providing at least $1,000,000 of unrestricted borrowing
availability and containing such terms as are customary (including but not
limited to interest rates) in form and substance satisfactory to Lender.

          (vii)  The Lender shall have received copies, certified by a
responsible officer of ATII to the satisfaction of Lender, of a copy of a senior
secured loan facility of ATII with Coast Business Credit the "SENIOR SECURED
FACILITY" providing a credit line of at least $5,000,000 and containing such
terms as are customary (including but not limited to interest rates) in form and
substance satisfactory to Lender.

     (b)  All Loans.  The obligation of the Lender to make any loan (including
the initial loan) to be made by it on any borrowing date is subject to the
satisfaction of the following conditions precedent:

          (i)    The Lender shall have received a Note conforming to the
requirements hereof, and fully executed by each Borrower.

          (ii)   The representations and warranties made by ATII and each other
Borrower in this Agreement and in each Borrowing Certificate shall be correct in
all material respects on and as of such borrowing date and after giving effect
to the loan to be made on such borrowing date.

          (iii)  No Event of Default or event or condition which with notice or
passage of time or both would constitute an Event of Default shall have occurred
and be continuing on such borrowing date or after giving effect to the loan to
be made on such borrowing date.

          (iv)   The Lender shall have received a Borrowing Certificate, dated
such borrowing date for such loan, satisfying the requirements of Section 3.

          (v)    Except where waived by Lender in the exercise of its reasonable
discretion, the Lender shall have received the waiver of liens and consent of
the real estate lessors of the Borrower, and of such other persons as the Lender
shall deem desirable, to facilitate the removal by the Lender, upon the
occurrence of an Event of Default, of all items of US Collateral which are or
were personalty where first located on any real property that is subject to any
real estate leases and/or mortgages, such waivers of liens and consents to be in
form and substance satisfactory to the Lender and its counsel.

          (vi)   The Borrowers shall have (1) executed and delivered to Lender
all documents (including, without limitation, financing statements) necessary to
create in favor of Lender a first-priority perfected security interest in, and
lien on, Collateral located in the United States ("US Collateral") with evidence
of any necessary filing,

                                      13
<PAGE>

registration or recordation of such documents, the payment of recording, stamp
or other taxes measured by indebtedness or otherwise required as a result of
filing, registration or recordation of such documents and searches confirming
the absence of any other liens or security interests thereon, and (2) with
respect to jurisdictions in the United States for which Lender has not
previously received an opinion of counsel covering its security interests in the
US Collateral, delivered an opinion of counsel to the applicable Borrower(s),
dated the date of such Advance, in form and substance satisfactory to Lender to
the effect that the lien and security interest of Lender on such US Collateral
constitutes a perfected security interest in favor of Lender.

          (vii)  the applicable Borrower(s) shall have (1) executed and
delivered to Lender all documents necessary to create in favor of Lender a
first-priority perfected security interest in, lien on, or trust or comparable
security ownership interest in, Collateral located in Mexico ("Foreign
Collateral," and together with US Collateral, the "Perfected Collateral"),
together with evidence of (x) any necessary filing, registration or recordation
of such documents, (y) the payment of recording, stamp or other taxes measured
by indebtedness or otherwise required as a result of filing, registration or
recordation of such documents and (z) the absence of any other liens or security
interests on such Foreign Collateral, and (2) delivered an opinion of counsel to
the applicable Borrower(s), dated the date of such advance, in form and
substance satisfactory to Lender to the effect that (y) the documents have been
validly executed and delivered by, and are binding and enforceable upon, the
applicable Borrower(s) and do not conflict with the applicable Borrower's
organizational documents, material contracts or applicable law, and (z) the
security interest in, lien on, or trust or comparable security ownership
interest of Lender on such Foreign Collateral is "perfected" or otherwise
enforceable against such Borrower and third parties in favor of Lender under the
laws of such foreign jurisdiction.

          (viii) No event of default, or event which with the giving of notice
or the passage of time, or both, would constitute an event of default under the
Senior Secured Facility shall have occurred and be continuing, the Senior
Secured Facility must provide a credit line of at least $5,000,000, and, no
Borrower shall have any past due accounts payables.

          (ix)   All proceedings and all other documents and legal matters in
connection with the transactions contemplated by the Agreement shall be
satisfactory in form and substance to the Lender and its counsel.

     10.  INTENTIONALLY DELETED.

     11.  AFFIRMATIVE COVENANTS:  Each Borrower (with respect to itself and its
business, property and Collateral) warrants, covenants and agrees that from the
Agreement date and until performance and payment in full of the Indebtedness, it
will:

     (a)  Furnish to Lender as soon as available, but in any event within one
hundred and twenty (120) days after the end of each fiscal year of ATII, a copy
of the consolidated balance sheet of ATII as of the end of such year and the
related statements of earnings and changes in financial position for such year,
setting forth in each case in comparative form, the figures for the previous
year audited by independent certified public accountants. The financial
statements shall be complete and correct in all material respects, and be
prepared in reasonable detail and in accordance with GAAP applied consistently
throughout the periods reflected therein (except as approved by such accountants
or a responsible officer, as the case may be, and disclosed therein).

     (b)  Furnish to Lender, concurrently with the delivery of the financial
statements referred to in subsection (a) hereof, a certificate of a responsible
officer of ATII and each other Borrower stating that, to the best of such
officer's knowledge, ATII and each other Borrower, during such period, has
observed or performed all of its covenants and other agreements, and satisfied
every condition contained in this Agreement and in the Notes to be observed,
performed or satisfied by it, and that such officer has obtained no knowledge of
any Event of Default except as specified in such certificate.

     (c)  Promptly upon receipt thereof, furnish to Lender one copy of each
written financial audit report submitted to ATII by independent accountants
resulting from any annual, interim or special audits made by them of ATII's
books.

                                      14
<PAGE>

     (d)  Furnish to Lender copies of all financial statements and material
reports which ATII or any other Borrower may make to, or file with, the
Securities and Exchange Commission or any successor.

     (e)  Pay promptly when due all taxes, assessments, governmental charges,
claims for labor, supplies, rent and other obligations, which, if unpaid, might
become a lien against the Perfected Collateral or any Borrower's other assets,
except liabilities (i) being contested in good faith and by appropriate
proceedings, which proceedings do not involve any danger of the sale, forfeiture
or loss of the Perfected Collateral or any interest therein or a material part
of ATII's or such Borrower's other assets, and (ii) against which ATII has set
up reserves satisfactory to the Lender.

     (f)  Comply with all applicable laws, statutes, orders, rules, regulations,
and directions applicable to each Borrower and the Perfected Collateral or any
part thereof or operation of any Borrower's business, except where the failure
to comply will not have a material adverse effect on the value of the Perfected
Collateral or the operations of ATII on a consolidated basis; provided that ATII
or such Borrower may contest any such statutes, orders, rules, regulations, and
directions in any reasonable manner which will not, in Lender's opinion,
adversely affect Lender's rights or ATII's or such Borrower's financial
condition, business or operations taken as a whole or the priority of the lien
or security interest in the Perfected Collateral.

     (g)  Maintain and preserve in full force and effect all rights, privileges,
licenses, and franchises applicable to each Borrower necessary for the orderly
and efficient conduct of each Borrower's business as is now conducted including,
without limitation, any licenses or authorizations required by the FCC or any
other public utility commission or comparable regulatory agency (a "PUC") for
the operation and maintenance of its present systems.

     (h)  Perform and comply in all material respects with all obligations under
the contracts and all other agreements to which it is a party or by which it is
bound relating to the Collateral except where the failure to do so would not
materially and adversely affect the value of the Collateral taken as a whole.

     (i)  Advise Lender promptly, in reasonable detail (i) of any lien, security
interest, encumbrance or claim made or asserted against any of the Collateral,
(ii) of any material change in the composition of the Collateral, and (iii) of
the occurrence of any other event which would have a material adverse effect on
the aggregate value of the Collateral, the security interest created hereunder,
or on any Borrower's financial condition, business, or operations.

     (j)  (1) Maintain books, records and accounts which, in reasonable detail,
accurately and fairly reflect its transactions and dispositions of its assets
and maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with
management's general or specific authorization, (B) transactions are recorded as
necessary (x) to permit preparation of financial statements in conformity with
GAAP and (y) to maintain accountability for assets, (C) access to assets is
permitted only in accordance with management's general or specific authorization
and (D) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences, and (2) prepare all financial statements required hereunder in
accordance with GAAP consistently applied and in compliance with the regulations
of any governmental regulatory body having jurisdiction over any Borrower or any
Borrower's business and keep such books and records pertaining to its financial
affairs and to the Collateral at ATII's address set forth above.

     (k)  Permit Lender or its representatives, at all reasonable times, to
inspect and copy each Borrower's books and records pertaining to its financial
affairs and to the Collateral;

     (l)  Keep the Collateral at the original location set forth in the
Collateral Schedule and such principal place of business at the address set
forth above and not move any of the Collateral from such locations, or change
the location of ATII's or any other Borrower's principal place of business
without giving Lender at least thirty (30) days advance written notice of such
change or move, and in connection with any change in location of Collateral or
of the principal place of business of ATII or any other Borrower, at its cost
and expense, from time to time, at the written request of Lender, execute,
deliver, file or record documents, agreements and instruments (in such manner
and form as Lender may reasonably require) in order to create, preserve,
perfect, validate or satisfy the first priority security interest

                                      15
<PAGE>

in, lien on, or trust or comparable security ownership interest in the
Collateral as a result of the move of the Collateral or of the change of ATII's
or such other Borrower's principal place of business.

     (m)  Keep the Collateral in good repair and operating condition, ordinary
wear and tear excepted, and maintain the Collateral owned or used by that
Borrower in good working order in accordance with established maintenance
procedures such that the Collateral performs to published specifications and
shall maintain the equipment within two of the latest Product Computing Loads of
the Supplier, and permit Lender or its representatives at all times, upon
reasonable notice, to enter into and upon any premises where any of the
Collateral is located for the purpose of inspecting it, observing its use or
otherwise protecting its interest therein.

     (n)  If any Collateral, in whole or in part, shall be lost, stolen or
destroyed or damaged, or is taken in any condemnation or similar proceeding by a
governmental authority (any such Collateral is referred to as the "Affected
Collateral"), promptly and fully notify Lender and (i) immediately place the
Affected Collateral in good condition and working order, or (ii) replace the
Affected Collateral with one of like value which is in good repair, condition,
and working order, and grant a first priority perfected security interest in,
lien on, or trust or comparable security ownership interest in such substitution
to the same extent that Lender had (or was required to have) in the Affected
Collateral, or (iii) prepay Lender, without prepayment premium, loans in an
amount equal to the value of such Affected Collateral.

     (o)  At its cost and expense, from time to time, at the written request of
Lender, execute, deliver, file or record documents, agreements and instruments
(in such manner and form as Lender may reasonably require) in compliance with or
to accomplish the covenants and agreements of each Borrower in this Agreement;
in order to create, preserve, perfect, validate or satisfy the security interest
in, lien on, or trust or comparable security ownership interest in the
Collateral granted or required hereby; or to enable Lender to exercise and
enforce its rights hereunder. Each Borrower also hereby authorizes Lender to
file any such financing statement or amendment thereto, without the signature of
the Borrower, or with a copy or telecopy of the Borrower's signature, to the
extent permitted by applicable law, or during upon the occurrence and during the
continuance of an Event of Default hereunder to execute any financing statement
or amendment thereof on behalf of each Borrower as each Borrower's attorney-in-
fact. Lender will promptly provide such Borrower with copies of any such
financing continuation statements.

     (p)  ATII shall take all actions necessary and commit adequate resources to
assure that computer-based and other systems of ATII and its Subsidiaries are
able to process dates effectively, including dates before, on and after January
1, 2000, without experiencing any Year 2000 Problem that could cause a material
adverse effect to ATII. At the request of Lender, ATII will provide Lender with
assurances and substantiations (including but not limited to the results of
internal and external audit reports prepared in the ordinary course of business)
reasonably acceptable to Lender as to the capability of ATII and its
Subsidiaries to conduct its and their businesses and operations before, on and
after January 1, 2000 without experiencing a Year 2000 Problem causing a
material adverse effect.

     (q)  Cause each Subsidiary of ATII formed or acquired after the date hereof
to become a Borrower hereunder in conformity with the terms and conditions of
Section 1(b).

     (r)  Obtain Lender's prior written consent before using or generating any
press release, advertisement, publicity materials or other publication in which
the name or logo of Lender or any of its affiliates is used or may be reasonably
inferred, and will not distribute any such materials in the absence of such
prior written approval.

     (s)  Comply with the financial covenants set forth on Exhibit C.

     (t)  Furnish to Lender such additional information or documents,
certificates, reports and agreements regarding ATII or any other Borrower, its
financial condition or the Collateral, as Lender may reasonably request.

     12.  NEGATIVE COVENANTS:  Until payment in full of the indebtedness, each
Borrower covenants that it will not directly or indirectly;

                                      16
<PAGE>

     (a)  Sell, lease, assign, transfer, pledge, create, or permit a security
interest in, or otherwise encumber any of the Perfected Collateral, or any of
its rights therein, or permit any levy, lien or encumbrance thereon in favor of
anyone other than Lender.

     (b)  Use, or permit the Collateral to be used, for any unlawful purpose or
in violation of any law, statue or ordinance.

     (c)  Permit the Collateral to become part of, or be affixed to, any real
property without first assuring, to the reasonable satisfaction of Lender, that
Lender's security interest will be prior and senior to any interest or lien then
held, or thereafter acquired, by any mortgagee of such real property or the
owner or purchaser of any interest therein.

     (d)  Permit the Collateral to comprise a part of any Borrower's inventory.

     (e)  Permit anything to be done that may impair the value of any of the
Perfected Collateral or the security intended to be afforded by this Agreement.

     (f)  Dispose of any part of the Collateral without the express prior
written consent of Lender.

     (g)  Change its name or change its corporate structure in any material way
without giving Lender at least thirty (30) days advance written notice thereof,
and ensuring that any steps that Lender may deem desirable to continue the
perfection and priority of Lender's security interests in the Collateral shall
have been taken.

     (h)  Engage in any business activities or operations substantially
different from or unrelated to the present business activities and operations of
ATII and its current Subsidiaries.

     (i)  Enter into, become the subject of or effect any transaction of merger,
acquisition or consolidation or liquidate, wind up or dissolve itself (or suffer
any liquidation or dissolution), or convey, sell, lease, transfer or otherwise
dispose of, in one transaction or a series of transactions, all or any
substantial part of any Borrower's business or assets, whether now owned or
hereafter acquired.

     (j)  Change the fiscal year end of ATII from December 31, except with the
prior written consent of Lender, which consent shall not be unreasonably
withheld.

     (k)  Permit Borrowers which are Foreign Subsidiaries to acquire title to
Collateral to be located in the United States.

     13.  RISK OF LOSS AND INSURANCE:  All risk of loss of, damage to, or
destruction of the Collateral shall, at all times, be with each Borrower.  Each
Borrower shall procure and maintain with financially sound and reputable
companies, insurance policies (i) insuring the Collateral against loss by fire,
explosion, theft and such other casualties as are usually insured against by
companies engaged in the same or similar business, and (ii) insuring such
Borrower and the Lender against liability for personal injury and property
damage relating to the Collateral.  The policies shall be in such form and in
such amounts and coverage as may be reasonably satisfactory to the Lender, with
losses payable to such Borrower and the Lender as their respective interest may
appear.  Each Borrower shall, if requested by Lender, deliver to the Lender
evidence that such insurance coverage is in effect.  All insurance shall (i)
contain a breach of warranty clause in favor of the Lender, (ii) provide that no
cancellation, reduction in amount or change in coverage thereof shall be
effective until at least thirty (30) days after receipt by the Lender of written
notice thereof, and (iii) be reasonably satisfactory in all respects to the
Lender.  If any Borrower fails to furnish such insurance or fails to pay the
premiums therefor, Lender may do so or may obtain insurance of its interest only
and add the amount of any such premium thereof to the other amounts secured
hereby.  Lender is under no obligation nor duty, however, to pay such premiums
or obtain such insurance.

     14.  DEFAULT:  The occurrence of any one or more of the following will
constitute an "Event of Default" under this Agreement:

                                      17
<PAGE>

          (a)  The failure of any Borrower to pay when due any Payment Amount or
any other amounts payable under this Agreement or any Note;

          (b)  A breach or failure in the observance or performance by any
Borrower of any other material provision of this Agreement or any other Loan
Document which is not remedied within thirty (30) days after receipt by any
Borrower of notice of such breach or failure;

          (c)  Any material representation, warranty or covenant made herein, or
in any certificate, document, financial or other statement delivered in
connection with this Agreement, or hereafter made by any Borrower proves to have
been incorrect in any material adverse respect when made or given;

          (d)  Any Borrower, or any surety or guarantor of the Indebtedness
evidenced by this Agreement or a Note (i) files a petition or has a petition
filed against it under the bankruptcy code, or any proceeding for relief of
insolvent debtors; (ii) generally fails to pay its debts as such debts become
due; (iii) shall admit in writing its inability to pay its debts as they become
due; (iv) has a custodian, trustee or receiver appointed, voluntarily or
otherwise, for it or its assets; (v) benefits from, or is subject to, the entry
of an order for relief by any court of insolvency; (vi) makes an assignment for
the benefit of creditors; (vii) becomes insolvent (however otherwise evidenced);
(viii) liquidates, winds-up, dissolves or suspends business; or (ix) has
commenced against it any case, proceeding or other action seeking the issuance
of a warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets, which results in the entry of an order
for any such relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within sixty (60) days from the entry thereof;

          (e)  Any Borrower shall (i) default in any payment of any other
instrument or agreement (other than with Lender) with an outstanding principal
amount in excess of $10,000 beyond the period of grace, if any, provided in the
applicable instrument or agreement, or (ii) default in the observance of any
other provision of such other instrument or agreement as to cause, or permit the
holder of such instrument or agreement to cause, the obligations thereunder to
become due prior to its stated maturity;

          (f)  One or more judgments or decrees shall be entered against any
Borrower involving in the aggregate a liability (not paid or fully covered by
insurance) of $10,000 or more, and any of such judgments or decrees shall not
have been vacated, discharged, or stayed or bonded pending appeal within sixty
(60) days after the entry thereof; or

          (g)  Any guaranty or any subordination agreement required or delivered
in connection with this Agreement is breached or becomes ineffective, or any
guarantor, or subordinating creditor disavows its obligations under the guaranty
or subordination agreement, as the case may be; or

          (h)  Any Borrower fails to perform any of its obligations under any
other agreement or lease with Lender; or

          (i)  At any time a Borrower other than ATII ceases to be a Subsidiary
of ATII; or

          (j)  If any Change in Control should occur without Lender's prior
written consent. A "Change in Control" of ATII shall be deemed to have occurred
upon any change in the direct or indirect control of, or the ability or right to
control, a majority of the voting shares of any class of securities or ownership
rights in any ATII or any other Borrower or in the right and/or the power to
control the election of the board of directors of ATII or any other Borrower; or

          (k)  The occurrence of a material adverse effect on, or material
adverse change in, (i) the business, operations or financial condition of ATII
or any other Borrower, (ii) the ability of ATII or any other Borrower to perform
its obligations under this Agreement, any Note, or the other Loan Documents, or
(iii) the Lender's ability to enforce the rights and remedies granted under this
Agreement or the other Loan Documents, in all cases whether attributable to a
single circumstance or event or an aggregation of circumstances or events.

                                      18
<PAGE>

     15.  RIGHTS AND REMEDIES ON DEFAULT: At Lender's option, upon the
occurrence of any such Event of Default under Section 14, and at any time
thereafter, at Lender's option, Lender's commitment to lend shall terminate
and/or all unmatured Indebtedness evidenced by the Note will immediately become
due and payable without presentation, demand, protest, or notice of any kind,
all of which are expressly waived. Lender may exercise, from time to time, any
rights and remedies available to it under this Agreement, any Note, the Uniform
Commercial Code and other applicable law. Each Borrower agrees that upon the
occurrence and during the continuance of an Event of Default, to the extent
permitted by applicable law (i) any amounts payable under this Agreement or
under any Note shall thereafter bear interest at a rate per annum equal to the
Interest Rate plus three percent (3%), or the maximum rate per annum allowed by
law, whichever is less, compounded monthly and payable on demand (both before
and after judgment), until the Indebtedness is paid in full or the Event of
Default is cured, (ii) it will, at Lender's request, assemble the Collateral and
make it available to Lender at places which Lender shall reasonably select, and
(iii) Lender, by itself or its agent, may, without notice to any person and
without judicial process of any kind, enter into any premises or upon any land
owned, leased or otherwise under the real or apparent control of any Borrower,
or any agent of any Borrower, where the Collateral may be, or where Lender
believes the Collateral may be, and disassemble, render unusable, and/or
repossess all or any item of the Collateral, disconnecting and separating the
Collateral from any other property. Each Borrower expressly waives all further
rights to possession of the Collateral after the occurrence and during the
continuance of an Event of Default and all claims for injuries suffered through,
or loss caused by, such entering and/or repossession.

Lender shall have the right to sell, lease or otherwise dispose of the
Collateral (or contract to do so), whether in its then condition or after
further preparation or processing, either at public or private sale, in lots or
in bulk, for cash or for credit, with or without warranties or representations,
and upon such terms and conditions as Lender, in its sole discretion, may deem
advisable.  Lender shall have the right to purchase at any such sale.  Lender
will give the applicable Borrower reasonable notice of the time and place of any
public sale of the Collateral or of the time after which any private sale or
other intended disposition of the Collateral is to be made.  Unless otherwise
provided by law, the requirement of reasonable notice shall be met if such
notice is delivered to the address of such Borrower set forth above at least ten
(10) days before the time of the sale or disposition.  Any proceeds of any
disposition by Lender of any of the Collateral may be first applied by Lender to
the payment of expenses, including reasonable attorneys' fees and legal
expenses, incurred in connection with the repossession, care, safekeeping, sale
or otherwise of any or all of the Collateral, or in any way relating to the
rights of Lender hereunder.  Any balance of such proceeds may be applied by
Lender toward the payment of the Indebtedness in such order as Lender, in its
sole discretion, shall determine. The Borrowers shall be liable for, and shall
pay to Lender on demand, any deficiency which may remain after such sale, lease
or other disposition, and Lender agrees to remit to the Borrowers any surplus
resulting therefrom.

     16.  GENERAL AUTHORITY: Upon the occurrence and during the continuance of
an Event of Default hereunder, Lender shall have the full power to exercise at
any time and from time to time all or any of the following powers with respect
to all or any of the Collateral:

          (a)  To demand, sue for collection, receive and give acquittance for
any and all monies due or to become due upon or by virtue thereof;

          (b)  To receive, take, endorse, assign and deliver any and all checks,
notes, drafts, documents and other property taken or received by Lender in
connection therewith;

          (c)  To settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereof;

          (d)  To sell, transfer, assign or otherwise deal in or with the same
or the proceeds thereof, as fully and effectually as if Lender were the absolute
owner thereof; and

          (e)  In general, to do all things necessary to perform the terms of
this Agreement, including, without limitation, to take any action or proceedings
which Lender deems necessary or appropriate to protect and preserve the security
interest of Lender in the Collateral. In the case of failure of ATII or any
Borrower to comply with any provision of this Agreement, Lender shall have the
right, but shall not be obligated, to so comply in whole or in

                                      19
<PAGE>

part, and all moneys spent, and expenses and obligations incurred or assumed by
Lender in connection with such performance or compliance, shall be payable on
demand together with interest on such amounts equal to the Interest Rate plus
three percent (3%) from the date and amount is expended or advanced by the
Lender until paid. Such sums plus interest shall constitute indebtedness secured
hereby. Lender's effecting such compliance shall not be a waiver of any
Borrower's default. Lender shall be under no obligation or duty to exercise any
of the powers hereby conferred upon it.

     17.  EXPENSES:  Each Borrower agrees (a) to pay or reimburse Lender for all
its reasonable costs, fees, charges and expenses incurred or arising in
connection with the negotiation, review, preparation and execution of this
Agreement, the Loan Documents, any commitment or proposal letter, or any
amendment, supplement, waiver, modification to, or restructuring of this
Agreement, the Indebtedness incurred hereunder, or the other Loan Documents,
including, without limitation, reasonable outside counsel legal fees and
disbursements, expenses, document charges and other charges and expenses of
Lender, (b) to pay or reimburse Lender for all its reasonable costs, fees,
charges and expenses incurred in connection with the administration of this
Agreement and the other Loan Documents or the enforcement, protection or
preservation of any rights under or in connection with this Agreement or any
other Loan Documents, including, without limitation, reasonable outside counsel
legal fees and disbursements, audit fees and charges, and all out-of-pocket
expenses, (c) to pay, indemnify, and to hold Lender harmless from, any and all
recording and filing fees and taxes and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes (excluding
income and franchise taxes and taxes of similar nature), if any, which may be
payable or determined to be payable in connection with the execution and
delivery or recordation or filing of, or consummation of any of the transactions
contemplated by, or any amendment, supplement or modification of, or any waiver
or consent under or in respect of, this Agreement and the other Loan Documents.
All of the amounts described in this Section are referred to collectively as the
"Lender's Expenses," shall be payable upon Lender's demand, and shall accrue
 ------------------
interest at the Interest Rate in effect when such demand is made from five (5)
days after the date of demand until paid in full. All Lender's Expenses, and
interest thereon, shall be part of the Indebtedness and shall be secured by the
Collateral. The agreements in this Section 17 shall survive repayment of the
other Indebtedness.  All Lender's Expenses that are outstanding on any Borrowing
Date shall be paid before or with such Advance. If a Borrower has not paid to
Lender the amount of all Lender's Expenses billed to ATII before such Borrowing
Date, Lender shall be authorized to retain from any Advance on such Borrowing
Date the amount of such Lender's Expenses that remain unpaid. Each Borrower's
obligation to pay Lender's Expenses shall not be limited by any limitation on
the amount of the Commitment that may be designated as available for such
purposes, and any amounts so designated shall be used to pay Lender's Expenses
accrued at the time of any Advance before any of the legal fees or similar
expenses of the Borrowers.

     18.  NOTICES:  Notices, demands and other communications required to be
given hereunder to be effective shall be transmitted in writing by telex,
telecopy, or facsimile transmission and confirmed by a similar mailed writing,
by hand delivery, by first class, registered or certified mail, return receipt
requested, or an overnight courier service, addressed to Lender at 501 Corporate
Centre Drive, Suite 600, Franklin, TN 37067 (Attention: Director Operations &
Administration), with a copy to TFS Portfolio Management, 10 Riverview Drive,
Danbury, CT 06810, or to the applicable as the case may be, at the address set
forth above or at such other address as any party may hereinafter substitute by
written notice. Notice shall be effective four (4) days after the date it was
mailed or upon receipt, whichever is earlier.

     19.  INDEMNIFICATION:  Each Borrower shall indemnify Lender against and
hold Lender harmless from any and all claims, actions, suits, damages,
allegations, liabilities, and liens and all costs and expenses, including,
without limitation, reasonable attorneys' fees incurred by Lender, arising out
of or in any way related to a Borrower's ownership or use of the Collateral, or
in connection with the transactions contemplated by this Agreement, including
without limitation, the granting and perfection of the security interest and
lien described herein.

     20.  FCC AND PUC APPROVALS; NOTIFICATION:  The exercise of any rights
hereunder by the Lender that may require FCC or PUC approval shall be subject to
obtaining such approval.  Pending obtaining any such FCC or PUC approval, each
Borrower will refrain from taking or permitting any action to be taken which is
contrary to the interest of the Lender.  In accordance with the requirements of
47 C.F.R. Section 22.917 (1984), or any successor provision, the Lender agrees
to notify the applicable Borrower and the FCC (if required) in writing at least
ten (10)

                                      20
<PAGE>

days prior to the repossession, in accordance with the Agreement, of all or any
part of the Collateral which is subject to the regulation.

     21.  ASSIGNMENT:  Lender may, in whole or in part, without notice to, or
the consent of any Borrower, sell, assign, grant a security interest in or
pledge its interest in the Collateral and/or a Note and any amounts due or to
become due hereunder to any third party ("Assignee"). Upon receiving written
notice from Lender, a Borrower shall, if so directed, pay the amounts due
hereunder, directly to Assignee. Any Assignee shall be entitled to rely on the
agreements, representations, warranties, and covenants of ATII and each Borrower
contained herein, as applicable, and shall be considered a third-party
beneficiary thereof. Each Borrower shall also execute and deliver to Lender, or
any Assignee, any additional documentation as Lender or Assignee may reasonably
request. Without Lender's prior written consent, no Borrower shall assign or
transfer its obligations hereunder. Any attempted transfer by any Borrower shall
be void ab initio.

     22.  MISCELLANEOUS:

     (a)  No failure or delay by the Lender to exercise any right, power or
privilege hereunder shall operate as a waiver of any such right, power or
privilege, nor shall any single or partial exercise of any right, power or
privilege preclude any other or future exercise thereof. The Lender may waive
any default before or after the same has been declared and restore this
Agreement to full force without impairing any rights hereunder, such right of
waiver being a continuing one. The waiver of any provision hereunder will not be
effective unless in writing signed by the Lender.

     (b)  If any provision in this Agreement or a Note shall be prohibited or
unenforceable, such provision shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions.

     (c)  To the extent that the Indebtedness is now or hereafter secured by
property other than the Collateral, or by the guaranty, endorsement or property
of any other person, corporation or entity, then Lender shall have the right, in
its sole discretion, to determine which rights, security, liens, security
interest or remedies it shall, at any time, pursue, relinquish, subordinate,
modify, or take any other action with respect thereto without, in any way,
modifying or affecting any of them or any of its rights hereunder.

     (d)  Lender's duty of care (as imposed by law) with respect to the
Collateral in its possession shall be deemed fulfilled if Lender exercises
reasonable care in physically safekeeping such Collateral, or in the case of
Collateral in the custody or possession of a bailee or other third person,
exercises reasonable care in the selection of the bailee or other third person,
and Lender need not otherwise preserve, protect, insure, or care for any
Collateral.

     (e)  No right or remedy is exclusive of any other provided under this
Agreement or permitted by law or equity. All such rights and remedies shall be
cumulative and may be exercised singularly or concurrently at Lender's option.
The exercise or enforcement of any one such right or remedy shall neither be a
condition to, nor bar the exercise or enforcement of any other.

     (f)  All representations and warranties made herein or in any document,
certificate or statement delivered pursuant thereto, or in connection therewith,
shall survive the execution and delivery of this Agreement and the Notes.

     (g)  ATII and each Borrower waive presentment, demand, protest and notice
to the extent permitted by applicable law.

     (h)  Time is of the essence with regard to each and every provision of this
Agreement and each Note.

     (i)  This Agreement may be executed in more than one counterpart, all of
which taken together, shall constitute one agreement.

     (j)  Except as otherwise provided in this Agreement, all computations and
determinations as to accounting or financial matters and all financial
statements to be delivered pursuant to this Agreement shall be made and prepared
in accordance with GAAP (including principles of consolidation where
appropriate), consistently applied,

                                      21
<PAGE>

and all accounting or financial terms shall have the meanings ascribed to such
terms by GAAP. At such time that ATII has any Subsidiaries, all accounting and
financial terms herein shall be deemed to include references to consolidated and
consolidating principles, and covenants, representations and agreements with
respect to ATII and its properties and activities shall be deemed to refer to
ATII and its consolidated Subsidiaries collectively.

     23.  SUCCESSORS AND ASSIGNS: This Agreement shall be binding on the parties
and inure to the benefit of Lender and each Borrower and their successors and
permitted assigns.

     24.  GOVERNING LAW, JURISDICTION AND VENUE: (a) This Agreement and the
Notes are being delivered to Lender in the State of New York and shall be
construed in accordance with and governed by the laws of such state, except to
the extent the internal laws of another jurisdiction are required to be applied
in connection with the exercise of rights pertaining to Collateral in that
jurisdiction.

     (b)  EACH BORROWER HEREBY IRREVOCABLY CONSENTS TO THE NONEXCLUSIVE
JURISDICTION OF THE COURTS LOCATED IN WILLIAMSON COUNTY, TENNESSEE AND DAVIDSON
COUNTY, TENNESSEE, INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE
MIDDLE DISTRICT OF TENNESSEE, THE CHANCERY COURT FOR WILLIAMSON COUNTY,
TENNESSEE, AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, FOR ANY SUIT
BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE NOTES, THE
OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND AGREES NOT TO CONTEST VENUE OR
JURISDICTION IN ANY SUCH COURTS. The choice of forum set forth herein shall not
be deemed to preclude the enforcement of any judgment obtained in such forum or
the taking of any action under this Agreement to enforce the same in any
appropriate jurisdiction.

     25.  WAIVERS AND LIMITATIONS OF LIABILITY: (a) EACH BORROWER AND LENDER
HEREBY KNOWINGLY AND WILLINGLY WAIVE THEIR RESPECTIVE RIGHTS TO DEMAND A JURY
TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS AGREEMENT, THE NOTES ANY OTHER
LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER.
EACH BORROWER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS
WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND VOLUNTARILY WAIVED ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     (b)  LENDER SHALL HAVE NO LIABILITY UNDER OR IN CONNECTION WITH THIS
AGREEMENT THE NOTES OR ANY OF THE OTHER LOAN DOCUMENTS FOR SPECIAL, EXEMPLARY,
PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT IN ANY SUIT
BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE NOTES THE
OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE EXTENT PROHIBITED
BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL
DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.

     (c)  To the fullest extent permitted by law, except as otherwise expressly
provided herein, each Borrower hereby waives (i) presentment, demand and protest
and notice of presentment, protest, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which any Borrower may in any way be liable and
hereby ratifies and confirms whatever Lender may do in this regard; (ii) notice
prior to taking possession or control of the Collateral or any bond or security
which might be required by any court prior to allowing Lender to exercise any of
Lender's remedies, including the issuance of an immediate writ of possession,
except as expressly required in any of the Loan Documents; (iii) any marshalling
of assets, or any right to compel Lender to resort first to any Collateral or
other persons before pursuing any Borrower for payment of the Indebtedness and
any defenses based on suretyship or impairment of Collateral; (iv) the benefit
of all valuation, appraisement and exemption laws; (v) any right to require
Lender to terminate its security interest in the Collateral or in any other
property of any

                                      22
<PAGE>

Borrower until termination of this Agreement and the execution by each Borrower
and by any person whose loans to a Borrower are used in whole or in part to
satisfy the Obligations, of an agreement indemnifying Lender from any loss or
damage Lender may incur as the result of dishonored or unsatisfied items of any
account debtor applied to the Indebtedness; and (vi) notice of acceptance
hereof. Each Borrower acknowledges that the foregoing waivers are a material
inducement to Lender's entering into this Agreement and that Lender is relying
upon the foregoing waivers in its future dealings with each Borrower.

     26.  ENTIRE AGREEMENT:  This Agreement constitutes the entire agreement
between Lender and each Borrower with respect to the subject matter hereof and
supersedes all previous negotiations, proposals, commitments, writings, and
understandings of any nature whatsoever.

     IN WITNESS WHEREOF, the parties have executed this Loan and Security
Agreement by their duly authorized representatives:

                                        BORROWERS:
                                        ---------

                                        AMERICAN TELESOURCE INTERNATIONAL, INC.

                                        BY:_____________________________________
                                        ______________

                                        TITLE:__________________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                      23
<PAGE>

                                        TITLE:_______________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        [ADDITIONAL SIGNATURES FOR SUBSIDIARIES
                                        OF ATII]

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        LENDER:
                                        ------

                                        NTFC CAPITAL CORPORATION

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                      24
<PAGE>

                                   EXHIBIT A
                                   ---------

                 FORM OF ANNEX TO LOAN AND SECURITY AGREEMENT
                 --------------------------------------------

     By executing this Annex to Loan and Security Agreement attached to and
forming a part of the Loan and Security Agreement dated as of June __________,
1999, (the "Loan Agreement"), between and among AMERICAN TELESOURCE
INTERNATIONAL, INC., a _______________________ corporation ("ATII"), NTFC
Capital Corporation (the "Lender"), Domestic and/or Foreign Subsidiaries of ATII
which are signatories to the Loan Agreement, and such additional Domestic and/or
Foreign Subsidiaries of ATII which may become a party to the Loan Agreement
pursuant to Section 1(b) thereof, _____________________________ represents and
warrants that it is a [FOREIGN or DOMESTIC] Subsidiary of ATII, joins as a party
                      ---------------------
to the Loan Agreement, assumes the obligations of a Borrower under the Loan
Agreement, and confirms that it is bound by the terms and conditions of the Loan
Agreement, including but not limited to the grant to Lender of a security
interest in all its right, title and interest in and to the Collateral as
provided in the Loan Agreement. _________________________________________
acknowledges and agrees that one or more other Subsidiaries of ATII may become
additional Borrowers under the Loan Agreement without the consent of any other
Borrower by execution of a form of the Annex to the Loan Agreement by ATII, the
Subsidiary and the Lender. ______________________________ acknowledges and
agrees that (i) other Subsidiaries of ATII may become additional Borrowers under
the Loan Agreement without the consent of any other Borrower by execution of a
form of the Annex to the Loan Agreement by ATII, the Subsidiary and the Lender;
(ii) the Lender is willing to extend certain credit to the Borrowers, subject to
the terms and conditions set forth in the Loan Agreement, including the
condition that all Borrowers will be jointly and severally liable for all
amounts owed by any Borrower under the Loan Agreement to Lender; (iii) without
this joint and several liability for all Indebtedness owed by any Borrower to
Lender under the Loan Agreement, Lender would not be willing to extend credit to
any Borrower; and (iv) __________________________________________, the existing
Borrowers and other Subsidiaries of ATII which may become additional Borrowers
under the Loan Agreement are related entities, and ________________________
expects to increase its business, and to benefit directly and indirectly,
through the use of the equipment to be acquired by it and the other Borrowers
with the proceeds of the loans to be made pursuant to the Loan Agreement.

     _______________________ authorizes the Lender to attach this Annex to the
Loan and Security Agreement, which shall be deemed a part of, and incorporated
by reference in, the Loan Agreement. This Annex to the Loan and Security
Agreement is being delivered to Lender in the State of Tennessee and shall be
construed in accordance with and governed by the laws of such state, except to
the extent the internal laws of another jurisdiction are required to be applied
in connection with the exercise of rights pertaining to Collateral in that
jurisdiction. Capitalized terms used in this Annex to the Loan Agreement without
definition shall have the meanings set forth in the Loan Agreement to which this
Annex is attached and form a part.

     This Annex may be executed in any number of counterparts (by facsimile
transmission or otherwise) and by the different parties hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same document.

     IN WITNESS WHEREOF, the parties have executed this Annex to Loan and
Security Agreement by their duly authorized representatives:

                                        ATII:
                                        ----

                                        AMERICAN TELESOURCE INTERNATIONAL, INC.

                                      25
<PAGE>

                                        BY:__________________________________
                                        ______________

                                        TITLE:_______________________________
                                        ______________

                                        BORROWER:
                                        --------

                                        BY:__________________________________

                                        TITLE:_______________________________

                                        LENDER:
                                        ------

                                        NTFC CAPITAL CORPORATION

                                        BY:__________________________________

                                        TITLE:_______________________________

                                        Exhibit B
                                        ---------

                                        Exhibit C
                                        ---------

                                      26<PAGE>

                                                                   Exhibit 10.10
                                  RIDER NO. 1
                                       To
                              LEASE SCHEDULE NO. 1
                                       To
                                MASTER AGREEMENT
                          Dated As Of December 4, 1998

               This Rider No. 1 (the "Rider") is entered into between BancBoston
     Leasing Inc. ("Lessor") and American TeleSource International, Inv.
     ("Lessee"), is contemporaneous with and amends the above-referenced Lease
     Schedule together with all riders and amendments thereto, (the "Lease
     Schedule") which incorporates the terms and conditions of above-referenced
     Master Agreement by and between Lessor and Lessee (the "Master Agreement").
     It is the intention of Lessor and Lessee that, upon execution, this Rider
     shall constitute a part of the Lease Schedule and the Master Agreement.

     IN CONSIDERATION OF the mutual covenants and promises as hereinafter set
forth, Lessor and Lessee hereby agree as follows:

1.   All capitalized terms used in this Rider shall, unless otherwise defined,
     have the meanings set forth in the Lease Schedule. The terms of this Rider
     shall apply only to the equipment (the "Equipment") set forth on the Lease
     Schedule.

2.   To add a new Section 8 to the Lease Schedule, as follows:

          "8. Tax Indemnification. In the event any of the Equipment
          is, at any time during the Term of the Lease, located
          outside the United States (the "Foreign Equipment"), Lessee
          agrees to pay, indemnify and hold Lessor harmless from any
          of the following Taxes, as hereinafter defined, attributable
          to the Foreign Equipment or the Lease as it relates thereto:
          (a) any sales, use, excise, import or export, value added,
          or similar tax or duty and any other tax or duty not based
          on Lessor's net income, and (b) any taxes required to be
          withheld or deducted from any payment required under the
          Lease from the Lessee and all such taxes and any additional
          amounts which the Lessor specifies as necessary to preserve
          the after-tax yield the Lessor would have received if such
          taxes were not imposed shall be paid by the Lessee; and (c)
          all government permit fees, license fees, customs fees or
          similar fees levied upon the Foreign Equipment or the Lease.
          All foregoing fees and taxes shall be referred to as Taxes.
          The Taxes to be paid pursuant to this Section are in
          addition to any other payment due under the Lease. The
          obligations and indemnities of Lessee under this Section 8
          shall continue in full force and effect, and shall survive,
          notwithstanding the expiration or other termination of this
          Master Agreement or the Lease Schedule".

     The terms and conditions of this Rider shall prevail where there may be
conflicts or inconsistencies with the terms and conditions of the Lease Schedule
as it applies to the Equipment.

     IN WITNESS WHEREOF, Lessor and Lessee, by their duly authorized
representatives, have executed and delivered this Rider which is intended to
take effect as a sealed instrument as of the date of the Lease Schedule.

Accepted and Agreed to at Boston, Massachusetts
BANCBOSTON LEASING INC                            AMERICAN TELESOURCE
                                                  INTERNATIONAL, INC.
By: _______________________________            By: /s/ H. Douglas Saathoff
Title: ____________________________            Title:  CFO

                                      33
<PAGE>

                              LEASE SCHEDULE NO. 1
                                       TO
                                MASTER AGREEMENT
                          Date as Of December 4, 1998

This is Counterpart No. 2 of 2 which has been serially numbered and manually
executed.  To the extent that this document constitutes chattel paper under
Article 9 of the Uniform Commercial Code of the Commonwealth of Massachusetts,
no security interest in this document may be created through transfer or
possession of any counterpart other than Counterpart No. 1.

     This Lease Schedule dated as of the 21/st/ day of January, 1999 is attached
to and made a part of that certain Master Agreement ("Master Agreement") dated
December 4, 1998 between BANCBOSTON LEASING INC ("Lessor") and American
Telesource International, Inc. ("Lessee").

I.   Equipment Location:

12500 Network Blvd. Suite 407
San Antonio, TX 78249

<TABLE>
<CAPTION>
Equipment Description:

Invoice 192047
                                        Equipment                               Acquisition
Quantity  Manufacturer/Supplier  Description                               Cost
<S>                              <C>                                       <C>            <C>
     1    Network Equipment                  INSTALLATION                       $xxxxx
          Technologies, Inc.                 INSTALLATION

Invoice 192048

     1    Network Equipment                  P2P-0192D                                    $xxxxx
          Technologies, Inc.                 POWER SUPPLY, 48-60VDC, DC
     3                                       P2L-0148N                                    $xxxxx
                                       MOD.TRK,E3,NRDN     95

     1                                       P2L-015OR                                    $xxxxxx
                                       MOD,ACS,MAIN,TXN,RDNT
     8                                       P2L-0115                                     $xxxxxx
                             MOD,PR,E1,CE+75 TXN,NRDNT
     1                                       P2N-0606D                                    $xxxxxxx
                                       PROMINA 2000, DC, MULTISRVC
     1                                       P2R-0700U                                    $xxxxxxx
                                       P2000 REMOTEACCESS UNIT,
                                       120VAC
     1                                       P2S-278ML                                    $xxxxxxx
                                       PVP, FMS/CMS S/W ADD-ONS-LIC
     1                                       P2S-301ML                                    $xxxxxxx
                                       PVP, FMS, OMS FMS FOUNDATION
     1                                       P2SW-0600                                    $xxxxxxx
                                       PROMINA 2000 S/W-INITIAL
                                       LICENSE

Invoice 192050
     1    Network Equipment                  097013L-009                                  $xxxxxxx
          Technologies, Inc.                 PS, STAGING SERVICES

Invoice 192051
     1    Network equipment                  EOS-GXT ONLINE DBL CONV            $xxxxx
          Technologies, Inc.                 LIEBERT GXT1500-RT-120 UPS
     1                                       EOS-CISCO760                       $xxxxx
                                 CISCO 766M ISDN ROUTER
     2                                       EOS-US ROBOTICS V.34               $xxxxx
                                 US ROBOTICS SPORTSTER 33.6 MODEM
                                       V3
     2                                       EOS-LMR4TA-01                      $xxxxx
                                 LANTRONIX LMR8TA-01 MIN HUB 8R
     3                                       EOS-LRSI-T-01                      $xxxxx
                                 LANTRONIX REMOTE ACCESS SERVER
     2                                       EOS-ADTRAN TSU 100 V.35                      $xxxxx
                                 ADTRAN TSU 100 V3.5 CSU/DSU
     1                                       EOS-A21UFE1A9P SUN ULTRA           $xxxxx
                                 SUN ULTRA 5 MDL 270 128MB 4GB FLOP
     1                                       EOS-X7121A SUN MONITOR                       $xxxxx
                                       SUN X7121A 21" COLOR MONITOR
     1                                       EOS-X1032A SUN ETHERNET            $xxxxx
                                       SUN X470A ADAPTER & X1032A
                                       INSTALL
     1                                       EOS-SG-XTAP8MM-010A TAPE           $xxxxx
                                       SUN SG-XTAP*MM-010A U/14GB
                                       8M
     1                                       EOS-SOLS-251-C SOLARIS                       $xxxxx
                                       SUN X3856A CABLE W/PWR SOLARIS 2.5.1.
     1                                       NET HANDLING FEE                             $xxxxx

Invoice 192056
     1    Network Equipment                  INSTALL                                      $xxxxx
          Technologies Inc,                  INSTALLATION

Invoice 192284
     1    Network Equipment                  PS, STAGING SERVICES               $xxxxx
          Technologies, Inc.

Invoice 192285
     1    Network Equipment                  EXPORT                                       $xxxxx
          Technologies, Inc.                 EXPORT SERVICES

Invoice 193015
     1    Network Equipment                  EOS-J1128AB                                  $xxxxxx
          Technologies, Inc.                 HP OPENVIEW VER.4.1/250 OR
                                       LESS IP
     1                                       EOS-SUPPORT UDATE LTU                        $xxxxx
                                 HP PHONE/SAME DAY SYS
                                       SUPPORT 1 YR
     1                                       EOS-HP 5.01 CD-ROM                 $xxxxx
                                       HP NETWORK NODE MANAGER
                                       5.01 CD-ROM
     1                                       EOS-UPDATE CD-ROM                  $xxxxx
                                       HP SUPPORT FOR CD-ROM ONE
                                       YEAR
     1                                       EOS-HP 5.01 DOC FOR UNIX           $xxxxx
                                       HP NETWORK NODE MGR 5.01
                                       DOCUMENT
     1                                       EOS0HP 5.0X DOC FOR UNIX           $xxxxx
                                       PHONE SUPPORT FOR HP NODE
                                        MGR
     1                                       EOS-NET SHUTDOWN SOFTWARE                    $xxxxx
                                       UPS SHUTDOWN S/W FOR SUN
                                       SOLARIS
Invoice 193079
     1    Network Equipment                  PS-TAC                             $xxxxx
          Technologies, Inc.                 ANNUAL TAC&PARTS
                                       MAINTENANCE

     Equipment Location:

     Roberto Rodriguez Saavadra
     Andador 21 No.7
     Col. Benito Juarez
     Nvo. Laredo, Tamps 88274
     R.F.C.-ROSR-540630-9J7

     Equipment Description:

Invoice 192049

     1    Network Equipment                  P2P-01920                               $xxxxx
          Technologies, Inc.                 POWER SUPPLY, 115-23 VAC, AC
     3                                       P2L-0148N                               $xxxxx
                                       MOD.TRK,E3,NRDNT
     1                                       P2L-0150R                               $xxxxx
                                       MOD,ACS MAIN, TXN, RDNT
     8                                       P2L-0155N                               $xxxxx
                                       MOD, PR, E1, CE+75 TXN, NRDNT
     1                                       P2N-0606A                               $xxxxx
                                       PROMINA 2000, AC, MULTISRVC
     1                                       P2R-0700U                               $xxxxx
                                       P2000REMOTE ACCESS UNIT,
                                       120VAC
     1                                       P2SW-0600                               $xxxxx
                                       PROMINA 2000 S/W-INITIAL
                                       LICENSE
     2                                       P2A-129AU                               $xxxxx
                                       CBL, POWER, 115V

Invoice 192048

          1.                                 PSL-0148N                               $xxxxx
                                       MOD.TRK,E3,NRDNT

                                 Texas Up-Front Tax (7.75%)                     $xxxxxx

                                                  Total Acquisition Cost:  $xxxxxxx
</TABLE>

2.   Lease Term: thirty-six (36) months commencing on 4/15/99.
                                                      -------

3.   Rent: The rent during this Lease Term shall be payable in that number of
     consecutive payments and in the amount indicated below. The first rent
     payment is due on April 15, 1999 subsequent payments are due on the 15/th/
     day of each subsequent month.

     Payment No.         Monthly Rent
     -----------         ------------
        1-36             $16,634.36 n advance plus applicable taxes
                              (amount to be paid on the fifteen of each month)

4.   Purchase Option Price:  $1.00

5.   Security Interest; Remedies: Lessor and Lessee agree that this Lease
     Schedule constitutes a lease intended as security within the meaning of
     Article 9 of the Uniform Commercial Code ("UCC") as adopted by
     Massachusetts. Accordingly, Lessee hereby assigns and grants to Lessor a
     lien, claim and continuing security interest in the Equipment, additions,
     replacements and proceeds thereof including, without limitation, proceeds

                                      34
<PAGE>

     of all insurance policies. Such lien, claim and continuing security
     interest shall secure the payment and performance of all obligations of
     Lessee to Lessor under this Lease Schedule as well as all other obligations
     and indebtedness of Lessee to Lessor, whether direct or indirect, absolute
     or contingent, due or to become due, now existing or hereafter arising. In
     connection with the foregoing, Lessor shall hold legal title to, but not
     beneficial ownership of, the Equipment as additional security for the
     obligations of Lessee under this Lease Schedule. Any reference in the
     Master Agreement to "title" to the Equipment as held by Lessor shall mean,
     for purposes of this Lease Schedule, legal title.

     Upon the occurrence of an Event of Default, without limiting any of the
     rights of Lessor under Section 12 of the Master Agreement, Lessor may
     pursue the rights and remedies of a secured party under the UCC of
     Massachusetts or any other jurisdiction, and recover such other actual
     damages as may be incurred by Lessor. In addition, Lessor may sell, lease
     or otherwise dispose of any or all of the Equipment, whether or not in the
     possession of Lessor, at public or private sale and with or without notice
     to Lessee, which notice is hereby expressly waived by Lessee, to the extent
     permitted by, and not inconsistent with, applicable law.

7.   Terms of Schedule: Lessor and Lessee agree that this Lease Schedule shall
     constitute a lease of the Equipment described in Section 1 above subject to
     the terms and conditions of which are hereby incorporated by reference in
     this Lease Schedule and made a part hereof to the same extent as if such
     terms and conditions were set forth in full herein. Terms used in this
     Lease Schedule and not otherwise defined herein shall have the meanings set
     forth in the Master Agreement. In the event of a conflict between the
     Master Agreement and the Lease Schedule, the terms and conditions of this
     Lease Schedule shall prevail.

     IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease Schedule to be
     duly executed by their authorized representatives as of this 15/th/ day of
                                                                  -----
     April, 1999.
     -----  ----

     ACCEPTED AT BOSTON, MASSACHUSETTS

     LESSOR                                  LESSEE
     BANCBOSTON LEASING INC.                 AMERICAN TELESOURCE INT'L., INC

     By: /s/ Angela Petrone                  By: /s/ H. Douglas Saathoff
         ----------------------------            -----------------------------

     Title: Assistant Vice President         Title: Chief Financial Officer
            -------------------------               --------------------------

                                      35
<PAGE>

                                                               February 19, 1999

BancBoston Leasing Inc.
100 Federal Street
Mail Stop 01-09-01
Attn.: Angela Petrone
Boston, MA 02110

              RE: Master Agreement dated December 4, 1998 between
                  American TeleSource International, Inc. and BancBoston
              Leasing Inc. (Master Agreement")
              -------------------------------

Dear Ms. Petrone:

This letter is written to acknowledge and confirm certain matters relating to
the leasing of certain capital equipment manufactured by Network Equipment
Technologies, Inc. ("NET") which BancBoston Leasing Inc. as lessor ("Lessor")
has agreed to lease to American TeleSource International, Inc. ("Lessee")
pursuant to the Master Agreement, and specifically Lease Schedule No. 1 dated
February 19, 1999 to the Master Agreement (" Lease Schedule 1").

Lessee acknowledges that it agreed, at Lessor's request, to make a ten percent
(10%) security deposit based upon the Acquisition Cost relating to the Equipment
subject to Lease Schedule 1.  Lessee erroneously made said security deposit to
NET rather than to Lessor.  Further, the amount which Lessee paid to NET was
based upon its information and belief that the Acquisition Cost for the subject
Equipment was $426,975.00, so that the ten percent (10%) security deposit Lessee
forwarded to NET was $42,697.50.  In fact, the Acquisition Cost relating to the
Equipment subject to Schedule No. 1  was $493,174.33, so that the original ten
percent (10%) security deposit should have been in the amount of $49,317.33.  In
effect, the security deposit that Lessee made to NET was short $6,619.83.

Lessee forwards to BBL herewith said $6,619.83 shortfall, via Check #24544, and
                                                                     -----
acknowledges and agrees that NET should forward the balance of $42,697.50 to
Lessor, thereby providing Lessor with the agreed upon amount of ten percent
(10%) of the Acquisition Cost for schedule 1, or $49,317.33.

The $49,317.33, ten percent (10%) security deposit, will be held by Lessor
and/or an affiliate of Lessor in an interest bearing cash collateral account
pursuant to a Pledge Agreement of even date herewith by and between Lessor and
Lessee, with the interest remitted semi-annually to Lessee directly by Lessor.

Lessee further recognizes that Lessor will fund to NET the amount of $493,174.33
the total amount of the Acquisition Cost of the Equipment relating to schedule
1; and Lessee will remit monthly lease payments to Lessor pursuant to Schedule
1.

                         AMERICAN TELSOURCE INTERNATIONAL, INC.

                         /s/  H. Douglas Saathoff
                         By:  H. Douglas Saathoff
                         Its: CFO

                                      36
<PAGE>

                     CERTIFICATE OF ACCEPTANCE AND WAIVER
                            To LEASE SCHEDULE NO. 1
              Dated as of January 21, 1999 (the "Lease Schedule")
   To Master Agreement dated as of December 4, 1998 (the "Master Agreement")
        Between American TeleSource International, Inc. ("Lessee") and
                       BancBostonLeasing Inc. (Lessor")

1.   EQUIPMENT ACCEPTANCE ; LEASE COMMENCEMENT:
     -----------------------------------------

In order to induce Lessor to commence the Lease Term of the Lease Schedule and
to agree to pay the vendor of the Equipment the Equipment Cost thereof when due,
Lessee hereby certifies, covenants and represents: (a) that the Equipment has
been delivered but not yet fully installed at the location(s) specified on the
Lease Schedule, (b) that Lessee nevertheless desires to accept the Equipment for
all purposes under the Lease Schedule as of the date hereof (the "Commencement
Date"), to commence as of the date hereof the Lease Term including all of
Lessee's obligations under the Lease Schedule and the Master Agreement, and to
instruct Lessor to pay promptly the vendor of the Equipment the Equipment Cost
thereof, (c) that, notwithstanding that the Equipment has not yet been fully
installed, Lessee irrevocably waives any and all rights to revoke, reject,
repudiate or cancel the Lease Schedule and, as between Lessee and Lessor (but
not as between Lessee and vendor), Lessee hereby waives any and all rights to
inspect and reject the Equipment as nonconforming or for any other reason; (d)
that rent including Monthly rent for all the Equipment shall commence on the
Commencement Date and shall not be subject to abatement, offset, reduction,
defense, counterclaim, or recoupment for any reason whatsoever.  Lessee hereby
authorizes and instructs Lessor to insert the payment dates and the Lease Term
commencement date, if applicable, in the Lease Schedule.

Lessee: AMERICAN TELESOURCE INTERNATIONAL,INC.

By: /s/ H. Douglas Saathoff

Name: H. Douglas Saathoff

Title:  CFOS

Date: March 29, 1999
            --

                                      37
<PAGE>

PLEDGE AGREEMENT

     This Agreement is made as of the 21/st/ day of January, 1999 among American
TeleSource International, Inc., a Texas corporation with its principal place of
business at 12500 Network Blvd., San Antonio, TX 78249 (The "Lessee") and
BancBoston Leasing Inc., a Massachusetts corporation with its principal place of
business at 100 Federal Street, Boston, MA 02110 ("Lessor" and "Agent").

     WHEREAS, the Lessor is providing certain leasing accommodations to the
Lessee pursuant to and evidenced by a Master Agreement dated as of December 4,
1998, and all Lease Schedules, Exhibits, and Riders thereto (the "Master
Agreement"); and

     WHEREAS, in consideration of such accommodations, the Lessee has agreed to
secure payment and performance of all obligations arising under the Master
Agreement by granting the Lessor a first lien and continuing security interest
in cash in an amount of not less than ten percent (10%) of the Acquisition Cost
of the Equipment leased under the master Agreement (subject to adjustment to be
negotiated by the Lessor and the Lessee for future lease schedules if and to the
extent that the total amount secured by this Pledge Agreement exceeds
$900,000.00) excluding interest earned thereon (the "cash Collateral").

NOW THEREFORE, for the mutual considerations herein contained, the parties
hereby agree as follows:

     1.   Cash collateral.  The term "Cash Collateral" as used herein shall mean
          ---------------
all Cash Collateral delivered to the Lessor pursuant to this Agreement and all
additions, substitutions, accessions, and proceeds thereto and thereof.

     2.   Pledge.  As collateral security for the payment and performance in
          ------
full of any and all obligations, indebtedness, and liabilities, and direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Lessee to the Lessor under the Master Agreement and
under any other agreement executed in connection therewith (all of the foregoing
collectively, the "Obligations"), the Lessee hereby pledges and assigns all of
its right, title, and interest, and grants a first lien and continuing security
interest to the Lessor, in the Cash Collateral.

     3.   Future Pledges.  To the extent the Lessor extends additional
          --------------
leasing accommodations to the Lessee, the Lessee agrees to pledge and deposit
with the Lessor, or at its direction, additional cash, to be additional Cash
Collateral, subject to the lien and security interest granted herein and to the
terms and provisions of this Agreement in such kinds and amounts as the parties
may agree.

     4.   Cash Collateral Account.  The Lessor shall, directly or through its
          -----------------------
agents, deposit the Cash Collateral in an interest-bearing First Rate Account
("Account ") with BancBoston.  The Account shall be in the name of "BancBoston
Leasing Inc., Agent, as Collateral Pledge for American TeleSource International,
Inc., Collateral Account", and shall be administered by the agents or employees
of Agent and/or BankBoston.  Any notices given with respect to the Collateral or
the Account shall be sent to Lessor.  Lessor's security interest in and to the
Cash Collateral shall extend only to the principal sum deposited by the Lessee,
and any and all interest which may accrue on the Account ("Interest") shall be
remitted semi-annually to the Lessee directly by BankBoston.  In the event that
Lessor receives any payment of or in respect of Interest on the Account, it
shall hold such payment in trust for the benefit of the Lessee and shall
immediately upon receipt notify the Lessee thereof and remit such payment to the
Lessee in accordance with the Lessee's written instructions.  Any interest
earned on such Interest payments received by Lessor while in Lessor's possession
or under its control shall also belong to the Lessee and be held in trust by
Lessor for the Lessee and shall be remitted to the Lessee along with the
original Interest payment.  In no event shall Lessor or BankBoston be entitled
to deduct, withhold, credit or set off any Interest or interest thereon against
any amounts owing from the Lessee to Lessor or BankBoston, respectively, under
this Agreement or any other agreement.

                                      38
<PAGE>

     5.   Return of Collateral.  The Cash Collateral shall be held in the
          --------------------
Account until the Obligations shall no longer be outstanding, whereupon Lessor
shall assign and deliver to the Lessee such of the Cash Collateral, with
interest earned thereon, as has not been applied by Lessor pursuant to the terms
hereof and which is held by Lessor or by Agent on Lessor's behalf.

     6.   Remedies Upon Default.  Upon an Event on Default, as hereinafter
          ---------------------
defined, either (i) Lessor, at its option, may transfer at any time to itself or
its nominee, or (ii) Agent, at Lessor's option and direction, shall transfer to
Lessor or Lessor's nominee any or all of the Cash Collateral and hold same as
security hereunder or apply it to any of the Obligations in such order and
manner as the Lessor may determine, all at the Lessor's sole discretion.

     7.   Representations, Warranties and Covenants of the Lessee.
          -------------------------------------------------------

  7.1  The Lessee represents and warrants that it is a corporation duly
organized, existing, and in good standing under the laws of the State of Texas
and is duly qualified and in good standing in every other state where to nature
of its properties or the conduct of its business requires such qualification,
except where the failure to be so qualified would not have a material adverse
effect on the Lessee's business or financial condition.

  7.2  The Lessee represents and warrants that the execution, delivery, and
performance of and under this Agreement are within the Lessee's corporate
powers, have been duly authorized, and are not in contravention of law or the
terms of the Lessee's charter, bylaws, or other incorporation papers, or of any
indenture, agreement, or undertaking to which it is a party or by which it is
bound.

  7.3  The Lessee represents  and warrants that it is the legal and equitable
owner of the Cash Collateral and holds same free and clear of all liens,
charges, encumbrances, and security interests of every kind and nature
whatsoever, and the Lessee covenants that it will not assign this Agreement or
any interest herein or in the Cash Collateral or any part thereof, or otherwise
pledge, encumber, or grant any option with respect to the Cash Collateral or any
part thereof, except with the prior written consent of the Lessor.

  7.4  The Lessee represents and warrants that it has good right and legal
authority to assign, deliver, and/or create a security interest in the Cash
Collateral in the manner hereby provided or contemplated, and the Lessee
covenants that it will defend its title to the Cash Collateral against all
claims of all persons or entities.

  7.5  The Lessee covenants that it shall not make or allow to be made any
withdrawals of cash constituting Cash Collateral, or any part thereof, including
the income and proceeds therefrom other than as expressly set forth in this
Agreement.

  7.6  The Lessee covenants that it shall at all reasonable times and from time
to time, following reasonable notice given to the Lessee by Lessor, allow the
Lessor, by or through any of its officer, agents, attorneys, or accountants, to
examine, inspect, or make copies or extracts from the Lessee's books and records
at Lessor's sole expense.

  7.7  The Lessee covenants that it shall at all times do, make, execute, and
deliver all such additional and further acts and instruments as the Lessor may
at any time reasonably request in connection with the administration and
enforcement of this Agreement or relative to the Cash Collateral, in order to
vest more completely in and assure or make available to the Lessor any of the
Cash Collateral and rights herewith or hereafter granted, assigned, or
transferred to the Lessor, and to carry into effect the provisions and intent of
this Agreement.

     8.   Attorney-in-Fact.  The Lessor is hereby irrevocably appointed by the
          ----------------
Lessee as the Lessee's attorney-in-fact for the purposes of carrying out the
provisions of this Agreement and taking any action and executing any

                                      39
<PAGE>

instrument which the Lessor may deem necessary or advisable to accomplish the
purposes hereof upon the Lessee's failure to take such action or execute such
instrument as and when required by this Agreement.

     9.   Default.  An event of default ("Event of Default") shall exist
          -------
hereunder if:

     (a)  the Lessee breaches any of the foregoing warranties and covenants and
          such breach continues for ten (10) days following receipt of notice
          from Lessor;

     (b)  the Lessee from and after the date hereof does or attempts to
          encumber, sell, transfer, or otherwise dispose of any of the Cash
          Collateral or any interest therein without the prior written consent
          of the Lessor;

     (c)  any of the Cash Collateral is attached or levied upon or seized in any
          legal proceeding or is held by virtue of any lien or distress, and
          such attachment, levy or seizure continues from ten (10) days
          following receipt of notice from Lessor to remove same;

     (d)  the Lessee or any maker, endorser, guarantor, or surety of or for any
          of the Obligations makes or has made any representation or warranty
          herein, or in the Master Agreement, or in any financial statement
          delivered pursuant to the Master Agreement, which is or was false or
          materially misleading when made;

     (e)  the Lessee fails to pay or perform when due any of the Obligations and
          such failure is not cured within the applicable grace period; and/or

     (f)  any of the following occurs: the death, dissolution, termination of
          existence, insolvency, business failure, appointment of a receiver for
          any part of the property, assignment for the benefit of creditors, or
          the commencement of any proceeding under any bankruptcy or insolvency
          laws, of, by, or against the Lessee or nay maker, endorser, guarantor,
          or surety of or for any of the Obligations.

     10.  Waivers.  The Lessee waives presentment, notice, protest, notice of
          -------
acceptance of this agreement, notice of any leasing or other financial
accommodations extended, extensions granted, collateral received or delivered,
or any other action taken in reliance thereon, all demands and notices in
connection with the delivery, acceptance, performance, or enforcement of any
Obligation as to which any of the Cash Collateral is pledged, and all other
demands and notices of any description (other than notice of default), and
assents to any extension or postponement of the time of payment or any other
such indulgence, or any substitution, exchange, or release of collateral, and to
the addition or re Master Agreement of any party or person primarily or
secondarily liable for any of the Obligations.

     11.  Rights and Remedies of the Lessor.  Upon the occurrence of an Event of
          ---------------------------------
Default, or at any time thereafter, without further notice or demand, the Lessor
may declare this Agreement to be in default and shall thereafter have, in
addition to all other rights and remedies, the rights and remedies of a secured
party under the Uniform Commercial Code of Massachusetts and of any and all
other applicable jurisdictions.  Right is expressly granted to the Lessor to
apply the Cash Collateral to the Obligations in such order and manner as the
Lessor may determine and all at the Lessor's sole discretion.

     12.  Miscellaneous
          -------------

     12.1 No delay or omission on the part of the Lessor in exercising any

                                      40
<PAGE>

right, power, privilege, or remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right, power, privilege, or
remedy by the Lessor preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.

     12.2  No waiver of any right, power, privilege, or remedy shall be
effective unless in writing and signed by the Lessor, and such waiver on one
occasion shall not be construed as a bar to or waiver of any right, power,
privilege, or remedy on any other occasion.

     12.3  All remedies of the Lessor are cumulative and are not exclusive
of any other remedy provided in law or equity.

     12.4  This Agreement shall not be amended or modified, nor shall any of the
Collateral be released nor shall the pledge or security interest created hereby
be extended, except by a writing signed by the Lessee and the Lessor.

     12.5  Any notice required to be given by the Lessee, Lessor/Agent
hereunder shall be deemed adequately given if hand delivered or if sent
(returned receipt requested) by overnight mail or by certified U.S. mail to any
other parts at its address stated herein or at such other place as such party
may designate in writing to the other parties.  Notice shall be effective on the
earlier of (i) actual receipt or (ii) the day after deposit in overnight mail or
the third day-after deposit in U.S. mail.

     12.6  All terms not defined herein shall have the meanings set forth in the
Master Agreement.

     13.   Termination.  This Agreement shall terminate when all the Obligations
           -----------
secured hereby have been fully paid and performed.  At such time, the Collateral
shall be distributed as provided in Section 5 above.

     14.   Severability.  The provisions of this Agreement are severable, and if
           ------------
any clause or provision shall be held invalid and unenforceable in whole or in
part in any jurisdiction, then such invalidity or inenforceability shall affect
only such clause or provision or part hereof in such jurisdiction and shall not
in any manner affect such clause or provision in any other jurisdiction or any
other clause or provision of this Agreement in any jurisdiction.

     15.   Successors and Assigns.  This Agreement and the terms, covenants, and
           ----------------------
conditions hereof shall inure to the benefit of the successors and assigns of
the Lessor.  The Lessee shall not assign any of its rights or obligations
herein.

     16.   Law and Jurisdiction.  The validity and interpretation of this
           --------------------
Agreement and the rights and obligations of the parties shall be governed by the
laws of the Commonwealth of Massachusetts (without reference to the choice of
law doctrine thereof), and the Lessee irrevocably consents to the jurisdiction
of the courts of the Commonwealth of Massachusetts and of nay federal court
located therein in connection with any action or proceeding arising out of or
related to this agreement.

     IN WITNESS WHEREOF, the Lessee has caused this Agreement to be duly
executed as an instrument under seal as of the day and year first written above.

                                      41
<PAGE>

MASTER LEASE AGREEMENT

          This MASTER AGREEMENT, dated as of the 4/th/ day of December, 1998,
which together with all riders and amendments now or hereafter executed and made
a part hereof (the "Master Agreement"), is made at Boston, Massachusetts by and
between BANCBOSTON LEASING INC. ("Lessor"), a Massachusetts corporation with its
principal place of business at 100 Federal Street, Boston, Massachusetts 02110
and American Telesource International, Inc. ("Lessee"), a Texas corporation with
its principal place of business at 12500 Network Blvd., San Antonio, TX 78249.

Section 1.  LEASE.  In consideration of the premises, the Lessee hereby leases
from the Lessor the Equipment described in the Lease Schedule attached hereto
and agrees to pay rent and perform the terms and conditions set forth herein.
Throughout this Lease, "rent" means (a) the amounts set forth in the Lease
Schedule as "Monthly Rent", (b) all taxes set forth in Section 8 below, and (c)
all other monetary amounts due hereunder.

Section 2.  TERM AND PURCHASE OPTION.  Lessee shall signify its acceptance of
the Equipment by promptly executing and delivering to Lessor a Certificate of
Acceptance.  This Lease will start on the day Lessee accepts physical possession
of the Equipment from the vendor of the equipment as set forth in the Lease
Schedule ("Vendor"), provided, Lessor is not bound hereunder until Lessor's
authorized officer signs this Lease.  Once the Lease begins it will continue for
the Term, which shall be the number of full months shown on the Lease Schedule
(initial term) plus the interim term (the number of days from the starting date
through the last day of the month in which such start occurs).  At the end of
the Term, Lessee shall purchase the Equipment for the amount set forth in the
Lease Schedule.

Section 3.  RENT.  Lessee agrees to pay Lessor rent throughout the Term monthly
in advance for the initial term at the Monthly Rent as set forth in the Lease
Schedule, and monthly in arrears at 1/30 of the Monthly Rent for each day of the
interim term.  Rent is due on the 1/st/ of each month.  If all or any part of a
payment is not received within ten (10) days of its due date, Lessor will charge
Lessee 1.5% per month interest on such amount beginning with such due date (or,
if less in either case, the maximum amount permitted by law).  Lessor intends
that the rents, fees and charges to be paid by Lessee hereunder conform to all
provisions of law; however, should any such amounts be in excess of the
applicable amounts allowed by law, upon notice thereof Lessor will promptly
refund such excess to Lessee.

Section 4.  DELIVERY, SELECTION AND PURCHASE OF EQUIPMENT.  Lessee agrees that
Lessor is not responsible for delivery or installation of the Equipment.  Lessee
will not have any claim against Lessor if the manufacturer, supplier or Vender
delays in delivery or installation.  Lessee agrees that LESSOR DID NOT SELECT,
MANUFACTURE, SUPPLY OR INSPECT THE EQUIPMENT AND HAS NO EXPERTISE REGARDING THE
EQUIPMENT.  LESSEE SELECTED THE EQUIPMENT BASED ON LESSEE'S OWN JUDGEMENT.
LESSOR IS BUYING THE EQUIPMENT AT LESSEE'S REQUEST ONLY FOR THE PURPOSE OF
LEASING IT TO LESSEE.  Lessee represents that before signing this Lease (i) it
approved the supply contract (if any) between Lessor and Vendor and (ii) it has
been advised in writing that Lessee may have rights against the Vender under a
supply contract and that Lessee may contact the Vendor to determine the extent
of these rights.  To the extent transferable, Lessor hereby transfers all
warranties of Vendor or manufacturer to Lessee.

Section 5.  NO WARRANTIES.  Lessee agrees that: (A) LESSOR IS LEASING THE
EQUIPMENT TO LESSEE "WHERE IS, AS IS AND "WITH ALL FAULTS".  LESSOR DISCLAIMS
ANY REPRESENTATION, GUARANTY OR WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY
IMPLIED WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A PARTICULAR PURPOSE
REGARDING THE EQUIPMENT; (B) Lessor will not be liable for any loss or injury
caused to Lessee or any other person or property (including lost profits and
consequential, incidental or special damages) caused by the Equipment or its
failure to operate properly;

                                      42
<PAGE>

(C) IF THE EQUIPMENT DOES NOT WORK AS REPRESENTED BY THE VENDOR, OR IF THE
VENDOR OR ANY OTHER PERSON FAILS TO PROVIDE ANY SERVICE OR IF THE EQUIPMENT IS
UNSATISFACTORY FOR ANY OTHER REASON, LESSEE WILL MAKE ANY CLAIM SOLELY AGAINST
THE VENDOR OR OTHER PERSON AND WILL MAKE NO CLAIM AGAINST LESSOR; and (D) Lessor
makes no representation and disclaims any warranty that the Equipment is "Year
2000 Compliant", that is, that any computer application or other systems, if
any, which may be contained or included in the Equipment will be able to
recognize and perform properly, date sensitive functions involving certain dates
prior to and any date after, December 31, 1999.

Lessee shall not assert any defenses against Lessor or its assignees arising
from the condition of the Equipment, or the use or intended use of the
Equipment.

Section 6.  USE, REPAIRS AND SERVICE.  LESSEE CERTIFIES THAT THE EQUIPMENT WILL
BE USED SOLELY FOR BUSINESS OF COMMERCIAL PURPOSES AND NOT FOR PERSONAL, FAMILY
OR HOUSEHOLD PURPOSES.  The Equipment shall be located at the address set forth
in the Lease Schedule, which shall be located in the continental U.S., or such
other location consented to in writing by the Lessor.  Lessee will not make any
alterations to the Equipment and will not allow it to be used by anyone except
Lessee or Lessee's employees.  Lessee will keep the equipment in good working
order and in accordance with its manufacturer's service standards, ordinary wear
and tear excepted, will service the Equipment as recommended by its
manufacturer, will enter into any maintenance contract required by the
manufacturer or supplier at its own cost and expense, and will permit its
possession, use and operation only in accordance with the law, applicable
regulations, and the terms of Lessee's insurance policies.  All replacement
parts and additions will automatically become Lessor's property, but will be
transferred to Lessee, together with the Equipment, at the end of the Term for
the purchase price set forth in the Lease Schedule.

Section 7.  LOSS; DAMAGE; INSURANCE.  Lessee assumes all risk of loss of the
Equipment.  Lessee will keep the Equipment insured against all risks of loss in
an amount not less than its replacement cost (listing Lessor as loss payee and
additional insured) and against public liability in an amount satisfactory to
Lessor (listing Lessor as additional insured).  Lessee will provide upon the
acceptance of each item of Equipment, and as requested subsequently, a
certificate of insurance or such other evidence of coverage.  In the event of
loss, theft, destruction, damage, condemnation or other taking of the Equipment,
Lessee shall at Lessor's option (i) replace the Equipment with like equipment in
good repair and condition or (ii) pay to the Lessor (1) past due rent, (2) all
future rent to become due during the unexpired Term discounted to present value
at 5%, and (3) all other amounts due under this Agreement.

Section 8.  TAXES AND OTHER FEES.  Lessee agrees this is a "net" lease and will
pay when due (or reimburse Lessor upon demand), and on a net after-tax basis
shall indemnify and defend Lessor against (a) all filing, services,
administrative and user fees, all taxes, assessments, levies, excises, fees and
all other governmental charges that are at anytime imposed or levied upon or
assessed against (i) the Equipment, (ii) any rent or other sum payable hereunder
(other than any net income tax measured solely by the net income of the Lessor)
or (iii) this Lease or the leasehold created herein, or which arise in respect
of any use, operation or possession of the Equipment and (b) all penalties and
similar charges, whether penal or administrative; and all other fees of any kind
which may be charged regarding the leasing, use or ownership of the Equipment
with respect to the Term.  Lessee shall also reimburse Lessor for any and all
costs (including reasonable attorney's fees) incurred in connection with any tax
or fee described in this Section 8.  Lessee's obligations set forth in this
Section 8 will survive and continue after the end of the Term.

Section 9.  INDEMNIFICATION.  Lessee agrees to defend Lessor against,
indemnify, and reimburse Lessor for (on an after-tax basis) all claims, actions,
suits, proceedings, costs, expenses and damages and liabilities in any way
relating to or arising out of this Agreement or any Schedule, including, but not
limited to, any claim or demand

                                      43
<PAGE>

based upon STRICT OR ABSOLUTE LIABILITY IN TORT, any violation of environmental
regulations or patent, trademark or other comparable infringements. Lessee shall
also reimburse Lessor for all attorney's fees and expenses (whether or not
litigation is commenced) incurred in connection with such claims or demands.
Lessee's obligations set forth in this Section 9 will survive and continue after
the end of the Term.

Section 10.  TITLE.  The Equipment will remain at all times, sole and exclusive
property of Lessor and, if requested by Lessor, Lessee agrees to affix
identifying marks to the Equipment designating the ownership by Lessor.  The
Equipment is considered personal property, and Lessee will not permit it to
become affixed to real estate.  If Lessor requests, Lessee will provide
recordable waivers of any landlord's or mortgagee's interest in the Equipment.
Lessee shall keep the Equipment at all times free and clear from all liens,
security interests or encumbrances of any nature except those created hereunder
or those arising under operation of law incurred in the ordinary course of
business which are not delinquent or are being contested in good faith.  Upon
request of Lessor, Lessee shall execute any documents or instruments which may
be necessary or appropriate to confirm, to record or to give notice of ownership
including financing statements under the Uniform Commercial Code.

Section 11.  SURRENDER TO LESSOR.  Immediately upon the expiration of the
Initial Term or any Extended Term or at any other termination of this Master
Agreement, Lessee shall surrender the Equipment to Lessor in good repair and
working order, reasonable wear and tear excepted, by assembling and delivering
the Equipment, ready for shipment, to a place or carrier, as Lessor may
designate, within the state in which the Equipment was originally delivered to
Lessee or to which the Equipment was thereafter moved with the written consent
of Lessor.  All costs of removal, assembly, packing, and delivery of such
equipment to the place designated by Lessor shall be borne by Lessee.

Section 12.  DEFAULT AND REMEDIES.   Lessee agrees that Lessee will be in
default if (a) Lessee fails to pay rent as required hereunder and such failure
continues after Lessor gives Lessee five (5) days written notice; (b) Lessee
fails to maintain insurance as required herein and such failure continues for
ten (10) days following written notice from Lessor; (c) Lessee does not comply
with any other term of this Lease or any Schedule and such failure to comply
continues after Lessor has given Lessee thirty 930) days written notice; (d) the
Equipment is taken or encumbered by any security interest, encumbrance, lien or
charge, choate or inchoate; (e) Lessee dies, sells all or substantially all of
its assets, or goes out of business; (f) Lessee becomes insolvent, makes or
consents to an assignment for the benefit of creditors or to the appointment of
a receiver or trustee; (g) a petition is filed by or against Lessee under the
Bankruptcy Code; (h) any information supplied to Lessor directly or indirectly
by Lessee or Lessee's agents, including all financial information, is not true,
correct and complete; (i) Lessee breaches any term of any loan, credit agreement
or other material obligation; or (j) any party to any guaranty, letter of
credit, subordination or credit agreement or other undertaking ("Undertaking"),
given for the benefit of Lessor and obtained in connection with this Master
Agreement or Lease Schedule, breaches, fails to continue, contests, or purports
to terminate or to disclaim the Undertaking; or such the Undertaking becomes
unenforceable; or a guarantor of this Master Agreement or any Lease Schedule
shall die, cease to exist or terminate its independent operations; or any event
or condition set forth in subsections (f), (g), (h), or (i) of this Section 12
shall occur with respect to any guarantor or other person responsible, in whole
or n part, for payment or performance of this Master Agreement or any Lease
Schedule.

If any of these defaults occurs, Lessee agrees that Lessor may take one or more
of the following actions, in addition to other actions available under law or
equity (including without limitation all remedies available under the Uniform
Commercial Code): (A) Lessor may cancel this Lease and/or recover damages
against Lessee, not as a penalty but as a liquidation for all purposes of what
is due to Lessor, including: (1) past due rent, (2) all future rent to become
due during the unexpired term discounted to present value at 5%, (3) all late
fees and any other charges, reimbursements or payments due and to become due,
(4) reasonable attorney's fees and all costs and expenses incurred in
repossessing, storing, repairing, refurbishing, leasing or selling the
equipment; and (5) the amounts indemnified in Section 8 (provided, no amount
shall be duplicated); and/or (B) Lessor may obtain a court order permitting

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repossession.  Lessee will be liable for any deficiency following repossession
and sale.  If notice of sale is required to be given to Lessee, Lessee agrees
ten (10) days prior to notice is sufficient.  Lessor may also sue for the
amounts listed in clause "A" above without first remarketing the Equipment, and
Lessee waives any rights under any law that provides otherwise.

Section 13.  ASSIGNMENT.  Lessor may assign any or all of its interest under
this Lease and/or the Equipment to a new owner or secured party at any time
without prior notice to Lessee, and such new owner or secured party may also
assign its rights.  Lessee agrees that the new owner or secured party will have
the same rights Lessor had under this Lease but will not have to perform any of
Lessor's obligations 9in which case Lessor will retain those obligations).
Lessee also agrees that the rights of the new owner or secured party will not be
subject to any claims, defenses or set-offs that lessee may have against Lessor
or any other person and that  any assignment by Lessor would not materially
change Lessee's obligations under this Lease or substantially increase Lessee's
burdens or risks or constitute a delegation of material performance.  LESSEE MAY
NOT ASSIGN (TRANSFER) ANY OF ITS INTERESTS UNDER THE LEASE TO ANY OTHER PERSON
OR SUBLEASE ANY OF THE EQUIPMENT WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR,
ANY ATTEMPTED SUBLEASE OR ASSIGNMENT WILL BE VOID AND IS A DEFAULT HEREUNDER.

Section 14.  REPRESENTATIONS AND WARRANTIES.  Lessee represents and warrants
that (i) Lessee is duly organized, validly existing and in good standing in the
jurisdiction of its organization and each jurisdiction in which it conducts
business, (ii) this Agreement and each Schedule have been and will be duly
authorized and upon execution by Lessee shall constitute the legal, valid and
binding obligation of Lessee enforceable against Lessee in accordance with its
terms, (iii) there are no pending or threatened actions or proceedings before
any court, arbitrator or administrative agency that would have a material
adverse effect on Lessee's business, (iv) Lessee is not in default under any
obligation for borrowed money or for the deferred purchase price of property,
any lease agreement or any other agreement; (v) the financial and other
information that Lessee has submitted, or will submit, is or will at the time of
the submission be accurate and true; and (vi) Lessee has reviewed the relevant
areas within its business and has developed or is developing a program to become
on a timely basis "Year 2000 Compliant", and from time to time, at the request
of Lessor, Lessee shall provide to Lessor such updated information or
documentation as is requested regarding the status of its efforts to become year
2000 Compliant.

Section 15.  FINANCIAL STATEMENTS.  Lessee shall annually, within ninety (90)
days after the close of its fiscal year, furnish to Lessor financial statements
of Lessee, including a balance sheet as of the close of such year and statements
of income and retained earnings for such year, prepared in accordance with
generally accepted accounting principles, consistently applied from year to
year, and certified by independent public accountants for Lessee reasonably
acceptable to Lessor.  If requested by Lessor, Lessee shall also provide
quarterly financial statements of Lessee, similarly prepared for each of the
first three quarters of each fiscal year, certified (subject to normal year-end
audit adjustments) by the chief financial officer of Lessee and furnished to
Lessor within forty-five (45) days following the end of each quarter, and such
other financial information as may be reasonably requested by Lessor.

Section 16.  NON-CANCELABLE AGREEMENT: NO OFFSET.  NEITHER THIS AGREEMENT NOR
ANY SCHEDULE MAY BE CANCELED FOR ANY REASON WHATSOEVER.  LESSEE SHALL NOT BE
ENTITLED TO ANY ABATEMENT OF ANY PAYMENT DUE HEREUNDER OR ANY SCHEDULE, NOR TO
ANY DEFENSE, REDUCTION, OFFSET, COUTERCLAIM, RECOUPMENT OR DEDUCTION FOR ANY
REASON WHATSOEVER NOR TO ANY EXCUSE FROM THE PERFORMANCE OF ANY OF ITS
OBLIGATIONS UNDER THIS LEASE OR ANY SCHEDULE.  LESSEE'S OBLIGATIONS HEREUNDER
ARE ABSOLUTE AND UNCONDITIONAL.

Section 17.  LESSOR'S PAYMENT; POWER OF ATTORNEY. If Lessee fails to perform
any obligation hereunder, Lessor may at its option (but without any obligation
to anyone to do so) perform such obligation, and

                                      45
<PAGE>

Lessee shall reimburse Lessor on demand for any costs incurred plus interest at
the rate of 18% per annum or, if lower, the maximum rate allowable by law from
the date of any such payment by Lessor. Lessee irrevocably appoints Lessor as
Lessee's attorney-in-fact to do any act that Lessee is obligated to do under
this Agreement and to exercise any and all rights and powers as Lessee might
exercise with respect to the Equipment.

Section 18.  PLACE FOR SUIT; JURY WAIVER.  Lessee agrees that: this Lease will
be governed by the internal laws of the Commonwealth of Massachusetts, LESSEE
WAIVES TRAIL BY JURY AND CONSENTS TO PERSONAL JURISDICTION IN THE STATE AND
FEDERAL COURTS IN MASSACHUSETTS; ANY LEGAL PAPERS FOR ANY LAW SUIT WILL BE
PROPERLY SERVED IF MAILED BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, WITH
DELIVERY TO LESSEE; and ANY LAWSUIT ARISING OUT OF THIS LEASE, REGARDLESS OF WHO
FILES THE SUIT, MUST BE BROUGHT ONLY IN THE STATE OR FEDERAL COURTS IN
MASSACHUSETTS AND NOT ELSEWHERE, UNLESS LESSOR AGREES IN WRITING OR ELECTS
OTHERWISE.

Section 19.  GENERAL.  Any notice to Lessor under this Lease shall be in writing
and shall be deemed given if mailed by registered or certified mail, return
receipt requested, or by overnight courier via a nationally recognized provider
of such services, to Lessor at the address listed on the front page of this
Lease, Attention: Contract Manager, Angela Petrone, Vendor Finance, or if to
Lessee, mailed first class to the address similarly shown unless changed in
writing. Notice to Lessee of a Lessor assignment constitutes such change of
address.  Notices shall be effective upon receipt.  This Lease constitutes the
entire agreement between Lessor and Lessee and supersedes any prior oral or
written agreements.  This Lease shall be binding upon and inure to the benefit
of the parties hereto and their permitted successors and assigns.  This Lease
nay not be modified, amended or terminated except by a writing signed by Lessee
and an Executive Officer of Lessor.  For the purposes of any arbitration, court
proceeding, audit, accounting or otherwise, Lessee agree that any copy,
reproduction or image (electronic or otherwise) kept of this Lease by Lessor in
the ordinary course of business shall be conclusive, final and binding upon the
parties hereto and evidence for all purposes.

Section 20.  NON-WAIVER.  Lessor's failure to require performance by Lessee of
any of the provisions of the Lease shall not be a waiver thereof.

Section 21.  CAPTIONS.  Captions in this Lease are for convenience only.  Lessee
certifies that Lessee has read ALL TWENTY-ONE (21) Sections of this Lease and
all applicable Schedules and agrees to all terms herein.

LESSEE: AMERICAN TELESOURCE         Accepted At Boston, Massachusetts
      INTERNATIONAL, INC.           LESSOR: BANCBOSTON LEASING INC.

Printed Name: H. Douglas Saathoff

By:/s/ H. Douglas Saathoff          By:__________________________________

Title:VP Finance                    Title:_______________________________

Date: 12/7/98                       Date:________________________________

                                      46

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